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Centralization vs. Decentralization Guide

This document discusses centralization and decentralization in organizations. Centralization refers to authority being retained at the top level, while decentralization delegates authority to lower levels. Centralization facilitates coordination and consistency but hampers development of lower managers. Decentralization allows flexibility and motivation but can create coordination problems. Examples of centralized organizations include dictatorships and militaries, while decentralized examples include open source software, peer-to-peer networks, and terrorist cells. The document advocates balancing centralization and decentralization to empower lower managers while allowing top managers to focus on strategy.

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697 views14 pages

Centralization vs. Decentralization Guide

This document discusses centralization and decentralization in organizations. Centralization refers to authority being retained at the top level, while decentralization delegates authority to lower levels. Centralization facilitates coordination and consistency but hampers development of lower managers. Decentralization allows flexibility and motivation but can create coordination problems. Examples of centralized organizations include dictatorships and militaries, while decentralized examples include open source software, peer-to-peer networks, and terrorist cells. The document advocates balancing centralization and decentralization to empower lower managers while allowing top managers to focus on strategy.

Uploaded by

divyardivi123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
  • Centralization and Decentralization
  • Arguments for Centralization
  • Limitations of Centralization
  • Arguments for Decentralization
  • Limitations of Decentralization
  • Examples of Centralized Organisations
  • Examples of Decentralized Organisations
  • Equating an Ideal Organization

CENTRALIZATION

AND
DECENTRALIZATIO
N

WHAT IS CENTRALIZATION
& DECENTRALIZATION?
Centralized organization: the authority to make

important decisions is retained by top level


managers
Decentralized organization: the authority to

make important decisions is delegated to managers


at all levels in the hierarchy

DECENTRALIZATION

ARGUMENTS FOR CENTRALIZATION


Centralization can facilitate coordination.
Centralization can help ensure that decisions are

consistent with organizational objectives.

Centralization can avoid duplication of activities by

various subunits within the organization.

By concentrating power and authority in one

individual or a management team, centralization can


give top-level managers the means to bring about
needed major organizational changes.

LIMITATIONS OF CENTRALIZATION
Development of low level managers are hampered .

Opportunity given to exercise initiative and


judgment is negligible .
It is a costly affair and delays decision making .
It creates problems of effective communication
No scope of specialization as a person may have to
look into many things

ARGUMENTS FOR DECENTRALIZATION


Top management can become overburdened when

decision-making authority is centralized.


Motivational research favors decentralization.
Decentralization permits greater flexibilitymore

rapid response to environmental changes.


Decentralization can result in better decisions.
Decentralization can increase control.

LIMITATIONS OF
DECENTRALIZATION
It creates problems in coordination between

different units of the organization.


May result in higher administrative expenses as
qualified managers a needed for different divisions
Due to different policies and procedures of each unit
in a decentralized organization inconsistencies may
arise in organizational activities

EXAMPLES OF CENTRALIZED
ORGANISATIONS
Dictatorship: Dictatorships are usually ruled by a

single powerful [Link] you can stop the leader, you


can destroy the entire group.
Military: Traditionally, the military has been the

classic example of top-down management.

Government: Governments are classic top-down

structures lead by the President or Prime Minister,


followed by Senators or Ministers who each have a
team below them.
Television: TV shows are created by centralized

organizations that decide what we watch and when


we watch it.

EXAMPLES OF DECENTRALIZED
ORGANISATIONS
Open Source Software: There are two

decentralized organization examples in the


computing world. The first is Open Source Software.
For example Think Linux.
Peer to Peer Software: Peer to Peer software uses

bits of information contributed by many people. For


example, Bit Torrent downloads.

Terrorist Cells: Terrorist cells

represent the best military


decentralized organization example.
The Internet: This is the classic

decentralized organization example of


our time.

COCA-COLA
Decentralized organization

structure is followed in CocaCola.

Equating a Ideal Organization


Balancing Centralization and Decentralization :

Enabling middle and lower managers


who are at the scene of the action to
make important decisions
Allowing top managers to focus on longterm strategy making

Thank you!!!

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