Question

If a company is not doing well financially. who is mostly at risk. and what is the responsibility to the employees, customers, vendors, etc?

Answer 1

When a company is not doing well financially means the business is in losses so there are no profits and also company will financially poor, the most impacted people are Shareholders who invested their cash into the business. Since the invested their cash into the business, they will not get their cash back and also they will not get their dividends. Moreover, sometimes few set of stockholders who holds rights in common equity need to pay extra in order clear the debts etc.

The second impacted people are employees as they will loss their jobs because company terminates them due to cost cutting.

The responsibility of employees is to work hard for the salary they take in every period and sometimes, taking initiatives or extra responsibilities which will help for the growth of the company as well as it will also help their individual growth.

The responsibility of customers is to buy the goods or getting the services from the same company instead of purchasing from different companies. Of course, if the quality of the goods or services is good and worth enough for the amount paid, the customers obviously purchase from the same company. In this situation, the customers will not have much responsibilities to continuously buy from the same company because if the quality is good then only customers will buy so it is the responsibility of the company to ensure that its products/services have good and standard quality.

The responsibility of vendors is to provide the quality raw materials at the reasonable prices. So that the final product that will manufactured by the company will have the good quality. Here also, there is no requirement that the vendors should have sell their raw materials to the company only because when the company pays to vendors regularly for the raw materials purchased, vendors will continue to sell their raw materials but when the company is not clearing the dues for the raw materials taken then vendors will not sell in future period, So it is the first company's responsibility to pay back for the raw materials purchased from vendors within the time so that vendors will continue to sell their materials to the comapany.