Which of the following is TRUE?
A)Maximizing division profits always leads to maximizing company-wide profits
B)Managers of profit centers are not given any discretion in their decision making
C)Profit centers often largely run by themselves without a lot of executive oversight
D)A manager being rewarded on division revenues has no incentive to make good decisions for his division

Question

​Which of the following is TRUE?
A)​Maximizing division profits always leads to maximizing company-wide profits
B)Managers of profit centers are not given any discretion in their decision making
C)Profit centers often largely run by themselves without a lot of executive oversight
D)​A manager being rewarded on division revenues has no incentive to make good decisions for his division

Quizplus · Accepted Answer

Profit centers are designed to operate with a large degree of autonomy, allowing them to make most of their own day-to-day operational decisions without a lot of executive management oversight. This is because profit centers are expected to generate their own revenue and profits, and are held accountable for their financial performance. However, they are still subject to corporate policies and guidelines.

Option A is incorrect because maximizing division profits may not always lead to maximizing company-wide profits if it comes at the expense of other divisions or the overall goals of the company.

Option B is incorrect because profit center managers are given a level of discretion in their decision making, as they are responsible for generating revenue and profits for their division.

Option D is incorrect because a manager being rewarded for division revenues does have an incentive to make good decisions for their division, as their performance is tied to the financial success of their division.

​Which of the Following Is TRUE

Which of the Following Is TRUE