Business – 7.1 Organisational structure – Centralisation and decentralisation | e-Consult
7.1 Organisational structure – Centralisation and decentralisation (1 questions)
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| Aspect | Centralisation | Decentralisation |
| Cost control | Uniform budgeting and tighter oversight can reduce waste, but may ignore local cost‑saving opportunities. | Local units can adapt spending to specific conditions, potentially finding cheaper solutions, though overall spending may be harder to monitor. |
| Innovation | Standardised processes limit experimentation; innovation often depends on top‑level initiatives. | Autonomous units encourage trial‑and‑error and rapid development of new ideas, but successful innovations may not be shared across the firm. |
| Speed of implementation | Decisions must pass through central approval, slowing rollout. | Local managers can act quickly, accelerating implementation. |
Overall, a hybrid approach often yields the best results: central oversight maintains cost discipline, while delegated authority fosters innovation and rapid response to market changes.