The systematic effort to delegate to the lowest level, all authority except that which can be exercised at central points is called: 

Decentralisation

The correct answer is option 1- Decentralisation. 

Decentralisation refers to systematic effort to delegate to the lowest level all authority except that which can be exercised at central points- Louis Allen.

Decentralisation explains the manner in which decision making responsibilities are divided among hierarchical levels. Put simply, decentralisation refers to delegation of authority throughout all the levels of the organisation. Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. In other words decision making authority is pushed down the chain of command. When decisions taken by the lower levels are numerous as well as important an organisation can be regarded as greatly decentralised.

OTHER OPTIONS

• Delegation is the transfer of authority from superior to subordinate. Delegation is a compulsory act because no individual can perform all tasks on his own.

• Centralisation- An organisation is centralised when decision making authority is retained by higher management levels whereas it is decentralised when such authority is delegated. Complete centralisation would imply concentration of all decision making functions at the apex of the management hierarchy.

• Departmentalization- Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialisation. This grouping process is called departmentalisation. Departments can be created using several criteria as a basis. Examples of some of the most popularly used basis are territory (north, south, west, etc.) and products (appliances, clothes, cosmetics etc).