Cenralistaion vs Decentalisation

The main decisions be make by senior management, where little authority is passed down the organisation. advantages decisions are made by experienced people with an overview of the company. ensures policies are consistent through unwrap the company. ensures quick decisions stomach be made without consultation. procedures such as ordering and purchasing can be standardised throughout the company, leading to economies of scale. in times of crisis the firm may need strong leadership by a central convocation of senior managers. disadvantages (mainly advantages of decentralisation) centralisation reduces the input of the day to day experts, e. g. , the shop floor staff, into the firms decision making. it risks demoralising branch managers who may feel mistrusted or powerless. Decentralisation Decisions are made by junior management as authority is passed down the organisation, thereby accepting less uniformity in how things are down. There has been a trend in the 1980s and 1990s i s to decentralise to provide greater flexibility. advantages reduces the stress and burdens of senior management it can empower local managers encouraging them to be more innovated and motivated. it reduces the volume of day to day communication between head office and the branches, therefore giving senior managers the time to consider long terminal figure strategy. subordinates may have a better fellowship of local conditions affecting their areas of work.This should allow them to make more informed well judged choices, e. g. , salespersons have detailed knowledge of customers. management at middle and junior levels are groomed to take over higher positions. They are given the experience of decision making when leaseing out delegated tasks (management development). could allow greater flexibility and a quicker response to changes. If problems do not have to referred to senior management decision making will be quicker. Since decisions are quicker, they are easier to change i n the light of unforeseen circumstances. disadvantages reduction in uniformity may unsettle customers who expect every Sainsburys to wait on the same or for every McDonalds hamburger to contain just one slice of gherkin. head office is in a position to stride the success of every aspect of the product and sales mix, therefore its instructions may prove more profitable than local managers intuition. mop up It is unlikely there will ever be complete centralisation or decentralisation. Certain functions within a business will always be centralised because of their importance, e. g. , decisions about budget allocation are likely to be centralised as they affect the whole economy. The decision to distribute profits is in like manner taken only by a few. Some delegation is necessary in all firms because the limits to the amount of work senior management can carry out. Even if authority is delegated to a subordinate it is usual for the manager to retain responsibility.