What are some advantages and some disadvantages of a decentralized operation?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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In business, there can be both advantages and disadvantages to a decentralized organization.  In general, decentralized organizations are more flexible, but they can also be less easy to control.

In a business, you want to be able to have some degree of control over your firm.  If you are the head of the firm, you want it to respond quickly to decisions that you make.  If the firm does not respond quickly, you can end up losing money.  If you have to take a long time getting changes made, it can take away from your efficiency.  When you have a decentralized operation, this can happen.  The decentralization takes away your ability to control the firm.

However, decentralization can also be a good thing.  If a firm is too centralized, there is no room for flexibility and for diversity of opinions.  People may feel that they have to conform to a single way of doing things.  This robs them of initiative.  If people do not feel that they can have control of their own areas of the firm, they may feel demoralized.  They may feel that they are not important but are just cogs in a centralized machine.

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