CENTRALIZING ORGANIZATION...........

2. Henri Fayol(French mining engineer and director of
mines) who developed a general theory of business
administration has introduced the 14 principles of management
which are very dynamic in nature.
Among those, the 8th principle is
CENTRALIZATION…

3. CENTRALIZATION

5. ..INTRODUCTION..
 The amount of authority and autonomy givento a
multinational divisional manager.
 In short, the simple meaning is that the location of
most authority at the upper levels of the organization, it’s
called THE centralization.

6. What is centralization?
 Centralization is the degree to whichdecision making takes place at upper levels of the
organization.
 If top managers make key decision withlittle input frombelow, then theorganization is
more centralized.
 KeepING in mind that centralization is relative not absolute- that is, an organization is
never completelycentralized.

7. Finance Manager
Executive Director
Admin.OfficerFinanceExecutive
Asst.Manager
OperationsManager
SENIOR
MANAGER
Centralization means reservation of authorityat central point within the organization.In centralization,controland decisionmaking reside at the
toplevelsof management…

8. Some times you would facethis situation in many companies that if you have ever called a company’s
with a complaint or a special request and beentold by the customer service representative ,,,
’’ I will have to ask my manager” or “ I am not authorizedto do it but I understoodyour situationyet I cannot do
it.”
so you are aware about suchtype situation’s answer.

9. Headquarter
Production Marketing Finance Personal
Therefore, in this type of organization, managers take most decisions even the small one also.
Thus the customerservice representative you called couldn’t make a decision without first askingthe
manager.
so, in a centralized organization, head officerwill retain the major responsibility and power.

10. More centralization…
 Environment is stable.
 Lowerlevelmanagersare not as capable or
experience at making decisionsas upperlevel
managers.
 Lowerlevelmanagersdo not want to have a sayin
decisions.
 Decisionsare significant.
 Organizationis facing a crisisor theriskof company
failure.
 Companyis large.
 Effective implementation of companystrategies
dependonmanagers’retaining say overwhat
happens.

11. Factors influencing centralization
Size and dispersal of operation
Level of diversity of product-lines
Nature of growth
Natureof Business
Qualityof Executives
Management by Exception
Effective Control System

12. implication of centralization
 Reservation of decision
making power at top
level.
 Reservation of operating
authority with the middle
level managers.
 Reservation of operation at lower level at the
directions of the top level.

14. Applications of centralization
 Small businesses oftenoperate in a centralized manner
simplybecause of the smaller size of their workforces
 A small business owner may be the only manager in
the entire company, with all other employees
reporting directly to the owner. Organizational
designs can change as small companies grow,
however

15.  A trucking companyis an example of a
companywitha centralized organizational
design
 Trucking company managers make all
operational decisions, sending
informationto individual drivers through
dispatchers
Continued…

16. Limitations of Centralization
 Development of low level
managers are hampered .
 Opportunity givento
exercise initiative and
judgment is negligible .
 It is a costly affair and
delays decisionmaking .
 It creates problems of
effective communication.
 No scope of specialization
as a personmay haveto
look intomany things.

17. Arguments for Centralization
 Centralizationcan facilitate
coordination.
 Centralizationcan helpensure
that decisions are consistent
withorganizational objectives.
 Centralizationcan avoid
duplicationof activitiesby
various subunits withinthe
organization.
 By concentrating power and
authorityin one individual or a
management team, centralization
can give top-level managers the
means to bring about needed
major organizational changes.

18. Examples of Centralization
Dictatorship: Dictatorships are usually ruledby a single
powerful figure, the easy to spotsignof a centralized
organization. If you can stopthe leader, you can destroy the
entire group.
Military : Traditionally, the military has beenthe classic
example of top-downor hierarchical management. The
General orders the Captainwho orders the Lieutenant who
orders the lower subordinates…..

19. Continued…
Government : Governments are classic top-
down structures leadby the President or
Prime Minister, followed by Senators or
Ministers who eachhave a teambelow
them.

20. Television : TV shows are createdby centralized
organizations that decide what we watch and
when we watchit. And, if think literally about it,
one message is sent down the airwaves for us to
watch at the other end.
Continued…

21. reserve bank of India : reserve bank of India takes every decision about C.R.R. (cash reserve
ratio) , inflation rate, printing money, interest rateetc. also rbi takes all the important
decisions relating to all the banks...
Continued…

22. Examples of Fusion centralization
Wikipedia : Comprisedof thousands of
volunteers, Wikipedia is basedon a wiki or
open platform for editing the encyclopedia
entries. A skeleton staff of employees
oversee the venture.

23. Facebook : Whilst the organization
provide the platformfor listings, users are
free to post what they like withinthe
guidelines set out by the platform owners.
Continued…

24. Advantages of Centralization
 Better co-ordination.
 Focus on the most
important decisions.
 Improved quality of work.
 Flexibility.
 Personal leadership.
 Uniformity in action.
 Reduced cost.

25. Disadvantages of Centralization
 Delay in work.
 Remote control.
 No loyalty.
 No Secrecy.
 No special
attention.

26. In the 19TH CENTURY, WE SAWthat Adolf Hitler & BenitoMussolini’S
leadership, all people WERE against THEIR leadership and THE result WAs that
they were lost. so in centralization, decision will be taken by ONLY one person & it
maybe correct or wrong, therefore centralization is not good for organization.

27. WHEN WE TALK ABOUT CENTRALIZATION,
AUTOMATICALLY THE TERM COMES IN OUR
MIND IS WHAT IS DECENTRALIZATION
COMPARED TO CENTRALIZATION ????

31. Some of the books on
.Centralization.

32. Some recent news updates on
.Centralization.
Year
2016.

33. Continued…
Year
2015.

34. Year
2012.
Continued…

35. …Conclusion…
The difference betweencentralization and decentralizationis one of the hot
topics these days. Some people think that centralizationis better while
othersare in favourof decentralization. In ancient times, peopleused to run
their organization in a centralizedmanner, but nowthe scenariohas been
changed completely. due to rise in competition where quick decision
makingis required and therefore manyorganizations opted for
decentralization.
However, centralization still exists in some of the organizations.