Explain how a company could benefit from either centralization or decentralization?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

In general, the bigger and more diverse a company is, the more it can benefit from decentralization.  

When a business is large or when its various parts have little to do with one another, decentralization is important.  Decentralization allows for shorter bureaucratic lines of communication.  It allows various divisions of the company to be controlled more clearly by people who are familiar with the work that division does.  

However, there are times when centralization can be good.  Centralization can result in better control of the firm.  If there is only one central authority, the decisions can be made relatively quickly and there can be one clear direction for the country.

deepalimaru's profile pic

deepalimaru | Student, Undergraduate | eNotes Newbie

Posted on

it can also be benifitted to large organizations for certain decisions like changing the line of business for ex. from clothing to shoe making business.... there decentralization is not required


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