Bachelor of General Studies (BGS) Degree Practice Exam

When evaluating ethical behavior, which stakeholder group is most impacted by a company's decisions?

1. Shareholders only

2. Only employees

3. All stakeholders

4. The government exclusively

The correct answer is: All stakeholders

The reasoning for selecting "all stakeholders" as the correct answer centers around the understanding that a company's decisions affect various groups in different ways. Stakeholders include shareholders, employees, customers, suppliers, the local community, and the government, among others. When a company makes decisions—be it about pricing, product safety, environmental policies, or labor practices—each of these groups can be directly or indirectly impacted. For instance, a decision to cut costs by downsizing can lead to job loss, affecting employees and their families, while the impact on shareholders might be related to increased profits in the short term but could damage the company's reputation, which can, in turn, affect its customer base and long-term viability. Likewise, decisions regarding environmental practices can impact the community and government regulations. Hence, evaluating ethical behavior must consider the broader impact on all these groups rather than isolating the evaluation to just one type of stakeholder. This holistic view fosters corporate responsibility and long-term sustainability.