Decentralized businesses can have three responsibility centers that must be evaluated differently because of their functions.Describe the three responsibility centers and give an example of each from your work.Give an explanation about how each is evaluated.Tell us why you would prefer to work in a centralized or decentralized organization.Discuss which type of responsibility center you would prefer to manage and why.

Decentralization is the division of an entire company into smaller units. These units achieve some form of autonomy as these are managed by people from their own departments. In a decentralized organization, the lower level managers have the authority to make operating decisions. The day-to-day operations of these units are left to lower level managers. Such a system frees top management from dealing with daily operations. This allows them to focus on important management functions like strategic planning, dealing with major customers and suppliers, making investment and financial decisions, etc. The three responsibility centers are: Cost Centre- Accounts department, Human resource department Profit Centre - Sales Department o Investment Centre- Subsidiary entity of the Given organization Evaluation of each responsibility Centre: Cost Centre- The cost Centre refers to the department that are not concerned with revenue generation. Hence the managers shall be evaluated on their ability to manage the cost. In order to determine the cost Centre, we shall determine is revenue is any of the factor. The department shall be a cost Centre if revenue is not the responsibility of the managers of the given department. Profit Centre- The managers of profit Centre departments are responsible not only for revenue generation but also for managing of costs in order to maximize the profits. Investment Centre- Managers here are responsible for the asset management and profit maximization that is generated from those assets. These managers shall have ability to approve construction of new factories, stores, purchases of major equipment. One of the advantage of decentralization is better decision-making. This operates on the presumption that lower level managers possess more knowledge and experience as to how their departments operate. They are more acquainted with the common problems faced by their departments. Hence, they make better, more timely decisions. Further, this sense of autonomy empowers lower level managers and motivates them to contribute more to the organization's overall goals. A potential problem associated with decentralization is management losing control over the company's operations. Lower level managers who are given power may mismanage or abuse their authority. Hence we shall prefer to work in decentralized organization.