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330 Chapter 10 Lecture Notes Chapter theme: Managers in large organizations have to delegate some decisions to those who are at lower levels in the organization. This chapter explains how responsibility accounting systems, segmented income statements, and return on investment (ROI),residual income, and balanced scorecardmeasures are used to help control decentralized organizations. I.Decentralization in organizationsA.A decentralized organizationdoes not confine decision-making authority to a few top executives; rather, decision-making authority is spread throughout the organization. The advantages and disadvantages of decentralization are as follows: i.Advantages of decentralization 1.It enables top management to concentrateon strategy, higher-level decision making, and coordinating activities. 2.It acknowledges that lower-level managers have more detailed information about local conditions that enable them to make better operational decisions. 3.It enables lower-level managers to quickly respond to customers. 4.It provides lower-level managers with the decision-making experiencethey will need when promoted to higher level positions. 1 2
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