Centralisation & Decentralisation

Question 1

Centralised Structure

Answer 1

All decisions come from one place e.g top of hierarchy

Question 2

Decentralised Structure

Answer 2

Decision making is shared/passed onto different profit centres / departments / stores

Question 3

Advantages of a Centralised structure

Answer 3

• Lower costs
• Consistent
• Quick decision making

Question 4

Disadvantage of a Centralised structure

Answer 4

Not able to respond / tailor to local market

Question 5

Advantages of a Decentralised structure

Answer 5

• Managers empowered / valued / motivated

- Tailored / better suited to locals

Question 6

Disadvantage of a Decentralised structure

Answer 6

• Lacks consistency

Question 7

Analyse how moving from a centralised structure to a decentralised structure might affect the profit of a business

Answer 7

Increase - Each individual store is buying its supplies, not benefitting from economies of scale
Increase - Empowered Managers - Manage resources correctly - Less wastage with low shelf - life, AND Motivation - Low labour turnover - Low recruitment & Selection and Training Costs
Decrease - Empowering Managers - Need Training - Increase costs - Decrease Profit