Discuss a specific moment in the text that connects to current events (anything in the 21st century). OR:
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chance to create a path for the management to work upon. Assess and Make Preliminary Decisions These recommendations can be linked to agency theory. Rankin (2017) explains agency theory as a contractual relationship between the managers and the shareholders whereby the shareholders pass on the decision-making authority to the managers to manage their wealth. However, it is assumed that managers act on the basis of their interest which results in additional costs for the shareholders. One of the problems associated with owner-manager agency relationship is horizon problem (Rankin, 2017). Shareholders are usually interested in long-term growth of the company whereas managers look to solve issues with a short-term approach. In case of Masters, as mentioned by McConnell (2016), the board and the management was aiming at crippling Westfarmers by attacking its strongest venture, Bunnings. This was clearly a short-term approach towards dealing with an external threat. In addition to that, Woolworths board was not exactly working towards the shareholders’ interest by burning more than $3 billion of shareholders money in the home improvement project. A robust risk management framework would have enabled the directors to gauge the foreseeable risk and the costs associated with it. It would have given the management a clear path about how to tackle threats involved in the home improvement industry. This eventually would have led to attacking their competitor, Westfarmers, in a more effective strategy.>