CHAPTER 14 INTERNATIONAL ORGANIZATION DESIGN & CONTROL


GROUP : PROACTIVE NETWORK TEAM

Monday, January 27, 2014

Centralization VS Decentralization



Centralization
  • Decision made by senior level manager at HQ
  • Facilities coordination of value chain
  • Ensures decisions are consistent with strategic objectives
  • Senior executives have authority to direct major change
  • Preempts duplication of activities
  • Reduces the risk of making wrong decisions at low level
  • Ensures consistent dealings with all stakeholders
  • Discourages initiative among lower level employees. 
Decentralization
  • Decisions made by employees, who are closest to the situation.
  • Employees who directly deal with customers, markets, etc
  • Motivates employees to exercise initiative
  • Enables more flexible response to rapid environmental changes
  • Permits to fix better accountability
  • Put the org at risk for bad decision making
  • Cross-unit coordination is at stake for favouritism

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