Decentralization is a process in which where the power to take decision or the authority of power is divided among all the departments. Whereas the centralization of decision making is a process in which the authority to take decisions are only with the hierarchy for making decision is followed.
In Decentralization the organizations which are large in size there is a desperate need of this method but for the small organization it is not mandatory, though if it is followed in small organization as well so it will sign very good to others.
A company which are working with many departments with their different type of work needs such power of decentralization, a man is not perfect itself but it is the team who makes things perfect.
Board of Directors who are sitting in their offices they really do not know the ground reality for the production, operation and distribution of goods, it is the manager who is well aware of the situation.
Now when goods are going to be distributed and distribution manager has to deliver its products to certain market with the decision of their top level managers a sudden strike happens within that area now the distribution manager must have power to take the decision either to supply the goods or to make stop on the spot.
In macro level a field manager working in a specific area knows better things than the General Manger, field manager must have power to coordinate the plan that he or she have made according to reality by keep in eye the ground situation.
There are mainly two type of decision that a manager or a person who is the authority to take the decision is usually deal with which are as follows:
Structured problems and Programmed Decisions: There are some problem which occurs on usual basis the decisions for those problems are clean as a whistle, these problems are familiar with individuals it can be the return of defective material, now this problem often occurs in the organization that what is the solution for that either to return its money back or to exchange the material, depends on the policy of the company.
Unstructured Problems and Nonprogrammed Decisions: In this type of decision making here the problems are new with the company that manager or the authority is facing for the first time, for whom he or she has to think about a provide an optimum solution as the information regarding that problem is incomplete.