By , the business moved to its downtown location. In , a second Jonesboro location was opened. With such growth, the company faced many management challenges.
Would it be best for management to remain centralized with decision-making coming from a single location, or should the process be decentralized, allowing local management the flexibility and autonomy to run individual locations? If local management is given autonomy to make their own decisions, will those decisions be in line with company, or perhaps, individual goals? How will management be evaluated? Will inventory management be a uniform process, or will people and the process have to adapt to accommodate differences in demand at each location?
These are just some of the hurdles that Gearhead needed to address. What are some other issues which Gearhead might have considered? Think in terms of inventory management, personnel, efficiencies, and leadership development. How could Gearhead have use decentralized management to grow and thrive? The CEO of a centralized organization will determine the direction of the company and determine how to get the company to its goals.
The steps necessary to reach these goals are then passed along to the lower-level managers who carry out these steps and report back to the CEO. The CEO would then evaluate the results and incorporate any necessary operational changes. On the other hand, the CEO of a decentralized organization will determine the goals of the company and either pass along the goals to the divisional managers for them to determine how to reach these goals or work with the managers to determine the strategic plans and how to meet the goals laid out by those plans.
The divisional managers will then meet with the managers below them to determine the best way to reach these goals. The lower-level managers are responsible for carrying out the plan and reporting their results to the manager above them.
The higher-level managers will combine the results of several managers and evaluate those results before sending them to the divisional manager. For each decision listed, identify and explain the best structure centralized, decentralized, or both for each of the following types of businesses:. Figure In a centralized organization, where are goals established? Figure Define segments and describe how identifying segments within a business might help manage the business.
Figure Choose a company and describe how a specific issue, policy, or procedure for example, granting merchandise returns, establishing sales prices might look if the business is structured as a centralized business.
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I do not want to receive the monthly best practices newsletter. The benefits to a decentralized organizational structure are more flexible and open to change. There is room for innovation and individual thought processes that could benefit the company as a whole or even one simple task. Employees of this type of environment favor change and like the fast paced environment that allows them to have input and feedback.
Here are some examples of such tasks:. There is no one-size-fits-all organization structure. And getting the acclaimed qualities of responsiveness, reliability, efficiency, and perennity does not always require hard structural changes to the organization chart. In many cases, less disruptive changes can also do the job, such as physically dispersing central staff to the operating units, appointing permanent points of contact at HQ for the operating units, setting up a temporary task force of people from the operating units, and so on.
But there is still a strong need for someone to define and implement the organizational rules of the game. You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access.
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