Question 1

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 B

Question 2

The types of problems in principal-agent relationships typically include

Accepted Answer

A) adverse selection - whom to hire 
B) moral hazard - how to motivate workers 
C) uncertainty - how many workers will be needed 
D) a and b. 
A) adverse selection - whom to hire 
B) moral hazard - how to motivate workers 
C) uncertainty - how many workers will be needed 
D) a and b. D

Question 3

A potential problem arises in principal-agent relationships

Accepted Answer

A) because the agents and the principals have identical goals 
B) because the principals may have different goals from the agents 
C) because the agents may have different goals from the principals 
D) the goals of principals and agents are irrelevant 
A) because the agents and the principals have identical goals 
B) because the principals may have different goals from the agents 
C) because the agents may have different goals from the principals 
D) the goals of principals and agents are irrelevant C

Question 4

The ways to address agency costs include all EXCEPT

Accepted Answer

A) advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee work 
D) replacing closed offices with cubical office spaces 
A) advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee work 
D) replacing closed offices with cubical office spaces

Question 5

An incentive compensation scheme includes

Accepted Answer

A) a performance evaluation system 
B) a disciplinary action committee 
C) a reward system 
D) a and c. 
A) a performance evaluation system 
B) a disciplinary action committee 
C) a reward system 
D) a and c.

Question 6

Examples of incentive pay include

Accepted Answer

A) allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) bonuses for meeting deadlines 
D) offering a certain number of sick days 
A) allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) bonuses for meeting deadlines 
D) offering a certain number of sick days

Question 7

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 
C) the sales staff want to negotiate too aggressively 
D) the Vice President is less 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 
C) the sales staff want to negotiate too aggressively 
D) the Vice President is less willing to offer discounts to make the sale

Question 8

Potential problems with incentive based compensation are

Accepted Answer

A) not evaluating the relevant performance measures 
B) rewarding outcomes that are not include in the performance evaluation 
C) not funding rewards for meeting performance measures 
D) all of the above 
A) not evaluating the relevant performance measures 
B) rewarding outcomes that are not include in the performance evaluation 
C) not funding rewards for meeting performance measures 
D) all of the above

Question 9

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

Accepted Answer

A) the flow of information to the decision maker that is relevant to the decision should be enhanced 
B) the flow of information from the decision maker that is relevant to the decision 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 information to the decision maker that is relevant to the decision should be enhanced 
B) the flow of information from the decision maker that is relevant to the decision 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 10

The ways to address agency costs include all EXCEPT

Accepted Answer

A) running background checks on prospective employees 
B) hiring only from job fairs 
C) spot checks of the quality of employee work 
D) replacing closed offices with cubical office spaces 
A) running background checks on prospective employees 
B) hiring only from job fairs 
C) spot checks of the quality of employee work 
D) replacing closed offices with cubical office spaces

Question 11

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

Accepted Answer

A) the flow of information to the decision maker that is relevant to the decision should be enhanced 
B) the flow of information from the decision maker that is relevant to the decision should be enhanced 
C) the incentives to make good decisions should be strengthened 
D) the incentives to make good decisions should be weakened 
A) the flow of information to the decision maker that is relevant to the decision should be enhanced 
B) the flow of information from the decision maker that is relevant to the decision should be enhanced 
C) the incentives to make good decisions should be strengthened 
D) the incentives to make good decisions should be weakened

Question 12

In a franchising relationship

Accepted Answer

A) the franchisor is the local businessman or businesswoman 
B) the trademark holder contracting with local operations is the franchisor 
C) the franchisor is the trademark holder contracting with local operations 
D) the trademark holder contracting with local operations is the franchisee 
A) the franchisor is the local businessman or businesswoman 
B) the trademark holder contracting with local operations is the franchisor 
C) the franchisor is the trademark holder contracting with local operations 
D) the trademark holder contracting with local operations is the franchisee

Question 13

Examples of incentive pay include

Accepted Answer

A) allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) cleaning the worksite with weekly janitorial service 
D) prizes to the employee team to win a project goal tournament 
A) allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) cleaning the worksite with weekly janitorial service 
D) prizes to the employee team to win a project goal tournament

Question 14

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 
C) the sales staff do not 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 
C) the sales staff do not want to negotiate too aggressively 
D) the Vice President is more willing to offer discounts to make the sale

Question 15

Examples of incentive pay include

Accepted Answer

A) commission sales 
B) providing onsite parking for employees 
C) cleaning the worksite with weekly janitorial service 
D) offering a certain number of sick days 
A) commission sales 
B) providing onsite parking for employees 
C) cleaning the worksite with weekly janitorial service 
D) offering a certain number of sick days

Question 16

Which of the following addresses agency costs

Accepted Answer

A) advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) instituting longer work days 
D) reducing the number of holidays 
A) advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) instituting longer work days 
D) reducing the number of holidays

Question 17

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

Accepted Answer

A) evaluating the identified performance measures 
B) avoiding rewards for outcomes that are not included in the performance measures 
C) demonstrating that evaluators can be influenced with small favors 
D) identifying the relevant measures on which to evaluate employees 
A) evaluating the identified performance measures 
B) avoiding rewards for outcomes that are not included in the performance measures 
C) demonstrating that evaluators can be influenced with small favors 
D) identifying the relevant measures on which to evaluate employees

Question 18

In organizational design issues,decision rights pertain to

Accepted Answer

A) the legal workplace related rights of employees 
B) the regulations governing how a potential customer chooses which product to purchase 
C) the set of decisions that go with a particular position within the firm 
D) who gets to decide from which place co-workers will order lunch 
A) the legal workplace related rights of employees 
B) the regulations governing how a potential customer chooses which product to purchase 
C) the set of decisions that go with a particular position within the firm 
D) who gets to decide from which place co-workers will order lunch

Question 19

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 20

When a manager's bonuses are tied to multiple unrelated performance measures

Accepted Answer

A) we typically see the manager miss all goals by about the same amount 
B) we typically see the manager greatly exceeding some goals while missing others altogether 
C) we typically see the manager just meeting some goals while missing others by a wide margin 
D) we typically see the manager indifferent to the goals 
A) we typically see the manager miss all goals by about the same amount 
B) we typically see the manager greatly exceeding some goals while missing others altogether 
C) we typically see the manager just meeting some goals while missing others by a wide margin 
D) we typically see the manager indifferent to the goals

Exam 21: Getting Employees to Work in the Firms Best Interest

When decision rights are decentralized,typically

The types of problems in principal-agent relationships typically include

A potential problem arises in principal-agent relationships

The ways to address agency costs include all EXCEPT

An incentive compensation scheme includes

Examples of incentive pay include

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

Potential problems with incentive based compensation are

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

The ways to address agency costs include all EXCEPT

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

In a franchising relationship

Examples of incentive pay include

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

Examples of incentive pay include

Which of the following addresses agency costs

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

In organizational design issues,decision rights pertain to

Which of the following addresses agency costs

When a manager's bonuses are tied to multiple unrelated performance measures

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

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 Indirect 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