Question

Assume that the new management wants to operate as a decentralized firm, what major management problems do you foresee in the transition from sole owner to employee ownership? ( Word limit 700 words , there is no need to provide extensive definations, focus is on how you apply the theories and concepts )

Answer 1

IN CENTRALISATION MANAGERIAL SYSTEM , THE MANAGERIAL ACTIVITY IS PERFORMED BY A FEW PEOPLE , AND IN DECENTRALISATION THE MANAGERIAL ACTIVITY IS DIVIDED AND ASIGNED TO EACH LEVEL INCLUDING THE LOWER LEVEL MANAGEMENT.

NOW COME TO THE POINT THERE ARE MANY LIMITATIONS ARISED DUE TO DECENTRALISED MANAGEMENT SYSTEM. SOME OF THEM ARE:-

-> AS THE AUTHORITY IS DIVIDED AND ASSIGNED TO EACH LEVEL MANAGER, THEY PERFORM THE DELEGATED WORK AS PER THEIR KNOWLEDGE AND EXPERIANCES WHICH MAY VARY IF THE ACTIVITY IS PERFORMED UNDER CENTRALISED SYSTEM.

->AS THE EACH LEVEL MANAGERS HAS AUTHORITY TO TAKE DECISION ON THE ASSIGNED WORK , THERE WILL NOT HAVE ANY UNIFORMITY AMONG THE MANAGERS.THEY PERFORM THE ACTIVITY ACCORDING TO THEIR KNOWLEDGE.

-> ENTITY'S DISCIPLINE CAN BREAK AS THE MANAGERS PERFORM THEIR ACTIVITY IN MONOPOLY.

-> CONFLICTS CAN ALSO BE ARISE AMONG MANAGERS.

->IF THE MANAGER IS UNDERQUALIFIED TO PERFORM THE ACTIVITY ,THEN THE WORK GONE WRONG AND THE WHOLE SYSTEM WILL BE AFFECTED.

-> MORE FUNDS ALSO REQUIRED TO TRAIN THOSE UNDERQUALIFIED MANAGERS.

->WORK CAN GET DELAYED IF THE MANAGER IS UNABLE TO UNDERSTAND HOW TO DO THE WORK.