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Nicole is a salesperson at a local ford dealership. her bonus pay is dependent upon surpassing sales targets, thus increasing the profitability of the company. which of the following governance mechanisms is illustrated in this scenario question 28answer

a. meeting standards
b. stock options
c. employee incentives
d. takeover constraint
e. self dealing

1 Answer

4 votes

Final answer:

Nicole's bonus pay as a salesperson represents an 'employee incentive' that motivates her to exceed sales targets, aligning her actions with the company's profitability goals. Market forces can also incentivize businesses to act less discriminatorily when profit motives or labor market realities necessitate inclusivity.

option c is the correct

Step-by-step explanation:

The scenario in question illustrates employee incentives. Nicole receives bonus pay for surpassing sales targets at her dealership. This governance mechanism motivates her to increase the dealership's profitability.

Incentives can influence individuals' choices significantly. For example, if Nicole's incentive was different, such as a fixed salary with no commission, her motivation to exceed sales targets might diminish. Businesses often use incentives to align employees' interests with the broader goals of the company, promoting more vigorous efforts to achieve desired outcomes.

Regarding market forces and non-discriminatory practices, businesses face a profit incentive to cater to all segments of the market. A bigoted flower delivery business owner will overlook personal prejudices to serve a diverse customer base when it positively affects profits.

Similarly, a business struggling to hire qualified workers may expand its hiring practices to include women and minorities when the traditional pool of white male candidates is insufficient. This demonstrates how market forces can lead businesses to act in a less discriminatory manner due to the necessities imposed by market demand and labor shortages.

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