Prince Mohammad Bin Fahd University
College of Business Administration
The MBA Program-Final Exam
Corporate Governance
Spring 2022- May 26, 2022 @ 5:00 pm
Students’ Name: ………………………......................Students’ ID#......................
Q1.
The manager’s self interests motivate them to perform better in their roles. The two factors that make
the managers’ self-interest to flourish is tying their compensation to organizational performance and
ensuring job satisfaction and security. In most businesses, the CEO is compensated depending on the
profits of the business. Its therefore the role of the CEO to ensure increased revenues with minimum
expenditure. People are likely to work hard and make the right decisions when their pay is in line. The
managers are therefore forced to make the right decisions to protect their self-interests which in return
flourishes.
In most companies, the managers are given long contracts that gives them job security and gives them
enough time to implement their business structures. Managers enjoy job satisfaction when their job are
secured enabling them to concentrate on improvement of the business performance.
Q2.
The society is an important part of the external environmental factor. It forms part of the market
besides providing the business with human capital and other resources. In the operation of the business,
its important for a company to come up with the most harmonious way of co-existing with the
community through sharing of locality and resources. Understanding of the culture of the society helps
in utilization of resources. For instance, a society that depends on the river for their source of drinking
water would then warrant the businesses to ensure controlled pollution to safeguard the health of the
society. As part of corporate social responsibility, the business should understand the people’s culture
and come up with projects that support their culture.
To produce a new product to the market, its important to understand the needs of the market as
dictated by the people’s culture. The society where the business operates forms a perfect market to test
the people’s reaction to the new product. The choice of the product is determined by the people’s
culture.
Q3.
Compensation of the CEO vary depending on the company. However, in corporate governance,
compensation of the CEO is determined by the board of governance as advised by the compensation
committee. The compensation ranges from salaries to benefits such as bonus. The salaries are the short-
terms compensation pays while the bonuses are parts of the long-term compensation pays. The CEO
plays an important role in the daily operations of the business and influences the business culture and
structure. To ensure that the CEOs act in the best interest of the stakeholders, they are given incentives
College of Business Administration
The MBA Program-Final Exam
Corporate Governance
Spring 2022- May 26, 2022 @ 5:00 pm
Students’ Name: ………………………......................Students’ ID#......................
Q1.
The manager’s self interests motivate them to perform better in their roles. The two factors that make
the managers’ self-interest to flourish is tying their compensation to organizational performance and
ensuring job satisfaction and security. In most businesses, the CEO is compensated depending on the
profits of the business. Its therefore the role of the CEO to ensure increased revenues with minimum
expenditure. People are likely to work hard and make the right decisions when their pay is in line. The
managers are therefore forced to make the right decisions to protect their self-interests which in return
flourishes.
In most companies, the managers are given long contracts that gives them job security and gives them
enough time to implement their business structures. Managers enjoy job satisfaction when their job are
secured enabling them to concentrate on improvement of the business performance.
Q2.
The society is an important part of the external environmental factor. It forms part of the market
besides providing the business with human capital and other resources. In the operation of the business,
its important for a company to come up with the most harmonious way of co-existing with the
community through sharing of locality and resources. Understanding of the culture of the society helps
in utilization of resources. For instance, a society that depends on the river for their source of drinking
water would then warrant the businesses to ensure controlled pollution to safeguard the health of the
society. As part of corporate social responsibility, the business should understand the people’s culture
and come up with projects that support their culture.
To produce a new product to the market, its important to understand the needs of the market as
dictated by the people’s culture. The society where the business operates forms a perfect market to test
the people’s reaction to the new product. The choice of the product is determined by the people’s
culture.
Q3.
Compensation of the CEO vary depending on the company. However, in corporate governance,
compensation of the CEO is determined by the board of governance as advised by the compensation
committee. The compensation ranges from salaries to benefits such as bonus. The salaries are the short-
terms compensation pays while the bonuses are parts of the long-term compensation pays. The CEO
plays an important role in the daily operations of the business and influences the business culture and
structure. To ensure that the CEOs act in the best interest of the stakeholders, they are given incentives
