The Demise of Cost and Profit Centre - Article Example

By the virtue that, personnel’s running this department has limited powers makes growth limited, limitation comes from lack of authority to independently work and plan in terms of investment (Kaplan 2007).

According to Kaplan, (2007) Cost center should be a strategic management factor that controls how finances are being undertaken in each and every organization. Every company has the ability to control and determine the prices of its product in the market; however, the actual determinations of the price are done by retailers themselves. Options are given out, on ways in which a manufacturer can instigate dynamics that aim in charging the pricing of its product in the market.

Cost and profit centers should work independently, without having a person who is controlling the flow and structure of work. It should be left out, for the experts and employees in that sector, to come up with a comprehensive strategic plan on how to work. A person is more likely to be productive when is left to work alone, compared to when is under constants supervision.