Question

Because risk is associated with the potential for higher profits, businesspersons are motivated to choose organizational forms that limit their liability while allowing them to take risks that may lead to greater profits. True or False?

Answer 1

Answer:

True

Explanation:

Remember, business persons are profit oriented, and so they are willing to make needed organisational decisions to achieve their profit goals while reducing their liability (loses).

For example, an organization may choose the hierarchical structure; where instructions flows from top level management to bottom instead of the divisional structure, which allows a spread of authority if deems it to limit their liability while allowing them to take risks that may lead to greater profits.