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Centralization and Decentralization

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This is a proven framework used by global strategy consulting firms for Fortune 500 companies. Learn this methodology and enrich your expertise. Then, save time by lifting slides directly from this presentation into your own.

The concepts of Centralization and Decentralization refer to where decisions are made in the chain of command. All organization have to make strategic and operational decisions. But, where and by whom should these decisions be made? How should the organization structure be adapted?

Centralization and Decentralization are two opposing ways to transfer decision-making power and to change the organizational structure of organizations accordingly. Centralization of authority means the power of planning and decision-making are exclusively in the hands of top management. On the other hand, for the case of Decentralization, the powers for the same has been disseminated by the top management to the middle or low-level management. Each structure offers its own set of advantages and disadvantages.

It is important to note that Decentralization is not the same as delegation. In fact, Decentralization is an extension of delegation. Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of management. Delegation of authority is a complete process and takes place from one person to another.


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