Question

"The responsibility of a firm should be divided among various levels such as top level, middle level, and lower level". Identify the concept of management function and state its importance.

Answer 1

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.

Importance of decentralization:

• There is less burden on the Chief Executive as in the case of centralization.
  
• In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.
  

• In decentralization, diversification and horizontal can be easily implanted.
  
• In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree.