Business Studies Test - 3

The correct answer is Scientific decisions.

Key Points

Nature of Principles of Management

• By nature is meant qualities and characteristics of anything.
• Principles are general propositions, which are applicable when certain conditions are present.
• These have been developed on the basis of observation and experimentation as well as personal experiences of the managers.  
• The following points summarise the nature of principles of management.  
  1. Universal applicability: The principles of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. 
  2. General guidelines: The principles are guidelines to action  but do not provide readymade, straitjacket solutions to all managerial problems. 
  3. Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
  4. Flexibile: The principles of management are not rigid prescriptions, which have to be followed absolutely.
  5. Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. 
  6. Cause and effect relationships: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
  7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time
• 'Scientific decisions' is not one of the significances of the nature of management. 

The correct answer is Flexible. 

• Flexibile: The principles of management are not rigid prescriptions, which have to be followed absolutely.
• They are flexible and can be modified by the manager when the situation so demands.
• They give the manager enough discretion to do so.

Key Points

Nature of Principles of Management 

• By nature is meant qualities and characteristics of anything.
• Principles are general propositions, which are applicable when certain conditions are present.
• These have been developed on the basis of observation and experimentation as well as personal experiences of the managers.  
• The following points summarise the nature of principles of management.  
  1. Universal applicability: The principles of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. 
  2. General guidelines: The principles are guidelines to action  but do not provide readymade, straitjacket solutions to all managerial problems. 
  3. Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
  4. Flexibile: The principles of management are not rigid prescriptions, which have to be followed absolutely.
  5. Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. 
  6. Cause and effect relationships: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
  7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time

The correct answer is Contigent. 

The application of principles of management is Contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements. 

Key Points

Nature of Principles of Management 

• By nature is meant qualities and characteristics of anything.
• Principles are general propositions, which are applicable when certain conditions are present.
• These have been developed on the basis of observation and experimentation as well as personal experiences of the managers.  
• The following points summarise the nature of principles of management.  
  1. Universal applicability: The principles of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. 
  2. General guidelines: The principles are guidelines to action  but do not provide readymade, straitjacket solutions to all managerial problems. 
  3. Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
  4. Flexibile: The principles of management are not rigid prescriptions, which have to be followed absolutely.
  5. Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. 
  6. Cause and effect relationships: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
  7. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. 

The correct answer is None of the above.

Key Points

 Significance of principles of management

• The principles of management derive their significance from their utility.
• They provide useful insights to managerial behaviour and influence managerial practices.
• The significance of principles of management can be discussed in terms of the following points:
  • Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations.
  • Optimum utilisation of resources and effective administration: Resources both human and material available with the company are limited. They have to be put to optimum use.
    • By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost. 
  • Scientific decisions: Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes. They must be timely
  • Meeting changing environment requirements: Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment. 
  • Fulfilling social responsibility: The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities. 
  • Management training, education and research: Principles of management are at the core of management theory. As such these are used as a basis for management training, education and research.

The correct answer is Henri Fayol.

Key Points

• Henri Fayol (1841-1925) was a French management theorist whose theories concerning scientific organisation of labour were widely influential in the beginning of twentieth century.
• Based largely on his own experience, he developed his concept of administration.
• The 14 principles of management propounded by him were discussed in detail in his book published in 1917,
• ‘Administration industrielle et generale’. It was published in  English as ‘General and Industrial Management in 1949 and is widely considered a foundational work in classical management theory.
• For his contribution he is also known as the ‘Father of General Management’

The correct answer is Harmony, Not Discord.

Key Points

• Henri Fayol (1841-1925) was a French management theorist whose theories concerning scientific organisation of labour were widely influential in the beginning of twentieth century.
• The 14 principles of management given by him are:

1. Division of Work: Work is divided into small tasks/ jobs. 
2. Stability of Personnel: “Employee turnover should be minimised to maintain organisational efficiency”,
3. Unity of Command: According to Fayol there should be one and only one boss for every individual employee.
4. Scalar Chain: An organisation consists of superiors and subordinates.
5. Initative: Workers should be encouraged to develop and carry out their plans for improvements according to Fayol. 
6. Unity of Direction: All the units of an organisation should be moving towards the same objectives through coordinated 
7. Discipline: Discipline is the obedience to organisational rules and employment agreement which are necessary for the working of the organisation
8. Subordination of Individual Interest to General Interest: The interests of an organisation should take priority over the interests of any one individual employee according to Fayol.  
9. Remuneration of Employees: The overall pay and compensation should be fair to both employees and the organisation.
10. Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation
11. Order: According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.”  
12. Equity: Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible,”
13. Authority and Responsibility: According to Fayol, “Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority. 
14. Esprit De Corps: Management should promote a team spirit of unity and harmony among employees, according to Fayol. 

• Harmony, Not Discord. was one of the Scientific management principles of Taylor. 

The correct answer is Taylor 's Principles of Management.

Key Points

• In the development of classical school of management thought, Fayol’s administrative theory provides an important link.
• While Taylor succeeded in revolutionising the working of factory shop-floor in terms of devising the best method, fair day’s work, differential piece-rate system and functional foremanship; Henri Fayol explained what amounts to a managers work and what principles should be followed in doing this work.  

The correct answer is ​Equity.

Key Points

• Fredrick Winslow Taylor (March 20,1856 – March 21, 1915) was an American mechanical engineer who sought to improve industrial efficiency.
• In the words of Taylor, “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.
• Taylor's scientific management principles are, 
  • Science not Rule of Thumb: Taylor pioneered the introduction of the method of scientific inquiry into the domain of management practice
  • Harmony, Not Discord: The factory system of production implied that managers served as a link between the owners and the workers.
  • Cooperation, Not Individualism: There should be complete cooperation between the labour and the management instead of individualism.
  • Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: Industrial efficiency depends to a large extent on personnel competencies. As such, scientific management also stood for worker development
• Equity is one of the principles of management given by Henri Fayol

The correct answer is Fredrick Winslow Taylor.

Key Points

• According to Taylor, there should be an almost equal division of work and responsibility between workers and management.
• All the day long the management should work almost side by side with the workers helping, encouraging and smoothing the way for them.
• Cooperation, Not Individualism: There should be complete cooperation between the labour and the management instead of individualism. This principle is an extension of principle of ‘Harmony not discord’.
• Competition should be replaced by cooperation. Both should realise that they need each other.

The correct answer is 1 and 2 only.

Key Points

• Basic differences between the principles of management between Fayol and Taylor. 

• Henri Fayol (1841-1925) was a French management theorist whose theories concerning scientific organisation of labour were widely influential in the beginning of twentieth century.
• Fredrick Winslow Taylor (March 20,1856 – March 21, 1915) was an American mechanical engineer who sought to improve industrial efficiency.