Agency Theory

The agency theory was presented in the video thru representation of the model
being a principal and the mother of the model, the agent. The friends argued that
according to the agency theory, the principal has free will to make their own
decisions. The agent may be there to support the principal but the final decision is
always executed by the principal in his own will.
Principal-Agent Problem
In the second video, the principal agent problem was shown. Linda, the secretary
was not performing well because she was a mere secretary only. She was not
motivated enough to perform her duties unless her boss was present. This is the
principal-agent problem. To make the agent perform better, the principal must make
the agent be the principal himself so that he can be motivated to perform well.
Principals can give incentives to agents in the form of bonuses.
Organizational Structure
The organizational structure is important in every corporation. It is implemented to
better manage the people and resources in the corporation. Organizational
structure is also formed to define the roles and responsibility of each key person in
the company. With the structure, accountability can be disseminated. The structure
must be built in such a way that it is aligned with the companys strategies so that
effective results would be seen in the future