Week4 SLides

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Unformatted text preview: sional coordination ∗ Interdivisional conflict – Hence, a crucial role of top management is to manage divisional interdependencies, which are present in all firms. M&S 452 — Strat and Org c 2008 Scott Schaefer – However, if delegation works perfectly, then there is no reason for the two firms to be under common ownership. – Observation: Delegation works perfectly if (and only if) the divisions are not interdependent. That is, if one division’s MR and MC do not depend on actions taken by the other division. • If all decisions are delegated to profit center managers, then what function remains to top management? Functions of Top Management 22 d d d d d d d d d d d d d d Demand for Camaros d E Q d d d d d d d d d d d d Q E price is pl . price is ph. Firebird Demand when Camaro d d d d d © © d d d d Demand for Firebirds d d d d Firebird Demand when Camaro • For any price Firebird sets, Firebird sells less when Camaro reduces its price. pl ph d d d d d T P T P • Suppose Chevy is trying to decide between setting a “high” sticker price, ph, and...
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This document was uploaded on 02/20/2014.

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