1.Organizational experts say that decentralization “co-locates knowledge and decision rights.” What does this statement mean? Is decentralization always beneficial? What are the costs associated with delegating decision making to lower levels of an organization?
2.Some argue that decentralization results in maximizing profit division by division. It may not lead to profit maximization at the overall firm level. Do you agree? Why or why not?
3.“Why not simply evaluate the performance of all divisional managers based on the entire firm’s profit? That way, we do not have to worry about divisional managers not acting in the firm’s best interests.” Is this a reasonable argument? Why or why not?
4.When evaluating investment centers, what are some of the disadvantages of using net book value to measure investment?