...Mini Research On Size of organization and its influence on adopting centralization in Nepalese Banks Submitted to: Prof. Subas KC Course Instructor, Organizational Theory Submitted by: Dipendra Karki (Roll No. 11605) Ganesh Bhattarai (Roll No. 11606) Pramila Ojha (Roll No. 11611) MPhil - II Term, Fall 2011, KUSOM June, 2012 Kathmandu, Nepal 1. Introduction Being one of the integral parts of the economic activities, banking sector plays vital role for the economic development of the country. American Institution of banking defines bank as “Corporation which accepts demand deposits subject to cheque’s and makes short term loans to business enterprises, regardless of the scope of its other services.” It deals in the process of channelizing the available resources in the needed sector. It is the intermediary between the deficit and surplus of financial resources. It pools the funds scattered in the economy and mobilizes them to the productive sector. According to Nigam (1967), the increase in capital has always been a sort of prime mover in the process of material growth and the rate of capital formation has been the principal variable in setting the overall pace of economic development. But these institutions inherent a large amount of risk, which cannot be, denied either. If a bank behaves irresponsibly, the costs borne by the economy are enormous...
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...Centralization In a centralized organization all of the commands come down from one head individual. Centralization is a popular business model in small organizations because the owner is in charge of all the companies operations. The owner's decisions are then passed down a chain of command. There are many benefits to centralizing an organization. The strict chain of command helps to keep the organization systematized. In turn the processes can help to reduce cost, improve coordination, the quality of work and communication. Like everything centralization also has its downfalls, which include the formation of a bureaucracy where all decisions need to be passed back up the chain of command causing the owner to burdened with decisions a lower level employee could handle them self. Due to the structure of a centralized organization it allows for the company to potentially cut cost in its operations. Since the managers delegate tasks and policy they have a strong knowledge about what is going on inside the company. They know the strengths and weaknesses of the business and how things should operate. In addition to this they also have strict control of the budget and their products. This knowledge helps them to make smart and safe decisions when it comes to taking on new projects, and not allowing unauthorized employees to make such decisions without their knowledge. Having the owner make the final decision on expenditures makes frivolous spending nearly nonexistent. Another...
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...ciop^ ^ mm James C. Emery, Assistant Professor THE IMPACT OF INFORMATION TECHNOLOGY ON ORGANIZATION November 1964 No. 103-64 Paper to be delivered at the 24th Annual Meeting, Academy of Management Chicago, December 29, 1964 . THE IMPACT OF INFORMATION TECHNOLOGY ON ORGANIZATION Introduction A discussion of the impact of information technology on organization is largely a matter of speculation, since we are just now beginning to per- ceive its effects. Speculation, though often interesting and occasionally useful, presents some obvious hazards. One hazard, of course, is that predictions may prove wrong. This is not as great a danger as one might suppose, however, since the dramatic developments in the field of information technology make it likely that any prediction, if it is sufficiently imaginative and glamorous, will eventually prove correct. In any event, suitable hedging can minimize the probability of error, and faulty memories will reduce the penalty of an error if the prognosticator is indiscrete enough to make it obvious. A more serious and immediate pitfall trite and commonplace. is that the speculation may be This hazard is particularly treacherous when dis- cussing information technology and organization, since we already have been * presented with such a rich abundance of speculation on the subject. I do not claim that I have avoided this hazard altogether, but I ...
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...Mechanistic versus Organic Structures a. Mechanistic Structure is appropriate for organizations focusing on a cost- minimization strategy through tight control, extensive division of labor, high formalization and centralization. The information network is limited and employees rarely participate in decision making process. b. Organic Structure is decentralized and has low complexity and formalization. It has an extensive information system, and employees rarely participate in decision making. It tends to be flexible and adaptive. c. Structure in function of the organization’s fundamental strategy. 1) Innovation Strategy focuses on developing important new product or services. An organic structure provides the flexibility for this strategy. 2) Cost-minimization Strategy imposes tight controls over expenses and reduces product prices. The mechanistic structure is appropriate. 3) Imitation strategies are not adopted by true innovators but rather by organizations that move into new markets after smaller competitors have demonstrated the potential for success. Limitation best suited to a structure that combines mechanistic and organic. d. Structure is also a function of 1) Size. Larger organizations tend to be mechanistic because greater formalization is needed. Strategies also change as sizes changes. Growing organizations often expand activities within their industry. 2) Technology. An organic structure may be...
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...that would be affected by the choice of the architecture? Centralization implies having one center of control. One may have two DNS servers in each bureau of an organization, yet they all may be controlled by a solitary element. Then again, decentralized frameworks appropriate control to numerous parts. In our DNS case, each of those offices may keep up and control its own particular DNS server, being in charge of keeping up the ability set to keep focused of the innovation as it changes, to modeler the frameworks as it sees fit, and to screen the administration. Organizations can structure IT in a centralized or decentralized way. Centralization is an attempt to enhance proficiency by taking advantages of potential economies like enhancing the average; it might also reduce the occurrences of any mistakes. Decentralization is an attempt to enhance speed and adaptability by redesigning to build neighborhood control and execution of an administration. Decentralization implies splitting against the disappointing bureaucratic methods of old and giving access to everyone. For example, it implies somebody has turned out to be so disappointed with an incorporated administration that "do it yourself" has the capability of being better. In the current environment decentralization is regularly an intentional reaction to the quicker pace of business what's more, to client desires of expanded independence. In centralization different groups are pulled together to enforce order of the...
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...characteristics of a bureaucratic organizational system are; a high level of job specialization, departmentalization by function, formal patterns of delegation, a high degree of centralization, a narrow span of management, and a clearly defined line and staff positions with formal relationships between the two. The departmentalization used at Benedictine College is, departmentalization by function. Departmentalization by function is the grouping of jobs that relate to the same organizational activity, basically this is saying that people that deal with the students, like hands on, are all in the same department, which is under that Dean of Students. Another example is all the employees at the school that deal with the enrollment and financial side of the college are grouped together, under that Dean of Enrollment. Since Benedictine College is a small organization departmentalization is wisely use by the college because supervision is more simplified since everyone that is involved is in the same activities, and can coordinate easily. A high degree of centralization is used at Benedictine College. Centralization organization concentrates authority to the upper levels of an organization. Since the environment of Benedictine College is pretty predictable, centralization is a good source of organization. Not that the lower level employees cannot make important decisions or give the correct answers, it is just that at BC it’s not hard to actually talk to the head of a department...
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...Relationship of Centralization to Other Structural Properties Paper citation: Jerald Hage and Michael Aiken, “Administrative Science Quarterly” Vol. 12, No. 1 (Jun., 1967), pp. 72-92 Group AC2: Ankit Kumar Baranwal (14F506) Ashish Girdhar Gyanchandani (14F513) Charu Pandey (14F516) Natesh Bhardwaj H S (14F535) Surya Bakshi (14F550) 1 Overview In the article titled “Relationship of Centralization to Other Structural Properties”, Jerald Hage and Michael Aiken talk about two different ways of measuring distribution of power. They collect data by conducting survey in 16 hospitals and welfare organizations of which 10 are private and 6 are public. The purpose of this article is to explore the relationship between centralization of power and two critical aspect of organizational social structure, namely; the degree of formalization and the degree of complexity. Here, Hage and Aiken measure the degree of complexity using three factors, namely; the number of occupational specialties, the amount of professional training and professional activity while on the other hand the degree of formalization is being measured in terms of degree of job codification and the amount of rule observation. The author Jerald Hage is a Professor Emeritus and Co-Director of Center for Innovation, University of Maryland. He completed his Bachelor of Business Administration (B.B.A.), marketing from University of Wisconsin and Doctor of Philosophy (PhD) in sociology from Columbia...
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...Q4) Key Differences Between Centralization and Decentralization The following are the major differences between centralization and decentralization: 1. The unification of powers and authorities, in the hands of high level management is known as Centralization. Decentralization means dispersal of powers and authorities by the top level to the functional level management. 2. Centralization is best for a small sized organization, but large sized organization should practice decentralization. 3. In centralization formal communication flow is there. Conversely, in decentralization, communication stretches in all directions. 4. In centralization due to concentration of powers in the hands of a single person, the decision takes time. On the other hand, decentralization proves better in terms of decision making as the decisions are taken much closer to the actions. 5. There is full leadership and coordination in Centralization. Decentralization, shares the burden of the toplevel managers. The reason for centralization is inadequate control over the organization, but the reason for decentralization is good and effective control over the same. Conclusion The difference between centralization and decentralization is one of the hot topics these days. Some people think that centralization is better while others are in favor of decentralization. In ancient times, people used to run their organization in a centralized manner, but now the scenario has been changed completely...
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...reality especially with new technologies and processes such as ‘just in time’ manufacturing, e-commerce, virtual organizations, and six sigma to name a few. In order for companies to survive and thrive, they must continually adapt to the market or make internal improvements of service or culture The Encyclopedia of Business defines an organizational structure as "comprised of functions, relationships, responsibilities, authorities, and communications of individuals within each department." An organizational chart is often used to provide a visual representation of a program's structure. Having a clear structure is critical for employees to know how their job relates to others in the department as well as to the institution's mission and goals. Source : by Dr. Betsy Alden Originally printed in Athletic Management, 22.05 August/September 2010 Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. In an organization of any size or complexity, employees' responsibilities typically are defined by what they do, who they report to,...
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...Proposal for Operations Transformation at Westpac March 26, 2009 To: Ms. Gail Kelly, CEO and Managing Director, Westpac Bank Mr. Peter Clare, Group Executive, Products and Operations From: __________, Principal, Asia-Pacific & Australia, Verint Systems Date: March 26, 2009 Re: Operations Transformation at Westpac We are very pleased with the opportunity to deepen our partnership with Westpac and believe our proposal provides the most comprehensive approach for Westpac to execute its strategy successfully. This initiative is critical for Westpac to differentiate its service delivery model in the midst of an industry shift towards growing customer share. Westpac lags behind its key competitors and the risk of further customer attrition will result in a systemic deterioration of profitability. Westpac and Verint have formed a shared perspective on the importance of operational improvements to the bank’s overall transformation. Our diagnostic work earlier this year suggests that a successful transformation program can free up at least 2,000 personnel for frontline sales roles over the next 12-24 months. Assuming current levels of Westpac sales productivity, migration of 2,000 personnel to the frontline could add $156 million in annual revenues. As important, a successful redesign of existing operating processes...
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...To achieve organizational goals and objectives, employee activities within the organization need to be coordinated and managed. To achieve this coordination, the organization must have a structure to it. Organizational structure is essential in specifying reporting relationships, delineating formal communication channels and in linking all activities together toward organizational goal achievement. There are two primary structure types; organic and mechanistic. There are four main elements to organizational structure; centralization, formalization, hierarchy, and departmentalization. These elements often coexist in organizational structures and their configuration will determine whether an organization is organic or mechanistic. Organic organizations are less formal and more flexible than traditional organizations and are characterized by such things as flexibility, informality, and knowledge based authority. An organic structure is laid out like a network and emphasizes horizontal specialization, personal coordination, and extensive communication. Organic organizations are generally flat and decentralized, with little reliance on formal authority, which enables faster decision making. Mechanistic structures are primarily hierarchical, with an emphasis on specialization, and vertical communication. Mechanistic structures also place an emphasis on control by relying on rules, policies, and procedures in conducting operations. Mechanistic structures are highly formalized and...
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...interdepartmental conflict and disagreement in company. For example, different department managers have different view and plan about CV305 and they becoming uncommunicative. Julie Crandell as an executive vice-president, she likes to keep tight control over the organisation and department managers have to check with her before making major decisions. This report analyses Malard Manufacturing Company’s the organization part of the management process and the two communication issues in company. Then it will offer some recommendations on what Julie can be done to address this problem and make each department work together to achieve goals. Many issues include organization structure and inappropriateness of communication between departments, managers and leaders in development of productions. It is suggested that It is suggested that adopt formal strategies that focus on successful production of CV305 in order to keep the company in an advantage place in the control valve industry. Long-term collaboration between each department will gain company a foreseeable future. 2 discussion 2.1 Organization structure Organizing is one of management of process and its process leads to the creation of organisation structure, which defines “the way tasks are divided and resources deployed”. ( textbook ) In general, Organisation structure is...
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...26 September 2006 Abstract The objective of this paper is to suggest a set of best organization structures for efficient supply chain management. For this, this paper derives organization types for supply chain management according to the formalization and centralization level of an independent department responsible for supply chain management (SCM) activities, and hierarchical relationship in organizational position and operational responsibility between the SCM department and existing other functional departments. And then, this paper identifies organizational characteristics, which have significant influences on SCM performance by investigating the difference in performance across the proposed organization types. From the results of empirical test, this paper finds that even though too excessive formalization and centralization of the SCM department within a firm may interrupt complete SC integration and performance improvement, a certain range of control by the SCM department is inevitable to build the fundamentals of integrated supply chain management, and thus the temporary pursuit of intensive control focused organization type such as integrated line organization may be considered depending on firm characteristics and environmental change. However, the empirical results further indicate that in the long run, intermediate organization types such as Functional and Process Staff organization that the SCM department maintains an adequate level of balance and harmony with other...
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...corporations are decentralized to a considerable degree. What kinds of organizations are best run in a largely centralized manner and why? Robbins and Coulter describe a company is centralized ‘if the managers make the organization’s key decisions with little or no input from below’. Thus, small businesses are the kinds of organizations that are best run in a largely centralized manner. There are numerous reasons why small organizations suit to run in a centralized manner. Usually, small organizations are typically controlled by the owner or the partners who develop the organization’s vision and mission and ultimately set the objectives for the business operations. In small businesses, the owners possess the necessary skills, knowledge and experience to run the business smoothly. Since they share the common goals and objectives, the decision making process can be done in a more effective manner as they do not have to consult their subordinates. On top of that, with centralized organizational structure, conflicts and long-stretch arguments with subordinates could be avoided and this will not distort the business operations. Centralized business structure is most suitable for small organization because of its small number of employees and capital to run the business. To implement decentralized organization it requires more employees and higher cost will have to be incurred. This is something that small organizations cannot afford to have. Furthermore, it is not necessary for them...
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...Authority, Incentives and Performance: Theory and Evidence from a Chinese Newspaper Yanhui Wu London School of Economics Job Market Paper February 2011 Abstract Authority de…nes the formal structure of an organization, and is essential for the allocation of resources inside the …rm. This paper develops a theory of authority in a multiple layer hierarchy, in which the distribution of authority alleviates incentive incompatibilities. To examine the theory, I collect monthly personnel data from about 200 journalists over three years in a Chinese newspaper, and provide evidence on their incentives and performance under two basic organizational forms — centralization and decentralization. Relying on an unexpected organizational reform from decentralizing to centralizing editorial power in some divisions of the newspaper, I …nd three main results: 1) centralization improves the quality of the journalists’performance, in terms of the newspaper’ inters nal assessment and the external measures of news content; 2) centralization reduces the journalists’activities for private gain; 3) centralization decreases the editorial activities conducted by managing editors. These results are in line with the theory: a more centralized hierarchy achieves better control over workers’ opportunistic behaviour, at the cost of depressing middle managers’initiative. Key Words: Authority, Organizational Structure, Incentives, Information, Action Distortion, Decision Bias, Media Bias JEL Classi…cations:...
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