Note Chapter 12: Segment Reporting and Decentralization I. Decentralization in Organizations a. Decentralized organization: organization where decision-making authority is spread throughout the organization rather than being confined to a few top executives. b. Advantages to decentralization: b.i. Delegating day-to-day problems to lower-level managers gives top management ability to concentrate on bigger issues b.ii. Lower-level managers have a better understanding of their specific area b.iii. Organizations can respond more quickly to customers and to changes in the operating environment b.iv. Giving lower-level managers decision-making authority makes them better prepared for higher positions b.v. Lower-level managers will have more motivation and job satisfaction c. Disadvantages of decentralization c.i. Lower-level managers may make decisions without fully understanding the bigger picture c.ii. Coordination may be lacking c.iii. Clashing objectives between lower-level managers and the entire org. c.iv.
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