NCERT Solutions for Class 12 Business Studies Chapter 2: Principles of Management

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Chapter2. Principles of Management
SubjectBusiness Studies
CategoryNCERT Solutions for Class 12

NCERT Solutions for Class 12 Business Studies can be a great tool for the students who have taken Business Studies stream for higher studies. These NCERT Class 12 Business Studies solutions are written by expert teachers and faculties to make your practice and revision easier. On this page, we have provided you with the complete solutions of Chapter 2: Principles of Management.

NCERT Solutions for Class 12 Business Studies Chapter 2

Principles of Management Solutions

Very Short Answer Questions

Q1) What makes principles of management flexible?

Answer) Management principles are varied and not one rule can be applied for all cases. Thus, a manager has to assess the situation and then determine the best solution to the issue at hand. For this reason, management principles are flexible.

Q2) State the main objective of time study.

Answer) Time study was undertaken to determine a standard time that is required to complete a designated job. This time would then be set as the standard time for the job completion. The benefit of this process is that it will help employers to determine the number of resources required to complete a particular job and also determine their wages.

Q3) Name the principle that is an extension of the ‘harmony, not discord’.

Answer) It is cooperation, not individualism which is the extension of the ‘principle harmony, not discord’

Q4) State any two causes of fatigue that may create hindrance in the employee’s performance.


  • Not having cordial relationship with the people in superior positions
  • Long working hours at the organisation

Q5) Sanaklal and Gagan started their career in Wales Limited (a printing press) after going through a rigorous recruitment process. Since they had no prior work experience, the firm decided to give them one year to prove themselves. Name the principle of management followed by Wales Limited.

Answer) Wales Limited followed the principle of ‘Stability of Personnel’.

Q6) Which technique is used by Taylor for distinguishing efficient and inefficient workers?

Answer) Taylor used the system of Differential Piece Wage System under which wages for workers was determined using a set standard. The workers who performed better were given higher wages than workers who performed below the standard.

Short Answer Questions

Q1) How is the principle of ‘Unity of Command’ useful to management? Explain briefly.

Answer) Principle of Unity of Command implies that each and every subordinate should have one and only one boss. Orders and instructions should come from only one head. This helps the working of any organisation in the following manner

  • Authority responsibility relationship is clearly defined.
  • Subordinates are known for whom they are accountable.
  • Discipline and order is maintained.

Q2) Define Scientific Management. State any three of its principles.

Answer) Scientific management is a theory of management that was developed by Frederick Taylor in 1911. It is a classical theory of management which focused on ways of getting work done in the best way possible to increase efficiency and effectiveness in work. Scientific management is the use of tools and techniques and personnel specialised to carry out the task for achieving quality and cost reduction.

Here are three principles of scientific management

  1. Science, not rule of thumb: In this principle Taylor laid emphasis on focusing on following management practices that are scientific in nature, and not deciding by rule of thumb. As per rule of thumb practice, managers will be assessing a situation and use trial and error to find a solution. Taylor suggested that instead of using such old methods, the approach to a situation should be scientific. Following such practice will result in a balanced result and improves efficiency and cost.
  2. Harmony, not Discord: This principle states that there should be a harmonious work environment between the managers and workers. The more they are at good terms with each other, more will be the performance of the organisation. The workers should feel that they are a part of the organisation and their contributions are very much essential for the organisation to grow. Management shall respond to the needs of the workers and in a similar way, the workers should respond back by giving their best for the organisation. Taylor termed this as mental revolution and suggested that it will improve harmony and propel the resources to work towards common goals of the organisation.
  3. Cooperation, not individualism: As per this principle, the managers and workers should cooperate each other in completing the activities. The work standards should be jointly determined by them, it will increase the level of involvement and more productive results can be achieved.

Q3) If an organisation does not provide the right place for physical and human resources in an organisation, which principle is violated? What are the consequences of it?

Answer) In such a situation the principle that is violated is the principle of order. It states that there should be right arrangement of resources. In other words, the right people at the right place and at the right time. Following this approach helps in carrying out the tasks effortlessly. Whenever that principle is violated it results in unnecessary delay at work and ensures chaos. Delay in completing work will result in loss for the company.

Q4) Explain any four points regarding significance of Principles of Management.

Answer) Significance of principles of management:

  • Management principles are based on years of observation and implementation into real life issues. Hence, these principles guide the managers in tackling real world problems easily.
  • Management principles are based on logic rather than on beliefs. These principles are derived from real life situations and therefore are based on logic and reasoning. It helps managers in making decisions which are devoid of personal bias.
  • Principles are the foundation of management education. It helped this to grow as a discipline and such principles also offer basis on which further research programs can be carried out to develop new methods and techniques.
  • Management principles helps organisations to perform at the best of its capacity or in other words, ensures optimum utilisation of the available resources.

Q5) Explain the principle of ‘Scalar Chain’ and gang plank.

Answer) Scalar chains can be defined as the formal chain of authority that follows a straight line from highest to lowest rank. It specifies the route through which information needs to be communicated to the designated authority.

Gang plank is an alternative route which is used in case of emergencies. Its main aim is to shorten the communication route. It facilitates communication with higher authorities directly surpassing the defined chains of hierarchy.


A production manager at top level in a resulted corporate, Mr. Rathore holds the responsibility for ordering raw material for the firm. While deciding on the supplier for the financial year 2017-18, he gave the order to his cousin at a higher price per unit instead of the firm’s usual supplier who was willing to lower the rates for the order. Which principle of management was violated by Mr. Rathore? What are the positive impacts of following the above identified principle?

Answer) In this case, Mr. Rathore has violated the principle of Subordination of individual interest to general interest. As per this principle an individual should put organisational goals on priority over any personal interest.

The positive impacts of this principle are:

  • Harmony in working environment and a good office culture
  • Increase in employee productivity
  • Employees feel they are a part of the organisation
  • Helps in achieving organisations goals
Long Answer Questions

Q1) Explain the Principles of Scientific management given by Taylor.

Answer) Scientific management is a theory of management that was developed by Frederick Taylor in 1911. It is a classical theory of management which focused on ways of getting work done in the best way possible to increase efficiency and effectiveness in work. Scientific management is the use of tools and techniques and personnel specialised to carry out the task for achieving quality and cost reduction.

These are principles of scientific management:

  • Science, Not Rule of Thumb When different managers use their own different methods to get the work done it is rule of thumb. Taylor believed that there was only one best method maximise efficiency. Taylor advised that every organisation should compare the results of different methods, test them again and again and finally select one best method of getting the work done.
  • Harmony, Not Discord Managers are an extension of the management and serve as a link between workers and the owners. Workers have to take the instructions from the managers and managers have to get the work done through the workers. Sometime the relation between them is spoilt, which is very harmful for everyone-workers, managers and owners. This class conflict should be replaced by harmony between the two. Both should change their thinking towards each other. This is known as mental revolution.
  • Co-operation, Not Individualism There should be complete co-operation between the labour and the management instead of individualism. This principle is an extension of principle of harmony, not discord. The management and the workers should not compete with each other rather co-operate with each other. Management should consider all good suggestions made by the employees which can help in cost reduction. At the same time workers should never think of going on strikes in order to get their unreasonable demands fulfilled.
  • Personnel Development: An organisation has to focus on developing its workers as well as the organisation itself. Developed or skilled workers will be in a better position to help an organisation grow. To increase competitiveness an organisation can announce incentives in order to build competitiveness among workers. Employees should be hired in a scientific manner which will put the best employee suited for a role as per the capability. Efficiency can be achieved with proper training to workers. In other words, a properly trained resource will develop himself as well as the organisation.

Q2) Explain the following principles of management given by Fayol with examples.

(a) Unity of direction
(b) Equity
(c) Espirit de Corps
(d) Order
(e) Centralisation and decentralisation
(f) Initiative

Answer a) All the units of an organisation should be moving towards the same objective. Each group of activities having the same objective must have one head and one plan. Each group should have its own incharge and on no account the working of two divisions neither be overlaped.

Answer b) This principle focuses on treating all the employees equally. The equality should be based on religion, caste, creed etc. It will promote harmony among the workers. For e.g.: Workers from different religions should be treated equally in a company.

Answer c) This principle emphasises on building harmony and team spirit among employees. In a large organisation due to a large work force teamwork is very important. Teamwork leads to better co-ordination while working. The head of each team should give credit of good result to the whole team rather than confining it to his ownself.

Answer d) A place for everything and everyone in his/her place. Basically it means orderlinss. If there is a fixed place for different things in a factory and they remain in their places then no time is wasted in locating them. Same way if every personnel is allocated an area to operate from then his co-workers, head or subordinates, anyone can contact him easily.

Answer e) Centralisation is the concentration of power or authority in hands of selected people in an organisation. Whereas decentralisation is shifting the authority to middle and lower levels of management. For e.g. if CEO has all decision-making powers it is centralisation whereas if the decision-making power is distributed to managers of middle and lower levels then it is decentralisation.

Answer f) Initiative means taking the first step with self-motivation workers should be encouraged to develop and carry out their plans for improvements according to Fayol. Initiatives should be encouraged. A good company should invite suggestions from employees which can result in substantial cost/time reduction. Rewards can be given to fruitful suggestions.

Q3) Explain the technique of ‘Functional Foremanship’ and the concept of ‘Mental Revolution’ as enunciated by Taylor.

Answer) Functional foremanship is a extension to the principle of division of labour. It was suggested by Taylor. According to his observation, it is not possible for a single worker to be expert in every aspect of production, therefore he suggested that eight persons should be performing the duties of a foreman and therefore this came to be known as functional foremanship. Under this the following roles were present.

  • Instruction Card Clerk: Whose role is to give instructions to workers
  • Route Clerk: His role was to specify the route of production
  • Time and Cost Clerk: His role was to prepare the time and costs sheet
  • Disciplinarian: His role was to maintain discipline in the production facility

The above four roles were working under the planning supervisor.

Now the other four persons who work under the production supervisor are:

  • Speed Boss: Responsible for timely completion of the designated job
  • Gang Boss: Responsible to keep machines in a ready state for work
  • Repair boss: Was responsible to keep machines and tools in proper working condition.
  • Inspector: This person was responsible to maintain the quality of the work.

Mental revolution: Mental revolution is the concept which revolves around bringing a change in the attitude of the workers and managers. It aims to improve the thinking of both in order to create a working environment that is conducive to both manager and worker. The basic premise of this concept is that both the worker and the manager should understand their importance in a organisation and both of them should work towards achieving a common goal for the organisation. Management should be taking care of the needs of its workers and periodically share the benefits in form of incentives or bonuses to keep them motivated. Workers in return should do their best in order to develop the organisation. Thus, we can say mental revolution is based on the mutual trust and cooperation among the managers and workers which can bring about great changes in an organisation.

Q4) Discuss the following techniques of Scientific Work Study:

(a) Time Study
(b) Motion Study
(c) Fatigue Study
(d) Method Study
(e) Simplification and standardisation of work.

Answer a) This study determines the standard time which is required in order to perform a job. Multiple readings are taken to arrive at a standard time for a particular task. Based on that it following things can be determined

  • Number of workers required to perform the task
  • Determine the costs associated with hiring such workers (i.e. wages)

Answer b) This study was based on movements that needed to be taken while performing a task. The purpose of this study is to eliminate unwanted movements in order to complete a task in a shorter time. For this study Taylor along with his assistant Frank Gilbreth studied the movements of a worker and then categorised the same into three classes productive, incidental and unproductive. The purpose was to eliminate the unproductive employee and reduce instances of incidental workers.

Answer c) Fatigue study was for determining the amount and frequency of rest taken during the completion of a designated task. A worker without rest will be unable to perform to his full capacity. Fatigue is detrimental to productivity hence this study is conducted to understand the standard intervals of break that help a worker regain the energy to carry on working with same efficiency.

Answer d) Method Study: The objective of this study is to find the best method of completing a particular work. It takes into consideration all the activities involved in the completion of a task. By determining the best method lower costs can be incurred along with more productivity.

Answer e) Standardisation is based on the scientific management techniques. It is the setting of standards or benchmarks for any activity. The purpose of standardisation is to improve the quality of work and attain excellence. It also determines standards of performance for both man and machines.

Simplification is all about eliminating the diversity in the products that are unnecessary and utilizing the best of the resources, reducing the inventories and increasing turnover of the organisation. In addition to reducing labour and machine cost. Simplification helps in optimum uses of the resources and removes unnecessary costs for the organisation.

Q5) Discuss the differences between the contributions of Taylor and Fayol.


Basis of ComparisonTaylor’s ContributionsFayol’s Contributions
ContributionIt was conceptualised by Frederick Taylor in 1911.It was conceptualised by Henry Fayol in 1916
ConceptScientific theory of managementIt is a general theory of administration
PersonalityTaylor was a practicing mechanical engineerFayol was working as a mining engineer.
Principles and TechniquesTechniques like functional foremanship and scientific management were introduced along with the different studies such as motion study, time study etc. were introduced by TaylorPrinciples of management such as equity, espirit de corps etc were introduced by Henry Fayol in his theory of 14 principles of management
Application of PrinciplesPrinciples suggested by Taylor are applicable in specialised situationsPrinciples suggested by Fayol are universal in their applicability
Emphasis and FocusEmphasis was on low level managementEmphasis was on top level management
ApproachThe approach is that of an engineerThe approach is that of a manager

Q6) Discuss the relevance of Taylor and Fayol’s contribution in the contemporary business environment.

Answer) Relevance of Taylor and Fayol’s contribution in the contemporary business environment-

Both Fayol and Taylor have given principles of management to improve efficiency in an organisation. Taylor gave us scientific principles of management which are being adopted by all organisations to improve its productivity at the shop floor level, the principles help in giving effective results. In the same manner, Henry Fayol gave in general principles of management which when implemented at any of the levels-top, middle or lower and helps in achieving better co-ordination, remove ambiguity and encourage the employees to improve their work performance.


‘Bhasin’ limited was engaged in the business of food processing and selling its products under a popular brand. Lately the business was expanding due to good quality and reasonable prices. Also with more people working the market for processed food was increasing. New players were also coming to cash in on the new trend. In order to keep its market share in the short run the company directed its existing workforce to work overtime. But this resulted in many problems. Due to increased pressure of work the efficiency of the workers declined.

Sometimes the subordinates had to work for more than one superior resulting in declining efficiency. The divisions that were previously working on one product were also made to work on two or more products. This resulted in a lot of overlapping and wasteage. The workers were becoming undisciplined. The spirit of teamwork, which had characterised the company, previously was beginning to wane. Workers were feeling cheated and initiative was declining. The quality of the products was beginning to decline and market share was on the verge of decrease.
Actually the company had implemented changes without creating the required infrastructure.

a. Identify the Principles of Management (out of 14 given by Henry Fayol) that were being violated by the company.
b. Explain these principles in brief.
c. What steps should the company management take in relation to the above principles to restore the company to its past glory?


1. The principles of management that are being violated in the given situation are as follows.

  • i
    • Quote 1: Sometimes the subordinates had to work for more than one superior resulting in declining efficiency.
    • Principle: Unity of command- This is evident from the situation that the employees are made to work for more than one superior.
  • ii
    • Quote 2: The divisions that were previously working on one product were also made to work on two or more products.
    • Principle: Division of work- In the given situation one division is made to work on more than one product which leads to wastages.
  • iii
    • Quote 3: The workers were becoming undisciplined.
    • Principle: Discipline- In the given instance, principle of discipline is not being followed as workers were becoming undisciplined.
  • iv
    • Quote 4: The spirit of teamwork, which had characterised the company, previously was beginning to wane.
    • Principle: Espirit de corps- It is given that the spirit of team work is declining in the company.
  • v
    • Quote 5: Workers were feeling cheated and initiative was declining.
    • Principle: Initiative- It is given in the situation that initiative is declining and employees are discouraged.


  • i. Unity of Command: According to this principle, an individual should be answerable to only one boss. If an employee receives orders from more than one superior, the employee will be confused about whose orders to follow, which will affect the work. It might also cause a clash of interests and egos among the superiors.
  • ii. Division of work: Division of work means that the given task is divided into small groups or units so that the task is completed in a competent manner. This principle leads to specialisation in work.
  • iii. Discipline: Discipline means that the organisation should follow rules and regulations and ensure conformity to the set rules and policies. It is important for both the workers as well as the management that they honour their commitments.
  • iv. Espirit de corps: This principle recommends that employees should work in unity with each other. They should work as a team. In other words, team spirit should be promoted by the manager. Each employee should have a sense of belongingness. This proves useful especially in large organisations where without team work, achievement of objectives would become difficult. Team sprit increases coordination and mutual understanding among the employees and thereby improves efficiency.
  • v. Initiative: According to this principle, workers should be given enough motivation and incentive to work. They should be inspired to come up with suggestions regarding the work. Although initiatives should be encouraged, but they should be in line with the practices and rules of the organisation. For example, the managers can ask the workers for their inputs over how to increase efficiency. Also, good suggestions can be rewarded.

3. The steps that can be taken by the company with regard to above mentioned principles are as follows.

  • Scientific management must be followed.
  • It must be ensured that the subordinates get instruction from only one superior at a time so as to avoid any confusion and chaos.
  • There must be specialisation in work in the sense that each division specialises in one particular task. This is required to avoid overlapping in work.
  • Workers must be given proper incentives and motivation to work through such measures as differential piece wage system.
  • Team work with proper coordination and understanding must be promoted.


(Further information related to the above question 6) The management of company ‘Bhasin Limited now realised its folly. In order to rectify the situation it appointed a management consultant ‘Mukti Consultants- to recommend a restructure plan to bring the company back on the rails. ‘Mukti Consultants undertook a study of the production process at the plant of the company Bhasin Limited and recommended the following changes –

  • The company should introduce scientific management with regard to production.
  • Production Planning including routing, scheduling, dispatching and feedback should be implemented.
  • In order to separate planning from operational management ‘Functional foremanship’ should be introduced.
  • ‘Work study’ should be undertaken to optimise the use of resources.
  • ‘Standardisation’ of all activities should be implemented to increase efficiency and accountability.
  • To motivate the workers ‘Differential Piece Rate System’ should be implemented.

(The above changes should be introduced apart from the steps recommended as an answer to Part c – case problem 6 above.).

It was expected that the changes will bring about a radical transformation in the working of the company and it will regain its pristine glory.

  • a. Do you think that introduction of scientific management as recommended by Mukti consultants will result in intended outcome?
  • b. What precautions should the company undertake to implement the changes?
  • c. Give your answer with regard to each technique separately as enunciated in points 1 through 6 in the case problem.


1) Yes, the scientific management techniques as suggested by ‘Mukti consultants’ would prove helpful for the organisation. With the implementation of scientific management techniques the company would be able to work according to standardised techniques and tools. This would help improve both the quantity as well as the quality of the product. At the same time it would also help in reducing the costs. In this way scientific management would help in improving the effectiveness as well as efficiency in work.

2) The following precautions can be taken by the Bhasin Limited:

  • i. Fresh trained and specialised staff can be recruited for certain specific areas. In addition the existing staff can also be given proper training.
  • ii. Production should be planned properly and with utmost care.
  • iii. In the introduction of functional foremanship care must be taken that there is enough incentive and motivation for the employees.
  • iv. Besides work study, other studies such as method study, motion study, time study and fatigue study should be undertaken.
  • v. Technique of standardisation can be used for different aspects of production.
  • vi. Monetary incentives can be given to motivate the employees to work more and with better efficiency.

That’s it. These were the solutions of NCERT Class 12 Business Studies Chapter 2 – Principles of Management. Our team hopes that you have found these solutions helpful for you. If you have any doubt related to this chapter then feel free to comment your doubts below. Our team will try their best to help you with your doubts.

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