BMF – May 2016 – L1 – SA – Q5 – Nature of Business, Types, and Objectives

This question assesses the understanding of corporate objectives in relation to stakeholders.

Question

It is often assumed that the main objective of a company should be to maximise the wealth of its shareholders. Johnson, Scholes, and Whittington state that the objective of an entity should be to ………………
A. Fulfil ‘stakeholder’ expectations
B. Fulfil ‘stakeholder’ values
C. Fulfil ‘shareholder’ expectations
D. Fulfil ‘government’ expectations
E. Fulfil ‘stakeholder’ thinking

Answer

A. Fulfil ‘stakeholder’ expectations

Explanation:

The objective of fulfilling stakeholder expectations reflects a broader view of corporate responsibility. While maximizing shareholder wealth is traditionally emphasized, Johnson, Scholes, and Whittington advocate considering the expectations of all stakeholders, including employees, customers, suppliers, and the community, to ensure sustainable business success.

Tags: Business Objectives, Corporate Goals, Stakeholders
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: MAY 2016

Uploader: Kwame Aikins