Case Assignment 14

Please read the scenario in the below case assignment (1st page uploaded) and answer the questions the case assignment.

Chapter 14 – “Analyzing Managerial Decisions: Structuring Compensation Plans”

*Chapters 14 is uploaded for your review and will assist you in answering the questions in the case assignment.

*When you are answering the questions remember to focus on the economic reasoning behind the problems. Also use the information in the chapter to suggest economic solutions. Try to include outside sources along with your text book.*

*Book Reference: Brickley, J.A., Smith, C.W., & Zimmerman, J.L (2009). Managerial economics and organizational architecture (6th ed.). New York: McGraw-Hill/Irwin

Solution Preview

Case Assignment 14

Why do you think the compensation plans differ at the two firms? In particular, why do

you think Kaufmann’s pays commissions to salespeople, while Parkleigh does not? Why does Parkleigh offer employee discounts on purchases, while Kaufmann’s does not?

There are various reasons why Parkleigh and Kaufmann’s use different strategies to compensate their employees. Parkleigh is a small department store that focuses on upscale, expensive personal accessories. On the other hand, Kaufmann’s is a large retail store chain, with several stores in the Rochester area.

(447 words)