SHINING STARS
Ameya Bhat 02
Ankita Pote 05
Bhagyashri Patil 08
Dhananjay Morey 11
Rachana Bhavsar 25
Vrushali Patil 39
Pallavi More 49
DECENTRALIZATION
INTRODUCTION
Decentralization of authority means dispersal
of decision-making power to the lower levels
of the organization
Company may be highly decentralized even
though all physical facilities and employees
are located in a single building
Decentralized organization is one in which
even the lowest-level managers and
employees are empowered to make decisions
Objectives of Decentralization
Relive the burden of work
Develop the managerial faculties
Motivation and satisfaction of workers
Quick and appropriate decision
Smooth communication at all levels
Principles of Decentralization
Co-ordination in decision-making
Competent and capable subordinates
Responsibilities with authorities
Mutual understanding
Collective decisions
TYPES OF DECENTRALIZATION
Administrative decentralization
Political
Fiscal decentralization
decentralization
Delegation Deconcentration Devolution
Factors determining the Decentralization
Size of the operation
High costs of decision
Higher differentiated product lines
Availability of managerial manpower
Top management philosophy
Environmental influences
Indicators of Decentralization
Hiring and fixing of employees
Approval of increase in pay (wages, salaries)
Promotion of officers
Purchase and sale of capital equipment
Approval of price quotation
Acceptance of sales orders
Approval of travel expenses
Advantages of Decentralization
It reduce the burden of top executives
It makes diversification effective
It helps in the development of managerial
facility
It is very important for production and
marketing activity
It creates perfect atmosphere and
development of morals
Disadvantages of Decentralization
It increases the administrative expenses
It requires the product lines of the concerns to be
broad
If finds problems in bringing co-ordination among
the various units
It brings about inconsistencies and uncertainties in
the company
It is not possible because of external factors
TECHNIQUES OF DECENTRALIZATION
Establishment of appropriate centralization
Development of manager
Provision for communication and cooperation
Establishing adequate controls
Guidelines for Introducing
Decentralization
Capable managers at all levels
Adequate controls at all levels
Effective communication and co-ordination
Dispersion of location of plants
When to Decentralize ?????
Relief to Top Executives
Diversification
Emphasis on Product and Market
Management Development
Higher Motivation
Break-through Strategy (BTS)
Centralization vs. Decentralization
Centralization Decentralization
The degree to which decision The degree to which decisions are
making is concentrated at a single made by lower-level employees
point in the organization
Top-level managers make decisions Distinct trend toward decentralized
with little input from subordinates decision making
in a centralized organization
Organization is facing crisis or the Corporate culture is open to allowing
risk of company failure managers to have a say in what
happens
Centralization vs. Decentralization
Centralized
Top managers hold most
decision-making authority
Decentralized
Lower level managers hold
significant decision-making
authority
Case deals with “Whether Management should be
Centralized or Decentralized”
Example of CML Group
Charles M. Leighton - Professor of
management at Harvard business school set
up his own unit
He want to start his own business and test
management theories
Operate a business with courage and
confidence
Cont….
He got his capital from capitalist who agreed
with his style of business management
In the three years they expanded their sales
and acquired 11 companies
Top management of the companies and end
up to interfering with acquired business
Cont…
The various heads of subsidiary companies
they set their own product line without
internal differences
Each manager measure his own performance
against goals set in a strategic plan
They adopted MBO and management by
result
The company management strategy believed
in decentralization
Cont…
COMMENTS :-
This case is indicated that a manager must
share the decision making responsibilities if
the environment is favourable
For effective decentralization, it is necessary
to have a favourable environment of group of
subordinates is capable
Conclusion
Decentralization implies more delegation of
authority
In large and complex organization higher
decentralization is always preferable
In the 21st century, knowledge workers will
always prefer higher decentralization and
delegation
