Question

Describe the advantages and disadvantages of a management position in a decentralized firm.

Answer 1

The advantages of management position in a decentralized firm are :

• Delegation of authority: The responsibility of taking decision is distributed among various levels of management. All the decisions are not fully dependant on the top executives.
• Minimisation of red tapism: Under this system, consent for each decision is not required to be obtained from each level of the management. This helps in taking decisions quickly.
• Promoting growth of personal: In a decentralized system, lower ranks executives are not required to obtain clarification or approval from their upper level. They get the opportunity to take business decision independently for the work under their scope. This helps to improve their skill and build confidence.
• Minimizing communication: Since consent or approval is not required from higher management, it reduces the communication among the management levels.

The disadvantages of management position in a decentralized firm are :

• Loss of control: Since different levels of management takes business decision without the consent of the upper authority, the top management lose control of what is happening at the operational level. Because they are not involved in the meetings held for such decisions.

• Undue advantages of authority: There is not much control of the top management on lower management in a decentralised system. Sometimes the lower management misuse their power for personal benefit.
• Communication gap: In this system, there is not much detailed communication among all levels of the management in every situation. Due to which, in case of emergency or any issue the top level is not aware of the exact facts. They will investigate after a critical situation has occurred.
• Lack of Co-ordination: Since there is a communication gap among the levels of management, the co-ordination in all the activities between the levels will not be smooth.

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