In your opinion, which of the following stakeholder groups is the most important - customers, employees, or shareholders? Please provide the rationale for your selection.

Question

What will be an ideal response?

Answer 1

Students' responses to this question will vary - what is most important is the rationale that they use to explain their choice. The text does not provide a specific answer to this question, so students must wrestle with the notion of stakeholders and develop their own opinion and rationale. Some possible answers include the following:

Customers are the most important stakeholders, because without customers the firm will not have any revenue or be able to earn a profit. Satisfying customer needs should be at the heart of every company's mission and guide the selection of strategies as well as industries or markets in which to compete. Both the I/O and RBV models acknowledge the importance of customers - customer preferences provide opportunities, as well as threats.

Employees are the most important stakeholders because they determine how productive the firm will be and also are the source of unique capabilities that might provide the firm with a competitive advantage. Employees are the lifeblood of any company - without employees, no firm will be able to satisfy the needs of its customers. Employees provide a variety of tangible, as well as intangible resources to a firm - they are crucial in determining how unique the bundle of resources and capabilities will be from one firm to another. Employees are also decision makers - the quality of the decisions they make play an important role in the survival of any firm.

Shareholders are the most important stakeholders because they provide a very important source of capital that allows the firm to finance its operations on a continuing basis. Shareholders also provide feedback about the viability of the firm's strategic choices and other important decisions made by managers. Shareholders are also important because sometimes their need for a return on their investment puts pressure on managers to make decisions that might conflict with the needs of other stakeholder groups, such as employees or customers.