Explain the merits and limitations of Decentralization
Merits or Advantages of Decentralization
- it motivates subordinates for high goals.
- it helps in Fast and accurate decision making at the point nearest to the place of actual operations.
- Decentralisation reduces the burden of the top executives.
- it facilitates the diversification of product lines.
- This leads to effective supervision and control because managers at low levels have adequate schedules authority to make changes in work assignment, to change production schedules, to recommend promotions and to take disciplinary action. it permits Management by objectives and self-control.
- it contributes survival and growth of the organization.
Limitations or disadvantages of Decentralization
- Decentralisation creates damage and top management May loss Central over the functioning of different departments.
- this can not be possible due to external factors like Market uncertain and trade union movement, government interventions.
- it is not suitable for small firms having narrow product lines it is also not suitable for specialized services like Accounting, finance research, and development etc.
- this is expensive because it increases the administrative expenses.
- it may lead to under and Undesirable competition and conflict among different units of Enterprise because some units may attempt to optimize performance at the cost of other in order to increase theirs on profitability.
You Are here Merits or Advantages And Limitations of Decentralization.