Decentralisation
Decentralisation shifts significant decision-making authority away from headquarters and towards local managers who are closer to customers and daily operations.
Also known asdecentralization
See it move
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A tree diagram places headquarters at the top, where targets are set, with three branches leading to Division A, Division B, and Division C, each labelled as taking its own local decisions. The structure illustrates how decentralisation delegates decision-making authority from the centre to operating units, gaining speed and local responsiveness in exchange for reduced direct oversight from headquarters.
Where it fits
TopicResponsibility Accounting & DecentralisationCoreSubjectManagerial AccountingCore
Check yourself
PracticeCORE
Which of the following best describes the primary rationale for delegating significant decision-making authority to local division managers?
Select an answer to check your understanding.