Which concept describes the degree to which formal authority is concentrated in one area or level of an organization, with top management making most decisions?

• A. Centralization
• B. Decentralization
• C. Delegation of Authority
• D. Departmentalization

Answer: (A)

Centralization describes how much formal authority is concentrated at the top of the organization. When top management makes most decisions, authority sits largely at the upper levels, guiding consistent policy and control from a central point. This can simplify coordination and maintain unified strategies, though it may reduce speed and flexibility at lower levels. Decentralization is the opposite, pushing decision-making down to lower levels to improve responsiveness. Delegation of authority refers to assigning specific decisions to others, which can occur within either structure and is about distributing tasks rather than the overall concentration of power. Departmentalization deals with how activities are grouped into departments and doesn’t address who holds decision-making authority.