A rapidly expanding retail organization continues to be tightly controlled by its original small management team. Which of the following is a potential risk in this vertically centralized organization?
A rapidly expanding retail organization continues to be tightly controlled by its original small management team. Which of the following is a potential risk in this vertically centralized organization?
A vertically centralized organization, where decision-making is concentrated in a small management team, can indeed lead to suboptimal decision-making. This happens because the small team might not have access to all the relevant information from different parts of the rapidly expanding organization. As a result, their decisions may not fully reflect the needs and conditions of various business units, leading to less effective overall outcomes for the organization.
C is correct, decision made by small management team may not fully capitalize on the insights and local knowledge of those working closely with specific operations, regions, or products.
I think A is correct. Why a vertically centralized organization has a risk to make suboptimal decisions?