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Organization Theory & Design (MGT504) Fall 2020


Due Date: December 17, 2020 Marks: 10

The CEO of a multination organization is a confirm believer of decentralization. The
organization is adrift due to currently prevailing pandemic situation. According to the
CEO, “We are not getting result even by putting complete efforts. Over a one-year period,
the organization’s profits have declined by 70%.”
Till this time, organization’s units have been operating independently, i.e. each unit handles
its own administrative functions and managers make decisions focused on meeting their
own unit’s goals. The manager of each unit does not have any link with other unit
managers. So, some dramatic changes are required to improve the performance of the
During the annual summit, the CEO decrees that all units would now be required to share
resources and cooperate with each other. As per new strategy, the bonuses would be linked
to companywide performance rather than unit performance. The payroll system has a cut
down and more than a hundred data centers are consolidated into a handful. Managers, who
have been accustomed to making all of their own decision, lost some of their autonomy as
per new companywide decision; such as Six Sigma quality improvement program is
centralized to headquarter level and implemented to down.
The organization away from its roots as a decentralized organization to one with a single
vision and more centralized decision making would not lead to success overnight!

Question 01

Is it easy for an origination to turnaround from decentralization to centralization within a
short period of time? Give strong reasons.

Question 02

Should the managers accept the decision of CEO? Why or why not, give rationale.

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