A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralized business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

The Company now needs to shift from centralization to Decentralization because it has grown in size. Decentralization will help the company in the following ways:-
• It will enable the sub ordinates to take minor decision which will reduce time and increase efficiency.

• It also develops managerial talents.

• Major policies will be taken by the higher authorities regarding performance of the business which will gradually catch up with the market.

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Question

A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralized business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

The Company now needs to shift from centralization to Decentralization because it has grown in size. Decentralization will help the company in the following ways:-

• It will enable the sub ordinates to take minor decision which will reduce time and increase efficiency.

• It also develops managerial talents.

• Major policies will be taken by the higher authorities regarding performance of the business which will gradually catch up with the market.

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Philoid · Accepted Answer

The Company now needs to shift from centralization to Decentralization because it has grown in size. Decentralization will help the company in the following ways:-

• It will enable the sub ordinates to take minor decision which will reduce time and increase efficiency.

• It also develops managerial talents.

• Major policies will be taken by the higher authorities regarding performance of the business which will gradually catch up with the market.