Class xii

Business studies
principles of management

REASON-BASED, EVALUATION & HOTS

Q. 1. "Panchayats in our country have been given powers to decide and spend funds
granted to them by the government for the welfare of villages." Identify the management
principle highlighted in the given statement.
Ans. Centralisation and Decentralisation.

Q. 2. Rama is a salesman in M/S Star Industries. He did an aggressive research on a new

cost saving advertisement technique and suggests the same to his sales manager.
However, the sales manager did not pay any attention to his suggestion. Moreover, he
also warned him not to come with any suggestions in future. Which principle of
management is being violated by the manager? What should have been the appropriate
way of response by the manager?
Ans. The principle of 'Initiative' is being violated by the manager. Manager should have
carefully listened to the suggestions of Rama. Manager should have also encouraged him
to come with more suggestions in future.

Q. 3. Raman, a purchase manager of a company, has to purchase 55 tonnes of raw

material. He purchased the raw material from a firm owned by his relative, at a rate
more than the market price. Which management principle is being violated? What
should have been the appropriate course of action by Raman?
Ans. The principle violated is 'Subordination of Individual Interest to General Interest'.
Raman should have invited bids from various suppliers and should have purchased the
raw material from the supplier quoting the minimum rate.

Q. 4. In Sharp Industries, the employee's objectives were in direct contrast to

organisational objectives. The employees ignored their own interest to give priority to
organisation's objectives. Which management principle is highlighted in the given
statement?
Ans. Subordination of Individual Interest to General Interest.

Q. 5. The production manager of a company wishes to enhance productivity level of

workers. For this, he wishes to set up a standard task and also want to reward the

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efficient workers. Discuss Mention the three techniques of scientific management, which
can be used by the production manager.
Ans. The production manager should first of all make use of "Motion study" to make
thorough analysis of various motions being performed by a worker while he is doing a
particular task. Motion study will help to detect and eliminate unnecessary movements
in doing a particular job.
Then, the production manager should use "Time study". Time study will help in
determining the standard time needed by a workman of reasonable skills and ability to
perform a well-defined job. After the standard task is established with the help of time
and motion study, the production manager should use "Differential piece wage system".
In this technique, workers who produce equal to or more than the standard task are paid
at higher wage rates and workers who do not reach the standard are paid at lower wage
rates. In this way, production manager will be able to reward the efficient workers.

Q. 6. Which principle of Taylor suggests that the job performed should be based on
scientific inquiry and not on intuition? Name and explain in brief the principle.
{CBSE, All India Compt. 2005}
Ans. Discuss principle of 'Science not Rule of Thumb'.

Q. 7. Which principle is being overlooked by Mohan, a manager, in the following cases:

i. He expects his subordinates to adapt to new environments and working conditions
without giving them time to settle down.
ii. He expects his subordinates to work for the happiness and pleasure of being in the
organisation.
iii. He does not distribute the work amongst his subordinates, either according to
capability or proportionately.
iv. He is very lax (careless) with his fellow employees and subordinates. He does not
give them parameters or rules for reporting to work and completion of
assignments.
v. He often speaks to people at all levels, passing on instructions regarding his
department and also other departments.
vi. He neither has a system of keeping his equipment nor people at a prescribed place.
vii. He expects his colleagues to get work out of subordinates without giving them any
powers.
viii. He expects his colleagues to get work out of subordinates and yet has a differential
treatment for each person.

Ans. (i) Stability of Personnel; (ii) Remuneration of Employees; (iii) Division of Work;
(iv) Discipline; (v) Scalar Chain; (vi) Order; (vii) Authority and Responsibility; (viii)
Equity.
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Q. 8. A company believes in natural growth of an enterprise as per needs and
circumstances. It has no policies to regulate the working of its staff. Therefore, the staff
has become unproductive and unpunctual. Advise.
Ans. Company must follow the principles of management. Discuss the 'Importance of
Principles of Management.

Q.9. Match the following:

(A) (B)
(i) Fatigue Study a. Refers to process of setting standards for every
business activity.
(ii) Motion Study b. Aims to find out one best way of doing the job.
(iii) Differential Piece Wage c. Aims to eliminate unnecessary movements in doing
System a job.
(iv) Standardisation of Work d. Aims at eliminating unnecessary diversity of
products.
(v) Functional Foremanship e. Aims to determine the amount and frequency of
rest intervals in completing a task.
(vi) Time Study f. Aims to differentiate between efficient and
inefficient workers.
(vii) Method Study g. Aims to determine the standard time taken to
perform a well-defined job.
(viii) Simplification of Work h. Each worker to take orders from eight foremen in
the related process.

CASE STUDIES
Q. 1. Fast Track Motors (automobile company) is producing 3 different types of vehicles:
Cars, Two wheelers and Three Wheelers. All the activities of the company (Purchase,
Production, Marketing, etc.) with respect to each type of vehicle are under one common
department. Due to this, the company is unable to achieve its overall objectives.
Which management principle is not observed by the Fast Track Motors?
What should be done so that Fast Track Motors can achieve its overall objectives?
Ans. (i) Fast Track Motors should have three separate departments for each type of
vehicle and each department should have its separate in charge, plans and resources. It
will help in achieving the overall objectives of the organisation.

Q. 2. Mr. Prakash Chopra, General Manager of M/S Kwality Enterprises (Leather bags
manufacturing company) retains complete authority over all the activities of the
business. No decision-making power is given to the subordinates. As a result, Mr.
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Prakash is always engaged in day-to-day operational activities and is unable to
concentrate on core issues of the company.
(i) Identify and state the management principle violated by Mr. Prakash Chopra.
(ii) How can Mr. Prakash concentrate more on core issues of the company?
Ans. (i) The principle violated is 'Centralisation and Decentralisation'. According to this
principle, there should be proper balance between centralisation (concentration of
authority) and decentralisation (evenly distribution of authority at all levels) in the
organisation.
(ii) Mr. Prakash should retain the authority to take vital decisions and should give
operational authority to his subordinates. It will reduce the need for his involvement in
day-to-day operational activities and he will be able to concentrate more on core issues
of the company.

Q. 3. Diya works as a secretary to the Managing Director of Knowledge Group Industries

(Research and Development company). Her boss has given the duty to acquire test
reports from the laboratory. However, she was unable to fulfil the assigned task as only
the technicians, researchers and top executives were allowed to enter and collect the test
reports.
Identify and state the management principle violated in the given case.
What should have been done so that Diya could have completed her assigned task?
Ans. (i) In the given case, the principle of 'Authority and Responsibility' is violated.
According to this principle, there should be a proper balance between authority and
responsibility.
(ii) Diya should be given requisite authority to enter and collect the test reports from the
laboratory.

Q. 4. Sargam Enterprises import various computer parts from China and assembles them
to make a complete computer. The total work involves three different tasks: assembling,
labelling and packing of computer. Each employee of the company independently
performs all the three tasks. As a result, no employee is able to gain specialisation in a
particular field and the company is unable to fulfil the orders on time. (i) State and
identify the principle, which can be followed by Sargam Enterprises to overcome this
problem?
Will the use of this principle enable the employees to gain specialisation?
Can the company implement this principle in managerial work also?
Ans. (i) Sargam Enterprises can overcome this problem by following the principle of
'Division of Work'. This principle refers to dividing the work into compact jobs and
allocating these compact jobs to different individuals.
Yes. Division will make each task simpler and repetitive performance will help in gaining
speed, accuracy and specialisation.
Yes. This principle applies to both managerial as well as technical work.
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Q. 5. In the festive season, Shah Industries (leading manufacturers of gift items) decided
to reduce the rest interval of workers from 30 minutes to just 7 minutes. However, due
to heavy work load and reduction in time of rest interval, efficiency of workers went
down and it led to fall in production level, instead of rising.
i. Which technique of scientific management should be followed by Shah Industries?
Also state the technique.
ii. What should be done by the company to make the technique effective?

Ans. (i) 'Fatigue Study'. It refers to determining the amount and frequency of rest
intervals required in completing a task.
(ii) To make this technique effective, the company should determine the amount and
frequency of rest intervals through fatigue study and not randomly. The workers should
be observed while performing job, so as to note down the time, when their efficiency
level starts decreasing.

Q. 6. D & D Ltd. Co. is a large manufacturing unit. Recently the company had conducted
the 'time' and 'motion' studies and concluded that on an average, a worker could
produce 120 units per day. However, it has been noticed that-average daily production of
a worker is in the range of 80-90 units. What steps will you suggest to ensure that the
actual performance is in accordance with the performance as per time and motion
studies? {CBSE, All India Compt. 2008}
Ans. The following steps can be taken: (i) Eliminate unnecessary movements in doing a
work; (ii) Conduct 'Fatigue study' and provide rest intervals to employees so as to enable
them to regain lost stamina; (iii) Use 'Differential piece wage system' in which efficient
and inefficient workers are paid at different rates. It will motivate the workers to put in
their maximum efforts.

Q. 7. A marketing manager was able to identify a bulk buyer and he was authorised to
give discount of 10% for credit period up to 30 days and discount of 5%, if credit period
extends beyond 30 days. However, the buyer was insisting for a discount of 10% for a
credit period of 45 days. Due to lack of powers with the manager, the deal could not be
finalised. Discuss the principle, which is overlooked?
OR
A company has given the responsibility of increasing the sales by 20% to the sales
manager. But sales manager is not authorised to increase the advertisement expense.
Moreover, he cannot appoint new salesmen. As a result, he was unable to achieve the
target. Discuss the principle violated in this situation.
OR
Shyam Singh is the Production and Stores in charge of ABC Ltd. He has complete powers
to draw the raw materials as and when required. Moreover, he has the sole powers to

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verify the stock and no one can interfere in his work. As a result, he has started misusing
his authority. Which principle of management is violated in the given case?
Ans. Discuss the principle of 'Authority and responsibility'.

Q. 8. Samundar Lal and his co-workers are employed by Crest Industry. All the workers
keep on working from 8:00 AM to 9:00 PM, without any break in between. Continuous
work has reduced the production level. Management is very worried as the demand of
the product is rising and production level is not satisfactory, in spite of having required
workforce.
i. Why has the continuous work reduced the production level?
ii. Identify the technique of scientific management, which is required to be observed
in this case? (iii) How can this technique help the Crest Industry in meeting the
increasing demand?

Ans. (i) The continuous work has reduced the production level because working
continuously makes a person physically and mentally tired, which decreases the
productivity and efficiency.
(ii) Fatigue Study.
Fatigue study will help to determine the amount and frequency of rest intervals
required. Such intervals will enable the workers to regain their lost stamina and their
productivity and efficiency will improve. It will help the company in meeting increasing
demand.

Q. 9. Telco Ltd. is manufacturing files and folders from the old clothes to discourage 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 the cost
reduction but it was not welcomed by the production manager. Another employee gave
some suggestion for improvement in design, but it was also not appreciated by the
production manager. State the principle of management described in the above para.
Ans. Initiative.

Q. 10. Quresh is working as a 'Production Manager' in CFL Ltd. engaged in manufacturing

of 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
matter, management is sharing the gains with the workers because they believe that
prosperity of the company cannot exist for a long time without the prosperity of the
employees. State the principle of management described in the above para.
Ans. Harmony not discord.

Q. 11. 'Kanpur Leather Ltd.' is the manufacturer of leather products. It is producing on

large scale and its organisational structure is functional. In the production department,
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various foremen have been employed. Each foreman has been made responsible for
production planning, implementation and control. This has led to a situation of confusion
and uncertainty. Suggest a technique of scientific management to Kanpur Leather Ltd.
which may help it to effectively organise planning and its execution.
{CBSE, Delhi Compt. 2016}
Ans. Discuss technique of 'Functional Foremanship'.

Q. 12. Beena, a student of management, likes to relate what she learnt in class to real life
situations. She observed many situations while watching educational programmes on
television that remind her of concepts of Scientific Management. In one such programme,
factories manufacturing parts for products like automobiles, computers and mobile
phones were being telecast.
Name the technique of Scientific Management that should be adhered to, while
manufacturing parts for such products. {CBSE, Delhi Compt. 2017}
Ans. Standardisation and Simplification of work.

Q. 13. Apaar Foundation is a Non-Governmental Organization (NGO) working to improve

the lives of children with medical needs, the homeless and victims of natural disasters.
Apart from donations in cash, they collect dry ration, old clothes, shoes, toys, books and
medicines from donors. At Apaar Foundation's office in Bhopal, the material collected is
segregated, classified and put in shelves and boxes that are labelled systematically. There
is a specific place for each of these items and volunteers put everything at their
respective places.
The volunteer work is divided into specific jobs like fund raising, field visits, social media
updates and so on. Each volunteer is part of a particular team, depending on their
competency and training. Each volunteer becomes specialized in their respective field,
leading to efficient utilization of human effort.
(i) Identify and explain two principles of management adopted by Apaar Foundation.
(ii) State two values that Apaar Foundation is displaying and promoting in society
through their work. {CBSE, Delhi Compt. 2017}

Ans. (i) Principles of management adopted by Apaar Foundation are: (a) Order; (b)
Division of work. For explanation, refer the respective principle.
(ii) Values that Apaar Foundation is displaying and promoting in society through their
work are: (a) Concern for the society; (b) Optimum utilization of resources.

Q. 14. Sakaar Foundation is an NGO (Non-Governmental Organisation) working to

improve the lives of children with medical needs, the homeless and victims of natural
disasters. Apart from donations in cash, they collect dry ration, old clothes, shoes, toys,
books medicines etc. from donors. At Sakaar Foundation's office in Lucknow, the
material collected is segregated, classified and put in shelves and boxes that are labelled
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systematically. There is a specific place for each of these items and volunteers put
everything at their respective places.
The volunteer work is divided into specific jobs like fund raising, field visits, social media
updates and so on. Each volunteer is part of a particular team, depending on their
competency and training. Each volunteer becomes specialized in their respective field,
leading to efficient utilization of human effort.
The management of Sakaar Foundation does not close its ears to any constructive
suggestions made by the volunteers. There is an equal division of work and
responsibility between volunteers and management. All the day long, the management
work side by side with the volunteers helping, encouraging and smoothing the way for
them.
Identify and explain one principle each of 'Scientific Management' and 'General
Management' adopted by Sakaar Foundation.
Stale any two values that Sakaar Foundation is displaying and promoting in society
through their work. {CBSE, All India Compt. 2017}
Ans. (i) Principle of Scientific Management adopted: 'Cooperation, not individualism'.
Principle of 'General Management 'adopted: 'Order'.
For explanation, refer the respective principle.
Values that Sakaar Foundation is displaying and promoting in society through their work
are: (a) Concern for the society; (b) Optimum utilization of resources.

Q. 15. In Climax Ltd., an employee has the objective of maximizing his salary, but the
organisational objective is to maximize output at competitive cost. Due to this, there was
some dispute on this for a while. Eventually, the organisation's interest was given
priority over employee's interest. Name the principle related to this situation.
Ans. Subordination of Individual Interest to General Interest.

Q. 16. Karan Nath took over 'North Motor Company' from his ailing father three months
ago. In the past, the company was not performing well. Karan was determined to
improve the company's performance. He observed that the methods of production as
well as selection of employees in the company were not scientific.
He believed that there was only one best method to maximise efficiency. He also felt that
once the method is developed, the workers of the company should be trained to learn
that 'best method'. He asked the Production Manager to develop the best method and
carry out the necessary training. The Production Manager developed this method using
several parameters right from deciding the sequence of operations, place for men,
machines and raw materials till the delivery of the product to the customers. This
method was implemented throughout the organisation. It helped in increasing the
output, improving the quality and reducing the cost and wastage.
Identify and explain the principles and the technique of scientific management followed
by the Production Manager in the above case. {CBSE, Delhi & All India 2018}

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Ans. Principles of Scientific Management followed in the above case are: (a) Science not
rule of thumb; and (b) Development of each and every person to his greatest efficiency
and prosperity. For explanation, refer the respective principles. Technique of scientific
management followed in the above case is 'Method Study'.
For explanation, refer the respective content.

Q. 17. Rajat joined as a CEO of Bharat Ltd., a firm manufacturing Computer hardware. On
the first day, he addressed the employees. He said that he believed that a good company
should have an employee suggestion system and he wished to minimize employee
turnover to maintain organisational efficiency. He informed all employees that he would
ensure that all agreements were clear, fair and there was judicious application of
penalties. However, he said that he believed that lazy personnel should be dealt with
sternly to send the message that everyone was equal in the eyes of management. Also
that he would want to promote a team spirit of unity and harmony among employees,
which would give rise to a spirit of mutual trust and belongingness among team
members and eventually minimize need for using penalties. He told all present that the
interests of the organisation should take priority over the interests of any one individual
employee.
Identify and briefly explain any four principles of management given by Fayol, which
Rajat highlighted in his address to the employees.
Also state two values that Rajat wanted to spread in the organisation.
{CBSE, Sample Paper 2018}

Ans.
(A) Following are the principles of management highlighted by Rajat in his address to the
employees: (Any four) (i) Initiative; (ii) Stability of Personnel; (iii) Discipline; (iv) Equity;
(v) Espirit De Corps; (vi) Subordination of individual interest to general interest. For
explanation, refer the respective principle.
(B) Following are values that Rajat wanted to spread in the organisation: (Any two)
 a. Responsibility.
 b. Discipline.
 c. Conflict resolution.
 d. Good behaviour in human interaction.
 e. Team work.

Q. 18. Deewan Ltd. is a multinational consulting company with its headquarters at

Washington D.C. It hires young people from different countries of the world. It is a
company in which people dream to work because of its work-environment, pay and
growth prospectus. The company has a culture of open communication and people of
various nationalities work together in a discrimination free environment. The behaviour
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of managers of Deewan Ltd. emphasises kindliness and justice which ensures loyalty and
devotion of workers.
It also promotes mutual trust and belongingness among team members. In this way,
management of Deewan Ltd. is able to achieve its objectives by promoting team work. By
doing so, managers of Deewan Ltd. are following some principles of management.
Identify and explain any two such principles. {CBSE, Delhi Compt. 2018}

Ans. The two principles of management followed by managers of Dewan Ltd are:
Equity & Espirit de Corps (Explain them)

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