Business
Study Notes
Decentralised structures
- Level:
- AS, A Level
- Board:
- AQA, Edexcel, OCR, IB
Last updated 22 Mar 2021
In a decentralised organisational structure, decision-making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations.
Good examples of businesses which use a decentralised structure include the major supermarket chains like WM Morrison and Tesco. Each supermarket has a store manager who can make certain decisions concerning areas like staffing, sales promotions. The store manager is responsible to a regional or area manager. Hotel chains are particularly keen on using decentralised structures so that local hotel managers are empowered to make on-the-spot decisions to handle customer problems or complaints.
The main advantages and disadvantages of this approach can be summarised as follows:
| Advantages | Disadvantages |
| Decisions are made closer to the customer | Decision-making is not necessarily “strategic” |
| Better able to respond to local circumstances | More difficult to ensure consistent practices and policies (customers might prefer consistency from location to location) |
| Improved level of customer service | May be some diseconomies of scale – e.g. duplication of roles |
| Consistent with aiming for a flatter hierarchy | Who provides strong leadership when needed (e.g. in a crisis)? |
| Good way of training and developing junior management | Harder to achieve tight financial control – risk of cost-overruns |
| Should improve staff motivation |
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