Question

Samir Gupta started a telecommunication company, 'Donira Ltd.' to manufacture economical mobile phones for the Indian rural market with 15 employees. The company did very well in its initial years. As the products was good and marketed well, the demand of its products went up. To increase the production, the company decided to recruit additional employees. Samir Gupta, who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions. This paid off and the company, was not only able to increase its production but also expanded its product range.

(a) Identify the concept used by, Samir Gupta through which he was able to steer his company to greater heights.

(b) Also explain any three points of importance of this concept.

Answer 1

(a) Decentralisation.

(b) Importance:

(i) Relief to top management: Top managers are not burdened by common day-to-day Problems. They have enough time to plan ahead and develop new strategies.

(ii) Develops managerial talent for the future: Even lower level managers learn the art of exercising decision making authority. This prepares them for Promotion to higher levels.

(iii) Quick decision making: Since decisions are taken at levels which are nearest to the point of action without seeking approval from many levels, the Process is much faster.

(iv) Develops initiative among subordinates: It helps to promote self-reliance and confidence among the subordinates.

(v) Facilitates growth: It provides greater autonomy to the middle and lower levels of management. It leads to more productivity, higher return, growth and expansion.

(vi) Better control: It makes evaluation of performance at each level better. The departments can be individually held accountable for their results.