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

Exercise 10

You are the owner and CEO of a large divisionalized firm, with operations in a number of diverse industries. Reporting to you are a number of division managers. Division managers have considerable decision-making responsibility with respect to the day-to-day operations of their divisions, but you must approve any capital investments above $100,000 before they are made.