What is sub optimization, and what factors contribute to it in a decentralized firm?

Wayne Litcomb is the president and chief operating officer of Litcomb Electronics. He founded the company and has led it to its prominent place in the electronics field. He has manufacturing plants or retail outlets in 40 states. Litcomb is finding, however, that he cannot keep track of things the way he did in the past. Discuss the advantages and disadvantages of decentralizing the firms decision-making activities among the various local and regional managers. Also discuss what functions Litcomb might want to be performed centrally and why he would choose these functions. Why are responsibility reports prepared? Is it appropriate for a single responsibility report to be prepared for a division of a major company? Why or why not? What is sub optimization, and what factors contribute to it in a decentralized firm? Why are support department costs often allocated to operating departments? Is such an allocation process always useful from a decision-making standpoint? How might support department cost allocation create a feeling of cost responsibility among managers of operating departments? The four criteria for selecting an allocation base for support department costs should be applied equally. Discuss the merits of this statement.

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