Some of the frequently asked exam questions on business management are as follows:

Q.1. What is meant by the term ‘business’?

Ans. According to the dictionary, the word business means occupation, calling, commercial or industrial establishment, etc. The term ‘business’ originates from the word ‘busy’ which denotes a state of engage­ment in some work. In the world of commerce, business refers to the economic or money-earning activities only.

Business means either producing or purchasing of goods and services and selling those goods and services for the purpose of earning a profit.


Whether the goods and services are produced car purchased, recurring sales provide the identifying mark of a business and constitute the essence of it. Sales imply an exchange of values between the buyers and sellers to their mutual benefit. In this sense, business consists of two basic elements exchange and mutual benefit.

Q.2. Define the term management.

Ans. There are some different ideas concerning the meaning of the term: management.

Some are quoted below to provide a background of its meaning:


According to Kirrball and Kiitball:

‘Management is the art of applying the economic principles that underline the control of men and materials in the enterprise under consideration’.


Appley defines:

‘Management is the attainment of pre-established goals by the direction of human performance along pre-established lines’.

E.F.L. Brech views:

‘Management is a social process entailing respon­sibility for the effective planning and regulation of the operations of an enterprise, such responsibility involving:


(a) The installation and main­tenance of proper procedures to ensure adherence to plans, and

(b) The guidance, integration and supervision of the personnel comprising the enterprise and carrying out its operation’.

Encyclopedia of the Social Sciences states:

‘management may be defi­ned as the process by which the execution of a given purpose is put into operation and supervised. The combined output of various types and grades of human effort by which the process is effected is again known as manage­ment in the human sense. Again the combination of those persons who together put forth this effort in any given enterprise is known as the management of the enterprise.’


Dr. John F. Meu points out:

‘management is the art of securing maximum results with a minimum of effort so as to secure maximum prosperity and happiness for both employer and employee, and give the public the best possible service.’

The above definitions give us several pertinent ideas for consideration.

First, they all deal with management as it applies to a group, not to an individual.


Second, consideration of an objective, either specifically stated or implied, is a requisite of management.

On further examination, it may be reasonable to state that management deals with the achievement of something specific. The success of management is commonly considered the extent to which the predetermined objective is achieved.

Q.3. Management leads, guides and directs- Discuss.

Ans. Management is defined as an “art of getting things done through and with the people in formally organised groups.” This definition makes it amply clear that management is a creative force which provides leadership to those who are not well equipped in determining the objects of an enter­prise.


They need a planned set of objectives, a well-designed organisation and wall defined standard which they would like to follow in accomplishing the given task.

Management leads them by preparing a plan with a view to achieve those objectives. Management provides a lead when it sets out an organisation and assigns responsibilities to those who are to work for the enterprise within the framework of the pre-planned objectives.

Management again gives a lead when it sets standards so that the activities of those who are responsible to achieve the objectives may be controlled and necessary corrections, if any, may be made.

Management also provides guidance. While setting standards it provides guideline which helps the task force in achieving, the defined goals of the enterprise. Management is the work of executive leadership hut the most important area of human activity is getting things done through the people at work.

However, people cannot work unless they are asked to do the work which requires careful handling, proper guidance and certainly fruitful direction. Management today is not interested in building the products. It is interested in building men who in turn build products.

And for building products men at work need well inspired and motivated group of people, who are not only knowledgeable and skillful but whose efforts are fully coordinated as a result of complete co-operation among various factors of production.


It is the purposeful guidance, fruitful direction and respectful control provided by the management which yield fully coordinated effort and complete co-operation with the help of which management is able to achieve its stated goals.

Management, therefore, leads in order to get the things done. It guides to develop the people and directs to utilize the growth inputs. It is the selection, training, supervision, control and development of people which help the enterprise in carrying out its operations successfully.

Q.4. Distinguish between management and organisation.

Ans. The following are the points of distinction between management and organisation:

1. Management refers to activities that may lead to get things done, whereas organisation means division of various activities and integration of them.

2. Management has manifold functions, namely, planning, organising, directing, motivating etc. Organisation is one of the functions of manage­ment.


3. For the management of the affairs of any business, organisation is necessary. It is therefore, regarded as a part of the management process.

4. Management functions cannot be effected until and unless organisa­tion structure is built up. Organisation is the framework of management.

5. A human body is made of different organs. If management is com­pared with a human body, organisation refers to its organs.

6. Management has three distinct levels, namely, top management, middle management and lower level of management. But organisation has diff­erent processes and no levels.

Q.5. “The most useful method of classifying managerial functions is to group them around their activities”. Comment and classify the managerial functions in detail.

Ans. Management should always be considered as a continuous process. In every co-operative and organised activity there is management so long as that activity continues. Old problems give rise to new problems and in ever changing environment management has to deal with a continuous flow of tasks.


This, obviously, makes the job of managing so complicated that it is difficult to comprehend all its facets at one and the same time. But, however, management process is essentially the same not only in all corporate sector but also at all levels in the enterprise.

Henri Fayol distinguished between principles and elements of management using the former for rules and guides, and the elements of management for its functions.

He grouped these elements into five managerial functions consisting of:

(i) Planning,


(ii) Organising,

(iii) Commanding,

(iv) coordinate and

(v) Controlling.

Fayol’s classification of managerial func­tions is widely acknowledged and acclaimed, though other classification exists.

Now man and summer viewed managing process into the functions of:


(i) Organising,

(ii) Planning,

(iii) Leading and

(iv) Controlling.

Similarly, Luther Gulick has coined a catchword ‘PODSCORB’ to indicate the functions of management and this catchword is composed of initial words of different management functions, such as:

(i) Planning,

(ii) Organising,

(iii) Directing,

(iv) Staffing,

(v) Coordinating,

(vi) Reporting and

(vii) Budgeting.

However, still another method of classifying managerial functions is to group than around their activities—planning, organising, staffing, directing and controlling.

The above functions of management are undoubtedly common to all busi­ness organisation but the manner in Which these are carried cut are not necessarily the same in different establishments. Likewise though all these functions constitute the job of a manager, relative importance of each of than will vary from time to time.

Q.6. Define the terms: planning, organising, controlling and directing in the context of management process. Identify the steps involved in them.

Ans. Planning:

Planning is the process of setting objectives for the future and developing courses and actions to accomplish them.


Organising is the process of arranging people and physical resources to carry out plans and accomplish organisational objec­tives.


Controlling is the process by which managers deter­mine whether organisational objectives are achieved and whether actual operations are consistent with plans.


Directing is the act of motivating other people to perform certain tasks intended to achieve specific objectives. It is the act of making things happen. [This function or process goes by various names: leading, motivating or actuating].

Steps in Planning:

The techniques of planning may be visualised by analysing the steps involved in major planning. It may be mentioned that planning must follow certain logical steps to make the same worthy of the purpose.

Of course, minor plans are less complex and eventually involve lesser stress and strain in following the steps. But the steps are essentially the same in planning process only with a variation in the degree of complexity involved.

Steps in planning may be generalised as follows:

1. Establishing objectives:

The first and primary step in planning process is the establishment of planning objectives or goals. Definite objectives, in fact, speak categorically about what is to be done, where to place the initial emphasis and the things to be accomplished by the net-work of policies, procedures, budgets and programmes. Here, the objecti­ves must be understandable and rational to make planning effective.

2. Establishment of planning premises:

This is the second step. Here, premises signify planning assumptions or future setting against which planning takes place. Future settings such as the markets, prices, tax structure, government policy, business cycles, etc., are prerequisites before framing the master plan. Premises, as such, may be viewed as environ­ment of plans in operation.

The selection, evaluation and review of planning premises and their use in planning depend upon the skill and experience of the planner.

The difficulties normally faced by the planners are two-fold:

(i) Selecting what premises to use, and

(ii) Evaluating the assistance obtained from the use of the premises.

However, it is to be kept in view that all assumptions are not premises. While sale assumptions may be considered premises, same represent future expectations from actual plans developed. For example assumptions pertaining to future business conditions, sales volume, change of government, industrial policy should be considered as premises on which to develop plans.

These assumptions or forecasts are a prerequisite to planning. However, it is to be noted that forecast is often the resultant effect of planning. Forecast regarding return on new investment or costs translate a planning programme into future expectations.

It may be noted that premises are not always the same far all the industries or units in the same industrial complex. Premises which may be of strategic significance to one industry may not be of equal significance to others due to size of the industry, nature of business and other relevant factors.

Q.7. What is scalar chain or scalar principle ?

Ans. Scalar chain or Principle refers to the chain of direct authority relationship from the top level right upto the bottom level throughout the organisation. It indicates that the ultimate authority must rest somewhere. Communications should not ordinarily bypass the chain; that means, all communications should pass via every link in the chain.

Scalar chain can be illustrated as under :

Scalar Chain 

A represents the top man in the organisa­tion, who is directly over B and L. B, in turn, is over C and L is the imme­diate superior of M, and so on along the line. According to scalar chain of comm­and, the communication F to P should go all the way up one side of triangle to A and down the other side. Here, F to A is one chain and P to A is another.

Q.8.  What is gangplank ?

Ans. Gangplank refers to the dotted line from F to P in the triangle AFP. According to Fayol, the Gangplank suggests direct contact between F and P and presupposes that (a) the superiors E and 0 autho­rise their respective subordinates to treat directly and (b) the sub­ordinates F and P inform their respective superiors of any action taken.

Q.9. What are ‘order’, ‘equity’ and ‘espirit de corps’ in management?

Ans. Order- It refers to the rational arrangement and placement of things and people  ‘a place for everything and everything in its place’. According to Fayol, the term emphasises that there should be a right man in the right place or the right material at the right time.

Equity – It means ‘justice’ tempered by ‘kindness’ – a judicious combination of the two. Throughout all the levels of scalar chain, equity demands good sense, experience, and humanistic attitude so as to command respect and devotion from the subordinates.

Espirit de Corps – The expression means ‘union is strength’. It emphasises the need for teamwork and the importance of effective commu­nication in obtaining it.

Q.10. What Is ‘rhochrenatlcs’ In management science ?

Ans. ‘Rhochrematics’ is a management technique stressing, planning and dealing with the management of material flow from its original source through production facilities to final consumers. It includes an effi­cient system of interactions among information, man-power, money, and materials. Its development depends upon improved accounting data and mathematical techniques for computer use.

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