tutor2u | Centralised versus decentralised structures

Study Notes

Centralised versus decentralised structures

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

One of the organisational issues that a business needs to address is where decision-making power resides in the structure.

Decision-making is about authority. A key question is whether authority should rest with senior management at the centre of a business (centralised), or whether it should be delegated further down the hierarchy, away from the centre (decentralised)

The choice between centralised or decentralised is not an either/or choice. Most large businesses necessarily involve a degree of decentralisation when it starts to operate from several locations or it adds new business units and markets. The issue is really how much independence do business units or groups within a business have when it comes to the key decisions?

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