Final answer:
There are three types of stakeholders that the BOD must understand: consumers, employees, and government agencies. A board needs to consider outcomes related to financial performance, social responsibility, and employee satisfaction to understand stakeholders' expectations.
Step-by-step explanation:
Types of stakeholders:
- Consumers: Consumers are individuals or organizations who use or purchase the product or service. For example, in the case of a new automobile design, consumers would be the people who will purchase the cars.
- Employees: Employees are a type of stakeholder as they work for the company and have a vested interest in its success. In the automobile design example, the mechanics who will maintain and repair the cars would be considered stakeholders.
- Government agencies: Government agencies are stakeholders when they have an interest in the product due to regulations or monitoring. The Environmental Protection Agency (EPA) monitoring the car's emissions in the automobile design example would fall under this category.
Outcomes a board needs to consider:
A board needs to consider outcomes that align with stakeholders' expectations, such as:
- Financial performance: Stakeholders often have expectations regarding the financial performance and success of the company. For example, shareholders may expect a return on their investment.
- Social responsibility: Stakeholders may have expectations regarding the company's social responsibility practices, such as environmental sustainability or community involvement.
- Employee satisfaction: Stakeholders may have expectations regarding employee satisfaction and well-being, as happy and motivated employees can contribute to the company's success.