A business decides to cut employee wages to increase profit for shareholders. Which stakeholder conflict does this best illustrate?

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Question

A business decides to cut employee wages to increase profit for shareholders. Which stakeholder conflict does this best illustrate?

Accepted Answer

Employees versus shareholders over the distribution of business profits — Cutting wages to increase shareholder profit directly pits the financial interests of employees against those of shareholders — a classic internal stakeholder conflict. Option A involves customers, who are not affected by wage cuts in this scenario. Option C involves government and tax policy. Option D involves suppliers and credit terms.

Answer

Employees versus customers over product pricing decisions

Answer

Managers versus government over taxation and business regulation

Answer

Suppliers versus shareholders over payment terms and credit periods

Answer

Employees versus shareholders over the distribution of business profits

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