Centralized system depends on a central point of authority to make decisions and maintain the operation of the entire system.
Centralized system is the opposite of a decentralized system where decisions are distributed in ways without the coordination of a central authority. Centralized and decentralized systems are the two types of organizational structure. Each type has its own advantages and disadvantages.
Advantages of centralization
- Centralized organizations benefit from a clear chain of command and focus on a vision which tends to be quick and efficient execution of decisions.
- Centralized organizations are also more cost-effective owing to the clear separation of responsibilities between different actors.
Disadvantages of centralization
- Centralized organizational systems lack control over the implementation process.
- Employees rely on the information communicated from the top level and there will be delays in work.
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