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 organization’s 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

Decentralized

Lower level managers hold significant decision-making

authority

Top managers hold most 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 place- Unimportant 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.

.• Branch managers may feel unimportant as they cannot make important decisions without first consulting their head office superiors. This may demoralize them.

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 self-confidence 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_diffe

rence-between-centralized-decentralized-

Thank You ?