Centralized & Decentralized organizations | Strength & Weaknesses

Strengths, weaknesses of Centralized organization structure and decentralized organization structure are as follows:

Strengths of Centralized Organization:

1. Centralized organization assumes uniformity of standards and policies among organizational units

2. Allows utilization of remarkable ability in managers by the whole organization as opposed to a solitary unit.

3. Decisions are uniform.

4. Helps eliminate duplication of effort and activity.

Weakness of Centralized Organization

1. Flood communication lines to a few individuals at the top of the organization.

2. Makes great demands on a few managers rather than spreading responsibility.

3. Personalizes decisions to the judgements of a few key decision makers.

4. Forces top managers to possess a broad view that may be beyond their capacity.

5. Gives vast amounts of power to a few individuals

6. Reduces sense of participation for all but a few people.

Strengths of Decentralized Organization

1. Reduces total responsibility to more managerial units.

2. Helps develop more personnel in decision making process.

3. Shortens line of communication.

4. Places decision making close to situation affected by decisions.

5. Allows more people to use skills and talents in decision making.

6. Disperses power among many persons

Weaknesses of Decentralized Organization

1. Lack of uniformity of standards and policies among organizational units.

2. Capable managers are not always available or willing to participate in decision making.

3. Creates problems or coordination among separate organizational units.

4. Inter-unit rivalry can interfere with the total organization’s operation.

5. Requires training programmes that may be time-consuming and costly.

Absolute centralization is impossible in a large business unit because that would mean considerable cost and delay. Absolute decentralization is also not possible, because in that case entire authority will be delegated to lower level managers, and the top manager will be left with no authority.

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