cbse class 12 business studies chapter – 2 principles of ..., Exams of Business

Download cbse class 12 business studies chapter – 2 principles of ... and more Exams Business in PDF only on Docsity! CBSE CLASS 12 BUSINESS STUDIES CHAPTER – 2 PRINCIPLES OF MANAGEMENT REVISION NOTES PRINCIPLES OF MANAGEMENT Principle A principle is a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning Principles of Management Principles of management are broad and general guidelines for managerial decision-making and behavior. Management principles are not as rigid as principles of science as this deals with human behavior and thus are to be applied creatively given the demands of the situation. Nature of Principles of Management The nature of principles of management are as follows: 1 1. Universal applicability: Principles of management is applicable in all types of organizations, business as well as non-business, small as well as large enterprises depending on the nature of the organisation. 2. General Guidelines: They are general guidelines to action but do not provide straight solution to all managerial problems, as the business situations are complex and dynamic. 3. Formed by practice and experimentation: They are formed from the knowledge, experiences and experiments of the managers. 4. Flexible: These principles are not rigid and can be adapted and modified by the practicing managers depending upon the situation. 5. Mainly Behavioral: Since the principles aim at influencing complex human behavior they are behavioral in nature. 6. Cause and Effect relationship: They are intend to establish relationship between cause & effect so that they can be used in various situations. 7. Contingent: Their applicability depends upon the prevailing situation at a particular point of time. The application has to be changed as per the situation. Significance of the Principles of Management 2 (1) Science, not rule of Thumb: There should be scientific study and analysis of each element of a job in order to replace the old rule of thumb approach or hit and miss method. We should be constantly experimenting to develop new techniques, which make the work much simpler, easier and quicker. Scientific method involved investigation of traditional methods through work-study. (2) Harmony, Not discord: There should be complete harmony between management and workers I achieving organizational goals. It implies that there should be mental revolution on part of managers and workers in order to respect each other’s role and eliminate any class conflict to realize organizational objectives. (3) Cooperation not individualism: It is an extension of the Principle of Harmony not discord, there should be complete cooperation between the labour and management instead of individualism. Constructive suggestions from employees must be encouraged and desist workers from going on strike and making unreasonable demands. (4) Development of each and every person to his or her greatest Efficiency and Prosperity: It implies taking actions for the development of competencies of all persons of an organization after their scientific selection and assigning work suited to their temperament and abilities. This will increase the productivity by utilizing the skills of the workers fully. Techniques of Scientific Management ‘e. 1. Functional Foreman-ship: Functional foreman-ship is a technique in which planning and execution are separate. e Supervision is divided into several specialized functions and each functions is to be entrusted to a foreman. e There are eight foreman in the related process or function of production. e Four each under planning and execution who keep a watch on all workers performance.  2. Standardization and Simplification of work: Standardization refers to developing standards for every business activities to maximize output. Whereas simplification refers to eliminating unnecessary varieties, sizes and grades of products or services. It results in savings of cost of labour, machines and tools. It leads to fuller utilization of equipment and increase in turnover. 3. Method Study: The objective of method study is to find out one best way of doing the job to maximize efficiency in the use of resources and to reduce cost of production and to maximizing quality and satisfaction of customers. 4. Motion Study: Refers to the study of productive movements. It is the science of identifying and eliminating wasteful movements resulting from unnecessary, incidental and unproductive motions of the workers so that it takes less time to complete the job efficiently. 5. Time study: It 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 & determine labour costs. 7 4. Unity of Command: According to Fayol there should be one and only one boss for every individual employee. It implies that every worker should receive orders from one superior only, otherwise it will create confusion, conflict and duplication of work. 5. Unity of Direction: All the units of an organisation should move 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 ensures unity of action and coordination. Difference between Unity of Command and Unity of Direction 10 BASIS FOR COMPARISON UNITY OF COMMAND UNITY OF DIRECTION Meaning Unity of command refers to a principle of management that states that one should get orders from and report to only one boss. Unity of direction is a management principle, which implies that all the activities with same objective must have one head and one plan. Purpose To prevent dual subordination. To prevent duplication of activities. Implications It effects an individual employee It effects the entire organization Outcome The principle leads to effective functioning of the subordinates. The principle results in coordination of work of various employees and managers. Relationship Represents relationship between superior and subordinate. Represents relationship of activities, as per organizational plans and goals. Need To fix the responsibility of each person in the organization. For efficient functioning of organizational activities. 6. Subordination of Individual Interest to general interest: The interest of an organization should take priority over the interest of any individual employee. In simple words the organisation interest to be prioritized over individual interest. 7. Remuneration of Employees: The overall pay and compensation should be, fair to both employees and the organization. The employees should be given fair wages so that they can have a reasonable standard of living. Wages should be within the paying capacity of the organisation. 11 8. Centralization and Decentralization: Centralization means concentration of decisions making authority with some, whereas its dispersal among more than one person is Decentralization. Both should be balanced, as no organization can be completely centralized or completely decentralized. 9. Scalar Chain: The formal lines of authority and communication between superiors and subordinates from the highest to the lowest ranks is known as scalar chain. This chain should not be violated but in case of emergency employees at same level can contact through Gang Plank by informing their immediate superiors. 10. Order: According to Fayol “ People and material should be in suitable places at appropriate time for maximum efficiency”. A place for everything and everyone and everything and everyone should be in its designated place 11. Equity: Good sense and experience are needed to ensure fairness to all employees who should be treated as fairly as possible. The working environment of any organization should be free from all forms of and principles of justice and fair play should be followed. No worker should be unduly favoured or punished. 12. Stability of Personnel: Employee turnover should be minimized to maintain organizational efficiency. A personnel should be selected and appointed after rigorous procedure and the selected person should be kept at the post for a minimum tenure to show results. 12