Q1. You're the vice president of a large company that makes outdoor furniture for decks, patios, and pools. Each product line and the firm itself have grown substantially in recent years. Unfortunately, your success has attracted the attention of competitors, and several have entered the market in the last two years. Your CEO wants you to determine how to cut costs by 10 percent so that prices can be cut by the same amount. She's convinced that the move is necessary to retain market share in the face of new competition.

You've examined the situation and decided that you have three options for cutting costs:

Begin buying slightly lower-grade materials, including hardwood, aluminum, vinyl, and nylon. Lay off a portion of your workforce and then try to motivate everyone who's left to work harder; this option also means selecting future hires from a lower-skill labor pool and paying lower wages.

Replace existing equipment with newer, more efficient equipment; although this option entails substantial up-front investment, you're sure that you can more than make up the difference in lower production costs.

1.Carefully examine each of your three options. In what ways might each option affect other parts of the organization?

2.Which is the most costly option in terms of impact on other parts of the organization, not in terms of absolute dollars? Which is the least costly?

3.What are the primary obstacles that you might face in trying to implement each of your three options?

4.Are there any other options for accomplishing your goal of reducing costs?(40)

Q2. Managers often find it necessary to change an organization's degree of centralization or decentralization. Begin this exercise by reflecting on two very different scenarios in which this issue has arisen:

Scenario A. You're the top manager in a large organization with a long and successful history of centralized operations. For valid reasons beyond the scope of this exercise, however, you've decided to make the firm much more decentralized.

Scenario B. Assume the exact opposite of the situation in Scenario A: You still occupy the top spot in your firm, but this time you're going to centralize operations in an organization that's always been decentralized.

Now do the following:

1. For Scenario A, list the major barriers to decentralization that you foresee.

2. For Scenario B, list the major barriers to centralization that you foresee.

3. In your opinion, which scenario would be easier to implement in reality? In other words, is it

probably easier to move from centralization to decentralization or vice versa? Whatever your

opinion in the matter, be ready to explain it.

4. Given a choice of starting your career in a firm that's either highly centralized or highly

decentralized, which would you prefer? Why?(40)

Q3. Describe some new forms of working arrangements. How do these alternative arrangements

increase motivation?(20)