Class 12 Business Studies

Nature and Significance of Management

NCERT Exercise

Very Short Answer Type

Question 1: What is meant by management?

Answer: The process of getting things done effectively and efficiently is called management.

Question 2: Name any two important characteristics of management.

Answer: Two important characteristics of management are: management is a continuous process and is a group activity.

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

Answer: Coordination is the force that binds all the other functions of management.

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

Answer: Growth in sales and growth in profits

Question 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 Rs 12,00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.

Answer: Organisational objective is being achieved by minimizing the cost, and social objective is achieved by protecting the environment.

Short Answer Type:

Question 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?

Answer: Ritu is working at the middle management level. Her basic functions can be as follows:

She is responsible for implementing and controlling plans and strategies developed by the top management.

She is responsible for all the activities of first line managers.

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

Answer: Basic features of management are as follows:

Question 3: Why is management considered to be a multi-dimensional concept?

Answer: A manager needs to have various skills, like technical skills, soft management skills, and people skills. A manager also needs to learn and develop respect for cross-cultural sensibilities in order to work in synchronization with diverse set of people. So, management is considered to be multi-dimensional concept.

Question 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?

Answer: This company is suffering from lack of coordination among various departments. The sales and marketing department is blaming production department. Production department is blaming the marketing department. Finance department is blaming both marketing and production people for poor return on investment. The company should chalk out some way to develop coordination among different departments in order to bring the company back on track.

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

Answer: The above case can be a good example where lack of coordination is ruining the business of an organization. There can be various functional departments in a company, with each department having its strengths and weaknesses. All the departments need to work in perfect tandem in order to achieve organization’s goals. So, it is correct that coordination is the essence of management.

Question 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 Rs 100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of Rs 55,000 whereas, Lakshita was able to produce only 450 units at a cost of Rs 90 per unit.

State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer.

Answer: Ashita was able to produce the required number within the deadline but her efforts resulted in cost overrun. So, Ashita is effective but inefficient.

Lakshita could produce less than the required number of bracelets but she was able to do so at a lower cost than stipulated. So, Lakshita is ineffective but efficient.

Long Answer Type:

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

Answer: Management is an art:

There is a variety of theoretical knowledge available on management. But a successful manager applies them based on his observation and experience. A good manager applies various theoretical solutions but he applies his creativity and ingenuity as per the situation. A good manager is like an artist.

To understand this, you can take example of any renowned music director. Let us say the legendary A. R. Rahman. Like all other musicians he too has learnt the seven notes and basics of music. But the way he applies his creativity to create magic is because of his ingenuity.

Management is a science:

Science is a systematised body of knowledge that explains certain general truths or the operation of general laws.

Management has a body of systematized knowledge. This knowledge is generally applied for managing human resources, raw materials, finance and production.

Various theories of management are the outcomes of simulated and real-life experiments. But since management deals with human beings and real-life situations, so results of these experiments cannot be fully implemented in real life situations.

A scientific theory has universal validity. But management theories do not have universal validity because of the dynamics of the market and various external factors.

However, management can be termed a science because it is loosely based on a systematized body of knowledge and results of experiments.

Question 2: Do you think management has the characteristics of a full-fledged profession?

Answer: I do not think that management has the characteristics of a full-fledged profession. Following are the reasons:

There is a body of well defined knowledge on management. There are business schools of various reputes all over the world. Many academic journals are regularly written on various topics of management.

Entry restrictions are well in place for true professions. For example, a person needs to study for a degree in medicine to become a doctor. A person needs to obtain a degree in order to become a chartered accountant. But many people become managers in spite of having no professional qualification.

Different professions have their separate associations. For example, doctors in India become members of the Indian Medical Association. A lawyer needs to become a member of the Bar Council. There is a professional body for managers by the name of All India Management Association but it is not mandatory for a manager to become a member of this association.

Service motive is another important criterion for a profession. The service motive for manager is generally the achievement of organization’s objective.

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

Answer: In fact effectiveness and efficiency are the two main goals of management. Both these words are synonymous with some degree of difference.


Let us try to understand the meaning of effective or doing things effectively. Doing things effectively means doing the right thing and doing it within the stipulated time frame. To understand this, let us take a hypothetical example of a company which is selling greetings card and calendars. We know that the occasion for maximum sale of greetings cards and calendar is the New Year. Almost eighty per cent of the annual sale in this market comes in the month of December. So, if the company finishes making the required number of greeting cards and calendars by the end of October, it can be in a position to ensure the supply of finished products to the shop-floor well in time. Then only the company will be in a position to reap rich sales when the season comes.


Let us now talk about doing things efficiently. It is all about doing a thing with minimum cost. The cost can be in terms of money, raw materials, manpower, etc. If a company is able to achieve its production target by incurring the minimum possible cost it will show the example of efficiency.

Product availability at the right time is possible through efficacy. Profit maximization can be possible through efficiency. So, we can say that a successful enterprise has to achieve its goals effectively and efficiently.

Question 4: Management is a series of continuous interrelated functions. Comment.

Answer: Management is a series of continuous interrelated functions and these functions are planning, organizing, directing and controlling. Following is the explanation.


Planning is all about determining in advance what has to be done. The management has to plan sales target and production target based on sales forecast. Management also needs to plan about various tasks which are required to achieve the final goal. This planning can never be a one-time affair because plans keep on changing in tune with the change in business environment.


Management has to organize various resources so that whatever is chalked out in plan can be transformed into actions. For that, the management needs to organize capital, machinery, raw materials, human resources, etc.


Management needs to channelize various resources to accomplish the task. It needs to define roles and tasks for various sets of personnel. It also needs to direct various stakeholders, like suppliers and buyers so that company’s objectives can be achieved. Different managers need to train and motivate their subordinates so that the work can be done effectively and efficiently.


This is about periodical review of various operations in the company. For example, a sales manager needs to periodically review the performance of the sales team in order to know if everything is going as per the initial plan. Similarly, the production manager needs to review if production is going as per schedule. If anything is lagging behind then the manager needs to take corrective action.

All these functions are interrelated and are continuous. Business environment is dynamic so all these aspects (planning, organizing, directing and controlling) need to be dynamic.

Question 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?

Answer: Let us assume that a company is selling kurta since thirty years. But this company sells kurta of white and cream colours only. Since the last five years people are changing their preference towards colourful kurtas with bold designs. Many celebrities and even many politicians are now donning more of colourful kurtas than white or cream ones.

The company now plans to enter the market of colourful kurtas. Following decisions/steps should be taken by various levels of management.

Top Management

Top management should gather market intelligence report in order to assess the market potential of colourful kurtas. Then based on the data, it should make a sales forecast. After that the top management should plan about the purchase of raw materials, machines, hiring some fashion designers and some celebrity for brand endorsement.

Middle Management

The middle management should impart necessary training to subordinate staffs so that they are in a position to embrace the change. Production manager needs to train the workers about latest design trends and aesthetic appeal of colourful kurtas. The sales manager needs to train the sales team on how to promote the new range of kurtas.

Lower Management

The first line managers need to ensure proper implementation of plan as given by the middle management. For example, a supervisor at the factory needs to ensure timely production and cost minimization. In other words, he has to ensure that work is done effectively and efficiently.

Question 6: A firm plans in advance and has a sound organization 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.

Answer: It is mentioned in this question that the firm has good planning, sound organization structure and efficient supervisory staff and control system. But on many occasions, implementation is not as per the plan.

The first sentence gives a hint that managers in this company are control freak. They are very good at controlling people, and they appear to be strict disciplinarian. There is a possibility that the managers of this company are deficient in soft managerial skills and people skills.

Such managers can be good for ensuring a semblance of discipline and orderliness but the end result is de-motivated staff. Here, the middle and lower management is probably failing in proper motivation of staffs.

They need to do some course correction as far as motivation of workers is concerned.

There is also the problem of duplication of work. This means that communication channels are not properly working. Different department heads may be living in their silos and they may be insulated from each other. So, proper communication among various departments is also required in order to sort the things out.