Discuss the merits and demerits of Centralisation and Decentralisation.
Answers
Answer:
DISADVANTAGES OF CENTRALIZATION
1. Poor environmental adaptation: Organizational environment tends to be dynamic, complex and uncertain. Centralization cannot quickly adapt to the changing environment.
2. Poor diversification management: Modern organizations tend to be highly diversified. They are also geographically dispersed. Centralization is not suitable to manage diversified and dispersed organizations.
3. Unsuitable for programmed decisions: Programmed decisions are routine-type decisions. They are relatively minor decisions. Such decisions are not suitable for centralization. They burden top managers.
4. Poor management development: Centralization blocks the management development of subordinates. Their skills and talents remain unutilized because of lack of participation and involvement in decision making.
5. Delayed decisions: Centralization creates multiple layers for decision making purposes. The files move through the hierarchy from subordinates to bosses. This delays decision making.
Demerits:
1. As decentralization gives autonomy and liberation in choice making it lead to discrepancies in plans, schedules and methods.
2. High cost: Decentralization can occur in duplication of works and exhaustion of resources. Social resources require to be instructed. This results in extended expenses.