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Case Studies - Principles Of Management

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Case study questions and answers, nature and significance of management, 3/4 mark questions.

• Mega Ltd manufactured water heaters. In the first year of its operations, the revenue earned by the company was just sufficient to meet its costs. To increase the revenue, the company analysed the reasons behind the less revenues. After analysis, the company decided: ● To reduce the labour costs by shifting the manufacturing unit to a backward area where labour was available at a very low rate ● To start manufacturing solar water-heaters and reduce the production of electric water heaters slowly. This will not only help in covering the risks but also help in meeting other objectives. a) Identify and explain the objectives of management discussed above. b) State any two values which the company wanted to communicate to society. ANSWER: (a) The objectives of management discussed above are: i. Organizational objectives: An organization strives to achieve multiple organizational objectives in the interest of its stakeholders like owners, employees etc. The main organizational objectives are survival, profit and growth. ii. Social objectives: It is the obligation of every organization to undertake such activities which will benefit the society at large like using eco-friendly methods, contributing towards weaker sections of the society, generating employment opportunities, promoting literacy etc. (b) The two values that the company wanted to communicate to the society are: i. Rural development ii. Environmental sustainability
• Mr. Nithin Singhania’s father has a good business of iron and steel. He wants to go to USA for his MBA but his father thinks that he should join the business. On the basis of emerging trends, do you think that Mr. Singhania should send his son to USA? Give any three reasons in support of your answer. In order to achieve target production of 50,000 units per month, the Production Manager of Action Shoes Ltd had to operate on double shifts. The workers are paid overtime charges earn higher wages workers try to go slow during normal working hours and complete their targets during overtime hours. Though the manager could achieve his target and produced 5000 units but at a higher production cost. a. In your point of view, what is lacking in management? b. Identify the values missing in the production manager and the employees of the organization.

Yes, according to me, Mr. Singhania should send his son to USA for his MBA because management is being recognized as a profession to a great extent because of the following reasons: a) Well defined body of knowledge: Management is considered to be a well-defined body of knowledge that can be acquired through instructions. As a separate discipline, it contains a set of theories and principles formulated by various management experts. Moreover, it is taught in various schools and colleges all over the world. b) Ethical code of conduct: Management in practice, like other professions, is bound by a code of conduct which guides the behavior of its members. Therefore, acquiring a degree in management will equip him with the good managerial skills and approach. c) Service motive: A good management course will provide him an insight into the multiple goals that an organization should pursue. This knowledge will help him to serve both the objectives of profit maximization and social welfare effectively for his company. 3. In order to achieve target production of 50,000 units per month, the Production Manager of Action Shoes Ltd had to operate on double shifts. The workers are paid overtime charges earn higher wages workers try to go slow during normal working hours and complete their targets during overtime hours. Though the manager could achieve his target and produced 5000 units but at a higher production cost. a. In your point of view, what is lacking in management? b. Identify the values missing in the production manager and the employees of the organization. ANSWER: a) Efficiency b) Values missing in the manager: i) Optimum utilization of scarce resources. ii) Sincerity iii) Leadership Values missing in the employees: i) Sincerity ii) Responsibility towards achieving the target iii ) Self motivation and loyalty 4. XYZ power Ltd. set up a factory for manufacturing solar lanterns in a remote village as there was no reliable supply of electricity in rural areas. The revenue earned by the company was sufficient to cover the costs and the risks .the demand of lanterns was increasing day by day ,so the company decided to increase production to generate higher sales. For this they decided to employ people from the nearby village as very few job opportunities were available in that area. The company also decided to open schools and crèches for the children of its employees. i. Identity and explain the objectives of management discussed above. ii. State and two values which the company wanted to communicate to the society. ANSWER:

where the required products are available for work at low wages in the absence of development opportunities and school (a) Which value do you disturbing in the above para? (b) Will the decision to install a new unit in a tribal area help society? Highlight the social values involved in his decision. ANSWER: . (a) values found disturbing: (i) testing on animals is banned. (ii) No information about the products on package is violation of right to information. (b) Benefits of decision to society: (i) Yes, the decision of installing a new plant in tribal area will definitely help in upliftment and development of tribal society (ii) Social values Involved: a. Equal opportunity to grow b. Proper utilization of natural resource 5/6 MARK QUESTIONS

• ABC handlooms Ltd. Set up a factory for manufacturing jute bags in a remote village as therewas no raw materials available. The revenue earned by the company was sufficient to cover the costs and the risks. The demand of bags was increasing day by day, so the company decided toincrease production to generate higher sales. For this they decided to employ people from the nearby villages as very few job opportunities were available in that area. The company alsodecided to open schools and creches for the children of its employees. A) Identify and explain the objectives of management discussed above. B) State any two values which the company wanted to communicate to the society.

(i) The Company is fulfilling the organizational and social objectives of management. Organisational objectives include survival, profit and growth. - In order to survive, ABC handlooms Ltd. earns enough revenues. - Company’s profits are sufficient to the cover the cost and the risks. - Since demand for bags was increasing day by day and so the company decided to increase production to generate higher sales, it implies that the company exploits fully its growth potential. Social objectives involve the creation of benefits for the society. ‘The company decided to employ people from the nearby villages as very few job opportunities were available in that area. It also decided to open schools and crèches for the children of its employees’ (ii) Values:

Providing employment opportunities in rural areas

Concern for the environment

Socially responsible behaviour

Community development by opening schools and crèches for children.

• Anju and Manju are good friends. Considering the fact that the activities involved in managing an enterprise are common to all organisations, after completing their masters in business management, both of them take up a job at managerial level in different organisations as per their individual areas of interest. Anju takes up a marketing job in a retail company and strives to increase sales whereas Manju joins an NGO and works diligently to realize its objective related to providing employment to specially abled persons. Both of them have to perform a series of continuous, composite, but separate functions. On some days, Anju spend more time in planning a future display layout and on another day, she may spend time in sorting out an employee’s problem. Both Anju and Manju make conscious efforts to build a feeling of team spirit and coordination among diverse individuals with different needs to build a feeling of team spirit and coordination among diverse individuals with different needs who work under them. The effect of their management is noticeable in their respective departments as the targets are met according to plans, employees are happy and satisfied, and there is orderliness in its functioning rather than chaos. In context of the above case:
• Identify the various features of management highlighted in the above paragraph by quoting lines from it.

The various features of management highlighted in the above paragraph are stated below: a) Management is all pervasive : “Considering the fact that ................... areas of interest.” b) Management is a goal oriented process: “Anju takes up a marketing job........... specially abled persons.” c) Management is a continuous process: “ Both of them..... out an employee’s problem.” d) Management is a group activity: “Both Anju and Manju ........ work under them.” e) Management is an intangible force: “The effect of their management ...... than chaos.” 3. Kartik joins a garment factory as a plant supervisor in Lucknow. He observes that the output of some workers is very low as compared to the standards set for their performance. On analyzing the reasons for the same, he finds out that a lot of time of the workers is wasted in getting the requisite materials issued from the store. Whereas on asking, the store keeper complaints that there is no harmony in the working of the production department as a whole. Every day the workers approach him at the last

individual needs. Moreover, he keeps a close watch on their individual performance in order to ensure that they are in accordance with the standard set and takes corrective actions whenever needed. In context of the above case: a. Identify the concept being referred to in the following line, “He has created an internal environment which is conductive to an effective and efficient performance of his team of ten relationship management executives.” b. Identify and describe the various functions of the concept as identified in part (a) of the question by quoting lines from the paragraph. a) The concept of management is being referred to in the following line, “He has created an internal environment which is conductive to an effective and efficient performance of his team of ten relationship management executives”. b) The various functions of the management concept mentioned in the above paragraph are listed below: i) Planning: It is the function of determining in advance what is to be done and who is to do it. “he decides the targets................ in advance”. ii) Organising : Organising is the process of bringing together human, physical and financial resources and establishing productive relations among them for the purpose of achieving the desired goals efficiently and effectively. “ The various resources........ work assigned to them.” iii) Staffing: The managerial function of staffing involves manning the organizational structure in order to fill in the roles designed into the structure. “Jayant workis in close coordination............ his department.” iv) Directing: Directing involves leading, influencing and motivating employees to perform the tasks assigned to them. “Through constant guidance.................... individual needs.” v) Controlling: Controlling is the management function of ensuring that events conform to plans. “Moreover, he keeps a close watch on their individual performances in order to ensure that they are in accordance with the standards set and takes corrective actions whenever needed.” 5. Ganesh Ltd. is a highly reputed company. Different functions are performed by different individuals in this company, who are bound together in a hierarchy of relationships. Every individual in the hierarchy is responsible for successful completion of a particular task. Mr. Sagar responsible for the welfare and survival of the organisation. He formulates overall organization goals and

strategies for their achievement. Mr. Bharat ensures that quality of output is maintained, wastage of materials is minimized and safety standards are maintained. Mr. Nagar assigns necessary duties and responsibilities to the personnel and motivates them to achieve desired objects. At what levels of management are Mr. Sagar, Mr. Bharat and Mr. Nagar working in Ganesh Ltd.? Justify your answer. ANSWER: Mr. Sagar is working at the top level management. (i) He is responsible for the welfare and survival of the organisation. He formulates overall organizational goals and strategies for their achievement. (ii) Mr. Bharat is working at lower level of management. (iii) He ensures that quality of output is maintained, wastage of materials is minimized and safety standards are maintained. (iv) Mr. Nagar is working at middle level management He assigns necessary duties and responsibilities to the personnel and motivates them to achieve desired objectives. CHAPTER : PRINCIPLES OF MANAGEMENT 3/4 MARK QUESTIONS

• For the last three years, Mahagun Industries is not functioning smoothly and systemically. The relations between management and employees are becoming bitter day by day. After a complete analysis, it was observed that employees are not working effectively and efficiently and management is not fulfilling its commitment of increments and promotions,
• Which management principle is being ignored in given case?
• Can the problem be solved if only management becomes in fulfilling its promises? What should be the appropriate course of action to achieve smooth and systematic functioning of Mahagun industries? ANSWER: i) The principles of ‘Discipline’ are being violated. ii) No, the problem cannot be solved through management efforts only. For smooth and systematic functioning of Mahagun Industries, both employees and management should be disciplined. Employees must be disciplined to work effectively and efficiently and management should meet their commitments increments and promotions.
• Rahul is a salesman in M/s Unique Industries. He did an aggressive research on a new cost saving advertisement technique and suggests the same to his sales manager. However, the sales manager did not pay attentions to his suggestion. Moreover, he has warned him not to come with any suggestions in future. Which principle of management is being violated by the manager? What should have been the appropriate way of response by the manager?

devices for each element of task the standard time is fixed for the whole of the task by taking several readings. b) Standardisation and Simplification: Simplification aims at eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It not only helps to reduce inventories but also save cost of labour, machines and tools. Thus it helps to increase turnover by ensuring optimum utilization of resources. c) Motion study: Motion study refers to the study of movements of limbs of a worker while doing a particular task. It seek to divide all such movements into three categories namely; i) Motions which are required ii) Motions which are necessary iii) Motions which are incidental 6. Pratap works as a head mechanic in M/s Royal Industries (machine assembling industry). He requires a number of tools while assembling the machine. For getting the tools, Pratap has to move frequently to the tool room, which is situated away from the work places. Such frequent movements leads to wastage of lot of time and no steps are taken by the factory manager to eliminate such unnecessary movements of Pratap and his co-workers.

• Which method of Taylor is over looked by the factory manager?
• How can the frequent movements be avoided?
• What kind of benefits will accrue to M/s Royal Industries after avoiding such unnecessary movements? ANSWER: Motion Study
• The frequent movement can be avoided either by having workplaces next to tool room or by keeping the necessary tool box at the work place.
• Elimination of unnecessary movements will help to increase the productivity of workers and will also improve the efficiency level.
• During boom period (summer), Sohan Industries (water cooler industries) decided to reduce the rest interval of workers from 45 minutes to just 10 minutes. However, due to heavy work load and reduction in time of rest interval, efficiency of workers went down and it led to fall in production level, instead of rising.
• Which technique of scientific management should be followed by Sohan Industries? Also describe the technique.
• What should be done by the company to make the technique effective? ANSWER:
• ‘Fatigue Study’. It refers to determining the amount and frequency of rest intervals required in completing a task.
• To make this technique effective, the company should determine the amount and frequency of rest frequency through fatigue studies and not randomly. The workers should be observed while performing job, as so to note down the time, when their efficiency level starts decreasing.
• Eliminate unnecessary movements in doing a work;
• Conduct ‘fatigue Study’ and provide rest intervals to employees so as to enable them to regain lost stamina;
• Use ‘Differential piece wage system’ in which efficient and inefficient workers are paid at different rates. It will motivate the workers to put in their maximum efforts
• Pawan is working as a Production Manager in CFL Ltd which manufactures CFL bulbs. There is no class-conflict between the management and workers. The working conditions are very good. The company is earning huge profits. As a policy, the management shares the profit earned with the workers because they believe in the prosperity of the employees. a. State the principle of management described in the above paragraph. b. Identify any two values which the company wants to communicate to the society. ANSWER: a) The principle of management described in the above paragraph is ‘Harmony not Discord’. Taylor emphasized that there should be complete harmony between the management and workers instead of a kind of class-conflict, the managers versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice. b) The two values that the company wants to communicate to the society are: i) Prosperity ii) Sharing 5/6 MARK QUESTIONS
• Radhika opens a jewellery showroom in Jaipur after completing a course in jewellery designing. She has employed eleven persons in her showroom. For greater productivity, she divides the work into small taks and each employee is trained to perform his/her specialized job. The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount, whereas the decision to give any further discount rests with Radhika as the final authority. In the earlier days of starting of the business, five of her employees were asked to put in extra hours of work. In return she had promised to give them a special incentive within a year. Therefore, after six months when the business was doing well, she awarded a cash bonus to each of these

S Basis Unity of Command Unity of Direction

• Meaning One subordinate should receive orders from and should be responsible to only one superior Each group of activities having same objective must have one head and one plan
• Aim It prevents dual subordination It prevents overlapping of activities.
• Implications It affects an individual employee It affects the entire organisation
• Davinder is a class 12th commerce student in a reputed school in Punjab. Satinder and his elder brother who is doing his Masters in Hospital Administration from Delhi after completing his B course. During vacations when Satinder comes home, Davinder shows him the business studies project that he is preparing on the topic “Principles of management”. Satinder tells him that these principles are also a part of MBA course curriculum at the beginner’s level as they form the core of management in practice. But he finds these principles are different from those of pure science. In context of the aboe case: a. Outline the concept of principles of management b. Why does Satinder find the principles of management different from those of pure science? c. Why do the principles of management form the core of management in practice? Explain by giving any two points highlighting the importance of principles of management. ANSWER: . (a) The principles of management serve as a broad and general guideline for the managerial decision making and action. (b) Satinder finds the principles of management different from those of pure science because the management principles are not as rigid as principles of pure science. This is due to the fact that they deal with the human behaviour and thus, need to be applied creatively in the light of the given situation. (c) The importance of principles of management are described below: (i) Providing managers with useful insights into reality (explanation) (ii) Optimum utilization of resources and effective administration (explanation)
• Swaraj is running an office furniture showroom. Most of his clients are businessmen and they prefer to buy goods on credit. Keeping this in mind, he has given the power to the sales manager, Mr. Bhardwaj, to offer a credit period of only 20 days, while negotiating a deal with a buyer. On a specific day, Mr. Bhardwaj finds that if he can offer a credit period of 30 days as an exception to a prospective buyer, he is likely to finalise a highly profitable deal for the business. So Mr. Bhardwaj requests Swaraj to grant him additional authority for offering a credit period of 30 days in the interest of the business. But Swaraj refuses to extend his authority and as a result, the deal is not finalized. a Bhardwaj be held responsible for loss of the deal? Why or why not? Give a suitable reason in support of your answer.

b. Also, explain the related principle. ANSWER: (a) No, Mr. Bharadwaj cannot be held responsible for the loss of the deal in the above case as he was not given the necessary authority to carry out his responsibility. There is an imbalance in authority and responsibility (b) The name of the related principle is Authority and Responsibility (with explanation) 5. Hritik is desirous of setting up a small factory to manufacture different kinds of eco- friendly packing materials. He proposes to adopt a logical approach to his business rather than hit and trial method as he knows that this can result in tremendous saving of human energy as well as wastage of time and materials. He plans to adopt paternalistic style of management in practice in order to avoid any kind of class-conflict that may emerge between him and the workers. Moreover, he plans to seek the opinion of his workers before taking any important decisions and also offers incentives to them for providing valuable suggestions for the business. a. Identify and explain the various principle of scientific management that Hritik plans to apply in his business. b. List any two values that he wants to communicate to the society by offering eco-friendly packaging material. ANSWER: (a)The various principles of scientific management that Hritik plans to apply in his business are described below: (i) Science, not Rule of Thumb (ii) Harmony, Not Discord (iii) Cooperation, Not Individualism (with explanation) (b) The two values that Hritik wants to communicate to the society by offering eco- friendly packaging material are: (i) Concern for environment (ii) Sense of responsibility CHAPTER: BUSINESS ENVIRONMENT

• With changes in the consumption habits of people, Neelesh, who was running a sweet shop, has shifted to the chocolate business. On the eve of Diwali, he offered chocolates in atrractive packages at reasonable prices. He anticipated huge demand and created a website chocolove for taking orders online. He got a lot of orders and earned huge profits by selling the chocolate. Identify and explain dimensions of business environment discussed in the above case. ANSWER: The various dimensions of business environment being referred to in the above case are as follows: a) Social environment b) Technological environment (with explanations)

more conscious about the carbon emission and climate change effects, and want themselves to be ‘seen’ as a green advocate among their peers. In such a scenario, it has become a challenge for the companies as they have to not only meet the needs of the consumers but also ensure that their products are safe and environmental friendly. As a result, there is growing need for better and advanced technologies to works as a catalyst in this regard. a. Identify the relevant features of business environment being discussed above. b. Describe briefly any three points which highlight the importance of business environment and its understanding by managers. ANSWER: a) Inter-relatedness is the relevant feature of business environment which is being discussed above. b) The three points which highlight the importance of business environment and its understanding by managers are described below: i) It enables the firm to identify opportunities and getting the first mover advantage. ii) It helps the firm to identify threats and early warning signals iii) It helps in tapping useful resources. (With explanations) 6. In the year 2016, the State Government of Kerala had made it mandatory for anganwadis hostels and canteens in educational institutions to secure the Food Safety and Standards Authority of India (FSSAI) license to ensure food safety. As the educational institutions also get categorized as food business operators in the event of the annual turnover of the hostels, they run exceeding Rs. 12 lakh per annum. a. Identify and explain the various dimensions of the business environment being referred to here. b. List any two values which the State Government of Kerala wants to convey through this initiative. ANSWER: a) The various dimensions of the business environment being referred to in the above case are as follows: i) Political Environment ii) Legal Environment (with explanation) b) Values are i) High quality standards ii) Good health

• Postage stamps have been unveiled to commemorate 140 years of existence of the country’s first stock exchange Bombay Stock Exchange (BSE). The setting up of BSE is considered to be the greatest revolution that took place in the financial markets in India as it acts as a key driver for economic growth of a country. This is due to the fact that there exists a strong correlation between economic growth and capital accumulation. a. Identify the dimension of business environment of India being referred here. b. State any three factors which broadly affect the dimension of business environment of India as identified in part (a) of the question. ANSWER: a) Economic environment is the dimension of the business environment of India being referred here b) The three factors which broadly affect the economic environment of India are stated below: i. Stage of economic development of the country. ii. The economic structure in the form of mixed economy which recognizes the role of both public and private sectors. iii) Economic planning, including five year plans, annual budgets and so on. 5/6 MARK QUESTIONS
• After completing his education, Arun joins his father in their family business of manufacturing cookware. As a businessman, his father is rigid in his approach and has fixed ideas about various issues. He tends to maintain a distance from the factory workers. However, Arun is more receptive to the needs of the workers and doesn’t seem to believe in any class-differences. He believes that the prosperity of their business greatly depends upon the prosperity of their workers and vice-versa. At the same time, he has a good understanding of the business environment. Therefore, he introduces new range of green pans that provide a healthy cooking surface, as they are manufactured with all ceramic or silicon coating and are considered safer than the traditional petroleum based non-stick surfaces which may contain toxic substances. Although, the new cookware range is highly priced, he expects a ready market for it as both the purchasing power of people and their preference for better quality products has increased over the years. a) Identify the nature of management which is being reflected in the different styles of management in practice adopted by Arun and his father. b) Name and explain the related principle of scientific management c) State the related dimensions of business environment. ANSWER:

ii) Promote well being of people 3. The court passed an order to ban polythene bags as (i) The bags are creating many environment problems which affect the life of people in general. (ii) Society in general is more concerned about quality of life. The government decided to give subsidy to jute industry to promote this business. Innovative techniques are being developed to manufacture jute bags at low rates. Incomes are rising and people can afford to buy these bags. Identify the different dimensions of business environment by quoting the lines form the above particulars. ANSWER: (1 ) Legal environment: The court passed an order to ban polythene bags. (2) Social environment: The bags are creating many environmental problems which affect the life of people in general. Social in general is more concerned about quality of life. (3) Political environment: The government decided to give subsidy to jute industry to promote this business. (4) Technological environment: Innovative techniques are being developed to manufacture jute bags at low rates. (5) Economic environment: Incomes are rising and people can afford to buy these bags. 4. Lately many companies have planned for significant investment in organized retailing in India. Several factors have prompted their decision in this regard. Customers income is rising .people have developed the taste for better quality products. The government is liberalized to economic policies in this regards and has permitted even 100% FDI in some sectors of retailing. Identify the change in business environment under different dimension quoting the line from the above para. ANSWER: Dimensions of business environment: (1) Economic environment: customer income is rising. (2) Social environment: people have developed a taste for better quality product even though they may have to pay more. (3) Political environment: the government permitted cent per cent foreign direct investment in some sector of retailing.

• Understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firm. In light of the statement, explain by giving any five points why in the present day competitive market, it is essential for a business enterprise to remain alert and aware of its environment. ANSWER: Importance of business environment:
• Identify opportunities and get first mover advantage: Early identification of opportunities help the firm to be the first to exploit them instead of losing them to competitors.
• Identify threats and early warning signals: Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.
• Tap useful resources: A business firm assembles various resources called inputs like finance, machines, raw materials, power and water, labour, etc. from its environment.
• Assist in planning and policy formulation: Since business environment provides both opportunities and threats for the firm, its understanding and analysis can be the basis for planning and policy formulation.
• Helps in coping with rapid changes: Managers must understand and examine the environment and develop suitable courses of action to cope with rapid change in business environment.
• Karodimal ltd. manufactures fashionable and designer clothes. Recently it finds that the demand for its product been declining. After market research it was discovered that fashion and tastes of the consumers is changing a pace. Consumers demand is increasing. New competitors have entered the market with new design. It is difficult for the company to predict future happening. Also it is difficult to know the extent of the relative impact of the social, economic, political, technological or legal factors on decrease in demand of its product in the market. A meeting was held in which managers from different functional level heading production, marketing, financial etc. for example, chief operating officer, chief finance officer, vice president (marketing) were present to discuss how to deal with the situation. After a long discussion, it was decided that they would study and analyze the market first to identify customers taste and fashion and then manufacture garments accordingly. It was also decided to increase expenditure on advertising, after sale service, etc. Identify any two features a business environment by quoting the lines from the above case. (a) At which level of management the meeting of managers in Karodimal Ltd. was held. (b) Identify any two impacts of government policy changes on business, quoting lines from the above case.
• Multiple Choice

Course : Principles of management (DBA 102)

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MBA Case Studies - Solved Examples

Need of MBA Case Studies

Case i: chemco case.

• ChemCo is a quality leader in the U.K. car batteries market.
• Customer battery purchases in the automobile market are highly seasonal.
• The fork-lift business was added to utilize idle capacity during periods of inactivity.
• This is a low-growth industry (1% annual growth over the last two years)
• Large customers are sophisticated and buy based on price and quality. Smaller customers buy solely on price.
• There is a Spanish competitor in the market who offers low priced batteries of inferior quality.

Essential MBA GD Guide: Key Topics with Strategies Free

• Importance of Group Discussions
• Tips and Strategies to handle a GD
• Top 25 GD topics
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• Established player in car batteries
• Losing heavily in fork-lift truck batteries
• Old fashioned owner resistance to change
• Low priced competitors
• Foreign competitors gaining market share
• Decisive Interview, GD & Essay prep
• GD: Topics 2021
• GD: Approach
• GD: Do's and Don'ts
• GD: Communications
• Solved GDs Topics

GD Introduction

• Types of GD topics: Techniques
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• GD: Content
• Solved Case Studies
• High quality product, but low end customers care more about price than quality
• Mismanaged product diversification in a price sensitive market
• Alternative 1: Establish an Off-Brand for the fork-lift business
• Alternative 2: Educate the customer market about product quality
• Alternative 3: Exit the fork-lift battery business
• Establishing the firm's quality image
• Increase in market share
• Increase in sales
• Cost of the product
• Protect firm's quality image in the automobile industry
• Redesigned product to reduce the cost of manufacture
• Low price to enable it to compete with Spanish producer
• Make use of the quality leadership in car batteries market
• Offer reliability testing, extended warranties etc. to promote quality image
• Set higher prices to extract surplus from these advantages
• A passive strategy, not proactive
• Recommendations: Alternative 1 is recommended in this case. Since the firm operates in an industry which has low growth, hence it can expand market share and sales only by taking the customers from other players. Hence, it needs to tackle the Spanish competitor head-on by aggressively pricing its product. At the same time, launching a low-priced product under the same brand name erodes the high quality image in the car batteries market. Hence, the best option is to go for an off-brand to target the fork-lift customers who are increasingly becoming price sensitive. This will enable the company to ward off the threat in short-term and build its position strongly in the long-term.

Case II: NAKAMURA LACQUER COMPANY

• The Nakamura Lacquer Company: The Nakamura Lacquer Company based in Kyoto, Japan was one of the many small handicraft shops making lacquerware for the daily table use of the Japanese people.
• Mr. Nakamura- the personality: In 1948, a young Mr. Nakamura took over his family business. He saw an opportunity to cater to a new market of America, i.e. GI's of the Occupation Army who had begun to buy lacquer ware as souvenirs. However, he realized that the traditional handicraft methods were inadequate. He was an innovator and introduced simple methods of processing and inspection using machines. Four years later, when the Occupation Army left in 1952, Nakamura employed several thousand men, and produced 500,000 pieces of lacquers tableware each year for the Japanese mass consumer market. The profit from operations was $250,000.
• The Brand: Nakamura named his brand “Chrysanthemum” after the national flower of Japan, which showed his patriotic fervor. The brand became Japan's best known and best selling brand, being synonymous with good quality, middle class and dependability.
• The Market: The market for lacquerware in Japan seems to have matured, with the production steady at 500,000 pieces a year. Nakamura did practically no business outside of Japan. However, early in 1960, when the American interest in Japanese products began to grow, Nakamura received two offers
• The Rose and Crown offer: The first offer was from Mr. Phil Rose, V.P Marketing at the National China Company. They were the largest manufacturer of good quality dinnerware in the U.S., with their “Rose and Crown” brand accounting for almost 30% of total sales. They were willing to give a firm order for three eyes for annual purchases of 400,000 sets of lacquer dinnerware, delivered in Japan and at 5% more than what the Japanese jobbers paid. However, Nakamura would have to forego the Chrysanthemum trademark to “Rose and Crown” and also undertaken to sell lacquer ware to anyone else the U.S. The offer promised returns of $720,000 over three years (with net returns of $83,000), but with little potential for the U.S. market on the Chrysanthemum brand beyond that period.
• The Semmelback offer: The second offer was from Mr. Walter Sammelback of Sammelback, Sammelback and Whittacker, Chicago, the largest supplier of hotel and restaurant supplies in the U.S. They perceived a U.S. market of 600,000 sets a year, expecting it to go up to 2 million in around 5 years. Since the Japanese government did not allow overseas investment, Sammelback was willing to budget $1.5 million. Although the offer implied negative returns of $467,000 over the first five years, the offer had the potential to give a $1 million profit if sales picked up as anticipated.
• Meeting the order: To meet the numbers requirement of the orders, Nakamura would either have to expand capacity or cut down on the domestic market. If he chose to expand capacity, the danger was of idle capacity in case the U.S. market did not respond. If he cut down on the domestic market, the danger was of losing out on a well-established market. Nakamura could also source part of the supply from other vendors. However, this option would not find favor with either of the American buyers since they had approached only Nakamura, realizing that he was the best person to meet the order.
• Decision problem: Whether to accept any of the two offers and if yes, which one of the two and under what terms of conditions?
• To expand into the U.S. market.
• To maintain and build upon their reputation of the “Chrysanthemum” brand
• To increase profit volumes by tapping the U.S. market and as a result, increasing scale of operations.
• To increase its share in the U.S. lacquerware market.
• Profit Maximization criterion: The most important criterion in the long run is profit maximization.
• Risk criterion: Since the demand in the U.S. market is not as much as in Japan.
• Brand identity criterion: Nakamura has painstakingly built up a brand name in Japan. It is desirable for him to compete in the U.S. market under the same brand name
• Flexibility criterion: The chosen option should offer Nakamura flexibility in maneuvering the terms and conditions to his advantage. Additionally, Nakamura should have bargaining power at the time of renewal of the contract.
• Short term returns: Nakamura should receive some returns on the investment he makes on the new offers. However, this criterion may be compromised in favor of profit maximization in the long run.?
• Reject both: React both the offers and concentrate on the domestic market
• Accept RC offer: Accept the Rose and Crown offer and supply the offer by cutting down on supplies to the domestic market or through capacity expansion or both
• Accept SSW: offer; accept the SSW offer and meet it through cutting down on supply to the domestic market or through capacity expansion or both. Negotiate term of supply.
• Reject both: This option would not meet the primary criterion of profit maximization. Further, the objective of growth would also not be met. Hence, this option is rejected.
• Accept RC offer: The RC offer would assure net returns of $283,000 over the next three yeas. It also assures regular returns of $240,000 per year. However, Nakamura would have no presence in the U.S. with its Chrysanthemum brand name The RC offer would entail capacity expansion, as it would not be possible to siphon of 275,000 pieces from the domestic market over three years without adversely affecting operations there. At the end of three years, Nakamura would have little bargaining power with RC as it would have an excess capacity of 275,000 pieces and excess labor which it would want to utilize. In this sense the offer is risky. Further, the offer is not flexible. Long-term profit maximization is uncertain in this case a condition that can be controlled in the SSW offer. Hence, this offer is rejected.
• Accept SSW offer: The SSW offer does not assure a firm order or any returns for the period of contract. Although, in its present form the offer is risky if the market in the U.S. does not pick up as expected, the offer is flexible. If Nakamura were to exhibit caution initially by supplying only 300,000 instead of the anticipated 600,000 pieces, it could siphon off the 175,000 required from the domestic market. If demand exists in the U.S., the capacity can be expanded. With this offer, risk is minimized. Further, it would be competing on its own brand name. Distribution would be taken care of and long-term profit maximization criterion would be satisfied as this option has the potential of $1 million in profits per year. At the time of renewal of the contract, Nakamura would have immense bargaining power.
• Negotiate terms of offer with SSW: The terms would be that NLC would supply 300,000 pieces in the first year. If market demand exists, NLC should expand capacity to provide the expected demand.
• Action Plan: In the first phase, NLC would supply SSW with 300,000 pieces. 125,000 of these would be obtained by utilizing excess capacity, while the remaining would be obtained from the domestic market. If the expected demand for lacquer ware exists in the U.S., NLC would expand capacity to meet the expected demand. The debt incurred would be paid off by the fifth year.
• Contingency Plan:  In case the demand is not as expected in the first year, NLC should not service the U.S. market and instead concentrate on increasing penetration in the domestic market.

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CBSE Class 12 Case Studies In Business Studies – Principles of Management

PRINCIPLES OF MANAGEMENT Principles of Management: Definition The principles of management serve as broad and general guidelines for the managerial decision making and action.

Types of Principles of Management

• Fayol’s Principles of General Management
• Taylor’s Principles of Scientific Management.

Significance of Principles of Management

• They help to provide managers with useful insights into reality and increase their efficiency in dealing with recurring problems.
• They ensure optimum utilisation of resources as due to the presence of cause and effect relationship the outcome of the decisions and actions can be predicted. Moreover, it leads to effective administration as the principles tend to restrict the personal prejudices and biases.
• They facilitate scientific decision making as they emphasise on logical thinking rather than blind faith.
• They help to meet the changing requirements of the environment to the best advantage ofa organisation.
• They help in fulfilling social responsibility of an organisation.
• They facilitate the process of management training, education and research as they are at the core of management theory.

Features of Principles of Management

• Universal Applicability: The principles of management are deemed to apply to all types and sizes of organizations.
• General Guidelines: The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems as the real business situations are very complex and dynamic and are a result of many factors.
• Formed by practice and experimentation: The principles of management are formulated by the management experts through observation and tested through repeated experimentation.
• Flexible: The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the manager in the light of given situation so as to achieve the desired goals.
• Mainly Behavioural: The principles of management aim at influencing behaviour of human beings in a desired manner.
• Cause and effect relationships: The principles of management seek to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.
• Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time.

FAYOL’S PRINCIPLES OF MANAGEMENT

• Division of work: The whole organisation work, both managerial and technical, should be divided into smaller jobs and the task involved in doing each such job should be determined. It leads to specialization, speed, efficiency and accuracy of work.
• Discipline: It refers to the obedience to organizational rules and the employment agreement. It is necessary for the systematic working of the organisation. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
• Authority and Responsibility: There should always be a balance between the authority given and responsibility entrusted to an employee. This is because if authority is more than responsibility, the employees are likely to misuse it whereas if authority is less than responsibility, he/she will be unable to do the desired work.
• Unity of command: There should be one and only one boss for every individual employee from whom he should receive orders and be responsible to. Dual subordination should be avoided.
• Unity of Direction: All the units of an organisation should be moving towards the same objectives through coordinated and focused efforts. Each group of activities having the same objective must have one head and one plan.
• Subordination of Individual Interest to General Interest: In all the situations, the interests of an organisation should take priority over the interests of any one individual employee .
• Remuneration of employees: The overall pay and compensation should be fair to both employees and the organization. The employees should be paid fair wages, which should give them at least a reasonable standard of living. At the same time it should be within the paying capacity of the company i.e. remuneration should be just and equitable.
• Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralization. Large organizations have more decentralization than small organizations.
• Scalar Chain: The formal lines of authority along which the communication flows from highest to lowest ranks are known as scalar chain. Gang Plank is a shorter route that has been provided so that communication is not delayed during emergencies. However, the superior has to be informed later on.
• Order: The people and materials must be in suitable places at appropriate time for maximum efficiency i.e. ‘a place for everything (everyone) and everything in its place/
• Equity: It emphasizes kindliness and justice in the behaviour of managers towards workers. No discrimination should be made by them on the basis of caste, creed, gender or otherwise caste, creed.
• Stability of Personnel: The employee turnover should be minimized to maintain organizational efficiency. Personnel should be selected and appointed after due and rigorous procedure. After placement, they should be kept at their post for a minimum fixed tenure so that they get time to show results. Any adhocism in this regard will create instability/insecurity among employees. They would tend to leave the organisation.
• Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.
• Espirit De Corps: The management should promote a team spirit of unity and harmony among employees. A manager should replace T with ‘We’ in all his conversations with workers.

Difference between Unity of Comman and Unity fo Direction

SCIENTIFIC MANAGEMENT Scientific Management: Definition Scientific Management means knowing exactly what you want your employees to do and seeing that they do it in the best and cheapest way. Fredrick Winslow Taylor is known as the ‘Father of Scientific Management’.

Techniques of Scientific Management

• Time Study is the technique to determine the standard time taken bya worker of average skill and knowledge to complete a standard task.
• Fatigue study seeks to determine the amount and frequency of rest intervals required in completing a task.
• Method study seeks to find out one best way of doing the job.
• Motion study refers to the study of movements of limbs which are undertaken while doing a typical job.This helps to eliminate unnecessary movements so that it takes less time to complete the job efficiently.
• Standardisation refers to the process of setting standards for every business activity Simplification aims at eliminating superfluous varieties, sizes and dimensions of products.
• Instruction Card Clerk: He assigns work to all the employees.
• Route Clerk: He decides how work will progress regarding total productions. So that production is on time.
• Time and Cost Clerk: He determines what will be the total cost and how much time each job take.
• Disciplinarian: He sees that there is discipline at work place.
• Speed boss: He ensures that the work is moving at a suitable pace.
• Gang Boss: He ensures sufficient availability of raw material, tools etc.
• Repair Boss: He sees that whenever some repair is involved in any work, the work is done properly.
• Inspector: He sees that whether the quality of output is good or not.
• Differential piece wage system was introduced to reward efficient workers by paying them at a higher rate than those who performed below standard.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

• Taylor believed that there was only one best method to maximise efficiency which can be developed through study and analysis and should substitute ‘Rule of Thumb’ or hit and trial method throughout the organisation.
• The scientific method involved investigation of traditional methods through work-study unifying the best practices and developing a standard method, which would be followed throughout the organisation.
• In the present context, the use of internet has brought about tremendous improvements in internal efficiencies and customer satisfaction.
• Taylor emphasised that there should be complete harmony between the management and workers instead ofa kind of class-conflict, the managers versus workers.
• To achieve this state, Taylor called for complete mental revolution on the part of both management and workers.
• The prosperity for the employer cannot exist fora long time unless it is accompanied by prosperity for the employees and vice versa.
• He advocated paternalistic style of management should be in practice.
• This principle is an extension of principle of ‘Harmony Not Discord’
• There should be complete cooperation between the labour and the management instead of individualism.
• Competition should be replaced by cooperation and there should be an almost equal division of work and responsibility between workers and management.
• Also, management should reward workers for their suggestions which results in substantial reduction in costs.
• At the same time workers should desist from going on strike and making unreasonable demands on the management
• Taylor was of the view that the concern for efficiency could be built in right from the process of employee selection.
• Each person should be scientifically selected and the work assigned should suit her/his physical, mental and intellectual capabilities.
• To increase efficiency, they should be given the required training.
• Efficient employees would produce more and earn more. This will ensure their greatest efficiency and prosperity for both company and workers.

Difference between Fayol’s and Taylor’s Approach to Management

Latest CBSE Questions

Question 1. Explain ‘unity of command’ and ‘equity’ as principles of general management. (CBSE, Delhi 2017) Answer:

• Unity of command: According to Fayol, there should be one and only one boss for every individual employee. Dual subordination should be avoided. Fayol felt that if this principle is violated “authority is undermined, discipline is in jeopardy, order disturbed and stability threatened”.
• Equity: According to Fayol, “Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible.” This principle emphasizes on kindliness and justice in the behaviour of managers towards workers. The managers should not discriminate against anyone on account of gender, religion, language, caste, belief or nationality etc.

Question 2. Sanchit, after completing his entrepreneurship course from Sweden returned to India and started a coffee shop ‘AromaCoffeeCan’ in a famous mall in New Delhi. The speciality of the coffee ship was the special aroma of coffee and a wide variety of flavours to choose from. Somehow, the business was neither profitable nor popular. Sanchit was keen to find out the reason. He appointed Sandhya, an MBA from a reputed college, as a Manager to find out the causes for the same. Sandhya took feedback from the clients and found out that though they loved the special unique aroma of coffee but were not happy with the long waiting time being taken to process the order. She analysed and found out that there were many unnecessary obstructions in between which could be eliminated. She fixed a standard time for processing the order. She also realised that there were some flavours whose demand was not enough. So, she also decided to stop the sale of such flavours. As a result with in a short period Sandhya was able to attract the customers. Identify and explain any two techniques of scientific management used by Sandhya to solve the problem. (CBSE, Delhi 2017) Answer: The two techniques of scientific management used by Sandhya to solve the problem are: (any two)

• Time study: It seeks to determines the standard time taken to perform a well-defined job. The objective of time study is to determine the number of workers to be employed , frame suitable incentive schemes and determine labour costs. By using time measuring devices for each element of task the standard time is fixed for the whole of the task by taking several readings.
• Simplification (Standardisation and Simplification): Simplification aims at eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It not only helps to reduce inventories but also save cost of labour, machines and tools. Thus it helps to increase turnover by ensuring optimum utilisation of resources.
• Motions which are required
• Motions which are unnecessary
• Motions which are incidental. Thus, motion study helps to eliminate unnecessary movements of a work and enables him to complete the given task efficiently.

Question 3. Explain briefly ‘discipline’ and ‘scalar chain’ as principles of general management. (CBSE, Delhi 2017) Answer:

• Discipline: Discipline refers to the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties. .

Question 4. Explain ‘order’ and ‘initiative’ as principles of general management. (CBSE, Delhi 2017) Answer:

• Order: According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything (everyone) in its (her/his) place’. A sense of orderliness will lead to increased productivity and efficiency in the organization.

Question 5. Explain briefly ‘Unity of Direction’ and ‘Order’ as principles of general mangement. (CBSE, OD 2017) Answer:

• Unity of direction: According to Fayol, each group of activities having same objective must have one head and one plan. It prevents overlapping of activities. For example if a company is manufacturing handmade carpets as well as machine made carpets there is likely to be a lot of overlapping of activities. Therefore, there should be two separate divisions for both of them wherein each division should have its own in charge, plans and execution resources.

Question 6. Explain briefly ‘Initiative’ and ‘Esprit de Corps’ as principles of general mangement. (CBSE, OD 2017) Answer:

• Initiative: Initiative means taking the first step with self-motivation. The workers should’ be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.
• Espirit de corps: According to Fayol, ‘Management should promote a team spirit of unity and harmony among employees.” A manager should replace T with ‘We’ in all his conversations with workers to promote teamwork. This approach is will give rise to a spirit of mutual trust and belongingness among team members. It will also reduce the need for using penalties.

Question 7. Explain briefly ‘Remuneration of Employees’ and ‘Scalar Chain’ as principles of general mangement. (CBSE, OD 2017) Answer:

• Remuneration of employees: According to Fayol, the overall pay and compensation should be fair and equitable to both employees and the organisation. The employees should be paid fair wages so that they are able to maintain at least a reasonable standard of living. At the same time it should be within the paying capacity of the company. This will ensure pleasant working atmosphere and good relations between workers and management.

Question 8. What did Taylor want to communicate through mental revolution? (CBSE, Sample Paper, 2017) Answer: Through the concept of mental revolution Taylor emphasized that there should be complete transformation in the outlook of the management and workers towards each other. Managers should share surplus with workers and the workers should work with full devotion instead of indulging in any form of class conflicts.

Question 9. Briefly explain work study techniques that help in developing standards to be followed throughout the organization. Answer: The various work study techniques that help in developing standards to be followed throughout the organization are described below:

• Time study: It seeks to determine the standard time taken to perform a well-defined job. The objective of time study is to determine the number of workers to be employed, frame suitable incentive schemes and determine labour costs. By using time measuring devices for each element of task, the standard time is fixed for the whole of the task by taking several readings.
• Method study: The objective of method study is to find out one best way of doing the job among the various methods available of doing the job. This can be done by taking into consideration several related parameters.
• Fatigue study: It seeks to determine the amount and frequency of rest intervals that should be provided to the workers for completing a task. This technique helps in increasing productivity as the rest intervals will help a person to regain stamina and work again with the same capacity.

Question 10. Nutan Tiffin Box service was started in Mumbai by the Mumbai Dabbawalas. The Dabbawalas who are the soul of entire Mumbai aim to provide prompt and efficient services by providing tasty homemade tiffin to all office goers at the right time and place. The service is uninterrupted even on the days of bad weather, political unrest and social disturbances. Recently, they have started online booking system through their website ‘mydabbawala.com’. Owing to their tremendous popularity amongst the happy and satisfied customers and members, the Dabbawalas were invited as guest lecturer by top business schools. The Dabbawalas operate in a group of 25-30 people alongwith a group leader. Each group teams up with other groups in order to deliver the tiffins on time. They are not transferred on frequent basis as they have to remember the addresses of their customers. They follow certain rules while doing trade—no alcohol during working hours; no leaves without permission; wearing white caps and carrying ID cards during business hours. Recently, on the suggestion of a few self-motivated fellow men, the dabbawalas thought out and executed a plan of providing food left in tiffins by customers to slum children. They have instructed their customers to place red sticker if food is left in the tiffin, to be fed to poor children later.

• State any one principle of management given by Fayol and one characteristic of management mentioned in the above case.
• Give any two values which the Dabbawalas want to communicated to society. (CBSE, Sample Paper 2016)
• The relevant principle of management given by Fayol is: Stability of Personnel: The employee turnover should be minimized to maintain organizational efficiency. Personnel should be selected and appointed after due and rigorous procedure. After placement, they should be kept at their post for a minimum fixed tenure so that they get time to show results. Any adhocism in this regard will create instability/insecurity among employees. They would tend to leave the organisation. (The other correct answers are principle of Discipline / Initiative / Espirit de corps) The characteristic of management mentioned in the above case is: Management is goal oriented as it seeks to integrate the efforts of different individuals towards the accomplishment of both organizational and individual goals. (The other correct answers are management is intangible/ group activity/dynamic)
• Concern for poor/ Humanity
• Responsibility

Question 11. ‘Aapka Vidyalaya’ believes in the holistic development of students and encourages team building through a mix of curricular, co-curricular and sports activities. On its Founder’s Day, a stage performance had to be put up. A committee of ten prefects was constituted to plan different aspects of the function. They all decided to use recycled paper for decoration. There was a spirit of unity and harmony and all the members supported each other. With mutual trust and a sense of belonging, the programme was systematically planned and executed. Kartik, one of the prefects, realised that the group had unknowingly applied one of the principles of management while planning and executing the programme. He was so inspired by the success of this function that he asked his father to apply the same principle in his business. His father replied that he was already using this principle.

• Identify the principle of management applied for the success of the programme.
• State any two features of management highlighted in the above paragraph.
• Identify any two values which ‘Aapka Vidyalaya’ communicated to society. (CBSE, Delhi 2015)
• The principle of management applied for the success of the programme is Espirit De Corps.
• Management is goal oriented as it seeks to integrate the efforts of different individuals towards the accomplishment of both organizational and individual goals.
• Management is pervasive as it is applicable to all types of organizations, (economic, social, political) all sizes of organizations (small, medium, large) and at all levels of management (top, middle and lower).
• Sustainable development.

Question 12. Telco Ltd. manufactures files and folders from old clothes to discourage the use of plastic files and folders. For this, they employ people from nearby villages where very less job opportunities are available. An employee, Harish, designed a plan for cost reduction but it was not welcomed by the production manager. Another employee gave some suggestions for improvements in design, but it also was not appreciated by the production manager.

• State the principle of management that is violated in the above paragraph.
• Identify any two values that the company wants to communicate to the society. (CBSE, OD 2014)
• The principle of management that has been violated in the above case is Initiative. Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.
• Concern for environment
• Providing job opportunities

Question 13. Pawan is working as a Production Manager in CFL Ltd. which manufactures CFL bulbs. There is no class-conflict between the management and workers. The working conditions are very good. The company is earning huge profits. As a policy, the management shares the profits earned with the workers because they believe in the prosperity of the employees.

• State the principle of management described in the above paragraph.
• Identify any two values which the company wants to communicate to society. (CBSE, OD 2014)
• The principle of management described in the above paragraph is ‘Harmony, not Discord’. Taylor emphasised that there should be complete harmony between the management and workers instead of a kind of class-conflict, the manager versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice.

Question 14. Voltech India Ltd. is manufacturing LED bulbs to save electricity. However, it is running under heavy losses. To revive from the losses, the management shifts the unit to a backward area where labour is available at a low cost. The management also asks the workers to work overtime without any additional payments and promises to increase the wages of the workers after achieving its mission. Within a short period, the company starts earning profits because both the management and workers honour their commitments.

• Identify any two values that the company wants to communicate to the society. (CBSE, Delhi 2014)
• The principle of management described in the above paragraph is ‘Discipline’. Discipline- It refers to the obedience to organizational rules and the employment agreement. It is necessary for the systematic working of the organization. It requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
• Sustainable development

Question 15. ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost equal division of work and responsibilities between workers and the management. The management even takes workers into confidence before taking important decisions. All the workers are satisfied as the behaviour of the management is very good.

• Identify any two values which the company wants to communicate to society. (CBSE, Delhi 2014)
• The principle of management described in the above paragraph is ‘Cooperation, Not Individualism’. This principle is an extension of principle of ‘Harmony, Not Discord’. There should be complete cooperation between the labour and the management instead of individualism. Competition should be replaced by cooperation and there should be an almost equal division of work and responsibility between workers and management. Also, management should reward workers for their suggestions which results in substantial reduction in costs. At the same time, workers should desist from going on strike and making unreasonable demands on the management
• Participation

Question 16. The principles of Taylor and Fayol are mutually complementary. One believed that management should share the gains with the workers while the other suggested that employees’ compensation should depend on the earning capacity of the company and should give them a reasonable standard of living. Identify and explain the principles of Favol and Taylor referred to in the above paragraph. (CBSE, Delhi 2014) Answer: The principles of Fayol and Toylor referred to in the above paragraph are ‘Remuneration of employees’ and ‘Harmony, Not Discord’. Remuneration of Employes: According to Fayol, the overall pay and compensation should be fair and equitable to both employees and the organisation. The employees should be paid fair wages so that they are able to maintain at least a reasonable standard of living. At the same time, it should be within the paying capacity of the company. This will ensure pleasant working atmosphere and good relations between workers and management. Harmony, Not Discord: Taylor emphasised that there should be complete harmony between the management and workers instead of a kind of class-conflict, the managers versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice

Question 17. The principles of Taylor and Fayol are mutually complementary. One believed that management should not close its ears to constructive suggestions made by the employees while the other suggested that a good company should have an employee suggestion system whereby suggestions which result in substantial time or cost reduction should be rewarded. Identify and explain the principles of Taylor and Fayol referred to in the above paragraph. (CBSE, Delhi 2014) Answer: The principles of Fayol and Taylor referred to in the above paragraph respectively are ‘Initiative’ and ‘Cooperation and Not Individualism’. Initiative: Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization. Cooperation and Not Individualism: This principle is an extension of principle of ‘Harmony, Not Discord’.There should be complete cooperation between the labour and the management instead of individualism. Competition should be replaced by cooperation and there should be an almost equal division of work and responsibility between workers and management. Also, management should reward workers for their suggestions which result in substantial reduction in costs. At the same time, workers should desist from going on strike and making unreasonable demands on the management.

Question 18. Nikita and Salman completed their MBA and started working in a multinational company at the same level. Both of them worked hard and were happy with their employer. Salman had the habit of back-biting and wrong reporting about his colleagues to impress his boss. All the employees in the organisation knew about it. At the time of performance appraisal, the performance of Nikita was judged to be better than Salman. Even then their boss, Mohammed Sharif, decided to promote Salman stating that being a female, Nikita would not be able to handle the complications of a higher post.

• Identify and explain the principle of management which was not followed by this, multinational company.
• Identify the values which are being ignored quoting the lines from the above paragraph. (CBSE, OD 2013)
• The multinational company didn’t follow the Principle of Equity. It emphasizes kindliness and justice in the behaviour of managers towards workers. No discrimination should be made by them on the basis of caste, creed, gender or otherwise.
• Honesty: “Wrong reporting about his colleagues to impress his boss.”
• Justice: “At the time of performance appraisal, the performance of Nikita was judged better than Salman. Even then their boss, Mohammad Sharif, decided to promote Salman.”

Question 19. Hina and Harish are typists in a company having the same educational qualifications. Hina gets Rs.3,000 per month and Harish gets Rs.4,000 per month as salaries for the same working hours. Which principle of management is being violated in this case? Name and explain the principle. (CBSE, Delhi 2006) Answer: The principle of Equity has been violated in this case. It emphasises kindliness and justice in the behaviour of managers towards workers. No discrimination should be made by them on the basis of caste, creed, gender or otherwise.

Additional Questions

Question 1. Radhika opens a jewellry showroom in Jaipur after completing a course in jewellry designing. She has employed eleven persons in her showroom. For greater productivity, she divides the work into small tasks and each employee is trained to perform his/her specialised job. The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount, whereas the decision to give any further discount rests with Radhika as the final authority. In the earlier days of starting of the business, five of her employees were asked to put in extra hours of work. In return she had promised to give them a special incentive within a year. Therefore, after six months when the business was doing well, she awarded a cash bonus to each of these employees to honour her commitment. However, when it comes to settling the conflicts among her employees, she tends to be more biased towards her female employees. In context of the above case:

• Identify and explain the various principles of management that are being applied by Radhika by quoting lines from the paragraph.
• Identify and explain the principle of management which is being violated by Radhika by quoting lines from the paragraph.
• State any one effect of the violation of the principle of management by Radhika as identified in part(b) of the question.
• Principle of Division of Work: According to Fayol, “The intent of division of work is to produce more and better work for the same effort. Specialisation is the most efficient way to use human effort.” He advocates that the principle of division of work is applicable to all kinds of work both technical as well as managerial. “For greater productivity, she divides the work into small tasks and each employee is trained to perform his/her specialised job.”
• Principle of Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation. According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” “The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount, whereas the decision to give any further discount rests with Radhika as the final authority.”
• Principle of Discipline: Discipline refers to the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties. “Therefore, after six months when the business was doing well, she awarded a cash bonus to each of these employees to honour her commitment.”
• The principle of management which is being violated by Radhika is Equity. According to Fayol, “Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible.” This principle emphasizes on kindliness and justice in the behaviour of managers towards workers. The managers should not discriminate against anyone on account of gender, religion, language, caste, belief or nationality etc. “However, when it comes to settling the conflicts among her employees, she tends to be more biased towards her female employees.”
• One effect of the violation of the Principle of Equity is that it may lead to job dissatisfaction among the male workers.

Question 2. Rajveer works as a plant superintendent in a carpet making factory. In order to complete the export orders on time, the production manager asks him to make the workers work over time whereas the finance manager is strictly against this practice because it will increase the cost of production. Moreover, Rajveer feels that since the company is manufacturing handmade carpets as well as machine made carpets there is a lot of overlapping of activities. Therefore, there should be two separate divisions for both of them wherein each division should have its own in charge, plans and execution resources. In context of the above case:

• Identify and explain the principle of management which is being violated.
• Also identify the principle of management that Rajveer feels should be implemented in the factory.
• Give any two differences between the principle of management as identified in part (a) and part (b) respectively.

Answer: The principle of management which is being violated is stated below:

• Unity of command: There should be one and only one boss for every individual employee. Dual subordination should be avoided. Fayol felt that if this principle is violated, “authority is undermined, discipline is in jeopardy, order disturbed and stability threatened”.
• Unity of direction: All the units of an organization should be moving towards the same objectives through coordinated and focused efforts. Each group of activities having the same objective must have one head and one plan. This will lead to unity of action and coordination.

Question 3. Neeraj is selected for the post of software developer in an IT Company. On the first day of his joining Mehul, his project manager tells Neeraj that during the course of his work he will come across many such opportunities which may tempt him to misuse his powers for individual or family’s benefit at the cost of larger general interest of the company. In such situations, he should rather exhibit exemplary behaviour as it will raise his stature in the eyes of the company. Also, for interacting with anyone in the company on official matters, he should adopt the formal chain of authority and communication. In context of the above case:

• Identify and explain the various principles of management that Mehul is advising Neeraj to follow while doing his job.
• List any two values that Mehul wants to communicate to Neeraj.
• Subordination of Individual Interest to General Interest: Through this principle, Fayol advocates that in all circumstances, the interests of an organisation should take priority over the interests of any one individual employee. This is essential because larger interests of the other employees and the stakeholders i.e., owners, shareholders, creditors, debtors, financers, tax authorities, customers and the society at large cannot be sacrificed for the interest of any one person. For example, Mehul tells Neeraj that he might get tempted to misuse his powers for his or his family’s benefit and so he must display exemplary behaviour to raise his stature in the eyes of the company.
• Self restraint

Question 4. Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder is his elder brother who is doing his Masters in Hospital Administration from Delhi after completing his B.Sc course. During vacations when Satinder comes home, Davinder shows him the business studies project that he is preparing on the topic ‘Principles of Management’. Satinder tells him that these principles are also a part of MBA course curriculum at the beginner’s level as they form the core of management in practice. But he finds these principles different from those of pure science. In context of the above case:

• Outline the concept of principles of management.
• Why does Satinder find the principles of management different from those of pure science?
• Why do the principles of management form the core of management in practice? Explain by giving any two points highlighting the importance of principles of management.
• The principles of management serve as a broad and general guideline for the managerial decision making and action.
• Satinder finds the principles of management different from those of pure science because the management principles are not as rigid as principles of pure science. This is due to the fact that they deal with the human behaviour and thus, need to be applied creatively in the light of given situation.
• Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations and help them to enrich their knowledge, ability and understanding of the diverse managerial situations and circumstances. It also enables the managers to learn from past mistakes and conserve time by solving recurring problems quickly.
• Optimum utilisation of resources and effective administration: The knowledge of management principles enables the managers to foresee the cause and effect relationships of their decisions and actions. As a result, it leads to optimum utilisation of scarce resources by avoiding wastage associated with a trial-and-error approach. Principles of management limit the boundary of managerial discretion so that their decisions may be free from personal prejudices and biases. This facilitates effective administration within the organisation.

Question 5. Gurpreet is running a retail mart in Varanasi to provide various types of products of daily use under one roof to the buyers. The employee turnover in his business is very high and he is perpetually on a look out for new staff. The fact of the matter is that he lacks managerial skills and assigns work to his employees on adhoc basis without letting them settle down in a specific work. This approach of his creates a sense of insecurity among the employees and they tend to leave the job very quickly. However, he is a very god fearing person and offers fair wages to his employees so they can afford a reasonable standard of living. In context of the above case:

• Identify and explain the principle of management which Gurpreet is unable to apply and is perpetually on a look out for new staff.
• “He is a very god fearing person and offers fair wages to his employees so they can afford a reasonable standard of living.” Name and explain the relevant principle of management will has been brought into effect by Gurpreet.
• Stability of Personnel: Stability of personnel is principle of management which Gurpreet is unable to apply and is perpetually on a look out for new staff. According to Fayol, “Employee turnover should be minimised to maintain organisational efficiency”. Personnel should be selected and appointed after due and rigorous procedure. After placement, they should be kept at their post for a minimum fixed tenure so that they get time to show results. Any adhocism in this regard will create instability/insecurity among employees. They would tend to leave the organisation.
• Remuneration of Employees: According to Fayol, the overall pay and compensation should be fair and equitable to both employees and the organisation. The employees should be paid fair wages so that they are able to maintain at least a reasonable standard of living. At the same time, it should be within the paying capacity of the company. This will ensure pleasant working atmosphere and good relations between workers and management.

Question 6. After finishing her BBA degree course, Tanya gets a job of Assistant Manager in a retail company through the reference of her cousin Taruna who works in the same company as a Senior Manager. Taruna decides to guide Tanya through her experience by making her aware of the important facts about management in practice. She tells her that neither the principles of management provide any readymade, straitjacket solutions to all managerial problems nor they are not rigid prescriptions, which have to be followed absolutely. In context of the above case :

• Identify the two features of principles of management mentioned in the above paragraph by quoting lines from the paragraph.
• Why do the principles of management not provide readymade, straitjacket solutions to all managerial problems?
• General guidelines: The principles of management are guidelines to action. Since the real business situations are very complex and dynamic and are a result of many factors, these principles do not provide readymade, straitjacket solutions to all managerial problems. But the importance of principles cannot be underestimated because even a small guideline may help to solve a given problem.
• 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 decide which principle should be used under what circumstances as individual principles are like different tools serving different purposes.
• As the real business situations are very complex and dynamic and are a result of many factors, the principles of management not provide readymade, straitjacket solutions to all managerial problems.

Question 7. Raj and Simran are both qualified eye surgeons and good friends. After obtaining a certificate of practice, they decide to persue a career of their own choice. Raj starts an eye care centre in the city whereas Simran joins a government hospital in a small village. They meet after a long time in a party. Raj invites Simran to visit his eye care centre and she accepts his invitation. She observes at his clinic that there is a fixed place for everything and everyone and it is present there so that there is no hinderance in the activities pf the clinic. Also, Raj always tends to replace T with ‘We’ in all his conversations with the staff members. Later on Raj shares with her that he always deals with lazy staff sternly to send the message that everyone is equal in his eyes. In context of the above case:

• Identify and explain the various principles of management that Raj is applying for the successful management of his eye care centre.
• List any two values that Simran wants to communicate to the society by taking up a job in a village.
• Espirit De Corps: According to Fayol, “Management should promote a team spirit of unity and harmony among employees.” A manager should replace T with ‘We’ in all his conversations with workers to promote teamwork. This approach will give rise to a spirit of mutual trust and belongingness among team members. It will also reduce the need for using penalties.
• Concern for poor

Question 8. Hritik is desirous of setting up a small factory to manufacture different kinds of eco-friendly packaging materials. He proposes to adopt a logical approach to his business rather than hit and trial method as he knows that this can result in tremendous saving of human energy as well as wastage of time and materials. He plans to adopt paternalistic style of management in practice in order to avoid any kind of class-conflict that may emerge between him and the workers. Moreover, he plans to seek the opinion of his workers before taking any important decisions and also offers incentives to them for providing valuable suggestions for the business. In context of the above case:

• Identify and explain the various principle of scientific management that Hritik plans to apply in his business.
• List any two values that he wants to communicate to the society by offering eco¬friendly packaging material.
• Science, not Rule of Thumb: Taylor believed that there was only one best method to maximise efficiency and it could be developed through scientific study and analysis. This is because if the managers rely on personal judgment in attending to the work related problems, it may suffer from the limitation of a trial and error approach. Therefore, it is important for them to know what works and why does it work. For this, they should adopt scientific method to substitute the ‘Rule of Thumb or hit and trial method’ throughout the organisation.
• Harmony, Not Discord: In the paternalistic style of management, the employer takes care of the needs of employees like a father. Taylor said that any kind of class conflicts between the workers and the managers were not good; rather they must realise that each one is important. Therefore, he emphasised that there should be complete harmony between the management and workers. To achieve this, Taylor called for complete mental revolution on the part of both management and workers by transforming their thinking. The management should share the gains of the company, if any, with the workers and at the same time, workers should work hard.
• Cooperation, Not Individualism: Through this principle, Taylor suggests that there should be complete cooperation between the workers and the management instead of individualism. This principle is an extension of principle of ‘Harmony, Not Discord’. Both should realise the importance of each other. In order to replace the feeling of competition with cooperation, the management should not close its ears to any constructive suggestions made by the employees. Rather, the workers should be rewarded for any of their valuable suggestions which results in substantial saving in costs. Also, the workers should be taken into confidence by the management whenever any important decisions are to be taken.
• Sense of responsibility

Question 9. ‘Study Buddy Pvt. Ltd.’ is company dealing in stationery items. In order to establish standards of excellence and quality in materials and in the performance of men and machines, the company adheres to benchmarks during production. Moreover, its products are available in limited varieties, sizes and dimensions thereby eliminating superfluous diversity of products. Identify the technique of scientific management which has been adopted by ‘Study Buddy Pvt. Ltd.’ Answer: Standardisation and Simplification of Work is the technique of scientific management which has been adopted by ‘Study Buddy Pvt. Ltd.’ Standardisation implies devising new varieties instead of the existing ones. It refers to the process of setting standards for every business activity; it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. These standards are the benchmarks which must be adhered to during production. It helps to reduce a given line or product to fixed types, sizes and characteristics, establish interchange ability of manufactured parts and products, determine standards of excellence and quality in materials and of performance of men and machines. Simplification aims at eliminating superfluous diversity of products in terms of varieties, sizes and dimensions. It not only helps to reduce inventories but also to save cost of labour, machines and tools. Thus it helps to increase turnover by ensuring ‘optimum utilisation of resources. Most large companies like Samsung, Toyota and Microsoft etc. have successfully implemented standardisation and simplification.

Question 10. Anshul owns a small scale factory where utility items are prepared from waste material like paper mache items, paper and cloth bags, decorative material etc. Over the past few weeks, he was observing that the productivity of one of his very efficient worker, Ramdas, is going down. So he decides to probe into the matter and confronts Ramdas one day. On being asked, Ramdas shares with Anshul that he has deliberately slowed down in his work as many of the less efficient workers often pull his leg saying that there is no need for him to be more efficient when everybody is being paid at the same rate. Taking a lesson from this insight, Anshul decides to implement an incentive bonus plan so as differentiate between efficient and inefficient workers. In context of the above case:

• Name and explain the incentive bonus plan that Anshul may implement so as differentiate between efficient and inefficient workers.
• State any two values that Anshul wants to communicate to the society by setting up a special type of business.

Answer: Differential Piece Wage System is the incentive bonus plan that Anshul may implement so as differentiate between efficient and inefficient workers. Differential Piece Wage System is a performance based wage system which was introduced by Taylor so as to distinguish between the workers who were able to achieve the standard or performed above standard from those who performed below standard. For example, it is determined that standard output per worker per day is 10 units and those who made standard or more than standard will get Rs. 40 per unit and those below will get Rs. 30 per unit. Now an efficient worker making 11 units will get 11 x 40 = Rs. 440 per day whereas a worker who makes 9 units will get 9 x 30 = Rs. 270 per day. According to Taylor, the difference of Rs. 170 should be enough for the inefficient worker to be motivated to perform better.

Question 11. Swaraj is running an office furniture showroom. Most of his clients are businessmen and they prefer to buy goods on credit. Keeping this in mind, he has given the power to the sales manager, Mr. Bhardwaj, to offer a credit period of only 20 days, while negotiating a deal with a buyer. On a specific day, Mr. Bhardwaj finds that if he can offer a credit period of 30 days as an exception to a prospective buyer, he is likely to finalise a highly profitable deal for the business. So Mr. Bhardwaj requests Swaraj to grant him additional authority for offering a credit period of 30 days in the interest of the business. But Swaraj refuses to extend his authority and as a result, the deal is not finalized. In context of the above case:

• Can Mr. Bhardwaj be held responsible for loss of the deal? Why or why not ? Give a suitable reason in support of your answer.
• Also, explain the related principle.
• No, Mr. Bhardwaj cannot be held responsible for loss of the deal in the above case as he was not given the necessary authority to carry out his responsibility. There is an imbalance in authority and responsibility.
• The name of the related principle is Authority and Responsibility. Authority is the right to give orders and obtain obedience by the virtue of one’s position in the organization. Responsibility is the obligation of a person to carry out the assigned task to the best of one’s abilities and skills. There are two types of authorities, namely the official authority, which is the authority to command, and personal authority, which is the authority of the individual manager. Authority is both formal and informal. According to Fayol, there should be balance between the authority given and responsibility entrusted to an employee so that he is able to carry out the assigned task. Any kind of imbalance in authority and responsibility is not good for the organisation. If the authority granted to an employee is less than what is required, he will ineffective in doing his work. On the other hand, if the authority delegated to an employee is more than what is required, he may tend to misuse it.

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All questions are very useful

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