Question Details

Strategies may be used by a company to alter its degree of resource dependence


1. Which one of the following statements accurately describes a key premise of agency theory? 
a) by protecting stockholder interests, all the interests of society are served. 
b) stockholders do not have a clear interest in greater returns. 
c) managers are self-interested and willing to sacrifice those self-interests for others (particularly stockholders. 
d) employees monitor how agents handle company strategies. 
e) newspapers report how agents manage company strategies. 
 

2. Which of the following control mechanisms is commonly used to ensure that executives and managers, as agents of the firm- owners, act in the best interests of those owners? 
a) pay plan incentives do not align the interests of management and stockholders. 
b) the establishment of a strong, independent board of directors. 
c) stockholders with a large stake in the firm taking a weak role on the board. 
d) stockholders read board of director reports. 
e) people read what is stated in newspapers. 
 

3. The issue of __________ is an important ethical consideration with respect to agency theory. 
a) pay of manufacturing workers. 
b) pay of service workers. 
c) pay of lower level managers. 
d) pay of middle level managers. 
e) pay of chief executive officers. 
 

4. Under which of the following conditions does the resource dependence of an organization increase? 
a) as needed resources become scarcer. 
b) as outsiders have less control over needed resources. 
c) as more substitutes for a particular type of resource are available. 
d) as more companies can provide the necessary key resources. 
e) as competitor firms become weaker in your market. 




5. Which one of the following strategies may be used by a company to alter its degree of resource dependence? 
a) engaging in mergers and acquisitions to exercise control over key resources. 
b) redirecting accountability and responsibility to a strong board of directors. 
c) maintaining the “rules of the game” to protect the company from powerful outsiders. 
d) hiring new employees with great knowledge about the key resources. 
e) saving key resources for future use. 
 




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