1. Economists argue about cost of diversification and the potential benefits. For example while diversification can certainly help company to promote new products at the same time through the merger of two firms it can be more expansive to develop information, communication and the operating system. Prove that under certain circumstances diversification can still create a real value?
2. In accordance with economic theory, the individuals are always trying to maximize their own utilities. Thus far, the owners are likely to be interested in maximization their own profits, while the managers and other workers do not share this goal necessarily. Explain the sources of conflicts between the owners and the managers of the firms?
3. Sometimes managers do not have strong incentives to maximize the firm value. At the same time development of the control systems can be both expensive and difficult. In this case compensation schemes based on the performance measurement can be very helpful in order to remove the potential conflict among owners and the measurement of the experience with the analysis of different compensation systems and their advantages and disadvantages from the owner point of view?