Langsam,Inc

question 100

Essay

Langsam,Inc.has used a decentralized form of organizational structure for the past five years.The controller,Ms.Terrance,has noticed that some of the divisions are still using fixed assets that are fully depreciated and that there has been little acquisition activity in these divisions.Coupled with this are very high ROIs,especially when compared to the other divisions that seem to have a regular program of disposition and replacement of fixed assets.She takes her concerns and observations to the Financial Vice President who says he will review her findings and look into the problem.Required:
1)What are the potential negative effects of decentralization?
2)Specifically discuss the issues involved in suboptimization.

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Definitions:

Parable of the Good Samaritan

A story told by Jesus in the Bible, which illustrates the importance of showing kindness and compassion to all people, including strangers.

Time Pressure

The stress experienced when the amount of time available to complete a task is perceived to be insufficient.

Gossip

Informal and often unverified conversation or reports about other people, typically involving details that are not confirmed as being true.

Cooperative

Pertaining to the willingness to act together with others for a common purpose or benefit.