ACCA SBL Syllabus H. Innovation, Performance Excellence & Change Management - Internal & External Relationships - Notes 4 / 9
Internal
Centralisation v De-centralisation
Head office decision making v delegated decision making
| Centralisation | Decentralisation |
|---|---|
| Ensures corporate objectives met | Better local knowledge |
| Better coordinated decisions | Motivates managers |
| Easier in a crisis situation | Quicker and more practical in large, complex firms |
Features of a centralised organisational structure:
A dominating head office
Working from a central headquarters
External
Strategic alliances, Joint ventures, Value Networks (all seen earlier) now let’s look at a different external relationship
Outsourcing
Common in the building industry - work carried out by a sub-contractor on your behalf
Often happens elsewhere, mostly in non-core activities e.g. Security, Payroll etc
| Reasons for | Problems with |
|---|---|
| Allows firm to concentrate on core competencies | Loss of control over the work |
| Outsource the work to an organisation whose core competency is that work | Managing the relationship |
| Allows specialists to work when otherwise couldn't afford the ability to pay them full time | Not as fully committed / flexible as own staff |
Offshoring
This is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting.
Typically this refers to offshoring to a cheaper labour country
Shared services
This is the provision of a service by one part of an organisation is shared and the providing department effectively becomes an internal service provider