Question

When corporations fail their impact is felt beyond shareholders and impact the lives of stakeholders. Critically evaluate what is the purpose of corporation from a stakeholder and shareholder perspective

Answer 1

A corporation is not just an artificial person but it also way of earning a livelihood for many of the stakeholders as well as stockholders.

when a corporation fails, the stockholders of the corporation lose their investment completely and it impact a lot of their savings as they have to write them off completely and they would be the dealing with huge losses.

when the corporation fails, the stakeholders associated with the corporation like employees lose out of their jobs, and they get unemployed so they are not able to fulfill with the daily expenses of their family, so corporation is a way of fulfilling various type of livelihood expenses for many of the employees of the company.

When the corporation fails, stakeholders such as the suppliers who are majorly dependent upon the share of corporation in their sales to generate a large extent of their profit, would also lose their profit generating customer and it will also get impacted and other organisations employee as well as investors because they are cut off their major source of revenue.

it also impact government as well as society as government is not able to generate any kind of tax while corporation would not be able to provide any kind of employment opportunities as well as various social investment beneficial for the society.

so corporation is not just an artificial person, it is connected to the day to the day life of various stakeholders of corporations.