Johnson & Johnson runs itself as many smaller companies. As a result, each of these companies keeps short lines of communication with its customers and employees. Which importance of decentralisation does this result support most directly?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Quick decision making
Option (1) Better control — Incorrect. Better control means that performance can be evaluated at each level, and each department is held accountable for its results. The Johnson & Johnson result is about how far information has to travel.
Option (2) Develops initiative among subordinates — Incorrect. Develops initiative means that lower managers become self-reliant and confident, because they learn to depend on their own judgment. The case speaks of short lines of communication, which is about how fast information moves.
Option (3) Relief to top management — Incorrect. Relief to top management means that direct supervision by superiors falls, and top managers get more time for important policy decisions. Short lines of communication with customers and employees do not free the top managers’ time.
Option (4) Quick decision making — Correct. Johnson & Johnson works as many smaller companies, so each keeps short lines of communication. Decisions are taken near the point of action without approval from many levels, so they are much faster.
Note: The Johnson & Johnson story sits in a side box of the chapter. Real-company boxes like this are a favourite place for questions, so read them along with the main text.
NCERT (2026-27 Edition): “Importance … (iii) Quick decision making: The management hierarchy can be looked upon as a chain of communication. In centralised organisation because every decision is taken by the top management the flow of information is slow as it has to traverse many levels. Response also takes time. This reduces the speed of decision making and makes it difficult for an enterprise to adapt to dynamic operating conditions. In a decentralised organisation, however ,since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels, the process is much faster. There are also less chances of information getting distorted because it doesn’t have to go through long channels.”
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