THE EAST INDIA COMPANY
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Organization Structure and Control Systems:
There is no denying the fact that the EIC faced control and
coordination problems as enforcing the regulations in the Indies from London was
not easy, more so in those days. However, the very fact that the company
survived for more than two hundred years in enough to undermine the seriousness
of the problem.
The main problem before the EIC was to establish a method whereby correct policy
decisions could be taken. Another important issue was the delegation of power
and authority to its servants in the Indies and the task of communication and
control. Decision-making was at two levels: a superior body in London, the Court
of Directors and a subordinate one in Asia, the president and his Council in
each of the company’s separate trading regions. (Refer Fig I)
The Court of Directors had the highest authority to set,
modify or change the goals of the company. It also had the power to suspend
trading activities altogether. However, the Presidencies in Asia had limited
powers and could vary their actions within prescribed limits.6 Thus it is clear
that the parent company had a strong control over its subsidiaries.
The Court of Directors had the highest authority to set, modify or change the
goals of the company. It also had the power to suspend trading activities
altogether. However, the Presidencies in Asia had limited powers and could vary
their actions within prescribed limits[1]. Thus it is clear that the parent
company had a strong control over its subsidiaries.
According to Chaudhuri[2] , the EIC controlled three separable components. The
first component was the economic, political and social environment which
affected the company’s internal state; the second was the decision-making part
which was a controlling mechanism; and the third was the operational part which
dealt with the actual physical aspects of trade. Chaudhuri further says that the
environmental factors were both exogenous and endogenous to the internal
functioning of the company. Outbreaks of war, weather fluctuations, and harvest
failures which affected the company’s economic position were exogenous factors
and were ‘inputs’ from the environment. Decisions and responses of the company
which affected the systematic external elements such as government policy or
economic behavior of consumers were ‘outputs’ coming from the company’s trading
system and were thus endogenous.
[1] K.N.Chaudhuri, The Trading World of Asia and the English East India
Company-1660-1760, Cambridge
University Press, Cambridge, 1978.
[2]K.N.Chaudhuri, The Trading World of Asia
and the English East India Company-1660-1760, Cambridge
University Press, Cambridge, 1978.
GOVERNANCE
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