NCERT Solutions for Class 12 Business Studies Business Studies I Chapter 2: Principles of Management

Chapter at a glance

Exercises – Very Short Answer Type

Question VSA – Q1

What makes principles of management flexible?

Answer

Principles of management are not rigid prescriptions. They can be modified by the manager according to the situation – the size, nature and needs of the organisation and changes in the environment. They give the manager discretion to apply them in a suitable form, which makes them flexible.

They can be modified and applied according to the needs of the situation, at the manager’s discretion.

Question VSA – Q2

State the main objective of time study.

Answer

The main objective of time study is to determine the standard time taken to perform a well-defined job. This helps in deciding the number of workers to employ, fixing a fair day’s work and wage rates, and estimating labour costs.

To fix the standard time for doing a job, which helps decide manpower, a fair day’s work, wages and labour cost.

Question VSA – Q3

Name the principle that is an extension of the ‘harmony, not discord’.

Answer

“Co-operation, not individualism” (Taylor) – it extends ‘harmony, not discord’ by calling for complete co-operation between labour and management instead of individualism.

Co-operation, not individualism.

Question VSA – Q4

State any two causes of fatigue that may create hindrance in the employee’s performance.

Answer

1. Long working hours without adequate rest intervals.
2. Poor working conditions – improper lighting, ventilation, noise, heat – and unsuitable or monotonous work. (Also: bad relations with the boss, excessive physical or mental strain.)

Long working hours without rest, and poor working conditions or unsuitable work.

Question VSA – Q5

SanakLal and Gagan started their career in Wales Limited (a printing press) after going through a rigorous recruitment process. Since they had no prior work experience, the firm decided to give them one year to prove themselves. Name the principle of management followed by Wales Limited.

Answer

Stability of tenure of personnel (Fayol) – employees, once selected after a rigorous process, should be given reasonable time to show results and should not be removed in a short time.

Stability of tenure of personnel.

Question VSA – Q6

Which technique is used by Taylor for distinguishing efficient and inefficient workers?

Answer

Differential piece wage system – workers who produce the standard output or more are paid at a higher rate per piece, and those who produce less are paid at a lower rate.

Differential piece wage system.

Exercises – Short Answer Type

Question SA – Q1

How is the Principle of ‘Unity of Command’ useful to management? Explain briefly.

Answer

Unity of command means an employee should receive orders from only one superior and be accountable to him.

Usefulness

1. It prevents confusion and conflicting orders.
2. It fixes clear responsibility and accountability.
3. It maintains discipline and stability of order.
4. It avoids dual subordination and duplication of work.
5. It improves superior–subordinate relations and efficiency.

By ensuring each employee gets orders from one boss, it avoids confusion and conflicting orders, fixes responsibility, and maintains discipline and efficiency.

Question SA – Q2

Define scientific management. State any three of its principles.

Answer

Scientific management, as defined by F.W. Taylor, means “knowing exactly what you want men to do and seeing that they do it in the best and cheapest way”. It is the application of scientific methods – observation, experimentation and analysis – to management, instead of rule of thumb.

Principles

1. Science, not rule of thumb – each job should be studied scientifically to find the one best way of doing it.
2. Harmony, not discord – there should be complete harmony between management and workers; both should realise that each is important (mental revolution).
3. Co-operation, not individualism – management and workers should co-operate; workers’ suggestions should be welcomed, and management should share responsibility.
4. Development of each person to his greatest efficiency and prosperity – scientific selection, training and placement of workers.

Scientific management is managing by scientific study of work rather than rule of thumb; its principles include science not rule of thumb, harmony not discord, co-operation not individualism, and development of each worker to the greatest efficiency.

Question SA – Q3

If an organisation does not provide the right place for physical and human resources in an organisation, which principle is violated? What are the consequences of it?

Answer

The principle of Order (Fayol) is violated – “a place for everything (everyone) and everything (everyone) in its (her/his) place”.

Consequences

1. Time is wasted in searching for materials and people.
2. Movement of materials becomes haphazard; productivity falls.
3. Hindrance to activities and delay in work.
4. Wastage, loss and damage of resources.
5. Confusion and indiscipline in the organisation.

The principle of Order is violated; the results are wasted time, hindrance and delay in work, wastage of resources, confusion and lower productivity.

Question SA – Q4

Explain any four points regarding significance of principles of management.

Answer

1. Providing managers with useful insights into reality – principles add to knowledge and understanding of managerial situations, helping managers learn from past mistakes.
2. Optimum utilisation of resources and effective administration – they show cause–effect relationships so that wastage is minimised; e.g. division of work and unity of command lead to efficiency.
3. Scientific decisions – decisions based on objective assessment, free from personal bias and prejudice.
4. Meeting changing environment requirements – principles are flexible; e.g. division of work encourages specialisation and diversification.
5. Fulfilling social responsibility – e.g. equity and fair remuneration.
6. Management training, education and research – they form the base of management as a discipline.

They give useful insights into reality, ensure optimum use of resources, lead to scientific decisions, help meet a changing environment, aid social responsibility and form the basis of management training and research.

Question SA – Q5

Explain the principle of ‘Scalar Chain’ and gang plank.

Answer

Scalar chain – the formal line of authority from the highest to the lowest rank. According to Fayol, communication should follow this chain, step by step, to maintain unity of command and order. In a chain A → B → C → D → E and A → F → G → H → I, if E wants to communicate with I, the message would pass through D, C, B, A, F, G, H.

Gang plank – to avoid delay in an emergency, Fayol allowed direct communication between employees at the same level (E and I), with the prior consent of their superiors, and informing them afterwards. This shortcut is called the gang plank. It saves time without breaking the chain of command.

Scalar chain is the formal line of authority from top to bottom through which communication should flow; a gang plank allows direct communication between employees at the same level in an emergency, with the superiors’ consent.

Question SA – Q6

A production manager at top level in a reputed corporate, Mr. Rathore holds the responsibility for ordering raw material for the firm. While deciding on the supplier for the financial year 2017-18, he gave the order to his cousin at a higher price per unit instead of the firm’s usual supplier who was willing to lower the rates for the order. Which principle of management was violated by Mr. Rathore? What are the positive impacts of following the above identified principle?

Answer

Principle violated: Subordination of individual interest to general interest – the interest of the organisation should take priority over personal interest. Mr. Rathore favoured his cousin at a higher price, at the cost of the firm.

Positive impacts of following it

1. The organisation’s goals are achieved and costs are minimised.
2. Trust and loyalty develop among employees.
3. It prevents favouritism and misuse of position.
4. It creates a sense of unity and dedication towards common goals.

Subordination of individual interest to general interest was violated; following it keeps the firm’s interest first, reduces cost, builds trust and loyalty and prevents favouritism.

Exercises – Long Answer Type

Question LA – Q1

Explain the Principles of Scientific management given by Taylor.

Answer

1. Science, not rule of thumb – Taylor said there is only one best way to do a job, which can be found through scientific study and analysis (method study, time and motion study) rather than rule of thumb or hit-and-miss methods. Once found, it should be standardised.
2. Harmony, not discord – there should be complete harmony between management and workers. Both should realise that each is important. Taylor called for a mental revolution – a change of attitude from conflict to co-operation, with management sharing gains with workers and workers working hard.
3. Co-operation, not individualism – an extension of harmony; there should be co-operation between labour and management. Management should welcome constructive suggestions from workers and reward them; workers should not go on strike. Management should be close to workers and share responsibility.
4. Development of each and every person to his/her greatest efficiency and prosperity – workers should be selected scientifically, assigned work suited to their abilities and trained to use the best methods, so that both efficiency and prosperity of workers and the company increase.

Science not rule of thumb; harmony not discord (mental revolution); co-operation not individualism; and development of each person to the greatest efficiency and prosperity through scientific selection, placement and training.

Question LA – Q2

Explain the following Principles of management given by Fayol with examples: a. Unity of direction b. Equity c. Esprit de corps d. Order e. Centralisation and decentralisation f. Initiative

Answer

a. Unity of direction – all activities with the same objective should be grouped and have one head and one plan. It ensures unity of action and coordination. Example: a company making motorcycles and cars should have separate divisions for each, each with its own head and plan.

b. Equity – managers should be kind, just and fair to employees; there should be no discrimination on the basis of caste, religion, sex, nationality, etc. Example: equal pay for equal work for men and women.

c. Esprit de corps – “union is strength”; management should promote team spirit, unity and harmony among employees. The manager should use “we” instead of “I”. Example: a sales manager who credits the whole team for achieving targets.

d. Order – “a place for everything and everyone, and everything and everyone in its place”. This avoids waste of time and materials. Example: in a factory, tools are kept at specific places so workers do not waste time searching.

e. Centralisation and decentralisation – centralisation means concentration of decision-making authority at the top; decentralisation means dispersal of authority to lower levels. Fayol said there should be a balance depending on the situation. Example: a company may centralise major investment decisions but decentralise day-to-day decisions to branch managers.

f. Initiative – workers should be encouraged to develop and carry out their plans for improvement; suggestion systems should be introduced, with rewards for useful suggestions. Example: a firm that gives a bonus to an employee whose suggestion cuts costs.

Unity of direction (one head, one plan for activities with the same objective), equity (fairness), esprit de corps (team spirit), order (a place for everything and everyone), balance of centralisation and decentralisation, and initiative (encourage employees’ suggestions) – each illustrated above.

Question LA – Q3

Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental Revolution’ as enunciated by Taylor.

Answer

Functional foremanship – an extension of the principle of division of work and specialisation to the shop floor. Taylor felt one foreman cannot have all the qualities needed for supervision, so he suggested eight specialist foremen, separating planning from execution:

Each worker gets orders from these eight foremen. The purpose is to place specialists in charge of each function for better supervision.

Mental revolution – a complete change in the attitude and outlook of both management and workers towards each other: from conflict to co-operation. Instead of fighting over the division of surplus, both should work to increase the surplus. Management should share part of the gains with workers; workers should work hard and accept change. This is the essence of scientific management.

Functional foremanship uses eight specialist foremen (four for planning, four for execution) to separate planning from doing; mental revolution is the change in attitude of management and workers from conflict to co-operation so that both work to increase and share the surplus.

Question LA – Q4

Discuss the following techniques of Scientific Work Study: a. Time Study b. Motion Study c. Fatigue Study d. Method Study e. Simplification and standardisation of work

Answer

a. Time study – determines the standard time for a well-defined job, using a stopwatch over a number of readings. It helps fix the number of workers, a fair day’s work, wage rates and labour cost.

b. Motion study – study of the movements of a worker (lifting, putting, sitting, changing positions) while doing a job, to eliminate unnecessary movements. It increases efficiency; Taylor and the Gilbreths used cameras for it.

c. Fatigue study – determines the amount and frequency of rest intervals needed to recover from fatigue. Rest helps workers regain stamina and maintain efficiency. Causes of fatigue include long hours, poor conditions and unsuitable work.

d. Method study – finds the one best way of doing a job, covering the whole process from procurement of raw materials to delivery of the final product. Its objective is to minimise cost and maximise quality and customer satisfaction (e.g. assembly-line production).

e. Simplification and standardisation of work

• Standardisation – setting standards for every business activity: process, raw materials, time, product, machinery, methods and working conditions. It ensures uniform quality and interchangeability.
• Simplification – eliminating unnecessary diversity of products (varieties, sizes, dimensions). It reduces inventory, machinery and labour costs and increases turnover.

Time study fixes standard time; motion study removes unnecessary movements; fatigue study fixes rest intervals; method study finds the one best way; standardisation sets standards and simplification removes unnecessary variety.

Question LA – Q5

Discuss the differences between the contributions of Taylor and Fayol.

Answer

Fayol focused on top-level general administration with universal principles from experience, following unity of command; Taylor focused on shop-floor productivity with scientific principles from experiments, violating unity of command through functional foremanship.

Question LA – Q6

Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment.

Answer

Taylor’s relevance today

1. Time and motion study, method study and standardisation are the basis of modern industrial engineering, quality control (TQM, Six Sigma) and lean manufacturing.
2. Scientific selection and training underlie modern HR practices.
3. Performance-based pay (incentives, bonus) follows the differential piece wage idea.
4. Mental revolution – co-operation between management and workers – is reflected in participative management and profit-sharing.
5. Separation of planning from doing is seen in specialised departments.

Fayol’s relevance today

1. His 14 principles are still used in organisation design – division of work, authority–responsibility, unity of command and direction.
2. Decentralisation, initiative (suggestion schemes, intrapreneurship), esprit de corps (teamwork) and equity are central to modern management.
3. The functions of management (planning, organising, directing, controlling) come from his work.
4. Gang plank is reflected in open communication and flat organisations.

Their principles are applied flexibly, adapting to technology, globalisation and a knowledge-based workforce.

Taylor’s work study, standardisation, scientific selection and incentive pay underlie modern productivity and quality systems; Fayol’s principles guide organisation structure, decentralisation, teamwork and the management functions – both remain relevant when applied flexibly.

Question LA – Q7

‘Bhasin’ limited was engaged in the business of food processing and selling its products under a popular brand. Lately the business was expanding due to good quality and reasonable prices. … In order to keep its market share in the short run the company directed its existing workforce to work overtime. But this resulted in many problems. Due to increased pressure of work the efficiency of the workers declined. Sometimes the subordinates had to work for more than one superior resulting in declining efficiency. The divisions that were previously working on one product were also made to work on two or more products. This resulted in a lot of overlapping and wastage. The workers were becoming indisciplined. The spirit of teamwork, which had characterized the company, previously was beginning to wane. Workers were feeling cheated and initiative was declining. The quality of the products was beginning to decline and market share was on the verge of decrease. Actually the company had implemented changes without creating the required infrastructure. a. Identify the Principles of Management (out of 14 given by Henry Fayol) that were being violated by the company. b. Explain these principles in brief. c. What steps should the company management take in relation to the above principles to restore the company to its past glory?

Answer

a. & b. Principles violated and their meaning

c. Steps to restore the company

1. Recruit additional workers (or plan production) instead of forcing overtime; pay fair overtime wages.
2. Ensure each worker reports to only one superior.
3. Create separate divisions for each product, each with one head and one plan.
4. Frame clear, fair rules and enforce them consistently to restore discipline.
5. Promote team spirit through communication, recognition and team rewards.
6. Treat all employees fairly and justly; resolve grievances.
7. Introduce a suggestion system with rewards to revive initiative.
8. Build the required infrastructure (machines, space, staff) before expansion.

Violated: unity of command, unity of direction, discipline, esprit de corps, equity, initiative and fair remuneration; the company should hire more staff, ensure one boss per worker, have separate product divisions, enforce fair discipline, build team spirit, treat workers fairly, reward suggestions and create the needed infrastructure.

Question LA – Q8

(Further information related to the above question) The management of company Bhasin Limited now realised its folly. In order to rectify the situation it appointed a management consultant – Mukti Consultants – to recommend a restructure plan. Mukti Consultants recommended: (1) The company should introduce scientific management with regard to production. (2) Production Planning including routing, scheduling, dispatching and feedback should be implemented. (3) In order to separate planning from operational management ‘Functional foremanship’ should be introduced. (4) ‘Work study’ should be undertaken to optimise the use of resources. (5) ‘Standardisation’ of all activities should be implemented to increase efficiency and accountability. (6) To motivate the workers ‘Differential Piece Rate System’ should be implemented. a. Do you think that introduction of scientific management as recommended by M consultants will result in intended outcome? b. What precautions should the company undertake to implement the changes? c. Give your answer with regard to each technique separately as enunciated in points 1 through 6 in the case problem.

Answer

a. Yes, scientific management can bring the intended outcome – higher efficiency, lower cost, better quality and regained market share – provided it is implemented carefully with the co-operation of workers and alongside the Fayol-based corrections in the previous question. Without mental revolution and proper infrastructure, however, it may face resistance.

b. Precautions

1. Take workers into confidence; explain the benefits and share gains (mental revolution).
2. Introduce changes gradually, not all at once.
3. Provide training and the required infrastructure.
4. Ensure techniques do not become exploitative (fair rest, fair standards).
5. Involve trade unions and supervisors in the planning.
6. Monitor results and take feedback.

c. Technique-wise analysis

Yes, scientific management can restore efficiency if introduced gradually with workers’ co-operation, training, fair standards and infrastructure; each technique – scientific methods, production planning, functional foremanship, work study, standardisation and differential piece rate – brings specific gains but needs the precautions listed.

Topic checklist

• ☒ Nature and significance of principles (VSA 1; SA 4)
• ☒ Taylor’s principles and techniques (VSA 2–4, 6; SA 2; LA 1, 3, 4)
• ☒ Fayol’s principles (VSA 5; SA 1, 3, 5, 6; LA 2)
• ☒ Comparison and relevance of Taylor and Fayol (LA 5, 6)
• ☒ Case problems (LA 7, 8)

Total questions answered: 20 of 20