Answer to Question #294811 in Management for Yashika Arora

Question

Amar Bajaj Ltd, a company dealing with PVC pipes has traditionally been a centralized company from generations run by the founders. Now as the 3rd Generation steps in to take over the reins, they feel its high time, they go decentralized as the firm has grown leaps and bounds and become a mid-sized company today from the small scale it started with. They have hired you as a consultant for the same. Can you guide them about the same by making them aware of the pros and cons of both and helping them take a decision?

Answer 1

Centralized management

1. It may encourage dictatorship.

2. It employs work standardization.

3. It is inflexible.

4. It does not allow replication.

5. It brings out the negatives in an organization administrative system.

6. It offers an area of specialization.

Decentralization management.

1. It develops more leaders.

2. It duplicates work.

3. It breeds unhealthy competition.

4. It breeds innovation and flexibility.

5. Unsuitable for new organisation.

6. Encourages accountability leaders.

From the listed advantages and disadvantages of each model, this organization needs decentralized form. This is due to its size, structure and age.