Ch 2 · Unit 2 · Part A

Principles of
Management

75 MCQs 50 Flashcards Unit 2 · 8 marks weightage Updated April 2026
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Chapter Overview

Chapter 2 of CBSE Class 12 Business Studies moves from understanding what management is to understanding how it should be practised — through principles. A principle of management is a broad, flexible guideline derived from research and experience that helps managers make better decisions. The chapter presents two landmark contributions to management thought: Henri Fayol's 14 General Principles of Management (covering organisational structure, human relations, authority, communication and ethics) and F.W. Taylor's Scientific Management (focusing on shop-floor efficiency through science, harmony, cooperation and human development).

Fayol's 14 principles range from Division of Work and Unity of Command to Esprit de Corps and Initiative — each addressing a different dimension of running an organisation effectively. Taylor's framework, built on the concept of replacing 'Rule of Thumb' with science, introduced powerful techniques including Functional Foremanship (8 specialist supervisors), Time Study, Motion Study, Fatigue Study, Method Study, Standardisation and the Differential Piece Wage System. The chapter concludes with a structured comparison of Fayol and Taylor — their levels, focus, expression and approach — and explains how they complement rather than contradict each other.

What You'll Learn
Fayol's 14 Principles — Quick Reference
# Principle Core Idea
1Division of WorkSpecialisation increases efficiency and output quality
2Authority & ResponsibilityAuthority (right to give orders) must equal responsibility (obligation to perform) — both must go together
3DisciplineObedience and adherence to rules — maintained through good supervisors, clear agreements, fair penalties
4Unity of CommandEach employee receives orders from ONE superior only — prevents dual command confusion
5Unity of DirectionOne head, one plan for all activities with the same objective
6Subordination of Individual InterestOrganisational interest must take priority over personal interest
7RemunerationFair compensation satisfactory to both employer and employee
8Centralisation & DecentralisationRight balance of authority concentration based on organisation size, nature and circumstances
9Scalar Chain (Gang Plank)Formal line of authority top to bottom; Gang Plank allows horizontal communication in emergencies
10OrderRight place for everything (material) and right person for every job (social/human)
11EquityFair and kind treatment — justice + compassion — creates employee loyalty
12Stability of PersonnelReduce unnecessary turnover — employees need time to become efficient
13InitiativeEncourage employees to think and act on new ideas within their authority
14Esprit de Corps"Union is strength" — build team spirit and harmony; replace divide-and-rule with unite-and-rule
Key Concepts
Definition
Management Principle
A flexible guideline based on cause-effect relationships, derived from research and experience. Applicable broadly but adapted to specific situations — not a rigid law like pure science.
Fayol
14 General Principles
Cover the full spectrum: structure (Division of Work, Scalar Chain), authority (Unity of Command, Authority-Responsibility), human relations (Equity, Esprit de Corps, Initiative), and remuneration.
Taylor — Core
4 Principles of Scientific Management
Science not Rule of Thumb · Harmony not Discord · Cooperation not Individualism · Development of each person. Foundation is the Mental Revolution — changing attitudes of both management and workers.
Taylor — Technique
Functional Foremanship
8 specialists replace one foreman: 4 in Planning Office (Instruction Card, Route, Time & Cost, Disciplinarian) + 4 on Shop Floor (Speed Boss, Gang Boss, Repair Boss, Inspector).
Taylor — Technique
Time, Motion & Fatigue Study
Time Study = standard time per task. Motion Study = eliminate unnecessary body movements. Fatigue Study = optimal rest intervals. All three improve worker efficiency scientifically.
Comparison
Fayol vs Taylor
Fayol: top management, general principles, top-down, theory. Taylor: shop floor, specific techniques, bottom-up, practice. Both are complementary — together they provide a complete management framework.
Fayol vs Taylor — Comparison Table
Basis Henri Fayol F.W. Taylor
Level of focusTop/General management — entire organisationShop floor — workers and operational efficiency
Nature of workDeveloped general principles (theory)Developed specific techniques (practice)
Expression14 broad general principlesSpecific operational techniques (Time Study, Motion Study, etc.)
ApproachTop-down — starts from overall management perspectiveBottom-up — starts from shop-floor problems
PerspectiveUniversal applicability across organisationsPrimarily applicable to manufacturing/shop floor
TitleFather of General ManagementFather of Scientific Management
RelationshipComplementary — Fayol provides organisational structure; Taylor provides operational efficiency tools
Sample MCQs
Q1. A worker in a factory receives instructions from both the Production Manager and the Quality Manager simultaneously. Which Fayol principle is violated?
A. Scalar Chain
B. Division of Work
C. Unity of Command — each employee should receive orders from only one superior
D. Equity
Unity of Command: each employee must have only one boss. Dual command creates confusion, divided loyalty and diluted accountability — exactly what this scenario describes.
Q2. Taylor's Functional Foremanship consists of how many specialist supervisors, and how are they divided?
A. 4 specialists — all on the shop floor
B. 6 specialists — 3 planning, 3 shop floor
C. 8 specialists — 4 in Planning Office (Instruction Card, Route, Time & Cost, Disciplinarian) and 4 on Shop Floor (Speed Boss, Gang Boss, Repair Boss, Inspector)
D. 10 specialists — 5 each in planning and execution
Functional Foremanship has 8 specialist supervisors: 4 in the Planning Office and 4 on the Shop Floor — each an expert in one aspect of production supervision.
Q3. 'Management and workers must change their attitude from conflict over dividing the surplus to cooperating to increase it.' This describes which concept in Taylor's Scientific Management?
A. Differential Piece Wage System
B. Rule of Thumb
C. Mental Revolution — the foundational change in attitude required for Scientific Management to work
D. Functional Foremanship
Mental Revolution is Taylor's call for a complete change in mindset — both management and workers stop fighting over the existing surplus and instead collaborate to grow it, so both benefit more.
Frequently Asked Questions
What are Fayol's 14 principles of management?
Fayol's 14 principles are: (1) Division of Work, (2) Authority and Responsibility, (3) Discipline, (4) Unity of Command, (5) Unity of Direction, (6) Subordination of Individual Interest to General Interest, (7) Remuneration, (8) Centralisation and Decentralisation, (9) Scalar Chain (with Gang Plank), (10) Order, (11) Equity, (12) Stability of Personnel, (13) Initiative, (14) Esprit de Corps. These cover structure, authority, human relations, communication and ethics.
What are Taylor's 4 principles of Scientific Management?
Taylor's 4 principles are: (1) Science, not Rule of Thumb — replace guesswork with scientifically determined best methods; (2) Harmony, not Discord — mental revolution replacing conflict with cooperation; (3) Cooperation, not Individualism — joint management-worker effort for mutual benefit; (4) Development of each person to their greatest efficiency — scientific selection, proper training and right job assignment. The foundation is the Mental Revolution — both sides changing their attitudes.
What is the difference between Unity of Command and Unity of Direction?
Unity of Command applies to individual employees — each employee should receive orders from only one superior at a time. Unity of Direction applies to groups or departments — all activities with the same objective should be directed by one head using one plan. Unity of Command prevents individual confusion from dual orders; Unity of Direction ensures departmental/group cohesion toward a single goal. They are related but distinct principles.
What is Gang Plank and why is it important?
Gang Plank is an exception to the Scalar Chain principle. It permits two officials at the same hierarchical level to communicate directly (horizontally) in urgent or emergency situations — without routing the communication up and down the full chain of command, which would cause costly delays. The condition: both officials must immediately inform their respective superiors. Gang Plank prevents rigidity while maintaining the overall integrity of the Scalar Chain.
What are Taylor's techniques of Scientific Management?
Taylor's techniques include: (1) Functional Foremanship — 8 specialist supervisors replace one foreman (4 in Planning Office + 4 on Shop Floor); (2) Standardisation and Simplification — setting standards and reducing unnecessary varieties; (3) Method Study — finding the best sequence of operations; (4) Motion Study — eliminating unnecessary body movements; (5) Time Study — determining standard time per task; (6) Fatigue Study — setting optimal rest intervals; (7) Differential Piece Wage System — higher wage rate for workers meeting/exceeding standard output.
How do Fayol and Taylor differ, and are they contradictory?
They are not contradictory — they are complementary. Fayol focused on top/general management, developed broad principles for the entire organisation, and worked top-down. Taylor focused on the shop floor, developed specific operational techniques to improve worker efficiency, and worked bottom-up. Fayol provides the organisational/managerial framework; Taylor provides the operational tools. Together they form a complete management framework for both the strategic and operational dimensions.