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Please explain why the centralized management approach is more cost-effective than the decentralized management approach.

Please explain why the centralized management approach is more cost-effective than the decentralized management approach.

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Answer #1

Centralized Management mostly takes decisions within themselves being a smaller size in the team with a very strictly defined roles, highly competitive in nature, where the directions come from the organizational hierarchy and continue with the goals organized in a strict manner. This cuts down unnecessary liabilities, unnecessary human resource , buildings and office equipment that makes it cost effective.

Decentralized Management hires many people to control the firm by decision-making process delegated to the lower management. Increase in their duties to execute are more in nature which can be costly and not cost -effective than the centralized management.

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