Centralized vs. Decentralized

Question 1

AUTHORITY IN AN ORGANIZATION

Answer 1

In any organization, authority can either be centralized or decentralized

Question 2

CENTRALIZATION

Answer 2

• Is the concentration of authority for most decisions at the top level of an organization.
• Span of control is narrow – tall organizational structure.
• Many levels of management

Question 3

CENTRALIZATION ll

Answer 3

• Common in organizations where markets and competitive relationships are relatively stable.
• Management does not need to make decisions or react too quickly.

Question 4

Centralized Organization

Answer 4

Many levels of management with a narrow span of control creates tall organizational structures where the authority rests with higher management levels

Question 5

DECENTRALIZATION

Answer 5

• Is the dispersion of authority to make decisions throughout all organization levels
• Middle and lower managers make decisions
  E.g. McDonalds
• Span of control is usually broad – flat organizational structures.
• Few levels of management

Question 6

DECENTRALIZATION ll

Answer 6

• Allows organizations to react quickly to new competitors and changes in the market place. It also helps train managers in making operational decisions.
• Common in industries where technology is rapidly changing and decisions need to be made quickly and efficiently E.g. Computer industry.

Question 7

Decentralized Organization

Answer 7

Few levels of management with a wide span of control creates flat organizational structures where the authority is dispersed down to lower management levels

Question 8

THE DEGREE OF DECENTRALIZATION DEPENDS ON

Answer 8

• The business environment in which the organization operates.
• Organizations size and rate of growth.
• Types of decisions that top management allow lower level managers to make.
• Organizations can be centralized in some areas and decentralized in other areas.