Decentralization is a method of organizing and management when management and decision making powers are delegated from center to the hands of management of individual organizational units (e.g. SBUs). Decentralization allows more flexible decision making and greater autonomy of individual organizational units. On the other hand, it may be missing an uniform coordination “from the center”.
Decentralization may concern all decisions and powers, or only selected managerial functions may be decentralized.
Decentralization in practice: Decentralization is mainly used for large companies, where it is necessary to delegate powers to the sub-units and increase their ability to make independent decisions and to respond flexibly to changes in the surroundings.