Bachelor of General Studies (BGS) Degree Practice Exam

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Which statement is correct regarding stakeholders' power?

All stakeholders have equal power.
Shareholders' voting power is unlimited.
Different stakeholders have varying types and degrees of power.
None of the above.

The correct answer is: Different stakeholders have varying types and degrees of power.

The statement regarding the varying types and degrees of power among stakeholders is correct because it acknowledges the reality of how stakeholder influence operates within an organization. Stakeholders can include a diverse group such as employees, customers, suppliers, shareholders, and the community, each wielding different types of power based on their relationship with the organization. For instance, shareholders have significant financial influence due to their investment but may not have direct decision-making authority on operational matters. Employees may possess power through their skills and ability to drive productivity, while customers can significantly affect a company's reputation and market success through their preferences and purchasing decisions. This variance in power dynamics means that stakeholders cannot be seen as homogenous; instead, their influence largely depends on the context and specific circumstances surrounding the organization. Recognizing these distinctions is vital for effective stakeholder management and strategic decision-making.