Thursday, October 20, 2011

Organization Theory - 26 (Sales rep, Law suit and centralization)

In the last blog, we looked at the decision making process, and understood the concept of centralization using the process. It would be interesting to discuss where  centralization and decentralization are going to play an important role - this is exactly what we are looking at in this blog.

In the current context, there is usually information at the click of a button. If anything, we have an information overload! Managers or any decision maker needs to make sense out of this huge information repository. 

Let us now take 2 different situations 
  1. A sales representative on a sales visit negotiating with a customer
  2. A law suite on an organization

How should the decision making be placed in these situations?

In the first case, a quick on the spot decision is the best response to this scenario. Taking time to go back to the sale person's  manager and then making the decision on price could mean loosing the customer! In such a situation it is obvious that the decision has to be decentralized.

In the second case, when a law suit is filed against the organization. The response the organization has to give and the way it reacts in every one of its activities mean that the situation has be controlled. This mandates a single point decision making instead of a denaturalized decision making process!

In many a situation, it is pretty interesting to note that having a decentralized decision making process would also result in a means to motivate the organization.

It has to be noted that there is no one right choice for an organization! It is extremely situational choice that the organization needs to take.

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