The top level manager has asked the production manager to achieve a target production of 2000 units in a month. But he does not give him the authority and holds the decision-making powers. Identify and explain the concept used in the case.
Centralisation is used, as top level manager has complete authority of decision-making and retains all powers.
Centralisation of authority refers to systematic and consistent retention or concentration of authority for decision-making at top or higher levels of management. An organisation is said to be centralised, when top management retains absolute authority for making almost all decisions on the functioning of the organisation. In a centralised organisation, all decisions on specific matters are taken by one or a few managers at the top level.
In such an organisation, very little authority is delegated to managers at middle and lower levels. They have to depend on the top management for instruction and guidance in their day-to-day activities. They are expected to show no initiative and freedom in their day-to-day activities. The top management exercises strict supervision and control over all the activities in the organisation.