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Decentralization is a form of organizational arrangement in which top management delegates power to the middle and lower levels of management. Regular activities and limited decision-making skills are delegated to the middle and lower levels of the organization in this arrangement, allowing top-level management to concentrate on big decisions such as market growth and diversification.

Benefits of Decentralization

  • Decentralization relieves top executives of the responsibility for a variety of tasks. The concentration of power places the whole burden of responsibility on the shoulders of a single executive and his immediate team.
  • Diversification of goods, activities, and economies, for example, is enabled by Decentralization. Diversifying an organization’s operations and starting new lines of manufacturing or delivery would be complicated and challenging for a centralized enterprise with a consolidation of power at the center.
  • Executives in the organization will have the ability to grow their skills by taking action as power is decentralized, and will also prepare them for leadership roles. The company’s success is heavily reliant on its professional executives.
  • Since supervisors at the lowest ranks will have the power to make unilateral decisions, Decentralization guarantees greater oversight and monitoring. As a result, they have a clear understanding of the assignment under their supervision and can make changes and correct errors.
  • The Decentralization of decision-making takes the decision-making process closer to the operation. Since decisions do not have to be referred up to the hierarchy, lower-level decisions can be made faster.
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