What is a characteristic of secondary stakeholders?

What is a characteristic of secondary stakeholders?

• A. They are not engaged in transactions with the company
• B. They are employees of the company
• C. They directly control the operations
• D. They hold voting rights in the company

Answer: (A)

Secondary stakeholders are individuals or groups who do not have a direct economic stake in the company but can still influence or be affected by its activities. This characteristic is highlighted by the fact that they are not engaged in direct transactions with the company, unlike primary stakeholders such as employees, customers, or investors who have direct economic ties. Individuals who hold official roles within the company, such as employees or management, do have direct involvement and therefore are categorized as primary stakeholders, not secondary. Similarly, parties that directly control operations or have voting rights, such as board members or major shareholders, also fall under the primary stakeholder category because their engagement is essential for the company's functioning. Hence, the essence of secondary stakeholders lies in their more indirect relationship with the business compared to those who have a primary stake.

Secondary stakeholders are individuals or groups who do not have a direct economic stake in the company but can still influence or be affected by its activities. This characteristic is highlighted by the fact that they are not engaged in direct transactions with the company, unlike primary stakeholders such as employees, customers, or investors who have direct economic ties.

Individuals who hold official roles within the company, such as employees or management, do have direct involvement and therefore are categorized as primary stakeholders, not secondary. Similarly, parties that directly control operations or have voting rights, such as board members or major shareholders, also fall under the primary stakeholder category because their engagement is essential for the company's functioning. Hence, the essence of secondary stakeholders lies in their more indirect relationship with the business compared to those who have a primary stake.