Apogee: Decentralisation, A Case Study!

718 words - 3 pages

The following appeared in a memorandum from the business department of the Apogee Company."When the Apogee Company had all its operations in one location, it was more profitable than it is today. Therefore, the Apogee Company should close down its field offices and conduct all its operations from a single location. Such centralization would improve profitability by cutting costs and helping the company maintain better supervision of all employees."Discuss how well reasoned . . . etc.The location of manufacturing is of prime importance for any firm, because if a firm is strategically located then it can be competitive in the market and provide goods at a competitive price. Location of firm can make a major difference in competition. If a firm is reasonably small size or of medium size then the location of the firm may be of little importance as compared to large firms. For a multination or transnational corporation the location of the firm is very important. A multinational firm cannot operate by manufacturing in one location only as the Tax norms vary from state to state within the same country and vary from country to country.It would not be feasible for a firm to produce at one place and supply all over the world, this is because of various reasons like the manufacturing capacity, market presence of a firm in other area, after sales service, transportation hassle of transporting day in and day out to other location. Hence it is advisable that if a firm or its product has substantial business in a particular region, then it should set up its operations considering various factors like the labor norms, competitors' etc. Moreover if a firm sets up its operations in a place and then withdraws from that place, then it shows the inability of the firms management to foresee such situation and may bring bad reputation and loss of business to some extent.Apogee should re-evaluate the situation; it should analyze the reason for high cost and lack of supervision in that area. It can bring about identical supervision and cost effectiveness in both the areas of operation, the cost of winding up from...

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