Advantages and disadvantages of centralisation and decentralisation pdf

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advantages and disadvantages of centralisation and decentralisation pdf

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Centralisation or centralization see spelling differences is the process by which the activities of an organisation, particularly those regarding planning and decision-making, framing strategy and policies become concentrated within a particular geographical location group. This moves the important decision-making and planning powers within the center of the organisation. The term has a variety of meanings in several fields. In political science , centralisation refers to the concentration of a government's power—both geographically and politically—into a centralised government. Centralisation of authority is defined as the systematic and consistent concentration of authority at a central point or in a person within the organization.

CENTRALISED AND DECENTRALISED ASSIGNMENT

Definition : Centralization refers to that organizational structure where decision-making power is confined to the top management, and the subordinates need to follow the instructions of their seniors. Centralization of authority is essential for the small-scale organizations which lack resources and finance.

Example : A person running a departmental store appoints a manager, a cleaning staff, a salesperson and a helper. The owner delegates the work among the staff according to their skills and positions. He also keeps firm control over the routine activities of the staff and instructs them from time to time. This type of organization has a decentralized structure where the owner is the decision-maker, and the staff has to follow his instructions.

In small organizations, the owner or the top management is responsible for making all the business decision solely. Whereas, the delegation of work among the subordinates takes place; therefore, centralization persists in these business units. The following factors result in the centralization of the organization:. You must be wondering; What is the need for centralization of authority in an organization? Yes, centralization and decentralization are equally crucial for a business.

The reasons for which some o organizations mainly centralizes its structure are as follows:. Cost Efficient : The management need not spend much on the office and administrative expenses in a centralized organization. Even the cost of hiring experts and highly experienced personnel at each level is saved due to the centralized decision-making process. Better Command : The management can hold a better command over the subordinates and the subordinates also clearly know whom to follow.

There is proper control over the subordinate actions, and the management is well aware of the strengths and weaknesses of the subordinates. Enhances Work Quality : The subordinates are answerable directly to the top management, and therefore they continuously aim at improving the work quality.

It also leads to standardization of the process and reduces the wastage. Uniformity in Action : When the control lies in the hands of few, the methods and techniques used are usually the same throughout all the levels and departments, thus encouraging the subordinates to perform uniformly.

Focus on Vision : The top management clearly defines and better understand the organizational vision. Therefore, it aligns all the resources, subordinates, activities and strategies towards the achievement of the vision.

Proper Coordination : The top management frames a uniform policy for subordinates at different levels, integrate their course of action and ensures coordination among all the subordinates. Centralization is not suitable for all type of business organizations. Let us now discuss the various shortcomings of centralization in an organization:. Slows Down Operations : The top management directs the day to day operations, and the subordinates have to report directly to the senior management.

At times when there is no managerial staff, the subordinates are unable to take immediate decisions. Thus, resulting in slowing down of business operations. Delays Decision Making : In centralization, the decision-making process slows down since all the decisions are to be taken by the top management. It is not suitable for handling emergencies or unexpected circumstances. Reduces Scope for Specialization : A person cannot specialize in all the activities alone. Therefore, in a centralized structure where all decisions are taken by the top management, the organization lacks specialized supervision and management.

Discourages Initiative : The subordinates are given instructions which they need to follow without questioning the decisions of the top management.

In centralization, the subordinates are intimidated from giving their input or suggestions. Lacks Adaptability to Change : The centralized organization runs in a conventional manner where the top management is somewhat rigid with its policies, methods and techniques. Thus, it creates a barrier to adopting modern and improved practices for organizational growth.

Overburden on Top Management : All the planning and decision-making work is done at the topmost level of management, they control even the day to day operations. Due to this reason, management becomes overburdened and is unable to concentrate on business expansion and growth. Bureaucratic Leadership : Centralization can be seen as a dictatorship by some, where the top management plans every course of action and the subordinates follow the instructions. Problem-solving becomes quite difficult in such circumstances since the decision-maker, and the implementer is two different individuals.

Poor Upward Communication : The subordinates are supposed to follow instructions while the least attention is paid towards their suggestions and feedback. All this hinders the upward communication in the organization. Centralization is taken as a dominating or dictatorial practice nowadays. The reason may be that the current employees do not like to be ruled.

Instead, they feel more comfortable in the organizations which treat employees as their associates and value their knowledge, skills and suggestions. However, from the organizational point of view, centralization is essential to keep a hold over the business activities and operations, especially in the organizations where the employees are not self-disciplined or do possess the required decision-making skills.

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Decentralisation: Meaning, Advantages and Disadvantages of Decentralisation

Definition : Centralization refers to that organizational structure where decision-making power is confined to the top management, and the subordinates need to follow the instructions of their seniors. Centralization of authority is essential for the small-scale organizations which lack resources and finance. Example : A person running a departmental store appoints a manager, a cleaning staff, a salesperson and a helper. The owner delegates the work among the staff according to their skills and positions. He also keeps firm control over the routine activities of the staff and instructs them from time to time. This type of organization has a decentralized structure where the owner is the decision-maker, and the staff has to follow his instructions.

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We use cookies essential for this site to function well. Please click "Accept" to help us improve its usefulness with additional cookies. Learn about our use of cookies, and collaboration with select social media and trusted analytics partners here Learn more about cookies, Opens in new tab. Timeless as the tug-of-war between centralization and decentralization is, it remains a dilemma for most companies. We heard that point loud and clear in some 50 interviews we conducted recently with heads of group functions at more than 30 global companies.

Centralisation

In distribution logistics, the determination of warehouse locations represents a strategic decision. A basic distinction is made between centralized and decentralized locations, which can have different effects on logistics costs see also warehousing costs and delivery service see also Perfect Order Fulfillment ; however, a combination of both variants is also possible. A central warehouse bundles the entire assortment see also Assortment Dimensions of one or more manufacturers. As a rule, customers are supplied from a single location, while decentralized solutions have several strategically and geographically distributed warehouses that do not hold the entire product range in stock.

Centralised organisations are where most decisions are taken by senior managers and then passed down the organisational hierarchy. This structure relies on having strong and competent managers. Centralised management structures can lead to greater uniformity within the organisation as each branch of the business will be using standardised procedures. Centralised organisational structures are often less responsive to localised external pressures.

The other key influencing factor on the organisation of the Procurement department is the issue of centralisation and decentralisation. A multi-site firm faces one additional organisational question that does not concern most single-site firms: To what extent should procurement activity be centralised at the corporate level? In practice, virtually every firm answers this question differently. Some firms centralise the activity almost completely, doing the procurement for all sites at a central headquarters office. Others decentralise the function entirely, giving each site full authority to conduct all of its procurement activities.

To centralize or not to centralize?

Centralisation

Advantages of Decentralisation :. Centralization enables a competent leader to control work and produce results quickly and effectively. It helps to coordinate work and put all activities on track.

ГЛАВА 82 Когда мысль о последствиях звонка Стратмора в службу безопасности дошла до сознания Грега Хейла, его окатила парализующая волна паники. Агенты сейчас будут. Сьюзан попробовала выскользнуть из его рук, Хейл очнулся и притянул ее к себе за талию. - Отпусти меня! - крикнула она, и ее голос эхом разнесся под куполом шифровалки. Мозг Хейла лихорадочно работал.

 Сьюзан! - позвал.  - Меня осенило. Здесь шестнадцать групп по четыре знака в каждой. - О, ради Бога, - пробурчал себе под нос Джабба.  - Все хотят поиграть в эту игру.


Advantages and disadvantages of centralisation are: Good examples of businesses which use a decentralised structure include the major.


COMMENT 4

  • Centralisation is a concept that denotes the concentration of authority in a particular position. Enzo S. - 30.04.2021 at 21:40
  • advantages and disadvantages which are distinctive from one to another. process of devolution of fiscal and decision-making authority from the higher to the. Lobsdosgiodia - 04.05.2021 at 07:45
  • Articles on the advantages and disadvantages of centralization and/or decentralization abound in the literature. Since different authors have di fferent assumptions. Henry P. - 05.05.2021 at 19:17
  • When a part of the work is entrusted to others, it is known as delegation. Maud M. - 07.05.2021 at 05:28

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