Case Scenario 3: Jewell Company

Multiple Choice

Case Scenario 3: Jewell Company.
Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple household items, cookware, and hardware. While JC's 16 different lines of business may appear quite different, they all share the common characteristics of being staple manufactured items and sold primarily through volume retail channels such as Walmart, Target, and Kmart. Because JC operates each line of business autonomously (separate manufacturing, R&D, and selling responsibilities for each line) , it is perhaps best described as pursuing a related linked diversification strategy. The common linkages are both internal (accounting systems, product merchandising skills, and acquisition competency are centralized in the corporate office) and external (distribution channel of volume retailers) . Despite this partial centralization of the divisions' operations, each business is run entirely separately. To keep the managers focused on their respective businesses, they are paid a base salary but can earn up to three times that salary in bonuses based on meeting divisional performance targets. An additional, but smaller, part of their compensation is derived from stock options.
-(Refer to Case Scenario 3) . Jewell's divisional incentive compensation can be described as

A) linked to divisional performance.
B) mixed linkage to corporate, SBU, and divisional performance.
C) linked to overall corporate profitability.
D) linked to Jewell's stock market performance.