SHINING STARS

 Ameya Bhat 02
 Ankita Pote 05
 Bhagyashri Patil 08
 Dhananjay Morey 11
 Rachana Bhavsar 25
 Vrushali Patil 39
 Pallavi More 49
DECENTRALIZATION
 INTRODUCTION

 Decentralization of authority means dispersal

of decision-making power to the lower levels
of the organization
 Company may be highly decentralized even
though all physical facilities and employees
are located in a single building
 Decentralized organization is one in which
even the lowest-level managers and
employees are empowered to make decisions
Objectives of Decentralization

 Relive the burden of work

 Develop the managerial faculties
 Motivation and satisfaction of workers
 Quick and appropriate decision
 Smooth communication at all levels
Principles of Decentralization

 Co-ordination in decision-making
 Competent and capable subordinates
 Responsibilities with authorities
 Mutual understanding
 Collective decisions
 TYPES OF DECENTRALIZATION

Administrative decentralization

Political
Fiscal decentralization
decentralization
Delegation Deconcentration Devolution
Factors determining the Decentralization

 Size of the operation

 High costs of decision
 Higher differentiated product lines
 Availability of managerial manpower
 Top management philosophy
 Environmental influences
 Indicators of Decentralization

 Hiring and fixing of employees

 Approval of increase in pay (wages, salaries)
 Promotion of officers
 Purchase and sale of capital equipment
 Approval of price quotation
 Acceptance of sales orders
 Approval of travel expenses
Advantages of Decentralization

 It reduce the burden of top executives

 It makes diversification effective
 It helps in the development of managerial
facility
 It is very important for production and
marketing activity
 It creates perfect atmosphere and
development of morals
 Disadvantages of Decentralization

 It increases the administrative expenses

 It requires the product lines of the concerns to be
broad
 If finds problems in bringing co-ordination among
the various units
 It brings about inconsistencies and uncertainties in
the company
 It is not possible because of external factors
 TECHNIQUES OF DECENTRALIZATION
 Establishment of appropriate centralization

 Development of manager

 Provision for communication and cooperation

 Establishing adequate controls

 Guidelines for Introducing
Decentralization

 Capable managers at all levels

 Adequate controls at all levels

 Effective communication and co-ordination

 Dispersion of location of plants

 When to Decentralize ?????

 Relief to Top Executives

 Diversification
 Emphasis on Product and Market
 Management Development
 Higher Motivation
 Break-through Strategy (BTS)
 Centralization vs. Decentralization
Centralization
The degree to which decision
making is concentrated at a single
point in the organization
Top-level managers make decisions
with little input from subordinates
in a centralized organization
Organization is facing crisis or the
risk of company failure
Decentralization
The degree to which decisions are
made by lower-level employees
Distinct trend toward decentralized
decision making
Corporate culture is open to allowing
managers to have a say in what
happens
Centralization vs. Decentralization

Centralized
Top managers hold most
decision-making authority

Decentralized
Lower level managers hold
significant decision-making
authority
Case deals with “Whether Management should be
Centralized or Decentralized”
 Example of CML Group

 Charles M. Leighton - Professor of

management at Harvard business school set
up his own unit
 He want to start his own business and test
management theories
 Operate a business with courage and
confidence
Cont….

 He got his capital from capitalist who agreed

with his style of business management
 In the three years they expanded their sales
and acquired 11 companies
 Top management of the companies and end
up to interfering with acquired business
Cont…

 The various heads of subsidiary companies

they set their own product line without
internal differences
 Each manager measure his own performance
against goals set in a strategic plan
 They adopted MBO and management by
result
 The company management strategy believed
in decentralization
Cont…

COMMENTS :-
 This case is indicated that a manager must
share the decision making responsibilities if
the environment is favourable
 For effective decentralization, it is necessary
to have a favourable environment of group of
subordinates is capable
 Conclusion

 Decentralization implies more delegation of

authority
 In large and complex organization higher
decentralization is always preferable
 In the 21st century, knowledge workers will
always prefer higher decentralization and
delegation