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?

  1. Cost
  2. Uniformity
  3. 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?

With centralisation a company can be consistent in:
  • Brand image
  • Packaging
  • Reporting
  • Policies
  • Standards
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  • 100% sure, 100% understanding
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What are the six disadvantages of centralisation?

  1. Local management is bottom-line responsible but does not have control over all costs.
  2. Central departments could be too far removed from operational activities.
  3. Reaction times are slower.
  4. Bureaucracy.
  5. Local conditions are undervalued.
  6. It's more difficult to sell off parts.

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