Business Studies 2004 CBSE [ All India ] Set II

Management requires series of operations to achieve the desired result of the enterprise. These operations are planning, organising, staffing, directing and controlling. In order to achieve the best possible results of the business, these functions should be performed systematically in a proper sequence. It makes the management as a process.

Following points highlight the nature of principles of management:
1.Universal: The principles of management are universally applicable to all types of organisations. They are applicable to any kind of organisation whenever there is a need of coordinated efforts of human beings.
2. Flexible: The principles of management are flexible guides and provide ample scope for taking into consideration the requirement of a given situation. The principles of management are applied in the light of changing conditions and special situations.
3.Evolutionary: The principles of management are developed on the basis of organised or  quantitative facts or from the accumulated experiences.

Three advantages of formal communication are:
1.      Formal Communication ensures systematic and orderly flow of information and ideas.
2.      Formal Communication provides support to the authority of superior over subordinates.
3.      The source of Formal Communication can be easily located.
Three advantages of formal communication are:
1.      Formal Communication is slow.
2.      Formal Communication is impersonal in nature.
3.      Formal Communication provides bottlenecks in the flow of information.

Following are the three factors that are considered while fixing the price of a product:
1. Cost: It is an important factor that is to be considered before fixing the price of a product. The price must enable the businessman to cover his total cost including a reasonable profit.
2. Competition: Competition is another important factor. If there is no competition the business firm can fix the price freely. But if there are competitors in the market the firm must consider the factor before fixing the price.
3.Government Control: Sometimes the government may announce a policy about pricing of goods or may specifically fix and control the prices of goods. Under such circumstances, a seller has little or no control over the prices.

Following are the three features of personal selling:

• Personal in nature: Personal selling is a direct method of selling the product. It is a personal form of presenting information regarding a product or a service. Personal selling is addressed to an individual buyer and not to a group of people.
• Company sponsored: Personal selling is mainly controlled and sponsored by the company itself.
• Recurring Nature: Personal selling relies on oral messages only. Hence it is of recurring nature. Personal selling is frequently repeated to create a memorizing value.

The principles of management are statements of fundamental truth which provide guidelines which help management to take decisions and action  which are derived by observation and experimental studies and establish cause and effect relationship.
Management principles are derived by observation and experimental studies:
Observation: Management principles are derived by observing and analysing the events management has to face in actual practice. For example the
principle of division of labour was derived after it was observed that dividing the work based on the workers’ knowledge and experience, resulted in improved performance.
Experimental Studies: By conducting experimental studies. For example – suppose we wish to conduct an experimental study to confirm the correctness of the principle of unity of command which states that no subordinates should receive orders from more than one boss, we take two groups of employees – one having only one boss and the other having two bosses. After some time it will be noted that the group with one boss is doing better than the other. This confirms that the principle of unity of command is correct.