The division of authority and power inside a company or network is referred to as centralization. A system is called centralized if the mechanisms for planning and making decisions are concentrated in one area of the system.

In any system, a governance mechanism is necessary. Without this, no choices that direct the remainder of the network may be made. Setting up the fundamental rules and micromanaging each system function are two examples of the different levels of governance.

A central point of authority in a centralized system approves and enforces decisions, which are then disseminated to lesser tiers of authority.

A decentralized system, in contrast to a centralized one, involves distributed decision-making without the involvement of a central authority.

Whether specific decisions should be made at a central location inside the network or be delegated away from any central authority is the primary question in the debate between centralization and decentralization.

Centralization has several benefits, including:

Strategy for the long term can be strictly managed.
The system has clearly defined roles and responsibilities.
Decisions are made quickly and clearly.
The success of the entire network is in the interests of the central power.

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