Accounting for Management Discussion Making
Week 6 Discussion Response
Colleague 1
Katlyn Bone
For this week’s discussion, I chose to focus on Blue Cross Blue Shield of Texas (BCBSTX). As the largest health insurance provider in the state and part of Health Care Service Corporation (HCSC), BCBSTX plays a critical role in offering health coverage to individuals, employers, and government programs. With millions of members across Texas, the company’s ability to make effective managerial decisions is central to both its operational success and the quality of service it provides.
When looking at its organizational structure, BCBSTX reflects a hybrid model that leans toward decentralization. While HCSC sets high-level policies, compliance rules, and corporate strategy, much of the day-to-day decision-making happens closer to the customer. Regional leaders, account executives, and product teams have the authority to respond to client needs, adjust offerings, and manage relationships. OpenStax (2022a) highlights that decentralized organizations distribute authority through multiple layers, which helps ensure that those closest to the issues can act quickly and effectively. This matches what we see in practice at BCBSTX.
The difference between centralized and decentralized decision-making is especially important in this context. In a centralized structure, major decisions funnel through top executives, which can slow responsiveness. In contrast, decentralized structures allow managers at different levels to carry out operational decisions within the boundaries set by leadership. OpenStax (2022b) emphasizes that this difference is not absolute—most organizations fall somewhere in between—but the key distinction lies in whether routine authority resides primarily at the top or is distributed across the organization.
There are several clear advantages to BCBSTX’s decentralized-leaning approach:
1. Responsiveness to Clients and Markets
Decentralization allows leaders in Texas to tailor products and service strategies for local markets, ensuring faster adaptation to employer and individual needs (OpenStax, 2022a, 2022b).
2. Employee Empowerment and Growth
When decision-making is pushed closer to the client, employees feel more ownership and accountability. This not only improves morale but also helps develop stronger managerial talent for the future (OpenStax, 2022b).
3. Efficiency and Speed
Removing bottlenecks by not requiring every decision to go through the corporate center means BCBSTX can react quickly to regulatory changes, market pressures, or client issues—an advantage in such a competitive industry (OpenStax, 2022a).
In short, BCBSTX’s decentralized structure provides a balance between corporate oversight and local flexibility. By empowering managers to make timely decisions while staying aligned with organizational goals, the company is better positioned to serve its members effectively and remain competitive.
References
OpenStax. (2022a). Principles of accounting, volume 2: Managerial accounting. Rice University. https://openstax.org/books/principles-accounting-volume-2-managerial-accounting
OpenStax. (2022b). 9.2 Describe how decision-making differs between centralized and decentralized environments. In Principles of accounting, volume 2: Managerial accounting. Rice University. https://openstax.org/books/principles-accounting-volume-2-managerial-accounting/pages/9-2-describe-how-decision-making-differs-between-centralized-and-decentralized-environments
Colleague 2
Lauren Adkins
Walmart: Centralized Structure and Managerial Decision Making
Organizational Overview
Walmart Inc. is one of the largest retailers in the world, with thousands of stores spread across various countries the firm deals in groceries, household products, clothing, electronics, and financial services. Managerial accounting analysis is of particular interest due to its structure, given its size, and the requirement for uniformity in pricing and operations.
Centralized Structure
Walmart is a centralized organization, with key strategic and operational decisions, such as buying, supply chain management, and pricing, being centralized at the corporate level. An example of this centralization is the way corporate leadership negotiates with suppliers on behalf of all stores, rather than each store manager making decisions about procurement or pricing. This corresponds to the definition of centralized management presented by Franklin, Graybeal, and Cooper (2019), in which decisions are made at the top level instead of being dispersed across divisions or store-level managers.
Three Advantages of Centralization at Walmart
1. Economies of Scale in Purchasing: By centralizing procurement, Walmart will be able to negotiate bulk prices with localized suppliers and lower the cost per unit, as well as maintain uniform pricing in the different regions (Franklin et al., 2019).
2. Standardized Operations: Corporate control brings about uniformity in policy on inventory management, store layouts, and customer service standards. This decreases variability and increases efficiency in thousands of locations.
3. Clear Accountability: Because major decisions are made at the top, responsibility for results rests with corporate leadership. This makes performance evaluation simpler, particularly when assessing cost centers such as supply chain and logistics [filecite].
Managerial Accounting Implications
The centralized model of Walmart affects the structure of responsibility centers. As an illustration, stores are often managed as cost centers, which means they are operated on managing operating expenses rather than making independent profit decisions. On the contrary, corporate functions are concerned with profit and the investment center. Centralized structures also result in less transfer pricing between divisions, as internal transfers (e.g., goods between distribution centers and stores) are centralized at headquarters. According to Franklin et al. (2019), centralized decision-making decreases the autonomy of divisions yet enhances consistency and control [filecite].
References
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 2: Managerial accounting. OpenStax. https://openstax.org/books/principles-managerial-accountingLinks to an external site.
Walden University, LLC. (2021). Transfer pricing [PDF]. Walden University Blackboard.
Walden University, LLC. (2021). How to calculate transfer pricing [PDF]. Walden University Blackboard.
