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Notes of Ch 2 Principles of Management| Class 12th Business Studies

Summary and Notes of Ch 2 Principles of Management| Class 12th Business Studies 

Principles of management: The Concept

A managerial principle is a broad and general guideline for decision making and behaviour. Management principles are not as rigid as principles of pure science.

Difference between Principle of management and Technique of management

Principles of management
Techniques of management
Principles are guidelines.Techniques are procedures or methods.
It helps to take a decision or action while Practicing techniques.It involved a series of steps to be taken to accomplish desired goals.
Nature of Principles of Management

 Universal applicability: The principles of management are universal in nature that means they can be applied to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector irrespective of their size and nature.

 General guidelines: The principles of management are guidelines to action and solve the problems, but these principles do not provide a readymade solution for all the problems because real business situations are very complex and dynamic.

 Formed by practice and experimentation: The principles of management are formed by experience and deep research work.

 Flexible:  The principles of management are not rigid they are flexible and can be modified by the manager when the situation so demands.

 Mainly behavioural: Management principles are formed to guide and influence the behaviour of employees.

• Cause and Effect Relationship: Management principles are based on cause and effect that means these principles are used in a similar situation in a large number of cases.

 Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. They may be changed according to the situation.

Significance of Principles of Management

These principles guide managers in taking and implementing decisions.
 Providing managers with useful insights into reality.
 Optimum utilisation of resources and effective administration.
 Scientific decision.
 Meeting changing environment requirements.
 Fulfilling social responsibility.
 Management training, education and research.

Principles of Scientific Management

According to Taylor "Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way".

Scientific principles of management
 Science not Rule of Thumb.
 Harmony, Not Discord.
 Cooperation, Not individualism.
 Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity.

Techniques of Scientific Management

• Functional foremanship: In this technique, Taylor suggested that revolves the entire production in planning, implementation and control. Taylor advocated separation of planning and execution functions. This concept was extended to the lowest level of the shop floor.
(a) Planning Department
 Card clerk
 Route clerk
 Time and cost clerk

(b) Operational Department
 Speed boss
 Gang boss
 Repair boss

• Standardisation and Simplification of work:  Setting standards for every business activity like for process, raw material, time, product, machinery, methods or working condition.

Method study:  The objective of method study is to find out one best way of doing the job. Taylor advised the concept of assembly line by using method study. The objective of the whole exercise is to minimise the cost of production and maximise the quality and satisfaction of the customer.

• Motion study: Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions etc. which are undertaken by doing typical job. Unnecessary movements are ignored so, it takes less time to complete a job. Through motion study, Taylor was able to design equipment and tools to educate workers on their use and the result was fantastic.

• Time study: 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. The objective of the time study is to determine the number of workers to be employed, frame suitable incentive schemes and determine labour costs.

• Fatigue Study: It refers to determine the duration and frequency of rest intervals to complete a particular job. The main objective of this study is to maintain the efficiency level of workers.

• Wage System: It means wages are paid on the basis of work done and not on the basis of time spent on doing the work. In this system, two different wage rates are used
(a) High wage rate
(b) Low wage rate.

• Mental revolution: It refers to the change in the attitude of management and workers towards one another from competition to cooperation.

Fayol’s Principles of Management

Henry Fayol, a famous industrialist of France, has described fourteen principles of management in his book "General and Industrialist Management".

The fourteen principles given by Fayol are as under:

• Division of work: The whole work is divided into smaller parts and each individual should be assigned only one parts of the work according to his ability and taste.

• Authority and responsibility: According to this principle, authority and responsibility should go hand in hand.

• Discipline:  The organisational rules and employment agreement should be obeyed by both the superiors and subordinate which are necessary for the successful working of the organisation.

• Unity of command:  An individual employee should receive orders from only one superior at a time and that employee should be answerable only to that superior.

• Unity of direction: It means that there should be one head for one plan for a group of activities having the same objective.

• Subordination of individual interest to general interest: The interests of an organisation should take priority over the interests of any one individual employee.

• Remuneration of employees:  The employees should be paid fair remuneration which should give them at least a reasonable standard of living.

• Centralisation and Decentralisation:  The concentration of decision - making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation.

• Scalar chain: The formal lines of authority from highest to lowest ranks are known as scalar chain.

• Order: A right person should be placed at the right job and a right thing should be placed at the right place.

• Equity: The managers should treat their subordinates as fairly as possible so that they develop a feeling of dedication for their work.

• Stability of personnel: There should be a stability of tenure of the employees so that the work continues efficiently.

• Initiative: Employees in the organisation must be given an opportunity in making and executing plan.

• Espirit De Corps: As per this principle, a manager should continuously make efforts to develop a team spirit among the subordinates.

Dissimilarities in the ideas of Taylor and Fayol

Business studies notes class 12 chapter 2 | Additional Study Material for Class 12

Business studies notes class 12 chapter 2 | Additional Study Material for Class 12

The document Business studies notes class 12 chapter 2 | Additional Study Material for Class 12 is a part of the Class 12 Course Additional Study Material for Class 12.
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FAQs on Business studies notes class 12 chapter 2 - Additional Study Material for Class 12

1. What is the significance of business studies in class 12?
Ans. Business studies in class 12 holds significant importance as it provides students with a comprehensive understanding of various business principles, practices, and processes. It equips students with the necessary knowledge and skills required to analyze and make informed decisions in real-life business situations. Additionally, it serves as a foundation for higher education and career opportunities in the field of business and management.
2. What are the main topics covered in chapter 2 of business studies class 12?
Ans. Chapter 2 of business studies class 12 covers the following main topics: 1. Principles of Management: Introduction to management, its significance, functions, and principles. 2. Nature and Significance of Management: Understanding the nature, characteristics, and importance of management in organizations. 3. Principles of Scientific Management: Study of Frederick Taylor's principles of scientific management, their application, and benefits. 4. Principles of Administrative Management: Exploring Henri Fayol's principles of administrative management and their relevance in contemporary organizations. 5. Principles of Bureaucracy: Understanding Max Weber's principles of bureaucracy and their implications in modern organizational structures.
3. How does the study of principles of management contribute to effective business operations?
Ans. The study of principles of management contributes to effective business operations in multiple ways. Firstly, it helps in establishing clear objectives and goals for the organization, ensuring that everyone is working towards a common purpose. Secondly, it aids in effective planning, organizing, and allocating resources to achieve these objectives. Thirdly, it provides a framework for effective decision-making, allowing managers to analyze various alternatives and select the most appropriate course of action. Additionally, the principles of management help in creating a positive work environment, motivating employees, and ensuring efficient coordination and control within the organization.
4. What are the key principles of scientific management?
Ans. The key principles of scientific management, proposed by Frederick Taylor, include: 1. Science, Not Rule of Thumb: The use of scientific methods to determine the most efficient way of performing tasks. 2. Harmony, Not Discord: Establishing a harmonious relationship between workers and management to create a cooperative work environment. 3. Cooperation, Not Individualism: Encouraging collaboration and cooperation between workers and management to achieve organizational goals. 4. Development of Each Person to Their Greatest Efficiency: Focusing on developing the skills and capabilities of each individual to maximize their efficiency and productivity. 5. Equal Division of Work and Responsibility: Ensuring a fair distribution of work and responsibility between workers and management.
5. How do bureaucratic principles contribute to organizational efficiency?
Ans. Bureaucratic principles, as proposed by Max Weber, contribute to organizational efficiency by providing a clear hierarchy of authority and division of labor. This helps in establishing a well-defined chain of command and clear lines of communication, enabling efficient decision-making and coordination. Additionally, the principles of bureaucracy emphasize the use of rules and standardized procedures, which reduces ambiguity and promotes consistency in organizational operations. Furthermore, bureaucratic principles emphasize the selection and promotion of employees based on merit and qualifications, ensuring that the most competent individuals are appointed to key positions. Overall, these principles help in creating a structured and efficient organizational framework.
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