What does the Stakeholders Theory highlight?

• A. Legal ramifications of business failures
• B. The importance of maximizing profit for shareholders
• C. The ethical responsibility to consider all affected stakeholders
• D. The necessity of following government regulations

Answer: (C)

The Stakeholders Theory emphasizes the ethical responsibility of businesses to consider the interests and well-being of all parties affected by their operations, rather than solely focusing on maximizing profit for shareholders. This approach recognizes that businesses interact with a diverse group of stakeholders, including employees, customers, suppliers, the community, and the environment. By considering the impacts of their decisions and actions on these stakeholders, organizations can promote sustainable practices and foster trust and goodwill, which ultimately contributes to long-term success. This holistic view encourages organizations to balance competing interests and create value not just for their shareholders but for society as a whole, highlighting the importance of ethical decision-making in business practices. This perspective differentiates itself from approaches that prioritize profit maximization or compliance with legal requirements, as it takes a broader view of corporate responsibility.