Business Finance. Company Problem and Solution

Business Finance. Company Problem and Solution

  • Submitted By: Weesiong
  • Date Submitted: 06/21/2013 11:24 PM
  • Category: Business
  • Words: 1448
  • Page: 6
  • Views: 158

1a) Agency problem: Receptionist considers his/her interest is greater than company interest (put herself interests before the best interests of the company), because receptionist routinely takes an extra 20 minutes of lunch time to run personal errands. Employer consider it would lower the productivity, but receptionist consider its no enough time for her lunch time (include do personal thing). Receptionist has been self-centered. The receptionist has failed to satisfy the interest of principal.
Cost to the firm: Salary paid. The receptionist might get laid off as well. It would lower the productivity and efficiency of company. Increase the company cost (salary), because the receptionist might be take over time (OT) to finish his/her day to day work.
Solution: Company should face to face talk with receptionist, see whether what kind of problem receptionist face. And give the solution to receptionist the deal with this kind of problem. But the best solution is dealt by clocking-in and clocking-out, once you leave the company.
1b) Agency problem: Division manager provide the misleading information to the company.

Cost to the firm:  Bonus or incentives may be reduced , but still align with interest to division managers It might be impact the management to plan costs and could affect the future gains. Even affect the financial statement become a wrong figure statement.

Solution: Monitoring the division managers by using top-management and hiring the auditor. With tight scrutiny, managers dare not to act on behalf of their self-interests again.
1c) Agency Problem: The firm’s chief executive officer had planned to merge the company with the competitor secretly. And become the CEO in the combined firm, which she puts self-interests before the best interests of company.
Cost to the firm: Bonding costs in which the chief executive officer will have to reassure to principal that she will stay loyal and only perform interests of principal.

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