Guidelines for dealing with contract violations

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1. A firm is noticing that 10% of its freelance contacts are not being completed on time. They suspect this is because there are no consequences for lateness for the freelancers, but it costs the firm money. The firm decides to implement a penalty for lateness, and guidelines for dealing with contract violations. The firm is:

A. increasing opportunism.

B. focusing on values and beliefs rather than laws and regulations.

C. expanding the range of acceptable actions that firms can take.

D. attempting to reduce transaction costs through institutional frameworks.

2. Esca Motors is aware that the brake wires used in its cars are of poor quality. Yet, it refuses to take any action and proceeds to produce and sell the cars. The family of a victim who lost his life due to a brake failure in the middle of a highway sues the company. Esca Motors is pressurized by Congress to recall its cars and compensate the victims with money. Esca Motors gives in to the pressure and does what is necessary. This is an example of _____.

A. defensive strategy

B. accommodative strategy

C. proactive strategy

D. reactive strategy

Reference no: EM132173913

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