MBA 435 SEMINAR PRESENTATION

MERITS AND DEMERITS OF CENTRALIZEDAND DECENTRALIZED ORGANIZATION STRUCTURES

Group 13 Members
Serupepeli Matakasa Student ID No:S93000216 Kavita Shah Student ID No: S11050160
Pita Tuni Turaganikeli Student ID No: S90766710

Presentation Outline
Objectives Organization structure Work Specialization Centralization Decentralization Merits/ Demerits of Centralization Merits/ Demerits of Decentralization Conclusion/ Reference Video

LEARNING OBJECTIVES
Identify the six key elements that define an organizations structure Know the concepts of centralization and decentralization

Discuss the merits and demerits of Centralization and Decentralization.

Organization Structure
Defines how job tasks are formally divided, grouped, and coordinated Key elements to be addressed:
Work specialization Departmentalization Chain of command Span of control Centralization Decentralization Formalization

Work Specialization
Division of labor Describes the degree to which activities in the organization are subdivided into separate jobs Creates problems when carried too far

Departmentalization
Basis by which jobs are grouped together
Function Product Geography Process Customer

Chain of Command
Unbroken line of authority that extends from the top of the organization to the lowest and clarifies who reports to whom Authority Unity of Command principle Fewer organizations find this is effective

Span of control
Determines the number of levels and managers an organization has Trend in recent years has been toward wider spans of control Wider span depends on employees knowing their jobs well

Formalization
Degree to which jobs within the organization are standardized

Centralization vs. Decentralization

Centralized
Top managers hold most decision-making authority

Decentralized
Lower level managers hold significant decision-making authority

Merits of Centralization
Senior Managers are given more responsibility.
There is more structure and more organization within the corporation. Important decisions are made at a senior level in head office so the daily operations are not interrupted. Important decisions can be made quicker and will be more consistent within the whole organization.

Demerits of Centralization:
Too Much Responsibility may fall on one or two regional managers. The rest of the workplace could feel out of placeUnimportant as they are left out of decision making processes. Branch managers may feel unimportant as they have to consult the superiors with all important decisions This could be demoralizing.

Merits of Decentralization

Decision can be taken by lower level managers.

Facilitates timely decision-making. Decisions and strategies can be quickly adapted to the competitive environment.

Provide autonomy to employees, increases their selfconfidence and thus enhances their motivation level.

Demerits of Decentralization
Coordination of decentralized units poses a serious challenge to top management. Policies are not be applied uniformly across the organization and could be demotivating Differences in opinions of top management could lead to conflict. The success of a unit will depend on the efficiency and capability of its head.

Empowering Employees
Employees can be empowered by having more autonomy to make their own decisions.

It also allows them to make better use of the knowledge and experience they have gained and implement some of their own ideas.

Movie Example: Apollo 13

What organizational structure does NASA use to handle a moon launch?

Conclusion
There is no simple answer to the question whether centralization or decentralization is the preferable option for an organization

Decentralization is not a proper solution for all problems, and centralization is not necessarily bad.

References
Robbins, S.P. Judge, T.A, Millett, Boyle,M.(2011)Organizational Behavior . Chapter 15( pg 438-455) www.youtube.com/watch?v=MF0ZxboKL http://www.ehow.com/info_8703779_diff erence-between-centralizeddecentralized-

Thank You ?