Question

Distinguish between centralisation and decentralisation.

Hint:

Centralisation is useful for maintaining control, while decentralisation allows for greater responsiveness and flexibility.

Answer 1

Step 1: Definition of Centralisation
Centralisation refers to the concentration of decision-making authority at the top levels of management. In a centralized system, key decisions are made by top executives, and lower levels are not involved in the decision-making process.
Step 2: Definition of Decentralisation
Decentralisation refers to the delegation of decision-making authority to lower levels of management. It allows local managers or departments to make decisions without seeking approval from top management.
Step 3: Key Differences


Decision-Making Authority: In centralisation, authority is concentrated at the top, while in decentralisation, authority is spread across various levels.
Speed of Decision Making: Decentralisation leads to quicker decision-making as decisions are made locally, while centralisation can slow down decision-making as approval must go through multiple layers.
Flexibility: Decentralisation provides more flexibility as local managers can respond to changes quickly, while centralisation is more rigid.
Control: Centralisation offers more control to top management, while decentralisation involves a degree of autonomy for lower-level managers.

Step 4: Conclusion
Both centralisation and decentralisation have their advantages and disadvantages. The choice between them depends on the size of the organization, the nature of the business, and the goals of management.
Final Answer: \[ \boxed{\text{Centralisation concentrates authority at the top, while decentralisation spreads authority across levels of management.}} \]