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

NCERT Class 12 Business Studies, chapter 2. Notes, key terms, important questions with answers and MCQs.

Chapter overview

Principles of management are broad, general guidelines for managerial decision-making and behaviour. They are flexible, mainly behavioural and contingent on the situation. Henri Fayol gave 14 general principles of management, while F.W. Taylor developed scientific management, replacing rule of thumb with scientific methods to increase efficiency.

Nature and significance of principles

Principles are universally applicable, general guidelines, formed by practice and experimentation, flexible, behavioural, cause-and-effect based and contingent.
They provide useful insights, help optimum use of resources, support scientific decisions, help meet changing environment, fulfil social responsibility and aid management training and research.

Fayol's principles

Division of work, authority and responsibility, discipline, unity of command (one boss for each employee), unity of direction (one head and one plan for activities with the same objective).
Subordination of individual interest to general interest, fair remuneration, centralisation and decentralisation, scalar chain (with a 'gang plank' for urgent communication), order.
Equity, stability of tenure of personnel, initiative and esprit de corps (team spirit).

Taylor's scientific management

Principles: science, not rule of thumb; harmony, not discord; cooperation, not individualism; development of each person to the greatest efficiency and prosperity.
Techniques: functional foremanship (eight specialist foremen, four in planning and four in production), standardisation and simplification of work, method study, motion study, time study, fatigue study and the differential piece wage system.

Key terms

Principle of management: a broad, general guideline for managerial decision-making and behaviour
Unity of command: each employee should receive orders from only one superior
Scalar chain: the formal line of authority from the highest to the lowest rank
Functional foremanship: Taylor's technique of separating planning and execution with eight specialist foremen
Differential piece wage system: paying a higher rate to efficient workers who meet the standard and a lower rate to others

Important questions with answers

Explain the principle of unity of command.2 marks

According to the principle of unity of command, each employee should receive orders from and be responsible to only one superior. If an employee gets orders from two bosses, it causes confusion, conflict and lack of discipline.

Distinguish between unity of command and unity of direction.3 marks

Unity of command means each employee receives orders from only one superior, and it prevents dual subordination; it relates to individuals. Unity of direction means each group of activities with the same objective has one head and one plan, and it prevents overlapping of activities; it relates to the organisation and departments.

Explain the principles and techniques of Taylor's scientific management.5 marks

F.W. Taylor developed scientific management to increase efficiency. His principles are as follows. Science, not rule of thumb: every task should be studied scientifically to find the best method instead of relying on intuition. Harmony, not discord: there should be complete harmony between management and workers through a mental revolution, so that both work for higher productivity. Cooperation, not individualism: management and workers should cooperate, and workers' suggestions should be valued. Development of each person to the greatest efficiency and prosperity: workers should be scientifically selected and trained. His techniques include functional foremanship, which separates planning and execution and uses eight specialist foremen; standardisation and simplification of work, which fix standards for materials, tools and processes and remove unnecessary varieties; method study, which finds the best way to do a job; motion study, which removes unnecessary movements; time study, which fixes the standard time for a job; fatigue study, which determines rest intervals; and the differential piece wage system, which pays higher rates to efficient workers who meet standards and lower rates to others.

Quick revision

Principles: flexible, behavioural, contingent.
Fayol: 14 principles, including unity of command and scalar chain.
Taylor: science, harmony, cooperation, development.
Techniques: functional foremanship, time, motion and fatigue study, differential wages.

Exam tips

Learn Fayol's 14 principles with one workplace example each.
Compare Fayol and Taylor on basis, focus, perspective and applicability.

Practice MCQs

The father of general management is
1. Henri Fayol
2. F.W. Taylor
3. Peter Drucker
4. Elton Mayo
Show answer
Answer: (a) Henri Fayol. He gave 14 principles.
The father of scientific management is
1. Henri Fayol
2. Abraham Maslow
3. F.W. Taylor
4. Philip Kotler
Show answer
Answer: (c) F.W. Taylor. He worked on shop-floor efficiency.
'Each employee should receive orders from only one boss' is the principle of
1. unity of direction
2. order
3. equity
4. unity of command
Show answer
Answer: (d) unity of command. It avoids confusion.
One head and one plan for a group of activities with the same objective is
1. unity of command
2. centralisation
3. scalar chain
4. unity of direction
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Answer: (d) unity of direction. It ensures coordination.
Under functional foremanship, Taylor suggested
1. eight specialist foremen
2. two foremen
3. one foreman
4. no foreman
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Answer: (a) eight specialist foremen. Four in planning and four in production.
The study to find the best way of doing a job is
1. time study
2. fatigue study
3. method study
4. motion study only
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Answer: (c) method study. It covers the whole process.
The 'gang plank' allows employees at the same level to communicate directly in emergencies; it modifies the principle of
1. equity
2. scalar chain
3. order
4. discipline
Show answer
Answer: (b) scalar chain. The formal chain may be too slow.
A worker producing above the standard gets a higher rate per piece. This is
1. time wage
2. bonus share
3. fixed salary
4. differential piece wage system
Show answer
Answer: (d) differential piece wage system. It rewards efficiency.

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.