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Centralized Organization: Definition & Explanation

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  • 0:00 What Is a Centralized…
  • 0:40 Advantages
  • 1:25 Disadvantages
  • 2:10 Example
  • 2:54 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
In this lesson, you will learn what a centralized organization is. You will also learn about some of its key features, its advantages and disadvantages, and look at an example.

What Is a Centralized Organization?

A centralized organization is structured by a strict hierarchy of authority where most decisions are made at the top by one or a few individuals. Information from lower levels flows up to the decision-maker where the information is analyzed and synthesized to gain a broader perspective in order to aid in decision-making. Information flows down to provide directions to the lower levels of the hierarchy where lower levels are expected to implement the decisions with little or no modifications. Examples of organizations utilizing a centralized structure include the U.S. Army and large corporations.

Advantages

A centralized organizational structure provides some significant advantages to an organization. Centralization can provide a good deal of efficiency in time and resources because a high degree of coordination is possible with decision-makers at the top coordinating all activities of the organization. This coordination prevents unnecessary duplication of efforts and permits the decision-makers to allocate tasks among various components of the organization in an efficient manner. Centralization can also aid in better decision-making because information flows up from all levels of the organization to the decision-makers at the top. This gives the decision-maker a great deal of information to get a handle on the 'big picture' needed for making the best decisions.

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