In developing a compensation policy used to implement a product-differentiation strategy, firms will
A) hold individuals responsible for experiments that fail.
B) punish individuals for taking risks when their projects are not successful.
C) simultaneously use multiple dimensions to examine employee performance.
D) provide appropriate incentives for managers and employees to reduce costs.

Question

Quizplus · Accepted Answer

To successfully implement a product-differentiation strategy, firms need to encourage risk-taking and innovation among employees. Therefore, it is crucial to use multiple dimensions to examine employee performance and provide appropriate incentives to reward successful and innovative projects. Punishing individuals for taking risks or holding them solely responsible for failed experiments can lead to a risk-averse culture and hinder the firm's ability to differentiate its products. Providing incentives to reduce costs is more suitable for a cost-leadership strategy rather than a product-differentiation strategy.

In Developing a Compensation Policy Used to Implement a Product-Differentiation