Listen to part of a lecture in a business class.
Large companies are organized in different ways. In some large companies that have more than one branch or location, responsibility and authority are spread throughout the entire company. So instead of managers at the central headquarters making all the decisions, managers at local branches can make decisions about how to run their branches. This is known as decentralization. Decentralization can sometimes be effective for companies with multiple locations, but it also has impossible disadvantages. One disadvantage of decentralization is that decisions made by local managers can sometimes harm the overall company. When local managers make decisions, they only consider what's best for their particular location. They don't have to think about what's good for the company in general. So a good decision for a local branch can sometimes be a bad decision for the company as a whole. For example, take a major clothing company with multiple stores, say there's one store that's not doing well. The manager may decide to spend a lot of the company's money on advertising to attract more customers to the store. But if the central office were in control, it would probably choose to close the struggling store to save money and invest in its more successful branches. Another disadvantage of decentralization is that company policies might be carried out differently in different locations. If local managers are allowed to make decisions about policies, then policies may vaiy from location to location. And If the policies aren't what customers are expecting, they may be unhappy So Back to the clothing company, say customers want to return clothing and get their money back, because it didn't fit right or something. And most stores allow customers to do this, but one store decides not to accept returns. Customers at that store may get upset if they can't return clothes and get their money back.
Using points and examples from the lecture, explain how decentralization can have disadvantages for a company.
In the lecture, the professor explains two disadvantages of decentralization for a company. The first one is that the decisions made by a branch of a company may harm the overall business since it may just care about its own local location rather than the whole company's benefit. For example, a clothing company has several stores. If one store doesn't do well, it may advertise to attract consumers. But actually, if the decision is made by the center company, it can just shut down this store in order to save the money and support more successful branches. The second disadvantage is that the policy of the whole company may be carried out differently in different branches which may hurt the company's whole reputation sometimes. Also, the clothing store. In some cases, consumers may want to return the clothes because it is not fit. But one of the branches refuses that. The customers will definitely be upset and have a bad impression of the whole brand.
