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EXERCISE 12-3. Why Firms Decentralize. The Lyndstrom Glass Company is a manufacturer of automotive glass and...

EXERCISE 12-3. Why Firms Decentralize.
The Lyndstrom Glass Company is a manufacturer of automotive glass and glass products used in homes. Discuss the advantages of forming two divisions (an Automotive division and a Home Products division) and allowing the division managers substantial decision-making autonomy.

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Expert Solution

Definition of Decentralisation in brief: Breaking down the entity into autonomus divisons.

Advanatges of forming two divisions:

1. The performance of both Automotive and Home product division can be judged separately and the responsibility for sales and profit of each division can be fixed.

2. The performance of Managers of both divisions will improve as they will be able to take decsions based on their respective customer expectation leading to better customer service.

3.It allows the entity to implement the strategies of business in an effcient manner i.e control and supervison will improve.

4. Increses the pace of information communication amongst the entity, making managers to take reasonably accurate decisons.

Therfore if Lyndstrom Glass Company forms 2 divisons viz. Automative division and a Home Product Division the productivity of managers and the implementation of overall strategies will increase. All the above stated advantages will help the Company in better achievemnet of its Goals.

ekkarill92 answered 2 years ago
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