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In the article ‘Is your growth flying blind’ by Baghai, Smit, and Viguerie, they say “A question executives must always ask themselves is whether the benefits of centralization genuinely outweigh the benefits of focus and unambiguous accountability” (2009). I think this is a good question for all groups in Management 300 as it is generally the CEO that has the final say on the amounts of money put into each area. This week we desperately needed to make a profit after being negative for the previous two weeks and therefore we had a goal to cut costs, but should this decision be left to the CEO in which areas need to be cut, or should we all be accountable for our own departments?

A common answer for CEOs is “don’t I employ managers to look after the business units so I can concentrate on the big picture?” We agree that all CEOs need breadth of vision, but they also need a clear view down through the organization which results in them often needing to know the finer details of each department. As I touched on last week our group has been working individually and passing on how much we think we need every week. This week we took a slightly more centralised approach with everybody contributing on ideas to cut costs.

With the help of the CEO, we decided to cut most of our costs in terms of marketing for each product. She felt that we had spent too much money on marketing individual products and that this is one way to try achieve better profits. We cut off several million which, although may have resulted in lower sales and therefore lower profits, we managed to achieve a profit of around $1 million which we were happy with (compared to our previous losses anyway). We also didn’t make a new product this week which also may have contributed.

I think this centralised decision-making helped us as each department thinks they can normally do better if they decide on their own amounts to spend. We had done this throughout the course (always with the help of finance department I might add) but it was still up to us on how much we wanted to spend. It certainly comes down to communication with other departments and the CEO but personally I feel the centralised control works best for this simulation as we aren’t a big group and therefore this allows us to all be on the same page and we can compare easily what areas need improving. I think this will encourage me to push for more centralised control (in terms of cost cutting at least) so that we can continue to increase our profit margin.

 

2 Comments

  1. Hi Timothy, I enjoyed reading your journal, this is definitely an improvement from Week 4's and Daughlin's structure is much more obvious than the previous one. I think you can improve this further by linking it to the readings, for example, "but they also need a clear view down through the organization which results in them often needing to know the finer details of each department." - You can go into this to add a bit more depth, like how does those finer details help? Hope this helps, Thanks (smile)

  2. Hi Timothy

    I think that the last time I gave you feedback I was not specific enough about the critiques I made. I will try to give you more applicable feedback this time.

    You have written quite an interesting and detailed journal entry here.  However, I would say that in the contexts of these learning journals you begin by not making a clear distinction as to what the problem was for you specifically, and for the most part have only discussed your team's activities. This means that I, for the most part, only get a sense of what occurred in the group context. This means that I do not get a great sense of what you learnt specifically, and therefore what you could personally change for the future. Even though you do conclude with your own opinion, which is well justified and shows a good critical acknowledgement of the decision making process, the initial introduction of the problem and later discussion of only your teams experiences limit the effectiveness of the conclusions which you reach.

    I would say that you could have probably benefited from making more references to the readings, listing their relevance to your learnings from the week. For example, some of what was mentioned in the Davenport reading could have been relevant in the context of your journal, as a lot of the discussion relates indirectly to patterns of corporate team work and decision making. This could potentially be used in your centralised decision-making argument towards the end, adding more critical engagement to the description of your team's activities. 

    Overall I would say that you have written a very descriptive summary for your learning and journal, but could benefit from making it more relevant to you specifically, and with further analytical depth in relation to the experiences that you had. Good luck for the rest of the semester