Advantages And Disadvantages Of Decentralization

Case study China GM

Advantages and disadvantages
Advantages of decentralization: decentralization allows decisions to be taken by the lower levels in the hierarchy providing increased efficiency. The main advantages of decentralization are: · The heads are closer to the point where decisions must be made. Reduces delays caused by consultations. · Increases efficiency by exploiting time and fitness officials. · It improves the quality of decisions relieving heads of excess decision work. · The amount of paper due to the processing of documentation staff headquarters can be reduced. · the coordination costs can be reduced due to greater autonomy to make decisions. Disadvantages of decentralization: lack of uniformity in decisions, insufficient

These so-called low-level decisions could focus on a certain department who participates in what project or what workers do shift. These decisions are important but not as crucial as develop criteria for hiring and firing employees.
First disadvantage of decentralization
Low-level managers could make decisions without fully understanding the effects that those decisions could have on the organization as a whole. While senior managers may have less information on local than low-level operations, they usually have more information about the company philosophy and should better understand the strategy of it. Low-level managers are not always in a position where know the impact of their decisions as the high level.
Second disadvantage of decentralization
Low-level managers may have targets and goals that differ from those of the organization.Some of them might be more interested in increasing the size of their departments rather than increasing the profits of the company. Senior managers must control the money and its impact on the company. Many low-level managers do not have to worry about finances as

These groups are self-managed and most focus on a limited aspect of products or services of the company. As with any organizational structure, divisions have strengths and weaknesses.

The divisions work well because they allow a team to focus on a single product or service, with a leadership structure that supports their most important strategic objectives. Have its own chairman or vice makes it more likely that the division receives the funds it needs from the company. In addition, the focus of a division allows you to build a common culture and spirit that contributes to both higher morale and a better understanding of the portfolio of the division. This is much better than having your product or service dispersed among several departments across the organization.

To succeed, the divisions must be well managed. Executive leadership is the most important to the success of a company using a divisional structure factor. Leaders need to understand what each division is doing and provide leadership to the division heads on how to accommodate the new strategic directions or partner more effectively with all divisions. In addition, executives must have a solid understanding of the use of resources. Having a shared source centrally managed resources, administrative support and office equipment can reduce the cost and complexity