Understanding the main points. 1. According to the survey conducted in the United States, what is the main

6. They are using out-dated plant and machinery to manufacture their products.

2. Word building.

Complete the following sentences with the correct form of the words in italics.

1. rely

  1. He is a very reliable worker.

  2. I am ……………….. informed that he’ll be promoted soon.

  3. Her main quality is her ……………….. .

  4. My assistant is someone who can be ……………….. on.

2. criticize

  1. The report has been received very ……………….. by top management.

  2. The Personnel Director is an outspoken ……………….. of our

       reorganization.

  3. I thought her ……………….. were unfair and not based on fact.

3. skill

  1. The Chairman was ……………….. at avoiding answering awkward

      questions.

  2. The ……………….. workers in the Production Department are well-paid.

  3. To be a good manager, you need many ……………….. .

  4. The ……………….. workers in our company are the lowest paid because

       they need no training for their jobs.

4. employ

  1. Most ……………….. in an organization can benefit from training.

  2. ………………… is almost 8% in my country – that’s far too high.

  3. The ……………….. are entitled to various social security payments.

  4. He’s fairly old and hasn’t had a job for years. I’d say he’s virtually ……. .

5. sure

  1. Performance appraisals help to ……………….. that promising staff are not

      overlooked for promotion.

  2. At my interview, my boss ……………….. me that I had a bright future

      in the company.

6. able

  1. This young trainee has considerable ……………….. .

  2. Due to our ……………….. to get certain supplies, we lost the order.

  3. Because of a production hold-up, we are ……………….. to provide the

      product.

  4. In my work, I am ……………….. assisted by my secretary.

7. decision

  1. Being a currency dealer in a bank, she has to make quick decisions and be

      very ……………….. at all times.

  2. Because we were ……………….. , we wasted time and lost the contract.

  3. I am still ……………….. whether to leave my present job but I must

      make up my mind soon.

DISCUSSION

Read about Sharp and Marsden Ltd and then discuss the questions below.

Sharp and Marsden Ltd. Is a group of menswear stores. Its clothes, which are stylish and expensive, are aimed at the fashion-conscious eighteen to thirty-year-old buyer. The group is expanding fast in the UK. It has ten stores at present in large cities, and plans to open many more in the coming years.

The group faces a difficult problem. The directors disagree about how the group should be organized in the future. Some of the directors – Group A – believe that the stores should have a great deal of autonomy. Each store manager should be given considerable independence and responsibility. The other directors – Group B – have other ideas about how the stores should be organized.

Group A want the stores to have responsibility for things like the buying of goods, stock control, warehousing, selection and training of staff, advertising and promotion and payment of salaries and bonuses. The tasks of Head Office would be mainly to set profit targets for the stores and maintain financial controls. Head Office would provide some back-up services, such as market research, information technology, and the keeping of personnel records. Store managers should be allowed to get on with the job of making a profit. As long as they did this, Head Office should not interfere.

Directors in Group B, however, see things differently. They think that Head Office should have more control and more direct involvement in the running of the stores. This group would like Head Office to do the buying of merchandise for all ten stores. Stocks should be held in large regional distribution centres, and supplied to the individual stores when needed. Head Office would carry out such functions as selection and training of staff, salary administration, advertising and promotion, etc. In addition, the Finance Department would keep a close check on the performance of each store. Also, Head Office would keep tight control over all aspects of the stores’ work. According to Group B directors, the task of the manager should be to run the store under the close guidance of Head Office.

1. What are the advantages and disadvantages of each system of organization?

2. Which system would be better for Sharp and Marsden Ltd? Why?

3. Give examples, if you can, of businesses which have either type of organization.

READING

Alfred Sloan (1874-1966) was an outstanding figure in the business world of America. He worked for forty-five years in the General Motors Corporation (GM). From 1923 to 1946, he was Chief Executive of the corporation, and he stayed on as Chairman of the Board until 1956. In 1963, Sloan published an account of his career with the organization, calling his book My Years with General Motors. In it he described some of the management problems he had had, and how he had dealt with them.

According to Sloan, every large enterprise has to face one major problem. It must decide how much it wishes to centralize or decentralize its business. What are centralization and decentralization? The terms refer to the degree of authority that is given to various levels of management and to the divisions of an organization. Authority may be defined as the right to make decisions, to direct the work of other people and to give instructions. When we talk about centralized and decentralized businesses, we mean the extent to which authority has been passed down – delegated – to lower levels or divisions of an organization.

When an organization is centralized, a limited amount of authority is delegated. If it is decentralized, a greater degree of authority is given to staff and divisions. For example, in a centralized company, Head Office may make most of the decisions concerning recruitment, the purchase of equipment and product lines. It may also be responsible for areas such as advertising, promotion and research and development.

In a decentralized company, the divisions will have wider responsibilities and authority. Divisional managers will, for instance, have authority to purchase expensive equipment and authorize substantial salary increases. In decentralized organizations, more important decisions can be made at lower levels. There are fewer controls from Head Office.

To sum up, a centralized business has a “tight” structure, whereas a decentralized business has a “looser” structure.

No enterprise chooses complete centralization or decentralization. In practice, it tries to find a balance between the two forms. The problem for organizations is to decide how much decentralization they want, and what kind?

When Alfred Sloan took over the running of General Motors, he inherited a corporation which was already decentralized. The previous Chief Executive, William Durant, had founded the company. Durant brought many businesses into General Motors and gave their managements a lot of independence. Alfred Sloan believed in decentralization and practiced it in the corporation. He made sure his division managers (e.g. those in charge of Cadillac, Buick and Chevrolet) had self-contained division. Each handled its own manufacturing, marketing, staff recruitment etc. However, Sloan did not give the divisions complete freedom. He wanted Head Office to coordinate action and keep a measure of control over the units. Therefore, he decided that certain functions would be controlled centrally.

Very early on, he realized that Head Office would have to control finance more tightly. When he arrived, each division controlled its own cash, having its own accounts and paying its own bills. This meant the corporation was getting little direct income. When it had to pay things like taxes and dividends, the treasurer used to ask the divisions for cash. Sometimes, he had to go to a division, first talk about general business matters, and then later on bring up the subject of cash. The division’s staff would often show surprise at the amount asked for, and delay handing it over! Clearly, with that system, cash was never available where and when it was needed in the corporation.         

Alfred Sloan set up a new, centralized cash system. Cash accounts were controlled by the financial staff at Head Office. Cash receipts were made to them. And they authorized payments made from the corporation’s accounts. With this system, money could be quickly transferred to units needing it. The central staff also decided how much would be kept in local accounts, to be used by the divisions.

As time went on, Alfred Sloan and his top managers worked out a balance between central control and delegated authority. Head Office controlled things like cash, capital expenditure and stock control. In addition, it controlled the profitability of divisions by developing measures of efficiency. But the divisions had a great deal of autonomy, being responsible for designing, making and marketing the cars.

Nowadays, decentralization is the fashion, the “buzz” word. Believers in decentralization argue along these lines: they say that it helps to “develop people” because staff get more responsibility, make more decisions, and so gain experience for later managerial positions. If an organization is too centralized, people become robots – which is demotivating. Decentralisation allows top managers to delegate jobs, so these managers will have more time to work on setting goals, planning corporate strategy and working out policies. The strongest argument for decentralization is that, in competitive conditions, the “looser” companies will be more flexible, better able to make quick decisions and to adapt to change.

In a famous book on management, In Search of Excellence, the writers argue that America’s best-run companies know how to balance control and delegation. Excellent companies, say the authors of the book, have “loose-tight” characteristics. On the one hand, they have a simple structure, generally based on product divisions which also have great autonomy. These divisions have control over functions like product development, purchasing, finance, personnel, etc. On the other hand, the centre of these excellent companies – top management – provides “firm central direction”. It continually stresses the “core values” of the organization, e.g. quality, need for innovation, service, informal communications and so on. These central values provide the context within which staff can be creative, take risks – even fail.

It is normal for people to like independence, to dislike control. The more educated staff are, the more they will want to make decisions, to have authority. However, it is not easy to have more decentralization if the right staff are not available. For example, if you own a chain of stores, it may be difficult to give more authority to employees. The employees may be used to following rules, so they may not be able to take decisions, to show initiative. As Charles Handy, the expert on organization says, “It is one thing to prescribe diversity, decentralization and differetiation. It is another to manage it”.      

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