Organizations often adopt either a decentralized or centralized approach across their functions, with a balanced approach being most effective. Decentralization allows for fewer management layers and empowers teams to develop their own practices, exemplified by companies like Google. Managers must consider income tax implications when selecting transfer-pricing methods for multinational operations.

1. A. Organizations typically adopt a consistent decentralization or centralization philosophy
across all their business functions. Do you agree or disagree? Explain.
B. define decentralization and provide an example of an organization that has successfully
implemented this policy.
C. How should managers deal with income tax issues when choosing a transfer-pricing
method that involves multinational considerations?
D.
Solution
A. Yes, I completely agree with this Statement. Every Organization adopt both the Philosophies.
Organization must establish whether its decision-making policies are centralized or
decentralized. Highly centralized companies tend to have more bureaucratic traits, while highly
decentralized companies tend to appear more out of control. Both extremes appear engulfed with
inefficiencies and waste. High performance work systems seem to have more decentralized
decision-making features, yet their culture, formed around their philosophy and values, is highly
centralized. Creating a centralized philosophy and value system allows employees to become
more empowered to make their own decisions, leading to decentralization.
B. Decentralization is characterized by relatively few layers of management, with few
centralized policies and procedures. Each group, whether a division, location, or team, creates its
own practices based mostly on the organization