Shared services - Advantages and disadvantages of centralisation
4 important questions on Shared services - Advantages and disadvantages of centralisation
What are the three advantages of centralisation?
- Cost
- Uniformity
- Control
Why is cost an advantage of centralisation?
- Because the company has more buying power = lower material cost.
- No duplication of resources.
Why is uniformity an advantage of centralisation?
- Brand image
- Packaging
- Reporting
- Policies
- Standards
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
What are the six disadvantages of centralisation?
- Local management is bottom-line responsible but does not have control over all costs.
- Central departments could be too far removed from operational activities.
- Reaction times are slower.
- Bureaucracy.
- Local conditions are undervalued.
- It's more difficult to sell off parts.
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