Question

“E – Solution Ltd.” Started its operations in the year 2000. At the time of its Inception, the Company had only 10 Employees with Two Departments, a “Production Department” and an “Administration Department”. The Products Supplied and the Services Provided by the company started gaining popularity over the years . The Management had faith in the abilities of the employees and thus they allowed them Freedom of Action. The Management recognized that the decision makes at different levels of the organization need to be given More Autonomy. They took a policy decision that there will be Less Control of Superiors over Subordinates .This increased the role of the Subordinates in the organization and now they were in a position to take numerous as well as important decisions . As a result , its Business has diversified into many areas . Presently, it has its Operations throughout the Country with Seven Branches Overseas . Its Organizational Structure has now changed into Divisional Structure and 10,000 People are Working with the Company. 

(a) Identify the Concept of Management which helped the Company to Diversify into many Areas and Branches Abroad . 

(b) Explain FIVE Points of Importance of the Concept identified in (a) above . 

Answer 1

(a) The Concept of Management which helped the Company to Diversify into many Areas and Branches Abroad is “Decentralization” . 

(b) Importance of Decentralization can be explain with the help of following points : 

• Developing Initiative among Subordinates : Passing of authority at middle and lower level shows the trust and faith of top level in their subordinates and this trust and faith motivate the employees working at different levels as they are allowed to take decisions without seeking the approval of superiors.
• Develop Managerial Talent for Future : In decentralization , Managers working at lower and middle level also learn the art of making decisions. They get the experience of performing activities of top executives and learn to manage the authority given to them. So decentralization process prepares the managers working at lower and middle level to perform the task of top level. So, whenever there is vacant job position at top level management, the managers working at lower or middle level can be promoted. This is how it level talent for future . 
• Quick Decision-making : In Decentralization process decision-making is not restricted in few hands only by decision-making power is entrusted to all the managers who are taking actions or performing the activities. This leads to faster decision because employees who have to perform the activities are allowed to take decision also.
• Relief to Top Level Management : In the process of Decentralization top level managers are not overburdened with the responsibilities and authority as they systematically pass the authority and responsibilities at different levels and they become free to concentrate on core and important issues .
• Facilitates Growth : Decentralization grants more autonomy or freedom to lower level. This helps the subordinates to do the work in the manner best suited for their department. When each department is doing to their best then productivity increases and it will generate more revenue which can be used for expansion.
• Better Control : In Decentralization employees working at different levels take their own decisions and they are personally accountable for their decisions, they cannot pass the blame to their superiors. With Decentralization better control can be exercised through Score Card, Management Information System etc.