ABSTRACT
Management in organizations can be either centralized or decentralized. In traditional companies, top management has the power of making all decisions. That is because only top management is considered to have skills and knowledge to make decisions. However, when an organization is big in scale, it is difficult for top management to obtain all information and make the proper decisions for environmental adaptation. Especially when a company is diversified and enters other business domains, managers need to acquire new knowledge about markets, customers, and technologies. The organization is therefore decentralized. Decentralized organizations are divided into two types: divisional organizations and functional organizations. The characteristics of decentralization are to make decisions in a timely manner and to make decisions properly. The division system adopted by many Japanese companies has some different features from those of the division system developed in the United States.
