Sidney Featherstone of TIP, Inc. is owner and CEO of the company. He has made the company successful through his decision making over the years. This year he decided to retire to Costa Rica. He does not intend to change any aspects of decision making, rewards or performance evaluation in TIP, Inc. What will happen to TIP? Why?

Question

Quizplus · Accepted Answer

The Answer is It will perform poorly, at least in the short run. Under Featherstone, decision making was highly centralized. The fact that the company was successful implies that Featherstone also possessed specific knowledge to make value-enhancing decisions. Unfortuately, other managers do not have the necessary specific knowledge nor the decision making skills they will need going forward. They will be calling Featherstone a lot in Costa Rica.