Why Is Vertical Differentiation Important?
Vertical differentiation determines where decision-making power is concentrated
Centralized decision-making
facilitates coordination
ensures decisions are consistent with organization’s objectives
gives managers the means to bring about organizational change
avoids duplication of activities
Decentralized decision-making
relieves the burden of centralized decision-making
has been shown to motivate individuals
permits greater flexibility
can result in better decisions
can increase control