Final answer:
The practice in large companies of establishing autonomous divisions whose heads are entirely responsible for what happens in the division is referred to as decentralization of authority. Hence, the correct answer is option (b).
Step-by-step explanation:
The practice in large companies of establishing autonomous divisions whose heads are entirely responsible for what happens in the division is referred to as decentralization of authority. This means that each division operates independently and the division heads are given the autonomy to make decisions that affect their own areas of responsibility. This concept is distinct from other organizational practices like management by exception, delegation of authority, integration, and informal organization.
Businesses implement decentralization to empower managers, improve decision-making speed, and enhance accountability within each division. While a hierarchy of authority exists in bureaucracies where individuals report through a clear chain of command, in a decentralized organization, decision-making power is spread out among various levels of the organization.