Question 3 OR (a)
Centralisation and decentralisation compared
9 marks
- Time to write
- About 18 minutes
- Notes
- Crux notes
Question
Question 3 OR (a) · 9 marksCompare and contrast Centralization and Decentralization.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- CompareCompare in a table, basis by basis.
What the paper leaves open
The cover prints the course as B.Com. (Hons) CBCS with maximum marks 75. This is read as a misprint: the paper carries the UGCF code for this course (2412081101) and five questions of 18 marks each (90), so it is treated as the December 2025 UGCF paper.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Meaning of centralisation and decentralisation 2 marks 4 min
- 2 Comparison table 4 marks 7 min
- 3 Merits, limitations and deciding factors 2½ marks 4 min
- 4 Conclusion ½ mark 1 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Step 1 opens with the meaning: a one-line definition, the quickest mark in it.
Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks. End with step 4 in a line or two.
Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Centralisation is the systematic reservation of decision-making authority at the top of the organisation. Most important decisions are taken by top management, and lower levels mainly carry out instructions. It is common in small firms and in owner-managed businesses.
1The counter can't say yes: she phones head office upstairs while the queue fumes.
CentralisationConcentrated at the top; slower; matters go up the hierarchy.
2The same counter, but the stamp is in her own hand—upstairs, the boss studies the plan.
DecentralisationSpread across levels; decisions taken on the spot; top managers focus on strategy.
Decentralisation is a policy of letting the managers nearest the work take most of its decisions: a store manager fixes staff rosters and local offers without waiting for head office. Top management keeps only decisions on policy, major investment and overall control. It goes further than delegation: delegation is the act of a superior passing authority to a subordinate, while decentralisation is a deliberate, organisation-wide policy of spreading authority across many levels.
Centralisation and decentralisation are relative: no organisation is completely one or the other; both extremes are unrealistic. The question is the degree: which decisions, how important, and how many are taken at lower levels.
| Basis | Centralisation | Decentralisation |
|---|---|---|
| Location of authority | Concentrated at the top | Spread across levels |
| Decision speed | Slower; matters go up the hierarchy | Faster; decisions taken on the spot |
| Burden on top management | Heavy | Lighter; top managers focus on strategy |
| Uniformity of policy | High | Lower; units may act differently |
| Initiative of lower managers | Little scope | Encouraged |
| Development of managers | Limited | Trains future leaders |
| Control | Direct and tight | Through policies, budgets and reports |
| Cost | Fewer managers needed | More capable managers and duplication |
| Suitable for | Small firms, crises, uniform operations | Large, diversified or dispersed firms |
| Communication | Long vertical chains | Shorter, more horizontal |
Centralisation ensures uniform policies, tight control, quick action in a crisis and economy in staff, but it overloads top management, delays decisions, discourages initiative and is unsuited to large or diversified firms.
Decentralisation relieves top management, speeds decisions, motivates and develops managers, suits diversification and makes control by results possible; but it is costly, risks inconsistent policies, needs capable managers and good control systems, and may weaken coordination. It works only when authority is delegated clearly, each unit head is answerable for results, and the units are kept in step through common policies and regular reporting; centralisation, by contrast, keeps direction firmly at the top.
Factors deciding the degree. Size of the organisation, cost and significance of decisions, need for uniform policy, availability of capable managers, geographical spread, the history and philosophy of top management, the quality of control techniques, and the speed of environmental change.
Example. A national retail chain decides prices, brands and store openings at head office (centralised) but lets store managers decide staff rosters, local promotions and display (decentralised).
The two are complementary positions on a scale. A sound organisation centralises what needs uniformity and decentralises what needs speed and local knowledge, and adjusts the balance as it grows. Information technology has made both easier: real-time reporting lets head office keep control while giving branches more freedom to decide.
Where the 9 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning of centralisation and decentralisation | 2 |
| 2 | Comparison (table) | 4 |
| 3 | Merits, limitations and deciding factors | 2.5 |
| 4 | Conclusion | 0.5 |
| Total | 9 |
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