in 1978 and proposed that profit was less important than fairness in the relationship. According to Hatfield (2011) “According to Equity theory, people feel most comfortable when they are getting exactly what they deserve from their relationships—no more and certainly no less” Exchange Theory is more concerned with under-benefit as a disadvantage but Equity Theory places a greater emphasis on both under-benefit and over-benefit. Under-benefits are likely to provoke a sense of anger and resentment and over-benefits are likely to provoke a sense of guilt. The Equity model suggests that a person would be driven to restore the equity within an unbalanced relationship by either reducing their input or increasing their outputs and it is the inability to reach balance that can lead to the breaking of the relationship. Investment theory focusses on the extent to which commitment is determined by investment in a relationship rather than solely satisfaction or reward.
Finally, we have seen how these incentives affect different types of organizations. We have seen cases where companies move for reasons that other may consider small like consultation, or travel. While others move because of additional material benefits, such as lower labor, and shipping costs. Because of the importance of this decision an organization should study the different types of incentives and chose the most beneficial to their
For these reasons, it is necessary to analyze the competitive advantage of the different options presented. • Strengths and Opportunities: The project evaluation should consider a SWOT analysis of each potential application, which allows identifying the strengths, opportunities, threats and weaknesses. This way, it is possible to choose the best option, which maximized the firm’s strengths and opportunities, while mitigating its threats and weaknesses. • Barrier to Entry: Also it is necessary to analyze the cost of enter to the industry. • Economic Benefit: What will be the earnings associated to the project.. • Customer Preferences Bernstein should recommend to the board the
Profit maximisation is assumed to be the objective of a firm, however there are other objectives that firms have, these include: revenue maximisation and sales maximisation. A firm aiming to maximise profit will aim to operate at output level Q, where Marginal Revenue (MR) is equal to Marginal Cost (MC). A process that companies undergo to determine the best output and price levels in order to maximize its return. The company will usually adjust influential factors such as production costs, sale prices, and output levels as a way of reaching its profit goal. There are two main profit maximization methods used, and they are Marginal Cost-Marginal Revenue Method and Total Cost-Total Revenue Method.
3) The sales budget is to estimate the profitability. As we know, sales budget is used to structure the company in a way to maximize profits. With an accurate projection of future sales, the company is actually can save the expenses and protects the company from failing. If the sales projection is overstated, the president has to decide whether to proceed or to have other alternative planning.
Incentives are rewards that are linked to >specific long-term goals of the organization. The most common long-term incentive is the stock option, which either gives the executive free company stock, or allows him or her to purchase company stock at a reduced price for a period of time. These stocks become more valuable as the company improves financially, and therefore, ownership of stock is intended to encourage the executive to make the organization more profitable. Executives can then sell these stocks at a later time when they have appreciated in value, therefore providing compensation beyond the employee's tenure with the organization. Recent news stories detailing company failures in which unethical accounting practices and artificial inflation of stock prices caused lower-level employees to lose investments in company stock have raised concerns about the ethics of granting large numbers of stock options to
This basic principal of social psychology is imbedded in economics, rational choice theory, and structuralism. Generally people like to be guaranteed that whatever they invest in will pay off for them later equaling or bettering the effort, money, time and energy they’ve spend putting into someone or something. The theory uses economic terms such as benefit, gain, cost, and payment as an analogy to describe social situations. According to this belief, people consciously and unconsciously evaluate every social possibility in terms of what they will have to put into it, and relate this to the benefits they think they may get out of it. The greater the potential benefit, the greater the chances are a person would socially invest time and energy into an individual in order to form a strong and sound relationship.
A total rewards approach allows an organization to have the flexibility to remove itself from the one-size-fits-all mentality and offer employees a mixture of reward packages that meet the employee’s needs. This is extremely important in today’s workforce because of the diversity among groups of employees. This flexibility benefits both the employer and employee because motivating employees through total rewards increases the organizations chances of profits in the bottom line. Another advantage is the ability to recruit and retain employees within the workforce. The primary way to address an issue in recruiting and retaining a quality workforce is to develop a total rewards package that is inviting.
Economic incentives are used by businesses and government agencies to influence the behavior of people. These incentives are designed for the overall profitability of the business or agency and can have either a negative or positive impact on the individual. Today economics is largely incentive based. There are work incentives, production incentives, investment incentives and even purchasing incen-tives. To accomplish goals you must provide incentives, without them people have no reason to com-plete tasks (Laffont & Martimort, 2001).
This control method would positively stimulate account managers. They are willing to put their effort on generating more profits for Haengbok, since the organization profits are highly related to their own benefits. The evaluation of account manager “mini profit center”, which considers interests, costs, and expenses