RBSE Solutions for Class 12 Business Studies Chapter 3 Principles and Techniques of Management

RBSE Solutions for Class 12 Business Studies Chapter 3 Principles and Techniques of Management

Rajasthan Board RBSE Class 12 Business Studies Chapter 3 Principles and Techniques of Management

RBSE Class 12 Business Studies Chapter 3 Textbook Exercise

RBSE Class 12 Business Studies Chapter 3 Very Short Answer Type Questions

Question 1.
Identify the nature of principles of management.
Answer:
Nature of principles of management are not rules or rigid laws, management principles are human behaviour which is not stable and is influenced by cultural background, which varies from country to country. So, they are not equally applicable everywhere.

Question 2.
State the meaning of ‘Principles’.
Answer:
Principles are general statements of truth which act as a guideline to our behaviour, action and decisions.

Question 3.
Who is the father of management by objective?
Answer:
Peter F. Drucker.

Question 4.
What is the basic assumption behind management by exception?
Answer:
The basic assumption behind management by exception is that superior manager’s attention is warranted only when an issue goes beyond the subordinate authority.

Question 5.
Name the principles of management which are universally accepted.
Answer:
Henry Fayol’s 14 principles of management.

Question 6.
What do you mean by principle of order?
Answer:
The principle of order states that there should be a place for everything and for every person. At the same time, everything and every person should be at their right place.

Question 7.
Which forces and situations of market compel to follow strategic management?
Answer:
Cut-throat market competition and neck-to-neck market forces of market compel to follow strategic management.

Question 8.
What do you understand by management by objectives?
Answer:
MBO is a process whereby both superior and subordinate managers jointly identify their common goals, of their work unit and define each employee’s major areas of responsibility and goals, with their .active participation.

Question 9.
What is strategic management?
Answer:
Strategic management is all about identification and description of the strategies that managers can carry, so as to achieve better performance and a competitive advantage for the organisation.

Question 10.
State any two limitations of management by exception.
Answer:

1. This approach promotes personalised decisions of an individual.
2. It requires detailed reporting system, which is not so easy.

RBSE Class 12 Business Studies Chapter 3 Short Answer Type Questions

Question 1.
In the situation of natural interest conflicts, which interest should supercede, according to Fayol ?
Answer:
In the situation of natural interest conflicts, organisational interest should supercede personal interest. Individual interest and organisational interest are different, so priority should- be given to‘organisational interest.

Question 2.
Which principle given by Fayol talks about judicious use of penalties?
Answer:
Discipline principle given by Fayol talks about judicious use of penalities. According to Fayol, discipline in an organisation is a must for ensuring smooth functioning of organisational activities and non-compliance of discipline by employees must lead to judicious application of penalties.

Question 3.
When was the English version of Fayol’s famous book published in America?
Answer:
In 1949, the English version of Fayol’s famous book “General and Industrial Management” was published and for this, he is known as the ‘Father of General Management’.

Question 4.
Give the classification of organisational activities in six different sections as stated by Fayol in his research Work on management problems.
Answer:

1. Technical activities
2. Commercial activities
3. Financial activities
4. Security activities
5. Accounting activities
6. Managerial activities.

Question 5.
Who gave the techniques of management by exception?
Answer:
The history of practice of this technique is very old. But its application in business was noticed in the end of 19th century. The credit to propound this principle and to apply it in organisations is given to Taylor. The father of scientific management. F. W. Taylor gave these techniques.

Question 6.
Managers must concentrate on complex and significant issues/deviation only. Which technique of management is relevant here?
Answer:
The technique of management by exception is relevant here. It ensures that superior manager’s attention is warranted only when an issue goes beyond the subordinate’s authority.

Question 7.
Which management technique determines collectively the individual, departmental and organisational objectives?
Answer:
Management by objectives is the management technique which determines collectively the individual, departmental and organisational objectives.

Question 8.
State any two advantages of management by objective technique.
Answer:

1. Efficient Management: MBO serves as a means to develop managerial skills and to improve the performance of managers.
2. Effective Planning: MBO programme provides a better and sharp planning by clearly stating the goals, developing action plans and fixing up the responsibilities.

Question 9.
To take advantages of available opportunities from the environment and to face the challenges boldly, which management technique should be applied ?
Answer:
Strategic management technique should be applied. Strategic management is all about identification and description of the strategies that managers can carry, so as to achieve better performance and a competitive advantage for their organisation.

Question 10.
Enumerate any two points of importance of MBE.
Answer:

1. It saves time, effort, energy of managers.
2. It extends the areas of managerial performance.

RBSE Class 12 Business Studies Chapter 3 Long Answer Type Questions

Question 1.
What do you mean by principles of management ? Explain the principles of management given by Fayol.
Answer:
Principles of management means the rules and regulation based on which decisions regarding the attainment of goals are taken in any organisation.

Principles of Management Given by Fayol :
Henry Fayol is recognised as the Father of modern theory of management. He has formulated a set of 14 principles which are universally accepted and applicate. They are as fallows :

• Division of Work or Specialisation :
  It states that the entire work should be sub-divided into small, compact jobs and each job should be given to that worker who specialises in that job.
• Authority and Responsibility :
  Authority, refers,to the right/power to take decisions and get them implemented, where as responsibility refers to the obligation on the part of the subordinate for doing the assigned work. According to Fayol, there should be perfect balance between authority and responsibility.
• Discipline :
  According to fayol, discipline in an organisation is a must for ensuring smooth functioning of of garnisational activities.
• Unity of Command :
  It states that each subordinate should receive orders from Only one boss or superior. When an employee gets orders and instructions from more than one boss, confusion and conflicts tend to arise.
• Unity of Direction :
  It states that there should be one head and one plan for the activities having the same objectives. In other words, the activities that have the same objective should be directed by one manager, under one plan.
• Subordination of Individual Interest to General Interest :
  It states that the interest of organisation should always supercede the interest of any individual.
• Remuneration :
  The remuneration or compensation for work done should be fair to both employees and the organisation. It must be adequate enough to lead a reasonable standard of life for the employees and within the paying capacity of the employer.
• Centralisation :
  There is a need to balance subordinate involvement through de-centralisation with manager’s retention of final authority through centralisation. Fayol, believed that the top manager should retain final responsibility.
• Scalar Chain or Hierarchy of Authority :
  Scalar chain refers to chain of, communication and command (authority), wherein, a manager has to communicate with his immediate subordinate/superior in a normal situation.
• Order :
  The principle of order states that there should be a place for everything and for every person. At the same time, everything and every person should be at their right place.
• Equity :
  Principle of equity implies that the employees should be dealt in a kind, just and fair manner. It refers to play fair along with justice friendliness.
• Stability of Personnel :
  It states that management must ensure that employees should be kept at their position for a reasonable time period. Management should not shift employees from one job to another frequently.
• Initiative :
  Workers should be encouraged to develop and carry out their plan for improvements. This freedom may encourage and inspire subordinates to initiate new things.
• Espirit-de-Corps :
  It states that managers should promote spirit of team work and cooperation and a sense of unity among the employees.

Question 2.
Discuss the contribution made by Henry Fayol in the Held of management.
Answer:
Henry Fayol’s book “Administration Industrille Generalle” published in 1917 in French was his major contribution to management explaining different concepts of management. This book was translated in English as ‘General and Industrial Management’ in 1949, and is widely considered as a foundational work in classical management theory. For this contribution, he is widely known as the ‘Father of General Management’. He studied the problems of management from the perspective of top level management. According to Fayol, all activities of an industrial undertaking could be divided into six parts :

1. Technical activities
2. Commercial activities
3. Financial activities
4. Security activities
5. Accounting activities
6. Managerial activities

Fayol classified his views related to managerial activities into three main parts :

1. Managerial qualities and training
2. Elements of management
3. Principles of management.

Fayol was the first to identify the qualities of a manager and he suggested the following six qualities, a manager should possess :

1. Physical
2. Intellectual
3. Ethical
4. Knowledge
5. Technical
6. Experience

Acconting to Fayol, management is a process having five essential functions :

1. Planning
2. Organising
3. Directing
4. Coordinating
5. Controlling.

Question 3.
Elucidate the concept of‘Management by Exception’.
Answer:
Management by exception is a method or plan of supervisiori/control under which only significant deviations from normally expected results or conditions are brought to the attention of top management for consideration and decision. The idea behind it is that management attention will be focused only on those areas where there is need of action.

MBE is a technique which holds that subordinates should be authorised to manage all routine matters and superior managers should reserve the authority with themselves to make decisions on exceptional issues and policy matters.
Importance of MBE

1. It saves time, effort and energy of managers.
2. The complex problems and issues demanding urgent attention of managers can’t be overlooked.
3. Timely attention and corrective measures for exceptional issues can be ensured as per desired standards.
4. It extends the scope of managerial performance.
5. It reduces the frequency of making decisions.

Limitations of MBE :

1. This approach promotes personalised decisions of an individual.
2. It requires establishment of clean and broad standards of performance. But it is very difficult to do so.
3. It requires detailed reporting system, which is not so easy.
4. It requires too much paper work, which makes it a costly and time consuming practice.
5. It requires delegation of authority which many managers do not want.

Question 4.
What is meant by ‘Management by Objective Technique’ ? Explain its merits and demerits.
Answer:
The term ‘management by objective’ refers to a formal procedure in which each manager at every level and his immediate superior manager jointly set the goals which the subordinate manager is expected to attain in the upcoming short period.

Merits of Management by Objective to Organisation

• Efficient Management :
  MBO serves as a means to develop managerial skills and to improve the performance of managers.
• Effective Planning :
  MBO programme provides a better and sharper planning by clearly stating the goals.
• Clarification of Organisational Roles :
  MBO clearly states the organisation’s role, structures, authority, responsibility, relationship, accountability, etc.
• Encourages Commitment :
  It creates commitment of employees towards their work and their goals. Under this, each employee gets clearly-stated goals to be achieved and action plan to accomplish the objectives.
• Facilitates Control :
  Effective control can be exercised on employees, goals, plans, programmes and progress of work as performance evaluation is made after a fixed time period.

Merits of MBO to Supervisors

1. It facilitates guidance and direction to subordinates.
2. It provides a base or aid for evaluating the performance of subordinates.
3. By MBO, superiors can motivate the subordinates towards the achievement of goals.
4. MBO helps in coordinating the individual efforts with group effort, unifying the individual goals with departmental goals and organisational goals in a better way.

Merits of MBO to Subordinates

1. As each employee knows about his specific goal and how to achieve it, its achievement becomes easy for him.
2. It enhances job-satisfaction of employees.
3. It encourages and motivates subordinates to work more.
4. It develops cordial relations between superior and subordinates.

Limitations of MBO

1. It is very difficult to set quantitative, measurable, realistic, verifiable goals.
2. To establish coordination between long-term and short-term goals, and between resources and goals to be achieved is a major problem of MBO.
3. Lack of cooperation and support of top level managers.
4. It is criticised for being a time-consuming process.

Question 5.
Write a note on strategic management.
Answer:
Strategic management is all about identification and description of the strategies that managers can carry, so as to achieve better performance and a competitive, advantage for their organisation. Strategy refers to future decision-making and defining the organsation’s direction and scope in the long run.
In the words of James M. Higgins, “Strategic management is the process of managing the pursuit of original mission while managing the relationship of the organisation to its environment.”

Features of Strategic Management

• Strategic management is a formal function of management, because under it, objectives are determined, strategies are formulated, implemented and evaluated and corrective actions are taken to modify the strategies if required.
• Organised and systematised method of managing: Strategic management is an organised and systematised method of managing the enterprise.
• It reflects the commitment of management in terms of selection of best strategic plans.
• It consists of plans such as strategic plans and organisational plans.
• It is related with impact of present decision on future market direction of an organisation. It forecasts future events, opportunities, threats, risks, etc. to have an edge over competitors.
• Strategic management is done by top level mangement. For this, they determine the objectives of organisation as a whole.

RBSE Class 12 Business Studies Chapter 3 Additional Questions

RBSE Class 12 Business Studies Chapter 3 Objective Type Questions

Question 1.
Principles of management are formulated by :
(a) laboratory
(b) managerial experience
(c) experience of consumers
(d) scientist
Answer:
(b) managerial experience

Question 2.
Who formulated the 14 principles of management ?
(a) F.W. Taylor
(b) Henry Mintzberg
(c) Henry Fayol
(d) None of these
Answer:
(c) Henry Fayol

Question 3.
Universally accepted principles of management are :
(a) division of work
(b) units of command
(c) discipline
(d) All of these
Answer:
(d) All of these

Question 4.
He is known as Father of modern mangement:
(a) Henry Fayol
(b) F.W. Taylor
(c) P.F. Druker
(d) None of these
Answer:
(b) Henry Fayol

Question 5.
Who was the writer of the book ‘Administration Industrille Generalle’ ?
(a) Urwick
(b) P. F. Drucker
(c) F.W. Taylor
(d) Henry Fayol
Answer:
(d) Henry Fayol.

Question 6.
Henry Fayol has divided the top managerial activities into categories.
(a) two
(b) three
(c) six
(d) five
Answer:
(b) three

Question 7.
Who is known as the management guru of 21st century ?
(a) Drucker
(b) Henry Fayol
(c) Taylor
(d) None of these
Answer:
(b) Drucker

Question 8.
Management by objective was first discussed in the year :
(a)1954
(b)1964
(c) 1984
(d) 1924
Answer:
(a) 1954

Question 9.
Management by objective concept was firstly discussed by :
(a) Terry & Franklin
(b) Max Weber
(c) F.W. Taylor
(d) Peter F. Drucker
Answer:
(d) Peter F. Drucker

Question 10.
Who is known as the Father of Management by Exception?
(a) Henry Fayol
(b) F.W. Taylor
(c) Drucker
(d) None ofAhese
Answer:
(b) F.W. Taylor

RBSE Class 12 Business Studies Chapter 3 Very Short Answer Type Questions

Question 1.
Earlier, goals of organisation society used to be based on what motto?
Answer:
Service and welfare of all organisations were run with the motto ‘Vasudhev Kutumbkam’.

Question 2.
How are the principles of mangement formulated?
Answer:
Principles of management are formulated on the basis of experience of the managers in the organisation.

Question 3.
Is management a universal activity?
Answer:
Yes, management is a universal activity.

Question 4.
“Principles of management are to the manager as a table of materials, strength and weakness is to a civil engineer”. Who said this?
Answer:
G.R. Terry and Franklin.

Question 5.
State the two principles of management.
Answer:
Discipline and unity o£command.

Question 6.
Who laid thg foundation of management principle?
Answer:
Henry Fayol.

Question 7.
What is Administration management also known as?
Answer:
Modern management.

Question 8.
What was Fayol’s age when he started a mining company?
Answer:
Fayol was of 19 years age when he started a mining company.

Question 9.
State the two types of activities of an industrial undertaker as divided by Fayol.
Answer:

1. Technical activities
2. Financial activities.

Question 10.
What do you mean by Espirit-de-Corps?
Answer:
It states that managers should promote the spirit of team work and cooperation and a sense of unity among the employees.

Question 11.
Which book of Fayol is widely considered as a foundational work in classical management theory?
Answer:
Book entitled ‘General and Industrial Management’ is considered as a foundational work in classical management theory.

Question 12.
What do you mean by commercial activities ?
Answer:
Commercial activities are those which are related to buying-selling and exchanging activites.

Question 13.
What -do you understand by accounting activities ?
Answer:
Accounting activities are related to stock evaluation, preparation of balance sheet, statistics, etc.

Question 14.
Into how many parts did Fayol divid’e the industrial undertaking activities ?
Answer:
Fayol divided the activities into six parts.

Question 15.
Define managerial activities.
Answer:
Managerial activities are related to planning, organising, directing, controlling and coordination.

Question 16.
Into bow many parts did Fayol classify his views related to managerial activities and what are they?
Answer:
Fayol classified them into three main parts and these are :

1. Managerial qualities and training
2. Elements of management
3. Principles of management.

Question 17.
State the three qualities of manager, as identified by Henry Fayol.
Answer:

1. Physical,
2. Intellectual,
3. Ethical.

Question 18.
Mention the elements of management as told by Henry Fayol.
Answer:
According to Henry Fayol, management is a process having five essential functions :

1. Planning,
2. Organising,
3. Directing,
4. Co-ordinating,
5. Controlling.

Question 19.
Who is known as the Management guru of the 21st century?
Answer:
Peter F. Drucker.

Question 20.
Who gave the concept of ‘knowledge worker’?
Answer:
Peter F. Drucker.

Question 21.
Enlist the four modern trends of management techniques.
Answer:

1. Management by objectives.
2. Management by exception.
3. Strategic management.
4. Productivity management.

Question 22.
Who firstly introduced the concept of management by objectives?
Answer:
Peter F. Drucker, in 1954, firstly introduced the concept of management by objectives.

Question 23.
Write the full form of MBO.
Answer:
Management by Objectives.

Question 24.
“This is a goal oriented philosophy of management which emphasises on achievements and results”. Who said this ?
Answer:
Aniny Rays.

Question 25.
State two advantages of MBO to superiors.
Answer:

1. It facilitates guidance and direction to subordinates.
2. It provides a base or aid for evaluating the performance of subordinates.

Question 26.
Who is known as the father of scientific management?
Answer:
F.W. Taylor.

Question 27.
“Management by exception is an information and control technique that provides management with signals that tell when a condition or operation is within its prescribed standard and when it is not”. Who said this ?
Answer:
Listel R. Bittel.

Question 28.
Define MBE according to Stoner.
Answer:
MBE principle holds that the controlling manager should be informed about operation progress only when there is a significant deviation from a plan or standard.

Question 29.
Write two points of importance of MBE.
Answer:

1. It saves time, effort, energy of managers.
2. It extends the areas of managerial performance.

Question 30.
Write two limitations of MBE.
Answer:

1. This approach promotes personalised decision of an individual.
2. It requires detailed reporting system, which is not so easy.

Question 31.
Write the name of the mining company established by Henry Fayol.
Answer:
Compagnie-De-Commentary-Fourchambean Decazeville.

Question 32.
Write the name of French book published in 1917 by Henry Fayol.
Answer:
“Administration lndustrille Generalle”.

Question 33.
Who is widely known as the ‘Father of General Management’?
Answer:
Henry Fayol.

Question 34.
What do you mean by security activities?
Answer:
Security activities are related to security of assets and materials.

Question 35.
What do you mean by authority?
Answer:
Authority refers to the right/power to take decisions and get them implemented through subordinates.

Question 36.
What do you mean by responsibility?
Answer:
Responsibility means the obligation on the part of the subordinates for doing the assigned work.

Question 37.
Write one advantage of unity of direction.
Answer:
Unity of direction ensures the unity of action and results in a sound organisational structure.

Question 38.
What type of competition is prevailing in market these days?
Answer:
Cut-throat market competition or neck-to-neck competition.

Question 39.
What do you mean by unity of command?
Answer:
It means that each subordinate should receive orders from only one boss or superior.

Question 40.
What do you mean by unity of direction?
Answer:
It means that there should be one head and one plan for the activities having the same objectives.

RBSE Class 12 Business Studies Chapter 3 Short Answer Type Questions (SA -I)

Question 1.
Earlier, what was the goal of the organisation?
Answer:
Earlier, goal of organisation, society and state used to be service and welfare of all, and the organisations were run with the motto ‘Vashudev Kutumbkam’, which increased cooperation and equality in society.

Question 2.
What do you meant by Division of Work?
Answer:
It states that the total work be sub-divided into small compact jobs and each job should be given to that worker who specialies in that job/work. It is applicable to technical as well as managerial activities at every level in the management.

Question 3.
Explain unity of command principle of management.
Answer:
It states that each subordinate should receive orders from only one boss or superior. When an employee gets orders and instructions from more than one boss, confusion and conflicts tend to arise.

Question 4.
Now-a-days the aims or goals of an organisation have shifted. Comment on this.
Answer:
Yes, this is true. Now the aims or goals of organisations or society have shifted from ‘Vasudhev Kutumbkam’ to ‘survival of the fittest’, which means every person or organisation attempts to prove itself the best in its every sphere and consequently, competition crisis arises from this.

Question 5.
How can the subordination of Individual Interest to General Interest be achieved in any organisation ?
Answer:
This can be accomplished by doing the following :

1. Exemplary conduct of the superiors.
2. Fair agreement with the employees.
3. Constant vigilance and supervision of the activities of the organisation.

Question 6.
Explain the concept of centralisation.
Answer:
According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” Fayol believed that a top manager should retain the final responsibility, but should, at the same time, give his/ her their subordinates enough authority to do their job properly.

Question 7.
Fayol divided all the activities of an industrial undertaking into how many categories and what are they ?
Answer:
Fayol divided the activities of an industrial undertaking into six parts :

1. Technical activities
2. Commercial activities
3. Financial activities
4. Security activities
5. Accounting activities
6. Managerial activities.

Question 8.
Write any two qualities of manager according to Fayol and explain them.
Answer:

1. Physical Appearance: Impressive health, ability and good nature/behaviour.
2. Technical Knowledge : Knowledge of points (things directly related to the work).

Question 9.
Write a note of elements of management.
Answer:
Management is a process having five essential elements planning, organising, directing, coordinating and controlling.

These inter-related and inter-dependent functions are performed at all the levels of management, though their importance differs along with the levels of management.

Question 10.
Write two new management techniques and explain modern trends.
Answer:
The changes taking place in environment directly or indirectly affect the working of organisation and its existence as well as personal life. As a result, to perform managerial functions with ease and smoothly, new techniques or tactics are adopted. Thus, new management techniques or managerial functions have emerged in the field of management, and these are known as Modern Trends:

1. Management of changes.
2. Management of struggles.

Question 11.
Define MBO in the words of Peter F. Drucker.
Answer:
According to Peter F. Drucker MBO is regarded as a system for improving performance of both the individual managers and enterprise as a whole by setting objectives at the corporate, departmental and individual managers level.

Question 12.
State the assumptions of management by objective.
Answer:
MBO is based on the following assumptions :

1. Existence of mutual understanding between a superior and a subordinate.
2. Employees can perform better when they clearly know what is expected from them and how their individual efforts contribute to organisation.
3. It assumes that employees are interested to participate in formulation of plans, want to know the results of their performance and expect to be fairly rewarded for their performance.

Question 13.
Explain the nature of MBO.
Answer:

1. It is a functional approach, giving primary importance to goal-setting process.
2. It focuses on process of setting goals at every level of the organisation, not on the means for their implementation.
3. It is a result-oriented approach.

Question 14.
State the advantages of MBO for superiors.
Answer:

1. It facilitates guidance and direction to subordinates.
2. It provides a base or aid for evaluating the performance of subordinates.
3. By MBO superiors can motivate the subordinates towards achievement of goals.

Question 15.
Write any two limitations of MBO.
Answer:

• Difficulty of Setting Goals :
  It is very difficult to set quantitative, measurable, realistic, verifiable goals. Future uncertainties, difficulty in accurate forecasting, dynamic environment, government policies, etc. make setting of goals a difficult exercise.
• Problem of Balancing and Coordination :
  To establish coordination between long term and short-term goals, and between resources and goals to be achieved, is a major problem of MBO.

RBSE Class 12 Business Studies Chapter 3 Short Answer Type Questions (SA- II)

Question 1.
Write the 14 Principles of Henry Fayol.
Answer:

1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interest
7. Remuneration
8. Centralisation
9. Scalar chain
10. Order
11. Equity
12. Stability of Personnel
13. Initiative
14. Espirit-de-Corps.

Question 2.
Explain the activities of an industrial undertaking as given by Fayol.
Answer:

1. Technical Activities : Related to production.
2. Commercial Activities: Related to buying-selling and exchange activities.
3. Financial Activities: Related to obtaining funds and their optimum utilisation.
4. Security Activities : Related to security of assests and materials.
5. Accounting Activities : Related to stock evaluation, balance sheet, etc.
6. Managerial Activities: Related to planning, organising, directing, controlling and coordination.

Question 3.
Explain the qualities that a manager should possess according to Henry Fayol.
Answer:

1. Physical: Impressive health, ability and good behaviour.
2. Intellectual: Ability to understand and to learn, wisdom, decision-making ability, awareness.
3. Ethical : Ability to take on responsibilities, initiative, loyalty, prestige, dignity and education.
4. Knowledge : Knowledge of activities related to work and the knowledge of doing things.
5. Technical: Knowledge of points/things directly related to work.
6. Experience: To be perfect and skilled in performing work/task.

Question 4.
Write the three advantages of MBO to organisation.
Answer:

• Efficient Management :
  MBO serves as a means to develop managerial skills and to improve the performance of managers.
• Effective Planning :
  MBO programme provides a better and sharper planning by clearly stating the goals, developing action plans and fixing up the responsibilities.
• Clarity of Organisational Roles :
  MBO forces managers to clarify the organisational roles and structures. It clearly states the organisation’s role, structures, authority and responsibility, relationship, etc.

Question 5.
Explain the meaning of management by exception and write its two limitations.
Answer:
Management by exception is a technique which holds that subordinates should be authorised to manage all Routine matters and superior managers should reserve the authority with themselves to take decisions only on exceptional policy matters. MBE is not only a control technique, it is also a method of finding/discovering new opportunities.

Limitations of Management by Exception

1. This approach promotes personalised decisions of an individual.
2. It requires establishment of clean and broad standards of performance. But this is very difficult in practice.

Question 6.
Write five points of importance of management by exception.
Answer:
The five points of importance of management by exception are as follows :

1. It saves time, effort, energy of managers.
2. The complex problems and issues demanding urgent attention of managers can’t be overlooked.
3. It extends the area of managerial performance.
4. It can limit or reduce the deviations in performance.
5. It helps in installing an effective control system.

Question 7.
State the features of strategic management.
Answer:

• Formal Managerial Function :
  Strategic management is a formal function of management because under this, objectives are determined, strategies are formulated, implemented and evaluated.
• Follows System Approach :
  Strategic management concepts follows system approach. It is treated as a system. In this system, the organisational objectives take precedence over departmental or individual objectives.
• Dynamic Process :
  It is a dynamic process as it involves making changes in organisational objectives, policies and plans of business, according to the changes in internal and external business environment.

Question 8.
Describe the limitations of MBO.
Answer:

1. Lack of cooperation and support of top level managers.
2. Excessive pressure on subordinates to accomplish objectives in time with no prioritisation of objectives.
3. Lack of suitable motivation, incentives or rewards to employee.
4. It emphasises more on short term goals, neglecting long term goals.
5. It is criticised to be a time-consuming process.

Question 9.
Explain subordination of individual interest to general interest principle of management.
Answer:
This principle states that the interest of organisation (general interest) should always supercede the interest of any one individual. Interest of an individual should not be given priority over general interest. This requires harmony of individual and common interest. Whenever individual interest and the common interest differ, efforts must be made to reconcile them.

If this principle is violated in the organisation, it may lead to organisational politics leading to self benefit, conflict between interest groups and chaos in the organisation.

Question 10.
Differentiate between authority and responsibility.
Answer:

Question 11.
Explain the two management principles given by Henry Fayol.
Answer:
(i) Unity of Command :
This principle states that each subordinate should receive orders from only one boss or superior. When an employee gets orders and instructions from more than one boss, confusion and conflicts tend to arise. The subordinate may not be able to serve two or more superiors at a time. Fayol believed that, when two bosses exercise their authority over the same person, uneasiness is felt, order is disturbed.

(ii) Unity of Direction :
The principle of unity of direction states that there should be one head and one plan for the activities having the same objectives. In other words, the activities that have the same objective should be directed by one manager under one plan. This will ensure unity of action, and result in sound organisational structure.

Question 12.
State the differences between principle of unity of command and unity of direction.
Answer:

Question 13.
Explain scalar chain or hierarchy of authority.
Answer:
Scalar chain refers to chain of communication and command (authority) wherein, a manager has to communicate only with his immediate subordinate/superior in a normal situation. But sometimes, it becomes essential to cut short the chain of command or to depart from the prescribed route, with a view to ensure fast and effective communication.

In such a case, gang plank should be used. Fayol’s gang plank allows two individuals at same level to deal directly with each other during emergencies. Fayol’s gang plank concept is shown in figure below :

In this, there are two chains ABCDEFG and ALMNOPQ, if D wants to communicate with N, then he has to start with CBALM then N, but according to gang plank and to minimise delay in communication, the people at the same level can commnicate directly. Hence, D could directly talk to N.

Question 14.
Explain the activities performed at different levels in a different manner in an organisation as given by Fayol.
Answer:

RBSE Class 12 Business Studies Chapter 3 Long Answer Type Questions

Question 1.
Explain the following principles of management with suitable examples :
(i) Unity of Direction,
(ii) Equity,
(iii) Cooperation,
(iv) Order,
(v) Centralisation and Decentralisation.
Answer:
(i) Unity of Direction:
It states that there should be one head and one plan for the activities having same objectives. In other words, the activities that have the same objectives should be directed under one manager under one plan.

Example : Let us assume, one company is manufacturing motorcycles. So, the company should appoint one person for the purchasing of raw materials and one person for the marketing and other person for production. By this, the process would go smoothly as one person is responsible for one profile only.

(ii) Equity:
It implies that the employees should be dealt in a kind, just and fair manner. It refer to fair play, justice, friendliness. No discrimination should be done among workers.

Example : If, in any organisation, employees work in shifts i.e. day shift and night-shift, it is the responsibility of the head to arrange the shifts for all employees in equal manner i.e. it should not happen that one is working always in day and the other one in night only.

(iii) Cooperation :
It states that managers should promote the spirit of teamwork and cooperation and a sense of unity among the employees.

Example : If manager has allotted the task of preparing 50 units of something in a group of 5 persons, then, they should work like team members cooperating with each other. It can be possible that one has the capacity to prepare 11 or other is able to complete only 9. So, it is the responsibility of the team members to complete the group task as the worker who can prepare 11 can help the one who can prepare only 9 units.

(iv) Order:
The principle of order states that there should be a place for everything and for every person. At the same time everything, and every person should be at its right place.

Example : Suppose, in any organisation, any equipment gets started with any specific instrument held by a person. So, it is the responsibility of the person to keep that instrument at a fixed and right place, so that other person can also operate in his absence.

(v) Centralisation and Decentralisation :
If power of taking decisions is in one hand, then its centralisation and power of decision making is distributed as per the needs of the department and decentralisation have totally depends on the size of the organisation. If it is big, it should be decentralised and if it is small, then centralised system should be preferred.

Example : If budget of the organisation is prepared by the top level management for all the departments and accordingly departments have to manage, then it is centralisation, whereas if the budget is prepared by department heads and then top level acceptance is taken, then it is decentralisation.

Question 2.
State the importance of strategic management.
Answer:
Strategic management plays a vital role in this cut-throat competition market and globalised market. Its importance is as follows :
(i) Ensures Long-Term Survival in the Marketplace :
Strategic management identifies opportunities and threats that influence the organisational performance. It makes use of opportunities and minimises threats to make sure that organisation can survive in the market by outperforming its rivals.

(ii) Effective and Smooth Running of Business :
Strategic management ensures effective and smooth running of business as it analyses the changes in the environment, identifies the new opportunities, helps in mitigating the future contingencies.

(iii) To Cope-up With Changing Environment :
Through this, the management can not only face the environmental challenges, but it also capable to grab the opportunities. Thus, this system helps in effective management and in coping with the changing environment.

(iv) Helpful in Taking Best Decisions :
Strategic management helps in taking the best decisions as :

1. It provides the required facts, data and information.
2. It helps in identifying the main problems of the organisation.
3. It indicates the best alternative.
4. It compels the manager to think for the future.

(v) Improves Employee’s Motivation :
Under strategic management, the objectives and goals for each step of strategic plan are clearly stated. The objectives stated are reward- linked. They are linked to the schemes of remuneration, promotion, etc. This results in increased motivation to the employees and ensures improved performance.

(vi) Other Benefits :
It helps speeding up implementation of core strategies, focusing on every one in the organisation, building an executing team that serves as a model of cross functional or horizontal team work, clarifying competitive advantage, providing tangible tools for dealing with stress or change.

Question 3.
Explain the advantages of MBO to superiors and to subordinates. Elaborate on its limitations also.
Answer:
Advantages of MBO to Superiors :

1. It facilitates guidance and direction to the subordinates.
2. It provides a base or aid for evaluating the performance of subordinates.
3. By MBO, superiors can motivate the subordinates towards achievement of goals.
4. MBO helps in coordinating the individual efforts with group efforts, unifying the individual goals with departmental goals and organisational goals in better way.

Advantages of MBO to Subordinates :

1. As each employee knows about his specific goal and how to achieve it, its achievement becomes easy for him.
2. It enhances job satisfaction of employees by providing them participation in management.
3. It encourages and motivates subordinates to work more.
4. It develops cordial relations between superior and subordinate, as the subordinate has to maintain continuous interaction with his superior, reducing the chances of confusion and chaos.

Limitation of MBO :

1. It is very difficult to set quantitative, measurable, realistic, verifiable, goals. Future uncertainities, difficulty in accurate forecasting, etc. makes setting of goals a difficult task.
2. Lack of cooperation and support of top level managers.
3. It is criticised for being a time-consuming process.
4. It emphasises more on short-term goals, neglecting long-term goals.