NCERT Solutions for Class 12 Business Studies Chapter 7: Directing

These Class 12 Business Studies Chapter 7 solutions cover Directing — the managerial function that initiates action by instructing, guiding, motivating and leading people in an organisation. This page gives you complete, step-by-step answers to every NCERT exercise question (Very Short, Short and Long Answer Type), updated for the 2026–27 session. You will master the meaning, characteristics, importance and principles of directing, its four elements — supervision, motivation, leadership and communication — along with Maslow’s Need Hierarchy Theory, financial and non-financial incentives, leadership styles, and the barriers to effective communication and how to overcome them. Extra questions, MCQs, Assertion–Reason and FAQs are included for thorough exam preparation.

Class: 12 Subject: Business Studies Chapter: 7 – Directing Part: Principles and Functions of Management Type: Theory (no numericals) Session: 2026–27
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Class 12 Business Studies Chapter 7 – Overview

Chapter 7, Directing, deals with the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives. Directing initiates action, takes place at every level of management, is a continuous process and flows from top to bottom through the organisational hierarchy. Effective directing is guided by principles such as maximum individual contribution, harmony of objectives, unity of command, appropriateness of direction technique, managerial communication, use of informal organisation, leadership and follow through. The function is carried out through four interrelated elements — supervision (overseeing subordinates’ work), motivation (stimulating people to act), leadership (influencing behaviour towards goals) and communication (exchange of information to create understanding). The chapter explains Maslow’s need hierarchy, financial and non-financial incentives, autocratic/democratic/laissez-faire leadership styles, the communication process, formal and informal (grapevine) communication, and the barriers to communication along with measures to overcome them.

Key Concepts & Terms

Directing: the process of instructing, guiding, counselling, motivating and leading people in an organisation to achieve its objectives. It initiates action and is performed by every manager throughout the life of the organisation.

Supervision: the process of overseeing the work of subordinates and giving instructions to ensure optimum use of resources and achievement of targets. A supervisor occupies a position at the operative level, immediately above the worker, and acts as a link between management and workers.

Motivation: the process of stimulating people to action to accomplish desired goals. It is an internal feeling that arises from unsatisfied needs and produces goal-directed behaviour. Related terms are motive (an inner state that energises behaviour), motivation (the process), and motivators (techniques like pay, bonus, promotion used to motivate).

Maslow’s Need Hierarchy: five needs in order — Basic Physiological, Safety/Security, Affiliation/Belonging, Esteem and Self-actualisation. A satisfied need no longer motivates; only the next higher need does.

Incentives: all measures used to motivate people to improve performance. Financial incentives are monetary or measurable in money (pay and allowances, productivity-linked wages, bonus, profit sharing, co-partnership/stock options, retirement benefits, perquisites). Non-financial incentives give psychological/social satisfaction (status, organisational climate, career advancement, job enrichment, employee recognition, job security, employee participation, employee empowerment).

Leadership: the process of influencing the behaviour of people so that they strive willingly towards organisational goals. The three main styles based on use of authority are autocratic, democratic (participative) and laissez-faire (free-rein).

Communication: the process of exchange of ideas, views, facts and feelings between or among people to create common understanding. Its elements are sender, message, encoding, media, decoding, receiver, feedback and noise.

Formal & informal communication: formal communication flows through official channels (vertical — upward/downward; and horizontal); informal communication or the grapevine flows outside formal lines and spreads rapidly. Networks include single chain, wheel, circular, free flow and inverted V (formal) and single strand, gossip, probability and cluster (grapevine).

Barriers to communication: semantic, psychological, organisational and personal barriers that prevent or distort communication; overcome by clarifying ideas, communicating to the receiver’s need, ensuring feedback, good listening, and follow-up.

NCERT Exercises — Full Solutions

All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises section. Answers are original, written in CBSE exam-ready style.

Very Short Answer Type

1. What is informal communication?

ANSWER Informal communication is communication that takes place without following the formal lines of communication laid down in the organisation chart. It is generally referred to as the ‘grapevine’ because it spreads throughout the organisation in all directions, in utter disregard of the levels of authority. It arises out of the social needs of employees to exchange their views, spreads rapidly, and sometimes gets distorted, giving rise to rumours. Examples: workers chatting in the canteen about a superior’s behaviour, or discussing a rumour about likely transfers.

2. Which style of leadership does not believe in use of power unless it is absolutely essential?

ANSWER The Laissez-faire or Free-rein leadership style does not believe in the use of power unless it is absolutely essential. Under it, followers are given a high degree of independence to set their own objectives and ways to achieve them, while the manager only supports them and supplies needed information.

3. Which element in the communication process involves converting the message into words, symbols, gestures etc.?

ANSWER Encoding is the element of the communication process that involves converting the message into communication symbols such as words, pictures, gestures, etc., which can be transmitted to the receiver.

4. The workers always try to show their inability when any new work is given to them. They are always unwilling to take up any kind of work. Due to sudden rise in demand a firm wants to meet excess orders. The supervisor is finding it difficult to cope up with the situation. State the element of directing that can help the supervisor in handling the problem.

ANSWER The element of directing that can help the supervisor is Motivation. Motivation is the process of stimulating people to act in a desired manner to achieve organisational goals. Since the workers are unwilling and reluctant to take up new work, the supervisor should use suitable financial and non-financial incentives (such as bonus, recognition or praise) to arouse their willingness, change their negative attitude into a positive one, and induce them to put in extra effort to meet the excess orders.

Short Answer Type

1. What are semantic barriers of communication?

ANSWER Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding a message into words or impressions. (Semantics is the branch of linguistics dealing with the meaning of words and sentences.) They usually arise from the use of wrong words, faulty translations or different interpretations. The main semantic barriers are: (i) Badly expressed message – intended meaning is not conveyed due to inadequate vocabulary, wrong words or omission of words; (ii) Symbols with different meanings – a word may have several meanings, and the receiver may perceive a wrong one; (iii) Faulty translations – mistakes creep in when a message is translated from one language to another by an unskilled translator; (iv) Unclarified assumptions – assumptions in a message are interpreted differently by sender and receiver; (v) Technical jargon – specialists use technical terms that non-specialists do not understand; and (vi) Body language and gesture decoding – a mismatch between what is said and the body movements may convey a wrong message.

2. Explain the process of motivation with the help of a diagram.

ANSWER The motivation process is based on human needs. An unsatisfied need creates tension within an individual, which stimulates his or her drives. These drives generate search behaviour to satisfy the need. Once the need is satisfied, the individual is relieved of tension — there is a reduction of tension. Example: Ramu becomes very hungry (unsatisfied need), which makes him restless (tension and drive); so he searches for a hotel (search behaviour), eats a meal (need satisfied) and regains energy (reduction of tension). The process can be shown as a chain:
StageMeaning
Unsatisfied NeedA need that has not yet been fulfilled.
↓ TensionThe unfulfilled need creates restlessness/tension.
↓ DrivesTension activates inner drives to act.
↓ Search BehaviourThe person searches for ways to satisfy the need.
↓ Satisfied NeedThe need is fulfilled through action.
↓ Reduction of TensionThe individual is relieved of tension.

3. State the different networks of grapevine communications.

ANSWER Grapevine (informal) communication may follow four types of networks: (i) Single strand network: each person communicates with the next person in a sequence. (ii) Gossip network: each person communicates with all others on a non-selective basis. (iii) Probability network: the individual communicates randomly with other individuals. (iv) Cluster network: the individual communicates with only those people whom he trusts. Of these four, the cluster network is the most popular in organisations.

4. Explain any three principles of Directing.

ANSWER (i) Maximum individual contribution: Directing techniques must help every individual in the organisation to contribute to his or her maximum potential for the achievement of organisational objectives. A good motivation plan with suitable monetary and non-monetary rewards can draw out an employee’s untapped energies. (ii) Unity of command: A person in the organisation should receive instructions from one superior only. If instructions come from more than one superior, it creates confusion, conflict and disorder; following this principle ensures effective direction. (iii) Appropriateness of direction technique: Appropriate motivational and leadership techniques should be used while directing people, based on subordinates’ needs, capabilities, attitudes and other situational variables. For some people money is a powerful motivator, while for others promotion may be more effective. (Other valid principles are: harmony of objectives, managerial communication, use of informal organisation, leadership, and follow through — any three may be explained.)

5. In an organisation, one of the departmental manager is inflexible and once he takes a decision, he does not like to be contradicted. As a result, employees always feel they are under stress and they take least initiative and fear to express their opinions and problems before the manager. What is the problem in the way authority is being used by the manager?

ANSWER The problem is that the departmental manager is following an Autocratic (Authoritarian) leadership style. An autocratic leader gives orders and expects subordinates to obey them; he is dogmatic (does not change or wish to be contradicted) and uses one-way communication, with the subordinate only acting on commands. Because authority is centralised and opinions are not invited, the employees feel stressed, take little initiative and fear to express their views and problems. The manager should instead adopt a more democratic (participative) style, consulting subordinates and encouraging them to participate in decision-making.

6. A reputed hostel, GyanPradan provides medical aid and free education to children of its employees. Which incentive is being highlighted here? State its category and name any two more incentives of the same category.

ANSWER The incentive highlighted here is Perquisites (fringe benefits such as medical aid and education to children of employees, given over and above salary). Category: It is a financial incentive, as it is measurable in monetary terms. Two more incentives of the same (financial) category: (i) Pay and allowances (basic pay, dearness allowance and other allowances), and (ii) Bonus (an incentive offered over and above wages/salary). (Other acceptable answers: productivity-linked wage incentives, profit sharing, co-partnership/stock option, retirement benefits.)

Long Answer Type

1. Discuss Maslow’s Need Hierarchy theory of motivation.

ANSWER Abraham Maslow, in a classic paper published in 1943, outlined a theory of motivation based on human needs. He felt that within every human being there exists a hierarchy of five needs, which a manager must understand in order to motivate employees. The five needs (lowest to highest):
NeedMeaning / Examples
1. Basic Physiological NeedsMost basic needs — hunger, thirst, shelter, sleep, sex. In an organisation, basic salary helps satisfy these.
2. Safety/Security NeedsSecurity and protection from physical and emotional harm — e.g. job security, stability of income, pension plans.
3. Affiliation/Belonging NeedsAffection, a sense of belongingness, acceptance and friendship.
4. Esteem NeedsSelf-respect, autonomy, status, recognition and attention.
5. Self-Actualisation NeedsThe highest need — the drive to become what one is capable of becoming (growth, self-fulfilment, achievement of goals).
Assumptions of the theory: (i) People’s behaviour is based on their needs; (ii) needs are in hierarchical order, from basic to higher needs; (iii) a satisfied need no longer motivates — only the next higher need can; and (iv) a person moves to the next higher level only when the lower need is satisfied. Evaluation: The theory is widely recognised and helps managers realise that the need level of an employee must be identified to provide motivation. However, it has been criticised on its rigid classification and ordering of needs, as needs may overlap in real life.

2. What are the common barriers to effective communication? Suggest measures to overcome them.

ANSWER Barriers to communication prevent communication, filter part of it, or carry an incorrect meaning, causing misunderstandings. They are broadly grouped into four types. (A) Semantic barriers (problems in encoding/decoding into words): badly expressed message, symbols with different meanings, faulty translations, unclarified assumptions, technical jargon, and body language & gesture decoding. (B) Psychological barriers (emotional factors): premature evaluation, lack of attention, loss by transmission & poor retention, and distrust between communicator and communicatee. (C) Organisational barriers (structure, rules, authority): organisational policy not supporting free flow, rigid rules and regulations, status differences, complexity in organisation structure, and lack of organisational facilities. (D) Personal barriers (personal factors of sender/receiver): fear of challenge to authority, lack of confidence of superior in subordinates, unwillingness to communicate, and lack of proper incentives. Measures to overcome the barriers: (i) clarify the ideas before communicating; (ii) communicate according to the needs of the receiver; (iii) consult others before communicating; (iv) be aware of the language, tone and content of the message; (v) convey things of help and value to listeners; (vi) ensure proper feedback; (vii) communicate for the present as well as the future; (viii) follow up communications; and (ix) be a good listener.

3. Explain different financial and non-financial incentives used to motivate employees of a company?

ANSWER An incentive is a measure used to motivate people to improve performance. Incentives are broadly classified as financial and non-financial. Financial incentives are in direct monetary form or measurable in monetary terms: • Pay and allowances – basic pay, dearness allowance and other allowances, with regular increments.
• Productivity-linked wage incentives – wage plans linking pay to increase in productivity.
• Bonus – an incentive over and above wages/salary.
• Profit sharing – giving employees a share in the profits of the organisation.
• Co-partnership/Stock option – offering company shares at a price lower than market price, creating a feeling of ownership.
• Retirement benefits – provident fund, pension and gratuity giving financial security after retirement.
• Perquisites – fringe benefits such as car allowance, housing, medical aid and children’s education over and above salary. Non-financial incentives mainly provide psychological, social and emotional satisfaction: • Status – ranking, authority, prestige and recognition of a position satisfy esteem needs.
• Organisational climate – characteristics such as individual autonomy and reward orientation that influence behaviour positively.
• Career advancement opportunity – skill development and sound promotion policy encourage better performance.
• Job enrichment – designing jobs with greater variety, autonomy and responsibility so the job itself motivates.
• Employee recognition programmes – acknowledging and appreciating good work (congratulations, awards, mementos).
• Job security – stability about future income and work (though it may cause complacency).
• Employee participation – involving employees in decision-making through committees.
• Employee empowerment – giving more autonomy and powers to subordinates, making them feel their jobs are important.

4. In an organisation all the employees take things easy and are free to approach anyone for minor queries and problems. This has resulted in everyone taking to each other and thus resulting in inefficiency in the office. It has also resulted in loss of secrecy and confidential information being leaked out. What system do you think the manager should adopt to improve communication?

ANSWER In the given situation, the office is relying mainly on informal communication (the grapevine), where employees approach anyone freely. This has led to inefficiency, loss of secrecy and leakage of confidential information. To improve communication, the manager should adopt the system of Formal Communication. Formal communication flows through the official channels designed in the organisation chart. It moves vertically (upward and downward between superior and subordinate) and horizontally (between people of the same level, e.g. a production manager contacting a marketing manager). Because it follows recognised channels and is generally recorded and filed, formal communication maintains discipline, authority relationships, secrecy and accountability, reduces confusion and improves efficiency. The manager may use suitable formal communication networks — single chain, wheel, circular, free flow or inverted V — depending on the situation, so that information flows in an orderly manner and confidential matters are protected.

Extra Practice Questions

Short Answer Type Questions

Q1. Define directing and state any two of its features.

ANSWERDirecting is the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives. Two features: (i) it initiates action in the organisation, and (ii) it flows from top to bottom through the organisational hierarchy.

Q2. What is meant by supervision?

ANSWERSupervision is the process of guiding the efforts of employees and other resources to accomplish the desired objectives. It means overseeing what subordinates are doing and giving instructions to ensure optimum utilisation of resources and achievement of work targets. A supervisor works at the operative level, just above the worker.

Q3. Distinguish between a motive, motivation and a motivator.

ANSWERA motive is an inner state that energises and directs behaviour towards goals (e.g. hunger). Motivation is the process of stimulating people to act to accomplish desired goals. A motivator is the technique used to motivate people — such as pay, bonus, promotion, recognition or praise.

Q4. What is ‘grapevine’ communication and why is it so called?

ANSWERGrapevine is informal communication that flows without following formal lines of communication. It is so called because, like a grapevine, it spreads throughout the organisation with its branches going out in all directions, ignoring the levels of authority. It spreads rapidly and may get distorted into rumours.

Q5. Name the elements of the communication process.

ANSWERThe communication process involves seven main elements: sender, message, encoding, media (channel), decoding, receiver and feedback, along with noise (any obstruction or hindrance to communication).

Long Answer Type Questions

Q1. Explain the importance of directing in an organisation.

ANSWERDirecting is important because every action in the organisation is initiated through it. (i) It initiates action by people towards desired objectives. (ii) It integrates employees’ efforts so that individual efforts contribute to organisational performance. (iii) It guides employees to fully realise their potential through motivation and effective leadership. (iv) It facilitates introduction of needed changes by reducing resistance through motivation, communication and leadership. (v) It brings stability and balance in the organisation by fostering cooperation and commitment among people and balancing the interests of various groups and departments. Thus, directing is the heart of the management process that converts plans into performance.

Q2. Describe the importance of supervision in an organisation.

ANSWERA supervisor performs multiple roles that make supervision important: (i) maintains day-to-day, friendly contact with workers and acts as a guide, friend and philosopher; (ii) acts as a link between workers and management, conveying management ideas to workers and workers’ problems to management, avoiding misunderstandings; (iii) maintains group unity and harmony among workers by sorting out internal differences; (iv) ensures performance according to targets and motivates workers; (v) provides good on-the-job training, building an efficient team; (vi) provides supervisory leadership that builds high morale; and (vii) analyses work and gives feedback, suggesting ways to develop work skills. Because the supervisor is in direct touch with bottom-level workers, his role is vital to the organisation.

Q3. Explain the importance of communication in management.

ANSWERA manager spends almost 90 per cent of his time communicating, so communication is central to management. Its importance: (i) Acts as basis of coordination – it coordinates departments, activities and persons by explaining goals and inter-relationships. (ii) Helps in smooth working of an enterprise – all organisational interactions depend on communication; when it stops, organised activity ceases. (iii) Acts as basis of decision making – it provides the information needed for meaningful decisions. (iv) Increases managerial efficiency – goals, instructions, job allocation and performance review all involve communication. (v) Promotes cooperation and industrial peace – two-way communication builds mutual understanding between management and workers. (vi) Establishes effective leadership – it helps a leader influence subordinates. (vii) Boosts morale and provides motivation – an efficient communication system motivates and satisfies employees.

MCQs & Assertion–Reason

1. Directing as a managerial function:

(a) takes place only at the top level    (b) initiates action and takes place at every level    (c) flows from bottom to top    (d) is a one-time activity

2. Which of the following is NOT an element of directing?

(a) Supervision    (b) Motivation    (c) Planning    (d) Communication

3. The principle that a person should receive instructions from one superior only is:

(a) Harmony of objectives    (b) Unity of command    (c) Follow through    (d) Managerial communication

4. In Maslow’s hierarchy, basic salary mainly helps satisfy which need?

(a) Esteem needs    (b) Safety needs    (c) Basic physiological needs    (d) Self-actualisation needs

5. Which of the following is a non-financial incentive?

(a) Bonus    (b) Profit sharing    (c) Job enrichment    (d) Perquisites

6. Co-partnership/Stock option is an example of:

(a) Non-financial incentive    (b) Financial incentive    (c) Barrier to communication    (d) Leadership style

7. A leader who makes decisions in consultation with subordinates follows which style?

(a) Autocratic    (b) Democratic    (c) Laissez-faire    (d) Dogmatic

8. ‘Noise’ in the communication process refers to:

(a) loud sound only    (b) any obstruction or hindrance to communication    (c) the feedback    (d) the channel

9. Which grapevine network is the most popular in organisations?

(a) Single strand    (b) Gossip    (c) Probability    (d) Cluster

10. Faulty translation and technical jargon are examples of:

(a) Psychological barriers    (b) Semantic barriers    (c) Organisational barriers    (d) Personal barriers

Answer key: 1-(b), 2-(c), 3-(b), 4-(c), 5-(c), 6-(b), 7-(b), 8-(b), 9-(d), 10-(b).

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: Directing is a continuous process.

Reason: Directing takes place throughout the life of the organisation, irrespective of the people occupying managerial positions.

A-R 2. Assertion: A satisfied need is a strong motivator.

Reason: According to Maslow, only the next higher unsatisfied need can motivate a person; a satisfied need no longer motivates.

A-R 3. Assertion: Promotion is treated as a non-financial incentive even though it may involve extra money.

Reason: In promotion, the non-monetary aspects such as elevation, status and challenge over-ride the monetary aspect.

A-R 4. Assertion: Informal communication can be useful to a manager.

Reason: The grapevine carries information rapidly and lets a manager know the reactions of subordinates.

A-R 5. Assertion: An autocratic leader encourages subordinates to participate in decision-making.

Reason: An autocratic leader gives orders and expects subordinates to obey, using one-way communication.

Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(D).

Exam Tips & Common Mistakes

How to score full marks in this chapter

Memorise the four elements of directing (supervision, motivation, leadership, communication) and the eight principles — questions often ask you to name or explain “any three”. Learn Maslow’s five needs in correct order with one organisational example each, and keep financial vs non-financial incentives as two clear lists. For case/application questions, first identify the concept (e.g. autocratic leadership, motivation, formal communication) and then justify it with a definition and the case facts. Draw the motivation process and communication process as simple labelled flow charts to earn diagram marks.

Common mistakes to avoid

  • Treating directing as a top-level-only function — it takes place at every level and flows top to bottom.
  • Confusing motive, motivation and motivators — keep their definitions separate.
  • Reversing Maslow’s order or forgetting that a satisfied need does not motivate.
  • Listing perquisites, bonus or profit sharing as non-financial — they are financial incentives.
  • Mixing up leadership styles — remember laissez-faire = free-rein, democratic = participative, autocratic = authoritarian.
  • Confusing encoding (message into symbols) with decoding (symbols back into meaning).
  • In case studies, giving only the answer without naming the underlying concept and explaining it.

Frequently Asked Questions

What is Chapter 7 of Class 12 Business Studies about?

Chapter 7, Directing, explains the managerial function of instructing, guiding, motivating and leading people to achieve organisational goals. It covers the meaning, characteristics, importance and principles of directing, and its four elements — supervision, motivation, leadership and communication — including Maslow’s need hierarchy, financial and non-financial incentives, leadership styles, and barriers to communication.

What are the four elements of directing?

The four elements of directing are supervision (overseeing subordinates’ work), motivation (stimulating people to act), leadership (influencing behaviour towards goals) and communication (exchange of information to create understanding).

How many questions are in the NCERT exercise of this chapter?

The end-of-chapter Exercises for Class 12 Business Studies Chapter 7 contain 4 Very Short Answer, 6 Short Answer and 4 Long Answer type questions — all answered step by step on this page, along with extra questions, MCQs and Assertion–Reason.

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