Last Updated: April 2026
Chapter 1 of CBSE Class 12 Business Studies — “Nature and Significance of Management” forms the conceptual foundation for the entire subject. In CBSE Board 2025, Chapter 1 contributed 8–10 marks in the 80-mark paper, including both short-answer (3 marks) and long-answer (5 marks) questions. This complete guide covers every concept with NCERT explanations, examples, and 10 practice MCQs.
What is Management?
Management is the process of planning, organising, staffing, directing, and controlling organizational resources (human, financial, material, information) to achieve organizational goals effectively and efficiently.
Key Definitions:
- Mary Parker Follett: “Management is the art of getting things done through and with people in formally organised groups.”
- Harold Koontz: “Management is the art of getting things done through and with people in formally organised groups.”
- Peter Drucker: “Management is a multipurpose organ that manages a business, manages managers, and manages workers and work.”
Features/Characteristics of Management
1. Goal-Oriented Process
Management is always directed towards achieving specific goals. Both organizational goals (profit, growth) and individual goals (salary, promotion) are pursued simultaneously.
2. Pervasive (Omnipresent)
Management is needed in ALL organizations — business, non-business, government, private. It exists at all levels: from a multinational company to a village cooperative to a school.
3. Multi-Dimensional
Management operates in THREE dimensions:
- Management of Work — deciding what tasks to do, how to do them
- Management of People — dealing with employees, motivating them
- Management of Operations — managing the production/service process
4. Continuous Process
Management is not a one-time activity but an ongoing process — planning, organising, staffing, directing, and controlling are carried out continuously as long as the organization exists.
5. Group Activity
Management cannot be done by one person alone. It involves coordinating the efforts of a group of people towards common goals.
6. Dynamic Function
Management must adapt to changing environments — economic conditions, technology, social values, competition. It cannot be rigid.
7. Intangible Force
Management is not visible physically, but its results are felt through orderly operations, satisfied employees, and profits achieved.
Objectives of Management
| Type of Objective | Examples |
|---|---|
| Organisational objectives | Survival, profit, growth |
| Social objectives | Providing quality goods at fair prices, generating employment, contributing to community |
| Personal objectives | Fair wages, recognition, job satisfaction, personal growth for employees |
Importance of Management
- Helps in achieving group goals — coordinates diverse efforts towards a common objective
- Increases efficiency — reduces costs, avoids wastage, uses resources optimally
- Creates dynamic organisation — helps organisations adapt to changing environments
- Helps in achieving personal objectives — motivates employees, develops their potential
- Development of society — produces good quality goods, generates employment, adopts new technology
Management as Science, Art, and Profession
Management as a Science
Science has three characteristics: systematic body of knowledge, universal principles, and cause-effect relationships.
- Management HAS a systematized body of knowledge (theories, principles)
- BUT management principles are NOT as exact or universal as physical sciences (they depend on human behavior, which varies)
- Therefore, management is considered an inexact or social science
Management as an Art
Art requires: theoretical knowledge, personal application, practice and creativity.
- Management has theoretical knowledge (principles)
- Managers apply knowledge through personal skills and creativity
- Improves with practice (experience makes a better manager)
- Management is both a science AND an art — it uses scientific principles as foundation but applies them creatively
Management as a Profession
| Feature of Profession | Does Management Qualify? |
|---|---|
| Well-defined body of knowledge | YES — management textbooks, MBA courses |
| Restricted entry (examination) | PARTIALLY — no mandatory exam like doctors/lawyers |
| Professional associations | YES — AIMA (All India Management Association) |
| Ethical code of conduct | YES — managerial ethics standards exist |
| Service motive | PARTIALLY — profit motive often dominates service |
Conclusion: Management is a profession in the process of professionalisation — it satisfies most but not all criteria of a full profession.
Levels of Management
| Level | Who | Functions |
|---|---|---|
| Top Level | CEO, Board of Directors, Managing Director | Set organizational goals; formulate policies; strategic planning; coordinate with external environment |
| Middle Level | Departmental managers, Branch managers, Divisional heads | Implement top-level policies; coordinate between top and lower levels; train supervisory staff |
| Lower/Supervisory Level | Foremen, supervisors, section officers | Supervise workers’ actual work; maintain discipline; ensure quality of output; maintain day-to-day records |
Functions of Management (POSDCORB / POSDC)
The five main functions of management as per NCERT:
- Planning — deciding what to do, how to do it, when, and by whom (decisions in advance)
- Organising — identifying tasks, grouping activities, assigning duties, establishing authority relationships
- Staffing — filling and keeping positions filled (recruitment, selection, training, appraisal)
- Directing — guiding, leading, motivating, and communicating with employees
- Controlling — comparing actual performance against planned, taking corrective action
Coordination — “The Essence of Management”
Coordination is the process of synchronising activities of different departments so they work towards common goals. It is not a separate function but runs through all management functions.
- It integrates group effort
- Ensures unity of action
- Is a continuous process
- Is the responsibility of ALL managers
Why coordination is called essence of management: All five functions (planning, organising, staffing, directing, controlling) involve coordinating efforts. Without coordination, management is impossible.
Effectiveness vs Efficiency
| Aspect | Effectiveness | Efficiency |
|---|---|---|
| Meaning | Doing the RIGHT things (achieving goals) | Doing things RIGHT (minimum cost/waste) |
| Focus | End result (output) | Input-output relationship |
| Example | Factory produces 1000 units as targeted | Factory produces 1000 units using 20% less raw material |
| Goal | Achieve objectives | Minimize cost of achieving objectives |
BOARD EXAM TIP: Management aims for BOTH effectiveness AND efficiency. A manager who achieves goals but at high cost is effective but not efficient. Good management achieves goals efficiently.
Practice MCQs — CBSE Class 12 Business Studies Chapter 1
Practice Quiz — 10 CLAT-Style Questions
Click an option to reveal the answer and explanation.
Board Exam Important Questions (3 & 5 Marks)
3-Mark Questions
- Distinguish between effectiveness and efficiency with examples.
- Why is coordination called the “essence of management”?
- State any three features of management.
- “Management is an inexact science.” Explain with reason.
5-Mark Questions
- Explain management as a profession. Does it satisfy all criteria of a profession? Give reasons.
- Explain any five characteristics of management.
- Discuss the three levels of management with their functions.
- “Management is both a science and an art.” Justify this statement.
Frequently Asked Questions (FAQ)
Is management a science or an art for CBSE Board exam?
For CBSE Board, the standard answer is that management is BOTH a science and an art, and it is in the process of becoming a profession. As a science, it has a systematized body of knowledge and principles; as an art, it requires personal skills, creativity, and practice. Always conclude with “management is an inexact science” because its principles are not as absolute as physical sciences.
What is the difference between coordination and cooperation?
Coordination is the deliberate effort of management to synchronize activities of different departments — it is a management function. Cooperation is the voluntary willingness of employees to help each other — it is an attitude. Coordination can exist without cooperation (people may be forced to coordinate) and cooperation without coordination (goodwill without direction is ineffective). Management achieves both for best results.
Who are the people at different levels of management?
Top level management includes CEO, Board of Directors, Managing Director, and President — they set strategy and policies. Middle level includes departmental heads, branch managers, and divisional heads — they implement policies. Lower/supervisory level includes foremen, supervisors, and section heads — they directly supervise workers and ensure day-to-day tasks are completed.
How many marks does Chapter 1 carry in CBSE Class 12 Business Studies?
Chapter 1 (Nature and Significance of Management) typically carries 8–12 marks in the CBSE Class 12 Business Studies 80-mark exam. Questions include 1-mark (MCQ/fill in blanks), 3-mark (short answer), and 5-mark (long answer) formats. Coordination, management as science/art/profession, and levels of management are the most frequently asked topics.
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