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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Differentiate between centralized and decentralized operations.

To determine

Centralized operations: In a company where the major plans and operating decisions are controlled by the top level management, such a company is said to have centralized operations.

Decentralized operations: In a company where the plans and operating decisions are delegated to the divisional managers, such a company is said to have decentralized operations.

To distinguish: Centralized operations from decentralized operations

Explanation

Differences between centralized and decentralized operations:

Centralized Operations Decentralized Operations
The major operating decisions are controlled by top level management. The major operating decisions are delegated to divisional managers.
Centralized operations are preferable by small businesses, where one man can handle all the operations. Decentralized operations are delegated to the managers with expertise in the respective production lines and services.
Since the business is small and can be controlled by one person, it is easy to maintain the operations, and not much experience is necessary. Since the product lines and numerous, top level management cannot alone control all the operations, and may not have expertise in all departments.

Table (1)

Conclusion
Thus the differences between centralized and decentralized operations are explained in detail

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