4P - 2014 Fudan Transfer Pricing英文学习资料 .pdfVIP

McFrankel Engineering Transfer Pricing THE DECENTRALIZATION CONTINUUM CENTRALIZED DECENTRALIZED Where do you want to be? Decision making Decision making authority is at authority is the top delegated to lower level managers Benefits of Decentralization 1. Creates greater responsiveness to subunit’s customers, suppliers, and employees 2. Leads to gains from faster decision making 3. Increases motivation of subunit managers 4. Assists management development and learning 5. Sharpens the focus of subunit managers Costs of Decentralization 1. Leads to suboptimal decision making, which arises when a decision’s benefit to one subunit is more than offset by the costs or loss of benefits to the organization as a whole. – Also called incongruent decision making or dysfunctional decision making 2. Focuses manger’s attention on the subunit rather than the company as a whole 3. Results in duplication of output and activities. Decentralization and Multinational Firms • Multinational firms, companies that operate in multiple countries, are often decentralized because centralized control of a company with subunits around the world is often physically and practically impossible. • Decentralization enables managers in different countries