Decentralised and centralised businesses

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  • Created by: AnnabelH
  • Created on: 16-03-16 12:57

Centralised and decentralised businesses

One main thing a business needs to decide is where decison making power is located within the business structure.

The choice between centralised or decentralised is not an either/or choice. Most large businesses necessarily involve a degree of decentralisation when it starts to operate from several locations or it adds new business units and markets to enable easy decison making. 

Centralised - The concentration of managment and decison making power is located at the top of a a businesse hierachy, and are handled strictly at the top or the executive level. 

Advanatges to centralised businesses 

  • Easier to implement common policies and practices for the whole business - ensure the whole business is working towards the same goal and can save money by implementing standardised procedures for the whole bsuiness
  • Prevents other parts of the business from becoming too independent - Work as a whole business
  • Easier to co-ordinate and control from the centre - for example with budgets
  • Much quicker usually - easier to show a strong leadership
  • Experienced senior managers make decisons - more likely to be benerficial to the company as a whole
  • Strong leadership

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