Wal-Mart has more than 3,700 stores, more than one million employees, and total revenues of close to a quarter of a trillion dollars in the United States alone. Sarah Frey-Talley runs the family-owned Frey Farms in Illinois and supplies Wal-Mart with pumpkins and other fresh produce.
a. How does Wal-Mart coordinate its activities? Is it likely to use mainly a command system or also to use incentive systems? Explain.
b. How do you think Sarah Frey-Talley coordinates the activities of Frey Farms? Is she likely to use mainly a command system or also to use incentive systems? Explain.
c. Describe, compare, and contrast the principal–agent problems faced by Wal-Mart and Frey Farms. How might these firms cope with their principal–agent problems?