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Nature and Significance of Management – Class 12 Business Studies notes, important questions and MCQs

NCERT Class 12 Business Studies, chapter 1. Notes, key terms, important questions with answers and MCQs.

Chapter overview

Management is the process of getting things done with the aim of achieving goals effectively and efficiently. It is goal-oriented, pervasive, continuous and multidimensional. Management works at top, middle and supervisory levels and performs the functions of planning, organising, staffing, directing and controlling, with coordination as its essence.

Meaning and characteristics

Effectiveness means completing the right task and achieving goals on time; efficiency means doing the task correctly with minimum cost.
Characteristics: goal-oriented, pervasive, multidimensional (work, people, operations), continuous, a group activity, dynamic and intangible.
Objectives: organisational (survival, profit, growth), social (benefits to society) and personal (needs of employees).

Nature and levels

Management is a science (systematic knowledge, principles), an art (personal skill and creativity) and has some features of a profession, though it lacks restricted entry by a professional body.
Top management (chairman, CEO) sets objectives and policies; middle management (division heads) implements plans; supervisory or operational management (foremen, supervisors) oversees workers.

Functions and coordination

Planning (deciding in advance), organising (arranging resources and roles), staffing (filling positions), directing (guiding and motivating) and controlling (checking performance).
Coordination is the process of synchronising the activities of different departments; it is called the essence of management.
Coordination integrates group efforts, ensures unity of action, is continuous, all-pervasive, the responsibility of all managers and a deliberate function.

Key terms

Management: the process of getting things done to achieve goals effectively and efficiently
Effectiveness: achieving the right goals on time
Efficiency: doing tasks correctly with minimum cost and resources
Coordination: synchronising the activities of different departments to achieve common goals
Supervisory management: the lowest level of management that directly oversees workers

Important questions with answers

Distinguish between efficiency and effectiveness.2 marks

Effectiveness means doing the right task and achieving the goal on time, focusing on the end result. Efficiency means doing the task correctly with minimum cost and resources, focusing on the use of inputs. A good manager must be both effective and efficient.

Why is coordination called the essence of management?3 marks

Coordination is needed in every function and at every level of management. It synchronises the efforts of different individuals and departments, ensures unity of action towards common goals, and avoids conflict and duplication. Since every managerial function aims at achieving harmony in group effort, coordination is the essence of management.

Explain the characteristics of management and its importance.5 marks

Management has several characteristics. It is goal-oriented, as it aims to achieve organisational objectives. It is pervasive, as it is needed in all kinds of organisations and at all levels. It is multidimensional, covering management of work, people and operations. It is a continuous process of planning, organising, staffing, directing and controlling. It is a group activity, as it coordinates the efforts of many people. It is dynamic, adapting to changes in the environment, and it is intangible, as it cannot be seen but its effects are felt. Management is important because it helps achieve group goals by directing individual efforts; it increases efficiency by reducing costs and wastage; it creates a dynamic organisation that adapts to change; it helps achieve personal objectives of employees through motivation and leadership; and it contributes to the development of society by providing quality products, employment and better technology.

Quick revision

Effectiveness vs efficiency.
Goal-oriented, pervasive, continuous, dynamic, intangible.
Levels: top, middle, supervisory.
Functions: planning, organising, staffing, directing, controlling; coordination is the essence.

Exam tips

Use one example to show the difference between efficiency and effectiveness.
Remember the five functions with POSDC.

Practice MCQs

Achieving goals on time is called
1. efficiency
2. effectiveness
3. coordination
4. control
Show answer
Answer: (b) effectiveness. It is about the right result.
Management is needed in all types of organisations; this shows it is
1. intangible
2. static
3. dynamic
4. pervasive
Show answer
Answer: (d) pervasive. It applies everywhere.
Foremen and supervisors belong to
1. top management
2. middle management
3. supervisory management
4. board of directors
Show answer
Answer: (c) supervisory management. They directly oversee workers.
Coordination is called the
1. function of top management only
2. first function of management
3. essence of management
4. last function only
Show answer
Answer: (c) essence of management. It runs through all functions.
Producing goods at minimum cost is an indicator of
1. efficiency
2. effectiveness
3. coordination
4. staffing
Show answer
Answer: (a) efficiency. Resources are used well.
Management is not a full profession mainly because
1. there is no restriction on entry through a professional body
2. it has no knowledge
3. it has no ethics
4. it has no principles
Show answer
Answer: (a) there is no restriction on entry through a professional body. Anyone can become a manager.
A firm met its production target but used much more raw material than planned. It was
1. effective but not efficient
2. efficient but not effective
3. both
4. neither
Show answer
Answer: (a) effective but not efficient. Goal achieved, resources wasted.
Which level of management is mainly responsible for implementing plans and coordinating departments
1. middle
2. top
3. supervisory
4. shareholders
Show answer
Answer: (a) middle. It links top management with operational staff.

All chapters of Class 12 Business Studies

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.