NCERT Business Studies Solutions Class 12 Chapter 2

 Very Short Answer Questions 

1. What makes principles of management flexible?

Management principles are varied, and one rule cannot be applied to all cases. Thus, a manager

has to assess the situation and then determine the best solution to the issue at hand. For this

reason, management principles are flexible.

2. State the main objective of time study.

Time study was undertaken to determine a standard time that is required to complete a

designated job. This time would then be set as the standard time for the job completion. The

benefit of this process is that it will help employers to determine the number of resources

required to complete a particular job and also determine their wages.

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

It is cooperation, not individualism which is the extension of the ‘principle harmony, not discord’

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

performance.

Causes of fatigue that creates hindrances in the performance of employees are:

1. Not having a cordial relationship with the people in superior positions

2. Long working hours at the organisation

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.

Wales Limited followed the principle of ‘Stability of Personnel’.

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

Taylor used the system of Differential Piece Wage System under which wages for workers were

determined using a set standard. The workers who performed better were given higher wages

than workers who performed below the standard.

Short Answer Questions NCERT Business Studies

Solutions Class 12 Chapter 2

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

Unity of command is a principle of management that a person should be answerable to only one

of his superiors. It states that if a person receives commands from two or more people, then this

principle is violated. If such a principle is violated, it creates confusion for the employee, which

can lead to instability and disturbance in the workflow. Therefore, to maintain a steady workflow

and uninterrupted operations in the organisation, unity of command is essential for management.

2. Define Scientific Management. State any three of its principles.

Scientific management is a theory of management that was developed by Frederick Taylor in

1911. It is a classical theory of management which focuses on ways of getting work done in the

best way possible to increase efficiency and effectiveness in work. Scientific management is the

use of tools and techniques and personnel specialised to carry out the task for achieving quality

and cost reduction.

Here are three principles of scientific management

1. Science, not rule of thumb: In this principle, Taylor laid emphasis on focusing on following

management practices that are scientific in nature, and not deciding by the rule of thumb. As per

the rule of thumb practice, managers will assess a situation and use trial and error to find a

solution. Taylor suggested that instead of using such old methods, the approach to a situation

should be scientific. Following such practice will result in a balanced result and improves

efficiency and cost.

2. Harmony, not Discord: This principle states that there should be a harmonious work

environment between managers and workers. The more they are on good terms with each other,

the more will be the performance of the organisation. The workers should feel that they are a part

of the organisation and their contributions are very much essential for the organisation to grow.

Management shall respond to the needs of the workers, and in a similar way, the workers should

respond back by giving their best for the organisation. Taylor termed this as a mental revolution

and suggested that it would improve harmony and propel the resources to work towards the

common goals of the organisation.

3. Cooperation, not individualism: As per this principle, the managers and workers should

cooperate with each other in completing the activities. The work standards should be jointly

determined by them, it will increase the level of involvement, and more productive results can be

achieved.

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?

In such a situation, the principle that is violated is the principle of order. It states that there should

be a right arrangement of resources. In other words, the right people at the right place and at the

right time. Following this approach helps in carrying out the tasks effortlessly. Whenever that

principle is violated, it results in unnecessary delay at work and ensures chaos. Delays in

completing work will result in a loss for the company.

4. Explain any four points regarding significance of Principles of Management.

Principles of management have the following significance

1. Management principles are based on years of observation and implementation into real-life

issues. Hence, these principles guide managers in tackling real-world problems easily.

2. Management principles are based on logic rather than on beliefs. These principles are derived

from real-life situations and therefore are based on logic and reasoning. It helps managers in

making decisions which are devoid of personal bias.

3. Principles are the foundation of management education. They helped it to grow as a discipline,

and such principles also offer a basis on which further research programs can be carried out to

develop new methods and techniques.

4. Management principles help organisations to perform at the best of their capacity or, in other

words, ensure optimum utilisation of the available resources.

5. Explain the principle of ‘Scalar Chain’ and gangplank.

Scalar chains can be defined as the formal chain of authority that follows a straight line from

highest to lowest rank. It specifies the route through which information needs to be

communicated to the designated authority.

Gangplank is an alternative route which is used in case of emergencies. Its main aim is to

shorten the communication route. It facilitates communication with higher authorities directly,

surpassing the defined chains of hierarchy.

Diagrammatically it can be represented as:

6. A production manager at top level in a resulted 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?

In this case, Mr. Rathore has violated the principle of Subordination of individual interest to the

general interest. As per this principle, an individual should put organisational goals on priority

over any personal interest.

The positive impacts of this principle are:

1. Harmony in the working environment and a good office culture

2. Increase in employee productivity

3. Employees feel they are a part of the organisation

4. Helps in achieving organisations goals

Long Answer Questions NCERT Business Studies Solutions Class 12 Chapter 2

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

Scientific management is a theory of management that was developed by Frederick Taylor in

1911. It is a classical theory of management which focuses on ways of getting work done in the

best way possible to increase efficiency and effectiveness in work. Scientific management is the

use of tools and techniques and personnel specialised to carry out the task for achieving quality

and cost reduction.

Here are three principles of scientific management

1. Science, not rule of thumb: In this principle, Taylor laid emphasis on focusing on following

management practices that are scientific in nature and not deciding by the rule of thumb. As per

the rule of thumb practice, managers will assess a situation and use trial and error to find a

solution. Taylor suggested that instead of using such old methods, the approach to a situation

should be scientific. Following such practice will give a balanced result and improves efficiency

and cost.

2. Harmony, not Discord: This principle states that there should be a harmonious work

environment between managers and workers. The more they are on good terms with each other,

the more will be the performance of the organisation. The workers should feel that they are a part

of the organisation and their contributions are very much essential for the organisation to grow.

Management shall respond to the needs of the workers, and in a similar way, the workers should

respond back by giving their best for the organisation. Taylor termed this as a mental revolution

and suggested that it would improve harmony and propel the resources to work towards the

common goals of the organisation.

3. Cooperation, not individualism: As per this principle, the managers and workers should

cooperate with each other in completing the activities. The work standards should be jointly

determined by them, it will increase the level of involvement, and more productive results can be

achieved.

4. Personnel Development: An organisation has to focus on developing its workers as well as the

organisation itself. Developed or skilled workers will be in a better position to help an

organisation grow. To increase competitiveness, an organisation can announce incentives in

order to build competitiveness among workers. Employees should be hired in a scientific manner

which will put the best employee suited for a role as per their capability. Efficiency can be

achieved with proper training for workers. In other words, a properly trained resource will develop

himself as well as the organisation.

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

a. Unity of Direction: This principle states that each unit of the organisation should be working

towards attaining a common business objective. It helps in avoiding work overlapping and also

increases profitability. For example, a company producing two different products should have

separate management for each.

b. Equity: This principle focuses on treating all employees equally. Equality should be based on

religion, caste, creed etc. It will promote harmony among the workers. For e.g., workers from

different religions should be treated equally in a company.

c. Espirit de corps: This principle states that employees in an organisation should work with each

other and maintain unity. The team spirit is improved when all resources are working unitedly,

and this feeling should be promoted by the manager.

d. Order: There should be order in work being done. The management should hire the right

people at right place and right time. Doing such things helps in carrying out the activities in a

smooth manner. For e.g., if the user manual pages are arranged in a sequence, shuffling them

will result in delay in production.

e. Centralisation and Decentralisation: Centralisation is the concentration of power or authority in

the hands of selected people in an organisation. Whereas decentralisation is shifting the

authority to middle and lower levels of management. For e.g., if CEO has all decision-making

powers, it is centralisation, whereas if the decision-making power is distributed to managers of

middle and lower levels, then it is decentralisation.

f. Initiative: As per this principle, workers should be motivated and provided incentives. They

should be encouraged to suggest points for improvement, it will make them take more initiative

for the development of the organisation.

3. Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental

Revolution’ as enunciated by Taylor.

Functional foremanship is an extension of the principle of division of labour. It was suggested by

Taylor. According to his observation, it is not possible for a single worker to be an expert in every

aspect of production. Therefore, he suggested that eight persons should be performing the duties

of a foreman, and therefore this came to be known as functional foremanship. Under this, the

following roles were present.

1. Instruction Card Clerk: Whose role is to give instructions to workers

2. Route Clerk: His role was to specify the route of production

3. Time and Cost Clerk: His role was to prepare the time and costs sheet

4. Disciplinarian: His role was to maintain discipline in the production facility

The above four roles were working under the planning supervisor.

Now the other four persons who work under the production supervisor are:

1. Speed Boss: Responsible for the timely completion of the designated job

2. Gang Boss: Responsible for keeping machines in a ready state for work

3. Repair boss: Was responsible for keeping machines and tools in proper working condition.

4. Inspector: This person was responsible for maintaining the quality of the work.

Mental revolution: Mental revolution is the concept which revolves around bringing a change in

the attitude of the workers and managers. It aims to improve the thinking of both in order to

create a working environment that is conducive to both manager and worker. The basic premise

of this concept is that both the worker and the manager should understand their importance in an

organisation, and both of them should work towards achieving a common goal for the

organisation. Management should be taking care of the needs of its workers and periodically

share the benefits in the form of incentives or bonuses to keep them motivated. Workers, in

return, should do their best in order to develop the organisation. Thus, we can say the mental

revolution is based on mutual trust and cooperation among managers and workers, which can

bring about great changes in an 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.

(a) Time Study: This study determines the standard time which is required in order to perform a

job. Multiple readings are taken to arrive at a standard time for a particular task. Based on that it

following things can be determined

1. Number of workers required to perform the task

2. Determine the costs associated with hiring such workers (i.e. wages)

(b) Motion Study: This study was based on movements that needed to be taken while performing

a task. The purpose of this study is to eliminate unwanted movements in order to complete a task

in a shorter time. For this study Taylor along with his assistant Frank Gilbreth studied the

movements of a worker and then categorised the same into three classes productive, incidental

and unproductive. The purpose was to eliminate unproductive employees and reduce instances

of incidental workers.

(c) Fatigue Study: Fatigue study was for determining the amount and frequency of rest taken

during the completion of a designated task. A worker without rest will be unable to perform to his

full capacity. Fatigue is detrimental to productivity hence this study is conducted to understand

the standard intervals of break that help a worker regain the energy to carry on working with the

same efficiency.

(d) Method Study: The objective of this study is to find the best method of completing a particular

work. It takes into consideration all the activities involved in the completion of a task. By

determining the best method, lower costs can be incurred along with more productivity.

(e) Standardisation and Simplification of Work: Standardisation is based on scientific

management techniques. It is the setting of standards or benchmarks for any activity. The

purpose of standardisation is to improve the quality of work and attain excellence. It also

determines standards of performance for both man and machines.

Simplification is all about eliminating the diversity in the products that are unnecessary and

utilizing the best of the resources, reducing the inventories and increasing the turnover of the

organisation. In addition to reducing labour and machine cost. Simplification helps in the optimum

uses of the resources and removes unnecessary costs for the organisation.

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

Basis of Taylor’s Contributions Fayol’s Contributions

Comparison

Contribution It was conceptualised by Frederick Taylor in

1911.

It was conceptualised by Henry Fayol

in 1916

Concept Scientific theory of management It is a general theory of administration

Personality Taylor was a practising mechanical engineer Fayol was working as a mining

engineer.

Principles and

Techniques

Techniques like functional foremanship and

scientific management were introduced along

with the different studies such as motion study,

time study etc. were introduced by Taylor

Principles of management such as

equity, espirit de corps, etc., were

introduced by Henry Fayol in his

theory of 14 principles of management

Application of

Principles

Principles suggested by Taylor are applicable

in specialised situations

Principles suggested by Fayol are

universal in their applicability

Emphasis and

Focus

Emphasis was on low-level management Emphasis was on top-level

management

Approach The approach is that of an engineer The approach is that of a manager

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

environment.

The principles of both Fayol and Taylor play a significant role in the contemporary business

environment. These principles provide a guideline to managers for making decisions and taking

appropriate actions. Business situations can be best understood with the application of these

principles. Such principles are not used as it is described, but managers can take guidance from

these and determine how to confront a situation. It can be used in various scenarios, and the

decisions which are taken by managers will be backed by facts and logic, which makes it more

applicable. By providing insight into real word business cases, they help managers in decision-

making. As these principles have industry-wide applicability and are based on human behaviour,

they provide insight into human and material resources. It helps in the development of an

organisation by improving effectiveness and efficiency with minimum use of resources and cost.

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 undisciplined. The spirit of teamwork, which had characterised the company

previously, was beginning to wane. Workers were feeling cheated, and initiative was declining.

The quality of the products was beginning to decline, and market share was on the verge of

decreasing.

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?

1. Following principles of management were violated:

i. Unity of Command (employees working under more than one superior)

ii. Division of Work (employees made to work on more than one product)

iii. Discipline (workers not following discipline)

iv. Espirit de corps (workers lacked spirit of team work)

v. Initiative (workers were not feeling like taking initiative)

2. The principles are described below

a. Unity of command: The workers should be reporting to only one superior. Employees receiving

orders from more than one superior will result in confusion and affect work.

b. Division of work: Employees should be given specialised tasks so that they will be completed

effectively and efficiently.

c. Discipline: Organisations should be following rules and regulations, and they should be

followed by both workers and management.

d. Espirit de corps: The teamwork motive should be developed among employees. It will improve

productivity.

e. Initiative: Motivation and incentives should be provided to workers, and they should be

encouraged to provide suggestions for improvement.

3. Steps which can be taken by the company are:

i. Scientific management should be applied.

ii. Only one superior should be there to provide instruction to subordinates in order for smooth

functioning.

iii. Individuals must be assigned tasks as per their specialisation. It increases productivity.

iv. Motivation and proper incentives should be provided to workers

v. Teamwork and coordination among workers should be promoted for organisational

development.

8. (Further information related to the above question 7) 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 7 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 Mukti

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.

1. Yes, as suggested by the new management consultant, i.e. Mukti Consultants, scientific

management techniques will be helpful for the organisation. It will improve the quality and

quantity of the product with a reduction in costs.

2. The following precautions need to be taken:

a. Specialised staff having training should be recruited, and existing staff can be further trained.

b. Production planning should be undertaken in a systematic way

c. Functional foremanship should be introduced with proper incentives and motivation for the

employees.

d. Different other methods should be introduced apart from work study. It can be a motion study,

method study, time and fatigue study.

e. Standardisation techniques can be used in case of different aspects of production

f. Employees can be offered monetary incentives so that they work more efficiently.