NCERT Solutions for Class 12 Business Studies Chapter 2: Principles of Management (NCERT 2026–27)
These Class 12 Business Studies Chapter 2 solutions cover Principles of Management, one of the most important and most frequently asked chapters of the Part A (Principles and Functions of Management) syllabus for the 2026–27 session. The chapter explains the meaning, nature and significance of the principles of management, then takes up F.W. Taylor’s principles and techniques of Scientific Management and Henri Fayol’s 14 principles of management. Below you will find step-by-step, exam-ready answers to all the NCERT exercise questions — Very Short, Short and Long/Essay/Case answer type — reproduced verbatim from the textbook, plus key terms, extra practice, MCQs, Assertion–Reason questions and FAQs.
Class: 12Subject: Business StudiesPart: A – Principles and Functions of ManagementChapter: 2Chapter Name: Principles of ManagementSession: 2026–27
A principle of management is a broad and general guideline for decision-making and behaviour. Such principles are universal in application, are general guidelines (not rigid, ready-made solutions), are formed by practice and experimentation, are flexible, are mainly behavioural, establish cause-and-effect relationships, and are contingent upon the situation. Their significance lies in providing managers with useful insights into reality, ensuring optimum utilisation of resources and effective administration, enabling scientific decisions, helping managers meet changing environmental requirements, fulfilling social responsibility, and serving as the basis for management training, education and research. The chapter then studies the two pillars of the classical school: F.W. Taylor’s Scientific Management (its five principles — Science not Rule of Thumb, Harmony not Discord, Cooperation not Individualism, Development of each person, and the spirit of Mental Revolution; and its techniques — Functional Foremanship, Standardisation and Simplification, Method Study, Motion Study, Time Study, Fatigue Study, and Differential Piece Wage System), and Henri Fayol’s 14 principles of management, ending with a comparison of the two thinkers.
Key Terms & Concepts
Principle of management: a broad and general guideline for managerial decision-making and behaviour, formed through observation and experimentation in real work situations.
Scientific Management (Taylor): conducting business activities according to standardised tools, methods and trained personnel in order to increase output, improve quality and reduce costs and wastes — finding the ‘one best way’ to do a job.
Mental Revolution: a complete change in the attitude of workers and management towards each other — from competition and conflict to cooperation — so that both work together to increase the size of the surplus instead of fighting over its share.
Functional Foremanship: Taylor’s technique of separating planning from execution and placing each worker under eight specialised foremen — four under the planning incharge (instruction card clerk, route clerk, time-and-cost clerk, disciplinarian) and four under the production incharge (speed boss, gang boss, repair boss, inspector).
Standardisation & Simplification: standardisation sets benchmarks for every business activity (process, raw material, time, product, machinery); simplification eliminates unnecessary varieties, sizes and dimensions, reducing inventories and costs.
Work-study techniques:Method Study (one best way of doing the job), Motion Study (eliminating unnecessary movements), Time Study (standard time to perform a task), and Fatigue Study (amount and frequency of rest intervals).
Differential Piece Wage System: paying a higher rate to workers who produce at or above the standard and a lower rate to those below it, to reward and motivate efficient workers.
Fayol’s 14 Principles: Division of Work, Authority and Responsibility, Discipline, Unity of Command, Unity of Direction, Subordination of Individual Interest to General Interest, Remuneration of Employees, Centralisation and Decentralisation, Scalar Chain, Order, Equity, Stability of Personnel, Initiative, and Esprit de Corps.
Scalar Chain & Gang Plank: the scalar chain is the formal line of authority from the highest to the lowest rank; the gang plank is a shortcut allowing two employees at the same level to communicate directly in an emergency without going up and down the whole chain.
NCERT Exercises — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises. Answers are original, written in CBSE exam-ready style.
Very Short Answer Type
1. What makes principles of management flexible?
ANSWERPrinciples of management are not rigid prescriptions that must be followed absolutely. They are flexible and can be modified by the manager to suit the demands of a particular situation. This flexibility exists because the principles mainly deal with human behaviour, which is dynamic, and because every business situation is different. The manager is given enough discretion to decide which principle to apply, and to what degree (for example, how much authority to centralise or decentralise), making the principles adaptable to changing circumstances.
2. State the main objective of time study.
ANSWERThe main objective of time study is to determine the standard time required to complete a well-defined job. By fixing this standard time it becomes possible to decide the number of workers to be employed, to frame suitable incentive schemes and to determine fair labour costs.
3. Name the principle that is an extension of the ‘harmony, not discord’.
ANSWERThe principle of ‘Cooperation, Not Individualism’ is an extension of the principle of ‘Harmony, Not Discord’. It stresses that competition should be replaced by complete cooperation between labour and management, as both need each other.
4. State any two causes of fatigue that may create hindrance in the employee’s performance.
ANSWERTwo causes of fatigue are: (i) long working hours without adequate rest intervals, and (ii) doing unsuitable work or working under bad working conditions / uncordial relations with the boss. Such causes reduce a worker’s efficiency and should be removed.
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.
ANSWERThe principle followed by Wales Limited is ‘Stability of Personnel’ (Stability of tenure of personnel). By giving the newly recruited employees a fixed period of one year to settle down and prove themselves, the firm ensures stability of tenure and gives them reasonable time to show results instead of removing them hastily.
6. Which technique is used by Taylor for distinguishing efficient and inefficient workers?
ANSWERTaylor used the ‘Differential Piece Wage System’ to distinguish between efficient and inefficient workers. Under it, workers who produce at or above the standard output are paid a higher rate per unit, while those who produce below the standard are paid a lower rate, thereby separating and motivating efficient workers.
Short Answer Type
1. How is the Principle of ‘Unity of Command’ useful to management? Explain briefly.
ANSWERThe principle of Unity of Command states that each employee should receive orders from, and be responsible to, only one superior. It is useful to management because:(i) It prevents dual subordination, so an employee is never confused by conflicting orders from two bosses about the same task.(ii) It clearly fixes responsibility and accountability, since the worker reports to a single superior.(iii) It maintains discipline, order and stability; as Fayol warned, if the principle is violated “authority is undermined, discipline is in jeopardy, order disturbed and stability threatened.”For example, if a salesperson is told by the marketing manager to give a 10% discount but by the finance manager not to exceed 5%, unity of command is violated; following one superior removes this conflict and ensures smooth working.
2. Define scientific management. State any three of its principles.
ANSWERScientific Management means conducting business activities according to standardised tools, methods and trained personnel in order to increase output, improve quality and reduce costs and wastes. In Taylor’s words, “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.” It replaces ‘rule of thumb’ with the ‘one best way’ based on study and analysis.Three principles of scientific management:(i) Science, Not Rule of Thumb – develop a true science of work through investigation and standardisation instead of relying on traditional rule-of-thumb methods.(ii) Harmony, Not Discord – there should be complete harmony between management and workers; both must realise they need each other, calling for a mental revolution.(iii) Cooperation, Not Individualism – competition should be replaced by mutual cooperation; management should value workers’ suggestions and workers should avoid unreasonable demands.
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?
ANSWERIf the organisation fails to provide the right place for its physical and human resources, the principle of ‘Order’ is violated. According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency” — ‘a place for everything (everyone) and everything (everyone) in its place’.Consequences: the absence of order causes hindrances in the activities of the business or factory; there is wastage of time and effort in searching for men and materials, increased confusion and chaos, lower productivity and efficiency, and overlapping or idle resources. Following the principle of order, on the other hand, brings smooth workflow and increased productivity.
4. Explain any four points regarding significance of principles of management.
ANSWER(i) Providing managers with useful insights into reality: the principles give managers useful insights into real-world situations, add to their knowledge and ability, and let them learn from past mistakes and solve recurring problems quickly, thereby increasing managerial efficiency.(ii) Optimum utilisation of resources and effective administration: by helping managers foresee the cause-and-effect relationships of their decisions, the principles ensure that scarce human and material resources are put to optimum use and that managerial discretion is exercised free from personal bias.(iii) Scientific decisions: decisions based on principles are thoughtful, justifiable, timely, realistic and measurable; they emphasise logic rather than blind faith and are free from personal prejudice.(iv) Meeting changing environment requirements: though general in nature, the principles are flexible and can be modified to help managers meet the changing requirements of a dynamic business environment.
5. Explain the principle of ‘Scalar Chain’ and gang plank.
ANSWERScalar Chain: the formal lines of authority and communication that run from the highest rank to the lowest in an organisation are called the scalar chain. According to Fayol, organisations should have a chain of authority and communication that runs from top to bottom, and it should normally be followed by managers and subordinates in the course of formal communication.Gang Plank: if employees at the same level — say ‘E’ on one line of authority and ‘O’ on another, both under head ‘A’ — need to communicate, strictly following the scalar chain would force them along the long route E–D–C–B–A–L–M–N–O. To avoid such delay, Fayol provided a shortcut called the gang plank, by which ‘E’ can contact ‘O’ directly in an emergency. It saves time and speeds up communication without permanently breaking the chain.
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?
ANSWERPrinciple violated: Mr. Rathore violated the principle of ‘Subordination of Individual Interest to General Interest’. By placing his personal/family interest (favouring his cousin at a higher price) above the interest of the firm, he sacrificed the organisation’s benefit for individual gain.Positive impacts of following this principle:(i) The interest of the organisation is given priority over personal interest, so resources are purchased at the most economical rates and costs are kept low.(ii) It promotes fairness and reduces the misuse of managerial power for personal or family benefit, raising the manager’s stature in the eyes of the workers.(iii) It builds mutual trust and a healthy work atmosphere, as employees follow the manager’s exemplary behaviour and also put the company’s larger interest first, improving overall efficiency and profitability.
Long Answer Type / Essay Type
1. Explain the Principles of Scientific management given by Taylor.
ANSWERTaylor gave the following principles of scientific management:(i) Science, Not Rule of Thumb: Taylor advocated the use of scientific inquiry in place of the rule-of-thumb approach. There should be only one best method to maximise efficiency, developed through study and analysis (work-study), and this standard method should replace rule of thumb throughout the organisation.(ii) Harmony, Not Discord: there should be complete harmony between management and workers instead of class conflict. Both must realise that each is important. Taylor called for a mental revolution — a complete change in attitude — whereby management shares the gains of the company with workers, and workers in return work hard and accept change.(iii) Cooperation, Not Individualism: competition should be replaced by cooperation. Management should welcome and reward constructive suggestions from employees and take them into confidence in important decisions, while workers should desist from strikes and unreasonable demands. There should be almost equal division of work and responsibility between workers and management.(iv) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: each worker should be scientifically selected and the work assigned should suit his/her physical, mental and intellectual capabilities. Workers should be given the required training so that efficient employees produce more and earn more, ensuring the greatest efficiency and prosperity for both the company and the workers.
2. Explain the following Principles of management given by Fayol with examples:
a. Unity of directionb. Equityc. Espirit de corpsd. Ordere. Centralisation and decentralisationf. Initiative
ANSWERa. Unity of Direction: each group of activities having the same objective must have one head and one plan, so that all units move towards the same objective through coordinated, focussed efforts. Example: a company making both motorcycles and cars should have two separate divisions, each with its own incharge, plans and resources, with no overlap.b. Equity: managers should be fair, kind and just to all employees, treating them as equally as possible to win their loyalty and devotion. There should be no discrimination on grounds of gender, religion, language, caste, belief or nationality. Example: in multinational companies, people of various nationalities work together in a discrimination-free environment with equal opportunities to rise.c. Esprit de Corps: management should promote a team spirit of unity and harmony among employees. A manager should use the word ‘We’ instead of ‘I’ in conversations to build a sense of belonging. Example: encouraging teamwork in large organisations fosters mutual trust and reduces the need for penalties.d. Order: “a place for everything (everyone) and everything (everyone) in its place” — people and materials must be in suitable places at appropriate times for maximum efficiency. Example: in a factory, a fixed place for tools and materials ensures no hindrance and increases productivity.e. Centralisation and Decentralisation: concentration of decision-making authority is centralisation; its dispersal among more than one person is decentralisation. Fayol said there must be a balance between the two depending on circumstances. Example: panchayats in India have been given more powers to decide and spend government funds — decentralisation at the national level.f. Initiative: workers should be encouraged to develop and carry out their own plans for improvement; initiative means taking the first step with self-motivation. Example: a good company has an employee suggestion system that rewards suggestions resulting in substantial cost or time reduction.
2. Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental Revolution’ as enunciated by Taylor.
ANSWERFunctional Foremanship: this is a technique based on separation of planning and execution functions, extending division of work and specialisation to the shop floor. Taylor found that no single foreman could possess all the required qualities, so he proposed eight specialists under whom each worker would work.Under the Planning incharge there are four personnel: (1) Instruction Card Clerk – drafts instructions for workers; (2) Route Clerk – specifies the route of production; (3) Time and Cost Clerk – prepares the time and cost sheet; (4) Disciplinarian – ensures discipline.Under the Production incharge there are four personnel: (1) Speed Boss – ensures timely and accurate completion of the job; (2) Gang Boss – keeps machines and tools ready for operation; (3) Repair Boss – ensures proper working condition of machines and tools; (4) Inspector – checks the quality of work.Mental Revolution: this is the spirit underlying all of Taylor’s ideas. It calls for a complete change in the attitude of workers and management towards each other — from competition and conflict to cooperation. Both should realise that they need one another and should aim to increase the size of the surplus rather than quarrel over its share. Management should share part of the surplus with workers, and workers should contribute their best so the company prospers. When this change of mindset takes place, there is no need for agitation, strikes or even trade unions.
3. Discuss the following techniques of Scientific Work Study:
a. Time Studyb. Motion Studyc. Fatigue Studyd. Method Studye. Simplification and standardisation of work
ANSWERa. Time Study: it determines the standard time taken to perform a well-defined job, using time-measuring devices for each element of the task and taking several readings. Its objectives are to decide the number of workers to be employed, frame incentive schemes and determine labour costs. Example: if a worker takes 20 minutes to make one box, she makes 3 boxes an hour and 21 in a 7-hour effective shift — that becomes the standard task.b. Motion Study: it is the study of the movements (lifting, putting, sitting, changing positions) undertaken while doing a job, so that unnecessary movements can be eliminated and the job completed in less time. Example: Taylor and his associate Frank Gilbreth reduced motions in brick layering from 18 to 5, raising productivity about four times.c. Fatigue Study: it determines the amount and frequency of rest intervals needed to complete a task, since a person tires physically and mentally without rest. Proper rest helps a worker regain stamina and maintain productivity. Causes of fatigue such as long hours, unsuitable work and bad conditions should be removed.d. Method Study: its objective is to find the one best way of doing a job — from procurement of raw material till final delivery to the customer. Taylor devised the concept of the assembly line through method study (successfully used by Ford Motor Company) to minimise cost and maximise customer satisfaction.e. Standardisation and Simplification of Work:standardisation is the process of setting standards (benchmarks) for every business activity — process, raw material, time, product, machinery, methods or working conditions — to establish interchangeability and standards of quality and performance. Simplification aims at eliminating superfluous varieties, sizes and dimensions, reducing inventories, fuller utilisation of equipment and lower costs. Companies like Nokia, Toyota and Microsoft have applied both successfully.
4. Discuss the differences between the contributions of Taylor and Fayol.
ANSWERAlthough the contributions of Taylor and Fayol are complementary, they differ on the following bases:
Basis of difference
Henri Fayol
F.W. Taylor
Perspective
Top level of management
Shop-floor level of a factory
Unity of Command
Staunch proponent
Did not feel it important — under functional foremanship a worker received orders from eight specialists
Applicability
Applicable universally
Applicable to specialised situations
Basis of formation
Personal experience
Observations and experimentation
Focus
Improving overall administration
Increasing productivity
Personality
Practitioner
Scientist
Expression
General Theory of Administration
Scientific Management
In essence, Fayol concentrated on the work of managers and general administration, while Taylor concentrated on improving the productivity of workers at the shop-floor level. Both contributions were complementary to each other.
5. Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment.
ANSWERBoth Taylor and Fayol made foundational contributions that remain highly relevant, although their interpretation has changed with the business environment.Relevance of Taylor: his ideas continue to drive the search for efficiency. Work-study techniques (time, motion, method, fatigue study) and standardisation underlie modern techniques such as operations research, cost accounting, assembly-line production, Just-in-Time (JIT), Kanban, Kaizen, Six Sigma and lean manufacturing. The use of the Internet, robotics and computers in production is an extension of his scientific management. His stress on selecting and training the right person and on harmony/cooperation (mental revolution) is reflected in today’s HRM and participative management.Relevance of Fayol: his 14 principles still guide managers, though their meaning has evolved with flatter, high-tech and service economies. For instance, ‘Authority and Responsibility’ once meant empowering managers but now means empowerment of employees; division of work has shifted from specialisation to generalisation; centralisation has given way to task-relevant, ad hoc decision-making; scalar chains have become flatter and less formalised; and equity is now obtained through a sense of ownership rather than mere kindness (as shown in Carl A. Rodrigues’s ‘Then and Now’ framework).Thus both thinkers laid the groundwork for management as a discipline, and their principles — suitably reinterpreted — continue to influence management thinking and practice today.
6. ‘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.b. Explain these principles in brief.c. What steps should the company management take in relation to the above principles to restore the company to its past glory?
ANSWERa. Principles being violated (each clue in the case points to a Fayol principle):(i) “Subordinates had to work for more than one superior” → Unity of Command.(ii) Divisions earlier on one product made to work on two or more products, causing overlapping and wastage → Unity of Direction.(iii) “Workers were becoming indisciplined” → Discipline.(iv) “The spirit of teamwork… was beginning to wane” → Esprit de Corps.(v) “Workers were feeling cheated” → Equity (and fair Remuneration, as they worked overtime without due reward).(vi) “Initiative was declining” → Initiative.b. Brief explanation:Unity of Command – each employee should receive orders from only one superior. Unity of Direction – each group of activities with the same objective should have one head and one plan. Discipline – obedience to organisational rules and agreements through good superiors, fair agreements and judicious penalties. Esprit de Corps – management should promote team spirit, unity and harmony. Equity – fair, kind and just treatment of all employees. Initiative – employees should be encouraged to develop and execute their own plans for improvement.c. Steps to restore the company: ensure every worker reports to only one superior (unity of command); give each product division its own head and plan to stop overlapping (unity of direction); enforce fair rules and agreements to restore discipline; rebuild team spirit by encouraging cooperation and using ‘We’ instead of ‘I’ (esprit de corps); treat workers fairly and reward their overtime so they no longer feel cheated (equity and remuneration); and revive an employee suggestion system that rewards good ideas to encourage initiative. Above all, create the required infrastructure before implementing changes.
7. (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.
ANSWERa. Will it result in the intended outcome? Yes. The introduction of scientific management — standardised methods, separation of planning from execution, scientific work-study and incentive-based wages — is likely to bring the intended transformation, because it removes inefficiency, overlapping and wastage and replaces rule-of-thumb working with the ‘one best way’, raising productivity, quality and accountability. The outcome, however, depends on careful implementation and on bringing about the underlying mental revolution (cooperation between management and workers).b. Precautions: the changes should be implemented gradually and only after creating the required infrastructure; workers should be taken into confidence and informed about the benefits to prevent resistance; proper training should be provided; there should be harmony and cooperation (mental revolution) so that workers do not feel threatened; and standards and wage rates should be fixed fairly and scientifically.c. Technique-wise:1. Scientific management in production – replaces rule-of-thumb with the one-best-way; will improve productivity and quality if workers cooperate.2. Production Planning (routing, scheduling, dispatching, feedback) – ensures the right sequence, timing and dispatch of work and continuous feedback, reducing delays and wastage.3. Functional Foremanship – separates planning from execution and provides eight specialists; brings expert supervision but requires enough skilled foremen, so it should be applied where the scale justifies it.4. Work Study – time, motion, method and fatigue study will optimise the use of resources and fix fair standards; care must be taken not to overburden workers.5. Standardisation – setting benchmarks for all activities increases efficiency and accountability; standards must be realistic and periodically reviewed.6. Differential Piece Rate System – rewards efficient workers with a higher rate and motivates the inefficient to improve; the standard output and rates must be fair so that no worker feels cheated.
Extra Practice Questions
Short Answer Type Questions
Q1. What is meant by ‘Science, Not Rule of Thumb’?
ANSWERIt is Taylor’s principle that there should be only one best, scientifically developed method of doing work, derived through study, analysis and work-study, which should replace the traditional rule-of-thumb (trial-and-error) approach throughout the organisation. This standardised method increases efficiency and reduces wastage.
Q2. State any two features (nature) of principles of management.
ANSWER(i) Universal applicability — they apply to all kinds of organisations (business and non-business, large and small, public and private), though the extent of application varies. (ii) Contingent — their application depends on the prevailing situation at a particular point of time and must be changed as per requirements.
Q3. Differentiate between Unity of Command and Unity of Direction on the basis of aim.
ANSWERUnity of Command aims at preventing dual subordination (it affects an individual employee), whereas Unity of Direction aims at preventing the overlapping of activities (it affects the entire organisation). One ensures a single boss for each worker; the other ensures one head and one plan for each set of activities with a common objective.
Q4. What is the purpose of the Differential Piece Wage System?
ANSWERIts purpose is to distinguish between efficient and inefficient workers and to motivate higher output. Workers producing at or above the standard receive a higher rate per unit, while those below the standard receive a lower rate, so the wide difference in earnings motivates inefficient workers to improve and rewards efficient ones.
Q5. Why are principles of management said to be ‘mainly behavioural’?
ANSWERBecause the principles aim primarily at influencing the behaviour of human beings. Although they also relate to things and phenomena, the emphasis is on managing people and on understanding the relationship between human and material resources in achieving organisational goals.
Long Answer Type Questions
Q1. Explain any six principles of management given by Henri Fayol.
ANSWER(i) Division of Work: work should be divided into small specialised tasks performed by trained specialists, leading to specialisation and more and better output for the same effort. (ii) Authority and Responsibility: authority (the right to give orders) should be balanced with responsibility; managers need authority commensurate with their responsibility, with safeguards against abuse of power. (iii) Discipline: obedience to organisational rules and agreements, requiring good superiors, clear and fair agreements and judicious penalties. (iv) Remuneration of Employees: pay should be fair and equitable to both employees and the organisation, giving workers a reasonable standard of living within the firm’s capacity. (v) Scalar Chain: a formal chain of authority and communication from top to bottom should be followed, with a gang plank for emergencies. (vi) Stability of Personnel: employee turnover should be minimised; once selected, personnel should be given stability of tenure and reasonable time to show results.
Q2. Explain the nature of principles of management.
ANSWERThe nature of principles of management can be summarised under seven heads. They are: (i) Universal applicability — applicable to all types of organisations, though the extent varies; (ii) General guidelines — they guide action but do not give ready-made, straitjacket solutions to complex, dynamic situations; (iii) Formed by practice and experimentation — derived from managers’ experience, collective wisdom and experiments; (iv) Flexible — not rigid; they can be modified to suit the situation; (v) Mainly behavioural — they aim at influencing human behaviour; (vi) Cause-and-effect relationships — they establish the likely effect of applying a principle in similar situations; and (vii) Contingent — their application depends on the prevailing situation. Together these features make the principles useful yet adaptable guidelines for managers.
Q3. ‘Principles of management and techniques of management are different from each other.’ Explain.
ANSWERPrinciples of management are broad and general guidelines for taking decisions and behaving, formed through research in work situations; for example ‘Unity of Command’ guides how authority should flow. Techniques of management, on the other hand, are procedures or methods involving a series of steps to accomplish desired goals; for example Functional Foremanship, Method Study and Time Study are techniques. In short, techniques are the methods used to get work done, while principles are the guidelines followed while practising those techniques. Principles should also be distinguished from values, which are general rules of behaviour with moral connotations formed through common practice, whereas principles are technical guidelines formed after research. Thus principles, techniques and values are related but distinct concepts.
MCQs & Assertion–Reason
1. A principle of management is best described as:
(a) a rigid law of pure science (b) a broad and general guideline for decision-making and behaviour (c) a step-by-step procedure (d) a moral value
2. F.W. Taylor is known as the ‘Father of’:
(a) General Management (b) Modern Management (c) Scientific Management (d) Administrative Management
3. Which of the following is NOT a principle of scientific management?
(a) Science, not Rule of Thumb (b) Harmony, not Discord (c) Cooperation, not Individualism (d) Unity of Direction
4. Under Functional Foremanship, the foreman who ensures the quality of work is the:
(a) Speed Boss (b) Gang Boss (c) Inspector (d) Repair Boss
5. The technique that finds the ‘one best way’ of doing a job is:
(a) Time Study (b) Method Study (c) Fatigue Study (d) Motion Study
6. ‘A complete change in the attitude of workers and management towards each other’ is called:
(a) Standardisation (b) Mental Revolution (c) Simplification (d) Esprit de Corps
7. The total number of principles of management given by Henri Fayol is:
(a) 12 (b) 13 (c) 14 (d) 15
8. The shortcut provided in the scalar chain for direct communication in an emergency is called:
(a) Span of control (b) Gang Plank (c) Chain of command (d) Order
9. The principle ‘a place for everything and everything in its place’ refers to:
(a) Equity (b) Discipline (c) Order (d) Initiative
10. According to Fayol’s comparison, Taylor’s focus was on:
(a) improving overall administration (b) increasing productivity at shop-floor level (c) unity of command (d) general theory of administration
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: Principles of management are flexible.
Reason: They mainly deal with human behaviour and can be modified by the manager to suit the situation.
A-R 2. Assertion: Functional foremanship violates the principle of unity of command.
Reason: Under functional foremanship a worker receives orders from eight specialists instead of one boss.
A-R 3. Assertion: Taylor’s and Fayol’s contributions are contradictory to each other.
Reason: Taylor worked at the shop-floor level while Fayol worked at the top level of management.
A-R 4. Assertion: The principle of order increases efficiency in an organisation.
Reason: When people and materials are in suitable places at appropriate times, there is no hindrance in business activities.
A-R 5. Assertion: The differential piece wage system motivates inefficient workers to improve.
Reason: It pays the same rate to all workers regardless of their output.
Answer key: 1-(A), 2-(A), 3-(D), 4-(A), 5-(C).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Memorise the seven points of nature and six points of significance of principles of management with one keyword each. Learn Taylor’s 5 principles and 7 techniques and Fayol’s 14 principles as named lists, and be ready to identify them from case studies (the most common question type). Always quote the exact wording in important definitions (e.g. unity of command “authority is undermined, discipline is in jeopardy…”) and give a short example for each Fayol principle. For comparison questions, present Taylor vs Fayol in a clear table. In case problems, first identify the principle from the keyword in the case, then explain it, then suggest the corrective step.
Common mistakes to avoid
Confusing Unity of Command (one boss per employee) with Unity of Direction (one head and one plan per set of activities).
Mixing up Taylor’s principles (Science not Rule of Thumb, Harmony, Cooperation, Development of each person) with his techniques (Functional Foremanship, Standardisation, Method/Motion/Time/Fatigue Study, Differential Piece Wage).
Forgetting that under functional foremanship there are eight (not four) foremen — four under planning and four under production.
Writing ‘Order’ when the answer is ‘Equity’ (fair treatment) or vice versa.
Saying principles give ‘ready-made solutions’ — they are only general guidelines.
Leaving case-study questions without naming the exact principle — always link the keyword in the case to a principle.
Frequently Asked Questions
What is Chapter 2 of Class 12 Business Studies about?
Chapter 2, Principles of Management, explains the meaning, nature and significance of the principles of management, and then studies F.W. Taylor’s principles and techniques of Scientific Management and Henri Fayol’s 14 principles of management, ending with a comparison of the two thinkers.
What is the difference between Taylor and Fayol’s contributions?
Taylor worked at the shop-floor level and focused on increasing the productivity of workers through scientific management, while Fayol worked at the top level and focused on improving overall administration through 14 general principles. Taylor relied on observation and experimentation; Fayol on personal experience. Their contributions are complementary, not contradictory.
How many principles and techniques of management are covered in this chapter?
The chapter covers Taylor’s 5 principles of scientific management and his techniques (Functional Foremanship, Standardisation and Simplification, and the work-study techniques of Method, Motion, Time and Fatigue study, plus the Differential Piece Wage System), and Henri Fayol’s 14 principles of management.
