Question : In contrast to most other businesses, L&M Ltd operates as 190 smaller businesses, each focused on a particular product or industry. This implies a selective distribution of authority and recognises the need for autonomy among decision-makers as decision-making authority is decentralised lower in the chain of command. It enables the business to keep lines of communication open with clients and staff members and quicken talent development. Describe the philosophy L&M Ltd. is using to distribute decision-making responsibilities among the various levels of the hierarchy.
Option 1: Delegation
Option 2: Decentralisation
Option 3: Functional structure
Option 4: Formal organisational structure
Correct Answer: Decentralisation
Solution : Decentralization is a particular type of organisational structure in which the top management assigns daily tasks and decision-making authority to intermediate and lower employees. Decentralization is essential in management because it gives employees the responsibility to take the initiative in making decisions and helps them gain self-assurance. Hence, the correct option is 2.
