Tag Archives: Centralisation

Centralisation, or centralization , is the process by which the activities of an organisation, particularly those regarding planning decision-making, become concentrated within a particular location and/or group.

The difference between Centralized management and Cental management

Centralized management is based on the Group’s management needs to achieve a unified reporting system, a unified management system of information collection of new management ideas and models. Centralized management is based on information centralized, centralized control of information to achieve the Group to achieve resource sharing between members of enterprise groups, win-win cooperation and common development.

To achieve centralized management of enterprise groups should be analyzed the existing problems, a clear need to address the key issues, and needs to develop consistent with the objectives of the enterprise group.

“Central management” is not “centralized management.” Centralized management is essentially a centralized information, processing power is still different interest groups; centralized management through the “control” parameter settings, different levels in the group set reasonable “control” the realization of “centralization” and “sub- rights “of unity is centralized within the scope of the right of disposal in centralized departments.

Centralized and decentralized management is the opposite, between the parent and subsidiary companies involved in group decision-making authority of the division of financial management, financial management is a group choice. The centralized management and decentralized correspondence should be involved in the Group parent company’s financial data and funds management business is focused on parent companies, or distributed to the members of the enterprise, is a select group of financial control approach, the two have different connotations.

The centralized management of network-based environment to achieve unity of group financial accounting system, unified reporting and unified management system, a new management ideas and models that group the financial situation of various units into the parent company of all the accounting and management among their units only for routine decision-making rights and the implementation of the Group’s obligations under the policy, its implementation is targeted group of affiliated units, including centralized accounting, financial decision-making centralized control and financial focus.

Centralized management of group financial hierarchical management based on ideology, between the parent and subsidiary companies in the Group’s financial management division of decision-making authority, financial management decision-making power will be concentrated in the parent company, on the one hand to facilitate the parent group is easier to mobilize internal production resources to achieve resource the reasonable allocation; on the other hand to facilitate the parent group by group product mix, the overall optimization of the organizational structure, such as through the consolidation of purchases (economy of scale reduce costs), or unified sales (share marketing network, reducing cost of sales) in the manner complementary advantages. The Group’s focus on financial management is reflected in the integration of financial management, which on the one hand through Internet technology and centralized accounting accounting, the group parent company’s financial accounting data concentrated in the parent company to parent company ready access to the subsidiary’s financial data, and to keep the Group generated consolidated summary statements of the Group Companies to eliminate the drawbacks of asymmetric information; the other hand, through the establishment of clearing house funds or finance companies to fund the Group parent company’s central management, the Group achieved all subordinate units within the group of funds cycle, and can focus on strategic investment and the Group funds to pay maturing debt, can reduce the Group’s capital costs and financial risk.

Centralisation VS Decentralization

The title says a lot for tonight’s post, which is pulled from the Principles of Management class I took at Umass-Amherst during the winter 2007 semester.

The advantages and disadvantages of centralized versus decentralized organizational structures lies greatly in the inherent qualities and effects of the structures themselves. Robbins and Coulter describe this very well, “If top managers make the organization’s key decisions with little or no input from below, then the organization is centralized.” Companies which wish to consolidate power and decision-making abilities at the top of the organizational chart, tend to be centralized organizations. If the CEO of a corporation has a particular vision and wishes for it to remain pure to his/her perspective, he/she will centralize the organization so that he/she is able to control as much of the company as possible. As the textbook states, this is helpful for companies who need to be stable or are facing a crisis and need one source of decision-making to lead them. These sort of organizations are becoming more rare, as employees become smarter and organizations become larger, however a few do still exist. Consider the Oakland Raiders, a team which is widely acknowledged as being run completely (but poorly) by its owner, Al Davis or a monarchy such as Saudi Arabia, or an absolute theocracy, such as the Vatican City. Centralized structures are becoming rare because of their many disadvantages. Due to power being consolidated at the top of the organization, risk is great if the top of the organization becomes incapable of leading the organization (death, illness, or massive organizational size causing a weak span of control). Employees also will feel less motivated to perform for the organization as they will not have an avenue for sharing their ideas on how to improve the organization.

Decentralized organizations are becoming more popular as the ability for organizations to decentralize increases. Decentralization allows organizations to take advantage of division of labor by sharing decision-making across the organization. It also empowers employees and allows them to improve their performance by being able to act to improve deficient or inefficient areas immediately without approval from the top of the organization. Another advantage of decentralization is allowing for the managers of business areas to actually use their first hand knowledge and experience to improve their areas. Consider the Dallas Cowboys of the early 90′s, where Jerry Jones the owner had final say over all personnel decisions to the New England Patriots of today, where numerous individuals throughout the organization have an input on personnel decisions. By trusting the individuals within the organization to obtain accurate information and use their minds to provide appropriate analysis, the Patriots are able to take advantage of division of labor and allows for multiple individuals to give input on players. Decentralization has proven so successful for the Patriots (via seemingly always finding cheap players to replace expensive stars) that the Cowboys have now moved toward a more decentralized structure.

Immediately, I would apply decentralization by allowing each division of my diversified food company to make decisions on the ingredients, manufacturing process, and almost all other aspects of each brand. I would allow the cookie experts to decide on what how and out of what to make the cookies. In my mind, many of the aspects of a food company correspond to an organic structure; for this reason I would encourage my managers to use teams, maybe based on each individual product, especially cross-functional teams that would work with all four food divisions to ensure that no one employee becomes bored by performing the same menial task over and over and allowing for all four divisions to be on the same page.

One area where I would consider using a centralized structure is in marketing. It would prove harmful to the salty snack foods and cookies brand if my breakfast cereals and fruit juice divisions decided to proclaim the health benefits of cereals and juice and expose the negative health aspects of eating too many cookies and salty snacks. Controlling the public image of the entire corporation would prove beneficial over a long-term outlook, even though it might take some of the ideas and unique marketing strategies out of the hands of the people who know them best. Although I would allow for decentralization via listening to employees and allowing managers to compile marketing campaigns, I would maintain final approval of all marketing related strategies in the hands of a few employees, with whom I would maintain a close relationship with. Overall, I would definitely use a decentralized structure to allow me for more free time to focus on truly important items, like relaxing and watching Boston sports on what must be a massive television in my CEO home [this is sort of a joke, I would use the extra time provided by decentralization to ensure I performed my duties as CEO of leading the company and planning the overall strategy well, trusting my employees would be able to perform their duties without exact instructions from me].

Centralization and Decentralization? Description

An organization has to make strategic and operational decisions. Where and by whom should these decisions be made? And: how should the organization structure be adapted? Centralization and Decentralization are two opposite ways to transfer decision-making power and to change the organizational structure of organizations accordingly.

Centralization:

* Definition: The process of transferring and assigning decision-making authority to higher levels of an organizational hierarchy.
* In a centralized organization, the decision-making has been moved to higher levels or tiers of the organization, such as a head office, or a corporate center.
* Knowledge, information and ideas are concentrated at the top, and decisions are cascaded down the organization.
* The span of control of top managers is relatively broad, and there are relatively many tiers in the organization. Compare: Fayol.

Decentralization:

* Definition: The process of transferring and assigning decision-making authority to lower levels of an organizational hierarchy.
* In a decentralized organization, the decision-making has been moved to lower levels or tiers of the organization, such as divisions, branches, departments or subsidiaries.
* Knowledge, information and ideas are flowing from the bottom to the top of the organization.
* The span of control of top managers is relatively small, and there are relatively few tiers in the organization, because there is more autonomy in the lower ranks.

Three Forms of decentralization

* Deconcentration. The weakest form of decentralization. Decision making authority is redistributed to lower or regional levels of the same central organization.
* Delegation. A more extensive form of decentralization. Through delegation the responsibility for decision-making is transferred to semi-autonomous organizations not wholly controlled by the central organization, but ultimately accountable to it.
* Devolution. A third type of decentralization is devolution. The authority for decision-making is transferred completely to autonomous organizational units.

Strengths of Centralization. Characteristics

* Philosophy / emphasis on: top-down control, leadership, vision, strategy.
* Decision-making: strong, authoritarian, visionary, charismatic.
* Organizational change: shaped by top, vision of leader.
* Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.
* Uniformity. Low risk of dissent or conflicts between parts of the organization.

Strengths of Decentralization. Characteristics

* Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
* Decision-making: democratic, participative, detailed.
* Organizational change: emerging from interactions, organizational dynamics.
* Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.

Participation, accountability. Low risk of not-invented-here behavior.