Asked by Numnums_ For-ever on Sep 24, 2024
Verified
A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and pays them per store opened.At the end of the quarter,the company notices a many of the new stores' sales volume fail to meet expectations.This is because
A) The consultants are paid per store and not just profitable store locations
B) The consultants are paid per store and hence choose the best locations
C) The consultants would always choose the best locations
D) None of the above
Payday Loan
A type of short-term borrowing where a lender extends high-interest credit based on a borrower's income and credit profile.
Profitable Store
A retail establishment that consistently earns more revenue than its expenses, resulting in a financial gain.
Consultants
Professionals who provide expert advice in a particular area or industry.
- Grasp the notion of synchronizing interests among the enterprise and external advisers or selling agents.
- Understand the potential rewards and hazards associated with performance-related remuneration as opposed to steady wages.
Verified Answer
AM
andrew moore1 day ago
Final Answer :
A
Explanation :
The fact that the consultants are paid per store opened incentivizes them to open as many stores as possible, regardless of whether or not they will be profitable. This leads to the opening of unprofitable store locations, which results in the poor sales volume.
Learning Objectives
- Grasp the notion of synchronizing interests among the enterprise and external advisers or selling agents.
- Understand the potential rewards and hazards associated with performance-related remuneration as opposed to steady wages.