Question

NCERT Solutions Class 12, Business Studies, Chapter- 2, Principles of Management

The NCERT solutions for Class 12 Business Studies provide students with a well-organized and detailed guide to understanding the curriculum. Created by experts in the field, these solutions deliver an in-depth examination of the essential concepts covered in each chapter. Designed to align perfectly with the latest CBSE syllabus, they ensure you are fully prepared and confident for your exams.

In these NCERT Solutions for Class 12 Business Studies, we have discussed all types of NCERT intext questions and exercise questions.

Concepts covered in Class 12 Business Studies chapter- 2 Principles of Management, are :

• Principles of Management : The Concept
• Nature of Principles of Management
• Significance Principles of Management
• Taylor's Scientific Management
• Principles of Scientific Management
• Techniques of Scientific Management
• Functional Foremanship
• Standardisation and Simplification of Work
• Differential Piece Wage System
• Fayol's Principles of Management
• Fayol Versus Taylor - A Comparision

The NCERT solutions for Class 12 Business Studies are a valuable resource for students aiming to excel in their business studies curriculum. By providing detailed explanations, practice exercises, and illustrative examples, these solutions enhance students' understanding of complex business concepts and prepare them for academic success. Utilizing these solutions effectively can lead to a deeper comprehension of business principles and better performance in exams.

Now, all the solutions and practice questions are readily accessible to help you get started.

Answer 1

NCERT Solutions Class 12, Business Studies, Chapter- 2, Principles of Management

Very Short Answer Type:

1. What makes principles of management flexible?

Solution:

The principles of management are not rigid and extremely flexible. The manager has enough discretion to modify the principle of management to be applied according to the demands of the situation. For example, the decision of centralization or decentralization depends upon the situation and the circumstances arising. The individual principles are like individual tools which can be applied on the basis of the circumstances by the manager.

2. State the main objective of time study.

Solution:

Time study determines the standard time taken to perform a job. The method of time study depends upon the volume and frequency of the task, the cost of time and the cycle time of the operation. There are three objectives of time study:

a. Determine the number of workers.

b. Determine labour cost.

c. Frame a suitable worker incentive scheme.

3. Name the principle that is an extension of the ‘harmony, not discord’.

Solution:

The extension of the  principle 'Harmony, not discord' is ‘cooperation, not individualism’. Cooperation among the managers and the workers is focused in this principle, rather than their individual interests. The managers should take care of the workers, so that the workers should work willingly, and give their best contribution to the company.

4. State any two causes of fatigue that may create hindrance in the employee’s performance.

Solution:

Two causes of fatigue that may create hindrance in the employee's performance are:

1. Long working hours
2. Uncordial relations with the boss or bad working conditions.

5. SanakLal and Gagan started their career in Wales Limited (a printing press) after going through a rigorous recruitment process. Since they had no prior work experience, the firm decided to give them one year to prove themselves. Name the principle of management followed by Wales Limited.

Solution:

The principle of management followed by Wales Limited is stability of personnel. According to Fayol, employee turnover should be minimized to maintain organizational efficiency. The employees should be selected after the rigorous procedure and ones selected they should be kept at their position for a minimum fixed tenure. They should be given a reasonable amount of time to show the result.

6. Which technique is used by Taylor for distinguishing efficient and inefficient workers?

Solution:

Differential Piece Wage System, technique used by Taylor distinguishes between efficient and inefficient workers.

Short Answer Type:

1. How is the Principle of ‘Unity of Command’ useful to management? Explain briefly.

Solution:

‘One boss on every subordinate’ this is the objective of this principle, which says that subordinate should be integrated with the help of its superior i.e. one boss on one subordinate. Orders and instructions should come from only one head hence, dual subordination should be avoided.

This helps the working of any organisation in the following manner:

1. Subordinate-superior relationship is clearly defined.
2. Subordinates are known to whom they are accountable and responsible.
3. Maintenance of order and discipline.

2. Define scientific management. State any three of its principles.

Solution:

Scientific management can be defined as knowing exactly what the objectives are and what you want from people to do for the particular work and they do it in the best and cheapest possible way or method which could be efficient and effective.

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 i.e. the lower level.

Three principles of scientific management are as follows:

(i) Science, Not Rule of Thumb: When different managers use their own different methods to get the work done as they have their own outlook and perception to deal with things behaviourally, it is rule of thumb not hit and trial method. Taylor believed that there is only one best method to maximise efficiency. Taylor advised that every—organisation should compare the results of different methods, and make that method to be used repetitive so that when so ever the situation arrives that method could be used to solve the concerned problem, test them again and again and finally select one best method of getting the work done.

(ii) Harmony, Not Discord: Managers are an extension of the management and serve as a link between workers and the owners. Management should share the gains of the company with workers on part of workers, they should work hard with loyalty and discipline. Often times the relation between them is spoilt which is very harmful for everyone-workers, managers and owners as it will lead to conflicts and make the things worst on the part of management. This class conflict should be replaced by harmony between the two. Both should change their thinking towards each other. Both should realise and give importance to each other. This is known as mental revolution. This is the most important concept as it leads to less conflicts.

(iii) Co-operation, Not Individualism: There should be complete co-operation and coordination between the workers and the management instead of individualism as their exist the collective responsibility of worker as well as their management. This principle is an extension of the principle of ‘Harmony not discord.’ The management and the workers should not compete with each other rather they need to coordinate with each other. Management should consider all good suggestions and initiative made by the employees which effects efficiency. At the same time, workers should never think of going on in order to get their unreasonable demands fulfilled.

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?

Solution:

If an organisation does not provide the right place for physical and human resources in an organisation, the principle of order is violated. It refers to the orderly arrangement of men and material in a fixed place for everyone and everything.

The consequences of it are:

• It would lead to a delay in the decision-making process.
• It will be an obstacle for the activities.
• A lot of time will be wasted in finding the resources.
• Wastage of time.
• Delay in contacting the people.

4. Explain any four points regarding significance of principles of management.

Solution:

Four significance of principles of management are:

 a. Providing managers with useful insight into reality- Principles of management gives real world insights based on real situations to managers. It adds to their knowledge, ability and understanding of managerial situations and circumstances. It helps manager to save their time and solve upcoming problems fast and efficiently. So, it increases managerial efficiency.

b. Optimum utilization of resources and effective of administration- Any organization has limited resources, be it human or materials. Principles of management help managers analyze cause and effect relationships of their decisions which then helps managers to make maximum utilization of their resources in minimum cost. It also limits the boundaries of managerial discretion so that their decisions are free from personal biases.

c. Scientific decisions-Decisions should be made based on facts and truth. They must be thoughtful, realistic, practical and must be evaluated. Principles of management helps managers to take thoughtful and realistic decisions based on facts. Such decisions are formed  by keeping away all the biases and prejudices.

d. Meeting changing environment requirements- Management is dynamic in nature. Some laid guidelines can never be static in management. It is flexible and changes according to technology, resources, upgradation in the business and much more. Principles of management helps to adhere to such changing business environments . For example: Some companies are outsourcing their non-core activities like share-transfer management and advertising to outside agencies. So much so, that even core processes such as R&D, manufacturing and marketing are being outsourced today.

Answer 2

5. Explain the principle of ‘Scalar Chain’ and gang plank.

Solution:

Principle of Scalar Chain and Gang plank: The chain of authority from the highest to the lowest ranks which help in formal communication 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 given diagram, O is heading 2 teams, where A and X are at the same level, B and Y are 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 directly. This at 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 C or Z could contact each other and same way B and Y could contact each other.

6. A production manager at top level in a reputed corporate, Mr. Rathore holds the responsibility for ordering raw material for the firm. While deciding on the supplier for the financial year 2017-18, he gave the order to his cousin at a higher price per unit instead of the firm’s usual supplier who was willing to lower the rates for the order. Which principle of management was violated by Mr. Rathore? What are the positive impacts of following the above identified principle?

Solution:

The principle of management which was violated by Mr. Rathore is 'Subordination of individual interest over the general interest'.He pursued his own interest by providing the supply order to his cousin at a higher price but not to the supplier instead of general interest. And as a result, this led to achieving his personal goal but not the organisational goal.
The positive impacts of following the above principle are:

(i) Helps in increasing productivity,
(ii) Harmonious work culture, and
(iii) Sense of belongingness and coordination to the organisation among employees.
(iv) Helps in achieving organisational goals.

Long Answer Type/ Essay Type:

1. Explain the Principles of Scientific management given by Taylor.

Solution:

Principles of scientific management given by FW Taylor are as follows:

(i) Science, Not Rule of Thumb: When different managers use their own different methods according to the behaviours and the situations to get the work done, it is rule of thumb. Taylor emphasized that there was only one best method to maximise efficiency, he even focuses on avoiding hit and trial method. Taylor advised that every organisation should compare the results of different methods, test them again and again and finally select one best method of getting the work done.

(ii) Harmony, Not Discord: Managers are an extension of the management and serve as a link between workers and the owners. Workers have to take the instructions from the managers and managers have to get the work done through the workers. Sometime the relation between them is spoiled, 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. This is known as mental revolution.

(iii) Co-operation, Not Individualism: There should be complete co-operation between the labour and the management instead of individualism. This principle is an extension of 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.

(iv) 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.

2. Explain the following Principles of management given by Fayol with examples:

a. Unity of direction
b. Equity
c. Espirit de corps
d. Order
e. Centralisation and decentralisation
f. Initiative

Solution:

Fayol introduced general principles of management. Some of them have been explained below:

(a) Unity of Direction:“One organization one plan”, every unit focuses on same goal irrelevant to their own department objectives, every objective will focus on same goal of organization. Each group of activities having the same objective must have “One Head and One Plan”. Each group should have its own in charge, plans and resources and there must be no overlapping of its work.

(b) Equity: This principle emphasises on equal and fair justice in the behaviour of managers towards workers, these must be no favouritism. This will ensure loyalty and devotion. Lazy personnel should be dealt sternly and strictly and penalties must be provided. There should be no discrimination against anyone on account of gender, religion, caste, language or nationality etc. All decisions should be merit and factual based.

(c) Espirit de Corps:This principle emphasises on building harmony and team spirit among employees. In a large organisation due to a large work force teamwork is very important. Teamwork leads to better co-ordination while working. The head of each team should give credit of good result to the whole team rather than confining it to his ownself, i.e. “I” should be replaced with “WE”.

(d) Order: A place for everything and everyone
in his/her place. Basically it means orderliness. If there is a fixed place for different things in a factory and they remain in their places then no time is wasted in locating them. In the 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 and decision making 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. An organisation can never be completely centralised. A combination of both is important. Simple, easy and work of routine type should be decentralised and critically, 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 system should invite suggestions from employees which can result in substantial cost/time reduction. Rewards can be given to fruitful suggestions.

3. Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental Revolution’ as enunciated by Taylor.

Solution:

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.

Basis	Henry Fayol	FW Taylor
Perspective	Top level management	Lower level management
Unity of command	Followed	Not followed (functional foremanship)
Applicability	Universal applicable	Application as per the specialised situations
Basis of formation	Personal experience	Observation experimentation
Focus	To improve overall working	Increase productivity
Personality	Practitioner	Scientist
Expression	General theory of administration	Scientific management

Answer 3

Under the factory manager, there is a planning incharge and a production incharge.

Under the planning incharge, the work goes as follows:

(i) Instruction Card Clerk: Draft instructions for the workers.
(ii) Route Clerk: Specify the route of production.
(iii) Time and Cost Clerk: Prepare time and cost sheet.
(iv) Disciplinarian: Ensure discipline.

Under the production incharge, the work goes as follows:

(i) Speed Boss: Timely and accurate completion of work.
(ii) Gang Boss: Keeping tools and machines ready for operation by workers.
(iii) Repairs Boss: Ensure proper working conditions of machines.
(iv) Inspector: Check the quality of work, process.

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 sometimes create problems between the two. Taylor emphasized that there should be harmony between the management and workers. Both should realise that they need each other. 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.

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

Solution:

(a) Time Study: Time Study is the original technique of work measurement, simple in concept though it does require a high degree of concentration and expertise on the part of the observer. Direct time study is the technique principally used for the measurement of repetitive work, i.e., work which follows a defined pattern and

method. 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/observations. The method of time study will depend upon volume and frequency of the task, the cycle time of the operation and time measurement costs.

Three objectives that can be achieved through time study are:

(i) Number of workers to be determined,
(ii) Incentive schemes are being framed accordingly,
(iii) Labour cost is analysed.

e.g., If standard time taken to do a piece of work in 20 minutes then one work can be done 3 times in an hour and total 21 times (3 ×7 hours per day) the work can be done on a single day.

(b) Motion Study: Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions. On close examination of body motions, e.g., it is possible to find out three types of motions:
(i) Motions which are productive and non-productive in nature,
(ii) Some of them are incidental,
(iii) 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 helps 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 interval 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 for the students and teachers after 4 periods of continuous learning.

(d) Method Study: The objective of method study is to find out the 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 objectives of standardisation are:

(i) Excessiv e product line must be reduced and even the product whose size, features are not necessary can be considered.
(ii) To focus on interchangeability.
(iii) To establish standards of excellence and quality in raw materials.
(iv) To establish standards of performance of men and machines.

Simplification aims at eliminating unnecessary diversity of products. It results in saving cost of labour, machines and tools. It implies reduced inventories, fuller utilisation of equipment and increasing turnover.

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

Solution:

The differences between the contributions of Taylor and Fayol are:

Principle	Taylor	Fayol
Title	Father of Scientific Management	Father of General Management
Contribution	Scientific Management or Taylorism was given by him in 1911.	The General Theory of Fayolism was introduced by him in 1916.
Perspective	Focused on lower level management	Focused on top level management
Focus	Focused on improving the overall administration of the organization	Focused on improving the productivity and worker’s efficiency
Unity of command	Focused on functional foremanship and not on unity of command	Followed the concept of unit of command
Basis of Formation	Based on observation and experiments	Based on personal experiences.
Applicability	Applicable in specific situation as they are less flexible in nature	Applicable universally as they are flexible in nature.

Answer 4

6. Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment.

Solution:

Both Fayol and Taylor have given principles of management of improve efficiency of an organisation by providing guidelines to the managers in taking actions and decisions. As these principles are based on the human behaviour, so, they help in establishing a relationship between the human and behaviour, so, they help in establishing a relationship between the human and materialistic resources in an organisation. Both the principles suggested division of work and specialization which focused on maximising the efficiency.Taylor gave us scientific principles of management which are being adopted by all the organisations to improve their productivity at the shop floor level the principles help in giving effective results. In the same manner, Henry Fayol gave general principles of management which when implemented at any of the levels—top, middle or lower and help in achieving better co-ordination, remove ambiguity and encourage the employees to improve their work performance.

7. 'Bhasin’ 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 coming 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 indisciplined. The spirit of teamwork, which had characterized 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.

a. Identify the Principles of Management (out of 14 given by Henry Fayol) that were being violated by the company.

Solution:

The principles of management that are being violated in the given situation are as follows:

(i) Quote 1: Sometimes the subordinates had to work for more than one superior resulting in declining efficiency.
Principle: Unity of command— This is visible from the situation that the employees are made to work for more than one superior.

(ii) Quote 2: The divisions that were previously working on one product were also made to work on two or more products.
Principle: Division of work— In the situation given, One division is made to work on more than one product which gives rise to the wastages.

(iii) Quote 3: The workers were becoming indisciplined.
Principle: Discipline— ‘Principle of discipline’ is not being followed in the given situation, as workers were becoming indisciplined.

(iv) Quote 4: The spirit of teamwork, which had characterised the company, previously was beginning to wane.
Principle: Espirit de corps—As the workers lost the spirit of team work. It resulted to the violation of ‘E sprit de corps” principle.

(v) Quote 5: Workers were feeling cheated and initiative was declining.
Principle Initiative: It is given in the situation that initiative is declining and employees are discouraged.

b. Explain these principles in brief.

Solution:

(i) Unity of Command: According to this principle, subordinate should be answerable to and take orders from only one boss. If an employee gets orders from more than one superior, the employee will be confused about whose orders to follow, which will eventually affect the work. It might also cause a conflict of interests and egos among the superiors.

(ii) Division of work: Division of work means that the given task is divided into small groups or units so that the task would be completed in a competent manner. This principle results in specialisation in work.

(iii) Discipline: Discipline means that the organisation must follow the rules and regulations to ensure conformity to the set rules and policies. It is important for both the workers as well as the management to honour their commitments.

(iv) Espirit de corps: This principle states that employees should work in unity with each other. They should work like a team and team spirit should be promoted by the manager. Each employee should have a sense of belongingness. This proves functional especially in large organisations where without team work, achievement of objectives would become difficult. Team sprit helps in increasing coordination and mutual understanding among the employees and thereby improves efficiency.

(v) Initiative: According to this principle, workers should be given praiseworthy motivation and incentive to work. They should be welcomed to come up with the suggestions regarding the work. Although initiatives should be encouraged, but they should be in line with the practices and rules of the organisation. For example, the managers can ask the workers for their inputs over how to increase efficiency. Also, good suggestions can be rewarded.

c. What steps should the company management take in relation to the above principles to restore the company to its past glory?

Solution:

The steps that can be taken by the company to restore its past glory are as follows:

Scientific management must be followed.

The subordinates get instruction from only one superior at a time to avoid any confusion and chaos.

There must be specialisation in work in such a manner that each division specialises in single particular task. Hence it will help to avoid overlapping in work.

Workers must be given proper incentives and motivation to work through such measures as differential piece wage system so they can work with their full efficiency.

Preverence would be given to team work with proper coordination and understanding.

8. (Further information related to the above question 6) The management of company Bhasin Limited now realised its folly. In order to rectify the situation it appointed a management consultant -Mukti Consultants - to recommend a restructure plan to bring the company back on the rails. Mukti Consultants undertook a study of the production process at the plant of the company Bhasin Limited and recommended the following changes — 

• The company should introduce scientific management with regard to production.
• Production Planning including routing, scheduling, dispatching and feedback should be implemented.
• In order to separate planning from operational management ’Functional foremanship’ should be introduced.
• ‘Work study’ should be undertaken to optimise the use of resources.
• ‘Standardisation’ of all activities should be implemented to increase efficiency and accountability.

To motivate the workers ‘Differential Piece Rate System’ should be implemented. (The above changes should be introduced apart from the steps recommended as an answer to Part c - case problem 6 above.)

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.

a. Do you think that introduction of scientific management as recommended by M consultants will result in intended outcome?

b. What precautions should the company undertake to implement the changes?

c. Give your answer with regard to each technique separately as enunciated in points 1 through 6 in the case problem.

Solution:

Yes, the scientific management techniques as suggested by ‘Mukti Consultants’ would be helpful for the organisation. By implementing the scientific management techniques the company would be able to work efficiently according to the standardised techniques and tools which results to improve both the quantity as well as the quality of the product. Simultaneously, It would also help in reducing the costs. In this way, scientific management would help in improving the effectiveness as well as efficiency in the work.

The following precautions can be taken by the Bhasin Limited:

(i) New staff i.e., freshly trained and specialised can be recruited for certain specific areas and the existing staff can be given proper training.

(ii) There should be proper planning of production with utmost care.

(iii) In the functional foremanship, there must be enough incentive and motivation for the employees.

(iv) Other studies such as method study, motion study, time study and fatigue study should be undertaken besides work study.

(v) For different aspects of production technique of standardisation can be used.

(vi) Monetary incentives can be given to motivate the employees to work more and with better efficiency.