Pros And Cons Of Decentralization

1270 Words 6 Pages
DECENTRALIZATION AND ITS PROS AND CONS

There is rather an obvious difficulty in designing an organizational structure. After all, every organizational structure has its own strengths and weaknesses that could either potentially be helpful or potentially detrimental to a company’s success. Just as every product out in the market has upsides and downsides, same goes also with the organizational structure. In that sense, companies must consider the pros and cons before embracing an organizational structure for the whole organization.
This paper provides a short comparative view on decentralization and centralization which may include the definition of terms. This will also examine the upsides and downsides of decentralized decision-making and
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Decentralization is also ideal when the size and geographic dispersion of the company become quite impossible for the senior management to strictly monitor. The size and scale of operations is a major factor of the organizational structure to consider. A case in point: decentralized organizational structure could be beneficial for a restaurant business but could be less beneficial for large computer manufacturing firm. Thus, decentralization is appropriate also as the business grows. Decentralizing authority and departmentalizing all significant strategic functions such as marketing, production, finance, and human resources (HR): each of them has to perform according to its function, and later, all chores are collated to form organizational …show more content…
Although decentralization has so much good to bring, it has also its own limitations. Despite its advantages, it limits the flow of information only focusing at a localized level. A case in point: a local manager makes decisions based on his local viewpoint of the company's operations. This may not lead to decisions favorable to the company as a whole. For example, a local manager might pour more funds into a struggling store, whereas a senior manager might elect to cut losses and shutter the store (query: what is shutter the store?). Decentralization also can cause procedural complexities. There tends to be a large number of small procedural differences between areas of authority since each local manager alters systems to fit his or her own needs. This can cause control

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