Centralisation and Decentralisation

• What does centralization in decision-making imply?

  Key decisions are made by top management
• What is the main characteristic of decentralized decision-making?

  Authority is shared among more employees
• How does centralization affect the organizational hierarchy?

  It creates more layers in the hierarchy
• What is one benefit of centralized decision-making?

  It can lead to economies of scale
• In which type of business structure is centralized decision-making most common?

  Multilocation businesses like fast food chains
• Why might centralized decision-making be quicker?

  Decisions are made by the board without debate
• What is a potential drawback of centralized decision-making?

  It can demotivate junior managers
• How can centralization impact customer service?

  It may frustrate customers needing quick decisions
• What does decentralization aim to achieve in decision-making?

  To spread authority down the hierarchy
• How does decentralization benefit hotel chains?

  Staff can make on-the-spot decisions
• What is a potential benefit of decentralization?

  It can lead to improved customer service
• What is a risk of decentralization if taken too far?

  It may lead to dis economies of scale
• When is centralized decision-making particularly valuable?

  When the business is in trouble
• How does decentralization affect the organizational structure?

  It can create a flatter hierarchy
• What are the potential benefits of centralization?

  • Economies of scale
  • Quicker decision-making
  • Consistent policies across locations
• What are the potential drawbacks of centralization?

  • Higher operational costs due to layers
  • Demotivation of junior managers
  • Frustration for customers needing quick decisions
• What are the potential benefits of decentralization?

  • Improved customer service
  • Lower operational costs with fewer layers
  • Increased employee empowerment and motivation
• What are the potential drawbacks of decentralization?

  • Risk of dis economies of scale
  • Inconsistent decision-making
  • Strategic decisions may be poorly made