Which of the following is a disadvantage of decentralization?
a. Managers make decisions in only their areas of expertise.
b. It typically provides excellent training for managers.
c. Decisions made by one manager may not be the best decision for the entire company.
d. Managers work closely with customers.
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The Correct Answer is Option c. Decisions made by one manager may not be the best decision for the entire company.
Disadvantages of Decentralization
Uniform policies not Followed: There can be no uniform policies or standardised procedures in a decentralised environment. Managers will work and formulate policies according to their abilities.
Problem of Co-Ordination: Because authority is dispersed throughout the organization, decentralisation of authority causes problems of coordination.
More Financial Burden: There is a greater financial burden associated with decentralisation and a small business cannot afford to employ specialists in a variety of fields.
Require Qualified Personnel: When there is no qualified and competent personnel, decentralisation becomes useless.
Conflict: With decentralization, divisional heads are under more pressure to maximize profits at all costs. This can lead to conflicts between managers as they meet their new profit goals.
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