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Centralisation & Decentralisation - Coggle Diagram
Centralisation & Decentralisation
Decentralisation
Authority
Control over branches/departments
Hiring employees
What products to manufacture
Ordering supplies
:
Meeting local customer needs
What is decentralised?
Decision making
Why might a business decentralise?
Business is becoming larger.
Reduces pressure on senior managers.
Can motivate employees.
Can lead to better decisions because local employees understand their area.
Allows faster decision-making.
How does it happen
Authority is passed from head office to different parts of the business.
Branch/factory managers are allowed to make decisions without asking senior managers.
What is needed for successful decentralisation?
Employees understand the business's aims.
Training may be needed.
Good communication between senior managers and employees.
What is it
Local managers/employees can make decisions themselves. :
Senior managers give authority to branches, departments, shops or factories.
NOT decentralisation
Senior managers keeping all decision-making authority
All important decisions being made at head office
Branches needing permission for every decision
Confusing it with delegation — delegation is giving authority to junior employees, while decentralisation gives authority to different branches/parts of the bus
Centralization
What is it?
Senior managers keep authority to make important decisions.
Decisions are mainly made at head office.
How does it happen?
Senior managers retain control over important decisions.
Branches, shops and factories have less authority.
Employees usually need to consult senior managers before making important decisions.
What is centralized?
Decision-making
Authority
Important business decisions
Control over different branches/departments
Why might a business stay centralized?
Employees may not have the skills needed for decentralisation.
Business may not be able to afford training.
Senior managers may not be overworked.
NOT centralisation
Branch managers independently making important decisions.
Authority being passed out to different locations.
Giving branches authority to make their own decisions.