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i. Management Philosophy:
This is the orientation of top management. Sometimes top managers do not interfere with the authority and information that they hold. At other times, top managers keep authority nt just as a desire for status or power but because they
simply cannot give up the activities and authority that they enjoyed before they reached on top. Top managers may see decentralization as a way that people create their own status.
ii. Costliness of the decision:
This is probably the most important factor as managers are reluctant to delegate authority for crucial decisions. Generally, the more costly the action to be decided, the more likely it will be made at higher levels e.g. an airline’s decision to purchase airplanes will be made at top levels while a decision to purchase desks may be made at the operating level. Similarly, quality control in drug manufacturing company where a mistake could risk lives, would normally be made at higher levels.
iii. Importance of the decision:
If decisions at lower levels affect important aspects of the organization, then the degree of centralization will be restricted.
iv. Volume/Number of organizational decisions at lower levels:
The greater the number of decisions being made by an organization at lower levels, the greater the degree of decentralization.
v. Desire for uniformity of policy:
Usually where uniformity of policy is required, centralization is favoured. An organization may wish to ensure that customers are treated alike with respect to quality, price, delivery and service or that vendors are treated alike with respect to quality, price, delivery and service or that vendors are treated with the same policies or that public relations are standardized. Uniformity of standards makes it easier to compare relative efficiencies of departments and to keep costs down.
vi. Size and character of the organization:
The larger the organization, the more need to decentralize. Large organizations with huge numbers of people must be divided into fairly autonomous divisions to facilitate efficient management. Sometimes, decisions may be slow because of the number of managers and specialists who must be consulted. This could be expensive and therefore whenever feasible, the organization should be centralized. The cost of large size may be reduced by organizing the enterprise into small units.
vii. History and culture of the enterprise:
viii. Desire for independence:
ix. Availability of managers/Manager talent:
x. Control Techniques:
xi. Willingness of employees to accept responsibility:
xii. Rate of growth of the organization
Kavungya answered the question on April 30, 2021 at 06:53
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