Question

The global economy, globalization, rapid technological change, and the increasing importance of knowledge are creating the need to

a. delegate strategic responsibilities to employees "closer to the action."
b. split responsibilities between the CEO and the board of directors as a result of corporate scandals triggered by unethical CEOs.
c. re-centralize the responsibility for strategy to the CEO.
d. expand the strategic responsibilities to all organizational stakeholders.

Answer 1

The pressure of globalization and technological advances necessitate businesses to consider how they allocate strategic responsibilities, either by delegating closer to the action, centralizing around CEOs, or involving a broader range of stakeholders. Choices made affect organizational responsiveness, innovation, and transaction costs, with factors like outsourcing, ethical considerations and international competition influencing these decisions.

Step-by-step explanation:

The global economy, rapid technological change, and the increasing importance of knowledge require organizations to make important decisions on how they structure their managerial responsibilities. Given the various ways through which companies can respond to these changes, some may choose to delegate strategic responsibilities to employees “closer to the action,” ensuring that those who are directly involved in specific work streams have input into decisions affecting their area of expertise. This is believed to enhance responsiveness and innovation within the business.

Alternatively, there could be a tendency to re-centralize the responsibility for strategy to the CEO, or a splitting of responsibilities between the CEO and the board of directors to counteract corporate scandals. However, these approaches could potentially stifle flexibility and rapid decision making. Lastly, expanding strategic responsibilities to all organizational stakeholders may democratize decision-making and increase buy-in, but also could raise transaction costs such as time spent on reaching consensus.

Factors like globalization and technology shifts have increased competition and the pace of change, making it necessary for businesses to consider reorganizing their structures for better agility. Moreover, the trend of businesses moving to countries with cheap labor and weaker regulations as a result of globalization adds to the complexity of strategic responsibility allocation, as ethical considerations and international relations play a bigger role in business decision-making.