Revision: Principles and Functions of Management >> Principles of Management Business Studies Commerce (English Medium) Class 12 CBSE

Principle is defined as a fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning.

• Toyota's seven guiding principles cover legal, cultural, environmental, technological, global, and partnership dimensions.
• These principles act as broad guidelines - not rules - for managerial vision and action.
• Toyota's managerial framework was structured around Global Vision 2010.
• Principles are essential for giving direction to management thought and organisational action.
• The study of management principles traces back to classical management theory.
• F.W. Taylor contributed Scientific Management; Henri Fayol contributed Administrative Principles.
• This case study introduces Chapter 2 of Class 12 Business Studies: Principles of Management.

• Management thought evolved through six phases, from early large-scale organisation to modern systems thinking.
• Classical theory is rooted in a rational economic view, with three contributors: Taylor, Fayol, and Weber.
• The Neo Classical / Human Relations approach shifted focus to social needs, supported by the Hawthorne Studies.
• Behavioural Science introduced psychology, sociology, and anthropology into management study.
• Management Science brought in quantitative and operations research methods for decision-making.
• Modern Management views organisations as complex systems and applies the contingency approach.
• Each phase built upon or reacted to the limitations of the previous one.

• Management coordinates planning, organising, staffing, coordinating, and controlling.
• Management is needed in all kinds of organisations.
• Management is counted as a key resource alongside machines, materials, and money.
• A principle = a fundamental truth or proposition.
• Principles of management act as broad guidelines for decision-making.
• They are less rigid than pure science.
• Principles are different from both techniques and values.

• Principles are derived from experience and experiments, not invented arbitrarily.
• They are universal yet flexible - applied differently across situations.
• They focus on human behaviour and cause-effect relationships.
• They are contingent, meaning context determines their application.
• The Biocon case shows how management principles drive organisational growth.

• Management principles offer practical insights into real situations faced by managers.
• They support optimum resource utilisation and effective administration.
• They enable scientific (logical/evidence-based) decision-making.
• They help organisations adapt to environmental changes.
• They guide managers in fulfilling social responsibilities.
• They serve as the foundation for management education, training, and research.

• Scientific Management is one of three classical schools, alongside Administrative Theory and Bureaucracy.
• Taylor is identified as the founder of the Scientific Management movement.
• Key elements include time studies, standardisation, differential rates, functional supervision, and management by exception.
• Planning is deliberately separated from execution under this approach.
• Practical studies at Bethlehem Steel and in brick laying demonstrate real-world application of these principles.
• The Lijjat Papad case illustrates how business, Gandhian values, and social responsibility can coexist.

• Scientific management means knowing what workers must do and ensuring it is done in the best and cheapest ways.
• It replaces Rule of Thumb with a scientific method.
• Jobs are split into smaller parts; the best approach for each part is identified.
• Standardised tools are used and workers are properly trainedshaalaa
• Taylor's four principles: Science, Harmony, Cooperation, Individual Development.
• Modern extensions include JIT, Lean Manufacturing, Kaizen, Six Sigma.

• Functional Foremanship is a technique of Scientific Management proposed to solve the problem of one foreman handling all tasks.
• Taylor proposed eight specialists replacing the single foreman concept.
• The eight specialists are split into Planning Incharge (4) and Production Incharge (4).
• Planning side: Instruction Card Clerk, Route Clerk, Time and Cost Clerk, Disciplinarian.
• Production side: Speed Boss, Gang Boss, Repair Boss, Inspector.
• A single worker may receive instructions from multiple foremen depending on the function.
• It is rooted in the principle of division of work and specialisation.

• Standardisation sets benchmarks for processes, materials, time, products, machinery, and working conditions.
• Simplification eliminates unnecessary varieties to reduce costs and improve resource utilisation.
• Method Study finds the best way to do a job using process charts and operations research.
• Motion Study classifies movements into productive, incidental, and unproductive - aiming to eliminate unproductive ones.
• Time Study sets standard time per task to determine workforce size, workload norms, labour costs, and incentive schemes.
• Fatigue Study identifies rest intervals to sustain worker productivity and prevent burnout.

• The Differential Piece Wage System applies two wage rates - higher for efficient workers, lower for inefficient ones - based on standard output.
• The financial gap between the two rates is the core motivating force of the system.
• Schmidt's case demonstrates that higher output directly results in significantly higher earnings (~60% more).
• Taylor's "mental revolution" is essential - both workers and management must adopt a cooperative, efficiency-first mindset.
• The surplus must be shared between workers and management, not contested.
• Scientific management principles evolved into modern tools: operations research, lean manufacturing, robotics, and computer-aided production.

• Fayol gave 14 principles derived from his managerial experience - not laboratory research.
• Principles are flexible guidelines, not rigid laws - must be applied with judgment.
• Unity of Command (one boss) ≠ Unity of Direction (one plan) - commonly confused in exams.
• Scalar Chain can be bypassed via a "Gang Plank" in urgent situations with the superior's approval.
• Centralisation vs. Decentralisation is not binary - degree varies by organisation and situation.
• Esprit de Corps and Equity together build a motivated, loyal workforce.
• Initiative must be encouraged at all levels – promotes innovation and ownership.