- AS, A Level
- AQA, Edexcel, OCR, IB
Last updated 22 Mar 2021
Businesses that have a centralised structure keep decision-making firmly at the top of the hierarchy (among the most senior management).
Fast-food businesses like Burger King, Pizza Hut and McDonald's use a predominantly centralised structure to ensure that control is maintained over their many thousands of outlets. The need to ensure consistency of customer experience and quality at every location, together with a desire to exploit economies of scale, are the main reasons for this choice.
The main advantages and disadvantages of this approach can be summarised as follows:
|Easier to implement common policies and practices for the business as a whole||More bureaucratic – often extra layers in the hierarchy|
|Prevents other parts of the business from becoming too independent||Local or junior managers are likely to much closer to customer needs|
|Easier to co-ordinate and control from the centre – e.g. with budgets||Lack of authority down the hierarchy may reduce manager motivation|
|Economies of scale and overhead savings easier to achieve||Customer service does not benefit from flexibility and speed in local decision-making|
|Greater use of specialisation|
|Quicker decision-making (usually) – easier to show strong leadership|
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