Page 28 - E1 Integrated Workbook STUDENT 2018

Chapter 2

Centralisation and decentralisation

In a centralised structure, the upper levels of the organisation’s
hierarchy retain the authority to make decisions.

In a decentralised structure, the authority to make decisions is
passed down to units and people at lower levels.

Advantages Disadvantages

 Senior managers can focus  Loss of control by senior
on strategy. managers.

 Better decisions due to local  Dysfunctional decisions of
expertise. local managers.

 Better motivation due to  Poor decisions from
empowerment of employees inexperienced managers.
and defined career path.
 Training costs.
 Faster response and
flexibility.  Duplication of roles.

 Extra costs of obtaining
information from different
sources

16