Global Business Plan the Issue

Global Business Plan

The issue of centralization and decentralization regarding organizations is discussed amongst both theoreticians and practitioners in diverse business fields. One cannot state that centralization is better than decentralization or the vice versa. The direction that the company in case intends to follow depends on the company's field of activity, its size, its mission, goals and objectives.

When a company's decisions are taken by the top management without much input from their subordinates, it means the company is centralized one. Centralization is applied by companies where the general trend is to consolidate power together with decision-making abilities at the top management level (Pieniazek, 2007).

Decentralization assumes that decisions are made on all management levels within the company. This way, each division of the company can decide on matters that directly concern it.

This is also the case of Niche Tools, Inc. The company is located in Australia one of its general objectives consists in providing high quality products for the timber processing activity in the region. These products are intended to reduce the time and labor of certain activities, including stripping the bark from the trees, gathering herbs and foods, and other activities regarding timber processing. The objective is to increase the amount of bark, food, and timber that the tribesmen can process per day.

Given the circumstances, Niche Tools must function as a decentralized organization. In this company's case, top management only establishes a general direction that the company must follow on medium term and long-term. Also, decisions regarding short-term periods are taken during periods of crisis, where the top management must step in and put things in order.

The general strategy and the afferent objectives are established by the top management in collaboration with other departments. For example, financial objectives are established by the financial department based on the requirements of top managers and the possibilities of the company, in accordance with the opportunities of the environment.

The general direction that the company must follow regarding human resources is established by the HR responsible in collaboration with the chief of each department or field work division. This is where decentralization can be very well observed in this company's case.

Each division manager knows what the division's objectives are for a specified period of time, and assesses the number of personnel required for achieving these objectives. They communicate the HR situation to the HR responsible who then acts in accordance with the information received from the division managers.

The business in which Niche Tools operates requires a lot of field work. This means that people at the base observe better and faster any problems or needs that might interfere with the company's activity. Therefore, information within the company circulates mainly from the bottom to higher levels. Top managers make their decisions based on the information received from their subordinates.

The company's top management mainly assesses the conditions of the external environment. They negotiate with suppliers, they analyze competitors in order to develop competitive advantage. Also, they analyze other components of the external environment, like the economic, demographic, geographical environment and their likely influence on the company's activity.

Top managers conduct analyses in order to identify the company's strengths and weaknesses. They identify opportunities that can be exploited by the company. Also, they must identify any potential threats that might affect the company's activity, and develop manners in which they can be avoided or counteracted. Based on their findings, top managers develop the tactic and the strategies that they consider to be suitable for the company in the context in case.

The employees that work on the field are able to observe any events that could lead to changes regarding the company's tactics and strategy, since the top managers have little contact with the actual field work. These employees further report their observations to their supervisors, the division managers, in case they have not made these observations themselves.