Currently, each unit employs economists who develop forecasts for interest rates and other economic conditions.

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Currently, each unit employs economists who develop forecasts for interest rates and other economic conditions.

Currently, each unit employs economists who develop forecasts for interest rates and other economic conditions. When assessing potential economic effects on each unit, what are the disadvantages of this approach versus having just one economist at the holding company provide forecasts?

Answer & Explanation (1)

Explanation
Hiring different economists for different units make them focus on their own department. They may undermine the profits of other departments just as to increase their own profits. For example, the insurance department would like to ensure continuous and stable annuity payments whereas the securities department would like to focus their investments towards high return paying stock markets. In addition to this, the cost of hiring one economist would be lesser than hiring more than one economists.

Sample Response
Conflict of interests, increased costs, distinct approaches and results.

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