Page 24 - Articles Written by JGJ EF DPS

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As a result, Sweet decentralized the company into twelve independent
domestic and foreign divisions, each with complete profit responsibility.
However, after this reorganization was in effect, he began to feel that the
divisions were not adequately controlled. There developed considerable
duplication in purchasing and personnel functions, each division manager
ran his or her operations without regard to company policies and
strategies, and it became apparent to Sweet that the company was
disintegrating into a number of independent parts.

Asked what the CEO has done in this paragraph the students answer
that he has created 15 independent domestic/foreign divisions each with
profit responsibility but this did not work. Pushing the students on why
this is so it is possible to draw out the serious loss of synergy associated
with this. Moreover, when pushed on what strategy the individual
divisions will follow, whether the parent or their own, the answer is
usually their own. But when asked who picks up the bill if a division
makes a loss or its director engages in a fraudulent or criminal act the
answer is usually the parent thereby opening up a wider debate.