Textbook for CBSE Class XII _ BUSINESS STUDIES may Bee © Principles and Functions of Management. a e Business Finance and Marketing along with Project Work # Objective Type Questions [ Case Studies & Application-based Questions | # NCERT Questions with Solutions | Scanner | © CBSE Sample Question Paper (Solved) # Model Test Paper (Solved) «# Self-Practice Paper BCS, sultan chand | 2,Contents PARTA PRINCIPLES AND FUNCTIONS OF MANAGEMENT 1, NATURE AND SIGNIFICANCE OF MANAGEMENT 1-121 Concept of Management tal Modern Concept of Management 12 Effectiveness and Efficiency Characteristics or Features of Management Objectives of Management 4 Importance of Management 1 Nature of Management ie Management as a Science ie Management as an Art Us Management as a Profession 17 Levels of Management 18 Top-level Management 18 Middle-level Management 18 Lower-level Management 19 Functions of Management 19 Concept of Coordination 1.10 Characteristics of Coordination 1.10 Coordination as the Essence of Management 1 Importance of Coordination 2. PRINCIPLES OF MANAGEMENT Concept of Principles of Management Features of Principles of Management 22 ‘Need or Significance of Management Principles 23 Fayol’s Principles of Management 24 Principles 24 ‘Taylor’s Principles of Scientific Management 241 Principles of Scientific Management ’ 211 Scientific Techniques of Taylor 213 Advantages of Scientific Management 215 ‘Comparison between Fayol and Taylor 215 3. BUSINESS ENVIRONMENT 3.1-3.22 Concept of Business Environment 31 Features/Characteristics of Business Environment 32 Importance of Business Environment 33 Dimensions/Elements/Components of Business Environment 34 ‘New Economic Policy 1991: Transformation of Indian Economy 36 ‘Impact of Changes in Economic Policy on the Business ¥ 38 Managerial Responses to Changes in Business Environment 39 Demonetisation . 39 Features of Demonetisation 3.10 Benefits of Demonetis 3a 4. PLANNING $ 4.1-4.21 Concept of Planning 42 Features of Planning 42 Importance of Planning . 43 Limitations of Planning 44 Planning Process 44eNauawne Part A Principles and Functions of Management . Nature and Significance of Management . Principles of Management . Business Environment Planning . Organising . Staffing . Directing . ControllingNature and Significance of Management WaldvHO Good management is the art of making problems so interesting and their solutions so constructive that ‘everyone wants to get to work and deal with them, —Paul Hawken ‘SYLLABUS AND LEARNINC ECTIVES ‘+ Management—Concept, Features, Objectives and Importance Management as Science, Art and Profession + Levels of Management ‘+ Management Functions—Planning, Organising, Staffing, Directing, Contrling ‘+ Coordination—Concept and Importanoe CESS STORY. OF APPLE INC ‘When Apple first went public in 1980, it was worth about $100 million under the leadership of Steve Jobs, who left ‘Apple in 1985. When he rejoined in 1997, he faced the task of restructuring an organisation that was on the brink of bankruptcy. Jobs saw an opportunity to target music fans who wanted affordable music but did not want to drive to a store to buy expensive CDs, In 2003, the iTunes Music Store was launched and soon became the top music ‘etailer, according to Rolling Stone. Jobs founded the App Store in 2008, which brought in hundreds of developers ‘who were eager to make easy money. Today, Apple is arguably one of the most transformative companies. From the first Apple computer in 1976 to the 2016 iPhone 7, the company has been consistently moving forward. Now, with CEO Tim Cook at the helm, the ‘company is worth $750 billion and is swiftly approaching a valuation of $1 trillion, Source: enbe.com ‘A business develops in course of time with complexities. With increasing complexities, managing business has become a difficult task, The need for existence of management has increased tremendously. Management is required in all types of organisations whether it is political, social, cultural or business because it helps direct efforts towards organisational goals. Traditionally, management means “managing men tactfully to get things done through others”, But the modern approach to management is much broader in scope than the traditional one. It involves all kinds of activities which determine the objectives of the organisation, With the changing environment, management process has changed in recent years. Modern trends in management focus on innovation, creativity and development. CONCEPT OF MANAGEMENT Management has been defined as a process of getting things done with the aim of achieving goals effectively and efficiently. Management is an individual or a group of individuals that accepts responsibilities to run an organisation. They plan, organise, direct and control all the activities of the business organisation.Oo” oo Business Studies—case y, Some popular definitions of ‘management’ are as follows “To manage is to forecast and to plan, to organise, to command, to coordinate and to control: “Management is the art of getting things done through and with people in formally organised groups.” Beno) “Management is the coordination of all resources through the process of planning, organising, directing ang controlling in order to attain stated objectives.” jing an effective environment for people operating in formal organisational group.” MODERN CONCEPT OF MANAGEMENT Modern concept states that all of an organisation's systems and processes work in an integrated manner Integrated manner implies getting things done with the aim of achieving goals effectively and efficiently “Management i estal According to Keith and Gubelini, “Management is the force that integrates human and non-human resources into an effective operating unit”. PLONE MAUL EFFECTIVENESS IS: DOING THE RIGHT THINGS cance Effectiveness and Efficiency | | | EFFECTIVENESS AND EFFICIENCY IN MANAGEMENT Efficiency (Means) Effectiveness (Ends) The words efficiency and effectiveness are often considered synonyms. However, in management, the words efficiency and effectiveness take on very different meanings. Efficiency refers to the ability to produce maximum output from the given input with the least wastage of time, effort, money, raw materials, etc. Effectiveness refers to the extent to which something has been done, to achieve the targeted outcome, The effectiveness of the managers is measured in the effectiveness of the organisation in achieving the organisational goals. It is very important for management to be efficient and effective, Example: ___ Production Team A achieves the monthly production target of producing 20,000 units of product X at a cost of € 220 per unit (standard cost € 200 per unit). They are effective but not efficient Production Team B fails to achieve the monthly production target and produces 19,000 units of product X at a standard cost of ¥ 200 per unit. They are efficient but not effective. Production Team C achieves the monthly production target of producing 20,000 units of product X at a standard cost of @ 200 per unit. They are both effective as well as efficient.Nature and Significance of Management Difference between Effectiveness and Efficiency 1. Meaning Effectiveness means doing Efficiency means whatever you produce accurate things, cor perform, it should be done in a perfect way. 2, Scope Broad Narrow 3. Objective To achieve end result To conduct cost-benefit analysis 4. Orientation Strategies Operations 5. Consideration Effectiveness is doing right things. Efficiency is doing things right. Effectiveness and Efficiency go hand in hand. One without the other is of no use. Efficiency and Effectiveness both have a prominent place in the business environment. Characteristics or Features of Management ‘The characteristics or features of management are discussed below: 1. Continuous Process: Management is a never-ending process. It is concerned with constantly identifying the problems and solving them by taking adequate steps. It is Management an ongoing process. Management is not a one-time act but is a Continuous an ongoing series of interrelated activities. The sum total Process of these activities is known as management process. 2. Goal-oriented: The success or failure of the management depends on how far itis able to attain the desired objectives. ‘The functions and activities of the manager lead to the achievement of organisational objectives. 3, Pervasive: Management is required everywhere. Management is not restricted to business firms only; it is applicable to profit-making or non-profit-making, business or non-business organisations. Management is universal. 4, Group Activity: Each individual performs his/her role in the projects and departments of an organisation. Then only the management function is executed, Management functions cannot be performed in isolation because management is a group activity. 5. Multidimensional: Management incorporates three aspects: (i) Management of Work: All organisations are set up to perform various tasks. and achieve goals. Management ensures that work is accomplished effectively and efficiently. ‘Management of People: Management has to get the goals accomplished through the people only. Management of people is necessary for the efficient working of the organisation. (ii). Management of Operations: Operations are the steps that are performed in the production cycle like purchase of raw material, work in progress and completion of finished goods. Management of operations means linking people to work for the attainment of organisational goals. Gi 6. Dynamic: Business environment keeps on changing and accordingly management has to make changes in goal, objectives and other activities for the attainment of organisational goals. External environment influences the decision of managers and the management style.Business Studies—case yy, making at all levels. Every situation et 2 i ve ‘ision-1 a 7. Decision-making: Management process involves decisionmaking on how effective the ‘ it tert has an altemative course of action, Choosing the best al management is. but it: 8. Intangible: Management function cannot be physically seen but ination in th Presence of management can be felt by seeing the coordinat across all management functions. 5 presence can be felt. The e working environment ang zs ising, staffing, directin, 9. Composite Process: Main functions of management are planning, grin mnetient a and controlling. These functions are not independent and all foncgons’ a Seen interdependent. That is why management is considered a composite P! ror Wdnagemes 10. Management Signifies Authority: Authority is the power to compel athe raver ar eae cannot discharge its functions without authority. Essence of management so it is important that management has an element of authority. en iy 11, Leadership: Management must be capable of inspiring, motivating and woe iC a Sails of on team members. A.well-motivated employee performs and helps in accomplishing the goals of the organisation, 12, Management is Science and Art: Science teaches us to know while art teach iB 10 do, Management is definitely an art as it involves the personalised skills of managers but the body of knowledge, methods, principles, etc., underlying the management practice is science. 13. Management is Multidisciplinary: Management involves managing men, money, methods and Processes, etc. All such aspects involve complex interrelationship in a real dynamic economic environment. Thus, study of management discipline involves study of other related subjects such as economics, sociology, psychology, etc., in an integrated manner to arrive at solutions. OBJECTIVES OF MANAGEMENT The main objectives of management are as follows: 1. Organisational Objectives: Management is responsible for setting and achieving objectives for the organisation. The main objective of any organisation should be to utilise human and material resources in the best possible manner. These are survival, profit and growth, (a) Survival: The basic objective of any business is survival. In ord ler to survive, an organisation Must earn enough revenues to cover costs. (b) Profit: Management has to ensure that the organisati for the continued successful operation of the enter and risks of the business. ion makes a profit. Profit provides incentive "prise. Profit is essential for covering costs (©) Growth: To remain in the industry, management must full the organisation. There are many indicators of growth suc head count of employees, number of products, 2. Social Objectives: As part of society, every o1 has a social obligation to fulfil. This includes: ly exploit the growth potential of ‘h as sales volume, increase in the etc. There can be other indicators of growth "ganisation, whether it is business or non-business, (a) Providing quality products at fair prices to society (b) Environment-friendly methods of production, (©) Giving employment opportunities to the disadvantaged sections of (d) Filing tax returns and paying taxes honestly (¢) Providing basic amenities like schools and creches to employees and contributing to improving living standards P society. ‘[Nature and Significance of Management oi (f) Preserving social and ethical values (g) Increasing GDP (Gross Domestic Product) and wealth of the nation 3. Personal Objectives: Organisation consists of different types of individuals who join it to satisfy their diverse needs. Management has to reconcile personal goals with organisational objectives to keep harmony in the organisation. The individual may seck to satisfy needs such as: (a) Competitive salaries and perks (b) Peer recognition (c) Personal growth and development (@) Job security (e) Good working conditions IMPORTANCE OF MANAGEMENT The importance of management is discussed below: 1, Helps in Achieving Group Goals: It arranges the factors of production and organises the gathered resources, integrates them in an efficient manner to achieve organisational goals. Management makes full utilisation of men, machines, money, etc. These resources are coordinated, directed and controlled in such a manner that the business organisation achieves its desired goals. 2, Reduces Costs: Management helps in utilising the resources in an efficient manner. It gets maximum results through minimum input by proper planning. Adequate planning and organising of resources helps in cost reduction. 3. Optimum Utilisation of Resources: Management utilises all the physical and human resources productively. Management provides maximum utilisation of scarce resources by selecting its best possible alternate use. If employees and machines are producing its maximum, there is no wastage of any resources. Management helps in optimum utilisation of these resources by implementing all the management functions. 4, Establishes Sound Organisation: ‘To establish sound organisational structure is one of the most important objectives of management. Management helps in hiring the right persons, having right skills, training and qualifications. Management helps in clearly defining authority and responsibility lines across all functions of the business organisation. 5. Establishes Equilibrium: Management enables the organisation to survive in changing environment. It keeps pace with the changing environment. Management helps the organisation to adapt itself to the changing needs of the environment. Management helps to maintain equilibrium between the organisation and the dynamic environment which leads to growth and survival of the organisation. 6. Helps in the Development of Society: Good management helps in avoiding wastage of scarce resources. It maximises profits which are essential for the success and survival of the business organisation and at the same time offers good quality producty/services to the society and cteates employnient opportunities. It improves standards of living of the people and brings prosperity to the organisation as well as to society. NATURE OF MANAGEMENT Various management thinkers have different opinions about, management being considered as a science, an art ot a profession. To conclude whether management is science, art or profession, we must understand the features of science, art and profession and compare them with the meaning and features of management.Management as a Science Science can be defined as a systematic body of knowledge based on leigealy observed findings and facts. Science comprises certain principles which ca" be verified and can establish cause and effect relationship. Features 0} science are: * Systematised body of knowledge * Principles based on observations and experiments + Cause and effect relationship : Managementasa * Universal validity of principles Profession > Let's see if management is having all the above ingredients of science: 2 (a) Systematised Body of Knowledge: Management is based on the principles and concept emerged over the years. Success of an wi F organisation depends on how well the principles of management are applied by the managers in particular situation. (b) Principles based on Observations and Experiments: Management principles have emerged through observations and experiments. Managers observe and analyse the scientific principles of management and apply them in a particular situation. The observations in management are not objective because management is the study of human behaviour and no scientific principle can predict human behaviour with certainty. () Cause and Effect Relationship: Principles of management create a cause and effect relationship between different factors like responsibility without authority of doing a task is of no use. However, management is not exact science like physics, chemistry, etc. That is why the study of management falls under “normative science” while physics and chemistry come under “positive science” (a) Universal Validity of Principles: Science comprises certain principles which can be verified. Similarly, management principles are tested and verified. These are universally valid. Thus, management is definitely a science. All the ingredients of science’ are present in management, However, management is not comparable with physical science, namely, physics and chemistry because management deals with human behaviour, which cannot be subjected to scientific tests. Management Principles cannot be said to be universal truths. Their applications need customisation by the managers depending on the situation. Management, thus, falls under normative science. Management as an Art Art can be defined as a systematic body of knowledge involving theoretical concepts which requires skills and creativity to achieve the desired results, Features of art are: * Systematic body of theoretical knowledge * Personalised application + Practice and creativity Let's see if management is having all the above ingredients of art: (a) Systematic Body of Knowledge: In management there is a stematic and organised body of knowledge available which can be acquired by undergoing manavericl eecqons weanised body agerial studies, (b) Personalised Application: Personal skill and creativity are the hallmark of apply that knowledge. In management also, all managers learn man creativity depends on how well they use these principles under different sewat en (c) Practice and Creativity: Every artist requires regular practice of art to become perfect. With experience, managers also improve their managerial skill and efficiency art as a discipline to ‘agement principles. But theirNature and Significance of Management Pes ‘Management is both science as well as art. Like science, it has a systematic and well-organised body of knowledge and like art it requires theoretical concepts, personal skill, creativity and practice to apply such knowledge in the best possible way. Management as a science and management as an art do not contradict each other. They go hand in hand. Management—Both a Science and an Art ‘Management is both a science and an art. Management combines features of both science as well as art. Icis considered a science because it has a systematised and well-organised body of knowledge. Itis called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge and art deals with the application of knowledge and skills. Science and art both exist together in every function of management. Management as a Profession Profession can be defined as an occupation backed by specialised knowledge and training in which entry is restricted by the code of conduct of the professional body. Features of profession are: + Systematic body of knowledge + Restricted entry * Professional associations + Ethical code of conduct ‘+ Service motive Let's see if management is having all the above ingredients of profession: {a) Systematic Body of Knowledge: In every profession, there is practice of systematic body of Knowledge which helps the professionals to gain specialised knowledge of that profession. In case of management also, there is vast literature of systematic body of knowledge which can be acquired by management studies so as to perform core functions of management. (b) Restricted Entry: The entry to a profession is restricted through an examination or degree whereas there is no legal restriction on appointment of a manager. However, now many companies prefer to appoint persons only with an MBA degree. (©) Professional Associations: Every professional has to get himself registered with his association before practising that profession, like the Bar Council of India for lawyers, Medical Council of India for doctors, Institute of Chartered Accountants of India for Chartered Accountants, etc. In management, various management associations are set up at national and international levels which have some membership rules and set of ethical code. But legally it is not compulsory for managers to become a part of these organisations. (@) Ethical Code of Conduct: For every profession, there in an ethical code laid down by professional organisations and are binding on all professionals of that profession. In case of management, there is a growing emphasis on ethical behaviour of managers. The code of conduct for managers is not legally binding. (©) Service Motive: The basic motive of every professional is to serve the clients. Strictly speaking, management may not be regarded as a unique and distinct profession since all management personnel are not bound by a common ethical code of conduct evolved by a professional body: But, by and large, management is run by those who possess specialised knowledge of their discipline and act in a professional manner. ,Business Studies—CBSE xy, Top-level Management Middle-level Management LEVELS OF sésnncinawe/: LEVELS OF MANAGEMENT Board of Director) Chief Executives & ‘Geneta Manager Sa Publ eaton Manger et Foreman, wer evel seclon oft, Management Siemon The levels of management can be classified into the following categories: Top-level Management Toprlevel management is also referred to as the administrative level of management. Top level of Oanagement is made up of the Board of Directors, Chief Executive Officer (CEO), Chief Operating Officer (COO), President or Vice President, etc. The role of top management is setting goals for the organisation and formulating policies and plans to achieve those goals. The top level of management is accountable to sharcholders for the performance of the organisation. Top management mainly focuses on Planning and coordinating functions. The highlighting features of the role of top management in a business organisation are: + Top management sets the goals and objectives of the organisation. * It lays down broad policies to be followed to achieve the desired results, * It prepares the strategies. + It appoints middle-level management executives. It provides guidance to subordinates. ‘« It controls and coordinates all the functions of the organisation, Middle-level Management Middle-level management is also referred to as the executory level; they level management and are responsible for the organisation’ and directo Middle-level management is made up of departmental manag communicators between the top level and the lower level as other data of the business organisation to the top level. The hii management in a business organisation are: are subordinates to the top- n of low-level management ers and branch managers. They are the they transfer information, reports and ighlighting features of the role of middle + They execute the plans of the orga ion in accordance with the policies of top management. ‘* They make plans for the lower-level management, * They help in the control and coordination activities within the departments, * They evaluate the performance of the junior staff. + They interpret policies of the top management and ex Plains the future course of action to the lower management level. They send performance reports and other data to the top managementNature and Significance of Management 19 Lower-level Management The lower-level management is also referred to as the supervisory or the operative level of managers. The lower-level managers are the first line of managers, They spend most of their time addressing the functions of the business organisation as instructed by the managers above them, This management level is made up of the foreman, the line boss, the shift boss, the section chief, the head nurse, superintendents, etc. The key features of the role of lower management in a business organisation are: + To allocate tasks and responsibilities to the operative employees. + ‘To ensure quality and be responsible for the production quantity. + To give instruction to workers on their day-to-day jobs. ‘+ To give periodic reports of the workers to the middle-level managers. + They communicate with the workers to address their problems. + They provide training to the workers. + They ensure that discipline is maintained in the business organisation. + They motivate the workers to attain their targets. FUNCTIONS OF MANAGEMENT ‘The various functions of management are as under: 1, Planning: It is the basic function of management. Itdeals with deciding in advance the most appropriate course of action for achievement of predetermined goals. Planning is necessary to ensure proper utilisation of human and non-human resources. Planning can be: * Short-term planning (weekly, monthly and quarterly), + Medium-term planning (annual), and + Long-term planning (more than 3 years). 2. Organising: Organising is the function of management which follows planning. It is a function in which human, . physical and financial resources are synchronised. Organising is a step-by-step process by which managers create authority responsibility relationships. Thus, organising is a systematic process to ensure proper implementation of plan by grouping of activities, bringing together physical, financial and other resources and assigning tasks to different people at different levels to achieve common goals. 3. Staffing: Staffing is concerned with ensuring that the organisation has the right number of people and the right kind of people at the right places, at the right time and that they are doing the right things. The entire recruitment, selection and training procedure falls under this staff policy and ensures that the right type of employee is in right place, 4, Directing: Directing is that interpersonal aspect of management which deals directly with influencing, guiding, supervising, motivating the subordinates for the achievement of organisational Goals. It is a continuous managerial process that goes on throughout the life of the organisation. In other words, directing involves determining the course, giving orders and instructions and providing dynamic leadership. inS Business Studies—case yy s of management, viz., planning Controlling is followaup action to other functions of Mt) AS fornisiceiaty oe organising, staffing and directing, It is a process of comparing the = cording to plans and, 4 Set standards of the company to ensure that activites are performed accor” functioning of the Not, then taking corrective action. Proper control is essential for the pi Sa aioe “ organisation, Controlling is required at all levels of management. But the na s control differs at all levels of management. CONCEPT OF COORDINATION Coordination is not a one-time attempt to integrate individual goals. It is a continuous process that keeps going as long as the organisation Survives. Coordination is the essence of management. It is not a separate function of management. It is required for every managerial function. Coordinating function is an essential function for achieving a balanced organisational performance. Coordination and cooperation are two words that look similar and often used interchangeably. However, both are different. Coordination Cooperation Difference between Coordination and Cooperation RSIS fio : 1 Meaning Itisan orderly arrangement of group It means working together to achieve a efforts in pursuit of common goals. common goal. 2. Scope Its broader than cooperation. Itisa part of coordination. Nature It Is evolved deliberately by the Itarises out of informal relations. ‘managers. 4. Relations Can be achieved through both Can be achieved through informal relations. formal and informal relations. 5. Need Essence of management Not considered as an essence of management Status When anew member is introduced, Cooperation can be preserved when a new takes some time to build member is introduced. coordination. ‘Some important definitions of coordination are given below: “Coordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals.” ETS “Coordination isthe integration of several parts into an orderly hole to achieve the purpose of understanding.” edie “Coordinationis balancing and keeping together the team by ensuring sutable allocation of tasks to the various members and seeing that the tasks are performed with the harmony among the members themselves" read Characteristics of Coordination ‘The features of coordination are given as follows: 1. Continuous Process: Coordination is not a one-time function. It is i @ continuous process. It starts with the planning function and links together all other management functions,‘Nature and Significance of Management 2. Coor peer Pervasive: Coordination is required at all levels of management. Various activities in an organisation are interlinked so it is essential to create a link between all activities, Coordination helps in creating this link for the achievement of desired goals, Integrates Group Efforts: Coordination is required in case of group efforts, There is no need of coordination when only single individual is working, Iis required to integrate group efforts for the timely achievement of desired goals. Unity of Action: Coordination is required for unifying the efforts of different individuals. This is required for avoiding conflicts in the organisation. The main conflicts and coordinate the efforts of all individuals, Responsibility of all Managers: Coordination is not the responsibilty of only top management but itis the responsibility ofall managers working at different levels, Top-Level managers coordinate with the middle-level managers who in turn coordinate with the low-level management for the implementation of policies and procedures, aim of a manager is to eliminate Deliberate Function: Coordination is never established by itself but it is a deliberate effort. Along with cooperation, coordination is required to achieve organisational objectives. ation as the Essence of Management Coordination brings unity of action and integrates different activities of an organisation. Coordination is considered as the essence of management. It is required in each and every function and at each and every stage. Coordinating function cannot be separated from other functions of management. Management seeks to achieve coordination through its basic functions of planning, organising, staffing, directing and controlling. Coordinating function cannot be separated from other functions as described below: 1 Coordination through Planning: Planning facilitates coordination by integrating the various plans through mutual discussion and exchange of ideas. Coordination through Organising: When management groups various activities and assigns them to the departments or to individuals, coordination of the activities is of utmost priority. Authority and responsibility among individuals should be coordinated, Coordination through Staffing: A manager should always work on bringing the best talent to the organisation. While selecting the staff, managers should coordinate with other managers to understand the requirements. Managers should bring the right number of personnel in various Positions, with the right type of education and skills so that there are right men on the right job. Coordination through Directing: The purpose of giving orders, instructions and guidance to the subordinates is served only when there is coordination between the managers and the subordinates. Coordination through Controlling: Management ensures through coordinating that there is no difference in actual performance as compared to the standard performance so as to achieve the organisational goals.Business Studies—CBSE xy, IMPORTANCE OF COORDINATION The need and importance of coordination arises due to: ‘ie arganteallone ao |. Growth in Size: As organisations grow in size, the number of people in lee bring unity of increases. So, coordination is needed to integrate their efforts and activities, i.» action. x ising out of the 2. Specialisation: In modern organisations, there is a high degree of Spe a deat Conflie compleaities of modem technology and the diversity of tasks to be performed. To a it is i coordinate and ensure between the specialists employed and other employees, it is important to unity of action. 3. Functional Differentiation: The functions of an organisation are divided nl departments or divisions. All departments have their own objectives, policies, strategies, etc. So, there may be a conflict between them. Therefore, coordination is necessary to link the activities of various departments and to avoid conflicts among them, rm * Management: Management has been defined as a process of getting things done with the aim of achieving goals effectively and efficiently. * Efficiency and Effectiveness: Efficiency is doing things right. Effectiveness is doing the right things. * Toprlevel Management: Top-level management is also referred to as the administrative level of management. It is made up of the Board of Directors, Chief Executive Officer (CEO), Chief Operating Officer (COO), President or Vice President, etc. + Middle-level Management: Middle-level mana: subordinates of the top-level mana low-level management. agement is also referred to as the executory level; they are agement and are responsible for the organisation and direction of the * Lower-level Management: Lower-level managements also referred to as the supervisory or the operative level of management. The lower-level managers are the fist line of managers. They spend most of their time addressing the functions of the business organisation as instructed by the managers above them, + Coordination: '5 an orderly arrangement of group efforts in pursuit of common goals. * Cooperation: t means working together to achieve @ common goal, (Taian MULTIPLE CHOICE QUESTIONS (MCQs) 1. The element that aims at integrating group efforts to achieve group objectives is called (2) Cooperation (b) Coordination (0) Management (d) Direction 2. Managing Director is the position of level of management ina large company, (@) top (b) middle (C) lower (A) middle and lower 3. Management is multidimensional because it has dimensions, (a) one (b) two (0) three (d) four‘Noture and Significance of Management 4, Management is a (a) continuously (© goal directed process as it aims at achieving specified goals. (b) future (d) deliberately 5. Is/are a systematised body of knowledge that explains certain general truths or operation of general laws. (@) Science (0) Profession (b) Art (d) Art and Profession both 6. Coordination is required at all levels of management in all management functions because it is in nature. (@) continuous (© intangible 7. Which one of the following is not an aspect of the charact (@) Management of work (0. Management of goals 8, Which of the following is not a feature of Art? (@) Cause and effect relationship (OQ Personalised application 9. Coordination is (@) function of management (0) the essence of management (b) flexible (@) pervasive of management being multidimensional? (b) Management of people (@) Management of operations (b) Systematised body of knowledge (d) Practice and creativity (b) an objective of management (@) alevel of management 10. The following is not an objective of lower management: (a) Quality products (© Innovation ‘11. Foremen and Supervisors are. (a) part of top-level management (© part of operational management 12. Marketing manager is (@) part of top-level management (© part of operational management 13, Chief Marketing Officer (@) part of top-level management “» + (©) part of operational management (b) Growth and development (d) Policy formulation (b) part of middle-level management (@) not part of management (b) part of middle-level management (@) not part of management (b) part of middle-level management (@). not part of management 14. Mr.A is the production manager of X Ltd. He was able to produce the desired output but not within the stipulated time. In this case the manager was (@) effective only, (0) both effective and efficient, (b) efficient only. (d) neither effective nor efficient.ieee ™ Business Studies—CBSe yy ANSWERS ae) 8. (a) 1. (b) 2. @ 2.0 40 5. (a) 6, (d) é z 9% 10. (ad) 1. 12. (b) 13, (a) 14. @) TRUE OR FALSE State with reasons whether the following statements are true or false. 1. “Management principles can be applied in all types of activities. Ans. True, management is pervasive, 2. “Coordinatior is required at all levels of management in all management functions.’ Ans, True, coordination is pervasive. 3. “Management involves the decisions by a manager and it is not a group activity.” Ans. False, management is a group activity because it nites individual efforts in common direction. 4. Top management level is responsible for implementing plans and strategies of the organisation. Ans. False, middle management level. 5. Effectiveness refers to the ability to produce maximum output from the given input with the least wastage of time, effort, money, raw materials, etc. Ans. False, Efficiency. SHORT ANSWER QUESTIONS 1. What do you understand by management? Ans. Management has been defined as a process of getting things done with the aim of achieving goals effectively and efficiently. 2. What Ans. Efficiency means whatever you produce or perform should be done in a perfect way. Efficiency is doing things right. 3. What is effectiveness in management? efficiency in management? Ans. Effectiveness is doing the right things. 4. What is budget? fans. A budget isa tool that managers use to plan and control the use of scare resources. Companies can use budget-to-actual comparisons to evaluate individual performance. 5. Why is management considered both science and art? Ans. Management is both science and art. Management combines features of both science as well as art Its considered as a science as it has a systematised and well-organised body of knowledge, scaled ey ot because managing requites certain skils which are personal possessions of managers, 6. What is coordination? Ans. Itis an orderly arrangement of group efforts in pursuit of common goals,Nature and Significance of Management sey 7. Give any two features of top-level management. Ans. The features of the role of top management in a business organisation are: (i) Top management sets the goals and objectives of the organisation. (i) ttlays down broad policies to be followed to achieve the desired results, 8. Give any two features of middle-level management. ‘Ans. The features of the role of middle management in a business orga ition are: (i) They execute the plans of the organisation in accordance of the policies of the top management. (i) They make plans for the lower-level management. 9. Give any two features of lower-level management. ‘Ans. The features of the role of lower management in a business organi {i) To allocate tasks and responsibilities to the operative employees. (i) To ensure quality and be responsible for the production quantity. 10. Which function of management is known as essence of management? Ans. Coordination is known as the essence of management. 11. Which function of management helps in synchronisation of different departments? Ans. Coordination, 12. Why is management dynamic in nature? ‘Ans, Business environment keeps on changing and accordingly management has to make changes in goal, objectives and other activities for the attainment of organisational goals. External environment influences the de jon of managers and the management style. 13. Name the level of management engaged in the following roles: (@) Launching a new product {b) Recruitment of employees {c) Hiring workers on daily wages (d)_ Changes in the capital structure of the company Ans. (2) Top level (0) Middle level (©) Lower level (@) Top level 14, Mention the level of management for the following: (@)_ Mr.A, heading the North zone of XYZ Bank _(b) Mr.B, supervisor in a factory (6) Mr.C, branch manager of PQR Limited (@) Mr.D, head of XYZ Bank Ans. (2) Top Management (b) Operating Management () Middle Management (d) Top Management 15, How is management intangible in nature? ‘Ans. Management function cannot be physically seen but its presence can be felt. he presence of management ‘Gan be felt by seeing the coordination in the working environment and across all management functions. |ize puis Sues—cose (2S) snes [AND APPLICATION-BASED QUESTIONS op tion which is used to organise the 1. The manager of PQR Limited is of the view that organising is the Lune ion vy of management involves Positions in an organisation. Is the manager's view correct? If not, w filing positions in the organisation? ving, std KedpiNg fle Ans. The view of the manager is not correct. Staffing function of management involves "NS: J the positions in the organisation structure. Bt tnetot en i i ereas Mr. e 2. Mr. A is of the opinion that management is required in all types of orga ac niract opinion? opinion that management is not required in non-profit organisations. Who is of Ans. Mr.A, Management is pervasive. ie 3. Various management thinkers are of the view that management has a systematised bod iat ledge that is based on logical observations and certain universal truths. Identify the nature of igement highlighted here. Ans. Management as a science. 4. ABC Limited is a manufacturer of washing machines. In the previous two quarters, the sales figures dropped by 20%.The production department is blaming the sales department and the sales department is blaming the production department. Which aspect of management is lacking in ABC Limited? Ans. Coordination. 5. If a manager is able to achieve the target production of 10,000 units at a high cost, is he efficient or effective? Ans. He is effective but not efficient, 6. A and B are two friends working in Q Limited and Z Limited respectively. A told 8 that he manages the strategic budgeting and launch of products of his company. B explained his role to A and told him that he is assigned with the duties of recruitment and selection of employees. Identify the levels of management on which A and B are working. Ans. A—Top level, B—Middle level. 7. POR Limited has a target to sell two lakh units of reftigerators in three months. To achieve this target, the production department employed contractual staff to produce rigorously and the sales department started making strategies to sell the products. Which characteristic of management is highlighted here? Ans. Management is a group activity. 8. Pizza Hut keeps on introducing new varieties of pizzas. Which characteristic of management is highlighted here? ‘Ans. Dynamic. 9. Wardrobe India Limited is a chain of ladies’ garment boutiques where most of the work is done manually Due to coming of international brands in India, the company is finding it difficult to compete on two fronts—finishing and embroidery work. The production manager realised that without modeen mechines it will not be possible for them to survive for long.The company purchases new hi-tech modern machines from Germany. During the production process,the manager observes that the quality of production is not as per standards and very often production is disrupted due to breakdown of machines The workers get frustrated by continuous rejection of output and start showing resistance towards new technolsy To increase the efficiency ofthe workers the company decides to train their workers on-he ob, iiiger the able guidance of specialists. The workers who are abe to pick the skis are promoted and made inchorge of the not-so-trained groups. This creates a positive impact and everybody wants to learn, Suggestions from the workers are valued and workers are encouraged to communicate freely. ee Identify and explain the importance of management highlighted here by quoting the lines from the above.‘Nature and Significance of Management ash ‘Ans. The importance of management highlighted in the above para are: 1, Management Helps in Achieving Group Goals Quote: "The production manager realised that without modern machines it will not be possible for them to survive for long,” 2. Management Creates a Dynamic Organisation Quote: “Due to coming of international brands in India, the company is finding it difficult to compete...... The company purchases new hi-tech modem machines from Germany,” 3, Management Increases Efficiency Quote: “To increase the efficiency of the workers, the company decides to train their workers ‘on-the-job under the able guidance of specialists.” 4. Management Helps in Achieving Personal Objectives Quote: “The workers who are able to pick the skills are promoted and made incharge of the not-so-trained groups.” 10. Pure Living Private Limited is a company engaged in the business of manufacturing water and air purifiers. The profits earned by the company are adequate for its existence and progress. One of the beliefs of the company is that a satisfied employee creates a satisfied customer, which leads to creation of profits ultimately resulting in satisfied shareholders. The company pays competitive salaries and incentives to all its employees. The employees are pleased working with the company because of personal growth and development. ‘The company has set up various training institutes in India, At these institutes, free of cost training to repair air and water purifiers is imparted to people living in the rural sector. Is the management of Pure Living Private Limited fulfiling its objectives? Identify and state by quoting from the above para. Ans. Yes, the management of Pure Living Private Limited is able to satisfy all three of its objectives, These objectives are listed below: 1. Organisational Objectives: These objectives aim at prosperity and growth of the organisation. It includes efforts towards survival, profit and growth of the organisation. (Quote:*The profits earned by the company are adequate for its existence and progress.” 2. Personal Objectives: These objectives aim at satisfying the needs of the workforce. Quote: “The company pays competitive salaries and incentives to all its employees. The employees are pleased working with the company because of personal growth and development.” 3. Social Objectives: Each organisation also contributes towards the betterment of the society. Quote: “The company has set up various training institutes in India. At these institutes, free of cost training to repair air and water purifiers is imparted to people living in the rural sector.” 11. Siddhivinayak Private Limited is a well-tecognised restaurant in the heart of Delhi. The restaurant has created a niche in the gourmet circle. Nakul is responsible for setting up new restaurants for the organisation. He identifies prime locations and arranges for funds. Chirag looks after the overall functioning of one of the restaurants. He ensures that the food quality is maintained anid resources are used optimally. For home _ delivery orders, Karan assigns areas to the delivery boys and sets the delivery time limits for them. At what levels of management are Nakul, Chirag and Karan working in Siddhivinayak Private Limited, Support your answer with two reasons for each level—one by quoting from the above para and one more. ‘Ans. (2) Nakul is working at Top level of Management as: (0) he is responsible to establish overall objectives of the organisation and formulating strategies for their establishment. (ii) he is responsible for setting up new restaurants, looking for prime sites and arranging for funds. aBusiness Studies—CBSE xy, (b) Chirag is working at Middle level of Management as: (0) he is responsible to evaluate and regulate the departmental performance. = i he food quality (ihe looks after the overall functioning of the restaurant and ensures that t quality is maintained and resources are used optimally. (0) Karan is working at Lower level of Management as: @ heis acting as a liaison officer between middle-level management and the workers. (i. he assigns necessary duties and responsibilities to the workers. He allocates areas to the delivery boys and sets time limits for them. 12, Chill-Out Private Limited is a company engaged in the business of manufacturing beverages. In the month of March, Shyam, the manager of Chill-Out Private Limited, plans to bring out a new drink for the summer season. He distributes free samples of the new launch and gets feedback from customers. The feedback feport clearly indicates that customers have preference for mango flavour over strawberry flavour and Jamun flavour over imli. Accordingly, the production is adjusted and the marketing department prepares its promotional and advertising campaigns. As per the sales performance report, Shyam further modifies his production plans. (a) Identify and explain the concept of management highlighted in the present case. (b) State the characteristics of the concept identified in the above para. Ans. (a) Coordination: Itis a force that binds all the departments of an organisation and ensures that all the ies of production, sales, marketing are directed towards achieving organisational goals. Thus, coordination is the essence of management. (b)_ The identified characteristics of coordination are: @ Continuous Process: Coordination is not a one-time function. It is a continuous process. It starts with the planning functions and links together all other management functions. (ii) Pervasive: Coordination is required at all levels of management. Various activities in an organisation are interlinked so it is essential to create a link between all activities. Coordination helps in creating this link for the achievement of desired goals. Integrates Group Efforts: Coordination is required in case of group efforts. There is no need of coordination when only a single individual is working Itis required to integrate group efforts for the timely achievement of desired goals. (iv) Unity of Action: Coordination is required for unifying the efforts of different individuals. This is required for avoiding conflicts in the organisation. The main aim of a manager is to eliminate conflicts and coordinate the efforts of all individuals. 13. Mr A is working as the plant superintendent of POR Limited, He is responsible for implementing and controling plans and strategies for the plant where he is working. Ths includes operational handing of the plant, supervising workers and reporting the progress to the COO (Chief Operating Officer) identy and explain the level at which Mr. A is working. Ans. Middle-level Management: Middle-level management is also referred to as the executory level they are subordinate to the top-level management and are responsible for the organisation and diccron of the lowrlevel management. Middle-evel management is made up ofthe departmental manasers and branch managers. They are the communicators between the top level and the lower level as they transfer information, reports and other data of the business organisation to the top level, x 14, Mr.A and Mr. B are both managers of X Limited Mr As the CEO ofthe company and Mi isthe branch manager ofX Limited. Both ae managing the company at cferent levels. At which levels of management are they working? State any two functions performed by their level of management,Nature and Significance of Management ‘Ans. Mr.A—Top-level Management Mr.B—Middle-level Management Functions performed by Top Management: () Top management sets the goals and objectives of the organisation. It lays down broad policies to be followed to achieve the desired results. Functions performed by Middle Management: (i) They execute the plans of the organisation in accordance of the policies of the top management. (ii) They make plans for the lower-level management. 15, In XYZ Limited, production and sales department have to coordinate their work so that production takes place according to the market demand. State the feature of coordination highlighted in this case. ‘Ans, Unity of Action: Coordination is required for unifying the efforts of different individuals. his is required for ‘avoiding conflicts in the organisation. The main aim of a manager is to eliminate conflicts and coordinate the efforts of all individuals. Tau ten 1. "Coordination is the essence of management’ Explain the statement. 2. Explain the objectives of management. 3. Management is an inexact science. Explain the nature of management in detail. 4, ‘Management is both a science and an art.” Explain the statement. 5. Why is management important for an organisation? 6. “Coordination is needed at all levels of management.” Explain the statement. 7. Write a note on the different levels in management hierarchy with their features. ‘8. Explain the various functions of management. 9. Define management and state its features. 10. Write a note on the modern concept of management. Us simeUSiCety VeRY SHORT ANSWER TYPE QUESTIONS (SOLVED) 1, What is meant by management? ‘Ans. Management is the art of getting things done through and with people in formally organised groups. 2, Name any two important characteristics of management. Ans. (i) Continuous Process: Management is a never-ending process. )) Goal-oriented: The success or failure of the management depends on how far it is able to attain the desired objectives. 3. Identify and state the force that binds all the other functions of management. ‘Ans. Coordination is the force that binds all the other functions of management. 4. List any two indicators of growth of an organisation. ‘Ans. Two indicators of growth of an organisation are: (i) Profit: Regular profit-earning organisations grow faster. (i) Expansion: Expansion leads to more employees and turnover which leads to growth.EU Business Studies—CBSE Xi 5. Indian Railways has launched a new broad gauge solar power train which is going to be a path-breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 litres of diesel and ensure a cost saving of 12,00,000 per year. Name the objectives of management achieved by Indian Railways in the above case. ‘Ans. The Management of indian Railways is efficient as the task was done correctly and with minimum cost. The management used resources in an efficient manner. : SHORT ANSWER TYPE QUESTIONS (SOLVED) 1. Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions? idle level, The basic features of the role of middle management in a business Ans. Ritu is working at the ‘organisation are: {) They execute the plans of the organisation in accordance with the policies of the top management. (i) They make plans for the lower-level management 2. State the basic features of management as a profession. Ans. The basic features of Management as a profession: () Systematic Body of Knowledge: In every profession, there is practice of systematic body of knowledge which helps the professionals to gain specialised knowledge of that profession. In case of management also, there is vast literature on systematic body of knowledge which can be acquired by management studies so as to perform core functions of management. (i) Restricted Entry: The entry to a profession is restricted through an examination or degree whereas there is no legal restriction on appointment of a manager. However, now many companies prefer to appoint persons only with an MBA degree. 3. Why is management considered to be a multidimensional concept? Ans. Management is considered as a multi-faceted concept because dimensions. These are: is a complex activity that has three main () Management of Work: All organisations are set up to perform various tasks and goals. Management ensures that work is accomplished effectively and efficiently. (i) Management of People: Management has to get the goals accomplished through people only. Management of people is necessary for the efficient working of the organisation. (ii) Management of Operations: Management of operations means linking people and work together for the attainment of organisational goals. Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods which are not of good quality and do not meet customer expectations. The finance department blames both production and marketing for the declining return on investment and bad marketing. What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track? ‘Ans. Coordination is missing in Company X. All the departments are not coordinating with each other and that is why they end up blaming each other for the poor performance.Nature and Significance of Management pice To bring coordi ion, management should take the following steps: (i) After the goals are established, it should be communicated to all departments. (ii) Managers should ensure that all departments coordinate with each other. (iii) In case of any difference, managers should try and strike a balance so that all departments work in the same direction, (iv) Regular meetings between the departmental heads should be organised to solve problems. y Coordination is the essence of management. Do you agree? Give reasons. ‘Ans. Coordination brings unity of action and integrates different activities of the organisation. Coordination is considered as the essence of management. Its required in each and every function and at each and every stage. Coordinating function cannot be separated from other Tunctions of management. Management seeks to achieve coordination through its basic functions of planning, organising, staffing, directing and controlling. 6. Ashita and Lakshita are employees working in Dazzling Enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of € 100 per bracelet, Ashita was able to produce the required number within the stipulated time at a cost of € 55,000 whereas Lakshita was able to produce only 450 units at a cost of € 90 per unit. State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer. ‘Ans. Efficiency refers to the ability to produce maximum output from the given input with the least wastage of time, effort, money, raw materials, etc. Effectiveness refers to the extent to which something has been done to achieve the targeted outcome. Ashita was effective because she completed her task within time but not efficient as they had to bear a high cost of & 55,000. Lakshita was neither effective nor efficient as she did not complete her task on time, LONG ANSWER TYPE QUESTIONS 1. Management is considered to be both an art and science. Explain. 2. Do you think management has the characteristics of a full fledged profession? 3. "Asuccessful enterprise has to achieve its goals effectively and efficiently.” Explain. 4. Management is a series of continuous interrelated functions. Comment. 5. A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision? 6. A firm plans in advance and has a sound organisational structure with efficient supervisory staff and control system but on several occasions it finds that plans are not being adhered to. It leads to confusion “and duplication of work. Advise remedy. iBUSINESS STUDIES Our Other Popular Titles Textbooks for CBSE Class XIl : + Double Entry Book Keeping f + Accounting for Not-for Profit Organisations. ‘and Partnership Firms (Vol. TS. Grewal + Accounting for Companies (Vo. TS. Grewal z > Analysis of Financial Statements TS. Grewal ~- ® Computer Science with Python Preeti Arora “s Informatics Practices with Python Preeti Arora + Introductory Macroeconomics 1G. Dhingra ® Indian Economic Development VK. Puri Essentials of Physical Education Dr. Loveleena Nadir & Dr. Anil Nadir Essentials of English Grammar and Composition Rajendra Pal _selttutors* for CBSE Class XII Examinations ATutor Teaches you the entire subject comprehensively Understands your probiem areas and helps you to solve them. Trains you for the final examination. Crients your mind to perform better. Revises the subject thoroughly and quickly for you, a These are the five keys to brilliant success. Get your own SELF-TUTOR® for the following subjects: An Aid to Accountancy ‘An Aid to Mathematics Sts SULTAN CHAND & SONS (P) ITD 24, DARYAGANJ, NEW DELHI -110 002, INDIA + ayhoks enn tw sha rd. om © BBornctrebok com/Sutontand $65 Here is your Personal Tutor in the comfort of your home at your command. % Business Studies ISBN 978-09-89174.56-4 Ni ae 385 Coes