Q – Please read the discussion below and prepare a Reply to this discussion post with
comments that further and advance the discussion topic.
Please provide the references you used.
Ensure zero plagiarism.
Word limit: 200 words
Discussion
Decentralized Operations
Introduction
Sherry Smith runs Tiller Components, a successful automotive manufacturing company with
a wide footprint. Smith now needs help managing the company due to its rapid growth. In this
paper, we will discuss how centralized and decentralized decision-making affect regional and local
managers and the company. We will also consider using analytical tools to help Smith understand
the company’s different divisions and sectors.
Decision-Making Approaches
CEO Sherry Smith is struggling to manage Tiller Components, a national vehicle
manufacturer, despite its rising size. To solve this problem, she must examine her centralized and
decentralized decision-making options and how they might affect local and regional managers. In a
hierarchical organization with “centralized decision-making,” the top management makes important
choices. This scenario would continue to provide CEO Sherry Smith with great influence over
important operational matters (Cuillier, 2022). Centralization can help standardize procedures,
reduce costs, and unify strategy. Tiller Components’ growth and complexity centralization may make
it harder to meet local market needs and need more adaptability to tackle regional problems.
Decentralized decision-making gives regional or local management decision-making power. This
technique gives local managers more freedom to make market-specific decisions. Decentralization
streamlines decision-making by reducing the need for lengthy approval processes. Tiller
Components, which operates in multiple locations, may benefit from this.
Activities to Centralize and Decentralize
Sherry Smith could adopt a hybrid strategy that combines centralization and decentralization
to find the best balance. Centralizing key strategic decisions like the company’s long-term goals and
direction helps maintain coherence and alignment with the vision. However, operational decisions
and daily management should be delegated to allow local and regional managers to better adapt to
their markets. In terms of central activities, Smith should consider centralizing some tasks to
maintain control and uniformity in operations. Strategic planning, marketing, finance, and human
resource management are some of these duties. A centralized strategic plan is necessary to
coordinate corporate goals across geographical boundaries. To ensure that money is handled
effectively and efficiently, financial management should also be centralized (Gaskell & Stoker,
2020). Centralized human resources management is necessary to guarantee that corporate policies
and processes are applied consistently across geographical boundaries. For the company’s brand to
be efficiently and uniformly displayed across all geographies, marketing needs to be
centralized.
The shift to decentralized decision-making may significantly impact the success of a
corporation as a whole. As decision-making becomes increasingly decentralized, Tiller Components
may face many significances. First, local and regional managers will feel more autonomous and
motivated, which may boost performance and market responsiveness. Clear communication and
accountability procedures must accompany decentralization to avoid confusion and redundancy.
Local managers can adapt faster to changing market conditions and client needs, increasing the
company’s agility. The likelihood of blocks and delays in highly centralized designs should decrease
(Kirvesoja, 2022). However, a middle ground and ground rules are needed to ensure the
organization’s general purpose is consistent.
Analytical tools for evaluating company performance
Smith is better able to assess the success of each division and segment thanks to analytical
tools like ROI and residual revenue. By comparing the return on investment (ROI) to the investment
cost, one may determine how profitable an investment is. The additional return on your investment
after deducting the cost of capital is measured by residual income. Smith can uncover lowperforming and high-performing organizations and categories using these methods (Gaskell &
Stoker, 2020). These methods might not be able to capture your company’s total successfully. You
can also use other measures, such as profitability and liquidity ratios, to evaluate how well each
business unit performs. While profitability metrics assess a company’s profitability concerning sales,
assets, and capital, liquidity metrics gauge its capacity to fulfill short-term obligations. These
indicators give Smith a more complete view of the business’s financial performance and assist him in
making wiser choices.
In conclusion, Tiller components can benefit from distributed decision-making, but some
disadvantages must be considered. Some tasks must be handled centrally to keep business
processes under control and consistent. Analysis tools help support these transformations by
improving understanding and management of the firm’s divisions and segments. Tiller Components
should be able to continue its industry leadership in-vehicle component and part production with
this strategy.
References
Cuillier, G. W. (2022). Advantages and Disadvantages of Centralized Versus Decentralized
Information Systems and Services from a Project Management
Perspective. https://scholarworks.lib.csusb.edu/etd/1487/
Gaskell, J., & Stoker, G. (2020). Centralized or decentralized. Democratic Theory, 7(2),
33. https://search.proquest.com/openview/acd3f5262d11abc702779045fd8f881a/1?pqorigsite=gscholar&cbl=2037565
Kirvesoja, V. (2022). Advantages and disadvantages of decentralized financial (DeFi)
services (Master’s thesis). https://jyx.jyu.fi/handle/123456789/81722
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