In a cosmetics company, the directors and divisional heads take even minor decisions. Lower-level managers only carry out these decisions.
Which of the following does the company follow?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Centralisation
Option (1) Centralisation — Correct. In a centralised organisation, decision making authority lies with the top management. Here directors and divisional heads take even minor decisions, and lower managers only carry them out.
Option (2) Decentralisation — Incorrect. Decentralisation means decision making authority is shared with lower levels. Here lower managers decide nothing, so it is the opposite.
Option (3) Delegation — Incorrect. Delegation is the transfer of authority from a superior to a subordinate. In this company no authority to decide is passed down, even for minor matters.
Option (4) Departmentalisation — Incorrect. Departmentalisation is the grouping of similar activities into departments, a step in organising. It deals with how work is grouped.
NCERT (2026-27 Edition): “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. …” “Centralisation and Decentralisation Centralisation and decentralisation are relative terms, as seen from the existing status of various business enterprises. An organisation is centralised when decision-making authority is retained by higher management levels whereas it is decentralised when such authority is delegated. …” |