Top management can preserve the autonomy of division managers and encourage an optimal level of internal transactions by
A)selecting performance evaluation measures that are consistent with the achievement of overall corporate goals.
B)selecting division managers who are most concerned about their individual performance.
C)prescribing transfer prices between segments.
D)setting up all organizational units as revenue centers.

Question

Quizplus · Accepted Answer

By selecting performance evaluation measures that are consistent with the achievement of overall corporate goals, top management can ensure that division managers are incentivized to work in the best interest of the company. This can help preserve their autonomy while still encouraging optimal levels of internal transactions. Prescribing transfer prices between segments or setting up all organizational units as revenue centers can actually limit autonomy and discourage collaboration between divisions. Selecting division managers who are only concerned with their individual performance may also not be in the best interest of the company as a whole.

Top Management Can Preserve the Autonomy of Division Managers and Encourage