Retailers and restaurants such as McDonald’s and Wal-Mart have a very large number of stores and store managers. These two firms have been very successful and have continued to grow during the 2008–2009 recession even though many other firms have suffered. McDonald’s and Wal-Mart’s success depends to a great deal on the energy, hard work, and effectiveness of these store managers. It is critical for these two firms and for firms in these two industries to provide effective compensation plans for the store managers.

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What type of compensation plan would you develop for managers of stores such as Wal-Mart and McDonald’s, and why?