tute_3ans - Hierarchies, incentives and firm structure...

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1 Hierarchies, incentives and firm structure ECOS3003 Tutorial 3 answers 1. Discuss the costs and benefits of decentralized decision making relative to centralized decision making? Benefits of decentralised decision making: More effective use of specific knowledge Conservation of senior management time Training and motivation for local managers Costs Incentive problems Coordination costs and failures Less use of central information 2. Discuss the positive and negative effects of a university rule that would not allow lecturers to change a grade once recorded. No grade change: Positives: No time wasted (by lecturer dealing with spurious complaints Less change of ex post corruption Negatives Mistakes not changed (new information not utilised) Students feel aggrieved 3. United Airlines assigns flight attendants to routes using the following procedure: once a month, the attendants request the routes they prefer, with conflicts resolved strictly on the basis of seniority. Why does United use this procedure rather than simply let the supervisor of the attendants assign the flights? Limit influence costs – assignment of personnel has little effect on company, so want to resolve it with lowest possible cost 4. An organizational consultant evaluates your division. She indicates that she does not like the divisional manager’s top-down style. She recommends setting up a board that consists of the divisional manager and his top 10 department managers. The consultant suggests that all major policy decisions be made by the board by a majority voting rule. She argues this process will make better use of information within the organization. She also argues that tour political system is a democracy, which works well, and that the same concept could be applied beneficially within a corporation. Evaluate the recommendation. Is a company a democracy?
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This note was uploaded on 08/24/2010 for the course ECOS 3003 taught by Professor Andrewwait during the One '10 term at University of Sydney.

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tute_3ans - Hierarchies, incentives and firm structure...

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