Quantity of tires sold to the revenue

Reference no: EM131024736

For years, the Goodyear Tire & Rubber Company compensated its sales force by paying a salesperson a salary plus a bonus, based on the number of tires he or she sold. Eventually, Goodyear made two changes to this policy:

(1) The basis for the bonus was changed from the quantity of tires sold to the revenue from the tires sold; and

(2) salespeople were required to get approval from corporate headquarters in Akron, Ohio, before offering to sell tires to customers at reduced prices. Explain why these changes were likely to increase Goodyear's profits.

Reference no: EM131024736

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