Explain decentralization and why firms choose to decentralize. Solution Decentralisation refers to transfer of decision making authority from the top management to middle and lower level management. All the opertaing day to day decisions are transferred to middle and lower level managers Firms choose to decentralise because of number of reasons most prominent being: a) Allow top management to focus on the most crucial decisions. b) Involve lower and middle level managers in the decision making process So if a firm has expansion decisions or starting a new product line firm can transfer existing day to day decision making authority to midlle and lower level mgt Doing this will allow top managers to focus on the expansion This alllows middle and lower level managers a sense of belonging in the company and increases their accountability and prepare them for upper level..

1. Explain decentralization and why firms choose to decentralize.
Solution
Decentralisation refers to transfer of decision making authority from the top management to
middle and lower level management. All the opertaing day to day decisions are transferred to
middle and lower level managers Firms choose to decentralise because of number of reasons
most prominent being: a) Allow top management to focus on the most crucial decisions. b)
Involve lower and middle level managers in the decision making process So if a firm has
expansion decisions or starting a new product line firm can transfer existing day to day decision
making authority to midlle and lower level mgt Doing this will allow top managers to focus on
the expansion This alllows middle and lower level managers a sense of belonging in the
company and increases their accountability and prepare them for upper level.