In management theory, centralisation is said to exist when which of the following conditions holds true within an organisation?

Introduction / Context:
Centralisation and decentralisation are fundamental concepts in management and organisational design. This question checks whether you can identify the situation in which an organisation is considered centralised, based on who holds decision making authority.

Given Data / Assumptions:
- The organisation has multiple managerial levels, from top management to lower level supervisors.- Decision making authority refers to the power to take important policy and operational decisions.- We are distinguishing centralisation from decentralisation and employee empowerment.- The focus is on the main pattern of authority distribution, not exceptional cases.

Concept / Approach:
Centralisation means that the authority to make key decisions is concentrated at the top levels of management. Top managers keep most decision powers and lower levels primarily follow instructions. In decentralisation, authority is distributed to middle and lower level managers. Many modern organisations also encourage employee initiative, which is the opposite of strict centralisation.

Step-by-Step Solution:
Step 1: Recall the definition of centralisation: concentration of decision making authority at the top of the organisational hierarchy.Step 2: Examine option A, where top management retains most decision making power. This matches the formal definition of centralisation.Step 3: Examine option B, where authority is shared with lower level managers. This reflects decentralisation, not centralisation.Step 4: Examine option C, where employees at all levels are allowed to take initiative. This indicates empowerment and participative management, again inconsistent with strict centralisation.Step 5: Since option A matches the concept exactly, choose it as the correct answer.

Verification / Alternative check:
A useful check is to imagine an organisation chart. In a centralised structure, arrows of authority and information flow upward for approval before actions are taken. Lower level managers have limited discretion. In decentralised systems, many decisions are taken closer to where the work happens. Management textbooks consistently define centralisation in terms of the proportion of decisions taken by top management versus lower levels, confirming that retaining authority at the top is the key feature.

Why Other Options Are Wrong:
Authority is widely shared with managers at lower levels: This describes decentralisation, where decision power is intentionally distributed.Employees at all levels are encouraged to take initiative: This describes participative or empowerment based cultures, not centralised authority structures.None of the above: This is incorrect because option A clearly matches the textbook definition of centralisation.

Common Pitfalls:
Students sometimes mix up centralisation with the physical central location of offices rather than authority. Another common confusion is thinking that any distribution of tasks is decentralisation, even if major decisions still require approval from top management. It is important to focus on who has the formal right to make significant decisions, not only who performs day to day activities. Centralisation has advantages such as consistency and control, but it can also slow down responses and reduce local initiative.

Final Answer:
Centralisation exists when top management retains most of the decision making authority in the organisation.