Centralised and Decentralised Decision-Making

Question 1

Authority & Organisational Design: Who makes the Decisions?

Answer 1

Decision-making is about authority. Question is whether it should rest with senior management at centre of business (centralised), or whether should be delegated further down hierarchy, away from centre (decentralised).

Question 2

Centralised Decision-Making

Answer 2

Businesses with centralised structure keep decision-making firmly at top of hierarchy (amongst most senior management).

Question 3

Examples of Centralised businesses:

Answer 3

• McDonald’s
• Burger King
  They ensure control is maintained over their thousands of outlets. Need to ensure consistency of customer experience and quality at every location, together with desire to exploit economies of scale.

Question 4

Benefits of Centralisation:

Answer 4

• Easier to implement policies and practices for whole business
• Prevents other parts of business from becoming too independent
• Easier to co-ordinate and control from centre
• Economies of scale ad overhead savings easier to achieve