Authority: Authority means the right to take important decisions whenever there is a need to do so. The higher a person is in the hierarchy of an organization, the more authority he has. This is why, authority increases with the position in an organization.

Chain of command: It is also called scalar principle. The chain of command makes the reporting relationships very clear in an organization. Because of the existence of the chain of command, people know whom they are reporting to and who is supposed to give orders to them. It makes the hierarchy very clear in an organization.