Principles of Management

Section: 1
Semester: Fall-2022

Course Instructor
Dr. MD. Mosharraf Hossain
(Professor)
Department of Management

University of Dhaka
Date: 14/05/2023
 Presentation On

Centralization and Decentralization Of

Organizations
Presented By:

Md. Abdus Sabur Sardar 3-22-01-069

 Introduction

Every organization has a management system that helps streamline

its daily processes and procedures. Companies often implement a
centralized or decentralized organizational structure to establish
management protocols and facilitate clear communication.
 Definition of Centralization

Centralization is a form of organizational structure where the

decision making capability rests with the top management. A couple
of hand-picked members are entitled to create strategies planning,
determine the goals and action taking activities on which an
organization will function.
 Advantages of Centralization
❑ An efficient communication chain
❑ Clear vision
❑ Economic Issue
❑ Decision-making is simple
❑ Increase in productivity
 Disadvantages of Centralization
❑ Bureaucratic command
❑ Remote control
❑ Workplace delays
❑ Employee dissatisfaction
❑ Decrease productivity
 Definition of Decentralization

Decentralization is a systematic delegation of authority at all levels

of management and in all of the organization. In a decentralization
concern, authority in retained by the top management for taking
major decisions and framing policies concerning the whole concern.
Rest of the authority may be delegated to the middle level and lower
level of management.
 Advantages of Decentralization
❑ Quick decision and response times
❑ Better ability to expand the company
❑ On-demand training
❑ Appraisals
❑ Better utilization of management
 Disadvantages of Decentralization
While a decentralized organizational structure can be beneficial to
many firms, it also has drawbacks, such as:

❑ Problem coordinating
❑ Increased expenditure
❑ Incongruity in operations
❑ Self-centeredness
❑ Reliance on hierarchy
 Centralized or Not to Centralized
A decision to centralize requires a yes to at least one of three questions
 Factors For Degree of Decentralization
While the degree of decentralization depends on a wide range of
factors which are different for different organizations, here is a
common list:
❑ Significance of the decision
❑ Size of the Enterprise
❑ The Attitude and Philosophy of the Management
❑ Control Techniques
❑ Availability of Capable Executives
 Comparison/Difference between
Centralized Decentralized

One body of management decides Management at every level makes decisions for
Decision-making
procedures and develops strategies. their department and teams.

Information comes from the top down. Departments communicate with each other more
Communication
Employees follow executive orders. freely.

Overall responsibility belongs to a small

Managers and employees share responsibility. This
Responsibility group of executives. They execute the
allows for feedback and opinions from employees.
company's vision with little input

May be best for small organizations with Often works well for large organizations with many
Size of organization
fewer employees. levels.

Benefit Proper leadership and coordination Sharing of responsibilities and workload

 Conclusion
Due to the impossibility of achieving complete centralization or
decentralization, most organizations currently have both. Complete
centralization is impossible in an organization since it implies that
the top echelon makes all decisions. On the other hand, complete
decentralization implies no control over subordinates’ actions. Hence,
maintaining a balance between the two is equally important.
 References
 https://byjus.com/commerce/difference-between-centralization-and-decentralization/
 https://www.managementstudyguide.com/centralization_decentralization.htm
 https://www.toppr.com/guides/business-management-and-entrepreneurship/organizing/centralization-and-
decentralization/
 https://www.geeksforgeeks.org/centralization-and-decentralization/
 https://keydifferences.com/difference-between-centralization-and-decentralization.html
 https://www.blockchain-council.org/blockchain/decentralized-vs-centralized/
 https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/to-centralize-or-
not-to-centralize
 https://www.vedantu.com/commerce/advantages-and-disadvantages-of-centralization-and-decentralization
 https://www.indeed.com/career-advice/career-development/centralized-vs-decentralized