ClamCo, a Large Energy Company, Was Once a Bureaucratic Organization

question 85

Essay

ClamCo, a large energy company, was once a bureaucratic organization that valued long service and promotions through a steep hierarchy.After several years of difficult change, it is now a much flatter organization that places more responsibility with self-directed work teams.Explain what changes ClamCo probably would have made to align its reward system with this new corporate philosophy.

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Definitions:

Risky-Asset Portfolio

A collection of investments that have a higher risk of loss but also offer the potential for higher returns.

Market Rate

The prevailing interest rate available in the marketplace.

Minimum Variance

Minimum Variance is a portfolio strategy or model that seeks to construct a portfolio with the lowest possible volatility or risk for a given level of expected return.

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification in an investment portfolio.