Which term refers to the situation in organizations where decision-making authority is delegated throughout the firm?

The term that refers to the situation in organizations where decision-making authority is delegated throughout the firm is "Decentralization."

Explanation of Decentralization

Decentralization is a structural approach in management that distributes decision-making powers to various levels of an organization. This process allows lower-level managers and employees greater autonomy in making decisions related to their specific roles and responsibilities.

The primary benefits of decentralization include increased responsiveness to local circumstances, improved motivation among employees due to greater empowerment, and quicker decision-making processes since individuals closer to the action can make decisions without waiting for higher management approval.

However, it is essential to strike a balance since too much decentralization can lead to inconsistencies in decision-making and dilute the overall strategic direction of the organization. Effective communication and alignment with the organization’s goals are crucial to ensuring that decentralized decisions align with broader objectives.