Guided by: Prof.

Jigar Nagvadia

Prepared by: 1) Patel Mehul 2) Patel Prapti 3) Patel Sejal 4) Patel Heena 5) Patel Dhaval

Centralisation
The process of systematically retaining power and authority in the hands of higher-level managers. It is top level activity For example: banks and insurance companies

Characteristics of centralisation
Delegation of authority is rule

Power and discretion are concenttated at the top levels

Control and decision making reside at the top levels of

the management.
The more highly centralised the organisation, the more control and decision making reside at the top.

Decentralisation
It is the pushing down of authority and power of decision making to the lower level. For example: production and sales departments It is completely opposite action of centralisation

Types of decentralisation
Profit centres(responsibility centre) Cost/expenses centres Investment centres

Advantages of decentralisation
Reduce workload of an overburdened executive.

It brings the decision-making process closer to the scene of the

action Decentralisation facilitates product diversification. Decentralisation gives individuals an opportunity to learn by doing It often results in effective controls and performance measurements. decentralised management is associated with the profit centre principle.

Disadvantages of Decentralisation
Conflict Cost Some disadvantages of decentralisation relate to the profit-centre concept Decentralisation can be extremely beneficial. But, it can also be dangerous unless it is carefully constructed and constantly monitored for the good

of

the

company

as

whole.

Excessive

decentralisation can do extreme damage to an organisation

Contingency(A possible event or occurrence or result) Factors in Decentralising

The appropriate organisational mix of centralisation and

decentralisation is affected by the following situational variables:

Purpose and goals of an organisation Knowledge and experience of executive Organisation size Geographical dispersion

(Cont.) Technical complexity of tasks The time frame of decisions The importance of the decision Views of subordinates Planning and control procedures Environmental factors