Question 3 OR (a)

Centralisation and decentralisation compared

9 marks

Time to write
About 18 minutes
Topic
Delegation and decentralisation
Notes
Crux notes

Question

Question 3 OR (a) · 9 marks

Compare 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

18 minfor 9 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

  1. Read; underline the asks; jot your points 1 min
  2. 1 Meaning of centralisation and decentralisation 2 marks 4 min
  3. 2 Comparison table 4 marks 7 min
  4. 3 Merits, limitations and deciding factors 2½ marks 4 min
  5. 4 Conclusion ½ mark 1 min
  6. 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.

Meaning of centralisation

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.

Picture itCentralisation and decentralisation compared

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.

Meaning of decentralisation

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.

Comparison

BasisCentralisationDecentralisation
Location of authorityConcentrated at the topSpread across levels
Decision speedSlower; matters go up the hierarchyFaster; decisions taken on the spot
Burden on top managementHeavyLighter; top managers focus on strategy
Uniformity of policyHighLower; units may act differently
Initiative of lower managersLittle scopeEncouraged
Development of managersLimitedTrains future leaders
ControlDirect and tightThrough policies, budgets and reports
CostFewer managers neededMore capable managers and duplication
Suitable forSmall firms, crises, uniform operationsLarge, diversified or dispersed firms
CommunicationLong vertical chainsShorter, more horizontal

Merits and limitations

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).

Conclusion

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

#ComponentMarks
1Meaning of centralisation and decentralisation2
2Comparison (table)4
3Merits, limitations and deciding factors2.5
4Conclusion0.5
Total9
Keyboard: ← → previous and next question, / search

Report a problemopens an email to admin@getkunji.com with the question ID7353-Q3aORalready filled in.