Centralization refers to decision-making authority being concentrated at higher levels of management, while decentralization distributes authority to lower levels. Centralization allows for better coordination but can slow decisions, while decentralization empowers local managers but reduces uniformity. Most organizations balance these approaches - some decisions require centralization for strategic consistency, while others benefit from decentralization's local knowledge and faster responses. The key is determining which types of decisions are best handled at each level.

1. Centralization &
De-centralization

2. CENTRALIZED
Top Managers Hold Most
Decision Making Authority
DECENTRALIZED
Lower Level Managers Hold
Significant Decision Making
Authority

3. CENTRALIZATION
The amount of authority and autonomy given to 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 centralization.

4. Some times you would face this situation in many
companies that if you have ever called a company’s with a
complaint or a special request and been told by the
customer service representative ,’’ I will have to ask my
manager” or “ I am not authorized to do it but I
understood your situation yet I can not do it.”
so you are aware about such type situation’s answer.

5. Therefore, in this type of organization
managers take most decisions even the small
one also, that why the customer service
representative you called couldn’t make a
decision without first asking the manager.
so, in a centralized organization, head
officer will retain the major responsibility and
power.
Headquarter
Production Marketing Finance Personal

6. For an example, reserve bank of India takes
every decision, about C.R.R. (cash reserve ratio) ,
inflation rate, printing money, interest rate etc.

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

8. Thus, decreasing role of subordinates in
decision making is calling
centralization.

9. Delay in work
Remote control
No faithfulness
No secrecy
No special attention
Politics

10. Centralization organization we can see that
Adolf Hitler & Benito Mussolini leadership,
all people against his leadership and result is
that they were lost, so in centralization,
decision will be taken by one person & it
may be correct or wrong, therefore
centralization is not good for organization.

11. Increasing the role of
subordinates in decision making
is decentralization & simple
meaning is that the location of a
significant amount of authority in
the lover levels of the
organization.
Decentralization

12. A organization is decentralization, if it has
a high degree of delegation at all levels
you may have talked to customer service
representative at call center who said “I can
take care of that for you right now.”
It’s mean a person was able to handle your
problem without any input from or
consultation with company ‘s management

13. In this organization workers closest to
problems are authorized to take the
necessary decision to solve the problems
on their own the best way to develop and
retain a close relationship with the
customer .
Customer care

14. How to be a more effective
decentralization
1. Trust your staff
2. Avoid seeking
perfection
3. Instruction
4. Know your interest
5. To help identify
potential problems
6. Praise the effort of
your staff
7. Routinely
decentralization work
8. Provide resources
9. delegate to the lowest
possible level.

15. Advantages
Reducing senior manager’s burden
Increased motivation
Maintenance of Secrecy
Quick decision
Local knowledge
Proximity to the market
 As manager in many organization consider
greater decentralization
 The important question is not whether an
organization should be decentralized but to
what extent to it should be decentralized.

16.  Expensive
 Lack of Uniformity
 Difficulty in Co-ordination
 lack of specialization
 Hard to make decisions
as a whole
Disadvantages

17. DIRECTOR
FINANCE
MANAGER
MARKETING
MANAGER
PRODUCTION
MANAGER
PERSONNEL
MANAGER
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