Decentralisation is said to facilitate the growth of an organisation.…

The correct answer is Option (2) → It gives greater autonomy to departmental heads, and the competition among departments raises productivity and returns for expansion.

Option (1) It gives greater autonomy to departmental heads, and the cooperation among departments cuts costs and frees funds for expansion. — Incorrect. The autonomy part is right. But autonomy lets each department work in its own best way, and this builds a sense of competition among departments. Growth comes from the higher productivity that this competition brings.

Option (2) It gives greater autonomy to departmental heads, and the competition among departments raises productivity and returns for expansion. — Correct. Decentralisation gives greater autonomy, that is, freedom to decide, to lower levels and to departmental heads. Each department works in the way that suits it and tries to do better than the others. So productivity rises, and the extra returns are used for expansion.

Option (3) It removes the duplication of activities across departments, which lowers costs and frees funds for expansion. — Incorrect. Minimal duplication of effort is an advantage of the functional structure, where similar jobs are grouped in one department. It lowers cost through economies of scale, and has nothing to do with how decentralisation brings growth.

Option (4) It allows closer personal supervision of subordinates, which raises their output and the returns for expansion. — Incorrect. Decentralisation reduces direct supervision by a superior. Subordinates get freedom to act and decide within set limits, and personal supervision is often replaced by other forms of control.