What Are The Advantages And Disadvantages Of Decentralized Structure?


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Tony Fyler Profile
Tony Fyler answered
The advantages of a centralised structure are fewer than that of a decentralised one, and mostly relate to the CEO's vision of the company. For example, the head of the company can implement his own ideas to steer the company towards his/her initial vision of it, without taking any advice or operational direction to the contrary. As well as this, corporations in crisis will often adopt a centralised structure as having a single source of decision making lends stability.

This method doesn't always produce the best results, however. A decentralised structure allows for input from other areas, something which is especially important in large companies. For example, the CEO of a major supermarket chain is probably unaware of the day to day experience of personnel in the electrical department of one of the stores under his control, whilst the staff from that department will have experience and knowledge which could be valuable in making decisions regarding the day to day operations of the department which lead to greater profits. This knowledge could relate to both the way that the business is run, and the products that are sold in the are as it's not feasible for the CEO to be an expert on every single product his business sells. As well as this, having an input into business structure and operations can lead to increased morale for staff - something which also has a huge impact on profits. Another important point to consider is what happens to the business in the eventuality that the CEO is taken sick: If his reasons for centralising the company were indeed to ensure his vision was the ultimate product of his and everyone's work, then having a person take his place for any amount of time simply wouldn't be an option to him.
Anonymous Profile
Anonymous answered
Decisions can be taken by lower level managers who are 'closer to the action'
Facilitates fast decision making
Decisions and strategies can be quickly adapted to competitive environment
Provides autonomy to employees Increases their self confidence and enhance motivation levels
Disadvantages :
Coordination of decentralized units poses a serious challange to top management
Policies may not get applied uniformly across all the units and may lead to employee de motivation
Difference in opinions of top management and unit heads can lead to conflicts
Success of any unit will depend on the efficiency and capability of its head 
Zhu Yugang Profile
Zhu Yugang answered
The Advantages Of Decentralised Structure are to Provide autonomy to employees Increases their self confidence and enhance motivation levels.The Disadvantages Of Decentralised Structure are to lead to conflicts success of any unit will depend on the efficiency and capability of its head.

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