Business Consultancy for Effective and Efficient Organizational Structures


Impacts of centralization on organizational efficiency

Centralize or better leave the organization untouched? This question does exist since people organize their business activities. Yet this question gained importance through modern trends in corporate structures and globalization: companies are more modular in many areas today, the worldwide reduction of barriers in the product, services, and capital sector, combined with increasingly powerful information systems and the presence of more flexible management makes it increasingly easier to build and operate centralized structures. Centralization has more facets than ever. In earlier days centralization described the physical summary and management of functions, nowadays the spectrum is significantly expanded, for example, by centralizing the development of workflows by a process owner or the enterprise-wide centralization of planning tasks in a supply chain.

Today strong cost pressures of modern business requires the realization of synergies and individual customer needs and short product life cycles also require flexible action. Centralization programs are at the heart of this tension. Once the decision for centralization has been made, complex transformation programs and projects will follow which demand a great deal of managers, employees and sometimes customers and suppliers and often lead to the undesired results and are entirely revised again.

Do central structures provide the required flexibility? Are they able to always produce cost-optimized in comparison to decentralized structures? How do you transform decentralized structures into centralized ones as smoothly as possible?

"Impact of centralization on the organization efficiency - mechanisms, causal relationships, utilization" describes the most important forms of centralization, identifies the relevant costs and examines the underlying interactive structure and the behavior of costs. Finally, the importance of the findings for the decision and implementation in the company will be explain.

Overall, the book provides a comprehensive overview of the complex mechanism that appears during centralization and positively or negatively affects the efficiency of the company.