A Disadvantage Associated with Decentralizing the Decision-Making Process in an Organization

question 38

Multiple Choice

A disadvantage associated with decentralizing the decision-making process in an organization is that:

• A)the CEO is likely to make suboptimal decisions.
• B)the cost of transferring information between the CEO and other decision makers can be high.
• C)it makes the three legs of the architectural stool of an organization inconsistent with each other.
• D)it prevents firms from benchmarking other firms to determine value-enhancing policies.

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Definitions:

Slope

The rate at which a dependent variable changes with respect to an independent variable in a linear relation.

API Gravity Degrees

An oil industry standard that compares the density of petroleum liquids to that of water, determining whether they are heavier or lighter.

Outliers

Observations in data that do not follow the pattern of the majority, significantly differing from other observations.

Covariances

Covariances are measures that indicate the extent to which two random variables change in tandem. A positive covariance indicates that two variables tend to move in the same direction.