Q.(OR) What is meant by centralisation and decentralisation? Tell the difference between two.
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The Management Authority Principle
Think about a cricket team. The captain decides the batting order, the field placements, and when to take the powerplay. Now imagine if every player on the field started making those decisions independently — the bowler deciding the field, the wicketkeeper deciding the batting order, and the twelfth man deciding the bowling changes. Chaos, right? The team would collapse before the first ball is bowled.
That is the everyday intuition behind the Management Authority Principle. In any organised effort — whether a cricket team, a school, a company, or a government — someone must have the right to decide and the power to get things done. Without that, nothing gets coordinated.
What the Principle Actually Says
The Management Authority Principle states that authority must be clearly defined, properly delegated, and matched with corresponding responsibility. It is not about bossing people around. It is about creating a clear chain of command so that everyone knows:
- Who has the right to make which decisions
- Who is answerable for what outcomes
- How orders flow from top to bottom
Authority is the right to command, not just the power to force. Subordinates accept it because it comes from a legitimate source — usually the organisation's hierarchy or rules. Without legitimacy, authority becomes mere coercion.
Why It Matters (The Real Reason)
In your NCERT textbook (Class 12 Business Studies, Chapter 5 — Organising), this principle is discussed under Delegation of Authority. The textbook makes a crucial point: authority without responsibility leads to misuse of power; responsibility without authority leads to frustration and failure.
Consider a school prefect. If the prefect is given the responsibility to maintain discipline in the corridor but has no authority to warn or report students, the job becomes impossible. Conversely, if the prefect has authority to punish but no responsibility for the corridor's discipline, they might misuse that power.
The principle ensures balance. It is the foundation of every well-run organisation.
Key Elements You Must Remember
- Authority flows downward — from the board of directors to the CEO, to managers, to supervisors, to workers. Each level has the right to command the level below.
- Responsibility flows upward — a subordinate is answerable to their superior for the tasks assigned.
- Accountability is absolute — a manager cannot delegate their own accountability. Even if they delegate authority, they remain answerable to their own boss for the final result.
NCERT emphasises that delegation is the process by which a manager transfers authority to a subordinate. But the manager's own accountability cannot be transferred. This is why senior managers still get fired when their team fails — they delegated authority, but not accountability.
A Simple Example to Lock It In …
Centralisation keeps decision-making authority concentrated at the top; decentralisation disperses it to lower levels. The two differ in where authority rests, freedom of lower levels, speed of decisions and development of subordinates. …
Centralisation concentrates authority at the top; decentralisation spreads it down the organisation. They differ in where authority lies, freedom of lower levels, decision speed and subordinate development.
Centralisation: It refers to the concentration of decision-making authority in the hands of top management. Lower levels merely implement decisions. It is useful for small firms and where uniformity and tight control are needed.
Decentralisation: It refers to the systematic delegation of authority throughout the organisation, right down to the lowest levels, giving managers at every level the authority to take decisions in their own areas. It is an extension of delegation applied to the whole enterprise.
| Basis | Centralisation | Decentralisation |
|---|---|---|
| Authority | Concentrated at the top | Dispersed to all levels |
| Freedom of lower levels | Very little | Substantial autonomy |
| Decision-making | Slower (routed to the top) | Faster (taken near the point of action) |
| Burden on top management | Heavy | Reduced; top is free for strategy |
| Development of subordinates | Limited | Promotes initiative and managerial development |
| Suitability | Small firms, uniform/routine work | Large, growing, diversified firms |
Showing the 12 most recent of 18 on this concept.
- CBSE 2025Set 66/2/11 markMCQQ.'The right of an individual to command his subordinates and to take action within the scope of his position' is called : (A) Decentralization (B) Authority (C) Responsibility (D) Accountability
›Reveal solutionSolution
The power to give orders, make decisions, and act within one's role is the definition of authority. The answer is (B).
When an organization assigns someone a position—say, a department head or a team leader—it must also give that person the power to actually do the job. That power is what we call authority. It's the formal right to command others, to allocate resources, to approve or reject proposals, and to make decisions within a defined boundary.
Think of it this way: responsibility tells you what you must achieve, but authority gives you the means to achieve it. A manager responsible for meeting a sales target needs the authority to hire salespeople, set prices within limits, and approve marketing spend. Without authority, responsibility becomes an empty burden.
The four terms in the options form a tightly connected system in management theory, so let's distinguish them clearly:
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Authority is the right to command and act. It flows downward from the organization's top and is attached to a position, not a person. When you leave the role, the authority stays with the role.
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Responsibility is the obligation to perform assigned tasks. It flows upward—you are responsible to someone higher. Crucially, responsibility cannot be delegated away; a manager who delegates a task to a subordinate remains responsible for its outcome.
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Accountability is the answerability for results. It's the flip side of authority: if you have the power to decide, you must answer for the consequences. Accountability is always retained by the person in the position. …
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- CBSE 2025Set 66/4/11 markMCQQ.Menon, a worker in 'Superior Toys Company' was given a task by his superior to produce 100 toys in a week. Menon delegated this task to his subordinates, Rohan and Farhan. Farhan met with an accident and was hospitalised. Rohan could not complete this task even after working more hours than allotted. Who is answerable to Menon's superior for this task ? (A) Farhan (B) Menon (C) Both Menon and Rohan (D) Both Rohan and Farhan
›Reveal solutionSolution
Under the principle of authority and responsibility, a manager who delegates a task remains fully answerable to their own superior for its completion — delegation does not transfer accountability upward.
This question tests your understanding of a core management principle: authority and responsibility. The NCERT textbook in Business Studies (Class 12) explains this principle clearly — when a superior delegates a task to a subordinate, the subordinate receives the authority to do the work, but the responsibility for getting it done still rests with the delegating manager. In other words, you can share the work, but you cannot share the accountability that flows upward.
Let’s apply this to the situation. Menon was given a target by his superior: produce 100 toys in a week. Menon then delegated this task to Rohan and Farhan. Farhan met with an accident and was hospitalised, so he could not work. Rohan tried but failed to complete the task even with extra hours. Now, who is answerable to Menon’s superior?
NoteDelegation means passing on authority to act, but the responsibility for the outcome remains with the person who delegated. This is why managers cannot escape accountability by blaming their subordinates. …
- CBSE 2024Set MARCH1 markMCQQ.What is it called where authority is centrally delegated at higher management level?(a) Centralisation(b) Decentralisation(c) Decapitalisation(d) Transmission
›Reveal solutionSolution
Concentration of authority at the top level is called centralisation.
Centralisation refers to the systematic and consistent retention of decision-making authority at the higher levels of management. Its opposite, decentralisation, means authority is systematically delegated down to …
- CBSE 2024Set ANNUAL1 markMCQQ.Authority cannot be delegated of (A) Routine work (B) Necessary work (C) Ordinary work (D) Easy work
›Reveal solutionSolution
Managers keep authority over the essential/necessary parts of their job and delegate only the routine parts, so the answer is (B).
Delegation means passing part of a manager's authority down to subordinates so routine, ordinary and easy work can be handled lower in the hierarchy, freeing the manager for more important matters. However, the authority tied to the necessary/crucial decisions of the post is kept by the manager; it is not delegated. So 'necessary work' is the kind of authority that cannot be …
- CBSE 2024Set ANNUAL1 markMCQQ.Centralisation refers to (A) Retention of decision making authority (B) Dispersal of decision making authority (C) Creating divisions as profit centres (D) Opening new centres or brnaches
›Reveal solutionSolution
Centralisation means authority to decide stays at the top, so the answer is (A).
Centralisation is the systematic retention of decision-making authority at higher levels of management; lower levels merely execute. Its opposite, decentralisation, is the systematic dispersal of authority to middle and lower levels. The question asks what centralisation means, which is the concentration/retention of authority.
- (B) Dispersal of decision-making authority describes decentralisation, not centralisation. …
- CBSE 2024Set ANNUAL1 markQ.What is the meaning of decentralisation?
›Reveal solutionSolution
Decentralisation is the systematic dispersal of decision-making authority down to the lower levels of the organisation.
Decentralisation refers to the systematic delegation of authority throughout all levels of management and in every part of the organisation. Under decentralisation, decision-making power is not held only by top management but is spread down to middle- and lower-level managers, who are given the authority to take decisions in their own areas. It is a matter of degree — complete centralisation or complete decentralisation is never possible; every organisation has a mix. Decentralisation gives lower levels more autonomy and …
- CBSE 2024Set ANNUAL1 markQ.Decision can be takes quickly in decentralisation. Do you agree with this, 'if yes', why?
›Reveal solutionSolution
Agree — decentralisation speeds up decisions because lower-level managers who are close to the action hold the authority to decide, avoiding delays of referring up the hierarchy.
Yes, I agree that decisions can be taken quickly under decentralisation. The reason is:
- Under decentralisation, decision-making authority is dispersed to the lower levels of management, closer to the point where the work is actually done and where problems arise.
- These managers can therefore take and implement decisions on the spot, without having to send the matter up to top management and wait for approval to come back down the long scalar chain. …
- CBSE 2024Set ANNUAL1 markQ.Differentiate between authority and responsibility on the basis of direction of flow.
›Reveal solutionSolution
On the basis of direction of flow, Authority moves downwards (top to bottom) while Responsibility moves upwards (bottom to top) in an organisation.
Basis Authority Responsibility Direction of flow Flows downward — a superior delegates authority to a subordinate, moving from higher to lower levels of the hierarchy Flows upward — a subordinate remains answerable/accountable to the superior for the performance of the assigned task, moving from lower to higher levels … - CBSE 2023Set MARCH1 markQ.Match the following:
A B a) Decentralisation i) Style of leadership b) Preliminary screening ii) Money market and capital market c) Laissez Faire iii) Quick decision making d) Modern techniques of controlling iv) Selection process e) Financial Market v) Management Information System ›Reveal solutionSolution
Correct matches: a-iii, b-iv, c-i, d-v, e-ii.
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- CBSE 2023Set ANNUAL1 markQ.Fill in the blank: ______ flow from top to bottom.
›Reveal solutionSolution
The blank is filled by 'Authority' — authority flows from top to bottom.
Authority is the right of a superior to give orders and take decisions. In the scalar chain of an organisation it is delegated from top management downward to lower levels, so authority flows from top to bottom. (In contrast, responsib …
- CBSE 2023Set ANNUAL1 markQ.Differentiate between 'Authority' and 'Responsibility' on the basis of nature.
›Reveal solutionSolution
On the basis of nature: Authority is the right to command (flows downward); Responsibility is the obligation to perform (flows upward).
Basis: Nature Authority Responsibility What it is The formal, legitimate power/right vested in a position to give orders and take decisions The obligation/duty of a subordinate to properly carry out an assigned task Direction of flow Flows downward, from superior to subordinate Flows upward, from subordinate to superior Origin Arises from one's official position in the organisation Arises from the acceptance of a duty/assignment given by a superior Nature A right — can be delegated An obligation — essentially cannot be delegated away; the person assigned remains answerable … - CBSE 2023Set ANNUAL1 markMCQQ.Which of the following is the ideal situation?(a) Authority > Responsibility(b) Authority = Responsibility(c) Authority < Responsibility(d) None of the above
›Reveal solutionSolution
The ideal relationship between authority and responsibility is that they should be equal.
Authority is the right to give orders and get obedience, flowing downward from superior to subordinate; responsibility is the obligation to perform the assigned duty, flowing upward as accountability to the superior. For an employee to do their job effectively, the authority granted to them must match the responsibility they are expected to fulfil. If responsibility exceeds authority, the person is answerable for outcomes they lack the power to control or influence — an unfair and unworkable situation. If authority exceeds responsibility, t …
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