Pros & Cons of various Alternatives

Centralized
Pro
The company can make use of the benefits of large scale production by centralizing the
manufacturing facility to 6 factories across Europe down from 19. This can lead to
implementing manufacturing processes that are most efficient and economical thereby
reducing costs and increasing profits. A more centralized production would also help in
quality control. Having Global Brands makes it more efficient to market the product with
global advertising campaigns which can be planned, implemented and be adapted to local
markets. A centralized structure makes tracking product performance and penetration
possible which can helps in establishing strategies for the future. The GM‘s now free of
manufacturing responsibility can concentrate more on product marketing.
Con
The vast variety of products in terms of packaging and flavours available in different local
markets makes it difficult to centralise the manufacturing. Any change in availability of
flavours or packaging which may affect sales locally may face resistance from the Business
Unit General Manager. In the decentralized structure the manufacturing was under the
Business Unit GM and so decision making was fast and the change in local demands could be
quickly acted upon. In the centralised structure this could be an issue of concern as any
change in manufacturing had to be done in IMCs’ which could also affect the other markets.
Implementation of this structure would require clearly defining roles responsibilities and area
of scope of GM’s. In the decentralized structure this was not done and hence there is no clear
line control in the organisation.

DECENTRALIZED STRUCTURE
Pro
Decision making is fast and entrepreneurial spirit is encouraged here. Initially
decentralization was done for every business unit in which the general managers had
total profit responsibility and all individual decision making was carried out under
their discretion. Another instance where decentralization was planned to be
implemented was separating the role of global brand sponsor from the role of general
manager and give them Consumer Marketing. This would give the GBS an
opportunity to plan marketing strategies on a more global level and the GM would be
 responsible for the implementation of this strategy. This would also decrease the work
load on the GBS.

Con
The role and responsibility of GM would be considerably reduced compared to initial
structure which may lead to dissatisfaction and conflicts. The marketing strategies on a global
level may not be suited to local markets and hence may need modification. In the initial
structure the manufacturing was on a local level which may result in increased cost due to
duplication of process setups and facility. Having many manufacturing units may have an
effect on quality control as they may not have the best processes incorporated due to be in
compliance with local laws which may restrict certain processes.