CBSE Class 12-commerce Answered

Decentralisation refers to the delegation of authority and power to the lower level in the hierarchy. It is optional in the sense that it is up to the organisation to decide that how much authority and power it wishes to delegate to the lower levels. The following points explain why an organisation would choose to be decentralised:

1. Initiative: Decentralisation provides managers the freedom and authority to take their own decisions. In this way, it gives them opportunities to take initiatives. This helps managers to develop self-confidence.
2. Managerial Competence: Decentralisation provides the personnel the opportunity to gain new experience and develop their skills. This helps in improving their competence. In this way, it helps in the development of future managers who can take greater responsibilities.
3. Control: With decentralisation, the performance of various departments can be evaluated in a better manner. The contribution of each department towards the overall objectives can be easily analysed.
4. Active Decision Making: Decentralisation enables decision making at the nearest point of action. This ensures quick decision making.