CBSE Class 12 Business Studies Chapter 2 Notes – Principles of Management
CBSE Class 12 Business Studies Chapter 2 Notes – Principles of Management
Easy Chapter Notes | Fayol’s 14 Principles | Taylor’s Scientific Management | Exam Revision
Welcome to Commerce Wallah
In our previous post, we discussed Chapter 1 – Nature and Significance of Management. In this post, we will study Chapter 2 – Principles of Management in simple and easy language.
This chapter is important for CBSE Class 12 Business Studies because questions can be asked from management principles, Fayol’s principles and Taylor’s Scientific Management. These notes are designed to help you understand the concepts, revise quickly and prepare better for application-based and case-study questions.
📚 What are Principles of Management?
Principles of Management are broad and general guidelines that help managers in decision-making and managing organisational activities.
They are not rigid rules. Managers use these principles according to the situation, nature of business and organisational requirements.
Simple Example
Suppose a manager gives an employee responsibility along with the necessary authority to complete a task. This reflects the principle of Authority and Responsibility.
Nature of Principles of Management
There are several important characteristics of management principles.
1. Universal Applicability
Management principles can be applied in different types of organisations and at different managerial levels.
For example, the principle of division of work can be useful in a manufacturing company as well as a school or hospital.
2. General Guidelines
Management principles do not provide fixed instructions for every situation. They act as broad guidelines that managers can adapt according to the circumstances.
For example, the appropriate degree of decentralisation may differ from one organisation to another.
3. Formed by Practice and Experimentation
Management principles have developed through observation, experience, practice and experimentation by managers and management thinkers.
Over time, successful practices have been studied and developed into useful principles.
4. Flexible
Management principles are flexible and can be modified according to changing business situations.
A manager may apply the same principle differently depending on the organisation, employees and circumstances.
5. Cause and Effect Relationship
Management principles help explain the relationship between an action and its likely result.
For example, proper division of work can lead to greater specialisation and efficiency.
⭐ Fayol’s 14 Principles of Management
Henri Fayol gave 14 principles of management. These principles are important for understanding how managers can organise and manage work effectively.
1. Division of Work
Work should be divided among employees according to their skills and specialisation.
Example: In a company, accounting, marketing and production work may be handled by different specialised employees.
2. Authority and Responsibility
Authority means the right to give orders, while responsibility means the obligation to complete the assigned work.
Authority and responsibility should go together.
Example: If a sales manager is responsible for achieving sales targets, the manager should also have sufficient authority to manage the sales team.
3. Discipline
Employees should respect organisational rules, agreements and procedures.
Good discipline helps maintain order and smooth functioning.
Example: Employees following office timings and workplace rules show discipline.
4. Unity of Command
An employee should receive orders and instructions from one superior only.
This helps avoid confusion and conflict.
Example: A salesperson should normally report to one sales manager rather than receiving conflicting instructions from several managers.
5. Unity of Direction
Activities having the same objective should have one head and one plan.
Example: All marketing activities for a particular product should work according to a common marketing plan under one responsible manager.
Remember:
Unity of Command → One employee → One superior
Unity of Direction → One objective → One plan → One head
6. Subordination of Individual Interest to General Interest
The interests of the organisation should be given priority over the personal interests of an individual employee.
Example: An employee should follow an important organisational deadline rather than putting personal convenience above the team's objective.
7. Remuneration of Employees
Employees should receive fair and reasonable remuneration for their services.
Fair compensation can help improve employee satisfaction and motivation.
Example: A company provides appropriate salary and incentives according to employees' work and responsibilities.
8. Centralisation and Decentralisation
Centralisation means concentration of decision-making authority at higher levels, while decentralisation means sharing authority with lower levels.
The appropriate balance depends on the organisation and situation.
Example: A small business may keep most decisions with the owner, while a large company may delegate some decisions to departmental managers.
9. Scalar Chain
Scalar chain refers to the formal line of authority from the highest level of management to the lowest level.
Example: Board of Directors → CEO → Department Manager → Supervisor → Worker.
Gang Plank
Fayol also suggested the idea of a gang plank, which allows employees at the same level to communicate directly in certain situations to avoid unnecessary delay, while respecting the formal chain of authority.
10. Order
There should be a proper place for everything and everyone in the organisation.
This principle promotes systematic arrangement of resources and people.
Example: Office documents should be stored systematically so employees can find them easily.
11. Equity
Managers should treat employees fairly, with kindness and justice.
Example: Employees performing similar work should be treated fairly without discrimination.
12. Stability of Personnel
An organisation should try to maintain stability in its workforce and avoid unnecessary employee turnover.
Example: Providing a supportive work environment and career opportunities can help retain capable employees.
13. Initiative
Employees should be encouraged to take initiative and suggest ideas.
Example: A manager encourages employees to suggest ways to improve customer service.
14. Esprit de Corps
Esprit de corps means promoting team spirit, unity and harmony among employees.
Example: A manager encourages teamwork and appreciates the collective achievements of the department.
🧠 Quick Memory Trick for Fayol’s 14 Principles
For revision, remember the sequence:
Division → Authority → Discipline → Unity of Command → Unity of Direction → General Interest → Remuneration → Centralisation → Scalar Chain → Order → Equity → Stability → Initiative → Esprit de Corps
Try writing all 14 principles from memory before your examination.
🔬 Taylor’s Scientific Management
F.W. Taylor is known as the Father of Scientific Management.
Scientific Management focuses on using systematic study, analysis and scientific methods to improve efficiency and productivity at the workplace.
Taylor gave four important principles of Scientific Management.
1. Science, Not Rule of Thumb
Taylor suggested replacing old methods based mainly on personal experience and guesswork with scientific study and analysis.
Example: Instead of allowing workers to use any method they prefer, the organisation studies different methods and selects the most efficient one.
2. Harmony, Not Discord
There should be harmony and cooperation between management and workers instead of conflict.
Both sides should work towards achieving organisational objectives.
Example: Management and workers cooperate to improve productivity and working conditions.
3. Cooperation, Not Individualism
Management and employees should cooperate with each other instead of working against each other.
Example: Managers and workers jointly follow production standards and work towards common targets.
4. Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity
Employees should be scientifically selected, trained and developed so that they can perform their work efficiently.
Example: A company provides proper training to an employee before assigning a specialised production task.
⚙️ Taylor’s Scientific Management Techniques
Taylor also developed several techniques to improve efficiency.
Functional Foremanship
Work supervision is divided among specialised functional experts rather than depending on one all-purpose supervisor.
Standardisation and Simplification of Work
Standardisation establishes standards for tools, materials, processes and working conditions. Simplification aims to reduce unnecessary variety.
Method Study
Method study identifies the best method of performing a particular job.
Motion Study
Motion study analyses the movements involved in performing a job and aims to eliminate unnecessary movements.
Time Study
Time study determines the standard time required to complete a task under specified conditions.
Fatigue Study
Fatigue study examines the amount and frequency of rest required to reduce employee fatigue.
Differential Piece Wage System
Workers may be paid different wage rates based on their level of performance, with higher rates for achieving or exceeding the specified standard.
📊 Fayol vs Taylor – Difference Between Their Approaches
| Basis | Henri Fayol | F.W. Taylor |
|---|---|---|
| Main focus | General principles of management | Scientific management of work |
| Approach | General management perspective | Shop-floor and operational perspective |
| Major contribution | 14 Principles of Management | Scientific Management |
| Main concern | Management and administration | Efficiency and productivity |
| Applicability | Broadly applicable to management | Strong focus on production/work methods |
| Key emphasis | Organisation and managerial activities | Scientific study of work |
| Major principles/ideas | 14 principles | 4 principles and scientific techniques |
| Level of focus | Higher/general management | Mainly operational level |
🔍 Fayol and Taylor – Easy Revision
Fayol
Think → MANAGEMENT
- 14 Principles
- General administration
- Organisation
- Managerial activities
Taylor
Think → SCIENCE + EFFICIENCY
- Scientific Management
- Work methods
- Productivity
- Worker efficiency
- Scientific techniques
🎯 Important Exam Questions
Very Short Answer Questions
- What are principles of management?
- Who gave the 14 principles of management?
- Who is known as the Father of Scientific Management?
- What is meant by Unity of Command?
- What is Esprit de Corps?
- What is Scalar Chain?
- What is Method Study?
- What is Time Study?
Short Answer Questions
- Explain any three characteristics of principles of management.
- Explain the principle of Unity of Command.
- Explain the principle of Unity of Direction.
- Explain the principle of Equity.
- Explain the principle of Initiative.
- Explain any four principles of Scientific Management.
- Differentiate between Unity of Command and Unity of Direction.
- Differentiate between Fayol and Taylor.
Case Study Practice
Case: A company appoints separate specialists for different activities such as production, quality control and maintenance. Employees are trained scientifically and their working methods are studied to improve efficiency.
Questions:
- Which approach of management is reflected in the case?
- Which Scientific Management technique may be related to finding the best method of performing a task?
- Name the thinker associated with Scientific Management.
Answers:
- Taylor's Scientific Management
- Method Study
- F.W. Taylor
📝 Quick Revision Chart
| Topic | Remember |
|---|---|
| Principles of Management | Broad guidelines |
| Henri Fayol | 14 Principles |
| F.W. Taylor | Scientific Management |
| Taylor's Principles | 4 |
| Unity of Command | One employee – One superior |
| Unity of Direction | One objective – One plan |
| Esprit de Corps | Team spirit |
| Scalar Chain | Formal line of authority |
| Method Study | Best method |
| Motion Study | Unnecessary movements |
| Time Study | Standard time |
| Fatigue Study | Rest and fatigue |
| Differential Piece Wage | Performance-based wage rates |
💡 Board Exam Tip
Business Studies answers should not be written as long paragraphs without structure.
For a theory question, try to use:
Meaning → Explanation → Example
For case-study questions:
Identify the principle/concept → Write the relevant concept → Explain it briefly → Connect it with the case
Use important Business Studies terminology in your answers and avoid unnecessary repetition.
📌 Frequently Asked Questions
Is Chapter 2 important for CBSE Class 12 Business Studies?
Yes. Students should prepare the concepts of principles of management, Fayol's principles and Taylor's Scientific Management carefully because these areas are part of the CBSE syllabus.
How many principles did Fayol give?
Henri Fayol gave 14 principles of management.
Who is the Father of Scientific Management?
F.W. Taylor is known as the Father of Scientific Management.
What is the difference between Unity of Command and Unity of Direction?
Unity of Command means an employee should receive orders from one superior. Unity of Direction means activities having the same objective should have one plan and one head.
What is Esprit de Corps?
Esprit de Corps means promoting team spirit, unity and harmony among employees.
📚 Continue Your Business Studies Preparation
If you found these notes useful, continue your preparation with:
👉 CBSE Class 12 Business Studies Chapter 1 Notes
👉 50 Business Studies MCQs with Answers
👉 Chapter 2 Business Studies MCQs
👉 Business Studies Case Study Questions
👉 CBSE Class 12 Business Studies Previous Year Questions
🔔 What’s Next on Commerce Wallah?
In our next post, we will practise 50 important MCQs from Chapter 2 – Principles of Management, including questions based on Fayol's principles and Taylor's Scientific Management.
If you want a PDF version of these notes, let us know in the comments.
Keep Learning. Keep Practising. Keep Improving.
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