Question

Do you believe it is possible to have effective overall management in a decentralized company? What are the advantages and disadvantages of decentralization? Does a company getting so large that it has to decentralize play a part in the gap between financial goals and actual ones? Please give personal opinion, experience and cite information gathered through research of existing companies’ experiences.

Answer 1

A. Yes decentralisation enhances effective overall management.

B. Advantages of decentralisation are as follows:

1. There is effecient and quick and quick decision making since chain for approval is short and decisions are taken considering operational level challenges.

2. There is ease in expansion since chief executive director and team can focus on expansion strategies.

3. It empower employees to make active participation and focus on companies growth as well.

4. It prepares employees and managers for emergency decision making where Business Owner might not be available..

Disadvantages:

1. Each department becomes self centered focusing only on their own growth and not company.

2. Decentralization increases the problem of co-ordination among the various units.

3. It increases the administrative expenses because highly-paid managers have to be appointed.

4. There shall not be uniformity in policies and actions, since each manager will form his own genius in designing them.

C. Decentralisation doesn’t part a gap between financial goals and actual ones provided profits from each decentralised department are reviewed quarterly.

D. Johnson and Johnson is a decentralised company and doing well.