Formally defined, the principles of management are the activities that plan, organize and control the operations .
c. self-interested managers as agents and shareholders of the firm who are the principals.
The Agency Problem in Corporate Finance refers to a situation where the Managers who are supposed to be agents to increase the wealth of the Shareholders who are the principles realise and decide to act in their own interest and increase their wealth instead.
It is an age old problem that rears its head up in almost every relationship where a party is to act in the best interest of another. They might simply ask themselves, why not act in our own best interests.
For example, Managers might award contracts to companies that promise to give them some form of compensation for the contract instead of companies that would have done the job in question at cheaper rates and with more efficiency and thus brought more Profitability to the firm.
Immediately inform Nissan of the breach in confidentiality
A breach of confidentiality is a situation that occurs when the data or information that has been provided by a certain client to an individual in confidence is made known without the consent of the client to a third party. It should be noted that this can lead to harm to the client.
Therefore, if a Dealer Principal learns a manager has revealed the details from a dealer advisory board meeting to a competitor’s dealership, the appropriate response is to inform Nissan of the breach in confidentiality.
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