...Centralization In a centralized organization all of the commands come down from one head individual. Centralization is a popular business model in small organizations because the owner is in charge of all the companies operations. The owner's decisions are then passed down a chain of command. There are many benefits to centralizing an organization. The strict chain of command helps to keep the organization systematized. In turn the processes can help to reduce cost, improve coordination, the quality of work and communication. Like everything centralization also has its downfalls, which include the formation of a bureaucracy where all decisions need to be passed back up the chain of command causing the owner to burdened with decisions a lower level employee could handle them self. Due to the structure of a centralized organization it allows for the company to potentially cut cost in its operations. Since the managers delegate tasks and policy they have a strong knowledge about what is going on inside the company. They know the strengths and weaknesses of the business and how things should operate. In addition to this they also have strict control of the budget and their products. This knowledge helps them to make smart and safe decisions when it comes to taking on new projects, and not allowing unauthorized employees to make such decisions without their knowledge. Having the owner make the final decision on expenditures makes frivolous spending nearly nonexistent. Another...
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...Centralization versus decentralization Every organization must establish whether its decision-making policies are centralized or decentralized. Highly centralized companies tend to have more bureaucratic traits, while highly decentralized companies tend to appear more out of control. Both extremes appear engulfed with inefficiencies and waste. High performance work systems seem to have more decentralized decision-making features, yet their culture, formed around their philosophy and values, is highly centralized. Creating a centralized philosophy and value system allows employees to become more empowered to make their own decisions, leading to decentralization. Centralization versus decentralization is an issue of control. Top executives make many decisions in a centralized organization and convey the decisions to managers at lower levels, creating a top-down management style. All divisions and locations are expected to adhere to policies and procedures approved by top-level managers. While this may seem like all employees are expected to conform to one way of thinking, stifling creative problem solving, centralization creates streamlined processes and allows the entire organization to utilize the same resources throughout the company. This can create process efficiency, but centralization typically does not allow employees to make and implement their own decisions without approval from levels higher up. Decentralization is characterized by relatively few layers...
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...“The vast majority of corporations are decentralized to a considerable degree. What kinds of organizations are best run in a largely centralized manner, and why?” Corporations nowadays are mainly run under the decentralization concept, where empowerment and appropriate delegation has been given to the lower level i.e. in this case, the Heads of the decentralized units, with regards to the decision making and also in terms of control and monitoring of their respective units. Decentralization has been chosen to reduce the burden at the corporate level and also to ease the running of the business so that some decisions can be made efficiently without many layers of approving authority. Nevertheless, the performance of the respective decentralized units will still be measured as per the targets that have been set earlier and with the agreement between the top management and the lower level. Also, there ...
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...Exercise 2: Centralization vs. Decentralization Identify whether your organization has a centralized or decentralized approach to procurement. My organization has a decentralized approach in which our stores play a big part in procurement. Even though purchasing makes all the decisions on product, the stores and the field operators make the final call. In comparison with other retail chains, decisions are mainly dealt at head office and the field would not have input on what is shipped to stores. Although my department (purchasing) has main control of the procurement process, we still need to advise our stores of what product has been ordered and shipped. When purchasing prepares for an upcoming event, we provide our stores the details of the feature products and recommend how much product they should order. However, stores have the ability to adjust their orders based on how much they can sell/lease. In terms of replenishment, we send an availability report to stores on a weekly basis that breaks down their inventory by idle/on order and identifies if store are over or below their optimal levels by category. This report is a good tool for our stores to recognize any gaps in their inventory and gives them the opportunity to move inventory within other stores and provides them a guideline on what they should replenish. Stores have the ability to order product through our internal ordering system by creating requisitions. The system will automatically approve orders...
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...Relationship of Centralization to Other Structural Properties Paper citation: Jerald Hage and Michael Aiken, “Administrative Science Quarterly” Vol. 12, No. 1 (Jun., 1967), pp. 72-92 Group AC2: Ankit Kumar Baranwal (14F506) Ashish Girdhar Gyanchandani (14F513) Charu Pandey (14F516) Natesh Bhardwaj H S (14F535) Surya Bakshi (14F550) 1 Overview In the article titled “Relationship of Centralization to Other Structural Properties”, Jerald Hage and Michael Aiken talk about two different ways of measuring distribution of power. They collect data by conducting survey in 16 hospitals and welfare organizations of which 10 are private and 6 are public. The purpose of this article is to explore the relationship between centralization of power and two critical aspect of organizational social structure, namely; the degree of formalization and the degree of complexity. Here, Hage and Aiken measure the degree of complexity using three factors, namely; the number of occupational specialties, the amount of professional training and professional activity while on the other hand the degree of formalization is being measured in terms of degree of job codification and the amount of rule observation. The author Jerald Hage is a Professor Emeritus and Co-Director of Center for Innovation, University of Maryland. He completed his Bachelor of Business Administration (B.B.A.), marketing from University of Wisconsin and Doctor of Philosophy (PhD) in sociology from Columbia...
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...Kebijakan Pemusatan Data Riset Nasional Muh. Yasir Magister Teknologi Informasi Fakultas Ilmu Komputer, Universitas Indonesia yasir@ristek.go.id ABSTRAK Saat ini lembaga riset yang melakukan kegiatan riset tersebar di Lembaga Penelitian dan Pengembangan (Lemlitbang) Pemerintah, Daerah, Perguruan Tinggi dan Industri. Masingmasing lemlitbang tersebut melakukan kegiatan riset yang sebagian besar menggunakan alokasi Anggaran Pendapatan dan Belanja Negara (APBN). Sayangnya, kegiatan riset yang dilakukan oleh lembaga riset tersebut sering berjalan tanpa koordinasi. Duplikasi hasil riset dengan fokus dan bidang yang sama di beberapa lembaga riset yang berbeda sering terjadi. Hal ini disebabkan fungsi koordinasi dan sinergi kegiatan riset tidak berhasil dijalankan secara optimal. Beberapa aspek menjadi faktor yang memengaruhi tingkat koordinasi dan sinergi kegiatan riset yang sangat rendah. Faktor utama yang menjadi kendala adalah kurang berperannya leading sector di bidang riset. Kementerian Riset dan Teknologi (Kemristek) yang berfungsi sebagai koordinator di bidang ini juga menghadapi kendala sulitnya mensinergikan lembagalembaga riset yang berada di luar koordinasi Kementerian Riset dan Teknologi secara langsung, misalnya lembaga litbang di Lembaga Pemerintah Kementerian (LPK) lain, Lembaga Pemerintah Non Kementerian (LPNK), perguruan tinggi, litbang daerah, dan industri. Kendala tersebut memerlukan upaya yang besar dalam mengintegrasikan seluruh lembaga litbang di Indonesia...
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...Mini Research On Size of organization and its influence on adopting centralization in Nepalese Banks Submitted to: Prof. Subas KC Course Instructor, Organizational Theory Submitted by: Dipendra Karki (Roll No. 11605) Ganesh Bhattarai (Roll No. 11606) Pramila Ojha (Roll No. 11611) MPhil - II Term, Fall 2011, KUSOM June, 2012 Kathmandu, Nepal 1. Introduction Being one of the integral parts of the economic activities, banking sector plays vital role for the economic development of the country. American Institution of banking defines bank as “Corporation which accepts demand deposits subject to cheque’s and makes short term loans to business enterprises, regardless of the scope of its other services.” It deals in the process of channelizing the available resources in the needed sector. It is the intermediary between the deficit and surplus of financial resources. It pools the funds scattered in the economy and mobilizes them to the productive sector. According to Nigam (1967), the increase in capital has always been a sort of prime mover in the process of material growth and the rate of capital formation has been the principal variable in setting the overall pace of economic development. But these institutions inherent a large amount of risk, which cannot be, denied either. If a bank behaves irresponsibly, the costs borne by the economy are enormous...
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...Proposal for Operations Transformation at Westpac March 26, 2009 To: Ms. Gail Kelly, CEO and Managing Director, Westpac Bank Mr. Peter Clare, Group Executive, Products and Operations From: __________, Principal, Asia-Pacific & Australia, Verint Systems Date: March 26, 2009 Re: Operations Transformation at Westpac We are very pleased with the opportunity to deepen our partnership with Westpac and believe our proposal provides the most comprehensive approach for Westpac to execute its strategy successfully. This initiative is critical for Westpac to differentiate its service delivery model in the midst of an industry shift towards growing customer share. Westpac lags behind its key competitors and the risk of further customer attrition will result in a systemic deterioration of profitability. Westpac and Verint have formed a shared perspective on the importance of operational improvements to the bank’s overall transformation. Our diagnostic work earlier this year suggests that a successful transformation program can free up at least 2,000 personnel for frontline sales roles over the next 12-24 months. Assuming current levels of Westpac sales productivity, migration of 2,000 personnel to the frontline could add $156 million in annual revenues. As important, a successful redesign of existing operating processes...
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...manufacturer recently faced a tough centralization decision: should he combine product management for the company's two business units--cutting and welding--which operated largely independently of each other but shared the same brand? His technical leader believed that an integrated product range would make the company's offerings more appealing to businesses that bought both types of equipment. These customers accounted for more than 70 percent of the market but less than 40 percent of the company's sales. "You cut before you weld," he explained. "You get a better weld at lower cost if the cutting is done with the welding in mind." Managers in both divisions, though, resisted fiercely: product management, they believed, was central to their business, and they could not imagine losing control of it. The CEO's dilemma--were the gains of centralization worth the pain it could cause?--is a perennial one. Business leaders dating back at least to Alfred Sloan, who laid out GM's influential philosophy of decentralization in a series of memos during the 1920s, have recognized that badly judged centralization can stifle initiative, constrain the ability to tailor products and services locally, and burden business divisions with high costs and poor service.1 Insufficient centralization can deny business units the economies of scale or coordinated strategies needed to win global customers or outperform rivals. Timeless as the tug-of-war between centralization and decentralization is, it remains...
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...ciop^ ^ mm James C. Emery, Assistant Professor THE IMPACT OF INFORMATION TECHNOLOGY ON ORGANIZATION November 1964 No. 103-64 Paper to be delivered at the 24th Annual Meeting, Academy of Management Chicago, December 29, 1964 . THE IMPACT OF INFORMATION TECHNOLOGY ON ORGANIZATION Introduction A discussion of the impact of information technology on organization is largely a matter of speculation, since we are just now beginning to per- ceive its effects. Speculation, though often interesting and occasionally useful, presents some obvious hazards. One hazard, of course, is that predictions may prove wrong. This is not as great a danger as one might suppose, however, since the dramatic developments in the field of information technology make it likely that any prediction, if it is sufficiently imaginative and glamorous, will eventually prove correct. In any event, suitable hedging can minimize the probability of error, and faulty memories will reduce the penalty of an error if the prognosticator is indiscrete enough to make it obvious. A more serious and immediate pitfall trite and commonplace. is that the speculation may be This hazard is particularly treacherous when dis- cussing information technology and organization, since we already have been * presented with such a rich abundance of speculation on the subject. I do not claim that I have avoided this hazard altogether, but I ...
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...location, it was more profitable than it is today. Therefore, The Apogee Company should close down its field offices and conduct all its operations from a single location. Such centralization would improve profitability by cutting costs and helping the company maintain better supervision of all employees.” The argument states that Apogee Co was more profitable when it was centralized than it is today. Therefore, the author suggests that in order to be most profitable, the company should close down its field offices and conduct all its operation from a single location. However, there are many other assumptions don’t necessarily apply to this argument. For example, the author assumes that centralization is the only factor that contributes to the business’s success. Also, the author doesn’t take all the costs associated with closing down all other facilities into consideration. And finally, because most companies agree that cutting cost and maintaining better supervision will improve profitability doesn’t necessarily mean that they can guarantee success. The first issue to be addressed is whether centralization is the only factor contributes to a business’s success. In the case of Apogee Company, the author falsely assumes that the company was more profitable when it was centralized. Therefore, centralization is the only key to its business’ success. However, one could argue that the business was more successful before due to other factors such as the wellbeing of the economy, the...
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...Chapter 12 – ALKO The goal of this case is to get students to understand that the value of centralization of inventory is affected by the coefficient of variation as well as the correlation of demand. High coefficient of variation products with low correlation provide the biggest gains from centralization while low coefficient of variation products with high correlations provide the least value from centralization. The results for this case are obtained using the accompanying spreadsheet Chapter12-Alko. Status Quo Calculations The worksheet Demand & Costs evaluates the inventory and transportation costs for the status quo where each region is served by a local DC. Each region follows a periodic review policy where an order is placed every 6 days with a replenishment lead time of 5 days. Given a reorder interval of 6 days, the batch size is 6 days of demand. The safety inventory in each location (for each product) is calculated using Equation 12.18. The cycle inventory and safety inventories are evaluated in Cells C43:G48. They are converted into days of demand in Cells K43:O48. It is interesting to get the class to observe that the days of safety inventory held is proportional to the coefficient of variation calculated in Cell C25:G27. The total cost of the status quo is evaluated in Cell H67 to be $960,326. Impact of Centralization The worksheet Central vs. Local details the inventory and financial impact of centralizing all inventory in an NDC. The mean and standard deviation...
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...that would be affected by the choice of the architecture? Centralization implies having one center of control. One may have two DNS servers in each bureau of an organization, yet they all may be controlled by a solitary element. Then again, decentralized frameworks appropriate control to numerous parts. In our DNS case, each of those offices may keep up and control its own particular DNS server, being in charge of keeping up the ability set to keep focused of the innovation as it changes, to modeler the frameworks as it sees fit, and to screen the administration. Organizations can structure IT in a centralized or decentralized way. Centralization is an attempt to enhance proficiency by taking advantages of potential economies like enhancing the average; it might also reduce the occurrences of any mistakes. Decentralization is an attempt to enhance speed and adaptability by redesigning to build neighborhood control and execution of an administration. Decentralization implies splitting against the disappointing bureaucratic methods of old and giving access to everyone. For example, it implies somebody has turned out to be so disappointed with an incorporated administration that "do it yourself" has the capability of being better. In the current environment decentralization is regularly an intentional reaction to the quicker pace of business what's more, to client desires of expanded independence. In centralization different groups are pulled together to enforce order of the...
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...Mechanistic versus Organic Structures a. Mechanistic Structure is appropriate for organizations focusing on a cost- minimization strategy through tight control, extensive division of labor, high formalization and centralization. The information network is limited and employees rarely participate in decision making process. b. Organic Structure is decentralized and has low complexity and formalization. It has an extensive information system, and employees rarely participate in decision making. It tends to be flexible and adaptive. c. Structure in function of the organization’s fundamental strategy. 1) Innovation Strategy focuses on developing important new product or services. An organic structure provides the flexibility for this strategy. 2) Cost-minimization Strategy imposes tight controls over expenses and reduces product prices. The mechanistic structure is appropriate. 3) Imitation strategies are not adopted by true innovators but rather by organizations that move into new markets after smaller competitors have demonstrated the potential for success. Limitation best suited to a structure that combines mechanistic and organic. d. Structure is also a function of 1) Size. Larger organizations tend to be mechanistic because greater formalization is needed. Strategies also change as sizes changes. Growing organizations often expand activities within their industry. 2) Technology. An organic structure may be...
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...Paper February 2011 Abstract Authority de…nes the formal structure of an organization, and is essential for the allocation of resources inside the …rm. This paper develops a theory of authority in a multiple layer hierarchy, in which the distribution of authority alleviates incentive incompatibilities. To examine the theory, I collect monthly personnel data from about 200 journalists over three years in a Chinese newspaper, and provide evidence on their incentives and performance under two basic organizational forms — centralization and decentralization. Relying on an unexpected organizational reform from decentralizing to centralizing editorial power in some divisions of the newspaper, I …nd three main results: 1) centralization improves the quality of the journalists’performance, in terms of the newspaper’ inters nal assessment and the external measures of news content; 2) centralization reduces the journalists’activities for private gain; 3) centralization decreases the editorial activities conducted by managing editors. These results are in line with the theory: a more centralized hierarchy achieves better control over workers’ opportunistic behaviour, at the cost of depressing middle managers’initiative. Key Words: Authority, Organizational Structure, Incentives, Information, Action Distortion, Decision Bias, Media Bias JEL Classi…cations: D2 J5 L2 M5 Economics Department and Centre for Economic Performance, London School of Economics, Houghton Street, London WC2A 2AE...
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