Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 11

The Brown Tool Company is a multidivisional firm with offices throughout the country. The company sets the salaries of most of its positions at the central level. For example, secretaries are paid $8 per hour throughout the company. Discuss two important reasons why the firm might adopt such a policy. Discuss two important problems that the policy might cause.