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CMA Foundation · Fundamentals of Business Economics and Management · Organisation Structure, Responsibility, Accountability and Delegation of Authority

Which of the following is a limitation of decentralisation rather than of centralisation?

Difficulty in maintaining coordination and uniform policy among units is a limitation of decentralisation. When many units decide independently, their actions may diverge. Overburdened top executives, slow decisions and neglect of local conditions are drawbacks of centralisation, not decentralisation.

  1. AOverburdening of top executives
  2. BDelay in decisions due to long communication chains
  3. CDifficulty in maintaining coordination and uniform policy among unitsCorrect
  4. DNeglect of local conditions

Explanation

When units take their own decisions, achieving coordination and uniform policy becomes harder and costs may duplicate. The other three options (top overload, delays, ignoring local conditions) are typical drawbacks of centralisation.

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