In Developing a Compensation Policy Used to Implement a Product-Differentiation

question 34

Multiple Choice

In developing a compensation policy used to implement a product-differentiation strategy, firms will

• A) hold individuals responsible for experiments that fail.
• B) punish individuals for taking risks when their projects are not successful.
• C) simultaneously use multiple dimensions to examine employee performance.
• D) provide appropriate incentives for managers and employees to reduce costs.

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Definitions:

Gratuitous Agency

An agency relationship where the agent agrees to act on behalf of another party, the principal, without receiving any compensation.

Duty Of Obedience

A legal or ethical obligation requiring individuals to follow the lawful orders and policies of an organization or authority.

Duty Of Loyalty

A legal obligation requiring individuals to act in the best interests of another party, typically in a fiduciary relationship.

Agency Relationship

A legal bond where one party, the agent, acts on behalf of another party, the principal, in a business transaction.