Decentralizing decision rights marries authority with local knowledge.This would seem to be a good thing,but a problem that may arise is that:
A)local management may conserve central management's time and effort.
B)local knowledge may allow local managers to tailor prices and services to suit local needs.
C)lack of local incentives may mean that local managers do not work to maximize firm value.
D)local managers may have too strong a corporate identification.

Question

Quizplus · Accepted Answer

The problem that may arise with decentralizing decision rights is that lack of local incentives may mean that local managers do not work to maximize firm value. While it is true that local management may conserve central management's time and effort and local knowledge may allow local managers to tailor prices and services to suit local needs, the lack of local incentives is the most significant problem that may arise. This is because if the local managers do not work to maximize firm value, it can harm the overall performance and profitability of the organization.

Decentralizing Decision Rights Marries Authority with Local Knowledge