Lesson 2.

Principles of management

Important case studies

Q1/Nutan Tiffin Box service was started in Mumbai by the Mumbai Dabbawalas. The
Dabbawalas who are the soul of entire Mumbai aim to provide prompt and efficient
services by providing tasty homemade tiffin to all office goers at the right time and
place. The service is uninterrupted even on the days of bad weather, political unrest
and social disturbances. Recently, they have started online booking system through
their website ‘mydabbawala.com’. Owing to their tremendous popularity amongst the
happy and satisfied customers and members, the Dabbawalas were invited as guest
lecturer by top business schools. The Dabbawalas operate in a group of 25-30
people alongwith a group leader. Each group teams up with other groups in order to
deliver the tiffins on time. They are not transferred on frequent basis as they have to
remember the addresses of their customers. They follow certain rules while doing
trade—no alcohol during working hours; no leaves without permission; wearing white
caps and carrying ID cards during business hours.
Recently, on the suggestion of a few self-motivated fellow men, the dabbawalas
thought out and executed a plan of providing food left in tiffins by customers to slum
children. They have instructed their customers to place red sticker if food is left in the
tiffin, to be fed to poor children later.

1. State any one principle of management given by Fayol and one characteristic
of management mentioned in the above case.
2. Give any two values which the Dabbawalas want to communicated to
society. (CBSE, Sample Paper 2016)

Answer:

1. The relevant principle of management given by Fayol is:

Stability of Personnel: The employee turnover should be minimized to maintain
organizational efficiency. Personnel should be selected and appointed after
due and rigorous procedure. After placement, they should be kept at their post
for a minimum fixed tenure so that they get time to show results. Any adhocism
in this regard will create instability/insecurity among employees. They would
tend to leave the organisation.
(The other correct answers are principle of Discipline / Initiative / Espirit de
corps) The characteristic of management mentioned in the above case is:
Management is goal oriented as it seeks to integrate the efforts of different
individuals towards the accomplishment of both organizational and individual
goals.
(The other correct answers are management is intangible/ group
activity/dynamic)
2. The two values that Dabbawalas want to communicate to society are:

o Concern for poor/ Humanity

o Responsibility
Question 2.
‘Aapka Vidyalaya’ believes in the holistic development of students and encourages
team building through a mix of curricular, co-curricular and sports activities. On its
Founder’s Day, a stage performance had to be put up. A committee of ten prefects
was constituted to plan different aspects of the function. They all decided to use
recycled paper for decoration. There was a spirit of unity and harmony and all the
members supported each other. With mutual trust and a sense of belonging, the
programme was systematically planned and executed. Kartik, one of the prefects,
realised that the group had unknowingly applied one of the principles of
management while planning and executing the programme. He was so inspired by
the success of this function that he asked his father to apply the same principle in his
business. His father replied that he was already using this principle.

1. Identify the principle of management applied for the success of the

programme.
2. State any two features of management highlighted in the above paragraph.
3. Identify any two values which ‘Aapka Vidyalaya’ communicated to
society. (CBSE, Delhi 2015)

Answer:

1. The principle of management applied for the success of the programme is

Espirit De Corps.
2. The two features of management mentioned in the above paragraph are as
follows:

o Management is goal oriented as it seeks to integrate the efforts of

different individuals towards the accomplishment of both organizational
and individual goals.
o Management is pervasive as it is applicable to all types of
organizations, (economic,
social, political) all sizes of organizations (small, medium, large) and at all
levels of management (top, middle and lower).
2. The two values that ‘Aapka Vidyalaya’ communicated to society are:
o Responsibility
o Sustainable development.

Question 3.
Telco Ltd. manufactures files and folders from old clothes to discourage the use of
plastic files and folders. For this, they employ people from nearby villages where
very less job opportunities are available. An employee, Harish, designed a plan for
cost reduction but it was not welcomed by the production manager. Another
employee gave some suggestions for improvements in design, but it also was not
appreciated by the production manager.

1. State the principle of management that is violated in the above paragraph.

2. Identify any two values that the company wants to communicate to the
society. (CBSE, OD 2014)
Answer:

1. The principle of management that has been violated in the above case is
Initiative. Initiative means taking the first step with self-motivation. The workers
should be encouraged to develop and carry out their plans for improvement.
Suggestion system should be adopted in the organization.
2. The two values that the company wants to communicate to the society are

o Concern for environment

o Providing job opportunities

Question 4.
Pawan is working as a Production Manager in CFL Ltd. which manufactures CFL
bulbs. There is no class-conflict between the management and workers. The working
conditions are very good. The company is earning huge profits. As a policy, the
management shares the profits earned with the workers because they believe in the
prosperity of the employees.

1. State the principle of management described in the above paragraph.

2. Identify any two values which the company wants to communicate to
society. (CBSE, OD 2014)

Answer:

1. The principle of management described in the above paragraph is ‘Harmony,

not Discord’.
Taylor emphasised that there should be complete harmony between the
management and workers instead of a kind of class-conflict, the manager
versus workers. To achieve this state, Taylor called for complete mental
revolution on the part of both management and workers. The prosperity for the
employer cannot exist for a long time unless it is accompanied by prosperity for
the employees and vice versa. He advocated paternalistic style of
management should be in practice.
2. The two values that the company wants to communicate to the society are:

o Prosperity
o Sharing

Question 5.
Voltech India Ltd. is manufacturing LED bulbs to save electricity. However, it is
running under heavy losses. To revive from the losses, the management shifts the
unit to a backward area where labour is available at a low cost. The management
also asks the workers to work overtime without any additional payments and
promises to increase the wages of the workers after achieving its mission. Within a
short period, the company starts earning profits because both the management and
workers honour their commitments.

1. State the principle of management described in the above paragraph.

 2. Identify any two values that the company wants to communicate to the
society. (CBSE, Delhi 2014)

Answer:

1. The principle of management described in the above paragraph is ‘Discipline’.

Discipline- It refers to the obedience to organizational rules and the
employment agreement. It is necessary for the systematic working of the
organization. It requires good superiors at all levels, clear and fair agreements
and judicious application of penalties.
2. The two values that the company wants to communicate to the society are:

o Trust
o Sustainable development

Question 6.
ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost
equal division of work and responsibilities between workers and the management.
The management even takes workers into confidence before taking important
decisions. All the workers are satisfied as the behaviour of the management is very
good.

1. State the principle of management described in the above paragraph.

2. Identify any two values which the company wants to communicate to
society. (CBSE, Delhi 2014)

Answer:

1. The principle of management described in the above paragraph is

‘Cooperation, Not Individualism’.
This principle is an extension of principle of ‘Harmony, Not Discord’. There
should be complete cooperation between the labour and the management
instead of individualism. Competition should be replaced by cooperation and
there should be an almost equal division of work and responsibility between
workers and management. Also, management should reward workers for their
suggestions which results in substantial reduction in costs. At the same time,
workers should desist from going on strike and making unreasonable demands
on the management
2. The two values that the company wants to communicate to the society are:

o Participation
o Sustainable development

Question 7.
The principles of Taylor and Fayol are mutually complementary. One believed that
management should share the gains with the workers while the other suggested that
employees’ compensation should depend on the earning capacity of the company
and should give them a reasonable standard of living.
Identify and explain the principles of Favol and Taylor referred to in the above
paragraph. (CBSE, Delhi 2014)
Answer:
The principles of Fayol and Toylor referred to in the above paragraph are
‘Remuneration of employees’ and ‘Harmony, Not Discord’.
Remuneration of Employes: According to Fayol, the overall pay and compensation
should be fair and equitable to both employees and the organisation. The employees
should be paid fair wages so that they are able to maintain at least a reasonable
standard of living. At the same time, it should be within the paying capacity of the
company. This will ensure pleasant working atmosphere and good relations between
workers and management.
Harmony, Not Discord: Taylor emphasised that there should be complete harmony
between the management and workers instead of a kind of class-conflict, the
managers versus workers. To achieve this state, Taylor called for complete mental
revolution on the part of both management and workers. The prosperity for the
employer cannot exist for a long time unless it is accompanied by prosperity for the
employees and vice versa. He advocated paternalistic style of management should
be in practice

Question 8.
The principles of Taylor and Fayol are mutually complementary. One believed that
management should not close its ears to constructive suggestions made by the
employees while the other suggested that a good company should have an
employee suggestion system whereby suggestions which result in substantial time or
cost reduction should be rewarded.
Identify and explain the principles of Taylor and Fayol referred to in the above
paragraph. (CBSE, Delhi 2014)
Answer:
The principles of Fayol and Taylor referred to in the above paragraph respectively
are ‘Initiative’ and ‘Cooperation and Not Individualism’.
Initiative: Initiative means taking the first step with self-motivation. The workers
should be encouraged to develop and carry out their plans for improvement.
Suggestion system should be adopted in the organization.
Cooperation and Not Individualism: This principle is an extension of principle of
‘Harmony, Not Discord’.There should be complete cooperation between the labour
and the management instead of individualism. Competition should be replaced by
cooperation and there should be an almost equal division of work and responsibility
between workers and management. Also, management should reward workers for
their suggestions which result in substantial reduction in costs. At the same time,
workers should desist from going on strike and making unreasonable demands on
the management.

Question 9.
Nikita and Salman completed their MBA and started working in a multinational
company at the same level. Both of them worked hard and were happy with their
employer. Salman had the habit of back-biting and wrong reporting about his
colleagues to impress his boss. All the employees in the organisation knew about it.
At the time of performance appraisal, the performance of Nikita was judged to be
better than Salman. Even then their boss, Mohammed Sharif, decided to promote
Salman stating that being a female, Nikita would not be able to handle the
complications of a higher post.

1. Identify and explain the principle of management which was not followed by
this, multinational company.
2. Identify the values which are being ignored quoting the lines from the above
paragraph. (CBSE, OD 2013)

Answer:

1. The multinational company didn’t follow the Principle of Equity. It emphasizes

kindliness and justice in the behaviour of managers towards workers. No
discrimination should be made by them on the basis of caste, creed, gender or
otherwise.
2. The two values which are being ignored in the given case are:

o Honesty: “Wrong reporting about his colleagues to impress his boss.”

o Justice: “At the time of performance appraisal, the performance of
Nikita was judged better than Salman. Even then their boss, Mohammad
Sharif, decided to promote Salman.”

Question 10.
Hina and Harish are typists in a company having the same educational qualifications.
Hina gets Rs.3,000 per month and Harish gets Rs.4,000 per month as salaries for
the same working hours. Which principle of management is being violated in this
case? Name and explain the principle. (CBSE, Delhi 2006)
Answer:
The principle of Equity has been violated in this case. It emphasises kindliness and
justice in the behaviour of managers towards workers. No discrimination should be
made by them on the basis of caste, creed, gender or otherwise.

Question 11

Radhika opens a jewellry showroom in Jaipur after completing a course in jewellry

designing. She has employed eleven persons in her showroom. For greater productivity, she
divides the work into small tasks and each employee is trained to perform his/her specialised
job. The sales persons are allowed to close a deal with a buyer by giving a maximum of 10%
discount, whereas the decision to give any further discount rests with Radhika as the final
authority. In the earlier days of starting of the business, five of her employees were asked to
put in extra hours of work. In return she had promised to give them a special incentive within
a year. Therefore, after six months when the business was doing well, she awarded a cash
bonus to each of these employees to honour her commitment. However, when it comes to
settling the conflicts among her employees, she tends to be more biased towards her female
employees.
In context of the above case:

1. Identify and explain the various principles of management that are being applied by
Radhika by quoting lines from the paragraph.
 2. Identify and explain the principle of management which is being violated by Radhika
by quoting lines from the paragraph.
3. State any one effect of the violation of the principle of management by Radhika as
identified in part(b) of the question.

Answer:

1. The various principles of management that are being applied by Radhika are listed
below:

o Principle of Division of Work: According to Fayol, “The intent of division of

work is to produce more and better work for the same effort. Specialisation is the
most efficient way to use human effort.” He advocates that the principle of
division of work is applicable to all kinds of work both technical as well as
managerial.
“For greater productivity, she divides the work into small tasks and each
employee is trained to perform his/her specialised job.”
o Principle of Centralisation and Decentralisation: The concentration of
decision-making authority is called centralisation whereas its dispersal among
more than one person is known as decentralisation. According to Fayol, “There
is a need to balance subordinate involvement through decentralisation with
managers’ retention of final authority through centralisation.”
“The sales persons are allowed to close a deal with a buyer by giving a
maximum of 10% discount, whereas the decision to give any further discount
rests with Radhika as the final authority.”
o Principle of Discipline: Discipline refers to the obedience to organisational
rules and employment agreement which are necessary for the working of the
organisation. According to Fayol, discipline requires good superiors at all levels,
clear and fair agreements and judicious application of penalties.
“Therefore, after six months when the business was doing well, she awarded a
cash bonus to each of these employees to honour her commitment.”
2. The principle of management which is being violated by Radhika is Equity.
According to Fayol, “Good sense and experience are needed to ensure fairness to all
employees, who should be treated as fairly as possible.” This principle emphasizes on
kindliness and justice in the behaviour of managers towards workers. The managers
should not discriminate against anyone on account of gender, religion, language, caste,
belief or nationality etc.
“However, when it comes to settling the conflicts among her employees, she tends to
be more biased towards her female employees.”
3. One effect of the violation of the Principle of Equity is that it may lead to job
dissatisfaction among the male workers.

Question 13.
Rajveer works as a plant superintendent in a carpet making factory. In order to complete the
export orders on time, the production manager asks him to make the workers work over time
whereas the finance manager is strictly against this practice because it will increase the cost
of production. Moreover, Rajveer feels that since the company is manufacturing handmade
carpets as well as machine made carpets there is a lot of overlapping of activities. Therefore,
there should be two separate divisions for both of them wherein each division should have its
 own in charge, plans and execution resources.
In context of the above case:

1. Identify and explain the principle of management which is being violated.

2. Also identify the principle of management that Rajveer feels should be implemented
in the factory.
3. Give any two differences between the principle of management as identified in part
(a) and part (b) respectively.

Answer:
The principle of management which is being violated is stated below:

1. Unity of command: There should be one and only one boss for every individual
employee. Dual subordination should be avoided. Fayol felt that if this principle is
violated, “authority is undermined, discipline is in jeopardy, order disturbed and
stability threatened”.
2. Unity of direction: All the units of an organization should be moving towards the
same objectives through coordinated and focused efforts. Each group of activities
having the same objective must have one head and one plan. This will lead to unity of
action and coordination.
3. The difference between the principle of Unity of Command and Unity of Direction is
given below:

S.No. Basis Unity of Command Unity of Direction

One subordinate should receive orders

Each group of activities having same
1. Meaning from and should be responsible to
objective must have one head and one plan.
only one superior.

2. Aim It prevents dual subordination. It prevents overlapping of activities.

3. Implications It affects an individual employee It affects the entire organization.

Question 14.
Neeraj is selected for the post of software developer in an IT Company. On the first day of
his joining Mehul, his project manager tells Neeraj that during the course of his work he will
come across many such opportunities which may tempt him to misuse his powers for
individual or family’s benefit at the cost of larger general interest of the company. In such
situations, he should rather exhibit exemplary behaviour as it will raise his stature in the eyes
of the company. Also, for interacting with anyone in the company on official matters, he
should adopt the formal chain of authority and communication.
In context of the above case:

1. Identify and explain the various principles of management that Mehul is advising
Neeraj to follow while doing his job.
2. List any two values that Mehul wants to communicate to Neeraj.

Answer:

1. The various principles of management that Mehul is advising Neeraj to

follow while doing his job are as follows:

o Subordination of Individual Interest to General Interest: Through

this principle, Fayol advocates that in all circumstances, the interests of
an organisation should take priority over the interests of any one
individual employee. This is essential because larger interests of the
other employees and the stakeholders i.e., owners, shareholders,
creditors, debtors, financers, tax authorities, customers and the society at
large cannot be sacrificed for the interest of any one person. For
example, Mehul tells Neeraj that he might get tempted to misuse his
powers for his or his family’s benefit and so he must display exemplary
behaviour to raise his stature in the eyes of the company.
o Scalar Chain: According to Fayol, the formal lines of authority from
highest to lowest ranks are known as scalar chain. He suggests that “The
organisations should have a chain of authority and communication that
runs from top to bottom and should be followed by managers and the
subordinates.” However, in order to ensure speedy communication during
emergencies, Gang Plank is a shorter route that has been provided.
However, the superior has to be informed later on.

For example, in the following case, there is one head ‘A’ who has two
lines of authority under her/ him. One line consists of B-C-D-E-F. Another
line of authority under ‘A’ is L-M-N-O-P. If ‘E’ has
to communicate with ‘O’, who is at the same level of authority, then
she/he has to traverse the route E-D-C-B-A-L-M-N-O.
 This is due to the principle of scalar chain being followed in this situation.
However, if there is an emergency, then ‘E’ can directly contact ‘O’
through ‘Gang Plank’ as shown in the diagram.

1. The two values that Mehul wants to communicate to Neeraj are:

o Honesty
o Self restraint

Question 15
Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder
is his elder brother who is doing his Masters in Hospital Administration from Delhi
after completing his B.Sc course. During vacations when Satinder comes home,
Davinder shows him the business studies project that he is preparing on the topic
‘Principles of Management’. Satinder tells him that these principles are also a part of
MBA course curriculum at the beginner’s level as they form the core of management
in practice. But he finds these principles different from those of pure science.
In context of the above case:

1. Outline the concept of principles of management.

2. Why does Satinder find the principles of management different from those of
pure science?
3. Why do the principles of management form the core of management in
practice? Explain by giving any two points highlighting the importance of
principles of management.

Answer:

1. The principles of management serve as a broad and general guideline for the
managerial decision making and action.
2. Satinder finds the principles of management different from those of pure
science because the management principles are not as rigid as principles of
pure science.
This is due to the fact that they deal with the human behaviour and thus, need
to be applied creatively in the light of given situation.
3. The importance of principles of management is described below:

o Providing managers with useful insights into reality: The principles

of management provide the managers with useful insights into real world
situations and help them to enrich their knowledge, ability and
understanding of the diverse managerial situations and circumstances. It
also enables the managers to learn from past mistakes and conserve
time by solving recurring problems quickly.
o Optimum utilisation of resources and effective administration: The
knowledge of management principles enables the managers to foresee
the cause and effect relationships of their decisions and actions. As a
result, it leads to optimum utilisation of scarce resources by avoiding
wastage associated with a trial-and-error approach. Principles of
management limit the boundary of managerial discretion so that their
 decisions may be free from personal prejudices and biases. This
facilitates effective administration within the organisation.

Question 16
Gurpreet is running a retail mart in Varanasi to provide various types of products of
daily use under one roof to the buyers. The employee turnover in his business is
very high and he is perpetually on a look out for new staff. The fact of the matter is
that he lacks managerial skills and assigns work to his employees on adhoc basis
without letting them settle down in a specific work. This approach of his creates a
sense of insecurity among the employees and they tend to leave the job very quickly.
However, he is a very god fearing person and offers fair wages to his employees so
they can afford a reasonable standard of living.
In context of the above case:

1. Identify and explain the principle of management which Gurpreet is unable to

apply and is perpetually on a look out for new staff.
2. “He is a very god fearing person and offers fair wages to his employees so
they can afford a reasonable standard of living.” Name and explain the relevant
principle of management will has been brought into effect by Gurpreet.

Answer:

1. Stability of Personnel: Stability of personnel is principle of management

which Gurpreet is unable to apply and is perpetually on a look out for new staff.
According to Fayol, “Employee turnover should be minimised to maintain
organisational efficiency”. Personnel should be selected and appointed after
due and rigorous procedure. After placement, they should be kept at their post
for a minimum fixed tenure so that they get time to show results. Any adhocism
in this regard will create instability/insecurity among employees. They would
tend to leave the organisation.
2. Remuneration of Employees: According to Fayol, the overall pay and
compensation should be fair and equitable to both employees and the
organisation. The employees should be paid fair wages so that they are able to
maintain at least a reasonable standard of living. At the same time, it should be
within the paying capacity of the company. This will ensure pleasant working
atmosphere and good relations between workers and management.

Question 17
After finishing her BBA degree course, Tanya gets a job of Assistant Manager in a
retail company through the reference of her cousin Taruna who works in the same
company as a Senior Manager. Taruna decides to guide Tanya through her
experience by making her aware of the important facts about management in
practice. She tells her that neither the principles of management provide any
readymade, straitjacket solutions to all managerial problems nor they are not rigid
prescriptions, which have to be followed absolutely.
In context of the above case :

1. Identify the two features of principles of management mentioned in the above

paragraph by quoting lines from the paragraph.
 2. Why do the principles of management not provide readymade, straitjacket
solutions to all managerial problems?

Answer:

1. The two features of principles of management mentioned in the above

paragraph are as follows:

o General guidelines: The principles of management are guidelines to

action. Since the real business situations are very complex and dynamic
and are a result of many factors, these principles do not provide
readymade, straitjacket solutions to all managerial problems. But the
importance of principles cannot be underestimated because even a small
guideline may help to solve a given problem.
o Flexibile: The principles of management are not rigid prescriptions
which have to be followed absolutely. They are flexible and can be
modified by the manager when the situation so demands. They give the
manager enough discretion to decide which principle should be used
under what circumstances as individual principles are like different tools
serving different purposes.
2. As the real business situations are very complex and dynamic and are a result
of many factors, the principles of management not provide readymade,
straitjacket solutions to all managerial problems.

Question 18
Raj and Simran are both qualified eye surgeons and good friends. After obtaining a
certificate of practice, they decide to persue a career of their own choice. Raj starts
an eye care centre in the city whereas Simran joins a government hospital in a small
village. They meet after a long time in a party. Raj invites Simran to visit his eye care
centre and she accepts his invitation. She observes at his clinic that there is a fixed
place for everything and everyone and it is present there so that there is no
hinderance in the activities pf the clinic. Also, Raj always tends to replace T with ‘We’
in all his conversations with the staff members. Later on Raj shares with her that he
always deals with lazy staff sternly to send the message that everyone is equal in his
eyes.
In context of the above case:

1. Identify and explain the various principles of management that Raj is applying
for the successful management of his eye care centre.
2. List any two values that Simran wants to communicate to the society by taking
up a job in a village.

Answer:

1. The various principles of management that Raj is applying for the successful
management of his eye care centre are described below:

o Order: According to Fayol, “People and materials must be in suitable

places at appropriate time for maximum efficiency.” The principle of order
 states that ‘A place for everything (everyone) and everything (everyone)
in its (her/his) place’. A sense of orderliness will lead to increased
productivity and efficiency in the organization.
o Espirit De Corps: According to Fayol, “Management should promote a
team spirit of unity and harmony among employees.” A manager should
replace T with ‘We’ in all his conversations with workers to promote
teamwork. This approach will give rise to a spirit of mutual trust and
belongingness among team members. It will also reduce the need for
using penalties.
o Equity: According to Fayol, “Good sense and experience are needed
to ensure fairness to all employees, who should be treated as fairly as
possible.” This principle emphasizes on kindliness and justice in the
behaviour of managers towards workers. The managers should not
discriminate against anyone on account of gender, religion, language,
caste, belief or nationality etc.
2. The two values that Simran wants communicate to the society by taking up a
job in a village are:
o Humanity
o Concern for poor

Question 19
Hritik is desirous of setting up a small factory to manufacture different kinds of eco-
friendly packaging materials. He proposes to adopt a logical approach to his
business rather than hit and trial method as he knows that this can result in
tremendous saving of human energy as well as wastage of time and materials. He
plans to adopt paternalistic style of management in practice in order to avoid any
kind of class-conflict that may emerge between him and the workers. Moreover, he
plans to seek the opinion of his workers before taking any important decisions and
also offers incentives to them for providing valuable suggestions for the business.
In context of the above case:

1. Identify and explain the various principle of scientific management that Hritik
plans to apply in his business.
2. List any two values that he wants to communicate to the society by offering
eco¬friendly packaging material.

Answer:

1. The various principle of scientific management that Hritik plans to apply in his
business are described below:

o Science, not Rule of Thumb: Taylor believed that there was only one
best method to maximise efficiency and it could be developed through
scientific study and analysis. This is because if the managers rely on
personal judgment in attending to the work related problems, it may suffer
from the limitation of a trial and error approach. Therefore, it is important
for them to know what works and why does it work. For this, they should
adopt scientific method to substitute the ‘Rule of Thumb or hit and trial
method’ throughout the organisation.
 o Harmony, Not Discord: In the paternalistic style of management, the
employer takes care of the needs of employees like a father. Taylor said
that any kind of class conflicts between the workers and the managers
were not good; rather they must realise that each one is important.
Therefore, he emphasised that there should be complete harmony
between the management and workers. To achieve this, Taylor called for
complete mental revolution on the part of both management and workers
by transforming their thinking. The management should share the gains
of the company, if any, with the workers and at the same time, workers
should work hard.
o Cooperation, Not Individualism: Through this principle, Taylor
suggests that there should be complete cooperation between the workers
and the management instead of individualism. This principle is an
extension of principle of ‘Harmony, Not Discord’. Both should realise the
importance of each other. In order to replace the feeling of competition
with cooperation, the management should not close its ears to any
constructive suggestions made by the employees. Rather, the workers
should be rewarded for any of their valuable suggestions which results in
substantial saving in costs. Also, the workers should be taken into
confidence by the management whenever any important decisions are to
be taken.
2. The two values that Harit wants to communicate to the society by offering
eco-friendly packaging material are:
o Concern for environment
o Sense of responsibility

Question 20.
‘Study Buddy Pvt. Ltd.’ is company dealing in stationery items. In order to establish
standards of excellence and quality in materials and in the performance of men and
machines, the company adheres to benchmarks during production. Moreover, its
products are available in limited varieties, sizes and dimensions thereby eliminating
superfluous diversity of products.
Identify the technique of scientific management which has been adopted by ‘Study
Buddy Pvt. Ltd.’
Answer:
Standardisation and Simplification of Work is the technique of scientific
management which has been adopted by ‘Study Buddy Pvt. Ltd.’
Standardisation implies devising new varieties instead of the existing ones. It refers
to the process of setting standards for every business activity; it can be
standardisation of process, raw material, time, product, machinery, methods or
working conditions. These standards are the benchmarks which must be adhered to
during production. It helps to reduce a given line or product to fixed types, sizes and
characteristics, establish interchange ability of manufactured parts and products,
determine standards of excellence and quality in materials and of performance of
men and machines.
Simplification aims at eliminating superfluous diversity of products in terms of
varieties, sizes and dimensions. It not only helps to reduce inventories but also to
save cost of labour, machines and tools. Thus it helps to increase turnover by
ensuring ‘optimum utilisation of resources. Most large companies like Samsung,
Toyota and Microsoft etc. have successfully implemented standardisation and
simplification.

Question 21.
Anshul owns a small scale factory where utility items are prepared from waste
material like paper mache items, paper and cloth bags, decorative material etc. Over
the past few weeks, he was observing that the productivity of one of his very efficient
worker, Ramdas, is going down. So he decides to probe into the matter and
confronts Ramdas one day. On being asked, Ramdas shares with Anshul that he
has deliberately slowed down in his work as many of the less efficient workers often
pull his leg saying that there is no need for him to be more efficient when everybody
is being paid at the same rate. Taking a lesson from this insight, Anshul decides to
implement an incentive bonus plan so as differentiate between efficient and
inefficient workers.
In context of the above case:

1. Name and explain the incentive bonus plan that Anshul may implement so as
differentiate between efficient and inefficient workers.
2. State any two values that Anshul wants to communicate to the society by
setting up a special type of business.

Answer:
Differential Piece Wage System is the incentive bonus plan that Anshul may
implement so as differentiate between efficient and inefficient workers.
Differential Piece Wage System is a performance based wage system which was
introduced by Taylor so as to distinguish between the workers who were able to
achieve the standard or performed above standard from those who performed below
standard. For example, it is determined that standard output per worker per day is 10
units and those who made standard or more than standard will get Rs. 40 per unit
and those below will get Rs. 30 per unit. Now an efficient worker making 11 units will
get 11 x 40 = Rs. 440 per day whereas a worker who makes 9 units will get 9 x 30 =
Rs. 270 per day. According to Taylor, the difference of Rs. 170 should be enough for
the inefficient worker to be motivated to perform better.

Question 22.
Swaraj is running an office furniture showroom. Most of his clients are businessmen
and they prefer to buy goods on credit. Keeping this in mind, he has given the power
to the sales manager, Mr. Bhardwaj, to offer a credit period of only 20 days, while
negotiating a deal with a buyer. On a specific day, Mr. Bhardwaj finds that if he can
offer a credit period of 30 days as an exception to a prospective buyer, he is likely to
finalise a highly profitable deal for the business. So Mr. Bhardwaj requests Swaraj to
grant him additional authority for offering a credit period of 30 days in the interest of
the business. But Swaraj refuses to extend his authority and as a result, the deal is
not finalized.
In context of the above case:

1. Can Mr. Bhardwaj be held responsible for loss of the deal? Why or why not ?
Give a suitable reason in support of your answer.
 2. Also, explain the related principle.

Answer:

1. No, Mr. Bhardwaj cannot be held responsible for loss of the deal in the above
case as he was not given the necessary authority to carry out his responsibility.
There is an imbalance in authority and responsibility.
2. The name of the related principle is Authority and Responsibility.
Authority is the right to give orders and obtain obedience by the virtue of one’s
position in the organization. Responsibility is the obligation of a person to carry
out the assigned task to the best of one’s abilities and skills. There are two
types of authorities, namely the official authority, which is the authority to
command, and personal authority, which is the authority of the individual
manager. Authority is both formal and informal. According to Fayol, there
should be balance between the authority given and responsibility entrusted to
an employee so that he is able to carry out the assigned task. Any kind of
imbalance in authority and responsibility is not good for the organisation. If the
authority granted to an employee is less than what is required, he will
ineffective in doing his work. On the other hand, if the authority delegated to an
employee is more than what is required, he may tend to misuse it