Question: Loblaw has more than 1,000 stores from coast to coast, more than 140,000 employees, and total revenues of close to $30 billion. Penny and David Chapman run the family-owned Chapman's Ice Cream in Markdale, Ontario, which employs local people and supplies Loblaw with ice cream.
a. How does Loblaw coordinate its activities? Is it likely to use mainly a command system or also incentive systems? Explain.
b. How do you think Penny and David Chapman coordinate the activities of Chapman's Ice Cream? Are they likely to use mainly a command system or also incentive systems? Why?
c. Describe, compare, and contrast the principal-agent problems faced by Loblaw and Chapman's Ice Cream. How might these firms cope with their principal-agent problems?