Question

Chapter 15 Global Business Today by Charles W.L.Hill

Know the factors that influence whether a firm should centralize or decentralize its manufacturing operations.

Answer 1

Here are the factors that influence whether a firm should centralize or decentralize its manufacturing operations:

1. Size of Organization and its Complexity

On the off chance that the association is huge and mind-boggling, at that point it has a more prominent requirement for decentralization. Be that as it may, if the association is generally easier and littler, at that point making self-sufficient units is normally exorbitant. In this manner, the top management settles on a large portion of the choices.

2. Are the operations dispersed?

Suppose that an association has its generation and deals units topographically dispersed over various areas. In such cases, keeping centralized control over every one of the procedures is exceptionally troublesome.

Hence, such associations will in general select decentralization. Then again, on the off chance that an association has every one of the units present inside a similar structure, at that point having centralized control is increasingly powerful.

3. Level of Diversification

On account of organizations having different diverse product offerings, decentralization is important just as gainful. Then again, on the off chance that the association wants elevated requirements of institutionalization, at that point it needs centralization.

4. What number of able personnel does the association have?

An association can effectively decentralize authority just on the off chance that it has skillful and experienced managers at lower levels. If there is a lack of such workers in the association, at that point decentralization will work in a confined way.

5. Top Management's Outlook

If the top management is moderate and puts stock in control in the hands of a predetermined number of individuals, at that point it is probably going to incorporate position.

Then again, if it trusts in singular opportunity and is all right with the authority not being kept to a constrained not many, at that point the association will have a high level of centralization.

6. Nature of Functions:

Typically, some fundamental functions in an association like deals, generation, and so forth have a higher level of decentralization.

In an examination, staff functions like personnel, innovative work, money, and so forth are less decentralized or even significantly centralized.

7. Communication System in the Organization:

If an association chooses to decentralize authority, at that point it must guarantee that a viable communication system exists. This is important for planning and controlling the exercises of the operational units.

Then again, on the off chance that an association has an ineffectual communications system, at that point it ought to decide on centralization.

Further, mechanized management data systems have empowered centralized basic leadership.

8. Planning and Control Procedures in the Organization?:

If an association is clear about its goals and arrangements, at that point seniors are all the more ready to enable their subordinates to settle on free choices.

Recall, decentralization is effective just when there is a decent control system in the association.

This is because the top management can utilize this system to survey the viability of the choices that the subordinates make.

9. Environmental Factors:

The environmental factors assume a significant job in deciding the level of decentralization in an association.

To give a model, if the business condition of an association is profoundly unsure, the association probably won't give a high level of opportunity to working units.

This is because, in unsure conditions, this may jeopardize the presence of the association itself.