How is decentralized management within an MNC advantageous?

Answer 1

• Decentralized companies typically categorize their business segments into cost centers, profit centers, and investment centers--depending on the responsibility of the segment managers of the segment.
• Firms that are decentralization in the home country may exercise tighter control over foreign divisions, at least until they gain more experience with their overseas operations.
• Quality of information is better and communication system become more streamline, hence quality of decision making can be improved
• Local managers are able to take appropriate decision on legal system and customs
• Decentralization allow org. to take advantage of specialized knowledge ex: loctite has local manger run their own division in particular marketing and pricing are under local control.
• Language is not a barrier for local management
• Local management is more timely responsive in decision making.
• Give the lower level manger in the home country a chance to develop managerial skills, foreign subsidiary mangers and gain valuable experience.
• Decentralization provides lower level managers with vital experience in making decisions. Without such experience, they would be ill-prepared to make decisions when they are promoted into higher level positions
• Added responsibility and decision making authority often result in increased job satisfaction. Responsibility and the authority, that goes with it makes the job more interesting and provides greater incentives for people to put out their best efforts
• Lower level managers generally have more detailed and up to date information about local conditions than top managers. Therefore the decisions of lower level management are often based on better information.