NCERT Solutions for Class 12 Business Studies Business Studies I Chapter 1: Nature and Significance of Management

Chapter at a glance

Exercises – Short Answer Type

Question SA – Q1

Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?

Answer

A divisional manager works at the middle level of management.

Her basic functions

1. Interpret the policies framed by top management and explain them to the supervisors.
2. Prepare the departmental plans and co-ordinate the work of the different sections of her division.
3. Assign duties and responsibilities to the first-line (supervisory) managers.
4. Motivate the supervisors, and report the performance and the needs of her division to top management.
5. Co-operate with the other divisions for the smooth working of the whole organisation.

Ritu works at the middle level; her role is to implement top management’s policies and co-ordinate the work of supervisors.

Question SA – Q2

State the basic features of management as a profession.

Answer

A profession has the following features, and management is moving towards all of them:

1. Well-defined body of knowledge: management has a large body of principles and theories, learnt from books and institutes.
2. Restricted entry: in most professions, entry is based on an examination or degree; for managers, MBA and similar degrees are increasingly preferred but are not compulsory.
3. Professional association: bodies such as AIMA (All India Management Association) and the NIPM guide members; membership is not compulsory.
4. Ethical code of conduct: associations lay down codes, but managers are not legally bound to follow them.
5. Service motive: the aim of management is to earn profit with the service of customers, employees and society.

Management has a knowledge base, professional bodies, codes of conduct and a service motive, but entry is not legally restricted, so it is an emerging profession.

Question SA – Q3

Why is management considered to be a multi-dimensional concept?

Answer

Management is multi-dimensional because it has three aspects that must be understood together:

1. Management of work: every organisation exists to do some work (a product or a service); management turns the goals into tasks, with plans and ways to complete them.
2. Management of people: employees differ in needs, expectations and background; management gets work done through them, and treats them as human beings and not as machines.
3. Management of operations: every organisation converts inputs into outputs; management ensures that a production process and technology exist to do this at the lowest cost.

It deals with work, people and operations at the same time, so it is multi-dimensional.

Question SA – Q4

Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers’ expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. State the quality of management that the company is lacking? What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track?

Answer

Quality lacking: co-ordination. Each department is working in its own interest and blaming the others, so the efforts of production, marketing and finance are not integrated towards the common goal.

Why co-ordination matters: it unites the efforts of all departments, brings unity of action and creates a balance between them, which is the essence of management.

Steps to take

1. Set clear, common organisational goals and communicate them to all departments.
2. Hold regular joint meetings of production, marketing and finance to share information (for example, customer feedback goes to production).
3. Define the authority and responsibility of each department clearly.
4. Appoint a person or team to co-ordinate between departments.
5. Introduce a reward system based on overall results, not on single departments, and train managers in team work.

The company lacks co-ordination; it should align all departments to common goals through regular communication and shared responsibility.

Question SA – Q5

Coordination is the essence of management. Do you agree? Give reasons.

Answer

Yes. Co-ordination is not a separate function; it is the force that binds all the functions (planning, organising, staffing, directing and controlling) together.

1. Integrates group efforts: it unifies the work of individuals and departments towards the common goal.
2. Needed at all levels: top, middle and supervisory managers all co-ordinate those below them.
3. Continuous process: it is required from planning to controlling.
4. Pervasive: it is needed in every organisation and every department.
5. Responsibility of all managers, and a deliberate (not automatic) function.
6. Ensures unity of action: it avoids duplication and conflict, and thereby economises on cost and time.

Without co-ordination, each function would pull in a different direction and the organisation could not achieve its goals.

Agreed; co-ordination binds all functions and all departments together, so it is the essence of management.

Question SA – Q6

Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of Rs 100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of Rs 55,000 whereas, Lakshita was able to produce only 450 units at a cost of Rs 90 per unit. State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer.

Answer

Budget: ₹ 100 per bracelet, so ₹ 50,000 for 500 bracelets.

Ashita

• Actual cost = ₹ 55,000, so cost per bracelet = , more than ₹ 100.

  

• She produced all 500 on time: effective, but she spent more than the budget: not efficient.

Lakshita

• Actual cost per unit = ₹ 90, which is below ₹ 100: efficient.
• She produced only 450 of 500: the target was missed, so she is not effective.

Ashita is effective but not efficient; Lakshita is efficient but not effective.

Exercises – Long Answer Type

Question LA – Q1

Management is considered to be both an art and science. Explain.

Answer

Management as an art. Art is the personalised, skilful application of knowledge to achieve a desired result. Management has these elements:

1. Existence of theoretical knowledge: a large body of literature exists on management.
2. Personalised application: each manager applies the principles in his own style and creativity.
3. Based on practice and creativity: the more a manager practises, the more skilled he becomes, and he uses creativity to find new solutions.

Management as a science. Science is a systematised body of knowledge based on cause-and-effect relationships and tested principles. Management has:

1. Systematised body of knowledge: principles and concepts are collected and organised.
2. Principles based on experiments: they are developed through repeated observation (for example, Taylor’s and Fayol’s work), but cannot be tested in a lab like physical sciences.
3. Limited universal validity: the principles must be adapted to the situation, so management is an inexact (social) science.

Conclusion: the knowledge is scientific, but its application is a personal skill. Hence management is both a science and an art; a manager uses the science to know what to do and the art to know how to do it.

Management has a body of scientific knowledge, but applying it needs personal skill and creativity; so it is both science and art.

Question LA – Q2

Do you think management has the characteristics of a full-fledged profession?

Answer

No, not yet. Management is an emerging profession. Comparing it with the five features of a profession:

Since entry is not restricted, membership is not compulsory and codes are not binding, management does not have the characteristics of a full-fledged profession. However, with the rise of professional managers and management institutes, it is steadily moving in that direction.

No; management fulfils the knowledge-base and service features but lacks restricted entry, compulsory membership and binding ethics, so it is an emerging profession.

Question LA – Q3

“A successful enterprise has to achieve its goals effectively and efficiently.” Explain.

Answer

• Effectiveness means completing the given task, achieving the target on time (doing the right task).
• Efficiency means doing the task correctly at the minimum cost, i.e. getting the maximum output from the given inputs (doing the task right).

Why both are needed

1. A manager who is effective but not efficient reaches the goal but with higher costs (for example, producing 5,000 units by running double shifts), so profit falls.
2. A manager who is efficient but not effective saves cost but misses the target (the goods do not reach the market), so demand falls and competitors enter.
3. The two are interrelated, “two sides of the same coin”; high efficiency usually goes with high effectiveness.
4. Poor management means both ineffectiveness and inefficiency.

Hence the real success of management is to achieve the goals at the lowest cost, keeping a balance between the two.

A successful enterprise must meet its targets (effectiveness) at minimum cost (efficiency), and balance both.

Question LA – Q4

Management is a series of continuous interrelated functions. Comment.

Answer

The process of management consists of five functions, each related to and dependent on the others:

1. Planning: deciding in advance what to do, how and when to do it.
2. Organising: assigning duties, grouping tasks and establishing authority relations and resources.
3. Staffing: finding the right people for the right jobs (recruitment, selection, training, appraisal).
4. Directing: leading, motivating, communicating and supervising people.
5. Controlling: comparing actual performance with plans and taking corrective action.

Why they are interrelated and continuous

• Plans are of no use without people and structure to implement them; control gives the information for the next plan.
• All the functions are performed together in practice; a manager may plan, direct and control on the same day.
• The cycle never ends: as one plan is completed, new plans are made, and the functions are repeated continuously.

Planning, organising, staffing, directing and controlling are linked, performed together and repeated continuously, so management is a series of interrelated functions.

Question LA – Q5

A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision?

Answer

Example product: a toothpaste whose sales are falling.

Co-ordination among the three levels ensures that the modified product reaches the market on time.

Top management decides and funds the modification, middle management plans and co-ordinates it, and supervisors implement it on the shop floor.

Question LA – Q6

A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system but on several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy.

Answer

Diagnosis: the firm has planning, organising, staffing and controlling, yet the plans are not followed, with confusion and duplication of work. This shows that the co-ordination among departments and people is missing.

Remedy

1. Establish co-ordination to integrate the efforts of the departments and individuals towards the common goal.
2. Communicate the plans clearly to every member, so that everyone knows what to do and what others are doing.
3. Define the roles, authority and responsibility clearly, to avoid duplication and overlap.
4. Hold regular meetings and use a common information system, and appoint a co-ordinator (or a committee) to resolve conflicts.
5. Encourage team work and reward group performance.

Co-ordination ensures unity of action, which removes the confusion and duplication of work.

The firm lacks co-ordination; it should integrate the departments through clear communication, defined roles and regular meetings.

Topic checklist

• ☒ Meaning, effectiveness and efficiency (SA Q6; LA Q3)
• ☒ Features and dimensions of management (SA Q3)
• ☒ Levels of management (SA Q1; LA Q5)
• ☒ Functions of management (LA Q4)
• ☒ Co-ordination (SA Q4, Q5; LA Q6)
• ☒ Management as art, science and profession (SA Q2; LA Q1, Q2)

Total questions answered: 12 of 12