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.
Consider the following statements about the case of Bharat Energy Ltd.:
(A) Under the new system, the change in who controls the service staff at each field is a downward transfer of authority from a superior to a subordinate.
(B) The way small repairs at a drilling site were cleared under the old system is an example of centralisation.
(C) The way the common services are run under the new system is an example of decentralisation.
(D) The change in who buys materials for a field makes each field manager’s authority commensurate with the responsibility he carries for his field.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B) and (D) only
(A) Under the new system, the change in who controls the service staff at each field is a downward transfer of authority from a superior to a subordinate. — Correct. Control of the service staff passed from the head office to each field manager. This is delegation.
(B) The way small repairs at a drilling site were cleared under the old system is an example of centralisation. — Correct. Even a small repair waited for the head office, where decision-making authority lay with the top.
(C) The way the common services are run under the new system is an example of decentralisation. — Incorrect. They are still run from the head office, so they show centralisation.
(D) The change in who buys materials for a field makes each field manager’s authority commensurate with the responsibility he carries for his field. — Correct. He answers for his field’s results and can now buy materials. His authority now matches his responsibility, as effective delegation needs.
NCERT (2026-27 Edition): “Delegation … Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a pre-requisite to the efficient functioning of an organisation because it enables a manager to use his time on high priority activities. …” “Decentralisation In many organisations the top management plays an active role in taking all decisions while there are others in which this power is given to even the lower levels of management. Those organisations in which decision making authority lies with the top management are termed as centralised organisations whereas those in which such authority is shared with lower levels are decentralised organisations. …” “Elements of Delegation … An important consideration to be kept in view with respect to both authority and responsibility is that when an employee is given responsibility for a job he must also be given the degree of authority necessary to carry it out. Thus, for effective delegation the authority granted must be commensurate with the assigned responsibility. If authority granted is more than responsibility, it may lead to misuse of authority, and if responsibility assigned is more than authority it may make a person ineffective.” |