extent to which authority is delegated)
decisions are made by senior management, where little authority is passed
down the organisation.
decisions are made by
experienced people with an overview of the company.
ensures policies are
consistent throughout the company.
decisions can 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 group of senior managers.
advantages of decentralisation)
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.
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 is to
decentralise to provide greater flexibility.
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 term strategy.
subordinates may have
a better knowledge 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 carrying 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 in the
light of unforeseen circumstances.
uniformity may unsettle customers who expect every Sainsbury’s to look the
same or for every McDonald’s hamburger to contain just one slice of
head office is in a
position to measure the success of every aspect of the product and sales mix,
therefore its instructions may prove more profitable than local manager’s
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 also 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.