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 Class 12 Business Studies
Principal and Functions of Management
Previous Year Questions
Chapter - 2
Principles of Managements

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 2.1 Principles of Management: Concept and Significance

MCQ

1. The principles of management are guidelines to action but do not provide

readymade straitjacket solutions to managerial problems.
The feature of principles of management discussed above is :
a) Universal applicability
b) General guidelines
c) Flexible
d) Mainly behavioural.
(Term-I, 2021-22)
2. The application of principles of management is dependent upon the prevailing
situation at a particular point of time.
The characteristic of principles of management reflected in the above statement is:
a) Universal applicability
b) Cause and effect relationship
c) Flexible
d) Contingent.
(Term-I, 2021-22)
3. 'Management principles help in thoughtful decision making. They emphasise
logic rather than blind faith'. This statement describes the following point of
significance of Principles of Management:
a) Fulfilling social responsibility
b) Scientific decisions
c) Meeting changing environment requirements
d) Optimum utilisation of resources and effective administration.
(Term-I, 2021-22)
4. The principles of management are said to be flexible as:
a) they aim at influencing behaviour of human beings
b) they are general guidelines to action, but do not provide ready made solutions to
management problems.
c) they can be modified by the manager when the situation so demands.
d) their application is dependent upon the prevailing situation at a particular point of
time.
(2020 C)

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 5. ‘Vanguard Inc.’, a company manufacturing footwear for men, women and
children has been earning consistent profits for the last many years. It has a
democratic style of working. Workers are encouraged to develop and carry out
plans for improvement in the organization. Varun who is working in the
production department gave a suggestion which resulted in a 10% reduction in
the cost of production of shoes. He was rewarded for his suggestion. Identify the
principle of management followed by ‘Vanguard Inc.’ in the above case:
a) Esprit De Corps
b) Subordination of Individual Interest to General Interest
c) Initiative
d) Equity
(2024)
VSA (1 mark)

6. Principles of management equip the managers to foresee the cause and effect
relationships of their decisions and actions so that the wastages associated with a
trial and error approach can be overcome. Identify the point of significance of
principles of management highlighted here.
(Foreign 2019) U
SA II (4 marks)

7. Explain any four points of importance of principles of management.

(Delhi 2016)
8. An environmentally conscious multinational company "AXN Ltd." follows certain
well defined business principles that result to minimise the employee turnover.
Following are some of the important environmental factors followed by 'AXN Ltd.'
I. Honour the law of every country in which it operates.
II. Respect the culture and customs of all nations.
III. Provides clean and safe products to enhance the quality of life throughout the
world.
IV. Develop a culture in the company that enhances individual creativity and
teamwork while honouring mutual trust and respect between management and
labour.
From the above,
(i) identify and state any one general principle of management and any one
dimension of business environment.
(ii) also identify any two values which the above guiding principles and
environmental factors are conveying to the society.
(Delhi 2015 C)

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 9. XYZ Power Ltd. set up a factory for manufacturing solar lanterns in a remote
village as there was no reliable supply of electricity in rural areas. The revenue
earned by the company was sufficient to cover the costs and the risks. The
demand of lanterns was increasing day by day, so the company decided to
increase production to generate higher sales. For this, they decided to employ
people from the nearby villages as very few job opportunities were available in
that area. The company also decided to open schools and creches for the children
of its employees.
(i) Identify and explain the objectives of management discussed above.
(ii) State any two values which the company wanted to communicate to the
society.
(Delhi 2014) Ev
10. CorticoFabrics’wasstartedbyAshishin2001tosellbedsheets, towels,
comforters, pillows,cushions,bathmatsetc.Itisnowafamousnameandits branches
are across India.Tomanage theworkall over India, it has eight teams-two each for
North, South, East and West India. Ashish spends a considerable amount of time
to develop an orderly pattern of group efforts among different teams and to
secure unity of action in pursuit ofacommonpurpose. To ensure suitable all
ocation of tasks to the various members of the teams. members, hetries to
balance the different teams at different locations.
a) Identify and explain the concept of management discussed in the above
para.
b) Also,explainanyonepointofimportanceoftheconceptidentifiedin
c) above.
(2024)
LA (5 marks)

11. Explain any five points of significance of Principles of Management.

(NCERT, Delhi 2019)
12. Explain how principles of management help the managers:
(i) in taking scientific decisions and
(ii) in providing the managers with useful insights into real world situations.
(Delhi 2019)
ET (6 marks)

13. Explain 'Cause and effect of relationship' as a feature of principles of

management,
(i) Meeting changing environment requirements; and
(ii) Management training, education and research as significance of principles of
management.
(2023)

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 14. Explain any four characteristics of principles of management.
(Delhi 2016)
Functions of Management

SA II (4marks)
15. Functions performed by Top Level Management:
(2024)
Efficiency and Effectiveness

MCQ

16. _________ refers to doing the task correctly and with minimum cost.
a) Effectiveness
b) Coordination
c) Process
d) Efficiency
(2024)
2.2 Fayol's Principles of Management

MCQ

17. Sangeeta visited 'Smile Dental Clinic' for treatment of toothache. She
observed that the receptionist was seated at the reception desk, the place fixed
for her. Dental instruments were laid neatly in dental instrument trays and the
used instruments were placed in the sterilisation area. There was a fixed place
for everything and it was present there. There was no hindrance in the work of
the dentist and she was working with her maximum efficiency.
The principle of management followed at the 'Smile Dental Clinic' was:
a) Equity
b) Discipline
c) Order
d) Initiative.
(2023)
18. Each participant in a formal organisation should receive orders from one
and only one boss and be responsible to only one superior.
The principle of management discussed above is :
a) Authority and Responsibility
b) Unity of command
c) Esprit de corps
d) Unity of direction
(Term-I, 2021-22)

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 19. 'Good Health Care' ensures that no doctor provides less favourable
treatment to patients on account of gender, religion, occupation, language,
caste, belief or nationality. They do their utmost to ensure that all patients are
treated as fairly as possible.
Identify the principle of management being followed by 'Good Health Care'.
a) Stability of personnel
b) Initiative
c) Order
d) Equity
(Term-I, 2021-22)
20. Identify the principle of management given by Fayol according to which
'The intent of this principle is to produce more and better work with the same
effort.'
a) Division of work
b) Unity of direction
c) Scalar chain
d) Equity (Term-I, 2021-22)

21. 'This principle will give rise to a spirit of mutual trust and belonging ness
among team members.' Which principle of management stated by Fayol is
highlighted by this statement?
a) Initiative
b) Esprit de Corps
c) Equity
d) Remuneration of Employees
(Term-I, 2021-22)
22. Pioneer Ltd. is dealing in fruit Juices and hair oils. To ensure unity of
action and coordination, it has made two separate divisions for each product.
Each division has its own incharge, plans and execution resources. Thus, both
the divisions are moving towards the same objectives through focused efforts.
Identify the Principle of management followed by Pioneer Ltd. in the above
case.
a) Esprit de corps
b) Equity
c) Unity of Direction
d) Authority and Responsibility
(Term-I, 2021-22)
23. The Fayol's principle of _______emphasises on kindliness and justice in
the behaviour of managers towards workers.
a) Equity
b) Discipline
c) Esprit de Corps
d) Scalar Chain
(Term-I, 2021-22)
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 VSA (1 mark)

24. Appliances India Ltd. is engaged in manufacturing and distribution of

home appliances since 1987. It has a good name in the market as the
company is producing good quality appliances. It has separate departments
for manufacturing, finance, sales, maintenance services and technical services
to achieve specialisation.
Since the areas of operations of the company have increased and customers
have become more demanding, the company decided to modify the existing
principle of management to meet the changing requirements of the
environment.
State the general principle of management which the company wants to
modify to meet the changing requirements.
(Delhi 2019)
SA I (3 marks)

25. Vibhu joined as a Chief Executive Officer (CEO) of 'Mega Marut Ltd.', a
firm manufacturing cars. On the first day he addressed his subordinates
saying that organisations should have a chain of authority and
communication that runs from top to bottom and should be followed by
managers and subordinates. He also added that for routine matters a worker
can not directly contact the CEO but in an emergency he/ she may contact
directly.
Vibhu discussed an important principle of management. Identify and explain
the principle with the help of an example.
(2023)
26. Vaibhav Sharma was working as the Production Manager in Crescent
Pharmaceuticals Pvt. Ltd. To get his son admitted in school he wanted to take
leave from the office but on the same day, an important meeting with the
Chief Executive Officer (CEO) of the company was scheduled to discuss about
some new medicines to be manufactured. Considering the significance of the
meeting, he did not take. leave. The CEO appreciated his exemplary
behaviour as he gave priority to the organisational interest over his personal
interest.
Name and explain the principle of management being followed by Vaibhav
Sharma in the above case.
(2020 C)
27. Explain 'order' and 'initiative' as principles of general management.
(Delhi 2017)

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 28. Voltech India Ltd. is manufacturing LED bulbs to save electricity and is running
under heavy losses. To revive from the losses, the management thought of shifting
the unit to a backward area where labour is available at a low cost. The
management also asked the workers to work overtime without any additional
payment and promised to increase the wages of the workers after achieving its
mission. Within a short period the company started earning profits, because both
the management and the workers honoured their commitments.
(a) State the principle of management described in the above para.
(b) Identify any two values that the company wants to communicate to the
society.
(Delhi 2014 C)
29. ABC Ltd. is engaged in producing electricity from domestic garbage. 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.
(a) State the principle of management described in the above para.
(b) Identify any two values which the company wants to communicate to the
society. (Delhi 2014 C, Delhi 2014)

30. Telco Ltd. is manufacturing files and folders from the old clothes to discourage
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 the cost reduction but it was not welcomed by the production manager.
Another employee gave some suggestion for improvement in design, but it was also
not appreciated by the production manager.
(a) State the principle of management described in the above para.
(b) Identify any two values that the company wants to communicate to the
society.
(Al 2014 C)
SA II (4 marks)

31. 'Aapka Vidyalaya' believes in holistic development of students and encourages

team building through a mix of curricular, co-curricular and sports activities. On its
founders 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
members supported each other. With mutual trust and belonging ness the
programme was systematically planned and executed. Kartik, one of the prefects,
realised that unknowingly the group had applied one of the principles of
management while planning and executing the programme. He was so inspired by
the success of the function that he asked his father to apply the same principle in his
business. His father replied that he was already using this principle.

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 a) Identify the principle of management applied for the success of the rogramme.
b) State any two features of management highlighted in the above para.
c) Identify any two values which 'Aapka Vidyalaya' communicated to the society.
(Delhi 2015)
ET (6 marks)

32. Explain the following principles of management:

(i) Equity
(ii) Authority and Responsibility
(ii) Stability of Personnel
(2023)
33. Explain the following principles of management:
(a) Subordination of individual interest to general interest.
(b) Development of each and every person to his or her greatest efficiency.
(Al 2015)
34. (a) ExplainthefollowingcharacteristicsofPrinciplesofManagement:
(i) Generalguidelines
(ii) Flexible
(iii) Causeandeffectrelationship
OR
(b) ExplainthefollowingtechniquesofScientificManagement:
(i) MethodStudy
(ii) Differential PieceWageSystem
(iii) FatigueStudy
(2024)
2.3 Taylor's Scientific Management: Principles and Techniques

MCQ

35. Which principle of scientific management called for complete mental

revolution on the part of management and workers?
a) Science, not rule of thumb
b) Harmony, not discord
c) Cooperation not individualism
d) Development of each and every person to his/ her greatest efficiency and
prosperity
(Term-I, 2021-22)

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 36. 'Heyday Productions' is a big factory having 3000 workers. Management of this
factory wants that workers should not go on strikes for their unreasonable
demands. There should be almost equal division of work and responsibility
between workers and management and both of them have to realise that they
need each other. To replace the competition by cooperation, management must
give importance to those constructive suggestions made by employees which
should result in reduction of cost. Identify the Taylor's principle of management
applied by 'Heyday Productions':
a) Initiative
b) Cooperation, not individualism
c) Development of each and every person to his/ her greatest efficiency and
prosperity
d) Subordination of individual interest to general interest
(Term-I, 2021-22)
37. In the technique of Functional Foremanship advocated by Taylor, the four
personnel who work under Planning incharge are:
a) Disciplinarian, Instruction Card Clerk, Time and Cost Clerk, Route Clerk
b) Speed Boss, Gang Boss, Repair Boss, Inspector
c) Route Clerk, Time and Cost Clerk, Inspector, Instruction Card Clerk
d) Speed Boss, Gang Boss, Repair Boss, Disciplinarian
(Term-I, 2021-22)
38. Reema is working as a Production Manager' in a company manufacturing
different types of products of milk. Now she is planning to launch packaged Kheer
in packs of 250 grams for which she requires to reduce a few line of products which
are not profitable. She knows that it will result in savings of cost of labour and
machines.
Identify the technique of management applied by Reema in the above situation:
a) Motion study
b) Time study
c) Method study
d) Standardisation and simplification of work
(Term-I, 2021-22)
39. The objective of which of the following techniques of scientific management is
to determine the number of workers to be employed in an organisation?

a) Method study
b) Motion study
c) Time study
d) Differential piece wage system (Term-I, 2021-22)

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 40. 'Flavours of South' is a famous chain of South Indian restaurants. It believes in
complete cooperation between the labour and management. It's management
encourages the employees for their constructive suggestions. They take their
employees into confidence for all important decisions.
Which principle of scientific management has been followed by 'Flavours of South'?
a) Science, not rule of Thumb
b) Harmony, not Discord
c) Co-operation, not individualism
d) Development of each and every person to his or her greatest efficiency and
prosperity (Term-I, 2021-22)

41. The technique proposed by Taylor aims at eliminating unnecessary diversity of

products.
a) Motion study
b) Standardisation and simplification of work
c) Differential piece wage system
d) Functional Foremanship
(Term-I, 2021-22)

42. Somesh works as a foreman in 'Lakshmi Automatives Ltd.,' a company

manufacturing cars. He is subordinate to Ramesh, who is the Production incharge in
the factory. Somesh is incharge of timely and accurate completion of job by
workers working in the Production Department. There are three other foremen
who work under the Production Incharge, while four other foremen work under
Naresh, the Planning Incharge in the factory.
Each of the eight foremen is a specialist in his area and gives orders to the workers
relating to it.
The technique of scientific management highlighted in the above case is :
a) Method study
b) Differential Piece Wage System
c) Functional Foremanship
d) Standardisation and simplification of work (Term-I, 2021-22)

43. Vidhya Public School is a renowned school in Nagpur. The management recently
appointed a new Business Studies teacher, Shweta, to teach classes XI and XII and
gave her a monthly salary of ₹50,000. Shweta is not satisfied with it and said, 'The
salary is not just and equitable as per the amount of work required to be done by a
Business studies teacher. Other schools in the city are paying ₹ 70,000 to their
teachers teaching classes XI and XII.'
Name the principle of management that has been violated by Vidhya Public School
in the above case :

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 a) Discipline
b) Remuneration of Employees
c) Equity
d) Esprit de corps
(Term-I, 2021-22)
VSA (1 mark)

44. State the role of 'gang boss' in functional foremanship.

(Delhi 2016, Al 2016)
45. State the role of 'speed boss' in functional foremanship.
(Delhi 2016)
46 .State the role of 'inspector' in 'functional foremanship'.
(Delhi 2016)
47. State the role of 'route clerk' in functional foremanship.
(AI 2016)
48. What is the use of 'Method Study' as a technique of scientific management?
(Delhi 2014)
49. What is determined by 'Time Study'?
(AI 2014)
SA I (3 marks)

50. Pawan 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.
(a) State the principle of management described in the above para.
(b) Identify any two values which the company wants to communicate to the
society.
(AI 2014 C)
SA II (4 marks)

51. Sanchit, after completing his entrepreneurship course from Sweden returned to
India and started a coffee shop 'Aroma Coffee Can' in a famous mall in New Delhi. The
speciality of the coffee shop was the special aroma of coffee and a wide variety of
flavours to choose from. Somehow, the business was neither profitable nor popular.
Sanchit was keep to find out the reason. He appointed Sandhya, an MBA from a
reputed college, as a Manager to find out the causes for the same.

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 Sandhya took feedback from the clients and found out that though they loved the
special unique aroma of coffee but were not happy with the long waiting time being
taken to process the order. She analysed and found out that there were many
unnecessary obstructions in between which could be eliminated. She fixed a standard
time for processing the order.
She also realised that there were some flavours whose demand was not enough. So, she
also decided to stop the sale of such flavours. As a result, within a short period Sandhya
was able to attract the customers.
Identify and explain any two techniques of scientific management used by Sandhya to
solve the problem.
(Delhi 2017)
LA (5 marks)

52. Explain the following techniques of Scientific Management:

(a) Fatigue Study and
(b) Differential Piece Wage System
(Delhi 2019)
53. Explain the following principles of scientific management:
(a) Harmony, not discord and
(b) Development of each and every person to his or her greatest efficiency and
prosperity.
(Delhi 2019)
54. Explain the following techniques of scientific management:
(a) Motion study and
(b) Time Study.
(Delhi 2019)
55. With the help of a diagram explain 'Functional Foremanship' as a technique of
scientific management.
(Delhi 2015)

56. Principles of Taylor and Fayol are mutually complementary. Onebelieved

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 in the above para. (Delhi 2014)

57. 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
Fayol and Taylor referred to in the above para.
(Al 2014)
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 ET (6 marks)

58. Explain the following principles of Scientific Management:

(i) Harmony, not Discord
(ii) Science, not Rule of Thumb
(2023)

59. Explain the following techniques of scientific management:

(a) Method study
(b) Motion study
(c) Time study
(2021 C)
60. 'Scientific Management means knowing exactly what you want men to do and
seeing that they do it in the best and the cheapest way.' Taylor developed various
techniques for application of Scientific Management principles and was able to achieve
a threefold increase in productivity in Bethlehem Steel Company, where he worked.
One of the techniques helps to determine the number of workers to be employed;
frame suitable incentive schemes and determine labour costs. Another technique
recognises those workers who are able to accomplish/ exceed the fair day's work and
is based on the premise that efficiency is the result of the joint efforts of the managers
and the workers.
Quoting the lines from the above paragraph, identify and explain the two techniques
of Scientific Management.
(Al 2019)
61. Karan Nath took over 'D'north Motor Company' from his ailing father three months
ago. In the past, the company was not performing well. Karan was determined to
improve the company's performance. He observed that the methods of production as
well as selection of employees in the company were not scientific.
He believed that there was only one best method to maximise efficiency. He also felt
that once the method is developed, the workers of the company should be trained to
learn that 'best method'.He asked the Production Manager to develop the best
method and carry out the necessary training. The Production Manager developed this
method using several parameters right from deciding the sequence of operations,
place for men, machines and raw materials till the delivery of the product to the
customers. This method was implemented throughout the organisation. It helped in
increasing the output, improving the quality and reducing the cost and
wastage.Identify and explain the principles and the technique of scientific
management followed by the production manager in the above case.
(Al 2018)

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 62. Explain the following techniques of scientific management:
(i) Differential piece wage system and
(ii) Motion Study.
(Delhi 2015)
63. Explain the following techniques of scientific management:
(i) Times study and
(ii) Simplification of work.
(Delhi 2015)
64. Explain the following principles of management
(i) Science, not rule of thumb
(ii) Discipline
(Al 2015)
65. Explain the following principles of management:
(i) Scalar chain
(ii) Harmony, not discord.
(NCERT, Al 2015)
Types of Plans

MCQ

66. Identify the type of plan indicated by the above sign:

a) Policy
b) Rule
c) Method
d) Programme
(2024)
Nature and Importance of Management

SA(3Marks)

67. Three friends, Aman, Ashish and Aashi after completing their MBA from a reputed
management institute, formed a startup named 'Solutions'. The goal of the startup was
to make a social and environmental impact through its services. 'Solutions' supports
social business ideas to improve living conditions in slums of Mumbai. As all the three
friends are specialised in social work, they adopted three different slums of Mumbai
and started educating the slum dwellers in their own creative manner. Aman used
'playway method', Ashish used 'music' as a method of learning while Aashi used
'activity based method of learning'. They used basic knowledge in their unique manner
and were able to educate the slum dwellers.
It implies that skillful and personal application of acquired knowledge varies from
individual to individual in achieving desired results.

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 Class 12 Business Studies
Principal and Functions of Management
PYQ Solutions
Chapter-2 Principles of Managements

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 2.1. Principles of Management: Concept and Significance

1. (b) : Principles of management act as guidelines and are considered to be the

general premises for decision making but they do not provide straitjacket solutions
to problems.

2. (d) : Contingent - The application of principles of management is dependent upon

the prevailing situation at a particular point of time.

3. (b) : The significance of management principle that emphasises on logic rather

than blind faith is 'scientific decisions'.

4. (c) : They can be modified by the manager when the situation so demands.

5. (C) Initiative.

6. The point of significance of principles of management highlighted here is that

'Management principles help in optimum utilisation of resources and effective
administration'.

7. Importance of principles of management are :

(i) Providing managers with useful insights into problems by improving the manager's
ability to locate problems and opportunities in business situations leading to better
managerial decision making.

(ii) Scientific decisions: Management principles helps in thoughtful decision making.

They are based on logic and objective assessment of the situation.

(iii) Fulfilling the social responsibility: Management principles help the managers to
fulfill their social responsibility e.g, principles of remuneration recommends payment
of adequate salary to employees.

(iv) Meeting the needs of the changing business environment : Principles of

management are flexible, i.e., they can be modified according to the changes taking
place in the environment. Thus, they help the managers in meeting the needs of
changing business environment.

8. (i) Principle of management : Cooperation not individualism and the company is

open to employees suggestion and creativity is encourage.
Dimension of business environment : The Company follows legal environment of
every country.
(ii) Values followed: (a) Team spirit (b) Concern for the environment.

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 9. The objectives of management referred to are:

(i) Social Objectives : These objectives are intended to do socially useful things in
the areas of health, safety, environment, etc. such as :

(a) Generation of employment opportunities in rural areas.

(b) Providing jobs to physically disabled people, etc.

(ii) Two values which the company wanted to communicate to the society are :

(a) Community development by taking decision to open schools and creches for the
children of it's employees.

(b) Increase in employment opportunities in rural/ backward areas.

10. (a) Co-ordination - Co-ordination is the process by which a manager

synchronises the activities of different departments towards the achievement of
a common goal.

(b) Importance of Co-ordination: (Any one)

(i) Growth in size

(ii) Functional Differentiation

(iii) Specialisation

11. The points of significance of Principles of Management are given as follows:

(i) Insights to reality: As management principles are based on years of
experimentation and experience, they guide the managers in facing real-world
problems in a more effective manner.

(ii) Suitability to dynamic environment: The application of management principles

depends on the situation and the manager's creativity. These principles can be
moulded as per the requirements and are thus flexible.

(iii) Social responsibility: By taking care of customers' values and business dealings,
management principles help the managers and the entire organisation in fulfilling
their social responsibilities.

(iv) Optimum utilisation of resources: Management principles provide an exact

cause-and-effect relationship of the manager's decisions, thereby minimising the
risk of wastages of resources that may be associated with the trial-and-error
method.

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 (v) Logical decisions: Management decisions should be based on reason and proof
rather than beliefs and intuitions. As the principles of management were
developed from experiments on real-life problems, they stand the test of logic and
reasoning.

12. Principle of Management helps in:

(i) Scientific Decisions - Management decisions should be based on reason and
proof rather than beliefs and intuitions. As the principles of management were
developed from experiments on real-life problems, they stand the test of logic and
reasoning.
(ii) Insights to reality - As management principles are based on years of
experimentation and experience, they guide the managers in facing real-world
problems in a more effective manner.

13. Cause and effect relationships: The principles of management are intended to
establish relationship between cause and effect, so that they can be used in
similar situations in a large number of cases. As such, they tell us if a particular
principle was applied in a particular situation, what would be its likely effect.
The principles of management are less than perfect since they mainly apply to
human behaviour. In real life, situations are not identical. So, accurate cause
and effect relationships may be difficult to establish. However, principles of
management assist managers in establishing these relationships to some extent
and are therefore useful. In situations of emergencies, it is desirable that
someone takes charge and others just follow. But in situations requiring cross-
functional expertise, such as setting up of a new factory, more participative
approach to decision making would be advisable.

(i) Meeting changing environment requirements: Although the principles are in the
nature of general guidelines but they are modified and as such help managers to
meet changing requirements of the environment. Management principles are
flexible to adapt to dynamic business environment. For example, management
principles emphasise division of work and specialisation. In modern times, this
principle has been extended to the entire business whereby companies are
specialising in their core competency and divesting non-core businesses. In this
context, one may cite the decision of Hindustan Lever Limited in divesting non-
core businesses of chemicals and seeds. Some companies are outsourcing their
non-core activities like share-transfer management and advertising to outside
agencies.

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 (ii) Management training, education and research: Principles of management are
\
at the core of management theory. As such these are used as a basis for
management training, education and research. These principles provide basic
groundwork for the development of management as a discipline. Professional
courses such as MBA (Master of Business Administration), BBA (Bachelor of
Business Administration) also teach these principles as part of their curriculum at
the beginner's level.

These principles enable refinement of management practices as well by

facilitating the development of new management techniques. Thus, we see that
techniques like Operations Research (OR), cost accounting, 'Just in Time',
'Kanban' and 'Kaizen' have developed due to further research on these principles.

14. Characteristics of 'Principles of Management'

(i) Universal applicability: The principles of management are intended to apply to

all types of organisation, business as well as non-business; small as well as large,
public as well as private sector, manufacturing as well as services sector at all
levels and at all times.

(ii) General guidelines : The principle of management are general guidelines to

managerial functioning. They do not provide readymade solutions to managerial
problems because real business situations are very complex and dynamic and are
a result of many factors.

(iii) Management principles are formed by :

(a) Observation and experimentation.

(b) Personal experience of the managers.

(iv) Flexible : Management principles 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.

Functions of Management

15. Planning: Top-level managers are responsible for setting the overall direction
and objectives of the organization.

Organizing: They establish the organizational structure and allocate resources to

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 Directing: They guide and oversee the activities of middle managers and
employees to ensure the organization's goals are met.

Controlling: Top-level management monitors performance against goals and

takes corrective actions as needed to ensure organizational effectiveness.

Efficiency and Effectiveness

16. (D) Efficiency

2.2 Fayol's Principles of Management

17. (c) : Order

18. (b) : Unity of command.

19. (d): The principle of management being followed by Good Health Care' is
Equity.

20. (a) : Division of work. According to Fayol, "The intent of division of work is
to produce more and better work for the same effort".

21. (b): The principle of 'Espirit De Corps' gives rise to the spirit of mutual trust
and belonging ness among team members.

22. c): The principle of management that is being followed by Pioneer Ltd. is
'Unity of Direction'.

23. (a): The Fayol's principle of 'Equity' emphasises on kindliness and justice in
the behavior of managers towards workers.

24. The principle of management that the company wants to modify is 'division
of work'.

25. Vibhu discussed "Scalar Chain Principle of Management".

Scalar Chain: An organisation consists of superiors and subordinates. The formal

lines of authority from highest to lowest ranks are known as scalar chain.

Fig. : Fayol's Scalar Chain

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 Let us consider a situation where 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. According to Fayol, this chain should not be violated in the
normal course of formal communication. However, if there is an emergency
then ' 𝐸 ' can directly contact ' 𝑂 ' through 'Gang Plank' as shown in the
diagram.

This is a shorter route and has been provided so that communication is not
delayed.

26. Subordination of individual interest to General Interest.

(i) This principle states that the interests of an organisation should take
priority over the interests of any one individual employee.
(ii) This is so because larger interests of the workers and stakeholders are
more important than the interest of any one person.

27. Order and Initiative are parts of Fayol's Principles of Management.

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'. Essentially, it means orderliness. If there is a fixed place for
everything and it is present there, then there will be no hindrance in the
activities of business/ factory. This will lead to increased productivity and
efficiency.

Initiative - According to Fayol, workers should be encouraged to develop and

carry out their plans for improvements. 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. But it does not
mean going against the established practices of the company for the sake of
being different. A good company should have an employee suggestion system
whereby initiatives suggestions which result in substantial cost/time
reduction should be rewarded.

28. (a) Principle of cooperation.

(b) Values that the company wants to communicate to the society:

(i) Development of backward area,

(ii) Determination to revive profits commitment to promises

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 29. (a) Cooperation not individualism by F.W. Taylor is the principle of management
described in the given paragraph.

(b) Values which the company wants to communicate to the society:

(i) Environment friendliness and optimum utilisation of resources.

(ii) Empathy towards workers and cooperation.

30. (a) Initiative : Initiative means eagerness to initiate action without being asked
to do so. According to Fayol, "employees should be allowed to think and execute
plans, to bring about improvements in work related matters".

(b) Two values that the company wants to communicate to the society.

(i) Conservation of resources by recycling.

(ii) Increase in employment opportunities in backward areas.

31. (a) Principle of management applied - Esprit de corps.

(b) Features of management - highlighted here are:

(i) Harmony, Not discord.

(ii) Cooperation, Not Individualism.

(c) Values being communicated to the society are :

(i) Concern for the environment.

(ii) Holistic development of children.

(iii) Teamwork.

32. (i) Equity: Good sense and experience are needed to ensure fairness to all
employees, who should be treated as fairly as possible," according to Fayol. This
principle emphasises kindliness and justice in the behaviour of managers
towards workers. This will ensure loyalty and devotion. Fayol does not rule out
use of force sometimes. Rather he says that lazy personnel should be dealt with
sternly to send the message that everyone is equal in the eyes of the
management.

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 (ii) Authority and Responsibility: According to Fayol, "Authority is the right to give
orders and obtain obedience, and responsibility is the corollary of authority. The
two types of authority are 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. Managers require authority commensurate with their
responsibility.
(iii) Stability of Personnel: "Employee turnover should be minimised to maintain
organisational efficiency", according to Fayol. Personnel should be selected and
appointed after due and rigorous procedure. But once selected they should be kept
at their post/position for a minimum fixed tenure.

They should have stability of tenure. They should be given reasonable time to show
results.

33. (a) Subordination of individual interest to general interest.

Managers should try to bring convergence between organisation's objectives and
objectives of the people working in the organisation. The objectives of the
individuals should be in the same direction as that of the organisation.

Positive effects of this principle : (i) achievement of organisational goals and (ii)
Aspirations of individual workers met.

Consequences of violation of this principle : (i) non achievement of organisational

goal and (ii) employees are de-motivated.

(b) Development of each and every person to his or her greatest efficiency :

Industrial efficiency depends upon the efficiency and competency of individual

workers. Employees should be scientifically selected. Then work should be allotted
to them on the basis of their physical, mental and intellectual capabilities. They
should be trained to learn the best methods to perform work. This will ensure
efficiency and prosperity for both company and workers.

34. (A)
(i) General guidelines
The principles of management are guidelines to action but do not provide
readymade straitjacket solutions to all managerial problems. It is so because real
business situations are very complex and dynamic and
are a result of many factors.

(ii) Flexible
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.

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 (iii) Cause and effect relationship
The principles of management are intended to establish relationship between cause
and effect so that they can be used in similar situations in a large number of cases. As
such, they tell us if a particular principle was applied in a particular situation, what
would be its likely effect. In real life, situations are not identical. So, accurate cause and
effect relationships may be difficult to establish.
OR
(B) (i) Method Study
It is a study to find out one best way of doing the job and includes all
activities from procurement of raw materials till the final product is
delivered to the customer. It helps to minimize the cost of production and maximize
quality and satisfaction of the customer.

(ii) Differential Piece Wage System

Differential Piece Wage System is a technique which differentiates between efficient
and less efficient workers. It rewards the efficient workers and motivates the less
efficient ones to improve their efficiency. In this plan, there are two piece rates – one
for those workers who produce the standard output or more, and the other for those
who produce less than the standard output.

(iii) Fatigue Study

Fatigue Study determines the amount and frequency of rest intervals in completing
task. The rest intervals help the workers to regain stamina and work again with
the same capacity resulting in increased productivity.

2.3 Taylor's Scientific Management: Principles and Techniques

35. (b) : Harmony, not discord principle of scientific management is called for complete
mental revolution on the part of management and workers.

36. (b) : Cooperation, not individualism, is applied by 'Heyday Productions'.

37. (a) : Under planning in charge as per functional foremanship, foremen are:
Disciplinarian, instruction card clerk, Time and Cost clerk, Route clerk.

38. (d) : Standardisation and Simplification of work is the technique applied by Reema.

39. (c) : The objective of time study is to determine the number of workers to be
employed in an organisation.

40. (c) : The principle of management that is being discussed here is cooperation, not
individualism".

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 41. (b) : The standardisation and simplification of work technique proposed by Taylor
aims at eliminating unnecessary diversity of products.

42. (c) : The technique of Scientific management discussed in the case here is
'Functional Foremanship'.

43. (b) : The principle 'Remuneration of Employees' has been violated by Vidya Public
School.

44. Role of 'Gang Boss' in functional foremanship is to ensure that workers and the
machines are fit enough for production and the material required for their use is
available to them.

45. Speed Boss reports to production incharge and is responsible for timely and
accurate completion of the work. He rectifies the situation if schedules are not met.

46. Inspector comes under production incharge and is responsible for checking the
quality of work.

47. Route clerk reports to planning incharge and is responsible for specifying the
sequence of doing the different tasks for the day.

48. The objective of method study is to find out one best way of doing the job.

49. Time Study is a technique, which is used to determine the standard time taken by
a workman of reasonable skills and ability to perform a well defined job.

50. (a) Principle of Harmony not discord is described in the given paragraph.

(b) Values which the company wants to communicate to the society are :

(i) Concern for employees and society.

(ii) Social responsibility and prosperity of one and all.

51. The techniques of scientific management used by Sandhya to solve the problem
are:
(a) Standardisation and Simplification of Work

Simplification aims at eliminating superfluous varieties, sizes and dimensions while

standardisation implies devising new varieties instead of the existing ones.
Simplification aims at eliminating unnecessary diversity of products. It results in
savings of cost of labor, machines and tools. It implies reduced inventories, fuller
utilisation of equipment and increasing turnover.

(b) Time study : It determines the standard time taken to perform a well-defined job.
Time measuring devices are used for each element of task. The standard time is fixed
for the whole of the task by taking several readings.
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 The objective of time study is to determine the number of workers to be employed;
frame suitable incentive schemes and determine labour costs.

52. Techniques of Scientific Management:

(a) Fatigue Study: Fatigue study studies the requirement of rest or a break while
performing a task. The study identifies the intervals required while completing a task
and suggests standard break timings for improving the workers' performance.

(b) Differential piece wage system: Under this technique, wages are decided according
to a set standard. The workers who perform better than the set standards get higher
wages than the workers who perform below the standards. Taylor introduced this
system to differentiate the efficient workers from the inefficient ones and reward
them accordingly.

53. The principles of scientific management are explained as follows:

(a) Harmony, not discord: According to this principle, the managers and the workers
should maintain a harmonious work environment. They should realise that they are
dependent on each other. Only if they work in amity, they will be able to perform
better. Taylor emphasised on complete mental revolution. That is, the
workers should change their attitude and each one should realise others importance.
Management should take care of the needs of the workers and workers on the other
hand, should work to their best efficiency. Both should work in harmony towards the
common goals of the organisation.

(b) Development of each and every person to his or her greatest efficiency and
prosperity: Personnel development aims at improving the capabilities of the
employees to the maximum. This will in turn enhance the overall efficiency of the
organisation as it depends on the individual competencies. Scientific management
aimed at improving the working capabilities of the employees to their maximum level.
It focused on the training and development of the labourers to raise their productivity.

54. The techniques of scientific management are explained as follows:

(a) Motion Study - Motion study refers to the study of motion (or movements) of a
worker involved in a given task. The study aims at identifying the unwanted actions or
motions and eliminating them so that the work can be completed in less time.

(b) Time Study - Time study emphasises setting a standard time limit for completing a
particular job. The time taken for completing the job is measured for setting the
standard time limit. This helps decide the number of workers to be employed for a
particular task, determine their wages, etc.

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 55. Functional foremanship : In order to apply specialisation at the supervisory level,
Taylor developed the concept of functional foremanship. He divided the work of the
factory into two sub-departments : Planning department and production department.
Further, to define the role of a foreman, he identified a list of qualities. Butherealised
that, a single foreman/supervisor cannot be expected to be an expert in all aspects of
work and cannot have all qualities (like education, intelligence, judgment, tact,
conceptual clarity etc.) and therefore, he suggested appointment of eight supervisors
to give instructions to a worker. Out of them, four would work under the planning
incharge and would be responsible for planning and the other four would work under
the production incharge and would be responsible for executions.

Specialists under the planning incharge :

(i) Route clerk: To lay down the sequence of operations.

(ii) Instruction card clerk: Would draft instructions for workers, in handling their jobs.
(iii) Time and cost clerk: Would fix - (a) dates for starting and completing work; and (b)
cost sheet to determine expenses for material, labour and other overheads.
(iv) Disciplinarian : Would ensure systematic performance of job by following rules and
regulations.

Specialists under production incharge :

(i) Gang boss : Would do all preliminary work keeps material, machines, tools etc. ready
for workers.
(ii) Speed boss : Would ensure timely and accurate completion of jobs.
(iii) Inspector: Would check quality of work done by the workers.
(iv) Repairs boss : Would ensure that each worker keeps his machine in good order.

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 56. Cooperation, not individualism of Taylor says: there should be cooperation
between workers and management. Cooperation is based on mutual faith, managers
should be opened to constructive suggestions by employees. They should be rewarded
when their suggestions result in economic benefits.
The principle of Fayol referred to is 'initiative'; The principle of initiative implies that
the managers of an undertaking should encourage the subordinates to take initiative in
thinking out and executing plans. There should be employee suggestion system
whereby initiatives to suggest will result in substantial cost/time reduction which
should be rewarded.

57. Following principles of Fayol and Taylor are referred in the given para.
Remuneration of Employees-Fayol : According to this principle, the remuneration
payable to employees should be fair, reasonable and rewarding of effort. Wages
should be determined on the basis of work assigned, cost of living, financial position of
the enterprise and average wage rates for similar work in the industry. It should ensure
a reasonable standard of living to workers and at the same time be within the paying
capacity of the firms.

Harmony, not discord-Taylor : This principle of scientific management aims at removing

differences between the management and the workers. This would contribute to the
overall gain for the organisation. The management should share the gains of the
company with the workers.

58. (i) Harmony, Not Discord: Factory system of production implied that managers
served as a link between the owners and the workers. Since as managers they had
the mandate to 'get work done' from the workers, it should not be difficult for you
to appreciate that there always existed the possibility of a kind of class-conflict, the
mangers versus workers. Taylor recognised that this conflict helped none, the
workers, the managers or the factory owners. He emphasised that there should be
complete harmony between the management and workers. Both should realise that
each one is important. To achieve this state, Taylor called for complete mental
revolution on the part of both management and workers.

(ii) Science, not Rule of Thumb: Taylor pioneered the introduction of the method of
scientific inquiry into
the domain of management practice. We have already referred to the limitations of
the rule of thumb approach of management. As different managers would follow
their indigenous rules of thumb, it is but a statement of the obvious that all would
not be equally effective. Taylor believed that there was only one best method to
maximise efficiency. This method can be developed through study and analysis. The
method so developed should substitute 'Rule of Thumb' throughout the
organisation. Scientific method involved investigation of traditional methods
through work-study, unifying the best practices and developing a standard method,
which would be followed throughout the organisation.
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 59. (a) Method Study: It is a study to find out one best way of doing the job and
includes all activities from procurement of raw materials till the final product is
delivered to the customer.It helps to minimize the cost of production and
maximize quality and satisfaction of the customer.
(b) Motion Study: It is a technique to study the movements that are necessary for
doing a well-defined job. It seeks to eliminate unnecessary and wasteful
movements so that it takes less time to complete a job efficiently.
(c) Time Study: It is a technique to determine the standard time taken by a worker
of reasonable skill and efficiency to perform a well-defined job.It helps in deciding
the number of workers to be employed, frame suitable incentive schemes and
determine labour costs.

60. The two scientific techniques of management discussed above are:

(a) Differential piece wage system : Under this technique, wages are decided
according to a set standard. The workers who perform better than the set
standards get higher wages than the workers who perform below the standards.
Taylor introduced this system to differentiate the efficient workers from the
inefficient ones and reward them accordingly.

Line: 'technique recognises those workers who are able to accomplish/ exceed the
and is based on the premise that efficiency is the result of the joint efforts of
the managers and the workers'.

(b) Time study : Time study emphasises setting a standard time limit for
completing a particular job. The time taken for completing the job is measured for
setting the standard time limit. This helps decide the number of workers to be
employed for a particular task, determine their wages, etc.

Line: One of the techniques helps to determine the number of workers to be

employed; frame suitable incentive schemes and determine labour costs.

61. In the above case, Principles of Scientific management followed by production

manager is:
(i) Science, not rule of thumb : Like Taylor, Karan Nath also believed that there was
only one best method to maximise efficiency. This method can be developed
through study and analysis.
That's why, production manager developed this method using several parameters.
Scientific method involves investigation of traditional methods through work
study, unifying the best practices and developing a standard method, which would
be followed throughout the organisation. This can result in saving of human
energy as well as wastage of time and materials.

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 (ii) Development of each and every person to his or her greatest efficiency and
prosperity : Taylor was of view that each person should be scientifically selected.
Worker training was essential to learn 'best method' developed through scientific
approach. Some are followed in this case.

Technique of scientific management followed by production manager is "Method

Study". As the objective of Method study is to find out one best way of doing the
job from procurement of Raw materials till the final product delivery, every
activity is part of Method study. Ultimate objective of this exercise is to minimise
cost of production and maximise the quality and satisfaction of customer.

62. (i) Differential piece wage system: Differential piece wage system is a
technique which differentiates between efficient and less efficient workers. It
rewards the efficient workers and motivates the less efficient ones to improve
their efficiency.
In this plan, there are two piece rates - one for those workers who produce the
standard output or more and the other for those who produce less than the
standard output. Example : Standard output (per worker per day)
= 10 units.

Wage rate I = ₹50 per unit (for output < 10 units)

Wage rate II = ₹80 per unit (for output ≥ 10 units)

Particulars Worker A Worker B

Actual output 9 units 11 units

Total wage 9 × ₹50 = 11 × ₹80

(in₹) ₹450 = ₹ 850

Difference in units produced = 2

Difference in wages = ₹430

The glaring difference in wages motivates the inefficient worker to produce the
standard output.

(ii) Motion study : It is a technique to study the movements of a worker which are
undertaken by him while doing a well defined job. The movements could be
productive, incidental and unproductive. It seeks to eliminate unnecessary and
wasteful movements so that it takes less time to complete a job efficiently.

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 It is useful in designing suitable equipment and tool and in increasing daily
productivity.

63. (i) Time study : Time study is a technique used to measure the time that may be
taken by an average worker of reasonable skill and efficiency to perform a job.
It helps to determine : (a) standard time required to do a job; (b) to determine
the number of employees to be employed; and (c) to determine labour cost and
to frame suitable incentive schemes.

(ii) Simplification of work : It aims at eliminating superfluous varieties, sizes and

dimensions. It results in saving of cost of labour, machines and tools. It leads to
reduced inventories, fuller utilization of equipment and increased turnover leading
to economic gains.

64. (a) Science, not rule of thumb : This principle was advocated by Taylor. This
principle encourages 'thinking before doing.' It involves cross-checking
traditional methods through work study and unifying the best practices to
develop a standard method that can be followed throughout the organisation.
(b) Discipline : Discipline means obedience to the rules of the organisation on the
part of both superiors and subordinates. Every member must conduct himself
properly towards other members of the oganisation, irrespective of his level or
position in the organisation.

According to Fayol, discipline requires good superiors at all levels. No organisation

can operate without proper discipline.

65. (a) Scalar chain : Scalar chain is the chain of superiors and subordinates. The
chain also represents the line of authority and communication. This suggests that
there should be a clear line of authority from top to bottom linking managers at all
levels and this should not be violated.
The figure shows a scalar chain linking managers at lower levels with the top
management. If 𝐷 has to communicate with 𝐺, the message should ordinarily move
up through 𝐶 and 𝐵 to 𝐴 and then
down from 𝐴 to 𝐸, 𝐸 to 𝐺.

In case of emergency or an urgent matter, direct communication can be

established between two people working at the same level with the help of gang
plank shown by the dotted line Joining D and G.
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 (b) Harmony, not discord : "Harmony, not discord". According to this principle, there
should be complete harmony and proper understanding between the management
and the workers. Management should share the gains of the company and at the same
time workers should work hard and be willing to accept changes as they come. This
requires a 'Mental Revolution' on the part of both the management and the workers
and develop a positive feeling for each other for harmony.

Fatigue study : It refers to determine the duration and frequency of rest intervals to
complete a particular job. Rest between duty hours refreshes the workers and are
important for his/her to continue for the full day's work.

Types of Plans

66. (B) Rule

Nature and Importance of Management

67. (a) Management as an Art

Art refers to skillful and personal application of existing knowledge to
achieve desired results.

(b)Features of Management as an Art:

(i) Personalised Application:
“They used basic knowledge in their unique manner and were able to
educate the slum dwellers.”

18
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