Question

Four Mark Question:
Nemaj Gupta stoned a company 'YoYo Ltd.' with ten employees, to assemble economical computers for the Indian rural market: The company did very well in its initial years. As the product was good and marketed well, the demand went up. To increase production the company decided to recruit additional employees. Neeraj Gupta, who was earlier taking all decisions for the company, had to selectively disperse the authority. He believed that people are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range with different features:
(a) Identify the concept used by Neeraj Gupta through which he was able to steer his company to greater heights.
(b) Also explain any three points of importance of this concept.

Answer 1

(a)- The concept used by Nemaj Gupta through which he was able to steer his company to greater heights is decentralization.

(b)- An organization would choose to be decentralized because of the following importance of decentralization:

1. Develops Initiative among Subordinates:

Decentralization helps the managers at the lower levels to take all those decisions, which are for the betterment of the organization, on their own and to develop solutions for solving the various problems they face. This helps in enhancing confidence and self-reliance among the employees.

2. Develops Managerial Talent for the Future: Decentralisation provides a chance to the employees to prove their abilities by handling various assignments independently. Such opportunities to take decisions to increase their knowledge & experience at all levels. It also provides qualified manpower for fulfilling the top positions through promotions.

3. Quick Decision Making:

Decentralization promotes independent and quick decision making by subordinates as they are close to the operations and are in constant touch with all activities of their departments. Approval from various levels being not required, decisions can be taken much faster on their own.

4. Relief for Top Management:

It relieves the top executives of excessive workload as the common and day to day routines are assigned to the subordinates. The saved time can be utilized by them in making strategic plans and providing direction to the organization for further growth