Centralised Decision-Making Definition
In business, centralisation is the process by which decisions are made by a small group of people at the top of an organisation. In a centralised organisation, power is concentrated in the hands of a few senior managers, who make all the major decisions. This contrasts with decentralisation, where power is distributed among a larger number of people.
The advantages of centralisation include:
– Quick decision-making: Because only a small number of people are involved in decision-making, decisions can be made quickly and efficiently. There is no need to consult with a large number of people or to reach consensus.
– Greater control: Centralisation gives senior managers greater control over the organisation as a whole. They can ensure that all employees are working towards the same goals and that resources are used effectively.
– Reduced costs: A centralised organisation can be cheaper to run than a decentralised one, because there is less duplication of effort and fewer layers of management.
The disadvantages of centralisation include:
– Lack of flexibility: A centrally controlled organisation may find it difficult to respond quickly to changes in the external environment or to new opportunities.
– Reduced creativity: With power concentrated in the hands of a few people, there may be less scope for creativity and innovation. Employees may be reluctant to challenge decisions made by those in authority.
– Dependence on key individuals: If key decision-makers leave the organisation or become unavailable for any
