Question

Rolleigh Corp. identifies growth by new product development and product improvement as the number one corporate goal. An employee at Wrigley's, one of Rolleigh's wholly-owned subsidiaries, developed an innovation to an existing product that would directly address a shortcoming in the similar product offered by Rolleigh's closest competitor. Wrigley's current Return on Investment (ROI) is 15%, but the product innovation is expected to generate ROI of only 12%. Awarding bonuses to subsidiary managers based on ROI could result in:

A) goal conflict
B) information overload
C) goal congruence
D) decreased value of information

Answer 1

Awarding bonuses to subsidiary managers based on ROI could result in goal conflict.

Step-by-step explanation:

Awarding bonuses to subsidiary managers based on Return on Investment (ROI) could result in goal conflict.

In this scenario, Rolleigh Corp., the parent company, has identified growth through new product development and improvement as its number one corporate goal. However, the employee at Wrigley's, one of Rolleigh's subsidiaries, developed a product innovation that is expected to generate a lower ROI of 12% compared to the subsidiary's current ROI of 15%. By awarding bonuses based on ROI, the subsidiary managers may prioritize achieving higher ROI over pursuing innovation that aligns with the parent company's goal.