Answer -1 Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.^[1]

Concepts of decentralization have been applied to group dynamics and management science in private businesses and organizations, political science, law and public administration, economics, money and technology.

Examples- 1) The transfer of authority from central to local government - "efforts to promote decentralization and reform of the national political party"

2) The movement of departments of a large organization away from a single administrative centre to other locations- "the decentralization of business services"

BENEFITS OF DECENTRALIZATION

1. Flexibility

2. Information-processing ability

3. Increased Morale

4. Development of expertise

5. Error mitigation

6. Ability to pinpoint strengths and weaknesses

7. Reliance on local insight

8. Ability to cope with adversity

Organizations have to take a close look at the benefits and challenges to see if decentralizing would make a positive impact. However, sometimes a pivot is needed after trying it out. For example, Zappos made a move toward holacracy, which replaces centralized hierarchy by eliminating titles and bosses. However, employees began leaving in droves because of confusion and dwindling motivation since there was no perceived career ladder.

Answer -2 ADVANTAGES OF NPV

1)ASSUMPTION OF REINVESTMENT

Unlike IRR, using NPV makes sense because it does not assume that the cash flows will be reinvested at IRR which is almost impossible. How can your cash flows get reinvested at the project’s rate of return? Reinvesting the cash flows at IRR would mean you are investing back the cash flows from your project into the market at the equivalent rate as that of your project’s rate of return. You need to find another investment yielding same as your project for the reinvestment. Well, that’s really difficult.

2)ACCEPTS CONVENTIONAL CASH FLOW PATTERN

NPV gets unaffected by Conventional cash flow pattern. Conventional cash flow pattern is as follows –

Year:	0	1	2	3	4
Cash Flow	-$1000	-$400	$300	$800	-$100

At year 0 there is an initial outlay and from year 1 there are positive and negative cash flows. Using IRR under this cash flow pattern would result in no IRR or multiple IRR which will distort your capital budgeting decisions. Under NPV you don’t need to be bothered when dealing with conventional cash flow pattern.

3)CONSIDERATION OF ALL CASH FLOWS

NPV takes into account each and every cash flow you define. It’s not like payback period method or discounted payback period method which ignores cash flows beyond the payback period.

E.g. – Initial outlay: -$1000 at time 0 for projects A and B

Year	Project A	Project B
1	$500	$500
2	$500	$100
3	$700	$4000

Here project A looks smarter because it recovers its initial outlay in 2 years and project B takes a little more time than project A. Here, what payback period is ignoring is the huge cash flow of $4000. NPV will take into account this $ 4000 and might as well say that project B appears smarter. I use the word ‘might’ here because at what rate the cash flows of both projects A and project B will be discounted is to be seen. But yes, NPV considers all the cash flows that you define.

4)GOOD MEASURE OF PROFITABILITY

If you wish to choose one single project from amongst many then NPV will be a good measure of profitability. If you use IRR for mutually exclusive projects you might end up selecting small projects with higher IRR and of a short-term nature at the expense of long-term (long-term value creation is good for shareholders) and higher NPV projects.

5)FACTORS RISKS

Discount rates are used in calculating NPV; the risk of undertaking the project (Business risk, financial risk, operating risk) gets factored into this method.

Advantages of Payback Period

1. It Is a Simple Process.
One of the biggest advantages of using the payback period method is the simplicity of it. You base your decision on how quickly an investment is going to pay itself back, and that is done through forecasted cash flow. If you have three different projects that will cost you the exact same amount, the decision can be as easy as the project that will return the initial investment the fastest. For managers that are struggling to make an investment decision, this can be a great way to do it.

2. Fewer Numbers to Crunch.
As the payback period method is loved for its simplicity, it also extends to every aspect of the equation, naturally. For budgeting using this method, management will not have any complicated accounting or math that they will have to do. It can be as simple as a monthly return on the investment divided by the initial investment itself. While it is not going to account for every available variable, it is a very easy way to do a basic comparison.

3. Can Help Small Businesses.
Small businesses are going to have very limited funds to be able to invest in projects, so they must be extremely careful with their spending. This method of capital budgeting is a great way for a small business to easily decide what project is going to pay off the most. Sometimes for a small business, you must look solely at the profit and cash flow to be able to grow, and the payback period method can help you make solid investments.

4. Reinvest Earnings Faster.
If a business is looking to recoup their investments so they can continuously keep reinvesting and growing, this method is going to make things quick and easy. You are able to see which investments are going to pay you back the fastest, or most efficiently, and use this information to invest in the right things. If it is all about growing your business, you want to constantly have your money working for you through the right investment opportunities.

5. Can Tip the Scales for a Difficult Decision.
Sometimes as a business manager, it can seem downright impossible to choose between multiple prospective projects or investments. There can be issues where projects look so similar in scope and ability that choosing is going to be difficult without some solid numbers to back it up. The payback period will be able to show exactly which investment is going to be better based on ROI, which should make the decision easier. When there is not much else to differentiate multiple projects, a manager is going to need all the information and help he/she can get to make a decision.

6. Keeps Financial Liquidity.
In the world of business, it is utterly essential that you have the liquid capital to be able to run day-to-day operations and to make investments in the future of the company. A business can quickly get themselves into trouble if they have too much of their money tied up in investments with no way of quickly getting at it. The payback period method will help by showing management the right investments to focus on to keep liquidity in the business for further growth.

Answer -3

The balanced scorecard is a method which displays organisation’s performance into four dimensions namely financial, customer, internal and innovation. The four dimensions acknowledge the interest of shareholders, customers and employees taking into account of both long-term and short-term goals.

Kaplan and Norton classified performance measures into four business ‘perspectives’:

(i) The financial perspective

(ii) The customer perspective

(iii) The internal business perspective

(iv) The learning and growth perspective

(i) Financial Perspective: “How Do We Look To Shareholders?” In this step manager of a division or a unit, links its business objectives to the corporate strategy of the company as a whole.Financial performance measures indicate whether the company’s strategy implementation and execution are contributing to its revenue and earnings. To identify key performance measures in this perspective, managers, during strategic planning ask “How do we look to shareholders?”

Corporate strategy and strategic initiatives are examined from the financial perspective to see feasibility of these initiatives of being met. The financial objectives chosen at the onset of the balanced scorecard implementation should serve two purposes:

1. To provide definite performance that was expected at the time of strategies selection.

2. To provide a focus for objectives and appropriate measures in each of the other three perspectives.

(ii) Customer Perspective: “How Do Customer View Us?” In this stage, companies identify customers and market segments in which they compete and also the means by which they provide value to these customers and markets. Managers identify the lead indicators which make a particular business unit or product different from that of others. Lead indicator may vary from customer to customer or market segment. If for example, a customer values on-time delivery then on-time delivery becomes a lead indicator. Examples of lead indicators may include any number of customer considerations, including:

· On-time delivery

· On-site service

· After sales support

· Defects per order

· Cost of the product

· Free shipments etc.

By delivering quality as per the customer demand and need, business units can improve outcome measures such as customer satisfaction, retention, acquisition and loyalty.

(iii) Internal Business Perspective: “At What Must We Excel?” In this stage companies identify processes and activities which are necessary to achieve the objectives as identified at financial perspectives and customer perspective stage. These objectives may be achieved by reassessing the value chain and making necessary changes to the existing operating activities. If maintaining net earnings is the financial objective of a company and after sales service can increase customer retention, then internal business perspective needs to improve after sales services to satisfy customer requirements to maintain net earnings. This objective may be achieved by providing for example toll free customer help lines, setting up service centres in all major cities.

(iv) Learning and Growth Perspective: “How Do We Continue To Improve And Create Value?” In the learning and growth perspective, Companies determine the activities and infrastructure that the company must build to create long term growth, which are necessary to achieve the objectives set in the previous three perspectives. Organisational learning and growth comes from three principle sources:

· People i.e. employee capabilities

· Systems i.e. information system capabilities and

· Organisational procedures i.e. motivation, empowerment and alignment.

Since, the balanced scorecard is intended to improve long-term performance, managers may invest in resources needed in the short-run but this should not affect business unit’s performance.

The ultimate result of using the Balanced Scorecard approach should be an improved long term financial performance. Since the scorecard gives equal importance to the relevant non –financial measures, it should discourage the short termism that leads to cuts in spending on new product development, human resource development etc which are ultimately detrimental for the future prospects of the company.

The responsibility to devise and implement a Balanced Scorecard should be that of the managers working with the business. Since every company is different, it shall need to work out for itself the various financial and non – financial measures, which need to be focused upon for its own development. Since the Balanced Scorecard is recommended as a management tool used both for internal and external reporting purposes, it is again the manager’s responsibility to decide as to what information needs to be disclosed and how any problems of confidentiality can best be overcome.