Question

Harsh started a company ‘Tiny-Toys Ltd.’ to manufacture economical toys for the Indian rural market, with 20 employees. The company did very well in its initial years. As the products were good and marketed well, the demand of its products went up. To increase the production the company decided to recruit additional employees. Harsh who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates 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 Harsh through which he was able to steer his company to greater heights.
b. Also, explain any three points of the importance of this concept.

Answer 1

a. The concept used by Harsh through which he was able to steer his company to greater heights is decentralisation. This is because Harsh, who was earlier taking all the decisions for the company, had selectively dispersed authority. Here, selectively dispersing authority is referring to decentralisation.

b. The following points signify the importance of decentralisation: 

1. Initiative: Decentralisation provides managers with the freedom and authority to take their own decisions. In this way, it gives them opportunities to take initiatives. This helps managers to develop self-confidence
2. Managerial Competence: Decentralisation provides personnel the opportunity to gain new experience and develop their skills. This helps in improving their competence. In this way, it helps in the development of future managers who can take greater responsibilities
3. Control: With decentralisation, the performance of various departments can be evaluated in a better manner. The contribution of each department towards the overall objectives can be easily analysed.