Question

Identify a party (other than stockholders) that can be classified as a stakeholder for a corporation. What obligation does the corporation have to this party? Describe a situation where stockholder claims on the organization might conflict with the claims of this stakeholder group. If you were CEO, how would you resolve these conflicts?

Please do not copy and paste, must be original.

Answer 1

A party:   

Answer: a lender

Stakeholders are those interested parties, the corporation should pay attention.

The lender is loan provider to the corporation. Therefore, it becomes interested about corporation’s performance.

Obligation:

Answer: the obligation of payment of interest and principal of loan.

The corporation must have repayment obligation, since the loan is taken. Such repayment could be done periodically or at once, based on the agreement.

A situation:

Suppose a loan is not repaid by the corporation; it forces the lender recovering the due amount along with interests by selling the mortgaged property; but, this property has 3 other charges – first charge to the lender, second charge to a bank, and third charge to a financial institution. Since other loans are continuing, the 1st charge becomes free but not the other 2 charges; selling of property requires agreement of all those, and there become a conflict.

Resolving by CEO:

CEO should look into the matter and can offer some scheme to those parties so that the matter could be resolved – suppose the initial 1st charge could be replaced by a freehold property, which could be sold out.