Benefit from higher economies of scale

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Reference no: EM131192752

A high degree of centralization can be useful for organizations that can benefit from higher economies of scale. Centralization may be recommended when conflicting goals and strategies exists between operating units or when organization-wide policies and compliance are necessary. A modern trend is toward decentralization, with organizations driving decision-making down to separate operating units, departments, or even teams authorized to make their own decisions. Decentralized decision making may be recommended when operating units perform distinctly different activities and there is little to no need for collaboration, and when conditions at the operating unit level require quick decision making and adaptability. However, extreme decentralization can negatively impact productivity, and ultimately profitability. Unless everyone authorized to make decisions is on the same page, conflicts, duplicated efforts, and waste are likely to occur. What are your thoughts on this?

Reference no: EM131192752

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