DB 5 Research Paper Example | Topics and Well Written Essays - 750 words

DB 5 - Research Paper Example 1. Stakeholders of a corporation Stakeholders to a corporation are people, groups of people, and entities with interest in the corporation’s achievements. They can be classified into two groups, internal stakeholders, and external stakeholders. Shareholders are the first group of stakeholders, their interest is in their investments, and potential rewards from the investments. A corporation’s employees are another set of stakeholders with stake in job security and the corporation’s ability to pay remunerations in time. Management, a part of employees, also has interest in their obligations as the corporation’s custodians (Hill and Jones, 2012). External stakeholders include bond holders and other types of creditors whose interests is in the corporation’s ability to repay its liabilities, consumers because of their dependence on the corporation’s products and the government whose interest include tax from the corporation and regulatory measures over the corporation. Other stakeholders are the society within which the corporation operates, and immediate and extended economies (Hill and Jones, 2011). 2. ... Consequently, entities with the highest number of stakeholders are more important than those with few stakeholders are. Entities whose actions poses macroeconomic consequences are also more important than those whose impacts are limited in scope (Brooks and Dunn, 2009). Relative significance of entities also depends on the possible impacts on market sustainability and those that can lead to market collapse are more important than others whose impacts on market sustainability are mild. Quality of jobs in an entity and the value that the entity adds to the economy also justifies the position that some entities are more important than others are. The government, as the custodial of national economy, should therefore help the important businesses to sustainability during financial crisis in order to ensure economic stability. The government should however restrain from help to less important businesses because of possible involved strain on federal expenditure and because of the need to promote prudence and self-reliance among businesses (Gilpin, 2011). 3. Determinants of deficiency and the need for downsizing, and benefits of downsizing solving deficiency Many measures exist by which a company may be considered deficient. A high debt ratio such as debt to equity ratio that shows the percentage debts relative to an entity’s internal equity indicates deficiency. A company’s inability to honor debts as they become due, increased number of court cases over defaulted payments and human resource problems regarding employees’ remunerations are other measures for determining a company’s deficiency. Extreme level of these measures identifies the need for downsizing as a strategy to improving a company’s liquidity towards meeting its obligations. Downsizing can