Question

Identify 3 criteria that can be used to determine whether a logistics organisational structure should be centralised or decentralised.

Answer 1

The 3 criteria that can be used to determine whether a logistics organizational structure should be centralised or decentralised are :

1. Size : The size of the organization determines whether it should be centralised or decentralised. Large organisation means more decisions to take. In that case a decentralised approach will serve the purpose.

2. Availability of managers : If there are lack of well trained managers there should not be de centralisation of power as decentralisation requires delegation of power and authority.

3. Management philosophy : Sometimes the philosophy of top management executives have an influence in how much authority should be delegated to others as some doesnot want interferance in their way of doing business. In that case the organisational structure should be centralised.