Chapter – 2

Principles of Management
Meaning
1. Principles of management refer to the broad and general guidelines which help in decision
making.
2. These principles are given by:
(a) F. W. Taylor (Scientific principles of management)
(b) Henri Fayol (General principles of management)

Taylor’s Principles of Scientific Management

1. Harmony Not Discord
(a) Factory management system implies that managers act as a link between the owners and
the workers.
(b) Since as managers, they have a mandate of getting the work done through others/workers.
(c) While getting the work done, there is a possibility of a class conflict.
(d) This conflict is beneficial for none.
(e) So, Taylor believed that there should be harmony in an organization.
(f) For this, both management and workers should understand the need and importance of
each other.
(g) To achieve this, mental revolution is needed. Mental revolution means complete
transformation in thinking.
(h) If mental revolution takes place,
• Workers would not go on strike.
• Would not make any unreasonable demand.
• Would be ready to work hard and embrace the change.
(i) Management would also be ready to share the gains with workers, if any.

2. Science, Not Rule of Thumb

(a) In the earlier days of industrial revolution, in the absence of any factory management
theories, managers used to rely on their personal judgment for attending the problem they
confronted. This was known as the Rule of Thumb.
(b) Rule of Thumb enabled managers to face the problem as it arose but suffered from the
limitation of trial-and-error approach.
(c) Scientific management means knowing exactly what you want your men to do and they do
it in the best possible and cheapest manner.
(d) If every manager follows their indigenous Rule of Thumb, it’s obvious that everyone would
not be equally effective.
(e) There can only be one best method for maximizing the efficiency. This best method can be
developed through study and analysis. The new method developed, would substitute the
traditional practice of an organization.
(f) For eg. Even a small task such as loading pigs of iron into box cars can be scientifically
planned and managed. More sophisticated the process, greater would be the efficiency.

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3. Development Of Each and Every Person to His/her Greatest Efficiency and Prosperity
(a) Industrial efficiency to a large extent depends upon the competencies of the workers.
(b) Taylor was of the view that concern for the training and development of the employees
should be built in right from the process of their selection.
(c) Worker should be selected scientifically. They should be given task that suits their physical,
mental and intellectual capabilities.
(d) By this, they will be able to produce more and earn more. This could result in development
of each and every person to his or her greatest efficiency and prosperity.

4. Co-Operation, Not Individualism

(a) There should be complete co-operation in an organization, instead of individualism.
(b) Competition should be replaced by co-operation in an organization. This principle is an
extension of principle of harmony, not discord; where both, the management and the
workers, should understand the need and importance of each other.
(c) For this, the management should not close their ears to the constructive suggestions of the
workers. If their advice results in substantial benefits, they should be rewarded.
(d) Worker should be taken into confidence when any important decisions are to be made.
(e) Workers should not go on strike, must ready to work hard, embrace the changes and should
not make any unreasonable demand.

Techniques Of Scientific Principles of Management

A. Work Study
Work study is categorized into 4 parts, namely:
1. Time study 2. Fatigue study 3. Motion study 4. Method study

1. Time Study
(a) It seeks to determine the standard time taken to do a well-defined job.
(b) To determine the standard time, there are several parameters and readings that should
be taken and tools and equipment’s can be used.
(c) Time study depends upon the following three factors: -
• Cycle time operation
• Time measurement cost
• Frequency of task to be performed.
(d) If the standard time is determined, it helps to know: -
• Number of workers required
• Labor cost
• Compensation and incentive plans.

2. Fatigue Study
(a) A person is bound to feel tired, physically or mentally if he/she does not get rest while
working. Rest intervals would enable a person to regain stamina and work with same
efficiency as before. So, fatigue study seeks to determine: -
• Number of rest intervals
• Duration of each rest intervals
(b) The causes of fatigue are: -
• Long working hours
• Uncordial relationships
• Doing unsuitable jobs
• Operating in bad working environments

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3. Motion Study
(a) Study of motions or movements like lifting, putting, changing positions, etc. that are to
be undertaken while doing a particular job is motion.
(b) On close examination of body movements, motion can be categorized as: -
• Productive
• Unproductive
• Incidental
(c) Unnecessary motions should be eliminated. Taylor and his associate Frank Gailberth
reduced the motions from 18 to 5 in the process of brick layering. This increased the
efficiency by almost 4 times.

4. Method Study
(a) The objective of method study is to find the best way of doing a task. To determine the
best method, there are several parameters. Right from the procurement of raw materials,
till the goods are delivered to customers, each and every activity is a part of method
study.
(b) Taylor devised the concept of assembly line by using method study.
(c) Many automobile companies are still using it quite successfully, like Ford.
(d) The objective of whole exercise of method study is to: -
• Maximize the sale
• Reduce the cost
• Enhance customer satisfaction

B. Standardization And Simplification

1. Standardization refers to the process of setting of standard for each and every activity of
the organization.
2. Standards can be set for the performance of men, material, quantity, quality, process etc.
3. Standards are the benchmarks that an organization would like to achieve. The objective of
standardization is: -
• To reduce the given line of product to limited sizes, shapes, varieties, dimensions,
color, etc.
• To develop interchangeability of manufactured parts and components.
• To set standards for excellence of quantity and quality of output.
• To set standards for performance of men and material.
4. Simplification aims at eliminating the unnecessary sizes or variety from product line.
5. Standardization aims at devising the product line whereas simplification aims at eliminating
unnecessary items.
6. Simplification results in following benefits:
• Increase in sales
• Increased turn over
• Reduced level of inventory
• Fuller utilization of resources
• Reduction in wastages

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C. Differential Piece Wage System

1. Taylor was a strong advocate of piece wage system. He always wanted to distinguish
efficient workers with inefficient ones.
2. So, he introduced differential piece wage system. For eg. A standard is set that a worker
producing greater than 10 units per day would receive Rs.50per unit and less than10 units
would get Rs.40. Now, for instance, an efficient worker producing 11 units would get Rs.550
and an inefficient worker producing 9 units would get only Rs. 360.
3. The difference of Rs. 190 is good enough to encourage inefficient workers to perform
efficiently.

D. Functional Foremanship
1. Separation of planning and execution function to the lowest level of shop floor by extending
the principle of division of work and specialization is functional foremanship.
2. A worker must possess some qualities like manual dexterity, determination, honesty, grit,
energy, educated, tact, judgment, intelligence, good health, specialized knowledge but
these qualities are not found in a single person so, Taylor proposed 8 specialists.

Under planning in charge, the following are included:

a) Instruction card clerk:
Provides the instruction of the task to be performed.
b) Route clerk:
Defines the route of production.
c) Time and cost clerk:
Prepares time and cost sheets
d) Disciplinarian:
Ensures discipline in the factory.

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Under production/execution in charge, the following are included:

a) Gang boss:
Ensures that tools and equipment are ready for production
b) Repair boss:
Ensures smooth functioning of the machines.
c) Speed boss:
Ensures timely production.
d) Inspector:
Inspects the quality of the output.

Fayol’s Principles of Management

1. Initiative
(a) Worker should be encouraged and carry out plans on their own.
(b) Taking first step with self-motivation is initiative. If initiative results in substantial benefits,
they should be rewarded. It is a trait of an intelligent person.
(c) Worker should be encouraged to take initiative but it does not mean going against the
practices of an organization just for the sake of looking different.

2. Stability Of Tenure of Personnel

(a) Employee turnover ratio/attrition ratio should be minimized for maintaining efficiency.
(b) Employees are selected after due and rigorous procedure, but once they are selected, they
should be kept at their fixed position.
(c) They should be given a reasonable time to show their performance. Any aphorism for
performance would create instability in the minds of the employees and they may tend to
leave the organization. This increases selection, training, and recruitment costs.

3. Order
(a) A place for everything and everything in its place essentially means orderliness.
(b) If men and material are available at right time and right place, it helps in increasing
efficiency and if men and material are not available at right time and right place, it may
cause hindrances in the performance of an organization.

4. Espirit De Corps
(a) Management should promote a spirit of unity and harmony in an organization. If team spirit
is properly promoted, there would be minimum use of penalties.
(b) If team spirit is not properly promoted, there would be loss of co-ordination and goals would
be difficult to achieve.
(c) Lastly, ‘I” should be replaced with ‘WE’ in all the conversations by management with
workers.

5. Centralization And Decentralization

(a) Concentration of decision-making powers with top level management is centralization
whereas dispersal of decision-making powers with lower-level management is
decentralization.
(b) There is a need to strike a balance between:
• Centralization, for retention of authority.
• Decentralization, for increasing subordinates’ involvement.
(c) For small scale organization, centralization policy is much more suitable whereas for large
scale organization decentralization policy is more suitable.

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6. Unity Of Command
(a) Meaning - A person should receive orders from one boss and shall be answerable to one
and only one boss.
(b) Implications - It implies at individual level / superior subordinate level.
(c) Aims – It aims at avoiding confusions and dual subordination.
(d) It resembles to military organizations.
(e) Fayol gave a lot of importance to this principle because if this principle is violated then: -
• Discipline would be in danger.
• Order will be disturbed.
• Stability would be threatened.
• Authority would be undermined.

7. Unity Of Direction
(a) Meaning - All departments (group of people having common objective) must be moving in a
common direction having ‘one head, one plan’.
(b) Implication - It implies at organizational level.
(c) Aims – to prevent duplication of efforts and overlapping of activities.

8. Discipline
(a) Obedience to organizational rules and regulations necessary for working of an organization.
(b) Discipline is all about honoring the commitments without any prejudice towards anyone.
(c) Discipline requires: -
• Good superiors at all levels.
• Clear and fair agreements.
• Judicious use of penalties.

9. Equity
(a) Good sense and experience are needed to treat employees as fairly as possible.
(b) Management should exercise kindliness and justice in their Behaviour so as to get hard
work and loyalty from them.
(c) Fayol does not rule out use of force. Instead, he believes that lazy personnel should be dealt
sternly as it would give a message that everyone is equal in the eyes of management.
(d) There should be no discrimination among employees on the basis of caste, class, creed,
color, gender, nationality, language, etc.

10. Remuneration To Employees

(a) The overall pay and compensation should be fair and equitable.
(b) Here ‘FAIR’ means:
• It should be within the paying capacities of the company.
(c) It should ensure a reasonable standard of living.

11. Division Of Work

(a) Work should be divided into small and manageable activities. A person who is trained to
perform these tasks should be given these tasks.
(b) Division of work leads to specialization. It is the best way of using human effort.
(c) Question: What is the intent of division of work?
Answer: The intent of division of work is to produce more and earn more with the same
human efforts.

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12. Authority Of Responsibility

(a) Authority refers to right to command others and get obedience for the same.
(b) Responsibility is duty or an obligation to perform an assigned task. They are corollary to
each other.
(c) Authority can be formal as well as informal.
(d) Authority can be: -
• Official: Right to command others.
• Personal: Individual decision-making authority.
(e) There has to be a proper balance between authority and responsibility.
(f) An organization must build sufficient safeguards to avoid misuse of managerial powers.

13. Subordination Of Individualism Interest to General Interest

(a) An organization is a collection of individuals with diverse needs and wants.
(b) Every individual joins an organization for achieving their personal goals. Whereas an
organization expects that these individuals work in a common direction for accomplishing
organizational goals.
(c) In all situations, organizational goals must have priority over individual goals.

14. Scalar Chain

(a) Every organization has superiors and subordinates. The formal lines of communication and
authority that runs from highest rank to lowest rank in an organization is scalar chain.
(b) Every superior and subordinate in an organization must follow the formal lines of
communication.
(c) Gang Plank: - In an emergency situation, when a subordinate of one department
communicates with the subordinate of another department by traversing scalar chain, it is
termed as gang plank.

Features / Characteristics / Nature of Principles of Management

1. Mainly Behavioral
(a) Principles of management are mainly behavioral in nature because they aim at influencing
human beings and human Behaviour.
(b) It is not that they do not apply to things, situation, phenomenon at all but it is just a matter
of emphasis.
(c) Moreover, it provides a better understanding of relationship between men and material.

2. Contingent
(a) The application of principles of management are contingent in nature because they apply
at a particular point of time, under prevailing situations.
(b) Moreover, its application can be changed according to the requirements of the organization.

3. Provides General Guidelines to The Actions

(a) Principles of management are general guidelines to actions. It does not provide readymade
straitjacket solutions to managerial problems as in real world the problems are: -
• Complex
• Dynamic
• Result of various factors
(b) However, one should not underestimate significance of principles of management as even a
small guideline can help in solving a major problem.

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4. Cause And Effect Relationship

(a) Principles of management aim at developing relationship between cause and effect as such
relationship would help in: -
• Solving recurring problems quickly
• Avoiding wastages with trial-and-error approach.
(b) Question: Why are principles of management not perfect?
Answer: Principles of management are less than perfect because: -
• Problems are quite complex
• Heterogeneous
• Result of various factors.
(c) For eg. Various factors, in an emergency situation, someone must take charge and the rest
must follow.
(d) However, for strategic decisions, requiring cross functional expertise more participative
approach should be followed.

5. Universal Applicability
(a) Principles of management intend to apply to all types of organizations whether: -
• Business or non-business
• Private sector or public sector
• Trading or manufacturing
• Small or large
(b) However, the extent of applicability would depend upon: -
• Nature of business
• Type of business
• Size of business

6. Formed By Experimentation and Observation

(a) Principles of management are formed after: -
• Repeated experimentation
• Careful observation
• Collective wisdom of managers
(b) Eg. Time study, fatigue study, etc. are done after repeated experimentation.

7. Flexibility
(a) Principles of management are flexible in nature because it can be altered or modified
according to the needs and wants of the circumstances.
(b) They are not rigid prescriptions that are to be followed absolutely. Managers have discretion
to alter or modify them.

Importance Of Principles of Management

1. Meeting Changing Environment Requirements
(a) Principles of management are general guidelines to actions.
(b) They are not rigid prescriptions that are to be followed absolutely.
(c) They can be altered or modified to the needs and wants of the circumstances.
(d) Thus, it helps in meeting the changing environmental requirements.

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2. Optimum Utilization of Resources and Effective Administration

(a) Resources are limited within an organization. So, it should be put to optimum use. Here,
optimum use means deriving maximum benefits with minimum cost.
(b) Principles of management establishes relationship between cause and effect, as it would
help: -
• Solving recurring problems quickly.
• Avoiding wastages of trial-and-error approach.
(c) Effective administration necessitates impersonalisation of managerial conduct and powers
so that powers are used with due discretion.

3. Management Training, Education and Research

(a) Principles of management are at the heart or at the core of the management. So, it serves
as the basis for management training, education and research.
(b) In courses like BBA and MBA, application of principles of management is taught at beginner
level.

4. Scientific Decision
(a) Decisions should be based on facts, thoughtful and justifiable in terms of intended purpose.
(b) Decision should emphasize on logic rather than blind faith.
(c) Decisions should be free from bias and prejudices.
(d) Decision should be SMART (Specific, Measurable, Attainable, Realistic and Time bound).
(e) Principles of management helps in making such decisions.

5. Provides Useful Insights into Reality

(a) Principles of management provide managers with useful insights into real world situations.
(b) Adherence to these principles / situations would: -
• Improve their knowledge.
• Understanding the recurring problems.
• Solving such problems quickly.

6. Fulfilling Social Responsibilities

(a) The increased awareness of public forces businessman, especially limited companies, to
fulfill social responsibilities.
(b) Management theories and principles of management have evolved taking this into
consideration.

Difference Between Principles of Management, Techniques of Management, Values and

Science
1. Principles of management are general guidelines to actions and Behaviour.
2. Series or sequence of steps that are to be followed for application of principles are techniques
of management.
3. Science is a systematized body of knowledge that explains general truths and operational laws.
4. Values are something that have moral connotations. Concepts that society hold with high
esteem are values.

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Difference Between Taylor’s and Fayol’s Principles of Management.

Basis Taylor’s Principles of Fayol’s Principles of Management
Management
Unity Of Command Did not feel that it was important Staunch Proponent
(Firm/ Strong Believer)
Personality Scientist Practitioner

Expression Scientific Principles of General theory of Management

Management
Basis Of Formation Experimentation and observation Personal observation and practice
Application Only to specialized situations or Applies to all types of organization
factories
Perspective Applies at shop floor level To level Management

Definitions
1. A managerial principle is a broad and general guideline for decision making and behaviour.

2. Techniques are procedures or methods, which involve a series of steps to be taken to

accomplish desired goals.

3. Values are something, which are acceptable or desirable. They have moral connotations.

4. In the earlier days of the Industrial Revolution, in the absence of an established theory of
factory organisation, factory owners or managers relied on personal judgment in attending to
the problems they confronted in the course of managing their work. This is what is referred to
as ‘rule of thumb’.

5. “Scientific management means knowing exactly what you want men to do and seeing that
they do it in the best and cheapest way.

6. Standardisation refers to the process of setting standards for every business activity; it can be
standardisation of process, raw material, time, product, machinery, methods or working
conditions.

7. Simplification aims at eliminating superfluous varieties, sizes and dimensions while

standardisation implies devising new varieties instead of the existing ones.

8. Motion study refers to the study of movements like lifting, putting objects, sitting and
changing positions, etc., which are undertaken while doing a typical job.

9. Mental revolution involves a change in the attitude of workers and management towards one
another from competition to cooperation.

10. Discipline is the obedience to organisational rules and employment agreement which are
necessary for the working of the organisation.

11. Authority is the right to give orders and obtain obedience.

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12. The concentration of decision-making authority is called centralisation

13. Dispersal of decision-making authority among more than one person is known as
decentralisation.

14. The formal lines of authority from highest to lowest ranks are known as scalar chain.

15. A place for everything (everyone) and everything (everyone) in its (her/his) place, essentially it
means orderliness.

16. Initiative means taking the first step with self-motivation.

Practice Questions

1. Sanchit, after completing his entrepreneurship course from Sweden returned to India and
started a coffee shop ‘AromaCoffeeCan’ in a famous mall in New Delhi. The speciality of the
coffee ship was the special aroma of coffee and a wide variety of flavours to choose from.
Somehow, the business was neither profitable nor popular. Sanchit was keen to find out the
reason. He appointed Sandhya, an MBA from a reputed college, as a manager to find out the
causes for the same. Sandhya took feedback from the clients and found out that though they
loved the special unique aroma of coffee but were not happy with the long waiting time being
taken to process the order. She analysed and found out that there were many unnecessary
obstructions in between which could be eliminated. She fixed a standard time for processing
the order. She also realised that there were some flavours whose demand was not enough. So,
she also decided to stop the sale of such flavours. As a result, with in a short period Sandhya
was able to attract the customers.
Identify and explain any two techniques of scientific management used by Sandhya to solve
the problem.

2. Pawan is working as a Production Manager in CFL Ltd. which manufactures CFL bulbs. There
is no class-conflict between the management and workers. The working conditions are very
good. The company is earning huge profits. As a policy, the management shares the profits
earned with the workers because they believe in the prosperity of the employees.
State the principle of management described in the above paragraph.

3. Telco Ltd. manufactures files and folders from old clothes to discourage the use of plastic files
and folders. For this, they employ people from nearby villages where very less job opportunities
are available. An employee, Harish, designed a plan for cost reduction but it was not welcomed
by the production manager. Another employee gave some suggestions for improvements in
design, but it also was not appreciated by the production manager.
State the principle of management that is violated in the above paragraph.

4. ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost equal
division of work and responsibilities between workers and the management. The management
even takes workers into confidence before taking important decisions. All the workers are
satisfied as the behaviour of the management is very good.
State the principle of management described in the above paragraph.

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5. Nutan Tiffin Box service was started in Mumbai by the Mumbai Dabbawalas. The Dabbawalas
who are the soul of entire Mumbai aim to provide prompt and efficient services by providing
tasty homemade tiffin to all office goers at the right time and place. The service is uninterrupted
even on the days of bad weather, political unrest and social disturbances. Recently, they have
started online booking system through their website ‘mydabbawala.com’. Owing to their
tremendous popularity amongst the happy and satisfied customers and members, the
Dabbawalas were invited as guest lecturer by top business schools. The Dabbawalas operate
in a group of 25-30 people along with a group leader. Each group teams up with other groups
in order to deliver the tiffins on time. They are not transferred on frequent basis as they have
to remember the addresses of their customers. They follow certain rules while doing trade—no
alcohol during working hours; no leaves without permission; wearing white caps and carrying
ID cards during business hours. Recently, on the suggestion of a few self-motivated fellow men,
the Dabbawalas thought out and executed a plan of providing food left in tiffins by customers
to slum children. They have instructed their customers to place red sticker if food is left in the
tiffin, to be fed to poor children later.
State any one principle of management given by Fayol and one characteristic of management
mentioned in the above case.

6. ‘Aapka Vidyalaya’ believes in the holistic development of students and encourages team
building through a mix of curricular, co-curricular and sports activities. On its Founder’s Day,
a stage performance had to be put up. A committee of ten prefects was constituted to plan
different aspects of the function. They all decided to use recycled paper for decoration. There
was a spirit of unity and harmony and all the members supported each other. With mutual
trust and a sense of belonging, the programme was systematically planned and executed.
Kartik, one of the prefects, realised that the group had unknowingly applied one of the
principles of management while planning and executing the programme. He was so inspired
by the success of this function that he asked his father to apply the same principle in his
business. His father replied that he was already using this principle.
(a) Identify the principle of management applied for the success of the programme.
(b) State any two features of management highlighted in the above paragraph.

7. Voltech India Ltd. is manufacturing LED bulbs to save electricity. However, it is running under
heavy losses. To revive from the losses, the management shifts the unit to a backward area
where labour is available at a low cost. The management also asks the workers to work overtime
without any additional payments and promises to increase the wages of the workers after
achieving its mission. Within a short period, the company starts earning profits because both
the management and workers honour their commitments.
State the principle of management described in the above paragraph.

8. The principles of Taylor and Fayol are mutually complementary. One believed that management
should share the gains with the workers while the other suggested that employees’
compensation should depend on the earning capacity of the company and should give them a
reasonable standard of living.
Identify and explain the principles of Fayol and Taylor referred to in the above paragraph.

9. The principles of Taylor and Fayol are mutually complementary. One believed that management
should not close its ears to constructive suggestions made by the employees while the other
suggested that a good company should have an employee suggestion system whereby
suggestions which result in substantial time or cost reduction should be rewarded.
Identify and explain the principles of Taylor and Fayol referred to in the above paragraph.

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10. Nikita and Salman completed their MBA and started working in a multinational company at
the same level. Both of them worked hard and were happy with their employer. Salman had
the habit of back-biting and wrong reporting about his colleagues to impress his boss. All the
employees in the organisation knew about it. At the time of performance appraisal, the
performance of Nikita was judged to be better than Salman. Even then their boss, Mohammed
Sharif, decided to promote Salman stating that being a female, Nikita would not be able to
handle the complications of a higher post.
Identify and explain the principle of management which was not followed by this, multinational
company.

11. Radhika opens a jewellery showroom in Jaipur after completing a course in jewellery designing.
She has employed eleven persons in her showroom. For greater productivity, she divides the
work into small tasks and each employee is trained to perform his/her specialised job. The
sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount,
whereas the decision to give any further discount rests with Radhika as the final authority. In
the earlier days of starting of the business, five of her employees were asked to put in extra
hours of work. In return she had promised to give them a special incentive within a year.
Therefore, after six months when the business was doing well, she awarded a cash bonus to
each of these employees to honour her commitment. However, when it comes to settling the
conflicts among her employees, she tends to be more biased towards her female employees. In
context of the above case:
(a) Identify and explain the various principles of management that are being applied by
Radhika by quoting lines from the paragraph.
(b) Identify and explain the principle of management which is being violated by Radhika by
quoting lines from the paragraph.
(c) State any one effect of the violation of the principle of management by Radhika as identified
in part(b) of the question.

12. Rajveer works as a plant superintendent in a carpet making factory. In order to complete the
export orders on time, the production manager asks him to make the workers work over time
whereas the finance manager is strictly against this practice because it will increase the cost
of production. Moreover, Rajveer feels that since the company is manufacturing handmade
carpets as well as machine made carpets there is a lot of overlapping of activities. Therefore,
there should be two separate divisions for both of them wherein each division should have its
own in charge, plans and execution resources. In context of the above case:
(a) Identify and explain the principle of management which is being violated.
(b) Also identify the principle of management that Rajveer feels should be implemented in the
factory.
(c) Give any two differences between the principle of management as identified in part (a) and
part (b) respectively.

13. Neeraj is selected for the post of software developer in an IT Company. On the first day of his
joining Mehul, his project manager tells Neeraj that during the course of his work he will come
across many such opportunities which may tempt him to misuse his powers for individual or
family’s benefit at the cost of larger general interest of the company. In such situations, he
should rather exhibit exemplary behaviour as it will raise his stature in the eyes of the
company. Also, for interacting with anyone in the company on official matters, he should adopt
the formal chain of authority and communication. In context of the above case, identify and
explain the various principles of management that Mehul is advising Neeraj to follow while
doing his job.

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14. Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder is his
elder brother who is doing his Masters in Hospital Administration from Delhi after completing
his B.Sc. course. During vacations when Satinder comes home, Davinder shows him the
business studies project that he is preparing on the topic ‘Principles of Management’. Satinder
tells him that these principles are also a part of MBA course curriculum at the beginner’s level
as they form the core of management in practice. But he finds these principles different from
those of pure science. In context of the above case:
(a) Outline the concept of principles of management.
(b) Why does Satinder find the principles of management different from those of pure
science?
(c) Why do the principles of management form the core of management in practice? Explain
by giving any two points highlighting the importance of principles of management.

15. Gurpreet is running a retail mart in Varanasi to provide various types of products of daily use
under one roof to the buyers. The employee turnover in his business is very high and he is
perpetually on a look out for new staff. The fact of the matter is that he lacks managerial skills
and assigns work to his employees on adhoc basis without letting them settle down in a specific
work. This approach of his creates a sense of insecurity among the employees and they tend
to leave the job very quickly. However, he is a very god-fearing person and offers fair wages to
his employees so they can afford a reasonable standard of living. In context of the above case
(a) Identify and explain the principle of management which Gurpreet is unable to apply and is
perpetually on a look out for new staff.
(b) “He is a very god-fearing person and offers fair wages to his employees so they can afford a
reasonable standard of living.” Name and explain the relevant principle of management will
has been brought into effect by Gurpreet.

16. After finishing her BBA degree course, Tanya gets a job of Assistant Manager in a retail
company through the reference of her cousin Taruna who works in the same company as a
Senior Manager. Taruna decides to guide Tanya through her experience by making her aware
of the important facts about management in practice. She tells her that neither the principles
of management provide any readymade, straitjacket solutions to all managerial problems nor
they are not rigid prescriptions, which have to be followed absolutely. In context of the above
case:
(a) Identify the two features of principles of management mentioned in the above paragraph
by quoting lines from the paragraph.
(b) Why do the principles of management not provide readymade, straitjacket solutions to all
managerial problems?

17. Hritik is desirous of setting up a small factory to manufacture different kinds of eco-friendly
packaging materials. He proposes to adopt a logical approach to his business rather than hit
and trial method as he knows that this can result in tremendous saving of human energy as
well as wastage of time and materials. He plans to adopt paternalistic style of management in
practice in order to avoid any kind of class-conflict that may emerge between him and the
workers. Moreover, he plans to seek the opinion of his workers before taking any important
decisions and also offers incentives to them for providing valuable suggestions for the business.
In context of the above case, identify and explain the various principle of scientific management
that Hritik plans to apply in his business.

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Business Studies Principles Of Management

18. ‘Study Buddy Pvt. Ltd.’ is company dealing in stationery items. In order to establish standards
of excellence and quality in materials and in the performance of men and machines, the
company adheres to benchmarks during production. Moreover, its products are available in
limited varieties, sizes and dimensions thereby eliminating superfluous diversity of products.
Identify the technique of scientific management which has been adopted by ‘Study Buddy Pvt.
Ltd.’

19. Anshul owns a small-scale factory where utility items are prepared from waste material like
paper Mache items, paper and cloth bags, decorative material etc. Over the past few weeks, he
was observing that the productivity of one of his very efficient workers, Ramdas, is going down.
So, he decides to probe into the matter and confronts Ramdas one day. On being asked,
Ramdas shares with Anshul that he has deliberately slowed down in his work as many of the
less efficient workers often pull his leg saying that there is no need for him to be more efficient
when everybody is being paid at the same rate. Taking a lesson from this insight, Anshul
decides to implement an incentive bonus plan so as differentiate between efficient and
inefficient workers. In context of the above case. Name and explain the incentive bonus plan
that Anshul may implement so as differentiate between efficient and inefficient workers.

20. Swaraj is running an office furniture showroom. Most of his clients are businessmen and they
prefer to buy goods on credit. Keeping this in mind, he has given the power to the sales
manager, Mr. Bhardwaj, to offer a credit period of only 20 days, while negotiating a deal with
a buyer. On a specific day, Mr. Bhardwaj finds that if he can offer a credit period of 30 days as
an exception to a prospective buyer, he is likely to finalise a highly profitable deal for the
business. So Mr. Bhardwaj requests Swaraj to grant him additional authority for offering a
credit period of 30 days in the interest of the business. But Swaraj refuses to extend his
authority and as a result, the deal is not finalized. In context of the above case:
(a) Can Mr. Bhardwaj be held responsible for loss of the deal? Why or why not? Give a
suitable reason in support of your answer.
(b) Also, explain the related principle

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A Handbook on Business Studies Study Circle

 Principles Of Management Business Studies
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A Handbook on Business Studies Study Circle