Modern business enterprises on the other hand had more flexibility, and yet could be more accountable. Managers formed the core of this multiunit enterprises as otherwise the units would not have served much purpose as only a federation of business units.
This structure added many process level advantages. Administration was linked such that producing, buying and distribution units were coordinated. Process management across units became easier and the overall operational costs were reduced. Once a group of managers were arranged for the units, it also became easier to internalize the activities of the business units. Newer processes came to be defined for the structure changes which were to change the way production and distribution processes worked before.
Direct and Indirect Costs: In the context of production and distributions, there can be both direct and indirect costs incurred on a process. Direct costs are those that can be traced to a particular cost object (Lari & Asllani, 2013). It could be the salary for a human resource, the cost per unit an object X is required for producing an object Y, etc. An indirect cost is one that cannot be accurately estimated. These are costs that might involve many different cost objects internally or might be dependent on processes that could change the cost appreciation or depreciation (Rodrigue, 2014). Factory insurance, an on-floor supervisor salary that might be counted based on the work hours, etc. are indirect costs. The direct costs can be planned for; however indirect costs can at best be estimated only. Most of the operational costs overhead might occur because of the indirect costs (Hilton, 1994). Direct costs are often made use of financial planning. Strategies’ and more can be made to control them and can be implemented accordingly, however indirect costs are often presented as something that can at best be approximated and then controlled. They cannot be eliminated and cannot be planned for completely.