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With the Help of Any Four Points, Explain the Importance of 'Decentralisation' in an Organisation. - CBSE (Commerce) Class 12 - Business Studies

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With the help of any four points, explain the importance of 'Decentralisation' in an organisation.


Decentralisation refers to the delegation of authority and power to the lower level in the hierarchy. It is optional in the sense that it is up to the organisation to decide that how much authority and power it wishes to delegate to the lower levels. The following points explain why an organisation would choose to be decentralised:

1) Initiative: Decentralisation provides managers 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 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.

4) Active Decision Making: Decentralisation enables decision making at the nearest point of action. This ensures quick decision making.

5) Growth: With decentralisation, the responsibility is passed on to the lower levels in the hierarchy. This motivates them to work to their best, improving their competence and efficiency. Accordingly, overall performance and growth of the organisation are enhanced.

6) Reduced Workload of Top Managers: With decentralisation, part of the responsibility of top-level managers is passed on to the lower management. Accordingly, the top-level managers can focus on other priority areas, while the lower-level managers handle routine work.

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Solution With the Help of Any Four Points, Explain the Importance of 'Decentralisation' in an Organisation. Concept: Concept of Decentralization.
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