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What does a highly centralized firm risk losing?
AControl over its spending and financial reporting
BAny ability to eliminate duplicated activity
CThe chance for junior staff to build decision skills
DThe authority of its own top management team
Answer & Solution
Correct answer: C. The chance for junior staff to build decision skills
1. Centralization delivers a broad view of operations, tight financial controls, and reduced cost through eliminating redundancy.
2. Against that, lower-level personnel do not get a chance to develop their decision-making and leadership skills.
3. The organization also becomes less able to respond quickly to customer demands.
4. Financial control and the removal of duplication are gains rather than losses under centralization, and top management authority is strengthened rather than lost.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 7 "Designing Organizational Structures", section 7.5 Degree of Centralization_
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