A Centralized Structure Transforms Home Depot

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Case study 1 A Centralized Structure Transforms Home Depot Q 1. In what ways can (a) decentralizing and (b) centralizing authority help an organization like Home Depot to improve its performance? Answer: The home depot case depicts a clear picture of how modification of an organization structure is essential for its success in highly competitive environment. The importance of decentralizing or centralizing authority in improving the performance of an organization is discussed below:- (a) Decentralizing – The decentralized structure of an organization, which the home depot previously was, helps to take advantage of division of labor by sharing decision making across the organization. It also empowers and allows them to improve their performance by being able to act to improve deficient or inefficient areas immediately without approval from the top of the organization. In other words, it helps in motivating the managers to act in an entrepreneurial way, and gives them the freedom to order or stock the products that suits the need of local and regional customers. Inventory management system is also better at the bottom level. (b) Centralizing – The centralized organization structure which lead to the success of home depot, helps to consolidate power and decision making abilities at the top of the organization chart. It helps to coordinate the employees, streamline and centralize activities so that the organization is stable and is helpful for companies which are facing a crisis/problem. As seen in the case of home depot, it helped to create centralized chain of command and uniform, standardized operating procedures to get the job done quickly and efficiently. The sophisticated organization wide IT system provided store-by-store performance comparisons and helped the top management to get real time information on the performance of the stores. Q2.

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