Question

Failure to understand the beliefs and expectations of stakeholders:a. Causes a company's profits to increase in the short run.b. Causes a company's profits to decrease in the short run.c. Causes the performance-expectations gap to grow larger.d. Increases the chance of a corporate buy-out.

Answer 1

Answer:

c. Causes the performance-expectations gap to grow larger

Explanation:

Primarily it is the duty of the directors of any organisation to understand the beliefs and the expectations of the stakeholders because their primary responsibility as stewards of the business or corporation is to make profit and then maximize shareholders' wealth.

Understanding the expectation of the stakeholders helps the organisation tailor its performance in a way to ensure that this expectation is met and stakeholders trust in the activities of the organisation.

Therefore, the failure to understand these expectations means that stakeholders will not be satisfied with the performance of the organisation which means a negative impact on organisational performance as a result of not meeting stakeholders expectation.

Answer 2

Answer:

The correct option is C,failure to understand the beliefs and expectations of stakeholders causes the performance-expectations gap to grow larger

Explanation:

A business must understand the priorities and expectations of its key stakeholders and respond to them as appropriate.

Failure to do so,bring about an enterprise where management team are moving eastward and stakeholders moving in another direction.

The performance-expectations gap is a metric used measuring how well the results of the company aligned to those expectations of stakeholders ,shareholders to be specific.

A management that failed to understand the rate of return expected by shareholders would have ended widening  the gap between their performance and shareholder expectation of return on investment.