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Decentralization in Organisations

In: Business and Management

Submitted By Christ27
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The vast majority of corporations are decentralized to considerable degree. What kinds of organizations are best run in largely centralized manner?

The majority of corporations today is decentralized in business units or divisions, but which are not, and why are they best run in centralized manner? This essay will answer the question above and provide my review of contents to create an efficient and well-run corporation. One of the most important and essential elements of a well-run corporation is motivation. A very well discussed topic of the current debate is, what corporations can do to avoid lack of motivation. Resent research had concluded cost companies all over the world fraud cost more than 2,9 trillion dollars every year (Win A. Van der Stede, 2011, p. 11). This essay will provide evidence from theoretical management and accounting theory to describe in which way corporations there are centralized, should be run best and most efficiently.

Most corporations is multinational and divided in divisions and business units, because it makes them more efficient and easier to control. All these divisions make them highly complex and they operate probably in many different countries. I my opinion, centralized corporations should have the exact opposite characteristics, they should be small, probably founder-owned and operate in highly changeable environments, e.g. high-tech or service companies. I think they need a vertical organizational structure, where the information line is very close from the management to the employees. The main issue in my opinion, and the foundation to these companies success is that the employees and the management defines and create the strategy together. Then the strategy is defined, the control systems should be defined to together as well. I think it is important to notice that this only can work in small and centralized…...

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