Ch10 - Chapter 10 Lecture Notes Chapter theme Managers in...

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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 scorecard measures are used to help control decentralized organizations. I. Decentralization in organizations A. A decentralized organization does 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 concentrate on 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 experience they will need when promoted to higher level positions. 1 2
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