What's The Difference Between Centralized And Decentralized Systems Of An Organization?

The difference between a centralized and a decentralized system of organization is that in a centralized structure all the decision making and authority are focused on the top tier of management. These few people are the ones that dictate company policy and make all the crucial decisions. A decentralized system, on the other hand, delegates authority throughout the organization and to all levels of management.

Very often the methods used will depend on a variety of influences such as the size of the company and if it is scattered in a variety of places rather than all under one roof. In a huge organization with many diversifications, like General Motors, for example, there is more likely to be evidence of a decentralized system because it would be impossible and impractical for only a handful of people to ensure that every aspect of the operation was covered.

Advantages of centralization include an organization’s ability to be able to keep a tight grip on all aspects of the business. In a smaller business where centralization is possible, there is less chance that employees will be unaware of what is expected and what the common goals are because there is such a tight grip on all aspects of the organization from management.

An advantage of decentralization is that there tends to be faster decision making and an ability to adapt to the demographic area of production. It also means that lower level managers have the opportunity to gain valuable experience and develop more fully because there is more room to grow.

Decentralized system is the democratic way of running an organization in which the power is en-routed from top to bottom and employees at each level are delegated to take independent decisions whereas centralized system is a undemocratic way (Army rule) of running an organization in which orders and decisions are passed from top to bottom and everyone has just to obey

(1)Centralization places the responsibility for decision-making at higher levels, concentrating both    authority and power at the top management. It minimizes the role of the individual employee which is centralizing. Decentralization places decision authority in the hands of the individuals and teams who are closest to a problem or who manage a process.

The difference of centralazation and de centralazition of power is,centralazition of power is when the goverment makes all the rules and runs everything on his own but decentralazition of power means the goverment give some power to smaller communities which allows the citizens in decision making.

Centralized Versus Decentralized:
The terms "centralized" and "decentralized" are important management concept. Often, they are used to refer to the distribution of authority and decision making with in an organization.

Centralized Organizations:
They are firms in which all the major decisions are made at the top of the organization hierarchy. In such organization, people at the top are in control of day-to-day operations.
In the year when founder Henry ford was running the Ford Motor Company, the auto manufacturer was a very centralized organization. Every key decision –and many less important ones was made directly by Mr. Ford. For example, he insisted on approving all purchase order within the firm, a task that most CEOs of his stature delegated to subordinates.

Today, Ford Motor Company is run quite differently than it was during its early years when Henry Ford was there, but many businesses (especially smaller ones) are still run in highly centralized manners.

Decentralized organization:
In such organizations responsibility for key decision is distributed as far down in the management hierarchy as is prudently possible. One of the advantages of decentralization is that it gives lower-level managers substantial practice at making decision in preparation is that for moving up the management hierarchy.

Centeralizatio means all the decisions are made by top level management and in decenterelization system employees are also involved in decision making.

Centralization places the responsibility for decision-making at higher levels, concentrating both authority and power at the top management. It minimizes the role of the individual employee which is centralizing.
Decentralization is the process of dispersing decision-making governance closer to the people or citizen. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy, sociology and economics.

The difference between centralized and decentralized system in statistics

Perception of decentralization

Centralization is where industries are located within the same geographical area while decentralization is where industries are distributed within the country

The difference Centralization and  Decentralisation is that although both are in management, the difference between the two is where power and decision making lie.

Centralized system is where only one department to an organization is given a full responsibility and duties of purchasing material needed to all organizations, while the decentralized system is where each department in an organization is given its own authority of purchasing its requirements.