The president of Silicon Company has just returned from a week of professional development courses and is very excited that she will not have to change the organization from a centralized structure to a decentralized structure just to have responsibility centres. However, she is somewhat confused about how responsibility centres relate to centralized organizations where a few managers have most of the authority.
Required: Explain how a centralized organization might allow for responsibility centres.

Question

Quizplus · Accepted Answer

The Answer is It does not make any difference what type of organizational structure exists when it comes to defining responsibility centres. If a centralized organization desires to hold its managers responsible for their actions it can design a reporting system that assigns all costs and revenues to their controllable managers. It's just that in a centralized organization, each manager may have more items to control than are reasonably possible.

The President of Silicon Company Has Just Returned from a Week