An 8 page paper that discusses a case provided by the student. A company has four autonomous divisions. In this case, one division is giving a bid for a project that is much higher than an outside company gave. The essay discusses the manager's justification along with the issue of transfer pricing. Recommendations are provided. Bibliography lists 3 sources.
Name of Research Paper File: MM12_PGwkhm.rtf
Unformatted Sample Text from the Research Paper:
present situation: Tumut, which makes cardboard boxes, Craft, which deals with paper and Wagga, which produces liner board and other products. Top management moved to this decentralized organizational structure several
years ago and they believe it has been successful in improving the companys overall profitability and competitive position in the industry. As a point of information, Tumut purchases almost all
of the material used from the different divisions in the company. Tumuts sales, however, are primarily to outside customers. This is not an uncommon structure for organizations, particularly large organizations
(Nickerson and Zenger 2002). However, this type of structure is not without its challenges, as the managers at Wickham are discovering. As Nickerson and Zenger point out, "With a decentralized
organizational structure you can achieve flexibility and innovation and with a centralized organization you have control and coordination" (Nickerson and Zenger 2002). Neither model of organizational structure allows a company
to have both control and coordination and flexibility innovation. This is one of the reasons companies will often flip-flop between the two structures, using each to achieve certain goals and
objectives (Nickerson and Zenger 2002). As Gavious commented, decentralized organizations have trouble evaluating and monitoring the performance of unit managers (n.d.). Furthermore, if the organization is really going to maximize
its performance and coordinate the efforts of the different divisions, there needs to be some sort of centralized evaluation process (Gavious n.d.). One of the issues corporations face when
using a decentralized autonomous model is that of one division purchasing materials from another division within the company. The issue that has arisen with Wickham is between the Tumut Division
and the Craft Division. Tumut spent months designing and determining production methods for a very special box the Craft Division asked it to design as a display box for one