Centralization – analysis of the term through article review
What does centralization mean?
In the multiple structures of a business organization, the concentration of power plays a crucial role in its operations towards fulfilling its goals and objectives. In some organizations, the power is concentrated over a single authority responsible for controlling the various activities of the organization. Organizations following such concentration of power are stated to follow centralization structure (Schmitt et. al., 2015).
Summary of the chosen article
The term centralization has far more significance in organizational structure than it has in literature. It refers to the managerial behavior that regulates the business processes and provides direction to the flow of decisions. The author considers the aspects of the behavioral supply chain and its management aspects to compare the problem-solving abilities in a centralized structure with that in a decentralized structure. The study compares the two structures of supply chains to understand the importance that the cognitive ability of the decision-maker has in both perspectives (Giannoccaro, 2018). During the study, it was observed that the centralization efficacy is boosted by the problem-solving ability of the high manager, especially with low change resistance. High centralization has been identified to be a prime necessity for the problems that require complex decision-making. It enhances problem-solving ability while regulating change resistance. In the study, the NK agent-based model was used to study the different types of problems that the managers of the supply chain may face during decision making and simulate the cases for centralized and decentralized structures. Don't use plagiarised sources.Get your custom essay just from $11/page
Discussion on the topic
One of the prime results obtained from the chosen study states the choice of centralized structure to be ideal, especially for the cases of complex decision making. The centralized concentration of power enhances the quality of decisions and makes it easier for the organization to keep the resistance against a new change under control. Centralization is one of the most preferred structures in the present business realm, especially considering the fact that the president of the company or the executive leader finds it easier to establish the vision, develop a strategy, and communicate the essentials with the other members of the team. Also, it becomes easier for the employees to follow the strategy once the direction of the movement is communicated to them. The inconsistency can be significantly controlled if the centralized structure is followed. The organizations also have an increased chance of delivering their message to the communities or their customers.
Another study conducted on the topic presents the various benefits that centralization can offer to the organization managers. Some of the most common ones include having clarity in the command chain, maintaining focus on the vision, regulating the costs, faster implementation of new decisions, enhanced work quality, and many more (Chen et. al., 2020). Such benefits offer great agility to the organizations, enabling them to boost their production line as well. The benefits are not limited to the supply chain operations or the manufacturing industry only. However, bottlenecking and inflexibility are some of the common disadvantages of a centralized business structure that can hinder the quality of its operational processes.
Reference
Chen, M., Ang, S., Jiang, L., & Yang, F. (2020). Centralized resource allocation based on cross-evaluation considering organizational objective and individual preferences. OR Spectrum, 1-37.
Giannoccaro, I. (2018). Centralized vs. decentralized supply chains: The importance of decision maker’s cognitive ability and resistance to change. Industrial Marketing Management, 73, 59-69.
Schmitt, A. J., Sun, S. A., Snyder, L. V., & Shen, Z. J. M. (2015). Centralization versus decentralization: Risk pooling, risk diversification, and supply chain disruptions. Omega, 52, 201-212.