Relationship Of Centralization

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Relationship of Centralization to other Structural Properties Jerald Hage and Michael Aiken A Review By AH1 Arya Ankit Harshvardhan Bajpai Priyanka C Koushik Sathish Babu P Rakesh Kumar Singh Introduction: Centralization 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 or keeping all of the important decision making powers within head office or the centre of the organization. Decision making power is the first indicator of centralization. Centralization has top down approach. It is also called Command and Control, which was originally…show more content…
It stressed on one structural property while keeping the others as control variables. Rule observation changed signs and started showing inverse relationship when partially correlated with decision making. Critical Comments: • After examining centralization of power with decision making, the authors have moved ahead to hierarchical authority. It was observed that there was a very partial association between hierarchy and job codification. Also, a strong relationship seemed to exist between rules observations and hierarchy. This proved to be an ineffective tool of measurement as the partial correlative coefficients either became negligible or reversed in directions. The following sequence of events can be implied from the paper. • According to the paper, concern for work decisions is related to hierarchy of authority whereas concern for policy decisions is related to power of decision making. Theoretically decision making is more important in policy decisions than in work decisions but decision making is also strongly related to hierarchy of authority which bonds strongly with rule observation and professional activity. This view represented by the authors is…show more content…
One of the factors aiding Centralization is it is relatively less complex because it concentrates predominantly on Oil and Gas. There are many other examples for centralised companies like Apple, Armed Forces of various countries, and many traditional companies in North America. There are also instances where the companies have moved to decentralisation from centralization and vice versa. For example McDonalds from being centralized company moved to becoming a decentralised company because of tight competition from the rivals and also because they wanted to localise the menu. But, again they made it a centralized structure for standardization and maintaining cleanliness across their outlets. Conclusion: As the study shows negative relationship between hierarchical authority and professional activity it implies that the education level of the employees has a negative relationship with formalisation and centralization. Hence the authors are of the opinion that professionally trained employees don’t have much of a role to play in the decision making of centralised organisations. Taking all this into consideration, the authors have indicated indirectly that they are not in favour of centralization at least for the organizations with many occupational specialities and diversified companies as it would need

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