CH 12

Question 1

What are the benefits of decentralized firms?

Answer 1

1) timely decisions
2) increase managerial skill and specialization
3) empower employees
4) trains managers

Question 2

What are the costs of decentralized firms?

Answer 2

1) avoid organizational goals
2) increases local goals
3) requires costly coordination of decisions

Question 3

How do we choose the right performance measures?

Answer 3

1) managers have incentives to make effort

2) managers demonstrate ability and skills

Question 4

What are the goals for performance in cost centers?

Answer 4

1) short term: achieving cost targets for a given level of output such as FLEX bud var
2) long term: continuous efficiency improvements to reduce costs. use benchmarking and Kaizen( cont improv)

Question 5

What is main goal of investment center?

Answer 5

1) maximize the returns from invested captial