Local communities are stakeholders of organizations because communities _____.
Options:
A. rely on the products the companies produce
B. rely on the tax base from companies, and their employee payrolls, to thrive
C. wish to join forces with organizations to create strategic alliances
D. need the publicity of national organizations
E. enjoy the changes that progress tends to bring
The Correct Answer Is:
B. rely on the tax base from companies, and their employee payrolls, to thrive
Correct Answer Explanation: B. rely on the tax base from companies, and their employee payrolls, to thrive
Local communities are interconnected with organizations in various ways, making them stakeholders due to their reliance on the economic contributions of these entities. The correct answer, B, underscores this connection by highlighting the significance of the tax base from companies and their employee payrolls to the prosperity of communities.
Communities rely on the tax base generated by companies to fund essential services and infrastructure. Taxes paid by these businesses contribute directly to local governments, enabling them to build roads, schools, hospitals, and other communal facilities.
Without this financial support, communities would struggle to maintain and improve their infrastructure, which is crucial for residents’ well-being and overall development.
Additionally, employee payrolls from companies inject money into local economies. Employees spend their earnings on goods and services within the community, thereby supporting local businesses. This circulation of money within the community bolsters economic activity and sustains livelihoods, fostering a vibrant local economy.
Now, let’s delve into why the other options are not accurate:
A. “Communities rely on the products the companies produce.”
While it’s true that communities benefit from the products and services offered by companies, this reliance on products alone doesn’t inherently establish stakeholdership. Communities may have preferences or needs for certain goods or services, but this consumer relationship doesn’t necessarily make them stakeholders.
Stakeholders typically have a more direct influence or are significantly impacted by the operations or actions of an organization beyond just being consumers.
C. “Communities wish to join forces with organizations to create strategic alliances.”
Collaborations and partnerships between communities and organizations can undoubtedly occur for various reasons, such as development initiatives, community programs, or shared objectives.
However, the desire to create strategic alliances doesn’t automatically grant communities the status of stakeholders. Stakeholders usually have a vested interest or are materially affected by the decisions and activities of an organization, often having a direct impact on their well-being or resources.
D. “Communities need the publicity of national organizations.”
Communities might benefit from the attention or visibility brought by national organizations, especially in terms of tourism, investments, or recognition.
However, the need for publicity alone doesn’t qualify communities as stakeholders. Stakeholders typically have more substantive relationships, often involving economic, social, or environmental dependencies, rather than just a need for publicity or visibility.
E. “Communities enjoy the changes that progress tends to bring.”
Communities might indeed appreciate advancements and changes that come with progress, such as technological advancements, improved infrastructure, or enhanced services.
However, the enjoyment of progress doesn’t inherently confer stakeholdership. Stakeholders usually have a more direct and material interest in the outcomes or impacts of an organization’s actions, often being significantly affected by these changes or advancements.
Stakeholdership involves a deeper, more interconnected relationship between the community and organizations, often rooted in tangible economic, social, or environmental dependencies.
In the case of local communities, their reliance on the economic contributions of companies through taxes and employee payrolls establishes them as stakeholders due to the direct impact these contributions have on their well-being and development.
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MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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