The Benefits and Costs of Decentralized Decision Making. Centralizing as a Cost.Cutting Approach One of the disadvantages of decentralization discussed in the text is the possiblity of increased costs (perhaps because of duplication of effort that can occic. Some firms have realized this and have centralized certain functions. For example, Pernod Ricard SA (a French. beverage company) purchases casics for many of its different products. Initially, casks were purchased separately for each of the brands. However, the company decided to centralize the purchase of casks from a central location in the U.S. The move helped the company shave off 2% to 3% of expenses ted to indirect procurement... Other companies that have centralized certain business activities include PayPal, Incorporated and the Royal Bank of Canada. In addition to the savings from centralizing the service function, Mary companies atso opt to place these hubs offshore in lower-cost countries, which can save 20\% to 35\%. However, not all companies believe that centrelizing functions is the right choice for their organization. For example, Huntington Ingalls Industries, incorporated, a miltary shipbullding company, has three separate units, each with their own services. Our philosophy is to have clear accountability to each of those sector presidents for their proft and loss, and that includes programmatic and financial performance... Many companies, even those that choose to centralize, recognize that there are lost opportunities when, for example, finance staff are not located with operating managers. As one manager notes. it's not all positive... Certainly you get efficiencies, but you also lose connectivity. Finally, there are other risks associated with centralization, especially to locations away from primary company operations. As described in the Business Application, "The Risks of Outsourcing a Service. Center," in Chapter 11, when unexpected events (such as the pandemic in 2020) arise, there may be regulatory or logistical issues in maintaining adequate services to the operating units. Required: What best describes the benefits that the companles that chose not to centralize likely hoped to recelve by keeping certain staff functions, such as finance, decentralized? Foster revponse Wher vse of managemenits time Training. evevuetion, the motivation of local manegers