iv. Alumni? Why? Briefly explain 2. (33 points) Bhola runs a carpet manufacturing firm. He produces high quality, expensive, hand-made carpets that require a good deal of design and production time. Bhoia faces penalties from his buyers if he does not deliver carpets on time. He was having difficulty getting his weavers to deliver in a timely fashion. To expedite production, he offered a 10% bonus to those who completed their work in no more than three months. The results were that very few weavers changed their behavior. On average, the time for carpet completion was still far longer than three months. Bhola concluded that money doesn't matter to the bulk to the rural village weavers, and that he should try some other method of motivation. a. (7 points) Is Bhola's conclusion that money doesn't matter correct? Why or why not? Briefly explain. b. (13 points) Using incentive theory, what are some explanations for why the bonus scheme made little difference? Briefly explain. 6. (13 points) What do these explanations suggest that Bhoia do to improve the incentive plan? 3. (33 points) Some Japanese rms have, in past decades, used "lifetime employment" systems in which core workers were essentially guaranteed jobs for their entire careers. Other organizations, such as Hewlett Packard and IBM have used similar systems. IBM has since dropped their lifetime employment policy, and HP relaxed its program (it now calls lifetime employment an "objective" but not a guarantee). Within other firms, seniority-based incentives are strongly used, but no formal policies governing lifetime employment exist. a. (13 points) What type of firms are more likely to offer lifetime employment or similar guarantees? Why? Explain briefly. b. (7 points) Under what circumstances will firms adopt such policies? Abandon such policies? Explain briefly. c. (13 points) What are the implications of strong seniority-based incentives for the firm's strategy? The rm's ability to adapt to new business environments? Explain briefly