Centralisation v's De-centralisation

Key term test 10/10 on Centralisation v Decentralisation - Homework from 11/12/13

1. Centralisation - An organisational structure where senior managers take all the important decisions
2. Decentralisation - An organisational structure where decision making power is spread to managers in branches and across divisions of the business.
3. Head office - The hub or an organisation where all the central support services are based such as purchasing, finance, payroll, marketing, ordering, IT and admin,  In Centralised organisational structures the head office can be very large.
4. Satellite operation - A branch of an organisation which is serviced by a head office function or central production and storage.
5. Re-organisation - This is when the organisation decides that the organisational structure is no longer supporting the aims and objectives of the business which may have changed.  Often an organisational structure is re-organised to save money or to improve quality goods or services or improve communication.
6. Accountability - With delegated authority comes accountability or answerability or liability to achieve business aims and objectives.  Accountability in centralised operations is kept with senior directors and managers often at head office.
7. Authority - This is the power given to an employee often managers and directors to make decisions, rules, set aims objectives and targets and deal with situations of poor performance.
8. De-layering - This occurs when an organisation reduces the number of layers in its hierarchy.  It may remove a layer of management to remove communication problems and related costs but will often result in creating a wider span of control  
9. Delegation - Delegation occurs when a manager passes down certain powers to subordinates.  The success of delegation is influenced by the responsibility, authority and accountability of those involved with the task.  The key to successful delegation is mutual trust. 
10. Culture - The culture of a business will change if an organisation moves from centralised to decentralised.  This gives more autonomy to all staff in the new business and with that comes freedom to make decisions and operate non core standards.

AQA course expectations 
Candidates should be familiar with the concepts of centralisation and decentralisation and the benefits and challenges that both can bring to the business.  How appropriate is the adopted method of control to the growing business.  Does it need to now change?

A growing business needs to organise itself, it may need more managers as well as more junior staff and create functional areas.  As it grows the busienss objectives will change and the job roles of its people will evolve with it.  Workers will get specific responsibilites linked to the company objectives so that their performance can be managed.  Business owners may also need to change the way that tehy manage their business which will ultimately allow junior managers to take on more responsibility.  By the end of these next TWO lessons you will know:

• the internal organisational structures that a business may use
• why growing busienesses may use centralisation or decentralisation. 

Starter activity
Can you match the key term with the clue on the right hand side click here

Key Terms - Pages 201-204 of core text book

• Authority
• Delegation
• Centralisation
• Decentralisation

Main task 
Q. Can you identify businesses that are operated with greater or less control ?

Identify a business that has a centralised structure and one that has a decentralised structure and prepare to discuss the advantages and disadvantages of each.  Present your ideas to the class in any format that you wish

• Centralised organsational structures link here
• Centralisation and motivation link here 
• Note-taker pack and topic test for this subject can be found here

Plenary

Topic test best business brain competition - Centralised or decentralised businesses

Peperation for next lesson - click here