The following are the main benefits or advantages of centralization:
1. Centralization Facilitates Unified Decision
Top level managers take all decisions in centralization. It is not necessary to consult and take consent of subordinates while taking a decision. The subordinates perform activities on the basis of instructions which facilitates maintenance of uniformity and consistency in performance.
2. Centralization Simplifies Structure
In centralized organization, the structure tends to be simple and clear. It involves two levels- managerial and operating levels. Managerial level is responsible for decision making whereas operating level is responsible for execution.
3. Centralization Facilitates Quicker Decision
Centralization facilitates quicker decision as one manager takes all the decisions. Managers can take suggestions and guidance from experts and professionals, but the final decision is taken by him. Quick decision is essential for business success in competitive environment.
4. Economy In Operation
In centralization. many levels and positions of management are reduced. It minimizes overhead cost of the organization. It also helps in effective utilization of skilled, qualified and experienced members.
5. Centralization integrates Operation
Centralization helps to integrate and unify all the operations of the organization. The top level manager maintains close supervision of the subordinates and their functions. On the basis of requirement, a manager takes quick decision to maintain control over the activities of the employees.
6. Centralization Is Suitable For Small Firms
Centralization is highly appropriate for small business organization performing business in a competitive environment. In such organizations, managers can personally look after overall activities of the organization.
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