BUILDING AN ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION: PEOPLE, CAPABILITIES, AND STRUCTURE

BUILDING AN ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION: PEOPLE, CAPABILITIES, AND STRUCTURE

Advantages and Disadvantages of Centralized versus Decentralized Decision Making. Centralization Organizational Structures for basic tenets is Decisions on most matters of importance should be in the hands of top-level managers who have the experience, expertise, and judgment to decide what is the best course of action. Lower-level personnel have the knowledge, the time, nor the inclination to properly manage the tasks they are performing. Strong control from the top is a more effective means for coordinating the firm’s actions. Chief Advantages: Fixes accountability through tight control from the top. Thus, eliminates potential for conflicting goals and actions on the part of lower-level manager. In addition, facilitates quick decision making and strong leadership under crisis situations. Then primary Disadvantages are Lengthens response times by those closest to the market conditions because they must seek approval for their actions. More does not encourage responsibility among lower-level managers and rank-and-file employees. Thus, discourages lower-level managers and rank-and-file employees from exercising any initiative. Decentralized Organizational Structures for basic tenets is   Decision-making authority should be put in the hands of the people closest to, and most familiar with, the situation. Those with decision-making authority should be trained to exercise good judgment. A firm that draws on the combined intellectual capital of all its employees can outperform a command-and-control firm. And for Chief Advantages have to Encourages employees to exercise initiative and act responsibly. Thus, promotes greater motivation and involvement in the business on the part of more company personnel. Spurs new ideas and creative thinking and allows fast response to market change. It’s also Entails fewer layers of management. Then Primary Disadvantages is Higher-level managers may be unaware of actions taken by empowered personnel under their supervision. The firm don’t have Puts the organization at risk if empowered employees happen to make “bad” decisions. Then can impair cross-unit collaboration with other.