Decentralization means consultant delegation of authority throughout the organization. It is pushing down authority and power a decision making to the lower levels of the organization.
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.
- Decentralization reduces the burden of 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 assignments, to change production schedules, to recommend promotions and to take disciplinary action. It permits management by objectives and self-control.
- It contributes to the survival and growth of the organization.
Limitations or Disadvantages of Decentralization
- Decentralization 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. 11 Non-Economic Environments Affecting Business Environment.
- 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 others in order to increase theirs on profitability.
Thus, now you know the advantages and disadvantages of decentralization