Please answer the following.. Provide a \"realistic\" example of an Agency Cost
ID: 2659047 • Letter: P
Question
Please answer the following..
Provide a "realistic" example of an Agency Cost and how it might be eliminated. If you can't think of one, use the f ollowing:
Employees at the Jackson Hole Corporation typically take 45 minutes for lunch when the allocated time is only 30 minutes. Employees are encouraged to eat at the company cafeteria located in the middle of the company facilities. Most employees choose to eat their lunch in the cafeteria. Is there an agency cost here? If so, how can management eliminate or reduce this agency cost?
Construct an example of the cycle of money, identify all the players involved, and identify their individual benefits from participating in the cycle of money.
Explanation / Answer
The main players involved in this case would be the employees at the Jackson Hole Corporation as well as the people in charge of them. If the employees were to participate in this money cycle, that is eating in the work area cafeterias then there could be many benefits involoved. There wouldn't really be an agenc cost but rather a gain the way I see it. For example, if the agency has a cafeteria open with vending machines or even a step further with cooks and fast food, then perhaps employees eating this areas would not be so bad after all. In fact the company would actually be making money off of their purchases. Not just that but it would also save the employees time and gas money as well since the food area and the food would be so nearby and at their proximity. So basically the the people in charge and the workers would gain from this situation, it's a win win for both sides with no loses assuming the company however does not need that space for anactivity which generates revenue, then things may be different, but for now it appears to be a gain in this case.
Hope this helped, good luck with your work.