Correct Answer: Both Statement 1 and Statement 2 are true.

Solution : The correct answer is (c) Both Statement 1 and Statement 2 are true.

Statement 1 is true. Decentralization involves delegating decision-making authority to lower levels of the organization. This empowers lower-level managers to make decisions in their respective areas, which can lead to faster decision-making as decisions can be made closer to the point of action without waiting for approvals from higher levels.

Statement 2 is true. Decentralization is all about empowering lower-level managers and employees to make decisions within their scope of responsibility. This empowerment boosts morale, enhances accountability, and fosters a sense of ownership among employees, ultimately leading to more effective decision-making.