1.4.3 Organisational design - Centralisation & Decentralisation

Question 1

Centralisation

Answer 1

Decision making process whereby decisions are made by those at the top of the hierarchy only e.g in fast food restaurants like mcdonalds

Question 2

Pros -4 and cons-2 of centralisation

Answer 2

Pros
- quicker decision making (can show strong leadership in times of crisis
- easier to coordinate/control from centre e.g with budgets
- Better quality decisions as centralised decisions made by senior management (notes)
- EOS and lower costs can be achieved as carrying out procedures e.g ordering & purchasing as one big organisation.

Cons
- Lost flexibility and speed of decision making (notes)
- Less employee involvement in decision making -> can be demotivating

Question 3

Decentralisation

Answer 3

Decision making process whereby decisions are delegated to managers in charge of regions, departments and product categories

Question 4

Pros 5 and cons 3 of decentralisation

Answer 4

Pros :
- empowers and motivates workers
- delegation allows greater flexibility and improves speed of decision making process - can improve customer service overall
- Local managers/employees more knowledgeable about local trends & needs
- Good way of training + developing junior management
- less stress & burden on senior management

Cons:
- Strong leadership & swift decision making process may not be present (e.g in a crisis)
- Diseconomies of scale may occur e.g purchasing & marketing
- maybe poorer quality in decision making as lower manager may not be experienced

Question 5

Pros 5 and cons 3 of decentralisation

Answer 5

Pros :
- empowers and motivates workers
- delegation allows greater flexibility and improves speed of decision making process - can improve customer service overall
- Local managers/employees more knowledgeable about local trends & needs
- Good way of training + developing junior management
- less stress & burden on senior management

Cons:
- Strong leadership & swift decision making process may not be present (e.g in a crisis)
- Diseconomies of scale may occur e.g purchasing & marketing
- maybe poorer quality in decision making as lower manager may not be experienced