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Centralization and decentralization

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centralization and decentralization

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Centralization and decentralization

  1. 1. Jul 2012 CENTRALIZATION Systematic Reservation Of Authority At Central Points Within The Organization Retention Or Concentration Of Managerial Power At Central Points In The Organization, Which Is Nerve Center Of The Organization i.e. At The Top Level
  2. 2. Jul 2012 Everything That Goes To Reduce The Subordinate’s Role In Decision-making Is Centralization It Is A Matter Of General Prudence That Every Manager Must Reserve Certain Authority For Overall Planning, Organization, Command, Motivation And Control
  3. 3. Jul 2012 BENEFITS OF CENTRALIZATION © Top Management Can Take Vital Decisions © Results in Quick Decisions © Uniform Policy And Coordination Of All Activities © Effective And Intelligent Decisions
  4. 4. Jul 2012 BENEFITS OF CENTRALIZATION © Crisis And Emergency Situations Effectively Managed © Successful Handling Of Emergencies © Higher Specialization Can Be Secured © Duplication Of Efforts Can Be Avoided © Control And Communication Easier
  5. 5. Jul 2012 LIMITATIONS OF CENTRALIZATION © Decisions not taken by people who face the situation © Lower and middle-level management will not have interest and initiative in the job © Top management unnecessarily wastes time and energy on unimportant and routine matters © Hampers Effective Communication
  6. 6. Jul 2012 IMPORTANT TO NOTE HERE Complete Centralization Is Impossible Without Some Measure Of Delegation Of Authority When An Organization Is Large And Complex, Management Cannot Centrally Control All Information Necessary For Decisions
  7. 7. Jul 2012 In Such A Case The Only Solution Is To Divide The Organization Into Autonomous Decision Making Units And Have Multiple Decision Centres Spread Over In The Organization Structure
  8. 8. Jul 2012 DECENTRALIZATION “Decentralization Is The Systematic And Consistent Delegation Of Authority To The Levels Where The Work Is To Be Performed.” —Louis Allen It Refers To The Systematic Effort To Delegate To The Lowest Level All Authority Except That Which Can Only Be Exercised At Central Points
  9. 9. Jul 2012 “Everything that goes to increase the importance of the subordinate’s role is decentralization; everything that goes to reduce it is centralization.” —Henry Fayol In a decentralized organization, the decision- making power will be widespread It is a systematic effort to delegate authority to the lowest levels
  10. 10. Jul 2012 BENEFITS OF DECENTRALIZATION ḋ Relieves Top Management Of The Burden Of Decision-making ḋ Forces Lower Level Managers To Participate Effectively ḋ Eases The Burden Of Chief Executive ḋ Encourages Decision-making And Assumption Of Authority And Responsibility
  11. 11. Jul 2012 BENEFITS OF DECENTRALIZATION ḋ Gives Managers More Freedom And Independence In Decision-making ḋ Aids In Adaptation To Fast Changing Environment ḋ Capable Managers Can Be Developed
  12. 12. Jul 2012 LIMITATIONS OF DECENTRALIZATION ḋ A Handicap In Case Of Quick Emergency Decision ḋ Makes It Difficult To Have A Uniform Policy ḋ Creates Problems Of Coordination ḋ Results In Loss Of Control By Upper Level Managers
  13. 13. Jul 2012 DISTINCTION BETWEEN DELEGATION AND DECENTRALIZATION DELEGATION 1. A Process 2. Takes Place Between A Superior And Subordinate 3. Superior Exercises Supervision And Control Over The Delegate DECENTRALIZATION 1. End Result Of A Deliberate Policy 2. Companywide Delegation As Between Top-management And Departments Or Divisions 3. Top Management Exercises Broad And Minimum Control

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