Reading 16: Organizing Production-LOS d 习题精选

Command systems are used when it is easy to monitor the performance of employees, as in the case of manufacturing personnel. Incentive systems are usually most effective for organizing the production of employees whose activities are difficult or costly to monitor, like those of outside sales people.

Command systems are used when it is easy to monitor the performance of employees, as is usually the situation with hourly production workers. Incentive systems are usually most effective for organizing the production of employees whose activities are difficult to supervise, like those of independent sales people.

Command systems are not used to reduce the principal-agent problem. The command system is used to coordinate production through a chain-of-command organizational structure, like an army.

The relative ease of raising large amounts of capital inexpensively is one of the primary advantages of the corporate form of business organization over a sole proprietorship or partnership.

The principal-agent problem refers to the difference between the incentives of a corporation’s managers and its owners. Partnerships and sole proprietorships both expose their owners to unlimited liability for debts and other legal liabilities. Partnership income is taxed only once.