********** Using the concept of Centralized and Decentralized Operation: 1. Comm
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Question
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Using the concept of Centralized and Decentralized Operation:
1. Comment on businesses you have worked for and characterized them as either centralized or decentralized. Be specific with details. (manager of a shoe store)
2. Explain the concept of Decentralized operation.
a) Discuss your thought on whether or not there can be a link between decentralized operations and increased profitability. Explain how.
3. What are the advantages of operating a centralized operation? Discuss 3 advantages, explain in detail and provide specific examples.
You are analyzing two companies – relate your answers to the following questions to these two companies:
A CPA, Accounting Firm, like Price Waterhouse Coopers (PWC)
Walmart Stores
4. Refer to question 2a – Is it more likely for the CPA firm to feel that effect or the Walmart store? Support you answer with details, insight and examples.
5. Why would the management feel that operating a centralized company would be more desirable?
a) Is it more likely for the Accounting Firm to pursue this type of operation or a Walmart store? Why?
6. What are the steps that the higher level management would take to ensure that the financial objectives of the company are met through decisions that the lower level management makes on daily basis in regards to cost, profit and investment accountability,?
a) Is it more likely for the Accounting Firm or the Walmart to have to implement these control steps?
Explanation / Answer
1. Manager of Shoe store is chatagarised as Decentralised Business - Manager of store has decision making power and flexibility in process to run his department as he see fit. In multi chain shoes store; management delegate the authority and flexibility to store manager for run his store and achive his individual growth target as well as collective organisation target as whole. Manager has power to take day to day operational decision regarding his store and he is accountable for his store operation.
2. There is link between decentralized operations and increased profitability. a. Decentralised strucure of organization is always more flexible and open to change. b. Change in organization according to change in Market requirement, Consumer Demand can be easily adopt in decentralized organization structure and it result in maintain the profitability. c. There is always room for innovation and individual thought process that could benifit to organization as whole or even in single task. d. In decetralized structure authority and resposibilty are divide in different level hence it will be easy to implement change and achive organization target as whole.
3. Advantages of operating a centralized operation.
a. Uniformity in action - Uniformity in action is established throughout the organisation because of central administrative control.
b. Better co-ordination - Centralisation facilitate better coordination among various operations. Direct control and supervision are facilitated which results in less conflict of authority and duplication of work.
c. Personal leadership - Centralisation encourages and permit personal leadership. The introduction of personal leadership facilitates quick action, aggressive marketing and attainment of pin-pointed objective or purpose
E.g. The Army commander and his team. Target or action is decided by the team commader. Role each soldier in team is decide by the commader and each one is reportable to him. Action of each one is uniform according to target and role decide by the commader. Co-ordination between team is better and everyone's role is known to them and control by the commader hence duplication of work and conflict between work is easily avoided.
4. Walmart store will feel the effect. Walmart is multi chain store located in different area of world. The market requirement, consumer type and their demand, culture etc. are not always similer in different area. Walmart has to always maintain the flexibilty in his store operation according to consumer demand and this will result in maintaining position in market and profitability in operations.
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