Centralisation

"Centralized system" redirects here. For other uses, see Centralized computing and Star network.

Centralisation (British), or centralization (American), is the process by which the activities of an organization, particularly those regarding planning and decision-making, become concentrated within a particular location or group, keeping all of the important decision-making powers within the head office or the center of the organization.

The term has a variety of meanings in several fields. In political science, centralisation refers to the concentration of a government's power both geographically and politically into a centralised government. In neuroscience, centralisation refers to the evolutionary trend of the nervous system to be partitioned into a central nervous system and peripheral nervous system. In business studies, centralisation and decentralisation refer to where decisions are made in the chain of command.

Centralisation in politics

Centralisation of authority

Centralisation of authority: The systematic and consistent concentration of authority at a central point or in a person within the organisation.(Acharya, 2012)[1]

History

This idea was first introduced in the Qin Dynasty of China. The Qin government was highly bureaucratic, and was administered by a hierarchy of officials, all serving the First Emperor, Qin Shi Huang.(Ancientmilitary.com, 2012)[2] The Qin Dynasty practiced all the things that Han Feizi taught, allowing Qin Shi Huang to own and control all his territories, including those conquered from other countries. Zheng and his advisers ended feudalism in China by setting up new laws and regulations under a centralised and bureaucratic government, with a rigid centralisation of authority. Under this system, both the military and government thrived, because talented individuals might be more easily identified and picked out to be trained for specialised functions.(Bachman et al., 2007).[3]

Features of Centralisation of authority in ancient Chinese government

Idea of centralisation of authority

The acts for the implementation are needed after delegation. Therefore, the authority for taking the decisions can be spread with the help of the delegation of the authority.

The centralisation of the authority can be done immediately, if complete concentration is given on the decision-making at any position. This concept is generally referred to as the centralisation of the authority. The centralisation can be done with a position or at a level in an organisation. Therefore, the extension of the organisation is referred to as the centralisation of the authority. And the decision-making power must be hold in a few hands.(Singh, 2015)[5]

Advantages of the centralisation of the authority

  1. Responsibilities and duties are well defined.
  2. Depends largely on the general consensus.
  3. Decision making is very direct and clear.(Singh, 2015)[5]

Disadvantages of the centralisation of the authority

  1. Decisions may be misled while passing on and lower position departments don't have the decision-making power, therefore it requires efficient and well-organised top department.
  2. Attentions and support on each department or cities may not be balanced.
  3. Delay of work information may result in inefficiency of the government.
  4. Discrepancies in economy and information resources between centre and other places are significant. (Fujii, 2010)[6]

Centralisation in economy

Relationship between centralisation (i.e. concentration of production) and capitalism

As written in V.I. Lenin’s book, Imperialism, the Highest Stage of Capitalism, “ …the remarkably rapid concentration of production in ever-larger enterprises are one of the most characteristic features of capitalism.”(Lenin, 1939),[7] he researched on the development of production and decided to develop the production in a centralised way, from individual and scattered small workshops into large factories, leading the capitalism to the world; when concentration of production develops into a particular level, it will become monopoly, like party organisations of Cartel, Syndicate and Trust.(Lenin, 1939)[7]

Centralisation in business studies

Where decision-making power resides in the structure is an organisational issue that a business ought to address.

Decision-making is the reveal of authority. The key question is either whether authority should manage all the things at the centre of a business (centralised), or whether it should be delegated far away from the centre (decentralised).

The choice between centralised or decentralised is various. Many large businesses necessarily involve a e of extension of centralisation and some extent of centralisation when it begins to operate from several places or any new units and markets added.(Riley, 2014)[10]

Features of centralisation in management

  1. Top level managers concentrate and reserve the decision-making power.
  2. Execution decided by the top level management with the help from the other levels of management.
  3. Lower levels management do the jobs which directed and controlled by the top managers.(BMS Team, 2013)[11]

Advantages of the centralisation in business studies

Disadvantages of the centralisation in business studies

See also

References

  1. Acharya, A. (2012). What are the advantages and disadvantages of centralization of authority ?. [online] Preservearticles.com. Available at: http://www.preservearticles.com/201101143291/advantages-and-disadvantages-of-centralisation-of-authority.html [Accessed 4 Nov. 2015].
  2. Ancientmilitary.com, (2012). Ancient China Government. [online] Available at: http://www.ancientmilitary.com/ancient-china-government.htm [Accessed 5 Nov. 2015].
  3. Bachman, D., Bickers, R., Carter, J., de Weert, H., Elders, C., Entenmann, R. and Felton, M. (2007). World and Its Peoples: Eastern and Southern Asia. New York: Marshall Cavendish, p.36.
  4. Jin, G. and Liu, Q. (1992). The Cycle of Growth and Decline - On the Ultrastable Structure of Chinese Society: Chapter 7. 2nd ed. Hong Kong: The Chinese University Press.
  5. 1 2 Singh, K. (2015). What is Centralization and De-Centralization of the Authority? | Total MBA Guide. [online] Mbaofficial.com. Available at: http://www.mbaofficial.com/mba-courses/principles-of-management/what-is-centralization-and-de-centralization-of-the-authority/ [Accessed 4 Nov. 2015].
  6. Fujii, G. (2010). 藤井厳喜WEBサイト | Fujii's Focus For Future 公式ブログ. [online] Gemki-fujii.com. Available at: http://www.gemki-fujii.com/blog/2010/000641.html [Accessed 4 Nov. 2015].
  7. 1 2 Lenin, V. (1939). Imperialism, the highest stage of capitalism. New York: International Publishers, pp.12-54.
  8. O’Sullivan, A. and Sheffrin, S. (2003). Economics. Needham, Mass.: Prentice Hall, p.171.
  9. Theodore, D. (1888). "The Legality of "Trusts"". Political Science Quarterly, 3(592).
  10. Riley, J. (2014). Centralised versus decentralised structures | Business | tutor2u. [online] Beta.tutor2u.net. Available at: http://beta.tutor2u.net/business/reference/centralised-versus-decentralised-structures [Accessed 5 Nov. 2015].
  11. BMS Team, (2013). Important Features of centralization | BMS.co.in. [online] BMS.co.in : Bachelor of Management Studies. Available at: http://www.bms.co.in/important-features-of-centralization/ [Accessed 5 Nov. 2015].
  12. Accountlearning.blogspot.co.uk, (2013). Advantages Of Centralization | Accounting-Management. [online] Available at: http://accountlearning.blogspot.co.uk/2013/05/advantages-of-centralization.html [Accessed 5 Nov. 2015].
  13. Accountlearning.blogspot.co.uk, (2013). Disadvantages Of Centralization | Accounting-Management. [online] Available at: http://accountlearning.blogspot.co.uk/2013/05/disadvantages-of-centralization.html [Accessed 5 Nov. 2015].

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