Burton Electronics produces radios, computers, and navigation systems. Although all high level decisions are made at company headquarters by top management, rapid expansion and increasingly specialized products have caused the company to consider decentralizing into three divisions. Each division manager would be responsible for costs, revenues, and investments in assets.

a. How should the company classify the three divisions, as cost centers, profit centers, or investment centers? Explain.

b. What are the potential advantages of decentralizing?

c. What are the potential disadvantages of decentralizing?