Question

What are the disadvantages of divisionalisation / decentralisation?

Answer 1

The disadvantages of divisionalisation or decentralisation in business organizations include a discouragement of new ideas, little flexibility on a day-to-day basis, a large bureaucracy, and a lack of incentive to work hard or better.

Step-by-step explanation:

Divisionalisation or decentralisation in business organizations can have several disadvantages:

1. Discourages new ideas: When departments or divisions operate independently, there may be a lack of communication and collaboration, making it difficult for new ideas to be shared and implemented across the organization.
2. Little flexibility on a day to day basis: Decentralized decision making can lead to slower response times and a lack of agility in addressing daily operational challenges or adapting to changing market conditions.
3. Has a large bureaucracy: Divisionalisation or decentralisation can lead to the formation of numerous layers of management and bureaucracy, which can increase administrative burdens and hinder decision-making processes.
4. Lack of incentive to work hard/better: In a decentralized structure, employees may lack the motivation to excel or improve their performance, as rewards and recognition may be limited to their specific division or department rather than the organization as a whole.