NCERT Solutions Chapter - 2 - Principles of Management, BST, Class 12 - Commerce PDF Download

NCERT Solutions for Class 12th Business Studies Chapter 2 – Principles of Management

National Council of Educational Research and Training (NCERT) Book Solutions for class 12th
Subject: Business Studies

These Class 12th NCERT Solutions for Business Studies provide detailed, step-by-step
solutions to all questions in an Business Studies NCERT textbook.

Class 12th Business Studies Chapter 2 – Principles of Management NCERT Solution is
given below.

Multiple Choice Questions
Question 1. Principles of management are not
(a) universal
(b) flexible
(c) absolute
(d) behavioural
Answer (c) Principles of management are not absolute as they
are flexible behavioral and universal nature

Question 2. How are principles of management formed?
(a) In a laboratory
(b) By experiences of managers
(c) By experiences of customers
(d) By propagation of social scientists
Answer (b) Principles of management are formed by the experiences of manager as It
provides useful Insights into reality.

Question 3. The principles of management are significant because of
(a) increase in efficiency
(b) initiative
(c) optimum utilization of resources
(d) adaptation to changing technology
Answer (c) Principles of management are Significant because It helps in increasing
overall efficiency.

Question 4. Henry Fayol was a
(a) social scientist
(b) mining engineer
(c) accountant
(d) production engineer
Answer (b) Henry Fayol was a mining engineer and management theorist.

Question 5. Which of the following statement best describes the principle of ‘Division of
Work’?
(a) Work should be divided into small tasks
(b) Labour should be divided
(c) Resources should be divided among jobs
(d) It leads to specialisation
Answer (a) Division of work implies division of work into small tasks.

Question 6. ‘She/He keeps machines, materials, tools etc ready for operations by
concerned workers’. Whose work is described by this sentence under functional
foremanship?
(a) Instruction card clerk
(b) Repair boss
(c) Gang boss
(d) Route clerk
Answer (c) Gang boss, keeping machines and tools.

Question 7. Which of the following is not a Principle of management given by Taylor?
(a) Science, not rule of the thumb
(b) Functional foremanship
(c) Maximum not restricted output
(d) Harmony not discord
Answer (b) Taylor advocated separation of planning and execution functions. This
concept is known as functional foremanship.

Question 8. Management should find ‘One best way’ to perform a task. Which
technique of scientific management is defined in this sentence?
(a) Time study
(b) Motion study
(c) Fatigue study
(d) Method study
Answer (d) The objective of method study is to find out one best way of doing job.

Question 9. Which of the following statements best describes ‘Mental Revolution’?
(a) It implies change of attitude
(b) The management and workers should not play the game of one upmanship
(c) Both management and workers require each other
(d) Workers should be pain more wages
Answer (a) Mental revolution implies change In the attitude of workers and
management towards one another.

Question 10. Which of the following statements is false about Taylor and Fayol?
(a) Fayol was a mining engineer whereas Taylor was a mechanical engineer
(b) Fayol’s principles are applicable in specialised situations whereas Taylor’s principles
have universal application
(c) Fayol’s principles were formed through personal experience whereas Taylor’s
principles were formed through experimentation
(d) Fayol’s principles are applicable at the top level of management whereas Taylor’s
principles are applicable at the shop floor
Answer (b) Fayol’s principle are universally applicable whereas Taylor’s principles
applied in special situations

Short Answer Type Questions

Question 1. How is the Principle of ‘Unity of Command’ useful to management? Explain
briefly.
Answer 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
1. Authority responsibility relationship Is clearly defined.
2. Subordinates are known for whom they are accountable.
3. Discipline and order is maintained.

Question 2. Define scientific management. State any three of its principles.
Answer 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
1. 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.

2. 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.

3. 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.

Question 3. If an organisation does not provide the right place for physical and human
resources in an organisation, which principle is violated? What are the consequences of
it?
Answer The principle of order is violated I if an organisation does not provide the right
place for physical and human resources.
If this principle is violated then
1. Lots of time will be wasted in locating the different resources.
2. This will lead to delayed decisions.
3. Wastage of energy which will lead to in efficiency and delay In production.
4. Causes hindrance in the activities of business.

Question 4. Explain any four points regarding significance of Principles of
management.
Answer Significance of principles of management
1. 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.
2. 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.
3. 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.
4. 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.

Question 5. Explain the principle of ‘Scalar Chain’ and gang plank.
Answer Principle of Scalar Chain and Gang plank
The formal lines of authority from highest to lowest ranks are known as scalar chain.
According to Fayol, “Organisation should have a chain of authority and communication
that runs from top to bottom and should be followed by managers and subordinates.

In the diagram, 0 is heading 2 teams where A and X are at the same level, B and Yare
at the same level and C and Z are at the same level. The line of communication is
clearly defined A to B to C and X to Y to Z. Authority responsibility relationship is also
very clear. But C and Z cannot directly contact each other. This some times may take lot
of time during an emergency to communicate as per the prescribed flow to avoid this
problem a system known as ‘Gang Plank’ was introduced where in Cor Z could contact
each other and same way Band Y could contact each other.

Long Answer Type Questions

Question 1. Explain the principles of scientific management given by Taylor.
Answer Principles of scientific management are given by FW Taylor
 

1. 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 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.
2. Harmony, Not Discord Managers are an extension of the management and
serve as a link between workers and the owners. Workers have to take the
instructions from the managers and managers have to get the work done through
the workers. Sometime the relation between them is spoilt, which is very harmful
tor everyone-workers, managers and owners. This class conflict should be
replaced by harmony between the two. Both should change their thinking towards
each other. This is known as mental revolution.
3. 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 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
on strikes in order to get their unreasonable demands fulfilled.
4. Development of Each and Every person to His or her Greatest Efficiency and
Prosperity Scientific management also stood for worker development. Taylor
believed that workers should be aware of the ‘best method’. On the other hand, all
organisations should select employee carefully in order to get maximum efficiency.
When the duties are allotted, perfect match should be made between the
requirements of the job and the capabilities of the worker. Training should be
provided to improve the skills further. In this way, efficiency will go higher resulting
in prosperity for both workers and company.

Question 2. Explain the following principles of management by Fayol with examples.
(a) Unity of direction
(b) Equity
(c) Espirit de Corps
(d) Order
(e) Centralisation and decentralisation
(f) Initiative
Answer 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 large work force teamwork is very important.
Teamwork due to a 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 own
self.

(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 n 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 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 suggesllons from
employees which can result in substantial cost/time reduction Rewards can be given to
fruitful suggestions.

Question 3. Explain the technique of ‘Functional Foremanship’ and the concept of
‘Mental Revolution’ as enunciated by Taylor.
Answer Functional Foremanship Taylor advocated separation of planning and
execution functions. This concept was extended to the lowest level of the shop floor. It
was known as functional foremanship.

Under the factory manager, there is a planning incharge and a production incharge.
Under the planning incharge. the work goes as follows
1. Instruction Card Clerk Draft instructions for the workers,
2. Route Clerk Specify the route of production.
3. Time and Cost Clerk Prepare time and cost sheet.
4. Disciplinarian Ensure discipline,

Under the production incharge. the work goes as follows
1. Speed Boss Timely and accurate completion of work,
2. Gang Boss Keeping tools and machines ready for operation by workers.
3. Repairs Boss Ensure proper working conditions of machines.
4. Inspector Check the quality of work.

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.

Question 4. Discuss the following techniques of scientific work study
(a) Time study
(b) Motion study
(c) Fatigue study
(d) Method study
(e) Simplification and standardisation of work
Answer 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
1. Determine the number of workers
2. Frame suitable incentive schemes
3. 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 x 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 pos.nons On close examination of body motions e.g., It IS
possible to find out three types motions
1. Motions which are productive.
2. Motions which are incidental.
3. Motions which are unproductive.
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 help one to regain stamina
and work again with the same efficiency for e.g., in an organisation 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 tor 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
1. To reduce product to fixed types, sizes, features etc.
2. To establish interchangeability of various parts.
3. To establish standards of excellence and quality in materials.
4. 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.

Question 5. Discuss the differences between the contributions of Taylor and Fayol.

Question 6. Discuss the relevance of Taylor and Fayol’s contribution in the
contemporary business environment.
Answer Relevance of Taylor and Favors contribution in the contemporary business
environment.
Both Fayol and Taylor have given principles of management to improve efficiency In an
organisation. Taylor gave us scientific principles of management which are being
adopted by all organisations to improve Its productivity at the shop floor level, the
principles help in giving effective results. In the same manner, Henry Fayol gave in
general principles of management which when implemented at any of the levels-top,
middle or lower and helps in achieving better co-ordination, remove ambiguity and
encourage the employees to improve their work performance.

Case Problems
1. ‘F’ limited was engaged in the business of food processing and selling its products
under a popular brand. Lately the business was expanding due to good quality and
reasonable prices. Also with more people working the market for processed food was
increasing. New players were also corning to cash in on the new trend. In order to keep
its market share in the short run the company directed its existing workforce to work
overtime.
But this resulted in many problems. Due to increased pressure of work, the efficiency of
the workers declined. Sometimes the subordinates had to work for more than one
superior resulting in declining efficiency. The divisions that were previously working on
one product were also made to work on two or more products. This resulted in a lot of
overlapping and wastage. The workers were becoming undisciplined. The spirit of
teamwork, which had characterised the company, previously was beginning to wane.
Workers were feeling cheated and initiative was declining. The quality of the products
was beginning to decline and market share was on the verge of decrease.
Actually the company had implemented changes without creating the required
infrastructure.

Question 1. Identify the principle of management (out of 14 given by Henry Fayol) that
were being violated by the company.
Answer Company violated following principles
1. Division of work
2. of command
3. Unity of direction
4. Discipline
5. Subordination of individual interest to general interest
6. Order
7. Initiative
8. Remuneration

Question 2. Explain these principles in brief.
Answer
1. Division of Work As per the case work is not divided among the workers as per
their specialisation. As specialisation is the most efficient way to use human
efforts and produces more and better work.
2. Unity of Command In the case subordinates had to work for more than one
superior. This results in declining efficiency. As per Fayol’s principle of unity of
command there should be one boss and if it is violated it results in authority is
undetermined, discipline is in jeopardy, order distributed and stability threatened.
Same we are observing in the above case.
3. Unity of Direction The units of an organisation should be moving towards the
same objective. Each group must be having same objective must have one head
one plan. But in case first the producers are working on one product then moved
to two or more group. Thus, this principle is also violated.
4. Discipline In the case, there is a lack of formalised control as the workers are
working beyond there abilities. There is no rules and regulations as well as lack of
employment agreement.
5. Subordination of Individual Interest to General Interest Every individual is working
better only when the organisation is giving priority to their general interest. In the
case, company in only focusing over its objective not on employees.
6. Order People and materials must be in suitable places at appropriate time for
maximum efficiency. But In case they are not following the order of anything.
7. Initiative It implies that workers should be self motivated, suggestions should be
taken from the employees. It results in substantial cost and time reduction but
here they are taking no feedbacks, no suggestions.
8. Remuneration The workers should get the fair wages but in case workers are
performing day and night but they are not getting a fair amount for the same. This
results that they are feeling cheated.

Question 3. What steps should the company management take in relation to the above
principles to restore the company to its past glory?
Answer Following steps should be taken by the company to retain its past glory
1. Work is divided into small tasks and distributed among the employees as per their
specialisation.
2. There should be one boss.
3. Functions should be performed under one head or one plan.
4. Formalised control should be maintained.
5. Proper remuneratIOn and Impressive Incentives should be given
6. Hierarchical communication pattern is to be followed
7. Suggestions and feedback shoo d be taken from the employees.
8. Maintain high morale among employees
2. The management of company ‘F’ Limited now realised its folly.
In order to rectify the situation, it appointed a management consultant ‘M consultants’ to
recommend a restructure plan to bring the company back on the rails. ‘M consultants’
undertook a study of the production process at the plant of the company ‘F’ limited and
recommended the following changes
1. The company should introduce scientific management with regard to production.
2. Production Planning including routing, scheduling, dispatching and feedback
should be implemented.
3. In order to separated planning from operational management ‘Functional
foremanship’ should be introduced.
4. Work study should be undertaken to optimise the use of resources.
5. ‘Standardisation’ of all activities should be implemented to increase efficiency and
accountability.
6. To motivate the workers ‘Differential Piece Rate System’ should be implemented.
7. The above changes should be introduced apart from the steps recommended in

case problem-l (as an answer to question number 3 of that case problem).
It was expected that the changes will bring about a radical transformation in the working
of the company and it will regain its pristine glory.

Question 1. Do you think that introduction of scientific management as recommended by M consultants will result in intended outcome.
Answer Though scient ftc management IS the best solution but still it Will not be able to
give very effective results as It has its own limitations
1. As competition has Increased market research now Will not help much.
2. Appointing professionals which increase the cost.
3. Principle of initiative will not help if functional foremanship will also be adopted.
4. In differential piece wage system only efficient workers may gain, the others will
be in pain as they might lose their wages if target not met. This will lead instability
which is harmful.
5. Lot of stress will be generated from top to lower level.

Question 2. What precautions should the company undertake to implement the
changes?
Give your enunciated answer with regard to each technique in points 1 through 6 in the
case problem.
Answer A large number of changes will not accepted by anyone. So the company
should play safe while making any changes.
1. Trained staff can be appointed for few areas and workers can be trained to
improve efficiency levels.
2. Production planning to be done with care.
3. Functional foremanship can be introduced but it not lead to clear killing of
initiative. Workers should be consulted for suggestions.
4. Optimum use of method, time, motion and fatigue study should be done. ,
5. Standardisation can be implemented for material, machinery and features of
product.
6. Financial incentives should be provided to workers to get more work rather than
adopting differential piece wage system.