If Budget Performance Is Overemphasized, Myopic Behaviour Can Occur Where

question 3

Essay

If budget performance is overemphasized, myopic behaviour can occur where a manager takes actions that improve budgetary performance in the short run but cause long-run harm to the firm.
Required:
a.
Give at least two examples of myopic behaviour that might be encouraged if there is an overemphasis on budgets as a performance measure.
b.
Discuss ways to discourage or prevent myopic behaviour in managers.

---

Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a certain good or service at a lower opportunity cost than others.

Specialize

To focus on a specific area of knowledge, skill, or production, often improving efficiency and quality in the process.

Produce

To create, manufacture, or grow goods and products.

Heckscher-Ohlin Model

An economic theory that proposes countries export what they can most efficiently and abundantly produce, based on their factor endowments of labor, capital, and resources.