Discuss Centralized Decision Making.

Discussion: Centralized Decision Making.

59Information Systems and Organizational Design

relationships. IS support decision rights by getting the right information to the decision maker at the right time and then transmitting the decision to those who are affected. In some cases, IS enables a centralized decision maker to pass information that has been gathered from operations and stored centrally down through the organization. If information systems fail to deliver the right information, or worse, deliver the wrong information to the decision maker, poor decisions are bound to be made.

Consider the case of Zara from the last chapter. Each of its 1,000 stores orders clothes in the same way, using the same type of handheld devices, and follows a rigid weekly timetable for ordering, which provides the headquarters commercial team with the information needed to manage fulfillment. Many other large retailers make the decision centrally about what to send to their stores, using forecasting and inventory control models. However, at Zara, store managers have decision rights for ordering, enabling each store to reflect the tastes and preferences of customers in its localized area. But, the store managers do not have decision rights for order fulfillment because they have no way of knowing the consolidated demand of stores in their area. The decision rights for order fulfillment lie with the commercial team in headquarters because it is the team that knows about overall demand, overall supply, and store performance in their assigned areas. The information from the commercial team then flows directly to designers and production, allowing them to respond quickly to customer preferences.3

Incentives The monetary and nonmonetary devices used to motivate behavior within an organization

Cultural variables

Values The set of implicit and explicit beliefs that underlies decisions made and actions taken; reflects aspirations about the way things should be done

Locus The span of the culture, i.e., local, national, regional

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