Centralization versus decentralizationThe general pattern of authority throughout an organization determines the extent to which that organization is centralized or decentralized.A centralized organization systematically works to concentrate authority at the upper levels. In a decentralized organization, management consciously attempts to spread authority to the lower organization levels. A variety of factors can influence the extent to which a firm is centralized or decentralized. The following is a list of possible determinants:•The external environment in which the firm operates. The more complex and unpredictable this environment, the more likely it is that top management will let low-level managers make important decisions. After all, low-level managers are closer to the problems because they are more likely to have direct contact with customers and workers.
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