Wednesday, August 8, 2012

Advantages of decentralization


1.       Quick and better decision: - Departmental manager divisional managers will have authority to make decision. They can use their knowledge, expert, skill in decision making. When the make decision autonomously decision making will be quick and better decisions are possible.

2.       Diversification: - Business of product diversification is possible in decentralization. By using expertise and knowledge of managers various kinds of business can be started, Different products can be launched and different activities can be performed.

3.       Competitive organizational climate: - Decentralization promotes competitive climate of improving performance among division, department and profit part. Comparison of unit wise performance is possible this increases productivity and profitability.

4.       Management development: - Hence, departmental managers have authority to make decisions, make plan and utilize resources. They can improve their talent, skill, knowledge. Managers know how to make decision, how to formulate plan, how to face challenges and how to solve problems. This also promotes innovation and creativity. Potential managers can be developed.

5.       Environmental adaptation: - Modern organization has to run in fast challenging environment. They have to adjust with such changing environment otherwise they will lag behind. Decentralization is an appropriate method/ approach for adjusting with changing environment. Managers know how to work in changing environment, capitalize opportunities and face challenges.

6.       Employees motivation and high moral: - When employees are provided authority to right to make decision, they will be highly motivated at work and their moral will be heightened. Their commitment will increase. Authority is the strong source of motivation.

Reduces burden of top management; - In decentralization most of decisions are push down to low level and middle level manger. Most of the problems are solved by them. Hence, burden of top management will be reduce and they will have sufficient times to formulate policies and strategies.

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