Chapter 10
Decentralization
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Decentralization in Organizations
Benefits of
Top management
Decentralization freed to concentrate
on strategy.
Lower-level managers
gain experience in
decision-making. Decision-making
authority leads to
job satisfaction.
Lower-level decision
often based on
better information.
Lower-level managers
can respond quickly to
customers.
10-2
, Decentralization in Organizations
May be a lack of
coordination among
autonomous
Lower-level managers
managers.
may make decisions
without seeing the
“big picture.”
Disadvantages of
Decentralization
Lower-level manager’s
objectives may not
be those of the
organization. May be difficult to
spread innovative ideas
in the organization.
10-3
, Cost, Profit, and Investments Centers
Cost Profit Investment
Center Center Center
Cost, profit,
and investment
centers are all Responsibility
known as Center
responsibility
centers.
10-4
Decentralization
McGraw-Hill /Irwin © The McGraw-Hill Companies, Inc., 2007
, Decentralization in Organizations
Benefits of
Top management
Decentralization freed to concentrate
on strategy.
Lower-level managers
gain experience in
decision-making. Decision-making
authority leads to
job satisfaction.
Lower-level decision
often based on
better information.
Lower-level managers
can respond quickly to
customers.
10-2
, Decentralization in Organizations
May be a lack of
coordination among
autonomous
Lower-level managers
managers.
may make decisions
without seeing the
“big picture.”
Disadvantages of
Decentralization
Lower-level manager’s
objectives may not
be those of the
organization. May be difficult to
spread innovative ideas
in the organization.
10-3
, Cost, Profit, and Investments Centers
Cost Profit Investment
Center Center Center
Cost, profit,
and investment
centers are all Responsibility
known as Center
responsibility
centers.
10-4
