Centralisation vs Decentralisation

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3.8CENTRALIZATION AND DECENTRALIZATION
Centralization
Centralization is concentrating the power and authority near the top or in the head of an organization.Centralization also means as decision authority is located near the top of the organization. Decentralization

Decentralization is dispersing the power and decision making to successively lower levels of the organization.Subordinates have the authority to make decisions through decentralization.The subordinates have the authority to identify any problems or issues and suggest suitable solutions to overcome the problems.

y
President
In centralized organization,a greater proportion
y
Vice president
of major decisions is made at top levels.
y
Division manager
y
Division manager
y
Unit manager
y
Department head
y
Supervisor
y
Employee
In decentralization organizations,a greater proportion of major decisions is made at lower levels.
Figure above show the centralization and decentralization and the chain of demand

Advantages and disadvantages of centralization
Advantages
Disadvantages
1.Faciliate
the
coordination
of organizational activities in order to achieve the organization goals. Top-level management takes a longer time to make decisions.This could lead to losses in terms of economic resources. 2.Avoid the abuse of power by

subordinates.
Difficulties in adjusting organizational activities and decisions parallel to changes in the business environment. 3.Facilitate the coordination of orders given to employees at different management levels. Employees are not motivated to work harder because trust or opportunites to show their abilities are not given. Advantages and disadvantages of decentralization

Advantages
Disadvantages
1.The organization becomes more flexible. The organization may easily lose control due to the abuse of power by
subordinates.
2.Middle and lower-level management are
given opportunities to make decisions....
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