Centralization refers to the hierarchical level within an organization
that has authority to make decisions. When decision making is kept at the top
level, the organization is centralized; when it is delegated to lower organizational
levels, it is decentralized as defined by Daft (1983).
According to a journal (Za´bojn?´k, 2002) decentralization is the
decision-making authority is delegated to the worker with no interference from
the top management level and centralization is the manager decides the project
choice and the investment without consulting the worker.
Type of management
of organizational processes (Neil, 2007)
decision making (Neil, 2007)
conflict (Neil, 2007)
control (Evangeline, 1998)
coordination (Evangeline, 1998)
employees (Chris, nd)
the burden on top executives (Smriti, nd)
control and supervision possible (Anon, nd)
and wise decision (Anon, nd)
· Poor diversification management (Anon, 2012)
· Poor management development (Anon, 2012)
· Organizational disconnect (Kristyn, 2017)
of uniformity (Smriti, nd)
financial burden (Smriti, nd)
of coordination (Smriti, nd)
Table 2.1.1 the advantages and disadvantages of centralization and
Toyota and Huawei had
the same organization structure which was centralization. However, Toyota and
Huawei transform from strong centralized organizational structure to least centralized
from year 2013 and 2016 respectively.
In the old organizational structure, TMC had a strong centralized
global hierarchy and thus, only the top level of management from headquartered
in Japan has the authority to make important decisions. Tall hierarchy
structure of organization was implemented by Toyota and therefore several
levels of management between top level and frontline employees. (Anon, 2015).
In 2013, Toyota Motor
Corporation (TMC) implements new changes with a less centralized organization
structure to strengthen the management system of TMC. Therefore, the new organizational
structure has 3 main characteristics which are the global hierarchy, geographic
divisions and product-based divisions (Toyota, 2013).
Geographic Divisions is a new organizational structure that TMC
can improve products and services according to 8 regional market conditions. By
applying Global Hierarchy, decision-making process will be faster and efficient
instead of major decision-making power relay on the headquarter of TMC in Japan
alone. This is because each regional head is able to make prompt management
decisions based on on-site information that is acceptable to its particular
region (Lawrence, 2017).
Lastly, Business-unit organization is another feature of TMC organizational
structure. TMC divides the product lines 4 divisions which are Lexus
International, Toyota No. 1, Toyota No. 2 and Unit Center. Business-unit organization
is to clarify the responsibility and the operations of TMC for steady growth
Figure 2.1.2. The organizational structure of Toyota in 2013.
Source from: http://www.toyota-global.com/company/history_of_toyota/75years/data/company_information/management_and_finances/management/organizational/organizational_changes15.html
The Huawei Company’s organizational structure is largely
Mechanistic also known as bureaucratic which mean strong centralized organizational
structure of management system. Thus, it is true that the top-level management
of Huawei Company has the right and authority of decision making and not
delegated to the subordinates. The subordinates have to give highly cooperation
and follow whatever their superior decides without interfering (Ahmed, 2015).
Huawei explains in their Hierarchy guide: “The Shareholders’
Meeting has the highest authority and right of decisions making on major issues
such as the company’s capital increase, profit distribution and selection of
the members of the Board of Directors or Supervisory Board.” (Huawei, 2017).
In 2016, management of Huawei Company has transformed and
improved from a centralized decision-making model to demand-driven model that
allows people closest to the action to call for support (Huawei, 2016). The organizational
structure changed based on five components which are Control Environment, Risk
Assessment, Control Activities, Information & Communication and Monitoring.
Huawei has defined the authority of its organization by
separating the rights and responsibilities of committees, group functions and
multi-level management teams. Besides, Huawei has developed multi-dimensional
information and communication channels to ensure transferring external
information from customers to corporate management team then, take appropriate
Figure 2.1.3. The organizational structure of Huawei Company.
Source from: http://www.huawei.com/en/about-huawei/corporate-governance/corporate-governance