What Is the Problem with Paying Plant Managers in Multi-Plant

question 102

Multiple Choice

What is the problem with paying plant managers in multi-plant firms according to the level of output they produce?

• A) Managers in low-cost or high-capacity plants could be penalized, in percentage terms, for their overproduction.
• B) The production problem in multi-plant firms is usually how to lower production to increase market power, not how to increase production.
• C) Managers in high-cost or low-capacity plants could be penalized for production constraints over which they have no control.
• D) Managers would have an incentive to understate the productive capacity of their plants.
• E) Managers would have an incentive to overstate the productive capacity of their plants.

---

Definitions:

Maximizing Sales

Pertains to strategies and efforts aimed at increasing the total sales revenue of a product or service.

Market Segment

A subsection of a market composed of individuals or organizations sharing one or more characteristics that cause them to demand similar products or services.

Repositioning

The process of changing the market position of a product or a brand to target new demographics or market segments.

Target Market

The specific segment of consumers most likely to be interested in a company's product or service, characterized by specific demographics or behaviors.