Importance of decentralization

• Helps to improve the quality of decisions at the top-level management.
• Facilitates diversification of activities.
• Encourages development of managerial personnel.
• Improves motivation within organization
• Makes decision-making quicker and better.
• Provides opportunity to learn by doing.

Limitations of decentralization

• May lead to problem of co-ordination at the level of an enterprise as the decision-making authority is not concentrated.
• May lead to inconsistencies at the organizational level.
• Costly as it raises administrative expenses on account of requirement of trained personnel to accept authority at lower levels.