CHAPTER-1

NATURE AND SIGNIFICANCE OF MANAGEMENT

Q. 1: 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 for meeting
customers' expectations. The finance department blames both production and marketing for
declining return on investment and bad marketing.
Which 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?
Solution : The company is lacking an important aspect of management that is Coordination.
Here production department, marketing department and finance department are not working
in unity for achieving the goals of the organisation due to which return on investment and
market share is declining.
To bring company back on track, proper coordination should be ensured. Coordination will
help in integrating activities of separate units of an organisation to accomplish the goals
efficiently. Favourable environment should be created where departments instead of blaming
each other can work in harmony with each other for improving the current situation of the
company.
Q. 2: 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?
Solution : Assuming that the company is in business of manufacturing pens. Due to strong
competition the sales of my product are declining. I want to bring changes in my product
design and other aspects.
Following decisions will be made by each management level for the same:
Top Level
(i) Top level managers will work out the objectives, policies and plans for initiating the
decision of bringing a change in the pens that we offer.
(ii) They will work out the budget that would be needed to bring this decision into action.
(iii) They will get in contact with the machinery suppliers, media and other experts needed.
(iv) They will coordinate with departmental heads to finalise this decision.
Middle Level
(i) Managers at this level would formulate plans and strategies to achieve the goals set by
the top management to bring about changes in our product.
(ii) They will arrange for the necessary resources like: raw material, machinery, personnel
etc., needed to implement the plan.
(iii) They will assign duties and responsibilities and set targets for the Lower level managers.
(iv) They will ensure coordination amongst various departments to achieve the goals.
Lower Level
(i) The managers at this level will issue instructions to the workers and oversee their work.
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(ii) They will guide and motivate the workers to achieve the targets.
(iii) They will ensure that the work goes as per schedule.
(iv) They will maintain order and discipline in the organisation.
(v) They will ensure that the work is being carried out effectively and efficiently.
(vi) They will ensure that the work goes on smoothly.
Q. 3: A firm plans in advance and has a sound organisation structure with efficient
supervisory staff and control system. On several occasion it finds that plans are not being
adhered to. It leads to confusion and duplication of work. Advise remedy.
Solution : The firm plans in advance and has a sound organisation structure with efficient
supervisory staff and control system. But yet if there is confue -n and duplication of work it
means firm lacks in directing its personnel effectively.
The following remedies are to be taken for improving the situation:
(i) A proper communication pattern is to be followed.
(ii) Efforts have to be put in to ensure proper co-ordination is achieved between the
departments and workers.
(iii) Regular feedback is to be taken by the middle level managers from the lower level
managers.
(iv) The workforce should be properly trained and motivated to achieve the goals efficiently
and effectively.
(CBSE Board’s Previous Year's Case Studies)

Q. 1: Volvo Limited's target is to produce 10,000 shirts per month at a cost of Rs. 100/- per
shirt. The Production Manager achieved this target at a cost of Rs. 90/- per shirt. Do you
think the Production Manager is effective?
Give one reason to support your answer.
Solution : Yes, the production manager has proved effective. This is because effectiveness
implies the ability to complete a task within the prescribed time limit. In the given situation,
the production manager has achieved the production target of 10,000 shirts within a month.
Q. 2: Hero Limited's target is to produce 10,000 shirts per month at a cost of Rs. 150 per
shirt. The production manager could achieve this target at a cost of Rs. 160 per shirt. Do you
think the production manager is effective?
Give reasons in support of your answer.
Solution : Yes, the production manager is effective in his work as he was able to complete
the assigned target on time. This is because effectiveness implies that the task is completed
within the prescribed time limit.
Q. 3: Your grandfather has retired as the director of a manufacturing company. At which
level of management was he working? Different type of functions are performed at this
levels. State one function.
Solution : As director of a manufacturing company, he was working at the Top Level of
Management. Of the various functions he would have performed, the most important would
have been formulating the goals and policies of the organisation.
Q. 4: ‘Is Management concerned only with doing the right task, completing activities and
achieving goals without taking into consideration the cost benefit?'
Give reason in support of your answer.

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Solution : No, management is not only concerned with doing the right task, completing
activities and achieving goals (effectiveness) but it also has to take into consideration the
cost benefit i.e., doing the task correctly and with minimum cost (efficiency).
Q. 5: 'Science is a systematised body of knowledge that explains certain general truths or
the operation of general laws'. Based on the statement identify and state the characteristics
of management that establish it as a science. (4 Marks) [CBSE, OD COMPTT. 2016]
Solution : The characteristics of management that establish it as a science are:
(i) Like science, management is a systematic body of knowledge with its own theories and
principles that have developed over a period of time. So, this feature of science is present in
management.
(ii) Like science, management principles are derived through observation and repeated
experimentation. So, this feature of science is present in management. However, since
management deals with human beings the outcome of these experiments are not capable of
being accurately predicted.
(iii) Principles of management like principles of pure science provide managers with certain
standardised techniques that can be used in different situations. Since they have to be
modified according to a given situation, their application and use is not universal. So, this
feature of science is not fully present in management.
Q. 6: ‘Adharshila Vidyalaya' believes in holistic development of students and encourages
team building through a mix of curricular, co-curricular and sports activities. On its Founders'
Day a stage performance had to be put up. A committee of ten prefects was constituted to
plan different aspects of the function. They all decided to use recycled paper for decoration.
As there was a spirit of unity and harmony and all members supported each other with
mutual trust and belongingness, the programme was systematically planned and executed.
Arvind, one of the prefects, realised that unknowingly the group had applied one of the
principles of management while planning and executing the programme. He was so inspired
by the success of the function, that he asked his father to apply the same principle in his
business. His father replied that he was already using this principle.
(a) State any three features of management highlighted in the above paragraph.
(b) Identify any two values which 'Adharshila Vidyalaya' communicated to the society.
Solution :
(a) Features of management:
(i) Management is pervasive:'...he asked his father to apply the same principle in his
business'. Management is pervasive as it can be applied to all types/ levels of organisations.
(ii) Management is a group activity: "There was a spirit of unity and harmony and all
members supported each other'. Management is a group activity because it requires team
work and coordination of individual efforts.
(iii) Management is goal Oriented: '...the programme was systematically planned and
executed'. Management is goal oriented as it unites the efforts of different individuals
towards achieving organisational goals.
(iv) Management is multi-dimensional: '....programme was systematically planned and
executed'. OR 'There was a spirit of unity and harmony and all members supported each
other'. Management is multi-dimensional as it involves management of work, people and
operations.
(v) Management is intangible: 'With mutual trust and belongingness...'. OR 'There was a
spirit of unity and harmony and all members supported each other'. Management is

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intangible as it cannot be seen but its presence can be felt in the way the organisation
functions
(b) Values being communicated to the society:
(i) Concern for the environment.
(ii) Holistic development of children.
(iii) Teamwork
Q. 7: Ashutosh Goenka was working in 'Axe Ltd.', a company manufacturing air purifiers. He
found that the profits had started declining from the last six months. Profit has an implication
on the survival of the firm, so he analysed the business environment to find out the reasons
for this decline.
(a) Identify the level of management at which Ashutosh Goenka was working.
(b) State three other functions being performed by Ashutosh Goenka.
Solution :
(a) Top Level.
(b) Functions of top level management:
(i) To coordinate the activities of different departments.
(ii) To be responsible for welfare and survival of the organisation.
(iii) The formulate overall organisational goals and strategies for their achievement.
(iv) To be responsible for all the activities of the business and for its impact on the society.
Q. 8: Rishitosh Mukerjee has recently joined AMV Ltd., a company manufacturing
refrigerators. He found that his department was under-staffed and other departments were
not cooperating with his department for smooth functioning of the organisation. Therefore, he
ensured that his department has the required number of employees and its cooperation with
other departments is improved.
(a) Identify the level at which Rishitosh Mukerjee was working.
(b) Also, state three more functions required to be performed by Rishitosh Mukerjee at this
level.
Solution :
(a) Middle Level.
(b) Functions required to be performed by Rishitosh Mukerjee:
(i) The interpret the policies framed by the top management.
(ii) To ensure that their department has the necessary personnel.
(iii) To assign necessary duties and responsibilities to the employees of their respective
departments for implementation of the plan.
(iv) To motivate employees of their respective departments to achieve the desired
objectives.
(v) To cooperate with the departments for smooth functioning of the organisation.
Q. 9: Hema is one of the most successful managers of her company, 'Kobe Ltd'. She uses
her creativity and initiative in handling challenging situations at work. The knowledge gained
by her during her student days at a renowned management institute as well as through her
observation and experience over the years is applied by Hema in a skillful manner in the

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context of the realities of a given situation. She often reads books and other literature in
various fields of management to keep her knowledge updated.
(a) An aspect of the nature of management is being highlighted in the above description.
Identify the aspect,
(b) Explain any three features of the aspect identified in part (a).
Solution :
(a) Management as an art.
(b) The features that establish management is an art are:
(i) Existence of theoretical knowledge: As in art, in management too, there is a lot of
literature available in various areas of management which the manager has to specialise in.
(ii) Personalised application: Like in any art, in management too, a manager applies his
acquired knowledge in a personalised and unique manner. This gives rise to different styles
of management.
(iii) Based on practice and creativity: Management satisfies this criteria as a manager gains
experience through regular practice and becomes more effective.
Q. 10: 'Mega Ltd.' was manufacturing water-heaters. In the first year of its operations, the
revenue earned by the company was just sufficient to meet its costs. To increase the
revenue, the company analysed the reasons of less revenue. After analysis the company
decided:
(i) To reduce the labour cost by shifting the manufacturing unit to a backward area where
labour was available at a very low rate.
(ii) To start manufacturing solar water-heaters and reduce the production of electric water-
heaters slowly. This will not only help in covering the risks, but also help in meeting other
objectives too.
(a) Identify and explain the objectives of management discussed above.
(b) State any two values which the company wanted to communicate to the society.
Solution :
(a) The objective of the management that is being discussed here is 'Organisational
Objective'. The total revenue earned by an organisation should be such that it is able to
sufficiently cover the various costs and expenses. That is, the revenue earned should be
such that the organisation is able to continue operations in the long run. In addition, it should
be able to focus on growth in terms of sales, production, etc.
(b) Following are the two values involved in the situation:
(i) Promotion of employment in backward areas.
(ii) Adoption of environment friendly methods of production.
Q. 11: XYZ Power Ltd. set up a factoiy for manufacturing solar lanterns in a remote village
as there was no reliable supply of electricity in rural areas. The revenue earned by the
company was sufficient to cover the costs and the risks. The demand of lanterns was
increasing day by day, so the company decided to increased production to generate higher
sales. For this, they decided to employ people from the nearby villages as very few job
opportunities were available in that area. The company also decided to open schools and
creches for the children of its employees.
(a) Identify and explain the objectives of management discussed above.
(b) Sate any two values which the company wanted to communicate to the society.

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Solution :
(a) Social objectives have been discussed in the given situation. The social objectives of an
organisation basically involves the creation of benefit and development of the society. The
following are some of the social objectives of management that are being indicated in the
given situation:
(i) Producing environment friendly products such as solar lanterns.
(ii) Setting-up a factory of solar lanterns in order to provide electricity in rural areas. (Hi)
Providing employment opportunities to the needy.
(iv) Developing school and creches for children in rural areas.
(b) The company wanted to communicate the following values to the society:
(i) Promoting the development of the village and rural areas.
(ii) Creating employment opportunities for the needy and developing schools in order to
benefit the society
Q. 12: Aman, Ahmad and Ally are partners in a firm engaged in the distribution of dairy
products in Maharashtra state. Aman is a holder of Senior Secondary School Certificate from
Central Board of Secondary Education with Business Studies as one of his elective subjects.
Ahmad had done his post graduation in History and Ally in dairy farming. One day there was
a serious discussion between Ahmad and Ally regarding the nature of management, Ahmad
argued that management was a profession. Whereas Ally argued against it saying that the
legal and medical professions are the only professions because they fulfill all the conditions
of profession. Aman on the basis of his knowledge of business studies explained the nature
of management as a profession to Ahmad and Ally.
Explain, how Aman would have satisfied both Ahmad and Ally?
Solution : Aman would have satisfied both Ahmed and Ally by explaining the following
features of management as a profession.
(i) Well-defined body of knowledge: All professions are based on a well-defined body of
knowledge that can be acquired through instruction. Management too is based on a
systematic body of knowledge comprising of well-defined principles. This feature of
profession is present in management.
(ii) Restricted entry: The entry to the above stated profession is restricted through a
prescribed qualification. But there is no restriction on anyone being appointed as a manager
in any business enterprise. So, presently this feature of profession is not present in
management.
(iii) Professional Association: Legal and medical professions are affiliated to a professional
association like bar council and medical council which regulates entry, grants certificate of
practice and formulates and enforces a code of conduct. There are several associations of
practising managers in India, like the AIMA that has laid down a code of conduct to regulate
the activities of their members. There is, however, no compulsion for managers to be
members of such an association. So, presently this feature of profession is not present in
management.
(iv) Ethical code of conduct: Legal and medical professions are bound by a code of conduct
which guides the behaviour of its members. AIMA has devised a code of conduct for Indian
managers but there is no statutory backing for this code. So, presently this feature of
profession is not present in management.
(v) Service motive: The motive of legal and medical profession is to serve their client's
interests by rendering dedicated and committed service. The purpose of management to
help the organisation achieve its goals by providing good quality products at reasonable

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prices, thereby serving the society is being increasingly recognised. So, presently this
feature of profession is not fully present in management.
The above discussion shows that management does not satisfy all the criteria of a
profession. Through the above discussion Aman would have been able to satisfy both
Ahmed and Ally by making them understand that Management is a profession but not a full
fledged or a true profession.
Q. 13: Kamal, Khan and Devid are partners in a firm engaged in the distribution of dairy
products in Madhya Pradesh. Kamal is a holder of Senior Secondary School Certificate from
Central Board of Secondary Education with Business Studies as one of his elective subjects.
Khan had done his post-graduation in Hindi literature and Devid in Dairy Farming. One day
there was a serious discussion between Khan and Devid regarding the nature of
Management as a Science'. Khan argued that Management was not a science whereas
Devid was of the opinion that Management was a science. Kamal intervened and corrected
both Khan and Devid about the nature of Management as a Science with the help of his
knowledge of Business Studies.
Explain how Kamal would have been able to satisfy both Khan and Devid.
Solution : Kamal would have been able to satisfy both Khan and Devid by explaining the
following features of management as a science:
1. Systematised body of knowledge: Like science, management is a systematic body of
knowledge with its own theories and principles that have developed over a period of time.
So, this feature of science is present in management.
2. Principles based on observation and experimentation: Like science, management
principles are derived through observation and repeated experimentation. So, this feature of
science is present in management. However, since management deals with human beings
the outcome of these experiments are not capable of being accurately predicted.
3. Universal validity: Principles of management like principles of pure science provide
managers with certain standardised techniques that can be used in different situations.
Since they have to be modified according to a given situation, their application and use is not
universal. So, this feature of science is not fully present in management.
Through the above discussion Kamal would have been able to satisfy both Khan and Devid
by making them understand that management is a science but not an exact science.
Q. 14: Narayana Computers Ltd. is a leading company in Computer Technology and IT
services. The Chief Executive Officer of the company attributes the success of the company
to its managerial team spirit, which have helped to handle rapid changes in technologies and
to transform threats into opportunities. Like any other business enterprise profits are
important for survival and growth of Narayana Computers Ltd. The management of the
company believes that a satisfied employee creates a satisfied customer, who in turn
creates profits that leads to satisfied shareholders. The company has a strong sense of
social responsibility. It has set up many educational institutions in the field of management,
engineering and computer education, in which half of the students are girls.
On the basis of the given information about Narayana Computers Ltd. answer the following
questions:
(a) Identify and explain the objectives of the company discussed in the above para. Also
quote the lines for the identified objectives.
(b) Identify any two values which the company is trying to communicate to the society.
Solution :

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(a) (i) Organisational objectives refer to the utilisation of human and material resources
considering the interest of all stakeholders. The main organisational objectives of an
enterprise are:
• Survival. • Profit • Growth.
Lines: "Like any other business enterprise profits are important for survival and growth of
Narayana Computers Ltd."
(ii) Social objectives refer to consistently creating economic value for various sections of the
society. The main social objectives of an enterprise are:
• Providing quality products at reasonable rates.
• Generating employment opportunities.
• Community progress and development by providing schools and creches to employees.
• Environmental friendly methods of production.
Lines: "The company has set up many educational institutions in the field of management,
engineering and computer education in which half of the students are girls."
(b) The values which the company is trying to communicate to the society are:
(i) Women empowerment.
(ii) Good work culture.
(iii) Fulfilling social responsibility/Concern for the society

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