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class XII Business Studies B.St. Notes Chapter 2



Principles of management are the statements and guidelines which are used for making decision and implementing them.

2.2 Significance of Management Principles

  • Helps in optimum utilization of resources and better administration – principles of management focuses on achieving maximum benefit at minimum cost which allows the optimum utilization of resources. Besides these principles act as guidelines which help in formulating policies and action plans.

  • Scientific decision – these principles are framed after lot of experimentation thus it help in taking solid decision. The decision are logical rather than blind decisions.

  • Adapting change – modern business has more complexities and to deal with them change is must in the organization thus management principles help to train the managers to adopt changes in the organization.

2.2 Fayol has developed 14 principles of management which are as follow:-

1.Division of work

According to fayol, the work should be spilt in to small tasks and tasks should be allotted to the specialist.


Authority means having right to give task and orders.

Responsibility means to be accountable for the assigned job.

Fayol suggested that authority and responsibility must be balanced.

3. Discipline

All employees should follow the rules and regulations of the organization.

4.Unity of command

Each employee should get orders from only one supervisor.

5.Unity of direction

All departments of organizations should work and move towards achieving common objective.

6.Subordination of individual interest to general interest

Organizational objectives should be given more preference then employees objectives.

7.Remuneration of personnel

Fair remuneration method should be followed.


& decentralization

Decision made only by the apex body is centralized system.

Dispersal of authority to middle level is known as decentralization.

9. Scalar chain

It means communication chain from top management to lower management.

Gang plank allows to shorter the route of communication.

10. Order

Right & proper place for everyone & everything.


It means employees having similar job should be treated same.

12. Stability of tenure and personnel

Employees should be provided job security by giving them fixed tenure period.

13. Initiative

Emoloyees should be motivated so they can carry out their ideas.

14. Espirit de corps

It says that ‘union is strength’. Fayol suggested that there should be spirit of unity among employees.

2.3 Scientific management : Principles and Techniques

F.W.Taylor developed scientific principles

  • Science, not rule of thumb – taylor believed to develop best method to achieve organizational efficiency .

  • Harmony, not discarded – this principle says that there should be peaceful & harmonious relationship between management and workers.

  • Cooperation, not individualism – management should work side by side with employees motivating encouraging them.

  • Development of each and every person to his/her greatest efficiency and prosperity – providing training & development to the employees.


  • Fatigue study – providing rest intervals to employees in completing assigned task.

  • Method study – finding the appropriate and best method of completing a task.

  • Time study- finding and setting standard time to complete a task.

  • Motion study – it means to study all the movements which occurs in completing a task so that unproductive movements can be reduced or eliminated.

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