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List the disadvantages of decentralization.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter15: Lean Accounting And Productivity Measurement

Section: Chapter Questions

Problem 14DQ

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Question

List the disadvantages of decentralization.

Expert Solution

Decentralization

Decentralization refers to a company's top management delegating authority to subunits of the company. Subunits include divisions, subsidiaries, profit centers, investment centers, and so on. In a decentralised organization, lower levels in the organizational hierarchy can make decisions. An example of a decentralised organization is a fast-food franchise chain. Each franchised restaurant in the chain is responsible for its own operation.

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