Dirección comercial I - PS4 PDF

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Universitat Pompeu Fabra Facultat de Ciències Econòmiques i Empresarials. Curs 2020-2021 Business Economics (Second trimester) Problem Set 4 1. Matrix companies. Why do you think many multinational firms have recently reorganized their international divisions from a country focus to matrix organizations focusing on both country and product?

A matrix organizational structure is adequate for multinational firms because they combine the efficiency of the central company with the flexibility of local operations. Therefore, workers from other countries report their activity to local managers, and provide them with useful local knowledge on both country and product that allows the company to increase its market share internationally. In conclusion, because of the efficiency and flexibility they provide, matrix organizational forms are suitable for large corporations who have extensive foreign operations. 2. Divisional performance evaluation Please answer the following questions: a) Cost centers are an appropriate performance measurement system when upper-level managers do not know the cost structure of production. True or false? Explain. False. Cost centers are appropriate when Upper-level managers know the cost structure of production, but not necessarily the optimal input mix. Then, local managers know this input mix, so they can establish the quantity that maximizes center’s profit, and the correct incentives b) When the knowledge required to make the quantity and product mix decision is available at low cost at higher management levels in the organizational hierarchy, the revenue center structure will tend to be efficient. True or false? Explain. True, because if the upper-level manager is not able to decide appropriate quantities and prices, the revenue center will tend to expand production until the marginal revenue is 0, and that is not efficient. c) For a company to be efficient, it is important that the decision rights assigned to employees are consistent with performance-evaluation and reward systems. ACO is a company with centralized decision rights. Recently, the top management of ACO decided to decentralize decision-making because market dynamics increased the costs of transferring information inside the organizational hierarchy. Explain why and how the top management of ACO has to re-align its reward systems and performance measurement and evaluation in response to the delegation of decision rights.

The top management must ensure that these delegation of rights does not imply that the employees start acting by their own incentives, and the new rewards system must align the top manager incentives with the employee’s incentives. 3. Tous: corporate governance and societies. Tous is a Spanish jewelry, accessories and fashion firm. It was founded in 1920 in the city of Manresa by Teresa Ponsa and her husband Salvador Tous. Tous currently operates more than 500 establishments in 45 countries. Its main shareholder is the Tous family. After having incorporated the investment fund Partners Group, which took 25% of the shares, into its capital in mid-2015, Tous executed an aggressive international expansion plan. The board of directors is made up of 12 members. Four of them belong to the founding family, the management team has two chairs, and they are joined by two representatives of the Partners Group fund and three independent directors. The incorporation of the independent director Ignacio de Pinedo in 2018, who is the founder and CEO of the Higher Institute for Internet Development (Isdi), responds to the company's desire to accelerate its digital transformation. In 2018, the president of Tous, Alba Tous, announced that she will reinvest a significant part of the firm’s profits in that and the following years in its digital transformation. That is, she committed to reinvest more than twothirds of Tous’ profits. At the same time, the management of the company plans to continue investing in internationalization, more staff ... A direct consequence of this measure is that the shareholders will receive less dividends. a) What type of company is Tous: open or closed? Explain. Tous is a closed company. A close company is a limited company of five or less participants, all of them being also directors. As a result, they are established by a limited number of shareholders who, in most cases, have certain personal safeguards. This suggests that the company's owners are most likely relatives of the company's constituents. This is the case of Tous, whose main shareholders are members of the Tous family. Closed firms, on the other hand, are distinguished by a low degree of feature specialization. As a result, family members hold management positions. Four of Tous's twelve executive team members are descendants of the company's founders. So, as Tous is a closed business, we may tell that shareholding entry and exit is difficult. b) If the decision that Tous has made regarding its profits had been taken by a listed company, what consequences do you think it would have had? Analyze possible effects on the share price, shareholder reactions, possible analyst comments, etc. Tous, as we've seen, agreed to spend two-thirds of its earnings in digital transformation and internationalization, among other items. If Tous' decision had been taken by a listed company, there may have been a conflict of interest about the utilization of company resources. In this scenario, if a large portion of the income is invested in future potential projects, the dividends paid to shareholders would be greatly influenced by an unconsulted decision. As a result, the stock price would fall, and shareholders would likely oppose the decision as long as it had a negative effect on them. c) The IPO is one of the future options that the company is analyzing. What reasons

could lead a company like Tous to make the decision to start listing its shares on a stock exchange? The initial public offering (IPO) is the process of selling shares of a private company to the public in a new stock issuance. A business may collect capital from the general public by selling public shares. As a result, if Tous chooses to sell its shares on the stock market, it will move from a closed to an open company. This decision may have been motivated by the advantages that this society can provide. Firstly, it would be simpler to transfer the shares if they did not have to meet with and receive authorization from the shareholders. Therefore, Tous could make this decision in order to separate property from management, allowing a greater flexibility in operation to occur and, as a result, a higher degree of functional specialization. Finally, financial specialization allows no limitation from individual contribution, risk diversification and therefore optimal investment decisions. d) If a company like Tous began to list its shares on a stock exchange, what changes would you anticipate in the composition of its management team and its Board of Directors? Please, explain the role of the Board of Directors in a society and how its members are chosen. As previously reported, if Tous began to list its shares on a stock exchange, it would go from a closed to an open company, which would have an effect on the firm's structure. The company's ownership and decision-making authority are now divided. On the one hand, there are the shareholders, who take on risk and spend money. The administrators, on the other hand, are in charge of control and making all the decisions. However, there could be conflicts of interest as a result of the division. So, we claim that a supervisory structure is created, transforming the type of company into a closed corporation. This organization consists first of the Shareholders' Meeting, which decides on functions, acquisitions, and capital increases. Secondly, the Board of Directors oversees control, is responsible for the company's governance, and evaluates and sets the management team's remuneration. the Board of Stock elects the members of the council. Finally, there is an Executive Team, which is made up of professionals and managers....