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Use the following information to answer questions 4 - 7 Florentino Allers is the production manager of Allied Electronics. Top management of Allied Electronics has
Use the following information to answer questions 4 - 7 Florentino Allers is the production manager of Allied Electronics. Top management of Allied Electronics has set goals for growth that require slow but steady profits of at least $100,000 per year. Due to limited capacity, the company can only produce one of two possible products that have been designed this year: Product 1: An industrial motherboard with a 65% probability of making a profit of $1.0 million and a 35% probability of making a profit of $70,000, and Product 2: A regular motherboard with a 100% chance of making a profit of $115,000. Florentino will get a bonus of 21% of the production department's profits. Florentino has the responsibility to choose between the two products and is more of a risk-taker, more so than most of the top management at Allied Electronics. Which option is Florentino more likely to choose? O Product 1 O Product 2 QUESTION 5 Which option would the company be more likely to choose? O Product 1 O Product 2 QUESTION 6 Does this performance reward system promote goal congruence? O Yes QUESTION 7 Which of the following would be more likely to promote goal congruence and ensure that Florentino makes the decision that would be favored by the company as a whole? O Provide a lower percentage bonus of the profit earned. Provide no bonus incentive and have a policy that requires managers to ensure profits of at least $100,000 or lose their jobs. O Provide a bonus of $10,000 if the profit is over $100,000. O Provide a higher percentage bonus of the profit earned
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