Which of the following points about decentralisation best explains ho…

Bharat Energy Ltd.

Bharat Energy Ltd. drills for oil at many sites across India. For many years, its work was run from the head office by the heads of separate activities such as drilling, finance and purchase. This old system had two difficulties. First, even a small repair at a drilling site had to be cleared by the head office, and site work often stood still for months. Second, the purchase head kept spare-part stocks low to show savings in his own budget, even when drilling stopped for want of parts.

A consultant advised forming a team around each oil field, with clearly defined duties. Each field manager was put in charge of all the service staff at his field and was even given the power to buy materials. Each team now has its own drilling, service and purchase staff and answers for the results of its field. A few common services are still run from the head office.

Which of the following points about decentralisation best explains how the new system in the case would remove the first difficulty of the old system?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Decisions are taken nearest to the points of action, with no approval needed from many levels.

Option (1) Lower levels learn to depend on their own judgment, which builds their self-reliance and confidence. — Incorrect. This is how decentralisation develops initiative among subordinates. It does not by itself end the wait for a repair.

Option (2) Top management is left with more time, which it can devote to important policy decisions. — Incorrect. This is relief to top management. The site would still wait if the head office had to clear the repair.

Option (3) Decisions are taken nearest to the points of action, with no approval needed from many levels. — Correct. Even a small repair had to be cleared by the head office, so work stood still for months. Now the field manager decides at the field, nearest to the point of action. No approval from many levels is needed, so action is much faster.

Option (4) Performance is evaluated at each level, and each department is held accountable for its results. — Incorrect. This is better control, which is about judging results.

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.”