DECENTRALIZATION

&
CENTRALIZATION

GROUP 4
 The process of transferring and assigning
decision-making authority to level of
organization hierarchy.
In a decentralized organization decision
making has been moved to lower levels such
as division branch, departments…
Knowledge information etc. are how from the
bottom to top of the organization.
Span of control of top management is
relatively small. The are relatively small tiers
in organization cause were is more autonomy
in lower level.
 Three forms
De-concentration: The weakest formal
decentralization decision making redistributed
to lower level or regional levels of the same
central organization.
Delegation: More extensive for through
delegation the responsibility for decision
making transferred to semi autonomous
organization not wholly
Devolution: The third type of decentralize. the
authority of decision making completely
transferred to autonomous organization unit.
STRATEGIES
Philosophy / Emphasis: On bottom up, political
cultural and learning dynamics.
Decision Making: Democratic, participative
detailed.
Organization Change: Emerging from
interactions organization dynamics.
Execution: Evolutionary, emergent, flexible to
adopt to minor use and charge.
Participation: Accountability low risk of not
invented here behavior.
Advantages
Reduction of work burdening top-level.
Quick decisions.
Diversification of activities.
Development of managerial personal.
Effective control & supervision.
Effective co-ordination.
Improve motivation and morale.
Limitations
It increase administrative expenses.
It may bring about in consistencies in the
company.
It may not be possible .. External factors.
It create problem in bringing coordination
among employees.
Decentralization requires the product line of
the concern to the board enough to allow
creation of autonomous units. Which is not
possible to small firms.
 CENTRALIZATION
Definition
 The process of transferring and assigning
decision making authority to higher level of an
organizational hierarchy.
In a centralized organization the decision
making has been moved to higher level or the
organization. Such as departments level,
corporate center.
Knowledge into ideas concentrate on higher
and decision an cascaded to lower level.
Span of control is relatively broad and they
are relatively many ties in the organization
 Strategies of centralization
It emphasis on top down control, leadership,
vision,strategy etc.
Decision Making: Strong, authorization,
Visionary and charismatic.
Execution: Decisive fast, Co-ordinated,able to
verify quickly to major issues and changes.
Uniformity: Low risk of dissent or conflict
between parts of organization
 Advantages
Promote uniformity in action.
To handle emergencies.
Facilitate personal leadership.
To avoid duplication.
To provide for integration.
 Disadvantages
There is chance of delay in decision making.
Problem in communication(Layers Between).
Delay in getting work done by subordinates.
Chance of authority being misused by higher
level.
No developments of lower level.s
Balance between decentralization
and centralization
Big – Decentralization
Small—Centralization
Effectiveness of communication system.
Adequate of effective communication---
Centralization
In efficient decentralization
Dispersion of organization unit or plant
No: of plant different places—Decentralization
otherwise-Centralization
Degree of standardization
Greater degree of standardization-centralized
otherwise decentralized.
Complexities of situation
Highly uncertain business condition-
centralization
Otherwise Decentralization
Thank you