- 10 Marks
Question
The Chief Executive Officer is concerned that with the expansion of the operations of HPC to other countries, she would further have to divulge authority and power to other Managers because of how the company would grow in size and complexity.
Required:
Explain to the CEO why HPC’s decentralized system of internal organizational relationship is preferable to a centralized system. (10 marks)
Answer
A decentralized system is preferable for HPC for the following reasons:
- Local Knowledge: Junior managers often have better knowledge of local operational conditions, allowing for more effective tactical and operational decisions.
- Motivation and Speed: Giving authority to divisional managers motivates them and enables faster decision-making since decisions do not need to be referred to senior management.
- Handling Complexity: In a large and complex organization like HPC, decentralization helps manage the sheer volume of decisions, preventing overload at the head office.
- Flexibility: A decentralized system allows for flexibility in decision-making, especially when operations spread across multiple countries.
- Scalability: With HPC’s expansion, decentralization allows managers at the regional level to make quicker, better-informed decisions, essential for adapting to local market needs.
In summary, decentralization will allow HPC to scale its operations more effectively as it expands, without overwhelming central management with decision-making responsibilities.
- Tags: Centralization, Decentralization, Decision Making, Organizational Structure
- Level: Level 3
- Topic: Strategy implementation
- Series: APR 2022
- Uploader: Dotse