1. While computing district profits for performance evaluation purposes, should there be 11 a charge for income taxes? Should corporate overheads be allocated to districts? Should profits be computed on the basis of historical costs or on the basis of replacement costs? Evaluate these issues from the standpoint of their motivational impact on the district managers.

2. Evaluate Qualitys incentive compensation system. Does the present system motivate district managers to make decisions which are consistent with the strategy of the firm? If not, make specific recommendations to improve the system.