Business Studies Chapter 2
Meaning of Principles of Management
Principles of management are general guidelines, which can be used for conduct in work places
under certain situations. It also helps manager to take and implement thoughtful decisions.
Importance of Management Principles
-Provide managers with useful insight into reality.
-Helps in thoughtful decision-making, i.e. scientific decisions.
-Helps in optimum utilisation of resources and effective administration.
-Helps the managers in meeting changing environment requirements.
-Fulfilling social responsibility.
Basis of management training, education and research.
1.What is meant by’Principles of management’?
Ans. Principles of management are general guidelines, which can be used for conduct in work
places under certain situations. It also helps manager to take and implement thoughtful
decisions.
2. What is meant by ‘Universal applicability of principles of management’?
Ans. ‘Universal applicability of principles of management’ means that the principles of
management are intended to apply to all types of organisations at all places.
3. State any one reason why principles of management are important?
Ans. Principles of management are important as they help managers in taking thoughtful and
scientific decisions.
4.What is meant by the statement ‘principles of management are flexible’?
Ans. Principles of management are flexible, which means that they are not rigid, and can be
modified by the manager as per the situation.
5.Why are the principles of management called universally applicable?
Ans. The management principles are universal because these are applicable in all conditions
and in all organisations whether it is a profit making or non-profit making.
6.How the management principles have been derived?
Ans. The management principles have been derived through observation, analysis,
experimental studies and personal experiences of the managers.
7.Why is it said that management principles are universal in application?
Ans. The management principles are said to be universal in application because these are
applicable to all types of organisations, irrespective of the size or nature.
8.Explain how principles of management
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(i)provide useful insight into reality and
(ii)help in thoughtful decision-making
Ans. (i) Provide useful insight into reality The principles of management provide useful insight
into real world situations. Managers may apply these principles to fulfil their tasks and
responsibilities. These principles guide the managers in taking and implementing thoughtful
decisions,
(ii) Thoughtful decision-making These principles help in enhancing knowledge, ability and
understanding of managerial situations and circumstances. They must be timely, realistic and
subject to measurement and evaluation. They emphasise logic rather than blind faith and are
free from bias and prejudice.
9.Explain any five characteristics which reflect the nature of principles of
management.
Ans. Management principles are broad and general guidelines for decision-making and
behaviour.
Following features highlight the characteristics of management principles:
(i) Universal application Management principles are applied in every situation where the
objectives are attained through group efforts. All social, economic, political or religious
organisations apply management principles for their successful operations. Every organisation
must make the best possible use of its available resources by the application of management
principles alongwith managerial functions such as planning, organising, staffing, directing and
controlling.
(ii) Flexibility 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 do so.
(iii) General statements Management principles are concerned with human behaviour which
cannot be tested under laboratory conditions. Human behaviour cannot be predicted accurately.
Therefore, management principles are not as exact as the principles of physical science.
(iv) Influencing human behaviour Human element is an essential factor of production. It
activates and extracts work from other factors also. Each person is different from other as
regards to his ability, knowledge, skills, social status, attitudes and ideologies. Management is
concerned with the integration of individual efforts.
(v) Cause and effect relationship Management principles also form a cause and effect
relationship. It indicates the consequences of certain actions or inactions in the business, eg. if
wages are paid on piece rate system, the quantity of work will increase but the quality will suffer.
The principles of unity of command, will avoid confusion, duplication and overlapping of work.
10.Explain by giving any five reasons why principles of management are needed?
Ans. Management principles are essential for the successful running of business organisation.
These principles are guidelines to management. They highlight the areas where the
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management should pay immediate attention. These principles simplify the process of
management, increase the overall efficiency of management and help in the achievement of
objectives.
The significance of management principles can be summarised as follows:
(i) Provide the manager with useful insight into reality Management principles act as guidelines
for the managers. These principles improve knowledge, ability and understanding of managers
under various managerial situations. The effects of these principles help the managers to learn
from their mistakes.
(ii) Optimum utilisation of resources Several principles of management aim at optimum
utilisation of all types of resources for the attainment of organisational goals, e.g. principles of
division of work, discipline, unity of direction, order, etc facilitate better utilisation of human
efforts and physical resources.
(iii) Scientific decisions The knowledge of management principles enables managers to learn
the cause and effect relationship between variables operating in the organisation. They are able
to develop a scientific and objective approach towards problem solving and decision-making.
(iv) Meeting changing environment requirements Every businessman has to cope up with the
changes that are taking place in the business environment. Management principles train the
managers to implement the changes in right direction and at right level in the organisation.
(v) Fulfilling social responsibility A manager is able to achieve efficiency and economy in the
activities of his enterprise by applying management principles. These principles are aimed at
maximising profits without loss of social value. In other words, management principles seek to
ensure that the resources of the society are utilised fully and good quality products at fair prices
are made available to society.
11. Explain how principles of management help in
(i)meeting changing environment requirement and
(ii)making scientific decisions.
Ans. Management principles are essential for the successful running of business organisation.
These principles are guidelines to management. They highlight the areas where the
management should pay immediate attention. These principles simplify the process of
management, increase the overall efficiency of management and help in the achievement of
objectives.
(i)Meeting changing environment requirements Every businessman has to cope up with the
changes that are taking place in the business environment. Management principles train the
managers to implement the changes in right direction and at right level in the organisation.
(ii)Scientific decisions The knowledge of management principles enables managers to learn the
cause and effect relationship between variables operating in the organisation. They are able to
develop a scientific and objective approach towards problem solving and decision-making.
12.How is the Principle of ‘Unity of Command’ useful to management? Explain briefly.
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Ans: Principle of Unity of Command implies that each and every subordinate should have one
and only one boss. Orders and instructions should come from only one head. This helps the
working of any organisation in the following manner
(i) Authority responsibility relationship is clearly defined.
(ii) Subordinates are known for whom they are accountable.
(iii) Discipline and order is maintained.
13.Define scientific management. State any three of its principles.
Ans: Scientific management can be defined as knowing exactly what you want from men to do
and seeing that they do it in the best and cheapest way.
Scientific management aims at choosing the best. Method to get the maximum output from the
workers the principles of scientific management are mainly applicable to the shop-floor level.
Three principles of scientific management are as follows
(i) Science, Not Rule of Thumb When different managers use their own different methods to get
the work done it is rule of thumb. Taylor believed that there was only one best method to
maximise efficiency. Taylor advised that every organisation should compare the results of
different methods, test them again and again and finally select one best method of getting the
work done.
(ii) Harmony, Not Discord Managers are an extension of the management and serve as a link
between workers and the owners. Workers have to take instructions from the managers and
managers have to get the work done through the workers. Oftentimes the relation between them
is spoilt which is very harmful for everyone-workers, managers and owners. This class conflict
should be replaced by harmony between the two. Both should change their thinking towards
each other. Both should give importance to each other. This is known as mental revolution.
(iii) Co-operation, Not Individualism There should be complete co-operation between the labour
and the management instead of individualism. This principle is an extension of the principle of
‘Harmony not discord.’ The management and the workers should not compete with each other
rather co-operate with each other. Management should consider all good suggestions made by
the employees which can help in cost reduction. At the same time, workers should never think
of going or stickes in order to get their unreasonable demands fulfilled.
14.Explain any four points regarding significance of Principles of management.
Ans: Significance of principles of management
(i) Providing Managers with Useful Insights into Reality When managers follow principles it adds
to their knowledge, ability and understanding of managerial situations and circumstances. This
improves managerial efficiency e.g., when managers use principle of delegation then they get
more time to concentrate on critical areas of working.
(ii) Scientific Decision Making management principles help in thoughtful decision making. They
emphasise on logic rather than blind faith. Here, decisions are based on the objective
assessment of the situation.
(iii) Optimum Utilisation of Resources and Effective Administration Principles help the managers
to conceptualise the net effect of their decision rather than going for trial and error method
resulting in saved time, efforts and energy thereby increased productivity.
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(iv) Management Training, Education and Research Principles of management are the base for
management theory. As such they are used as a basis for management training, education and
research. These principles provide basic groundwork for the development of management as a
subject. Professional courses like BBA, MBA also teaches these principles as part of their
curriculum.
15.Explain the following principles of management given by Fayol with examples.
(a) Unity of direction
(b) Equity
(c) Espirit de Corps
(d) Order
(e) Centralisation and decentralisation
(f) Initiative
Ans: Fayol introduced general principles of management. Some of them have been explained
below
(a) Unity of Direction
All the units of an organisation should be moving towards the same objective. Each group of
activities having the same objective must have one head and one plan. Each group should have
its own incharge and on no account the working of two divisions neither be overlaped.
(b) Equity
This principle emphasise kindliness and justice in the behaviour of managers towards workers.
This will ensure loyalty and devotion. Lazy personnel should be dealt sternly and strictly. There
should be no discrimination against anyone on account of gender, religion, caste, language or
nationality etc. All decisions should be merit based.
(c) Espirit de Corps
This principle emphasises on building harmony and team spirit among employees. In a large
organisation due to a large work force teamwork is very important. Teamwork leads to better
co-ordination while working. The head of each team should give credit of good result to the
whole team rather than confining it to his ownself.
(d) Order
A place for everything and everyone in his/her place. Basically it means orderlinss. If there is a
fixed place for different things in a factory and they remain in their places then no time is wasted
in locating them. Same way if every personnel is allocated an area to operate from then his
co-workers, head or subordinates, anyone can contact him easily.
(e) Centralisation and Decentralisation Concentration of authority in a few hands is
centralisation and its dispersal among more number of people is decentralisation. Fayol
believed that an organisation should not work with anyone of them in isolation. A combination of
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both is important simple, easy and work of routine type should be decentralised and critical
important type of work should be centralised.
(f) Initiative Initiative means taking the first step with self-motivation workers should be
encouraged to develop and carry out their plans for improvements according to Fayol. Initiatives
should be encouraged. A good company should invite suggestions from employees which can
result in substantial cost/time reduction. Rewards can be given to fruitful suggestions.
#Note.Mental Revolution
In a factory, the managers served as a link between the owners and the workers. The managers
have to get the work done from the workers which created sometimes problem between the two.
Taylor emphasized that there should be harmony between the management and workers. Both
should realise that each one is important. For this both had to change their thoughts for each
other, This is known as ‘Mental Revolution’. Management should share the gains of the
company with the workers and at the same time workers should work hard and be ready to
accept any change made for the betterment of the organisation.
16.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
Ans: Some of the techniques of scientific work study are
(a) Time Study It determines the standard time taken to perform a well-defined job. The
standard time is fixed for the whole of the task by taking several readings. The method of time
study will depend upon volume and frequency of the task, the cycle time of the operation and
time measurement costs. There are three objectives achieved through time study.
(i) Determine the number of workers.
(ii) Frame suitable incentive schemes.
(iii) Determines labour costs.
e.g., if standard time taken to do a piece of work in 20 minutes then one work can be done 3
times in an hour and total 21 times (3×7 hours per day) the work can be done on a single day.
(b) Motion Study Motion study refers to the study of movements like lifting, putting objects,
sitting and changing positions. On close examination of body motions, e.g., it is possible to find
out three types motions
(i) Motions which are productive.
(ii) Motions which are incidental.
(iii) Motions which are unproductive.
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Out of the above, three workers were motivated to eliminate the third type completely and
reduce the second one to the minimum. This help in increasing productivity.
(c) Fatigue Study Fatigue study seeks to determine the amount and frequency of rest intervals
in completing a task. A person is bound to feel tired physically and mentally if he does not take
rest while working. The next intervals will heip one to regain stamina and work again with the
same efficiency for e.g., in an organisaton working hours are 9 to 5. There is a lunch break of an
hour for the workers to take rest similarly in a school there is a break for the students and
teachers after 4 periods of continuous learning.
(d) Method Study The objective of method study is to find out one best way of doing the job.
Different managers would use their own different methods of getting the work done. But there is
always one best method. Right from procurement of raw materials till the final product is
delivered to the customer every activity is the part of method study. The objective of whole
exercise is to minimise the cost of production and maximise the satisfaction of the customer.
(e) Simplification and Standardisation of Work Standardisation refers to the process of setting
standards for every business activity e.g., process, raw material, time, product, machinery,
methods or working conditions. The objective of standardisation are
(i) To reduce product to fixed types, sizes, features etc.
(ii) To establish interchangeability of various parts.
(iii) To establish standards of excellence and quality in materials.
(iv) To establish standards of performance of men and machines.
Simplification aims at eliminating unnecessary diversity of products. It results in savings of cost
of labour, machines and tools. It implies reduced inventories, fuller utilisation of equipment and
increasing turnover.
#Note.FW Taylor is considered as the father of scientific management as he opposed rule of
thumb and proposed scientific management. He broke up human activity into small parts and
found out how it could be done effectively, in less time and increased productivity.
Scientific management In words of Taylor, scientific management means knowing exactly what
you want men to do and seeing that they do in the best and the cheapest way.
. Principles of Scientific Management
(i) Science, not rule of thumb Decisions should be made on the basis of facts developed by the
application of scientific methods.
(ii) Harmony, not discord There should be harmony between the management and the workers.
Mental revolution was proposed for attaining harmony.
(iii) Cooperation, not individualism There should be cooperation between workers and
management.
(iv) Development of each and every person to his/her greater efficiency and prosperity Industrial
efficiency depends on the efficiency of workers.
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17.What is the main objetive of’method study’?
Ans. The main objective of method study is to find out the best way of doing the job.
18.State the objective of motion study.
Ans. The objective of motion study is to eliminate unnecessary and wasteful motions so that it
takes less time to complete the job efficiently
19.Why did Taylor developed the technique of differential piece wage system?
Ans. Taylor developed the technique to differentiate efficient and inefficient workers and to
suitably reward the effecient workers
20.What is the main objective of simplification in scientific management?
Ans.The main objective of simplification is to eliminate unnecessary variety of products or forms.
21Why do Taylor’s techniques of scientific management not applicable to all types of
organisations?
Ans. Taylor’s techniques of scientific management are not applicable to all types of
organisations because they are more specific in nature and should be applied only in specific
conditions.
22. Climton is working as a Production Manager in CFL Ltd engaged in manufacturing of
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 matter,
management is sharing the gains with the workers because they believe that prosperity
of the company cannot exist for a long time without the prosperity of the employees.
(i)State the principle of management described in the above para.
(ii)Identify any two values which the company wants to communicate to the society.
Ans. (i) Harmony, not discord The principle advocated by FW Taylorr, suggests that there should
be no class conflict but there should be complete harmony between the management and the
workers. For achieving this, Taylor suggested ‘mental revolution’. He also emphasised that
management should share the gains with the workers, if any.
(ii) The values which the company wants to communicate to the society are:
Concern for environment (producing CFL bulbs).
Concern for human welfare (by providing good working conditions).
23.Explain ‘harmony, not discord’ as a principle of scientific management?
Ans. According to this principle, there should be a complete harmony between the management
and the workers working in an organisation. To support this, Taylor advocated a complete
‘mental revolution’, i.e. change in the attitude of both workers and management towards one
another, from competition to cooperation. Both should realise the importance of each other
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24.What is meant by Fayol’s principle of’esprit de corps’?
Ans. Fayol’s principle of ‘esprit de corps’ suggests that management should promote a team
spirit of unity and harmony among the employees.
25.Which principle of management implies that there should be ‘one head and one plan’
for a group of activities having the same objective?
Ans. Principle of unity of direction implies that there should be ‘one head and one plan’ for a
group of activities having the same objective.
26.Which principle of management states that an employee should receive orders from
one superior only?
Ans. Unity of command states that an employee should receive orders from one superior only.
27. What does the principle of initiative indicate?
Ans. Principle of initiative indicates that the management should encourage workers to think,
make and execute plans within prescribed limits of authority.
28.Name and explain the principle of management according to which a manager should
replace ‘I’ with ‘We’ in all his conversation with workers?
Ans. Esprit de corps It is the principle of management, according to which a manager should
replace ‘I’ with ‘We’ in all his conversation with workers.
Literally speaking, the phrase ‘esprit de corps’ means the spirit of loyalty and devotion which
unites the members of the group.
According to Fayol, management should promote a team spirit of unity and harmony among
employees. A manager should replace ‘I’ with ‘We’ in all his conversation with workers to foster
team spirit. This will give rise to a spirit of mutual trust and belongingness among team
members.
29.Name and explain the principle of management in which workers should be
encouraged to develop and carry out their plans for improvement in the organisation.
Ans. Initiative According to Fayol, ‘Initiative means taking the first step with self motivation, it is
thinking out and executing the plan’. It is one of the traits of an intelligent person. Initiative
should be encouraged because employees get satisfaction when they are allowed to take
initiative. But it does not mean going against the established practices of the company for the
sake of being different.
