NIOS Class 12 Business Studies Chapter 6 Fundamental of Management

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NIOS Class 12 Business Studies Chapter 6 Fundamental of Management

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Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Business Studies Chapter 6 Fundamental of Management, NIOS Senior Secondary Course Business Studies for All Chapter, You can practice these here.

Fundamental of Management

Chapter: 6

Module – 2 Business Management and its Functions

INTEXT QUESTIONS 6.1 

1. Define the term ‘Management’ in your own words.

Ans: The process of using various resources (inputs) to produce some results (outputs) is known as management. 

2. Complete the following incomplete words by taking clues from the statements given for each. Every blank represents one letter only. The first one has been done for you. 

(a) Management is U__ __ V __ __S __ L (UNIVERSAL).

Ans: UNIVERSAL.

(b) Management is __ N__ __ __G I __ __ E.

Ans:  INTANGIBLE. 

(c) Management is S __ __ I __ L process.

Ans: SITUATIONAL.

(d) Management is S __ __ U __ __ __ O __ A L.

Ans: SOCIAL.

(e) Management is a __ O __ T I __ __ O __ S process.

Ans: CONTINUOUS.

Clues: 

(a) It is required for every type of organisation. 

(b) It is an unseen force. 

(c) It deals with people organised in groups. 

(d) There is no best way of managing, so it varies. 

(e) It is an ongoing process. 

3. List any three objectives of management.

Ans: (a) Optimum utilisation of resources. 

(b) Increase in productivity.

(c) Fair return on.

(d) Credit Goodwill.

(e) Meet Challenges of changing environment (any three).

INTEXT QUESTIONS 6.2 

1. The following statements make the management an art, science or profession. Identify each statement and put their numbers in the box given below. 

(a) There is a systematised body of knowledge that includes concepts, theories and people.

Ans: Science.

(b) It is creative in nature.

Ans: Art.

(c) It should have universal application. 

Ans: Profession.

(d) There is no best way of managing.

Ans: Science.

(e) There is always a formal method of acquisition of knowledge.

Ans: Profession.

2. Match the expression given in Column-I with these given in Column-II.

Ans:

INTEXT QUESTIONS 6.3 

1. The following table contains the function, position and different levels of management. Pick one from each column and make a meaningful combination.

Ans:

2. Given one word substitution of the following. 

(a) Deciding in advance about the future course of action. 

Ans: Planning.

(b) Guiding and supervising the subordinates towards the work.

Ans: Directing.

(c) It confirms that plans are properly carried out. 

Ans: Controlling.

(d) It determines the authority and responsibility relationships among the functions, departments and personnel at various levels.

Ans: Organising.

(e) It ensures that right type of persons is in the right position.

Ans:  Staffing.

INTEXT QUESTIONS 6.4 

1. What is meant by ‘unity of direction’?

Ans: Unity of direction is a principle developed by Henri Fayol, which states that each group in a company with the same objectives must have one head and be accomplished by one plan.

2. From the following identify the general principles of management that each sentence implies: 

(a) A person should receive order from one person only. 

Ans: Unity of command.

(b) Team spirit should be encouraged. 

Ans: Esprit – de-corps.

(c) Managers should be kind and just to workers.

Ans: Equity. 

(d) Instructions should be passed through a well-defined path only. 

Ans: Scalar Chain.

3. Tick the right choice: 

(i) Who is known as the father of Scientific Management. 

(a) Peter F. Drucker.

(b) Henry Fayol.

(c) Fredrick Winslow Taylor.

(d) None of the above.

Ans: (c) Fredrick Winslow Taylor.

(ii) Name the technique of Scientific Management that lays down that there should be two types of rates of wage payment. 

(a) differential piece rate system. 

(b) Standardisation. 

(c) functional foremanship. 

(d) mental revolution.

Ans: (a) differential piece rate system.

(iii) From the following identify the technique of Scientific Management which lays down that workers should have multiple accountability. 

(a) standarlisation.

(b) functional foremanship.

(c) differential piece rate system.

(d) mental revolution.

Ans: (b) functional foremanship.

Very Short Answer Questions: 

1. Define the term ‘Management’. 

Ans: Management helps in efficient and effective use of available resources of an organisation. Objectives are the end results, towards which all managerial efforts and organisational activities are directed.

2. List different levels of management. 

Ans: Managers performing different types of duties may, thus, be divided into three categories:  

(i) Top-Level Management. 

(ii) Middle-Level Management.  

(iii) Lower-Level Management.

3. State the meaning of Esprit de Corps. 

Ans: These French words mean team spirit. Managers should infuse the spirit of team work and cooperation among the employees. It helps in developing an atmosphere of mutual trust and a sense of unity.

4. What is meant by subordination of individual interest to general interest? 

Ans: While taking any decision, the collective good and collective interest of the organisation as a whole should be preferred to individual interests. The individual’s interest should be subordinated to the overall interest of the organisation. This ensures welfare of the organisation as well as its individual members.

5. Define the term ‘Equity’ as a principle of management. 

Ans: This principle requires the managers to be kind and just to workers. This promotes a friendly atmosphere between superiors and subordinates and motivates them to perform their duties efficiently. 

6. State any one principle of Scientific Management. 

Ans: The principles of Scientific Management are: 

(i) Development of Science for Each Element of Man’s Work: According to this principle, decisions should be based on facts rather than rule of thumb. The work assigned to a worker should be observed. Each element (time taken, fatigue of worker etc.) of work should be analysed. The purpose of such observation is to decide the best way of performing the job. Taylor stressed that each job should be based on scientific study.

7. What is meant by motion study?

Ans: Under motion study, the movement of men, machines and materials are observed and analysed. Motion study eliminates wasteful motions and helps to find the best method of doing a particular job.

1. State any three objectives of management. 

Ans: Objectives of management include:

(i) Optimum Utilisation of Resources: Management should try to secure maximum outlay with minimum efforts and resources by utilising the human and material resources available in an organisation for deriving the best results. 

(ii) Increase in Productivity of All Factors of Production: Management should minimise the wastage of time, money and efforts through proper utilisation of various factors of production like capital and labour. This will lead to increase in efficiency of all factors of production. It should also try to set higher standards of productions every year and should strive higher to reach these targets. 

(iii) Fair Return on Capital: Management has to provide a fair return to the owners on the capital invested by them. Management must maintain the investment and should also attract further investments for growth and expansion. 

2. Mention the different characteristics of management. 

Ans: The various characteristics of management are: 

(a) Management is Universal: It means that management is required for every type of organisation. It may be a business organisation or social or political enterprise. It may be a small firm or a large one. Management is required by a school or a college or university or a hospital or a big firm like Reliance Industries Limited or a small variety store in your locality. Thus, it is a universal phenomenon and is common and essential element in all organisations. 

(b) Management is Goal Directed: Every organisation is created to achieve certain goals. For example, for a business firm it may be to make maximum profit and/ or to provide quality products and services. Management of an organisation is always aimed at achievement of the organisational goals. Success of management is determined by the extent to which these goals are achieved. 

(c) Management is a Continuous Process: Management is an ongoing process. It continues as long as the organisation exists. No activity can take place without management. To perform all activities like production, sales, storage, operations etc. management is required. So, as long as these activities continue the process of management also continues to operate. 

(d) Management is an Integrating Process: All the functions, activities, processes and operations are intermixed among themselves. It is the task of management to bring them together and proceed in a coordinated manner to achieve desired results. In fact, without integration of men, machine and materials and coordination of individual efforts to contribute successfully as a team, it will be difficult to achieve organisational goals. 

(e) Management is Intangible: Management is not a place like a picture showing board meeting or a school Principal at her office desk which can be seen. It is an unseen force and you can feel its presence in the form of rules, regulations, outputs, work climate, etc.

3. Explain the meaning of ‘management as a discipline’. 

Ans: Management as a Discipline: Management is a systematised body of knowledge that has developed, grown and evolved over the years through practice and research. The knowledge so accumulated is disseminated to successive generations of managers and used by them in performing their jobs. Thus, it has become a separate field of study with its own principles and practices and thus, evolved as an independent discipline with its own techniques and approaches.

4. Can management be treated as a profession? Give reasons in support of your answer. 

Ans: Management as Profession: In the first lesson you had learnt that profession is an occupation. 

To be precise, any occupation that satisfies the following requirements is called a profession. 

(i) It must be an organised and systematised body of knowledge. Take for example professions like engineering or chartered accountancy. These require specialised knowledge. 

(ii) There is always a formal method of acquisition of such knowledge. In other words, individuals, to pursue a specific profession, must acquire the specialised knowledge through some formal institutions. For example, you need to get a degree in law or engineering to pursue the profession of a lawyer or engineer.

Though management may not meet all the requirements of a profession in strict sense of the term, but it meets most of the above requirements and is, now a days, regarded a full- fledged profession. A number of institutions have come up to teach management in a formal way and train future managers. Various associations like American Management Association in USA, All India Management Association in India have been functioning as representative bodies of managers and have duly devised codes of conduct for managers. Many more organisations have come up in the specialised fields of management.

5. What is meant by scientific management? 

Ans: Frederick Winslow Taylor identified that the existing management practices were based on trial and error method. F.W. Taylor is known as father of Scientific Management. 

Scientific management means the application of scientific methods of study and analysis of the problems of management. Taylor developed the following principles for guiding the managers of an organisation. These principles are known as the principles of Scientific Management.

6. State any three characteristics of principles of management. 

Ans: The three characteristics of principles of management are as follow:

(i) Division of Work: This principle suggests that work should be assigned to a person for which he is best suited. Work should be divided into compact jobs to be assigned to individuals. This facilitates specialisation and improves efficiency. 

(ii) Authority and Responsibility: Responsibility means the obligation to perform the work assigned to any person, and authority means rights that are given to him to manage people and things to ensure performance. In other words, authority should go hand in hand with the responsibility for effective results. 

(iii) Discipline: This principle emphasises that subordinates should respect their superiors and obey their orders. On the other hand, superiors’ behaviour should be such that they make subordinates obedient. If such discipline is observed, there will be no problem of industrial disputes.

7. Explain the importance of principles of management.

Ans: The importance of principles of management are as follows:

(a) Attainment of Goals: Every organisation has a goal to achieve and all employee in the organisation also have their own goals that they want to achieve. Even at operational level each department, each unit or even each group has a goal that it wants to achieve. It is only through proper management – by well thought out planning, good direction and proper coordination and control that effectiveness of the efforts of each group to achieve given goals can be ensured. 

(b) Stability and Growth: Management strives to utilise the available resources of the organisation effectively and efficiently. It controls the activities and operations, integrates the functions, motivates the employees, maintains the health of the organisation in the ever changing environment. It thus, ensures stability to the working of the organisation and contributes to its growth.

(c) Change and Development: Management keeps itself in touch with the changes in the environment and foresees development in the future. Accordingly, plans are made to keep the organisation ready to meet the challenges. The technologies, operations, processes and human factors are developed on a continuous basis keeping an eye on the future. 

(d) Efficiency and Effectiveness: By proper planning, staffing, organising, coordinating, directing, and its controlling activities, the management helps in achieving efficiency and effectiveness of human efforts and operations. 

8. What is meant by principles of management? 

Ans: Principles of management are derived on the basis of observation and experimentation studies. Principles of management establish cause and effect relationship and serve as a guide for thought and action. For example, according to the principle of division of work, specialization is the result of division of work. The cause (dividing the work) and effect (specialisation) can be clearly located. Management principles are statements of fundamental truth, which provide guidelines for managerial decisions. 

9. What do you mean by Mental revolution?

Ans: According to F.W. Taylor, without complete mental revolution of workers and managers, scientific management will not be successful. The workers and managers should have a complete change of outlook with respect to their relations and work efforts. This is called mental revolution. 

1. Describe the characteristics of management. 

Ans: The various characteristics of management are: 

(a) Management is Universal: It means that management is required for every type of organisation. It may be a business organisation or social or political enterprise. It may be a small firm or a large one. Management is required by a school or a college or university or a hospital or a big firm like Reliance Industries Limited or a small variety store in your locality. Thus, it is a universal phenomenon and is common and essential element in all organisations. 

(b) Management is Goal Directed: Every organisation is created to achieve certain goals. For example, for a business firm it may be to make maximum profit and/ or to provide quality products and services. Management of an organisation is always aimed at achievement of the organisational goals. Success of management is determined by the extent to which these goals are achieved. 

(c) Management is a Continuous Process: Management is an ongoing process. It continues as long as the organisation exists. No activity can take place without management. To perform all activities like production, sales, storage, operations etc. management is required. So, as long as these activities continue the process of management also continues to operate. 

(d) Management is an Integrating Process: All the functions, activities, processes and operations are intermixed among themselves. It is the task of management to bring them together and proceed in a coordinated manner to achieve desired results. In fact, without integration of men, machine and materials and coordination of individual efforts to contribute successfully as a team, it will be difficult to achieve organisational goals. 

(e) Management is Intangible: Management is not a place like a picture showing board meeting or a school Principal at her office desk which can be seen. It is an unseen force and you can feel its presence in the form of rules, regulations, outputs, work climate, etc. 

(f) Management is Multi-disciplinary: Management of an organisation requires wide knowledge about various disciplines as it covers handling of man, machine, materials and looking after production, distribution, accounting and many other functions. Thus, we find the principles and techniques of management are mostly drawn from almost all fields of study like – Engineering, Economics, Sociology, Psychology, Anthropology, Mathematics, Statistics etc.

(g) Management is a Social Process: The most important aspect of management is handling people organised in work groups. This involves developing and motivating people at work and taking care of their satisfaction as social beings. All managerial actions are primarily concerned with relations between people and so it is treated as a social process. 

(h) Management is Situational: The success of management depends on, and varies from, situation to situation. There is no best way of managing. The techniques and principles of management are relative, and do not hold good for all situations to come. 

(i) Management is Dynamic: Management is a dynamic function and has to adapt itself to the changing environment. An organisation interacts with the external environment. This environment is impacted by various economic, social and political factors. To sustain the organisation needs to adapt its goals according to the evolving external environment.  

2. Explain the objectives of management.

Ans: Objectives are the end results, towards which all managerial efforts and organisational activities are directed. 

Objectives of management include:

(i) Optimum Utilisation of Resources: Management should try to secure maximum outlay with minimum efforts and resources by utilising the human and material resources available in an organisation for deriving the best results. 

(ii) Increase in Productivity of All Factors of Production: Management should minimise the wastage of time, money and efforts through proper utilisation of various factors of production like capital and labour. This will lead to increase in efficiency of all factors of production. It should also try to set higher standards of productions every year and should strive higher to reach these targets. 

(iii) Fair Return on Capital: Management has to provide a fair return to the owners on the capital invested by them. Management must maintain the investment and should also attract further investments for growth and expansion. 

(iv) Create Goodwill: Management should aim at building the reputation of the firm through various activities like popularising products by advertising, reasonable price, good quality products etc. Business environment is dynamic and is influenced by a number of factors. 

(v) Meet Challenges of the Changing Environment: Enterprises which are unable to adopt themselves to the changing situations, will not be able to survive. Management should frame steps to meet the challenges of the changing environment. Thus, management can help an organisation for its survival and growth.

3. Describe the importance of management. 

Ans: Its’ importance is reflected in the positive result that the organisation can get in respect of the following: 

(a) Attainment of Goals: Every organisation has a goal to achieve and all employee in the organisation also have their own goals that they want to achieve. Even at operational level each department, each unit or even each group has a goal that it wants to achieve. It is only through proper management – by well thought out planning, good direction and proper coordination and control that effectiveness of the efforts of each group to achieve given goals can be ensured. 

(b) Stability and Growth: Management strives to utilise the available resources of the organisation effectively and efficiently. It controls the activities and operations, integrates the functions, motivates the employees, maintains the health of the organisation in the ever changing environment. It thus, ensures stability to the working of the organisation and contributes to its growth.

(c) Change and Development: Management keeps itself in touch with the changes in the environment and foresees development in the future. Accordingly, plans are made to keep the organisation ready to meet the challenges. The technologies, operations, processes and human factors are developed on a continuous basis keeping an eye on the future. 

(d) Efficiency and Effectiveness: By proper planning, staffing, organising, coordinating, directing, and its controlling activities, the management helps in achieving efficiency and effectiveness of human efforts and operations.  

4. State the various functions of management. 

Ans: These are discussed basically here under. You will learn about all these functions in detail in the lessons to follow: 

(a) Planning: Planning is deciding in advance what is to be done, when it is to be done, how it is to be done. It is basically concerned with the selection of goals to be achieved and determining the effective course of action from among the various alternatives. This involves forecasting, establishing targets, developing the policies and programming and scheduling the action, procedure etc. Thus, planning requires decisions on what should be done, how it should be done, who will do it, where it will be done, and why it is to be done. The essential part of planning consists of setting goals and programmes of activities.

(b) Organising: After the plans have been drawn, management has to organise the activities, and physical resources of the firm to carry out the selected programmes successfully. It also involves determining the authority and responsibility relationships among functions, departments and personnel at various levels to ensure smooth and effective functioning together in accomplishing the objectives. Thus, the organising function of management is primarily concerned with identifying the tasks involved and grouping them into units and departments, and defining the duties and responsibilities of people in different positions within each department for well-coordinated and cooperative effort in the organisation. 

(c) Staffing: Staffing is concerned with employing people for the various activities to be performed. The objective of staffing is to ensure that suitable people have been appointed for different positions. It includes the functions of recruitment, training and development, placement and remuneration, and performance appraisal of the employees. 

(d) Directing: The directing function of management includes guiding the subordinates, supervising their performance, communicating effectively and motivating them. A manager should be a good leader. He should be able to command and issue instructions without arousing any resentment among the subordinates. He should keep an eye on the performance of his subordinates and help them out whenever they come across any difficulty. The communication system, i.e., exchange of information should take place regularly for building common understanding and clarity. The managers should also understand the needs of subordinates and inspire them to do their best and encourage initiative and creativity. 

(e) Controlling: This function of management consists of the steps taken to ensure that the performance at work is in accordance with the plans. It involves establishing performance standards and measuring the actual performance with the standards set. If differences are noticed, corrective steps are taken which may include revision of standards, regulating operations, removing deficiencies and improving performance.  

5. State the fourteen principles of management given by Henry Fayol.

Ans: 14 general principles of management which are still considered important in management. 

These are: 

(a) Division of Work: This principle suggests that work should be assigned to a person for which he is best suited. Work should be divided into compact jobs to be assigned to individuals. This facilitates specialisation and improves efficiency. 

(b) Authority and Responsibility: Responsibility means the obligation to perform the work assigned to any person, and authority means rights that are given to him to manage people and things to ensure performance. In other words, authority should go hand in hand with the responsibility for effective results. 

(c) Discipline: This principle emphasises that subordinates should respect their superiors and obey their orders. On the other hand, superiors’ behaviour should be such that they make subordinates obedient. If such discipline is observed, there will be no problem of industrial disputes. 

(d) Unity of Command: A subordinate should work under the supervision of one superior only from whom he gets instructions and to whom he is accountable. It avoids confusion in authority and instructions. 

(e) Unity of Direction: Each group of activities having the same objective must have one head and one plan of action. Otherwise, there may be wastage, over expenditure and useless rivalry among the managers. 

(f) Subordination of Individual Interest to General Interest: While taking any decision, the collective good and collective interest of the organisation as a whole should be preferred to individual interests. The individual’s interest should be subordinated to the overall interest of the organisation. This ensures welfare of the organisation as well as its individual members. 

(g) Remuneration: Management should try to give fair wages to the employees so as to ensure reasonable satisfaction of workers and productivity for the organisation. Fair means it should be in accordance to the paying capacity of company and should be able to provide a reasonable standard of living. 

(h) Centralisation: When a single person controls the affairs of an organisation, it is said to be complete centralisation. In small concerns, a single manager can supervise the work of the subordinates easily, while in a big organisation, control is divided among a number of persons to facilitate operational decision making at various levels. Fayol’s opinion was that there should be a proper balance between centralisation and delegation of authority in an organisation. 

(i) Scalar Chain: This is the chain of authority relationship from the highest to the lowest ranks. This implies that subordinates report to their immediate supervisors who, in turn, report directly to their own boss. The order of this chain should be maintained when some instructions are to be passed on or enquiries are to be made.

(j) Order: Placement of men and materials should be properly made. Proper space should be made available where materials can be kept safely. Each man should be provided the work for which he is best suited. 

(k) Equity: This principle requires the managers to be kind and just to workers. This promotes a friendly atmosphere between superiors and subordinates and motivates them to perform their duties efficiently.

(l) Stability of Tenure: Employees should be provided stability and continuity of their tenure of employment. There should not be frequent termination of employees. This could be achieved through attractive remuneration and honourable treatment of personnel. 

(m) Initiative: This implies encouraging initiative among its personnel to chalking out and execution of a plan to achieve the desired results. 

(n) Esprit De Corps: These French words mean team spirit. Managers should infuse the spirit of team work and cooperation among the employees. It helps in developing an atmosphere of mutual trust and a sense of unity. 

6. Explain any three characteristics of management.

Ans: The various characteristics of management are: 

(a) Management is Universal: It means that management is required for every type of organisation. It may be a business organisation or social or political enterprise. It may be a small firm or a large one. Management is required by a school or a college or university or a hospital or a big firm like Reliance Industries Limited or a small variety store in your locality. Thus, it is a universal phenomenon and is common and essential element in all organisations. 

(b) Management is Goal Directed: Every organisation is created to achieve certain goals. For example, for a business firm it may be to make maximum profit and/ or to provide quality products and services. Management of an organisation is always aimed at achievement of the organisational goals. Success of management is determined by the extent to which these goals are achieved. 

(c) Management is a Continuous Process: Management is an ongoing process. It continues as long as the organisation exists. No activity can take place without management. To perform all activities like production, sales, storage, operations etc. management is required. So, as long as these activities continue the process of management also continues to operate.

7. Explain management as a discipline and as a group. 

Ans: Management as a Discipline: Management is a systematised body of knowledge that has developed, grown and evolved over the years through practice and research. The knowledge so accumulated is disseminated to successive generations of managers and used by them in performing their jobs. Thus, it has become a separate field of study with its own principles and practices and thus, evolved as an independent discipline with its own techniques and approaches.

Management as a Group: Management normally refers to a group of managers working in an organisation. It includes the top executive as well as the first line supervisors. These managers perform their functions jointly as a group. The success of business does not depend on the efficiency of one, but of all managers taken together. Managers work as a team so that objectives of the business are fully achieved. However, in every organisation there are certain levels of management with varying degree of the nature of authority and responsibilities. You will learn about these later in this lesson.