Centralised and Decentralised Structure

Question 1

Define centralised structures

Answer 1

All important decisions are made centrally by one senior management team at head office.

Question 2

Discuss centralised structures

Answer 2

Advantages

• easy to implement policies for the whole business
• easier to keep control over budgets
• consistent image across business grows the brand

Disadvantage

• local managers will be demotivated by lack of authority
• miss out in local knowledge of local managers
• lack of flexibility to respond to local changes

Question 3

Define decentralised structures

Answer 3

Managers throughout the organisation have the authority to make their own decisions

Question 4

Discuss decentralised structures

Answer 4

Advantages

• better motivation throughout the hierarchy
• develops skills of local mangers to allow for progression
• business can respond to local changes (so meet customer needs better)

Disadvantage

• decision making may not be strategic (not focuses on whole business)
• may not achieve consistency of approach (brand image could suffer)
• financial control may not be as tight