Question 1

​In a franchising relationship

Accepted Answer

A) ​the franchisor is the principal 
B) the agent is the franchisor 
C) the franchisor is the agent 
D) ​the principal is the franchisee 
A) ​the franchisor is the principal 
B) the agent is the franchisor 
C) the franchisor is the agent 
D) ​the principal is the franchisee

Question 2

​If a firm decides to stop its sales agents from pricing too aggressively to make sales by requiring the agent to obtain permission to reduce price below a specific threshold,and the manager has all the relevant information transferred to him by the firm,the solution would

Accepted Answer

A) ​Work 
B) Not work 
C) Not work in all circumstances 
D) ​None of the above 
A) ​Work 
B) Not work 
C) Not work in all circumstances 
D) ​None of the above

Question 3

Promoting from Within
Like most fast food restaurants,Chipotle has a high rate of employee turnover. However,for Chipotle,this occurred not only at the entry-level,server jobs,but also at the shift supervisor,store manager,and area manager levels.Why did their enactment of a policy of exclusively promoting from within the organization reduce their turnover problem in these supervisory roles?​

Accepted Answer

Especially for lower level supervisory j

Question 4

​The conflict between the Vice President of Marketing and her sales staff arises because

Accepted Answer

A) ​the sales staff are too willing to offer discounts 
B) the sales staff does not want to negotiate aggressively enough 
C) the Vice President wants to negotiate too aggressively 
D) ​the Vice President is more willing to offer discounts to make the sale 
A) ​the sales staff are too willing to offer discounts 
B) the sales staff does not want to negotiate aggressively enough 
C) the Vice President wants to negotiate too aggressively 
D) ​the Vice President is more willing to offer discounts to make the sale

Question 5

​The conflict between the Vice President of Marketing and her sales staff arises because

Accepted Answer

A) ​the sales staff are unwilling to offer discounts 
B) the Vice President does not want to negotiate aggressively enough to maximize profits 
C) the sales staff want to negotiate too aggressively 
D) ​the Vice President is more willing to offer discounts to make the sale 
A) ​the sales staff are unwilling to offer discounts 
B) the Vice President does not want to negotiate aggressively enough to maximize profits 
C) the sales staff want to negotiate too aggressively 
D) ​the Vice President is more willing to offer discounts to make the sale

Question 6

​If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem,the principle can

Accepted Answer

A) ​Hire a salesman who has a reputation for working hard 
B) Monitor the salesman to prevent shirking 
C) All of the above 
D) ​None of the above 
A) ​Hire a salesman who has a reputation for working hard 
B) Monitor the salesman to prevent shirking 
C) All of the above 
D) ​None of the above

Question 7

​The manager of Fatty Foods is thinking about retiring.He has two options: to leave his stores as a company stores,to be managed by a salaried manager,or to sell some of them as franchises.The franchisor however is offering a really low franchisor fee for the store.What would be his best bet?

Accepted Answer

A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire 
A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire

Question 8

​As a result of moving more decision making from the periphery of the organization toward the center,typically

Accepted Answer

A) ​the flow of relevant information to the decision maker should be enhanced 
B) the flow of relevant information from the decision maker should be enhanced 
C) the incentive structure for the decision maker should be strengthened 
D) ​the incentive structure for the decision maker can be eliminated 
A) ​the flow of relevant information to the decision maker should be enhanced 
B) the flow of relevant information from the decision maker should be enhanced 
C) the incentive structure for the decision maker should be strengthened 
D) ​the incentive structure for the decision maker can be eliminated

Question 9

​Relative to a franchisee,a manager of a company owned store is more likely to

Accepted Answer

A) ​Work very hard 
B) Not work as hard 
C) Work only evenings 
D) ​Work only night shifts 
A) ​Work very hard 
B) Not work as hard 
C) Work only evenings 
D) ​Work only night shifts

Question 10

​When decision rights are decentralized,typically

Accepted Answer

A) ​decisions are being moved to those with more of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved from those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions 
A) ​decisions are being moved to those with more of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved from those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions

Question 11

​An HVAC company is selling heating and cooling equipment.Between its sales staff and the VP of Marketing,the sales staff would want to

Accepted Answer

A) ​Price aggressively to ensure sales are made 
B) Price less aggressively to ensure that profitable sales are made 
C) Price at cost to minimize sales 
D) ​None of the above 
A) ​Price aggressively to ensure sales are made 
B) Price less aggressively to ensure that profitable sales are made 
C) Price at cost to minimize sales 
D) ​None of the above

Question 12

​The problem the agent faces when deciding which agent to hire is called

Accepted Answer

A) ​Adverse selection 
B) Moral hazard 
C) Both of the above 
D) ​None of the above 
A) ​Adverse selection 
B) Moral hazard 
C) Both of the above 
D) ​None of the above

Question 13

​In a situation where an artist is selling his own work to the galleries,the principle is

Accepted Answer

A) ​The artist 
B) The gallery 
C) Both of the above 
D) ​None of the above 
A) ​The artist 
B) The gallery 
C) Both of the above 
D) ​None of the above

Question 14

​When decision rights are decentralized,typically

Accepted Answer

A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved from those with stronger incentives to make good decisions 
C) decisions are being moved from those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions 
A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved from those with stronger incentives to make good decisions 
C) decisions are being moved from those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions

Question 15

​Which of the following addresses agency costs?

Accepted Answer

A) ​advertising for employee positions in as many outlets as possible 
B) hiring only from job fairs 
C) instituting longer work days 
D) ​replacing closed offices with cubical office spaces 
A) ​advertising for employee positions in as many outlets as possible 
B) hiring only from job fairs 
C) instituting longer work days 
D) ​replacing closed offices with cubical office spaces

Question 16

​As a result of moving more decision making from the periphery of the organization toward the center,typically

Accepted Answer

A) ​the flow of relevant information to the decision maker can be weakened 
B) the flow of relevant information from the decision should be enhanced 
C) the incentive structure for the decision maker should be strengthened 
D) ​incentive compensation at the periphery can be weakened 
A) ​the flow of relevant information to the decision maker can be weakened 
B) the flow of relevant information from the decision should be enhanced 
C) the incentive structure for the decision maker should be strengthened 
D) ​incentive compensation at the periphery can be weakened

Question 17

​A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and must decide how to pay them.To align incentives,it should to pay the consultants

Accepted Answer

A) ​Per store opened 
B) A percentage of the profit earned per new store 
C) A fixed contract amount 
D) ​All of the above 
A) ​Per store opened 
B) A percentage of the profit earned per new store 
C) A fixed contract amount 
D) ​All of the above

Question 18

​The components of a well-run incentive compensation scheme include all of the following EXCEPT

Accepted Answer

A) ​evaluating the identified performance measures 
B) demonstrating that supervisors are friendly outside of the work environment 
C) rewarding workers who for meet performance measures 
D) ​identifying the relevant measures on which to evaluate employees 
A) ​evaluating the identified performance measures 
B) demonstrating that supervisors are friendly outside of the work environment 
C) rewarding workers who for meet performance measures 
D) ​identifying the relevant measures on which to evaluate employees

Question 19

​Monitoring

Accepted Answer

A) ​Gives the principle a better performance evaluation metric 
B) Allows the principle to better align the incentives of the agent with the goals of the principle 
C) Can be costly for the principal 
D) ​All of the above 
A) ​Gives the principle a better performance evaluation metric 
B) Allows the principle to better align the incentives of the agent with the goals of the principle 
C) Can be costly for the principal 
D) ​All of the above

Question 20

​When decision rights are decentralized,typically

Accepted Answer

A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved to those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions 
A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved to those with more of the relevant information 
D) ​decisions are being moved from those with weaker incentives to make good decisions

In a franchising relationship

If a firm decides to stop its sales agents from pricing too aggressively to make sales by requiring the agent to obtain permission to reduce price below a specific threshold,and the manager has all the relevant information transferred to him by the firm,the solution would

The conflict between the Vice President of Marketing and her sales staff arises because

The conflict between the Vice President of Marketing and her sales staff arises because

If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem,the principle can

The manager of Fatty Foods is thinking about retiring.He has two options: to leave his stores as a company stores,to be managed by a salaried manager,or to sell some of them as franchises.The franchisor however is offering a really low franchisor fee for the store.What would be his best bet?

As a result of moving more decision making from the periphery of the organization toward the center,typically

Relative to a franchisee,a manager of a company owned store is more likely to

When decision rights are decentralized,typically

An HVAC company is selling heating and cooling equipment.Between its sales staff and the VP of Marketing,the sales staff would want to

The problem the agent faces when deciding which agent to hire is called

In a situation where an artist is selling his own work to the galleries,the principle is

When decision rights are decentralized,typically

Which of the following addresses agency costs?

As a result of moving more decision making from the periphery of the organization toward the center,typically

A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and must decide how to pay them.To align incentives,it should to pay the consultants

The components of a well-run incentive compensation scheme include all of the following EXCEPT

Monitoring

When decision rights are decentralized,typically

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 19: Getting Employees to Work in the Firms Best Interest

​In a franchising relationship

​If a firm decides to stop its sales agents from pricing too aggressively to make sales by requiring the agent to obtain permission to reduce price below a specific threshold,and the manager has all the relevant information transferred to him by the firm,the solution would

​The conflict between the Vice President of Marketing and her sales staff arises because

​The conflict between the Vice President of Marketing and her sales staff arises because

​If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem,the principle can

​The manager of Fatty Foods is thinking about retiring.He has two options: to leave his stores as a company stores,to be managed by a salaried manager,or to sell some of them as franchises.The franchisor however is offering a really low franchisor fee for the store.What would be his best bet?

​As a result of moving more decision making from the periphery of the organization toward the center,typically

​Relative to a franchisee,a manager of a company owned store is more likely to

​When decision rights are decentralized,typically

​An HVAC company is selling heating and cooling equipment.Between its sales staff and the VP of Marketing,the sales staff would want to

​The problem the agent faces when deciding which agent to hire is called

​In a situation where an artist is selling his own work to the galleries,the principle is

​When decision rights are decentralized,typically

​Which of the following addresses agency costs?

​As a result of moving more decision making from the periphery of the organization toward the center,typically

​A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and must decide how to pay them.To align incentives,it should to pay the consultants

​The components of a well-run incentive compensation scheme include all of the following EXCEPT

​Monitoring

​When decision rights are decentralized,typically

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

In a franchising relationship

If a firm decides to stop its sales agents from pricing too aggressively to make sales by requiring the agent to obtain permission to reduce price below a specific threshold,and the manager has all the relevant information transferred to him by the firm,the solution would

The conflict between the Vice President of Marketing and her sales staff arises because

The conflict between the Vice President of Marketing and her sales staff arises because

If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem,the principle can

The manager of Fatty Foods is thinking about retiring.He has two options: to leave his stores as a company stores,to be managed by a salaried manager,or to sell some of them as franchises.The franchisor however is offering a really low franchisor fee for the store.What would be his best bet?

As a result of moving more decision making from the periphery of the organization toward the center,typically

Relative to a franchisee,a manager of a company owned store is more likely to

When decision rights are decentralized,typically

An HVAC company is selling heating and cooling equipment.Between its sales staff and the VP of Marketing,the sales staff would want to

The problem the agent faces when deciding which agent to hire is called

In a situation where an artist is selling his own work to the galleries,the principle is

When decision rights are decentralized,typically

Which of the following addresses agency costs?

As a result of moving more decision making from the periphery of the organization toward the center,typically

A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and must decide how to pay them.To align incentives,it should to pay the consultants

The components of a well-run incentive compensation scheme include all of the following EXCEPT

Monitoring

When decision rights are decentralized,typically