CBSE Class 12 Business Studies Revision Notes Chapter 2

Class 12 Business Studies Chapter 2 Notes- Principles of Management

Business Studies is an important theoretical subject that introduces students to various important concepts that will help them better understand the real-world scenarios of business. A thorough understanding of the subject is beneficial for the students when they are writing examination papers and holds extreme importance in the real world. Students will learn about important communication skills, entrepreneurial skills, principles of management, etc. It will benefit students who wish to make a career in management, marketing, accounting, etc.

It will equip students to take up employment and help them manage the dynamic and ever-changing business environment.

One very important aspect for students to learn are the principles of management. The Principles of Management make it imperative for managers to make decisions that help the organisation reach its end goal. Students will learn majorly about two types of such principles, namely, the Principles of Management by Henry Fayol and the Scientific Principles of Management by F.W. Taylor. An in-depth understanding of the concepts, nature, and significance of these principles will help the students better comprehend the chapter. It will ultimately lead to good results in tests and examinations. Students can benefit from the Class 12 Business Studies Chapter 2 Notes while preparing for this chapter.

To prepare for the examinations, students need access to trustworthy and reliable resources that offer accurate solutions to end-text problems. It can sometimes be difficult for students to find such credible resources for various reasons. This is why Extramarks has come up with the Class 12 Business Studies Chapter 2 Notes. These notes provide students with comprehensive material that will aid in  a better understanding of the chapter Principles of Management and the various concepts that are related to it.

Extramarks is a well-known resource for students to use in order to prepare, review, and study for exams. It is an online study resource that helps thousands of students all across the country. Subject experts used NCERT textbooks, reference books, CBSE sample papers, and other materials to create the Class 12 Business Studies Chapter 2 Notes on the Principles of Management. It gives students a general concept of the types of questions that may appear on the exam. Subject professionals provide step-by-step answers to questions for greater comprehension, making the Class 12 Business Studies Chapter 2 Notes an invaluable study tool for students learning and preparing for exams.

Aside from the Class 12 Business Studies Chapter 2 Notes, numerous other resources are available for students to study. Students who register on the website will have easy access to NCERT books, NCERT solutions, reference books, CBSE essential questions, and other resources that will help them feel prepared to confront the problems in their exams.

Key Topics Covered in Class 12 Business Studies Chapter 2 Notes

Business studies might appear to be a difficult subject at first, but when students make an effort to understand the topics and concepts, it can become a really interesting subject. Not to mention it’s a really good one.Hence, with a few efforts, students can perform well on their Business Studies tests and enjoy the rich learning opportunities they offer to help them get the required information on the concept of Principles of Management. Extramarks has given them the Class 12 Business Studies Chapter 2 Notes, which explain in detail various critical concepts.

A different business organisation follows various principles of management. Management thinkers and writers are also accredited with studying these Principles of Management from time to time. In the Class 12 Business Studies Chapter 2 Notes by Extramarks, emphasis is laid on the works of Henry Fayol and Frederick WinslowTaylor, who gave the Principles of Management and the Principles of Scientific Management. Students will learn about the concepts, nature and significance of the principles mentioned earlier, as well as the other Techniques of Scientific Management. The students will also be able to draw comparisons between the two theories.

All important aspects of the chapter are included in Class 12 Business Studies Chapter 2 Notes. Students can easily access many other resources from the Extramarks, which, when employed in their study schedules, can easily help them get better scores on tests and examinations.

A list of the key topics covered in detail in the Class 12 Business Studies Chapter 2 Notes is as follows:

Principle

A statement that serves as a direction for thought and action is known as a principle. A principle serves as the basis for a system of beliefs, behaviors, or a chain of reasoning.

Principles of Management

• Management principles are broad and general standards for managerial decision-making and behaviour. Management principles are less rigorous than scientific principles because they deal with human behaviour and must be implemented creatively, given the demands of the situation.
• Management principles are broad and fundamental truths that build a relationship between cause and effect.
• These ideas serve as guiding principles for managerial decision-making and behaviour.
• Management forecasts the outcome of their actions based on principles.

The difference between Principles of Management and Techniques of Management as given in the Class 12 Business Studies Chapter 2 Notes is shown below:

To learn about the whole chapter in detail students can access the Class 12 Business Studies Chapter 2 Notes provided by Extramarks.

Natures of Principles of Management

The natural principles of management are as follows:

1. Universal Applicability
2. General Guidelines
3. Practice and Experimentation
4. Flexible
5. Behavioural
6. Cause and Effect Relationship
7. Contingent

A detailed description of the nature of the principles of management is given in the Class 12 Business Studies Chapter 2 Notes:

1. Universal Applicability: Management principles are universally applicable. These apply to all types of organisations, including businesses and non-profits, small and large companies, and at various levels of authority. Because these ideas are universal, managers can utilise them in different managerial contexts.
2. General Guidelines: They are general recommendations for action and decision-making but do not provide readymade solutions because the business environment is dynamic and ever-changing. It is because real-world business situations are dynamic and complex.
3. Practice and Experimentation: The principles were formed by scientists through research, experiments, knowledge, and expertise. Through observation, analysis, and experience, the principles are used to solve various managerial issues.
4. Flexible: These concepts are not inflexible, and practising managers can adjust and modify them based on the scenario and changes in the corporate environment. They are adaptable and dynamic.
5. Behavioural: Management must deal with human behaviour; hence, the principles strive to influence human behaviour. Because they are based on complicated human behaviour that managers cannot control, they are basic guides to action that managers can implement depending on the situation.
6. Cause and Effect Relationship: They establish a relationship between cause and effect, allowing them to be used in a variety of similar situations.

Extramarks’ credibility stems from its ability to provide credibly  trusted NCERT study material for all subjects from Class 1 to 12. One can easily access the CBSE Class 12 Business Studies Chapter 2 Notes from the Extramarks website and enjoy a better learning experience and improve their performance in the examinations.

Significance of Principles of Management 

A detailed description of the significance of the principles of management as mentioned in Class 12 Business Studies Chapter 2 Notes is as follows:

1. Providing managers with useful insights into reality: Management principles provide managers with important insights into real-world scenarios; following these principles will increase their knowledge, ability, and comprehension of diverse managerial settings and conditions.
2. Optimal resource utilisation and efficient administration: The company’s resources are limited.. Management principles enable managers to recognise the cause and consequence of their decisions and activities, resulting in less waste. Maximum benefit at the lowest possible cost is what is meant by optimal resource utilisation.
3. Scientific decisions: Decisions must be fact-based, well-considered, and justifiable regarding the intended objective. Management concepts must be timely, practical, and subject to measurement and evaluation. Principles are free of bias and prejudice.
4. Meeting the changing environmental requirements: Management principles are adaptable and dynamic, allowing organisations to achieve their goals even in a changing business environment.
5. Fulfilling social responsibility: Management principles also guide managers in meeting their social duties while assisting them in accomplishing organisational goals. Principles assist managers in making the most use of their human and material resources. The efficient utilisation of resources leads to an improvement in the quality of work. It will also lead to a rise in the societal standard of living.
6. Management training, education, and research: Management principles are important for managers because they help them improve their knowledge, which is the foundation for management training and research.

Students can access the detailed description of the whole chapter from the Class 12 Business Studies Chapter 2 Notes provided on the Extramarks website.

Taylor’s Scientific Management 

FrederickWinslow Taylor, often known as the “Father of Scientific Management,” was the first expert to lay the groundwork for management as a science based on fundamental principles and the application of scientific methods to address managerial problems.

In a very short period of time, F.W. Taylor rose from an apprentice position to that of a Chief Engineer at Midvale Steel Company. There he conducted a series of experiments and concluded that the workers working in the company were producing much less than the predicted standards. Another issue that came to his attention was that the management and the workers were hostile towards one another.

He made several proposals to fix the problem and accurately suggested the theory of scientific management to emphasise the use of a scientific approach in managing a business rather than the hit-and-trial method.

Scientific management entails carrying out corporate processes with standardised tools, procedures, and trained personnel in order to maximise productivity, improve quality, reduce costs, and eliminate waste through effective and optimum resource utilisation.As a result, it emphasises that there is always one single best method for improving productivity. This method can be refined through research and analysis.

A detailed description of the principles is given in Class 12 Business Studies Chapter 2 Notes provided by Extramarks.

Principles of Scientific Management

The principles of scientific management are as follows:

1. Science, Not a Rule of Thumb.
2. Harmony, not Discord.
3. Cooperation, not Individualism.
4. Development of every person to their greatest Efficiency and Prosperity.

A detailed description of the principles as given in the Class 12 Business Studies Chapter 2 Notes is as follows:

1. Science, Not a Rule of Thumb: Instead of the hit-and-trial approach, every work performed in an organisation should be founded on scientific research and analysis. To accomplish a job efficiently and successfully, there should be a scientific plan and uniform equipment. As a result, new techniques and methods must be developed to simplify jobs and enhance ease of performance, and management should not rely on old ways and approaches.
2. Harmony, not Discord: To fulfil organisational goals, there must be total harmony between management and workers. It means that there should be a healthy working atmosphere. Taylor created a full revolution in management policies to respect each other’s duties and avoid conflict (Mental Revolution).
3. Cooperation, not Individualism: Individualism should be replaced by comprehensive collaboration and coordination between labour and management to achieve organisational goals. Employees’ constructive suggestions should be supported, as this will prevent workers from going on strike and making unrealistic demands.
4. Development of every person to their greatest Efficiency and Prosperity: The development of each individual to their maximum efficiency and prosperity entails taking actions to improve the capabilities of all individuals in an organisation through scientific selection and allocating work matched to their temperament and talents. It will improve productivity by fully leveraging the workers’ skills.

Techniques of Scientific Management

The techniques of Scientific Management, as given in the Class 12 Business Studies Chapter 2 Notes are explained below:

1. Functional Foremanship: Functional foremanship is a management method in which planning and execution are separated. Supervision is divided into various specialised responsibilities, each assigned to a supervisor. This principle is an extension of Fayol’s principle of division of labour and specialisation. It is carried out by eight people, who are divided into two groups: Planning and Production In charge.

Class 12 Business Studies Chapter 2 Notes also describe the job roles of the eight people as prescribed by Henry Fayol:

Planning Incharge 

• Instruction Card Clerk: is responsible for drafting instructions for the workers.
• Route Clerk: to specify the exact sequence and route of production.
• Time and Cost Clerk: prepare time and cost sheet for the job.
• Disciplinarian: to ensure discipline and enforcement of rules and regulations among the workers.

Production Incharge

• Speed Boss: is responsible for the timely and accurate completion of the job.
• Gang Boss: is responsible for keeping tools and machines ready for operation.
• Repair Boss: to ensure proper working conditions of tools and machines.
• Inspector: to check the quality of work.

1. Standardisation and Simplification of work: The process of setting standards for every company operating to maximise output is referred to as standardisation. Simplification is the process of removing unnecessary product or service variants or quantities. Simplification and standardisation can reduce labour, machine, and tool costs. It leads to better resource utilisation and an increase in turnover.
2. Method Study: Technique research aims to determine the best way to accomplish the job to achieve maximum efficiency and optimum resource utilisation and increase quality and customer satisfaction.
3. Motion Study: The study of movements such as lifting, putting objects, sitting, and changing positions, among other things, is referred to as motion study. Unnecessary motions are avoided, resulting in a shorter task completion time. Taylor created equipment and tools to teach workers about their use using motion analysis, and the result was wonderful.
4. Time study: The standard time for the entire task is determined by obtaining many readings. The time study method will be determined by the work’s volume and frequency, the operation’s cycle time, and the cost of time measurement. The time study aims to estimate the number of workers engaged, design appropriate incentive programmes, and calculate labour expenses.
5. Fatigue study: A fatigue study determines the length and frequency of rest intervals while completing a job. Workers will be able to replace lost energy during rest periods, avoiding accidents, rejections, and occupational illness.
6. Differential piece wage system distinguishes between efficient and unproductive employees and connects salaries and productivity. The standard output per day is determined, and two rates are applied: higher rates for those who achieve equal to or greater than the standard output, i.e. ,efficient workers, and lower rates for inefficient and slow-paced workers. As a result, productive employees will be rewarded, while unproductive employees will be encouraged to improve their performance.

For example, if the standard production per worker per day is 20 units, workers who create more than the organisation will pay the usual Rs. 100 per unit, while those who produce less than the standard will be paid Rs. 80 per unit. A productive worker who makes 21 units earns 21×100 = Rs. 2100 per day, but a worker who produces 18 units earns 1880 = Rs. 1440 per day. The Rs. 660 differential will encourage the inefficient worker to work more efficiently and make more money.

This section is based on the detailed study of the techniques of scientific management given by F.W. Taylor. Hence, students should be completely aware of it. As a result, Extramarks has covered every concept of the section in Class 12 Business Studies Chapter 2 Notes. You can access it from the official website.

Fayol’s Principle of Management

Henry Fayol (1841-1925) earned a degree in mining engineering and began working for the French Mining Company as an engineer in 1860. In 1988, he was promoted to the position of Managing Director. When the company was on the verge of going out of business, he embraced the task and used his extensive administrative knowledge to turn the company’s fortunes around.

According to Henri Fayol’s specialisation, it boosts workforce efficiency and increases output. Furthermore, labour specialisation improves accuracy and speed.Henry Fayol gave 14 principles in his book “General and Industrialist Management”. A detailed description of these 14 principles of management is shown in Class 12 Business Studies Chapter 2 Notes.

Principles of Management by Fayol

1. Division of Work: Division of labour entails breaking down a large task into smaller tasks and assigning them to people. The entire project is broken into little parts, and each task is completed by a trained specialist competent enough to accomplish that job. As a result, it leads to enhanced efficiency, specialisation, and productivity.
2. Authority and Responsibility: Authority denotes the ability to make decisions, whereas responsibility denotes the obligation to accomplish the specified task on time. There should be a healthy balance of authority and responsibility. A lack of power makes an executive less engaged in carrying out their responsibilities. Similarly, delegating authority without assigning responsibility makes him arrogant, and there is a risk of misuse of power.
3. Discipline: Obedience, respect for authority, and adherence to rules and regulations are all examples of discipline. It is essential to maintain a productive working atmosphere in any organisation. Good monitoring at all levels and a well-established penalty system will aid in maintaining organisational discipline.
4. Unity of Command: According to Fayol, employees should have only one boss. It indicates that each worker should only get commands from one superior; otherwise, there will be confusion, disagreement, and duplication of work.
5. Unity of Direction: All organisational units should work together to achieve the same goals through coordinated and targeted efforts. There should be only one leader and one plan for a collection of people working toward the same purpose. As a result, the unity of action is assured by this principle.
6. Subordination of Individual Interest to general interest: An organisation’s interests should precede employees’ interests. In other words, the organisation’s interests must precede individual interests.

For example, the organisational goal of achieving a certain goal should precede an individual’s personal goal of earning a higher income with the least hard work.

1. Remuneration of Employees: All employees in the organisation should be paid and compensated fairly. Fair pay should be provided to the employees in order to establish a suitable quality of life. The remuneration should be based on the organisation’s ability to pay.
2. Centralisation and Decentralisation: Decentralisation refers to the distribution of decision-making authority among more subordinates.

Whereas centralisation refers to the concentration of decision-making authority in the hands of one person. Because no organisation can be totally centralised or completely decentralised, decision making must be balanced.

1. Scalar Chain: Scalar chain refers to the formal lines of authority and flow of communication between superiors and subordinates from the highest to the lowest positions. People in the organisation should keep this chain. Still, in the event of an emergency, employees at the same level can contact each other via Gang Plank by informing their immediate superiors to communicate quickly.
2. Order: There must be a material and social order in any organisation. “People and materials should be in the right places at the right times for maximum efficiency,” says Fayol. Material order implies having a place for everything and having everything in its proper position. In contrast, social order means having a place for everyone and having everyone in their proper place.
3. Equity: Fairness to all employees, who should be treated as equitably as possible, necessitates common sense and experience. Any organisation’s working environment should be free of any sort of harassment and adhere to the values of justice and fair play. No employee should be unfairly favoured or penalised.
4. Stability of Personnel: Employee turnover should be low to maintain organisational efficiency. Personnel should be chosen and appointed following a comprehensive selection process. The chosen individual should be retained for a specified period to allow the employee to produce results, as learning and adjusting to a new position take time.
5. Initiative: Employees should be encouraged to create and carry out improvement strategies. Taking the first step with self-motivation is referred to as initiative. It comprises developing and implementing a strategy.
6. Espirit de Corps: Employee team spirit, unity, and harmony should be encouraged by management. As a result, efforts should be made to ensure group cohesion within the organisation.

The principles of management given by Henry Fayol are an essential part of the chapter;  a thorough understanding of them is therefore essential for students. They can access such information from the Class 12 Business Studies Chapter 2 Notes provided by Extramarks.

Difference Between Unity of Command and Unity of Direction

The following table represents the main differences between the concepts of unity of command and unity of direction, as given in the Class 12 Business Studies Chapter 2 Notes by Extramarks.

The entire chapter is given in detail in Class 12 Business Studies Chapter 2 Notes provided by Extramarks. Students can register on the website and easily access many such resources without hassles.

Fayol Vs Taylor

The following table highlights the differences in the ideas of Henry Fayol  and Frederick Winslow Taylor, as given in Class 12 Business Studies Chapter 2 Notes:

This section deals with the comparison between Henry Fayol and F.W. Taylor. Students must understand the different approaches used by individuals when researching management. When students clearly understand this difference, only then will they easily comprehend the management principles given to them. With the help of Class 12 Business Studies Chapter 2 Notes, students can thus gain access to information about management principles as well as the differences between them.

To get the most out of Chapter 2 of Class 12 Business Studies, students must have the correct solutions to all the textbook questions. Getting access to reliable and trustworthy solutions can take a lot of work for students. Keeping this in mind, Extramarks created the Class 12 Business Studies Chapter 2 Notes to provide students with precise, accurate, and relevant solutions to the end text problems. Subject experts create the solutions with years of experience in the field of Business Studies.

These solutions are created keeping in mind the latest CBSE curriculum and guidelines to ensure that the students access the latest material when preparing for the examination.

By practising the Class 12 Business Studies Chapter 2 Notes, students will learn about the principles of management given by Henry Fayol and F.W. Taylor.  The Chapter 2 Business Studies Class 12 Notes allow students to conduct in-depth research on the various concepts and ideas presented by thinkers in the principles of management and the principles of scientific management.Students can access the Class 12 Business Studies Chapter 2 Notes by registering on the Extramarks website.

Students can click on the links given below to view exercise-specific questions and solutions covered in our Class 12 Business Studies Chapter 2 Notes:

Class 12 Business Studies Chapter 2: Exercise and Solutions

Extramarks is an online learning platform that offers an enjoyable learning experience through technology. The academic materials offered address every idea in-depth and enable greater comprehension. CBSE revision notes, such as Class 12 Business Studies Chapter 2 Notes, are essential reference materials that will assist students in reaching their full potential and performing well in their exams.

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• Important Formulas
• CBSE Extra Questions

Key Features of Class 12 Business Studies Chapter 2 Notes

The key features of the Class 12 Business Studies Chapter 2 Notes include the following points:

• The Business Studies Class 12 Notes Chapter 2 focuses on the core concepts in the chapter Principles of Management. The notes focus on helping students comprehend the fundamentals of the chapter.
• Students can rely on this resource because the Class 12 Business Studies Chapter 2 Notes are created in accordance with the most recent CBSE guidelines and syllabusIt also ensures that students access the most relevant material for their exam preparation.
• The notes are made by subject matter experts with years of experience in the field, ensuring that the resource is trustworthy and reliable.
• The notes are provided to students in easy language so that they can comprehend the chapter without any hassles. It also ensures that every student gets a thorough understanding of the fundamental ideas in the Class 12 Business Studies Chapter 2 Notes.
• The notes provide a useful way for students to clear all their doubts regarding the chapter, which will help them to score better marks in their examinations.
• The Class 12 Business Studies Chapter 2 Notes also aid students in understanding the types of questions they can face in their examinations, which will help them prepare better.
• It will also help students  build proper time-management and problem-solving skills and develop an analytical viewpoint towards solving questions. Having such skills will help their prospects.
• The students can access the Class 12 Business Studies Chapter 2 Notes free of cost. Students must register with the Extramarks website to access the various study resources that can help them study, practice, and prepare well for their tests and examinations.
• The Class 12 Business Studies Chapter 2 Notes will help the students develop a strong conceptual base for the further chapters they will be learning in the subject.

For further assistance and guidance, students can visit the Extramarks website. There, the students will be able to access a lot of information about various board exams, such as CBSE and ICSE, as well as competitive exams. A plethora of information about various study resources is also available on the Extramarks website, apart from the Class 12 Business Studies Chapter 2 Notes. Students can take full advantage of these study resources to perform well on their examinations.