Q.(a) Explain the principles of Modern Management.

(a) Henri Fayol's 14 principles form the basis of modern management. (b) The micro (task) environment is made up of the close forces around a firm — customers, competitors, suppliers, intermediaries, public and employees — that directly affect its working.

(a) Principles of Modern Management (Henri Fayol's 14 Principles)

Henri Fayol, the father of modern (administrative) management, gave fourteen principles:

1. Division of Work – specialisation raises efficiency.
2. Authority and Responsibility – authority to command must go with matching responsibility.
3. Discipline – obedience and respect for rules and agreements.
4. Unity of Command – an employee should receive orders from one superior only.
5. Unity of Direction – one head and one plan for a group with the same objective.
6. Subordination of Individual Interest to General Interest – organisation's interest comes first.
7. Remuneration – wages should be fair and satisfying to both employees and employer.
8. Centralisation – a proper balance between centralisation and decentralisation of authority.
9. Scalar Chain – a clear line of authority from top to bottom (with a "gang plank" for quick horizontal contact).
10. Order – a place for everything and everything in its place (material and social order).
11. Equity – kindliness and justice in dealing with employees.
12. Stability of Tenure of Personnel – minimise labour turnover; give job security.
13. Initiative – encourage workers to think out and execute plans.
14. Esprit de Corps – promote team spirit and unity among employees.

(b) Micro (Task) Environmental Factors of Business

The micro environment consists of the forces close to the firm that directly affect its ability to serve customers:

1. Customers – the people who buy the product; the business exists to satisfy them, and changes in their tastes directly affect sales.
2. Competitors – rival firms whose pricing, products and promotion the firm must respond to. …