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Transcription of this question: 5.Casas CarrerasPaolo Carreras, founder Of Casas Carreras in 1950, had a vision to become the largest retailerin Brazil. He ran his business in a very autocratic fashion. Casas Carreras always had a tallorganizational structure. Managers were always expected to consult Paolo on major decisions.Consequently, decision-making was slow and salespeople complained that their ideas were rarelycommunicated to senior management.By 2001, Casas Carreras had become the largest retail chain store in Brazil. As many Of the itemsCasas Carreras sells are large household items (such as stoves, refrigerators and washing machines)a key driver Of this growth was credit cards being made available to most Brazilians. However,sales growth at Casas Carreras has slowed in recent years.Paolo died in 2006 and ownership Of the business was passed to his daughter Suzanna.Suzanna believes that the business is too bureaucratic: she is planning to make it more flexibleand more responsive to market needs. She believes the managers do not have sufflcient incentivesand is proposing to Offer them greater freedom by creating a flatter organizational structure.They will have greater independence as long as they meet revenue and profit targets. Suzanna proposesthat a store manager would have the right to cut prices by as much as 10 0/0, and a regional managerby up to 25 0/0, without consulting executive management.At present, salespeople are paid a monthly salary Of $350. Suzanna wants to reduce the monthlysalary to $200 (the minimum wage as required by law) but salespeople will be able to improvetheir income by earning 5% commission on sales. As a result, the average salesperson could earn$500 per month.(a)(b)(c)(d)Define the term commission.(i) Explain how the greater availability Of credit cards enabledCasas Carreras to increase its sales.(ii) Comment on two causes Of the communication problems that resultedfrom Paolo’s autocratic leadership style.Analyse one advantage and one disadvantage Of changing the organization OfCasas Carreras from a tall to a flatter structure.Evaluate the impact Of the proposed payment scheme for salespeople on theirjob satisfaction, motivation and productivity.[2 marks][2 marks][4 marks][5 marks][7 marks]

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