- Centralized Vs. Decentralized
- Centralized organizational structures rely on one individual to make decisions and provide direction for the company.
- Businesses' that are centralized:
- Apple.Inc uses this method; this is one of the largest business' in the world.
- eBay also uses this method. This is one of the biggest online markets.
- The advantages and disadvantages of using this method:
- Centralized organizations can be extremely efficient regarding business decisions. Business owners typically develop the company’s mission and vision, and set objectives for managers and employees to follow when achieving these goals.
- Centralized organizations can suffer from the negative effects of several layers of bureaucracy. These businesses often have multiple management layers stretching from the owner down to frontline operations. Business owners responsible for making every decision in the company may require more time to accomplish these tasks, which can result in sluggish business operations.
- Decentralized organizational structures often have several individuals responsible for making business decisions and running the business. Decentralized organizations rely on a team environment at different levels in the business. Individuals at each level in the business may have some autonomy to make business decisions.
- A business that are decentralized:
- Amazon uses this method, this business is very well-known and is next to eBay on the online market.
- Decentralized organizations utilize individuals with a variety of expertise and knowledge for running various business operations. A broad-based management team helps to ensure the company has knowledgeable directors or managers to handle various types of business situations.
- The advantages and disadvantage of using this method:
- Decentralized organizations can struggle with multiple individuals having different opinions on a particular business decision. As such, these businesses can face difficulties trying to get everyone on the same page when making decisions.
Similar Business Studies resources: