Chapter 2

Principles of management
Case studies
Question 1.
Explain ‘unity of command’ and ‘equity’ as principles of general management. (CBSE, Delhi 2017)
Answer:
1. Unity of command: According to Fayol, there should be one and only one boss for every individual
employee. Dual subordination should be avoided. Fayol felt that if this principle is violated “authority is
undermined, discipline is in jeopardy, order disturbed and stability threatened”.
2. Equity: According to Fayol, “Good sense and experience are needed to ensure fairness to all employees,
who should be treated as fairly as possible.” This principle emphasizes on kindliness and justice in the
behaviour of managers towards workers. The managers should not discriminate against anyone on
account of gender, religion, language, caste, belief or nationality etc.
Question 2.
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. (CBSE,
Delhi 2017)
Answer:
The two techniques of scientific management used by Sandhya to solve the problem are: (any two)
1. Time study: It seeks to determines the standard time taken to perform a well-defined job. The objective of
time study is to determine the number of workers to be employed , frame suitable incentive schemes and
determine labour costs. By using time measuring devices for each element of task the standard time is
fixed for the whole of the task by taking several readings.
2. Simplification (Standardisation and Simplification): Simplification aims at eliminating superfluous
diversity of products in terms of varieties, sizes and dimensions. It not only helps to reduce inventories but
also save cost of labour, machines and tools. Thus it helps to increase turnover by ensuring optimum
utilisation of resources.
3. Motion study: Motion study refers to the study of movements of limbs of a worker while doing a
particular task. It seek to divide all such movements into three categories namely;
o Motions which are required
o Motions which are unnecessary
o Motions which are incidental.
Thus, motion study helps to eliminate unnecessary movements of a work and enables him to
complete the given task efficiently.
Question 3.
Explain briefly ‘discipline’ and ‘scalar chain’ as principles of general management. (CBSE, Delhi 2017)
Answer:
1. Discipline: Discipline refers to the obedience to organisational rules and employment
agreement which are necessary for the working of the organisation. According to Fayol, discipline requires
good superiors at all levels, clear and fair agreements and judicious application of penalties. .
 2. Scalar chain: According to Fayol the formal lines of authority from highest to lowest ranks are known as
scalar chain. He suggests that the,”Organisations should have a chain of authority and communication that
runs from top to bottom and should be followed by managers and the subordinates.” However in order to
ensure speedy communication during emergencies, Gang Plank is a shorter route that has been provided .
However, the superior has to be informed later on.

For example in the following case there is one head ‘A’ who has two lines of authority under her/ him. One
line consists of B-C-D- E-F. Another line of authority under ‘A’ is L-M-N-O-P. If ‘E’ has to communicate with
‘O’ who is at the same level of authoritythen she/he has to traverse the route E-D-C-B-A-L-M-N-O. This is
due to the principle of scalar chain being followed in this situation. However, if there is an emergency then
‘E’ can directly contact ‘O’ through ‘Gang Plank’ as shown in the diagram. But they should inform their
superiors about it later on.
Question 4.
Explain ‘order’ and ‘initiative’ as principles of general management. (CBSE, Delhi 2017)
Answer:
1. Order: According to Fayol, “People and materials must be in suitable places at appropriate time for
maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything
(everyone) in its (her/his) place’. A sense of orderliness will lead to increased productivity and efficiency in
the organization.
2. Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to
develop and carry out their plans for improvement. Suggestion system should be adopted in the
organization.
Question 5.
Explain briefly ‘Unity of Direction’ and ‘Order’ as principles of general mangement. (CBSE, OD 2017)
Answer:
1. Unity of direction: According to Fayol, each group of activities having same objective
must have one head and one plan. It prevents overlapping of activities. For example if a company is
manufacturing handmade carpets as well as machine made carpets there is likely to be 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.
2. Order: According to Fayol, “People and materials must be in suitable places at appropriate time for
maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything
(everyone) in its (her/his) place’. A sense of orderliness will lead to increased productivity and efficiency in
the organization.
Question 6.
Explain briefly ‘Initiative’ and ‘Esprit de Corps’ as principles of general mangement. (CBSE, OD 2017)
Answer:
1. Initiative: Initiative means taking the first step with self-motivation. The workers should’ be encouraged to
develop and carry out their plans for improvement. Suggestion system should be adopted in the
organization.
2. Espirit de corps: According to Fayol, ‘Management should promote a team spirit of unity and harmony
among employees.” A manager should replace T with ‘We’ in all his conversations with workers to
promote teamwork. This approach is will give rise to a spirit of mutual trust and belongingness among
team members. It will also reduce the need for using penalties.
Question 7.
Explain briefly ‘Remuneration of Employees’ and ‘Scalar Chain’ as principles of general mangement. (CBSE, OD
2017)
Answer:
1. Remuneration of employees: According to Fayol, the overall pay and compensation should be fair and
equitable to both employees and the organisation. The employees should be paid fair wages so that they
are able to maintain at least a reasonable standard of living. At the same time it should be within the
 paying capacity of the company. This will ensure pleasant working atmosphere and good relations
between workers and management.
2. Scalar chain: According to Fayol, the formal lines of authority from highest to lowest ranks are known as
scalar chain. He suggests that the,”Organisations should have a chain of authority and communication that
runs from top to bottom and should be followed by managers and the subordinates.” However in order to
ensure speedy communication during emergencies, Gang Plank is a shorter route that has been provided .
However, the superior has to be informed later on.

For example in the following case there is one head ‘A’ who has two lines of authority under her/him. One
line consists of B-C-D- E-F.
Another line of authority under ‘A’ is L-M-N- O-P. If ‘E’ has to communicate with ‘O’ who is at the same
level of authority then she/he has to traverse the route E-D-C-B-A-L-M-N-O.
This is due to the principle of scalar chain being followed in this situation. However, if there is an
emergency then ‘E’ can directly contact ‘O’ through ‘Gang Plank’ as shown in the diagram.
Question 8.
What did Taylor want to communicate through mental revolution? (CBSE, Sample Paper, 2017)
Answer:
Through the concept of mental revolution Taylor emphasized that there should be complete transformation in the
outlook of the management and workers towards each other. Managers should share surplus with workers and the
workers should work with full devotion instead of indulging in any form of class conflicts.
Question 9.
Briefly explain work study techniques that help in developing standards to be followed throughout the
organization.
Answer:
The various work study techniques that help in developing standards to be followed throughout the organization
are described below:
1. Time study: It seeks to determine the standard time taken to perform a well-defined job. The objective of
time study is to determine the number of workers to be employed, frame suitable incentive schemes and
determine labour costs. By using time measuring devices for each element of task, the standard time is
fixed for the whole of the task by taking several readings.
2. Motion study: Motion study refers to the study of movements of limbs of a worker while doing a
particular task. It seek to divide all such movements into three categories namely;
o Motions which are required
o Motions which are unnecessary
o Motions which are incidental.
Thus, motion study helps to eliminate unnecessary movements of a work and enables him to
complete the given task efficiently.
3. Method study: The objective of method study is to find out one best way of doing the job among the
various methods available of doing the job. This can be done by taking into consideration several related
parameters.
 4. Fatigue study: It seeks to determine the amount and frequency of rest intervals that should be provided to
the workers for completing a task. This technique helps in increasing productivity as the rest intervals will
help a person to regain stamina and work again with the same capacity.
Question 10.
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
alongwith 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.
1. State any one principle of management given by Fayol and one characteristic of management mentioned
in the above case.
2. Give any two values which the Dabbawalas want to communicated to society. (CBSE, Sample Paper 2016)
Answer:
1. The relevant principle of management given by Fayol is:
Stability of Personnel: The employee turnover should be minimized to maintain organizational efficiency.
Personnel should be selected and appointed after due and rigorous procedure. After placement, they
should be kept at their post for a minimum fixed tenure so that they get time to show results. Any
adhocism in this regard will create instability/insecurity among employees. They would tend to leave the
organisation.
(The other correct answers are principle of Discipline / Initiative / Espirit de corps) The characteristic of
management mentioned in the above case is:
Management is goal oriented as it seeks to integrate the efforts of different individuals towards the
accomplishment of both organizational and individual goals.
(The other correct answers are management is intangible/ group activity/dynamic)
2. The two values that Dabbawalas want to communicate to society are:
o Concern for poor/ Humanity
o Responsibility
Question 11.
‘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.
1. Identify the principle of management applied for the success of the programme.
2. State any two features of management highlighted in the above paragraph.
3. Identify any two values which ‘Aapka Vidyalaya’ communicated to society. (CBSE, Delhi 2015)
Answer:
1. The principle of management applied for the success of the programme is Espirit De Corps.
2. The two features of management mentioned in the above paragraph are as follows:
 o Management is goal oriented as it seeks to integrate the efforts of different individuals towards
the accomplishment of both organizational and individual goals.
o Management is pervasive as it is applicable to all types of organizations, (economic,
social, political) all sizes of organizations (small, medium, large) and at all levels of management
(top, middle and lower).
3. The two values that ‘Aapka Vidyalaya’ communicated to society are:
o Responsibility
o Sustainable development.
Question 12.
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.
1. State the principle of management that is violated in the above paragraph.
2. Identify any two values that the company wants to communicate to the society. (CBSE, OD 2014)
Answer:
1. The principle of management that has been violated in the above case is Initiative. Initiative means taking
the first step with self-motivation. The workers should be encouraged to develop and carry out their plans
for improvement. Suggestion system should be adopted in the organization.
2. The two values that the company wants to communicate to the society are
o Concern for environment
o Providing job opportunities
Question 13.
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.
1. State the principle of management described in the above paragraph.
2. Identify any two values which the company wants to communicate to society. (CBSE, OD 2014)
Answer:
1. The principle of management described in the above paragraph is ‘Harmony, not Discord’.
Taylor emphasised that there should be complete harmony between the management and workers
instead of a kind of class-conflict, the manager versus workers. To achieve this state, Taylor called for
complete mental revolution on the part of both management and workers. The prosperity for the
employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice
versa. He advocated paternalistic style of management should be in practice.
2. The two values that the company wants to communicate to the society are:
o Prosperity
o Sharing
Question 14.
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.
1. State the principle of management described in the above paragraph.
2. Identify any two values that the company wants to communicate to the society. (CBSE, Delhi 2014)
Answer:
1. The principle of management described in the above paragraph is ‘Discipline’. Discipline- It refers to the
obedience to organizational rules and the employment agreement. It is necessary for the systematic
 working of the organization. It requires good superiors at all levels, clear and fair agreements and judicious
application of penalties.
2. The two values that the company wants to communicate to the society are:
o Trust
o Sustainable development
Question 15.
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.
1. State the principle of management described in the above paragraph.
2. Identify any two values which the company wants to communicate to society. (CBSE, Delhi 2014)
Answer:
1. The principle of management described in the above paragraph is ‘Cooperation, Not Individualism’.
This principle is an extension of principle of ‘Harmony, Not Discord’. There should be complete
cooperation between the labour and the management instead of individualism. Competition should be
replaced by cooperation and there should be an almost equal division of work and responsibility between
workers and management. Also, management should reward workers for their suggestions which results
in substantial reduction in costs. At the same time, workers should desist from going on strike and making
unreasonable demands on the management
2. The two values that the company wants to communicate to the society are:
o Participation
o Sustainable development
Question 16.
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 Favol and Taylor referred to in the above paragraph. (CBSE, Delhi 2014)
Answer:
The principles of Fayol and Toylor referred to in the above paragraph are ‘Remuneration of employees’ and
‘Harmony, Not Discord’.
Remuneration of Employes: According to Fayol, the overall pay and compensation should be fair and equitable to
both employees and the organisation. The employees should be paid fair wages so that they are able to maintain
at least a reasonable standard of living. At the same time, it should be within the paying capacity of the company.
This will ensure pleasant working atmosphere and good relations between workers and management.
Harmony, Not Discord: Taylor emphasised that there should be complete harmony between the management and
workers instead of a kind of class-conflict, the managers versus workers. To achieve this state, Taylor called for
complete mental revolution on the part of both management and workers. The prosperity for the employer cannot
exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated
paternalistic style of management should be in practice
Question 17.
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. (CBSE, Delhi 2014)
Answer:
The principles of Fayol and Taylor referred to in the above paragraph respectively are ‘Initiative’ and ‘Cooperation
and Not Individualism’.
Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to develop
and carry out their plans for improvement. Suggestion system should be adopted in the organization.
Cooperation and Not Individualism: This principle is an extension of principle of ‘Harmony, Not Discord’.There
should be complete cooperation between the labour and the management instead of individualism. Competition
should be replaced by cooperation and there should be an almost equal division of work and responsibility
between workers and management. Also, management should reward workers for their suggestions which result
in substantial reduction in costs. At the same time, workers should desist from going on strike and making
unreasonable demands on the management.
Question 18.
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.
1. Identify and explain the principle of management which was not followed by this, multinational company.
2. Identify the values which are being ignored quoting the lines from the above paragraph. (CBSE, OD 2013)
Answer:
1. The multinational company didn’t follow the Principle of Equity. It emphasizes kindliness and justice in the
behaviour of managers towards workers. No discrimination should be made by them on the basis of caste,
creed, gender or otherwise.
2. The two values which are being ignored in the given case are:
o Honesty: “Wrong reporting about his colleagues to impress his boss.”
o Justice: “At the time of performance appraisal, the performance of Nikita was judged better than
Salman. Even then their boss, Mohammad Sharif, decided to promote Salman.”
Question 19.
Hina and Harish are typists in a company having the same educational qualifications. Hina gets Rs.3,000 per month
and Harish gets Rs.4,000 per month as salaries for the same working hours. Which principle of management is
being violated in this case? Name and explain the principle. (CBSE, Delhi 2006)
Answer:
The principle of Equity has been violated in this case. It emphasises kindliness and justice in the behaviour of
managers towards workers. No discrimination should be made by them on the basis of caste, creed, gender or
otherwise.
Additional Questions
Question 1.
Radhika opens a jewellry showroom in Jaipur after completing a course in jewellry 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:
1. Identify and explain the various principles of management that are being applied by Radhika by quoting
lines from the paragraph.
2. Identify and explain the principle of management which is being violated by Radhika by quoting lines from
the paragraph.
3. State any one effect of the violation of the principle of management by Radhika as identified in part(b) of
the question.
Answer:
1. The various principles of management that are being applied by Radhika are listed below:
 o Principle of Division of Work: According to Fayol, “The intent of division of work is to produce
more and better work for the same effort. Specialisation is the most efficient way to use human
effort.” He advocates that the principle of division of work is applicable to all kinds of work both
technical as well as managerial.
“For greater productivity, she divides the work into small tasks and each employee is trained to
perform his/her specialised job.”
o Principle of Centralisation and Decentralisation: The concentration of decision-making authority
is called centralisation whereas its dispersal among more than one person is known as
decentralisation. According to Fayol, “There is a need to balance subordinate involvement
through decentralisation with managers’ retention of final authority through centralisation.”
“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.”
o Principle of Discipline: Discipline refers to the obedience to organisational rules and employment
agreement which are necessary for the working of the organisation. According to Fayol, discipline
requires good superiors at all levels, clear and fair agreements and judicious application of
penalties.
“Therefore, after six months when the business was doing well, she awarded a cash bonus to
each of these employees to honour her commitment.”
2. The principle of management which is being violated by Radhika is Equity.
According to Fayol, “Good sense and experience are needed to ensure fairness to all employees, who
should be treated as fairly as possible.” This principle emphasizes on kindliness and justice in the
behaviour of managers towards workers. The managers should not discriminate against anyone on
account of gender, religion, language, caste, belief or nationality etc.
“However, when it comes to settling the conflicts among her employees, she tends to be more biased
towards her female employees.”
3. One effect of the violation of the Principle of Equity is that it may lead to job dissatisfaction among the
male workers.
Question 2.
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:
1. Identify and explain the principle of management which is being violated.
2. Also identify the principle of management that Rajveer feels should be implemented in the factory.
3. Give any two differences between the principle of management as identified in part (a) and part (b)
respectively.
Answer:
The principle of management which is being violated is stated below:
1. Unity of command: There should be one and only one boss for every individual employee. Dual
subordination should be avoided. Fayol felt that if this principle is violated, “authority is undermined,
discipline is in jeopardy, order disturbed and stability threatened”.
2. Unity of direction: All the units of an organization should be moving towards the same objectives through
coordinated and focused efforts. Each group of activities having the same objective must have one head
and one plan. This will lead to unity of action and coordination.
3. The difference between the principle of Unity of Command and Unity of Direction is given below:
S.No. Basis Unity of Command Unity of Direction
 One subordinate should
Each group of activities
receive orders from and
1. Meaning having same objective must
should be responsible to
have one head and one plan.
only one superior.

It prevents dual It prevents overlapping of

2. Aim
subordination. activities.

It affects an individual It affects the entire

3. Implications
employee organization.

Question 3.
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:
1. Identify and explain the various principles of management that Mehul is advising Neeraj to follow while
doing his job.
2. List any two values that Mehul wants to communicate to Neeraj.
Answer:
1. The various principles of management that Mehul is advising Neeraj to follow while doing his job are as
follows:
o Subordination of Individual Interest to General Interest: Through this principle, Fayol advocates
that in all circumstances, the interests of an organisation should take priority over the interests of
any one individual employee. This is essential because larger interests of the other employees
and the stakeholders i.e., owners, shareholders, creditors, debtors, financers, tax authorities,
customers and the society at large cannot be sacrificed for the interest of any one person. For
example, Mehul tells Neeraj that he might get tempted to misuse his powers for his or his family’s
benefit and so he must display exemplary behaviour to raise his stature in the eyes of the
company.
o Scalar Chain: According to Fayol, the formal lines of authority from highest to lowest ranks are
known as scalar chain. He suggests that “The organisations should have a chain of authority and
communication that runs from top to bottom and should be followed by managers and the
subordinates.” However, in order to ensure speedy communication during emergencies, Gang
Plank is a shorter route that has been provided. However, the superior has to be informed later
on.

For example, in the following case, there is one head ‘A’ who has two lines of authority under
her/ him. One line consists of B-C-D-E-F. Another line of authority under ‘A’ is L-M-N-O-P. If ‘E’ has
to communicate with ‘O’, who is at the same level of authority, then she/he has to traverse the
 route E-D-C-B-A-L-M-N-O.
This is due to the principle of scalar chain being followed in this situation. However, if there is an
emergency, then ‘E’ can directly contact ‘O’ through ‘Gang Plank’ as shown in the diagram.
2. The two values that Mehul wants to communicate to Neeraj are:
o Honesty
o Self restraint
Question 4.
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:
1. Outline the concept of principles of management.
2. Why does Satinder find the principles of management different from those of pure science?
3. 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.
Answer:
1. The principles of management serve as a broad and general guideline for the managerial decision making
and action.
2. Satinder finds the principles of management different from those of pure science because the
management principles are not as rigid as principles of pure science.
This is due to the fact that they deal with the human behaviour and thus, need to be applied creatively in
the light of given situation.
3. The importance of principles of management is described below:
o Providing managers with useful insights into reality: The principles of management provide the
managers with useful insights into real world situations and help them to enrich their knowledge,
ability and understanding of the diverse managerial situations and circumstances. It also enables
the managers to learn from past mistakes and conserve time by solving recurring problems
quickly.
o Optimum utilisation of resources and effective administration: The knowledge of management
principles enables the managers to foresee the cause and effect relationships of their decisions
and actions. As a result, it leads to optimum utilisation of scarce resources by avoiding wastage
associated with a trial-and-error approach. Principles of management limit the boundary of
managerial discretion so that their decisions may be free from personal prejudices and biases.
This facilitates effective administration within the organisation.
Question 5.
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:
1. Identify and explain the principle of management which Gurpreet is unable to apply and is perpetually on
a look out for new staff.
2. “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.
Answer:
 1. Stability of Personnel: Stability of personnel is principle of management which Gurpreet is unable to apply
and is perpetually on a look out for new staff. According to Fayol, “Employee turnover should be
minimised to maintain organisational efficiency”. Personnel should be selected and appointed after due
and rigorous procedure. After placement, they should be kept at their post for a minimum fixed tenure so
that they get time to show results. Any adhocism in this regard will create instability/insecurity among
employees. They would tend to leave the organisation.
2. Remuneration of Employees: According to Fayol, the overall pay and compensation should be fair and
equitable to both employees and the organisation. The employees should be paid fair wages so that they
are able to maintain at least a reasonable standard of living. At the same time, it should be within the
paying capacity of the company. This will ensure pleasant working atmosphere and good relations
between workers and management.
Question 6.
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 :
1. Identify the two features of principles of management mentioned in the above paragraph by quoting lines
from the paragraph.
2. Why do the principles of management not provide readymade, straitjacket solutions to all managerial
problems?
Answer:
1. The two features of principles of management mentioned in the above paragraph are as follows:
o General guidelines: The principles of management are guidelines to action. Since the real
business situations are very complex and dynamic and are a result of many factors, these
principles do not provide readymade, straitjacket solutions to all managerial problems. But the
importance of principles cannot be underestimated because even a small guideline may help to
solve a given problem.
o Flexibile: The principles of management are not rigid prescriptions which have to be followed
absolutely. They are flexible and can be modified by the manager when the situation so demands.
They give the manager enough discretion to decide which principle should be used under what
circumstances as individual principles are like different tools serving different purposes.
2. As the real business situations are very complex and dynamic and are a result of many factors, the
principles of management not provide readymade, straitjacket solutions to all managerial problems.
Question 7.
Raj and Simran are both qualified eye surgeons and good friends. After obtaining a certificate of practice, they
decide to persue a career of their own choice. Raj starts an eye care centre in the city whereas Simran joins a
government hospital in a small village. They meet after a long time in a party. Raj invites Simran to visit his eye care
centre and she accepts his invitation. She observes at his clinic that there is a fixed place for everything and
everyone and it is present there so that there is no hinderance in the activities pf the clinic. Also, Raj always tends
to replace T with ‘We’ in all his conversations with the staff members. Later on Raj shares with her that he always
deals with lazy staff sternly to send the message that everyone is equal in his eyes.
In context of the above case:
1. Identify and explain the various principles of management that Raj is applying for the successful
management of his eye care centre.
2. List any two values that Simran wants to communicate to the society by taking up a job in a village.
Answer:
1. The various principles of management that Raj is applying for the successful management of his eye care
centre are described below:
 o Order: According to Fayol, “People and materials must be in suitable places at appropriate time
for maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and
everything (everyone) in its (her/his) place’. A sense of orderliness will lead to increased
productivity and efficiency in the organization.
o Espirit De Corps: According to Fayol, “Management should promote a team spirit of unity and
harmony among employees.” A manager should replace T with ‘We’ in all his conversations with
workers to promote teamwork. This approach will give rise to a spirit of mutual trust and
belongingness among team members. It will also reduce the need for using penalties.
o Equity: According to Fayol, “Good sense and experience are needed to ensure fairness to all
employees, who should be treated as fairly as possible.” This principle emphasizes on kindliness
and justice in the behaviour of managers towards workers. The managers should not discriminate
against anyone on account of gender, religion, language, caste, belief or nationality etc.
2. The two values that Simran wants communicate to the society by taking up a job in a village are:
o Humanity
o Concern for poor
Question 8.
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:
1. Identify and explain the various principle of scientific management that Hritik plans to apply in his
business.
2. List any two values that he wants to communicate to the society by offering eco¬friendly packaging
material.
Answer:
1. The various principle of scientific management that Hritik plans to apply in his business are described
below:
o Science, not Rule of Thumb: Taylor believed that there was only one best method to maximise
efficiency and it could be developed through scientific study and analysis. This is because if the
managers rely on personal judgment in attending to the work related problems, it may suffer
from the limitation of a trial and error approach. Therefore, it is important for them to know what
works and why does it work. For this, they should adopt scientific method to substitute the ‘Rule
of Thumb or hit and trial method’ throughout the organisation.
o Harmony, Not Discord: In the paternalistic style of management, the employer takes care of the
needs of employees like a father. Taylor said that any kind of class conflicts between the workers
and the managers were not good; rather they must realise that each one is important. Therefore,
he emphasised that there should be complete harmony between the management and workers.
To achieve this, Taylor called for complete mental revolution on the part of both management
and workers by transforming their thinking. The management should share the gains of the
company, if any, with the workers and at the same time, workers should work hard.
o Cooperation, Not Individualism: Through this principle, Taylor suggests that there should be
complete cooperation between the workers and the management instead of individualism. This
principle is an extension of principle of ‘Harmony, Not Discord’. Both should realise the
importance of each other. In order to replace the feeling of competition with cooperation, the
management should not close its ears to any constructive suggestions made by the employees.
Rather, the workers should be rewarded for any of their valuable suggestions which results in
substantial saving in costs. Also, the workers should be taken into confidence by the management
whenever any important decisions are to be taken.
 2. The two values that Harit wants to communicate to the society by offering eco-friendly packaging material
are:
o Concern for environment
o Sense of responsibility
Question 9.
‘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.’
Answer:
Standardisation and Simplification of Work is the technique of scientific management which has been adopted by
‘Study Buddy Pvt. Ltd.’
Standardisation implies devising new varieties instead of the existing ones. It 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. These standards are the benchmarks which must be adhered to during production.
It helps to reduce a given line or product to fixed types, sizes and characteristics, establish interchange ability of
manufactured parts and products, determine standards of excellence and quality in materials and of performance
of men and machines.
Simplification aims at eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It
not only helps to reduce inventories but also to save cost of labour, machines and tools. Thus it helps to increase
turnover by ensuring ‘optimum utilisation of resources. Most large companies like Samsung, Toyota and Microsoft
etc. have successfully implemented standardisation and simplification.
Question 10.
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 worker, 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:
1. Name and explain the incentive bonus plan that Anshul may implement so as differentiate between
efficient and inefficient workers.
2. State any two values that Anshul wants to communicate to the society by setting up a special type of
business.
Answer:
Differential Piece Wage System is the incentive bonus plan that Anshul may implement so as differentiate
between efficient and inefficient workers.
Differential Piece Wage System is a performance based wage system which was introduced by Taylor so as to
distinguish between the workers who were able to achieve the standard or performed above standard from those
who performed below standard. For example, it is determined that standard output per worker per day is 10 units
and those who made standard or more than standard will get Rs. 40 per unit and those below will get Rs. 30 per
unit. Now an efficient worker making 11 units will get 11 x 40 = Rs. 440 per day whereas a worker who makes 9
units will get 9 x 30 = Rs. 270 per day. According to Taylor, the difference of Rs. 170 should be enough for the
inefficient worker to be motivated to perform better.
Question 11.
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:
1. Can Mr. Bhardwaj be held responsible for loss of the deal? Why or why not ? Give a suitable reason in
support of your answer.
2. Also, explain the related principle.
Answer:
1. No, Mr. Bhardwaj cannot be held responsible for loss of the deal in the above case as he was not given the
necessary authority to carry out his responsibility. There is an imbalance in authority and responsibility.
2. The name of the related principle is Authority and Responsibility.
Authority is the right to give orders and obtain obedience by the virtue of one’s position in the
organization. Responsibility is the obligation of a person to carry out the assigned task to the best of one’s
abilities and skills. There are two types of authorities, namely the official authority, which is the authority
to command, and personal authority, which is the authority of the individual manager. Authority is both
formal and informal. According to Fayol, there should be balance between the authority given and
responsibility entrusted to an employee so that he is able to carry out the assigned task. Any kind of
imbalance in authority and responsibility is not good for the organisation. If the authority granted to an
employee is less than what is required, he will ineffective in doing his work. On the other hand, if the
authority delegated to an employee is more than what is required, he may tend to misuse it.