Centralization in management refers to the concentration of decision-making power and activities involving planning within an organization in a specific leader or location. In a centralized organization, the head office retains the decision-making powers, and all other locations are directed from this main office, resulting in communication flowing in a top-down manner. The key features of centralization in management include:

• Top-down decision-making: Top-level managers concentrate and reserve the decision-making power, and lower-level management does their jobs under the direct control of the top managers.

• Clear lines of communication: Clear lines of communication and senior executives can communicate the organization’s vision to employees and guide them towards the achievement of that vision.

• Efficient use of resources: Centralized management follows standard procedures and methods that lead to reduced office and administrative costs.

Centralization in management is suitable for organizations with clear and stable strategies and environments, while decentralization suits those that value innovation and operate in unpredictable contexts. The extent of an organization’s scope, structure, and interdependence influences this decision as smaller, focused organizations might find efficiency in centralization, while larger and complex ones might benefit from decentralized flexibility.