Question

1. Under what conditions can management delegate a financial responsibility center of Profit Responsibility ?
2. Explain the difficulties that top management experiences in formulating strategies if the business environment changes rapidly

Answer 1

1.

Conditions where management can delegate a financial responsibility center of Profit Responsibility:

Delegation is a win-win when done appropriately, however, that does not mean that you can delegate just anything. To determine when delegation is most appropriate there are five key questions you need to ask yourself:

• Is there someone else who has (or can be given) the necessary information or expertise to complete the task? Essentially is this a task that someone else can do, or is it critical that you do it yourself?
• Does the task provide an opportunity to grow and develop another person's skills?
• Is this a task that will recur, in a similar form, in the future?
• Do you have enough time to delegate the job effectively? Time must be available for adequate training, for questions and answers, for opportunities to check progress, and for rework if that is necessary.
• Is this a task that I should delegate? Tasks critical for long-term success (for example, recruiting the right people for your team) genuinely do need your attention.

If you can answer "yes" to at least some of the above questions, then it could well be worth delegating this job.

2.

The challenges are: 1. Globalisation 2. Quality and Productivity 3. Ownership 4. Environment 5. Strategy Formulation 6. Ethics and Social Responsibility 7. Workforce Diversity 8. Change 9. Empowerment 10. Information Technology.

Challenge # 1. Globalisation:

Almost all home companies face the challenge of competition with their international counterparts. Small retailers, big manufacturers, all are competing with the international products. It has resulted in greater complexities, greater economic and political risk and uncertainty. The problems of internationalization are faced in the fields of goods and services, finance, human resource and advertising. An important question that managers have to answer, therefore, is “Should we focus on globalisation or regionalism?”

Challenge # 2. Quality and Productivity:

Companies compete with international competitors with respect to quality and productivity of goods and services. Successful companies have been able to maintain and enhance the quality of goods and services with fewer resources (productivity). Managers must, therefore, focus on producing more and better with fewer resources.

Quality is “the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs”. Productivity is “an economic measure of efficiency that summaries the value of outputs relative to the value of the inputs used to create them”. Quality and productivity are important determinants of business that affect its success.

Challenge # 3. Ownership:

Another area that concerns managers is ownership. Large foreign investors are buying stocks of home companies and ownership can be transferred in their hands. Profitability and productivity, thus, may suffer.

Challenge # 4. Environment:

Environment is changing at a fast rate. Organisations have to change with the competitive environment to maintain their customers. Managers should develop deep understanding of the internal and external environmental factors and their application to business operations.

Challenge # 5. Strategy Formulation:

Just as everything around is constantly changing, business firms must watch the strategies and strategic management. Strategies keep changing according to environmental changes. “Strategic management is a way of approaching business opportunities and challenges—it is a comprehensive and ongoing management process aimed at formulating and implementing effective strategies.”

It keeps managers constantly involved and promotes healthy interaction between the organisation and the environment. Managers who frame effective strategies will remain in the market and those who fail to do so will leave the market. Strategy formulation, therefore, requires constant attention of contemporary managers.

Challenge # 6. Ethics and Social Responsibility:

Firms which do not adhere to ethical standards and social responsibilities are not accepted by the society. It is, therefore, a challenge for managers to define relationships with the social environment. Organization that violates social expectations has the risk of legal interference, loss of goodwill and even loss of business.

Challenge # 7. Workforce Diversity:

Diversity in the workforce exists when members differ along dimensions like race, colour, caste, creed, nationality, gender etc. Traditionally, organisations were managed by workforce with no or very little diversity, like all men, all whites or all Indians but today almost all organisations experience tremendous change in the composition of workforce. Firms employ people from diverse sets of cultural, social, economic and ethical backgrounds at almost every organisational level.

Challenge # 8. Change:

Change is a continuous process. If firms want to compete in the complex, dynamic and diverse environment as they are facing today, where expectations from managers and their organisations are on an ever increase, they must accept the changes that confront their every day life.

Challenge # 9. Empowerment:

Though management is ‘the art of getting things done through others,’ the others/subordinates will not do things if they have to merely carry out the orders and instructions of managers. Workers want more information about the organisation to perform and control their jobs. Participative decision-making and formation of groups and work teams help in fulfillment of individual, group and organisational goals.

The basic requirement, therefore, is to communicate with the external environment and their workforce. Communication is a major task of managers today. They must convey organisational goals to individuals and understand their individual goals, in turn. Failure to do so will result in loss of empowerment. This will affect organisational goals, both quantitative and qualitative.

Challenge # 10. Information Technology:

Information technology “refers to the resources used by an organisation to manage information that it needs to carry out its mission”. Information is an important part of communication and managers have to be careful in selecting the amount and type of information (out of the large quantity of information available) for carrying out the business operations. Lack of control over use of information can result in lack of control over business operations.