Description Discussion Topic: Centralization versus Decentralization and their Effects on the CompanyIn a centralized organization, budgets are often completed at the executive level without input from lower-level management. In a decentralized organization, more say for what goes into the budget is allowed from those same lower-level managers that will eventually be approved by the executive level.Garrison, R., Noreen, E., & Brewer, P., (2021). Managerial accounting (17ed). McGraw Hill.Do the discussion and the posted 1 to 3 down belowPosted 1A decentralized organization would be the better option. I believe the best decisions are made from experience in the lower-level environment. Empowering lower-level managers to make decisions put the decision-making authority in the hands of those who tend to have the most detailed and up-to-date information about day-to-day operations (Garrison, Noreen, & Brewer, 2021, p. 499). In most cases, executive level managers are from different generations. This may influence the way they compute budgets and make other decisions. Decentralized organizations also build strong managers. Allowing managers to make decisions at a lower-level is a great way to prepare them for executive level positions and other opportunities. Posted 2I believe that a decentralized process is better because it draws more information directly from more sources than a centralized process. In a centralized process, upper management has a better view of strategic vision but can lack pertinent departmental information the lower-level management has access to (Garrison, Noreen, & Brewer, 2021). This can lead to budgets that are too difficult, or too easy, to achieve (Garrison, Noreen, & Brewer, 2021). Additionally, it can cause lower morale in lower-level managers who are given these budgets. Companies can remedy these issues with a decentralized process. Lower-level managers can set budgets that are relevant to their departments, which boosts morale and can train them to upper-level management (Garrison, Noreen, & Brewer, 2021). Once lower-level managers have prepared their budgets, executives can review them, allowing an opportunity to adjust them to be more in line with the strategic vision, and it gives them a chance to prevent managers created too much budgetary slack (Garrison, Noreen, & Brewer, 2021)Posted 3The more buy-in owners and managers can get with their staff the better. I think decentralizing as much as possible helps with gaining critical buy-in and helps the organization run better. On the flip-side, centralized management tends to create more doers just doing what they’re told instead of advancing the organization (generally speaking). Decentralizing budgets and other decision making authority also helps ownership and senior leadership more effectively run the organization. Senior leaders can’t be in all places at all times, so having a team able to make effective decisions within a set of boundaries allows for business to run more smoothly. Whereas centralized budgeting and decision making potentially creates bottle necks when decisions need to be made or money to be spent. As always, when to implement one method over the other depends on the type, size, scalability, and strategy of the business. In reality though, there should be a balance of both: centralized strategy and major goals, and decentralize the details that can be controlled and managed at the manager level! Tags: cost accounting Decentralization centralization Advance Managerial Effects on the Company User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

Description

Discussion Topic: Centralization versus Decentralization and their Effects on the CompanyIn a centralized organization, budgets are often completed at the
executive level without input from lower-level management. In a
decentralized organization, more say for what goes into the budget is
allowed from those same lower-level managers that will eventually be
approved by the executive level.Garrison, R., Noreen, E., & Brewer, P., (2021). Managerial accounting (17ed). McGraw Hill.Do the discussion and the posted 1 to 3 down belowPosted 1A decentralized organization would be the better option. I believe the best decisions are made from experience in the lower-level environment. Empowering lower-level managers to make decisions put the decision-making authority in the hands of those who tend to have the most detailed and up-to-date information about day-to-day operations (Garrison, Noreen, & Brewer, 2021, p. 499). In most cases, executive level managers are from different generations. This may influence the way they compute budgets and make other decisions. Decentralized organizations also build strong managers. Allowing managers to make decisions at a lower-level is a great way to prepare them for executive level positions and other opportunities. Posted 2I believe that a decentralized process is better because it draws more
information directly from more sources than a centralized process. In a
centralized process, upper management has a better view of strategic
vision but can lack pertinent departmental information the lower-level
management has access to (Garrison, Noreen, & Brewer, 2021). This
can lead to budgets that are too difficult, or too easy, to achieve
(Garrison, Noreen, & Brewer, 2021). Additionally, it can cause lower
morale in lower-level managers who are given these budgets. Companies
can remedy these issues with a decentralized process. Lower-level
managers can set budgets that are relevant to their departments, which
boosts morale and can train them to upper-level management (Garrison,
Noreen, & Brewer, 2021). Once lower-level managers have prepared
their budgets, executives can review them, allowing an opportunity to
adjust them to be more in line with the strategic vision, and it gives
them a chance to prevent managers created too much budgetary slack
(Garrison, Noreen, & Brewer, 2021)Posted 3The more buy-in owners and managers can get with their staff the better.
I think decentralizing as much as possible helps with gaining critical
buy-in and helps the organization run better. On the flip-side,
centralized management tends to create more doers just doing what
they’re told instead of advancing the organization (generally speaking).
Decentralizing budgets and other decision making authority also helps
ownership and senior leadership more effectively run the organization.
Senior leaders can’t be in all places at all times, so having a team
able to make effective decisions within a set of boundaries allows for
business to run more smoothly. Whereas centralized budgeting and
decision making potentially creates bottle necks when decisions need to
be made or money to be spent. As always, when to implement one method
over the other depends on the type, size, scalability, and strategy of
the business. In reality though, there should be a balance of both:
centralized strategy and major goals, and decentralize the details that
can be controlled and managed at the manager level!

Tags:
cost accounting

Decentralization

centralization

Advance Managerial

Effects on the Company

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.