Home Depot Case Study
1. In what ways can (a) decentralizing and (b) centralizing authority help an organization like Home Depot to improve its performance?
The case of Home Depot brings about the opportunity for one to view both the benefits of centralized and decentralized authority and the benefits that it brings to an organization. As noted by the success of the Home Depot, it is vital that mangers in businesses know which form of authority is appropriate during certain stages of the organizational development. Having the wrong type of structural authority can be detrimental to the growth of a business and can have a potentially fatal effect to the organization as a whole. By closely examining the principles of each type of organizational authority, one can more effectively decide which type of structure is most appropriate for the company. The first step in knowing what type of authority to implement is to understand the characteristics of each type of authority. Decentralization is a form of organizational structure that allows a sort of “bottom to top” management. Decentralized organizations allow front line managers to decide what is best for their organization without upper level executives and managers making decisions which they see most suitable for the organization as a whole. In decentralized organizations top level executives delegate decision making authority to lower tiers within the organizational structure. This offers a wider span of control which in turn often reduces the number of tiers within the organization giving the hierarchy a flat appearance. Often times decentralized organizations demonstrate policies which are less rigid. This form of structure within an organization allows the advantage of a bottom-to-top flow of information which allows decisions by executives at the top of the hierarchy to be well informed about the lower tier operations. Centralization of authority on the other hand displays characteristics of a high...
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