Principles of Managerial Accounting · free preview
How Decision-Making Differs across Organization Structures
Decision rights follow the structure, centralized organizations route choices through hierarchy and policies, decentralized organizations push choices to the information, and the difference changes what managers do all day.
1. Routing decisions
Routing decisions
2. Span of control and layers
Span of control and layers
3. Segment reporting under each structure
Segment reporting under each structure
4. Information economics
Information economics
5. Speed difference
How does decision speed differ between the structures?
6. Tall structure risk
What risk grows as centralized organizations add review layers?
7. Segment report purpose under decentralization
What do segment reports primarily serve in a decentralized organization?
8. Delegation audit purpose
Why do healthy organizations periodically audit decision rights?
9. Flat structure enabler
Flat, decentralized structures rely on segment ____ systems rather than supervision layers to keep the center informed. One word.
10. Local information principle
Decisions belong where the relevant ____ sits, provided incentives align. One word.
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