Monday, March 11, 2013

Business Finance.

Something's obscenely wrong with my laptop recently. I cannot even type out my assignment in Word. I had to resort to blogger. =/ Not cool.

But anyways, here's the answer to question 6. =p You guys only have less than an hour left. 
One assignment down, one mid-term left.
G'luck studying guys!

Question 6:
Agency problem here exists when the receptionist (agent) routinely took extra 20 minutes of lunch time to run personal errands. This means that she is putting her own personal interest before the best interest of the company (principal). This can be resolved by monitoring her actions and tasks so that she will perform better in the future. Other than that, we should also call her and let her know that she is running late. Because tardiness should be stopped before it becomes chronic.

Division managers are padding cost estimates so as to show short-term efficiency gains when the costs come in lower than the estimates. If this continues, the firm’s planning and management will be messed up and in the long run will be disastrous. This stands in contrast with the business moral code and should be stopped. One of the ways to reduce unethical morale is to state the right thing clearly and firmly. Companies need to let employees know that “You might not get arrested for this, but you’re crossing the line.” Strict internal policies could help and leaders should work on sanctioning unethical behavior before it gets to a critical level. This could be done by paying attention to employees more and also to their environment as it also in a way affects their choices.

The firm’s CEO has had secret talks with a competitor about the possibility of a merger in which she would become CEO of the combined firms. One of the keys to a successful workplace is effective communication between employers and employees. By having secret talks with a competitor, colleagues will get the wrong idea about you and it will lead to unnecessary gossip. Practicing having an open office concept might also help in decreasing misunderstandings between colleagues. 

The branch manager is trying to reduce company cost by getting rid of his best and full-time employees. By laying off these employees means bad news for the firm in the long run as new or part time employees won’t be able to have the experience. Profitability based bonus is not advisable because as you can see, managers would ignore the health of the company entirely for his own advantage. Plus, this does not take into account employee’s performance throughout the year and making it more possible for an employee to be unethical. Bonus should be given based on performance or maybe stock incentive plans.


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