At persistent signs of ineffective work, a company should analyze its organizational design, systems, and work flow for the possible causes of those problems. The nature and extent of any design changes must reflect the magnitude of the problem. In choosing a new organizational design or modifying an existing structure, managers must establish a system of communication and control that will provide for effective decision making. At such times, managers need to localize decision making and integrate widely dispersed and disparate global operations.
Besides determining the behavior of the organization on a macro level (in terms of what divisions, subsidiaries, departments, and units are responsible for), the orgaithational design must determine behavior on a micro level. For example, the organizational design affects the level at which certain types of decisions will be made. Determining how many and what types of decisions can be made and by whom can have drastic consequences; both the locus and the scope of authority must be carefully considered. This centralization - decentralization variable actually represents a continuum. Jn the real world, companies are neither totally centralized nor totally decentralized: The level of centralization imposed is a matter of degree. Exhibit 8-9 illustrates this centralization - decentralization continuum and the different ways that decision making can be shared between headquarters and local units or subsidiaries. In general, centralized decision making is common for some functions (finance and research and development) that are organized for the entire corporation, whereas other functions (production, marketing, and sales) are more appropriately decentralized. Two key issues are the speed with which the decisions have to be made and whether they primarily affect only a certain subsidiary or other parts of the company as well.
Global Strategy -Structure Relationships : Organizing Structure article from Formulating Implement Catagory Global Strategy -Structure Relationships
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