CBSE Class XII Business Studies Fundamental Concepts

Chapter 2

Principles of Management

What do you understand by the “principles of management”? 2 marks

Principles are fundamental truth that explains the relationship between variables factors. Principles are based on scientific study, inquiry and analysis. They establish relationship between causes and effect. They are universally acceptable, verifiable and

their results predictable. Since management principles are fundamental truth, they provide guidelines for managerial decision making.

Explain the nature of principles of management 5 marks

State any two characteristics of the principles of management 2 marks

Briefly explain the characteristics of principles of management 2 marks

Management principles are fundamental truth. These principles help management as guidelines in decision making. Following are the following features highlights the characteristics of management principles:

1. Universal application

Management principles are applied in every situation where the objectives are attained through group efforts. All social, economic, political or religious organizations apply management principles for their successful operations. Every organization must make the best possible use of its available resources by the application of management principles such as planning, organizing, staffing directing and controlling.

2. Flexibility

Management principles are dynamic guidelines not static rules. Management helps the business to maximize the profit at minimum cost. The business situations and the socio-economic environment are rapidly changing. Therefore the management principles are dynamic to adapt to the changing situations.

3. General Statements

Management principles are concerned mostly with human behavior, which cannot be tested under laboratory conditions. Human behavior cannot be predicted accurately. Therefore management principles are not as exact as the principles of physical science.

4. Influencing human behavior

Management explains how to get work done by people. Human element is an essential factor of production. It activates and extracts work from other factors also. Each person is different from other as regards his ability, knowledge, skills social status, attitudes and ideologies. Management is concerned with the integration of individual efforts to group objectives.

5. Cause and effect relationship

Management principles also display a cause and effect relationship. They indicate the consequences of certain action or inaction in the business. For example if he wages are paid on piece-rate system, the quantity of work will increase, but the quality will suffer. The principle of unity of command will avoid confusion, duplication and overlapping.