NCERT Solutions for Class 12 Business Studies Chapter 1 - Nature and Significance of Management

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    Very Short Answer Type Questions

    1. What is meant by management?


    Define management.

    Ans. The management is a single or group of individuals who challenges and oversees a person or collective group of people in efforts to accomplish desired goals and objectives.  

    2. Name any two important characteristics of management.

    Ans.Continuous and Pervasive. 

    3. Identify and state the force that binds all the other functions of management.

    Ans.Coordination is a binding force that integrates the individuals’ efforts for the accomplishment of the common organisational goals. It is a process by which the activities of different departments and units get synchronized for the
    achievement of the organisation’s goals.

    4. List any two indicators of growth of an organisation.

    Ans. Indicators of Growth of an organisation are:

    1. Growth in sales volume
    2. Increment in the capital investment

    5. Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple
    Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of `12, 00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.

    Ans. The objective achieved by the Indian Railways in the given case is Social objective. Social objectives involve creation of benefit by assuring health, safety and price control to the society. This involves creating economic value consistently for the society as a whole.

    Short Answer Type Questions

    1. Ritu is the manager of the Northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?

    Ans. Ritu is working at the middle level of management. Her basic functions are (number of functions should be given according to the marks allotted for the question).

    1. Conveying the policies formed by the top level management and acting as a link between top level management and
      operative/lower/supervisory management.
    2. Assigning duties to the subordinates.

    2. State the basic features of management as a profession.


    Discuss the basic features of management as a profession.

    Ans. Basic features of management as a profession are as follows:

    (i) Well-defined Body of Knowledge: All professionals focus on well defined body of knowledge as they contain some rules and regulations.

    (ii) Professional Association: They are associated with various associations for practicing managers in India, like the AIMA (All India Management Association) that has laid the code of conduct to regulate the activities of their members. It is not compulsory for managers to become a part of these associations.

    (iii) Service Motive: All business organisations aim to provide good quality product or service at a reasonable price thus serving the society and focusing on welfare.

    Thus, we can say management does not meet the exact criteria of a profession but it has some features as a profession.

    3. Why is management considered to be a multidimensional concept?

    Ans. Management is considered as a multidimensional concept because it is a complex activity that has three main dimensions. These are:

    (i) Management of Work: Every organization focuses on work and how the work will be processed e.g., producing or selling. A work is defined as the goals or objectives which needs to be achieved.

    (ii) Management of People: The main element of the organisation is the people who will work and accommodate the process. This resource has to be managed in such a manner that it helps to achieve the goals and objectives of the organisations.

    (iii) Management of Operations: All organisa-tions either produce a product or provide a service. This requires a production process which means using an operation to convert the inputs into the output, therefore is interlinked with both management of work and management of operations.

    4. Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers’ expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. State the quality of management that the company is lacking? What quality of management do you think the company is lacking?
    Explain briefly. What steps should the company management take to bring the company back on track?

    Ans. As per the given situation, the quality of management lacking in the organisation is coordination. This can be determined from the example that various departments blame each other for the fall off in profits and market share of the company. Coordination refers to a path by which the group functions get interconnected. It binds the people of the organisation and their activities to make a functioning of the work smooth. It is that force which unites the working and efforts of the people of the organisation towards the common objective of the organisation. It links the interrelated functions of management. Every organisation has various departments and sub-departments such as production, sales, finance, etc. There is an independent working of each department according to their own policies and objectives In such a case, there may arise a conflict between the two departments. Coordination is needed to synchronise the activities of each department towards the achievement of common goals of the organisation. For instance, in the given situation, the various departments rather than blaming each other should work by coordinating with each other and work collectively to improve company’s position with regard to profit margins and market share.

    The following steps can be taken by the management to bring the company back on track:

    1. The market should be analysed carefully and the demand must be analysed such that the products can be amended accordingly.
    2. The quality of the products must be improved.
    3. The various products and their features should be marketed well.
    4. Customer satisfaction should be worked upon through measures such as customer care services and feedback.
    5. Each of the departments must be motiv ated to work collectively towards the common goals of the organisation rather than indulging in a blame game.

    5. Coordination is the essence of management. Do you agree? Give reasons.

    Ans. Coordination is a function that is inherent and pervasive. Coordination is not a separate function of management. It is the essence of management. The coordination is needed to perform all the functions of management. They are:

    (i) Coordination in planning: Coordination is needed between overall plan of the organisation and the departmental plans. It is needed between objectives and available physical and human resources.

    (ii) Coordination in organising: Coordination is required between resources of an organisation and activities to be performed and among authority, responsibility and accountability.

    (iii) Coordination in staffing: In staffing, coordination is needed between the skills of the workers and the jobs assigned to them and between the efficiency of the workers and the compensation, etc.

    (iv) Coordination in directing: Coordination is required among orders, instructions, guidelines and suggestions. Coordination is required between superiors and subordinates, e.g. a manager instructs the subordinates, motivates them and also supervises their work.

    (v) Coordination in controlling: Coordination is required between the standard and the actual performance. Coordination is required between correction of deviations and achievement of objectives.
    Management function revolves around making, arranging things, moving things in an organisation in relation to overall objective of the organisation. Thus, coordination can be considered as the core function of management which ensures that all the factors in the business work together smoothly.

    6. Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of ₹100 per bracelet.
    Ashita was able to produce the required number within the stipulated time at the cost of ₹55,000 whereas, Lakshita was able to produce only 450 units at a cost of ₹90 per unit. State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer.

    Ans. Ashita is effective, but not efficient because Ashita completed the task on time but at a higher cost. Effectiveness involves completing a given work in the required time with a focus on the end results.
    Whereas, Lakshita is neither efficient nor effective because Lakshita did not complete the target at all. Even though she produced the units at a lower cost, but not achieving the target will make her inefficient and ineffective.

    Long Answer Type Questions

    1. Management is considered to be both an art and science. Explain.

    Ans. Art is the skillful and personal applications of existing knowledge to achieve desired goals and objectives.

    Management is considered as an art due to the following reasons:
    (i) Existence of Theoretical Knowledge: All art subjects are based on theoretical knowledge, as their exists number of theories and principles and conventions. For e.g., various books on ‘ragas’ are available in music. In the same way, there is lot of literature available on management and its branches – finance, marketing, human resource, etc.

    (ii) Personalised Application: The use of knowledge differs from one particular individual as it is based on theories and behaviour. Two painters, two dancers or two singers all use their knowledge and creativity in their own way. Same way two managers who have acquired the same knowledge may use it in their own different ways to get the work done.

    (iii) Based on Practice and Creativity: All art is practical. It involves creative practice and regular consistency. The more we practice it, better we become at it. Without practice artists lose their perfection. It also requires creativity.
    Same way a manager applies his gained knowledge in a unique manner. More practice makes him a better manager and he also develops his own style of management.

    Management is an In-exact Science:
    (i) Systematic Body of Knowledge: Science is a systematised body of knowledge. Its principles are based on cause and effect relationship, and it is universal in nature as these are the principles which focus on experiments and they are proven to be truth e.g., water evaporates on being heated. Same way management is a body of systematized knowledge. All managerial principles have cause and effect relationship.

    (ii) Principles Based on Experimentation: Scientific principles are first developed through observation and then tested through repeated experimentation. Same way management principles are also propounded after observation and repeated experimentation as they also have a database for representing a particular type of behaviour.

    (iii) Universal Validity: All scientific principles have universal validity, as they are propounded by certain elements of behaviour and condition. They give same result wherever applied. Principles of management do not have universal validity. They have to be adjusted and applied according to the need and behaviour of the situation.
    Thus, management is an in-exact science.

    2. Do you think management has the characteristics of a full fledged profession?

    Ans. No, management doesn’t have all the characteristics of a full fledged profession. 

    The reasons are as follows:
    (i) Well-defined Body of Knowledge: All professions are characterised as a well-defined body of knowledge that can be acquired through adapting teaching– learning process. This feature of a profession is possessed by management as well. There is vast knowledge available in management in the form of definitions, concepts, theories, principles but that too can be adapted with regular practice and functioning etc.

    (ii) Restricted Entry: All professions have a restriction on the entry of its practitioners, as they have to bear the specialised knowledge. They have to acquire a specific degree to be professional e.g., LLB for a lawyer, MBBS for a doctor, etc. But a manager can be an MBA qualified or not therefore it cannot be fully organized.

    (iii) Professional Association: All professions are affiliated to a professional association which regulates entry, grants certificate of practice and formulates a code of conduct e.g., all lawyers to get registered with Bar of Council to practice law. It is not compulsory for all managers to be a member of AIMA.’

    (iv) Ethical Code of Conduct: All professions are bound by an ethical code of conduct which likely guides the behaviour of members. But as it is not compulsory for all managers to be members of AIMA, they all may not be aware of the prescribed code of conduct of AIMA.

    (v) Service Motive: Basic motive to serve their client’s interest is welfare, it is the most important aspect of management e.g., lawyers to get justice for their clients, doctors to treat the patients etc. All managers also work in a manner through which they show their effectiveness and efficiency in the form of good quality goods provided to the customer at a reasonable price.
    Thus, management possesses some characteristics of a profession but not all.

    3. “A successful enterprise has to achieve its goals effectively and efficiently” Explain.

    Ans.“A successful enterprise has to achieve its goals effectively and efficiently”. Thus, management has to see that tasks are completed and goals are achieved with the minimum resources.
    Management is thus getting things done with the aim of achieving objectives effectively and efficiently. Being effective or doing work effectively basically means finishing the given task on time or within the stipulated time frame. It is concerned with end result, it is achieved or not. Efficiency means doing the work correctly and with minimum cost. If by using less resources more benefits are derived then efficiency has been increased. It is thus essential for any organisation to focus on efficiency as well as effectiveness. It is not only important to complete the work correctly but equally important to complete it with minimum cost. In the same manner, it is not only important to reduce cost but equally important to complete the work correctly.
    Thus, in real work situations, it is important for a manager to be both efficient and effective.

    4. Management is a series of continuous inter-related functions. Comment.

    Ans. Management is a series of continuous inter-related functions. Each one of them is performed to guide and direct the efforts of others.
    The functions are:

    (i) Planning: Planning is the primary function of management which runs through all other functions. It is the process of thinking before doing. It creates a benchmark or blueprint to proceed further. It focuses on more wider concept of objective which needs to be fulfilled. As it bridges the gap between where we are in the present and where we want to go in the future.

    (ii) Organising: It is the process of defining the formal relationship among people and resources to accomplish the desired goals, it makes planning execution. It involves:
    (a) Identification and division of work
    (b) Departmentalisation
    (c) Assigning of duties
    (d) Establishing reporting relationships

    (iii) Staffing: Human resources make goal to be achieved only through human efforts. It is the duty of management to make the best possible use of this resource. Thus, placing the right person on the right job at right time is very important. Staffing helps management to motivate, select and place the right person on the right job.

    (iv) Directing: Directing involves leading, influencing, supervising, communicating and motivating employees to perform the tasks assigned to them. It requires establishing an atmosphere that encourages employees to do their best. Directing comprises of four elements; supervision, motivation, leadership and communication.

    (v) Controlling: Controlling function which focuses on monitoring organisational performance towards the attainment of organisational goals. It means comparing actual performance with planned perfor-mance. The task of controlling involves.
    (a) Establishing standards of performance,
    (b) Measuring actual performance,
    (c) Comparing it with established standards,
    (d) Taking corrective action.

    5. A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision?

    Ans. In order to modify the existing product in the market, the following decisions/steps should be taken by each level of management.
    Top Level Management:

    1. The top level managers must analyse the market and modify the product accordingly.
    2. It should work by coordinating the activities of the various departments towards the common goal by modifying the product.
    3. It must organise various resources that are required for the achievement of the objective of modification of the product.

    Middle Level Management

    1. The middle level managers must work towards executing the plans framed by the top level management.
    2. They must organise the personnel required for implementing the plans and strategies.
    3. The personnel must be assigning the duties according to the plan and it must be ensured that the work is being done accordingly.

    Operational Level:

    1. The operational level management must provide instructions properly to the workers and provide guidelines to them to work smoothly.
    2. It must ensure quality of the work while minimising the wastages.
    3. It must motivates the workers to work towards the achievement of the common objectives.

    6. A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system but on several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy.

    Ans. The main aspect that needs to be worked upon in the organisation is coordination. Coordination is the force which synchronise all the functions of management and activities of different departments.
    Coordination means linking the functions of groups and individuals. It binds the activities of employees to ensure the smooth functioning of the organisation.

    1. The various management functions must be linked with strong coordination to avoid any confusion in the work.
    2. Every level of management from the planning stage, where the objectives are set must be coordinated with each other. Next, it is required between the planning stage and the staffing stage, so that the right people are hired. After that, functions of directing and controlling must be coordinated with each other.
    3. It must be ensured that interdepartmental conflicts are avoided. The wok of each of the departments, must be synchronised.
    4. It must be ensured that the proper direction and motivation are being given to the workforce to avoid any chaos and duplication of the work.
    5. It must be focused that the personal goals of the individuals are synchronised with the overall objectives of the organisation and the plans are properly adhered to or not.

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