Consider the following two settings Setting 1 Firm A operates a set of branch offices Branch offices usually can fulfill customers needs themselves However, occasionally, they lack a specialist in the area or may not have the needed programs In such cases, they refer the customer to other branches (or get the specialist to visit for a day) The other branch is willing to spare the specialist because many customers transact with many branches (e g , a corporation with many divisions interacting with the many branches of a bank) Setting 2 Firm B operates a set of branch offices These offices are self contained, and there is little interaction across branches Customers tend to be branch specific Required Comment on why firm As incentive plan for branch managers might include both local and global (e g , regional) measures of performance Why is such a feature of less importance in firm B

Question: Consider the following two settings: Setting 1: Firm A operates a set of branch offices. Branch offices usually can fulfill customers needs themselves. However, occasionally,

Consider the following two settings:
Setting 1: Firm A operates a set of branch offices. Branch offices usually can fulfill customers’ needs themselves. However, occasionally, they lack a specialist in the area or may not have the needed programs. In such cases, they refer the customer to other branches (or get the specialist to visit for a day). The other branch is willing to spare the specialist because many customers transact with many branches (e.g., a with many divisions interacting with the many branches of a bank).
Setting 2: Firm B operates a set of branch offices. These offices are self-contained, and there is little interaction across branches. Customers tend to be branch specific.

Required:
Comment on why firm A’s incentive plan for branch managers might include both local and global (e.g., regional) measures of performance. Why is such a feature of less importance in firm B?

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