Centralized/Decentralized will be discussing pros and cons of

Centralized/Decentralized
Maneuver.

Understanding centralized
and decentralized control/decision structure approach:

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Centralization is where the upper bodies such as high-level
managers take decisions which route the company’s vision in general, the effort
from bottom mangers is minimum or negligible.

Whereas, Decentralization is stated as, decisions made by the
lower-level managers, significant and can be very beneficial to company because
the minor managers directly involved with client and can assess the situation
rapidly and better. 

Both approaches have
its own pros and cons. This is the reason companies habitually prefer dynamic
control. Which per se is beneficial to company’s personal interest, thus helps
in making better choices, which in return provide ecstatic results. Both
centralization and decentralization hand in hand works well, best strategy for
large corporates because it can reduce the dependencies.

As stated in the
reference book, no company is absolute, which pertains that all company share
decentralized control as well as centralized, but the ratio differs.

Later this text’s
context, the papers will be discussing pros and cons of Centralization and decentralization
in automotive industry, comparing between Ford general motors and Toyota’s
approach to centralization and decentralization. 

 

More
Centralized

More
Decentralized

• Environment
is stable.
• Lower-level
managers are not as capable
or experienced at making decisions as
upper-level managers.
• Lower-level
managers do not want a say in
decisions.
• Decisions
are relatively minor.
• Organization
is facing a crisis or the risk of
company failure.
• Company
is large.
• Effective
implementation of company
strategies depends on managers retaining
say over what happens.

• Environment
is complex, uncertain.
• Lower-level
managers are capable and
experienced at making decisions.
• Lower-level
managers want a voice in
decisions.
• Decisions
are significant.
• Corporate
culture is open to allowing
managers a say in what happens.
• Company
is geographically dispersed.
• Effective
implementation of company
strategies depends on managers having
involvement and flexibility to make
decisions.

 

Toyota’s
decision and control analysis.

Toyota is more focused on centralized decision-making
structure because of globalization and the colossal magnitude of the company.
All the decisions are made by Toyota Japan, by Board of directors which consist
of 29 Japanese men and they make the crucial global decisions. Toyota America,
which is controlled by US Toyota executives, are mentored by a Japanese boss
who guide them, but US executives are prohibited to act against recall and
major upheavals.

The production, designing and sale is centralized.

This abstract strong depicts that Toyota centralized.

But there is more to the story, As stated in ‘Stephen
P Robbins’ that no company is absolute in decision making, Toyota also drawn to
decentralized approach, as the employees are permitted to assess and solve the
problem as quick as possible if it arose. But under a certain criterion. Its
not possible for huge company to take note of minor yet significant problems.

Car repair, workshop and sale are decentralized. Also
there are some branches which fall into both centralized and decentralized
command.

Both approaches are mandatory for company as massive
as Toyota to dominate.

Ford’s
decision and control analysis.

Learning from Toyota, Ford is making the drift to more
centralized decision-making process from decentralization, which is making it
more central. The cause behind this drifting is, in past each individual plant
could select diverse suppliers without a central oversight, but this arises a
problem, as it was more decentralized the environment was very complex, and
took ages for decision to be implemented and last but not least it caused
misalignment of part in vehicles due to decentralization. The introduction of
centralization improved the company’s decision-making process.

Similarities
and differences between both corporates.

Differences

Toyota’s individual plants are directed by central
over watchers, where in Ford’s , individual plants chose themselves.

Similarities

Both Toyota and ford allows their first-line employees
to assess and take decision to help client immediately.

Conclusion
Authors perspective.

Both companies follow similar yet distinct process of
decision making, but due to Toyota’s success in preceding years, many
auto-manufacturer as well as rivals from other companies follow the example.
Despite having very proper decision making process mishaps happens and
companies changes its approach. Most important thing is to quickly analyze the
problem and  find solution.