In a centralised organisation head office will retain the major responsibilities and powers. Decentralised organisations will spread responsibility for decisions across various outlets and lower level managers, including branches. Decision-making is about authority. The key question will always be whether responsibility should remain with senior management at the centre of a business (centralised), or whether it should be distributed further away from the centre (decentralised) An example of a decentralised structure is Tesco the supermarket. Each Tesco has a store manager who can make certain decisions concerning their store. The store manager is then responsible to a regional manager. Most ...view middle of the document...
So Tesco's provide the framework and the information regarding pricing, layout, staff terms etc, but the rest can operate flexibly to a certain degree within that branch. With this style of management it enables people who are close to the shop floor and close to the customers, to be able to make decisions and influence power, so that the customer is satisfied. However, some people say argue that this does not operate well in practice and in particular some of their buyers ie Tesco push farmers particularly within the third world so hard that they are effectively forced to live in poverty.
Advantages / Importance of Decentralization
1. Decisions will be made close to the customer.
2. Better geared to understand local circumstances.
3. Customer services will be improved.
4. Staff motivation will be better.
5. Good way of training managers
Limitations of Decentralization
1. Difficult to maintain consistent practices and policies over all branches.
2. Harder to maintain financial control.
3. Maybe some duplication of roles.
There are a number of different organisational structures each with their advantages and disadvantages. The most appropriate structure will depend on the size of the business and the type of business.Most disadvantages of decentralization can be overcome by controlling the degree of authority delegated to the lower levels of the organization. Striking a balance between how much independence is given to individual business units and what kind of decisions remain under the central command could lead to a successful strategy.