Decentralization

Possible Essay Question 1 – AC410. Question: The vast majority of corporations are decentralized to a considerable degree. What kinds of organizations are best run in a largely centralized manner and why?

A large majority of corporations are decentralized to a considerable degree. However there are still corporations that practice centralization in a largely manner due to it being the best way for them to run their organization. When a corporation is run in a centralized manner it means that management and decision making power is at the top of the organizational hierarchy or in other words the administrative power is concentrated in a central authority. The types of corporation that are best suited to run in this particular manner are small businesses that are of low complexity.

One of the reasons as to why small businesses would adopt centralization is that managers have the time and expertise to manage all aspects of the organization. Top management can make organization’s key decisions with little or no input from below. This allows the corporation to achieve common goals set by the top management thus easy to communicate information to the employees since the employees report direct to the management. Furthermore, for small businesses the owner would want the organization to have a particular vision to remain to his perspective and so that management can have as much control as possible. By having proper control over the organisation, the top management is able to have proper understanding on specific details regarding how the organization is run. Therefore, if any problems may occur, corrective actions may be planned and performed immediately. This however, causes the employees to not have enough say or involvement in decision making involving work done by them.

For centralized organizations, only one person or a small group at the top makes important decisions, therefore organizations experience less conflict and disagreements among lower to mid-level...