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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