One way firms can increase benefits for external stakeholders is through:

One way firms can increase benefits for external stakeholders is through:

• A. Cutting operational costs
• B. Modifying business practices
• C. Reducing product range
• D. Hiring external consultants

Answer: (B)

Modifying business practices is a strategic approach that firms can use to enhance their relationships with external stakeholders, which may include customers, suppliers, investors, and the wider community. By adjusting how they operate, companies can better align with stakeholders' needs and expectations, leading to increased satisfaction and loyalty. For instance, a firm might implement more sustainable practices that resonate with environmentally conscious consumers or adopt customer-centric approaches that improve service quality. Such modifications not only strengthen stakeholder relationships but can also lead to improved corporate reputation and trust, which are vital for long-term success. Cutting operational costs, reducing product range, and hiring external consultants do not inherently focus on stakeholder benefits in the same way. While these actions might lead to financial improvements or operational efficiencies, they often do not directly contribute to enhancing relationships or the well-being of external stakeholders. In contrast, modifying business practices shows a proactive commitment to responding to the expectations and demands of those outside the organization, therefore fostering a more positive impact on stakeholders.

Modifying business practices is a strategic approach that firms can use to enhance their relationships with external stakeholders, which may include customers, suppliers, investors, and the wider community. By adjusting how they operate, companies can better align with stakeholders' needs and expectations, leading to increased satisfaction and loyalty.

For instance, a firm might implement more sustainable practices that resonate with environmentally conscious consumers or adopt customer-centric approaches that improve service quality. Such modifications not only strengthen stakeholder relationships but can also lead to improved corporate reputation and trust, which are vital for long-term success.

Cutting operational costs, reducing product range, and hiring external consultants do not inherently focus on stakeholder benefits in the same way. While these actions might lead to financial improvements or operational efficiencies, they often do not directly contribute to enhancing relationships or the well-being of external stakeholders. In contrast, modifying business practices shows a proactive commitment to responding to the expectations and demands of those outside the organization, therefore fostering a more positive impact on stakeholders.