...MANAGEMENT CONTROL SYSTEMS Performance Measurement, Evaluation and Incentives Second Edition Kenneth A, Merchant University of Southern California Wim A. Van der Stede London School of Economics Lffir Prentice Hall FINANCIAL Th,tES An impriil of P Harlow, England . London ' eatson Education New York . Boston . san Francisco . Toronlo Sydney. Tokyo . Singapore. Hong Kong .Seoul. Taipei. New Delhi Cape Town . Madrid . Mexico City . Amsterdam ' Munich . Paris. Mian "@@64wrw MANAGEMENT AND CONTROL in organizations. Management contlol \ fianagemenr conrrol is a critical function o In Aplil 2005, employees at the 75-year-old California-based not-for'-proirt Gemological Institute of America (GIA), the world's largest grader of diamonds, were accused of accepting bribes fi'om large diamond dealers to inflate diarnond grades. Large diamond can lead to large financial losses, r'eputation damage, and possibly even to organizational failure. Here are some recent examples: IYlfaitures dealers rvouid submit proportionally high bids, often 20 to 30qa highel than prevailing bids fol lough stones. knowing that they would be able to sell these stones at a profit because they bribed GIA staff to get a higher-than-deserved grade. A small differ-ence in grade can mean a huge difference in price, often hundreds of thousands of dollars on larger diamonds. The size of the blibes is unknown, but the probe into the allegations...
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