Centralization and Decentralization in a Company (Essay Sample)

Centralization and decentralization in a company
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Centralization and decentralization in a company
Centralization of a company is a process where the managerial positions have the power and authority to make decisions for a company. On the other hand, decentralization allows the other middle and low members of the company to contribute toward decision making of the company.
* Why companies should centralize or decentralize
Centralization of companies helps the business meet its decisions efficiently. This is because many centralized companies are small companies where the owner is the main decision maker. In the process, the owner handles making the mission and vision of the company with the set business goals that need to be achieved. He or she controls the management process with full power and control to other employees of the company towards achieving the set objectives (Chantal, 2012).
On the other hand, decentralization of a company leads toward full utilization and maximization of individuals. The individuals are given the mandate to oversee the decision-making process, and execution process combines efforts so as to come up with a better solution to a problem affecting the company. In the process, business knowledge is shared at the various departmental sections that yield to a favorable outcome to the company.
B. Reasons why a company may choose to change its structure for a more centralized or decentralized option
Consideration of the business type serves very important in determining the change of structure of the company. Small companies enjoy the centralization of its business due to the presence of the centralized organizational structures. This is brought by the urge by the owners to remain on the forefront towards ensuring that the business is managed effectively.
On the other side, large companies rely on a decentralized structures due to the many departments the company may have. A need to have a team of decision makers in that system arises so as to ensure that every department of the company contributes towards achieving the company's goals, aims and objectives (David, 2009).
Therefore, the changing of organizational structures from the business owners need to be brought by the consideration of its expansion, growth, and development.
Again, the general management of employees in a company may determine the change of its structure. Employees will tend to be flexible in the business depending on the way the management react and respond on the various issues that affect the company. Some of these when well catered for sets the organization structure by default with minimum planning being involved. Decentralization may, however, pose a limitation of complicating the decision-making process due to the losing of control by the company.
C. There are some reasons why a company may look to either centralize or decentralize their organization
The management structure a company uses may lead it to centralize or decentralize. Every manager in the centralized system gets the authority the many employees of his company. They thus get very little time for interaction with the other subordinate staff of the company (Andrew, 2011).
The decision and information flow also serves a very imperative in determining the centralization or decentralization of a company. The decision-making process in middle and lower managerial levels are given very minimum chances of effecting decisions in a company unlike in the decentralized design.
D. Some companies have found a need to decentralize while others feel they need to centralize
Different reason will create a need for a company to centralize as well as decentralize depending on ...