Advantages and Limitations of Decentralization

1. Prepared by,
Mrs. Rijo Lijo

2.  Advantages
 The advantages of decentralization are
as follows:
 1. Relieves top manager from burden of
managing.
 2.Encourages subordinates to undertake
responsibility.
 3. More freedom to managers.

3.  4. Increases motivation of subordinates.
 5. Enhances competition among various
departments/units.
 6. Helps setting up of profit centres.
 7. Promotes development of general
managers.
 8. Prepares mangers for rapid change in
the organization.

4.  Limitations
 The limitations of decentralization are as
follows:
 1. Maintenance of uniform policy
throughout organization becomes difficult.
 2. Increases complexity of coordination.
 3. May lead to loss of control by superior
level managers.
 4. May be limited by inadequate control
techniques.
 5. May be constrained by inadequate
planning.

5.  6. Limited by inadequate training.
 7. Limited by inadequate number of
qualified personnel at lower level.
 8. It may be limited by external factors
like; government regulations, taxation
policy of government, etc.