A Two-Department Model of Firm Decision-Making

The founder and sole owner of a growing bakery has just hired a general manager to oversee daily operations. The business is facing two immediate decisions: 1) whether to invest a large sum of money to purchase a neighboring storefront for expansion, and 2) how to set the price for a new line of pastries. Based on the typical division of decision-making authority within a firm, which of the following scenarios is the most likely to occur?

Conflict of Authority at a Tech Startup

Distinguishing Decision-Making Authority

A firm's decisions can be categorized as either strategic (typically made by owners) or operational (often delegated to managers). Match each business decision below to the party most likely responsible for making it.

Analyzing Delegated Authority in a Business

A manager of a large retail chain, acting on their own initiative and without consulting the board of directors, decides to close 15% of the company's stores to shift the firm's focus entirely to e-commerce. This action is a typical example of an operational decision delegated to management.

The manager of a local coffee shop decides to change the brand of coffee beans used and adjust the daily work schedule for baristas. These actions are examples of ________ decisions that are typically delegated by the firm's owners.

A company's board of directors, representing the firm's owners, spends its quarterly meeting debating whether to acquire a smaller competitor. During the same week, the head of sales, without consulting the board, adjusts the monthly discount allowances for her team based on recent performance data. Which of the following statements best analyzes this division of decision-making?

A small, privately-owned software company decides to launch a new productivity application. Arrange the following actions in the most logical sequence, from the initial high-level strategic decision to the final operational implementation.

A large, publicly-traded corporation has been experiencing declining profits. The board of directors, representing the owners, hires a new CEO and grants them full authority to 'do whatever it takes to turn the company around,' including selling off entire divisions of the business and entering completely new markets. Which statement provides the most critical evaluation of this arrangement?