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Home/Practice questions/Business Studies
Business StudiesPrinciples of Management

"When the business was doing well, she honored her commitment by givi…

Read the passage and answer the following questions.

After completing her Bachelor's in Fashion Designing from a well known college in London, Aahana opened a boutique in a posh market in Delhi. She divided the work into smaller units and each employee was well-trained to perform his/her work efficiently. The sales persons are allowed to close a deal with the buyers by giving a maximum of 5% discount. Whereas the decision to give any further discount rests with Aahana as the final authority.

In the earlier period of her business venture, employees were asked to put in extra hours of work. In return, she had promised to give them a special incentive within a year. Therefore, when the business was doing well, she honored her commitment by giving a bonus to her employees. She also instructed employees that communication from top to bottom should follow the official lines of command.

However, she tends to be more biased towards her female employees when it comes to resolving conflicts among employees.

"When the business was doing well, she honored her commitment by giving a bonus to her employee". Identify the Principle of Management here.

Answer & explanation+

Correct answer: option 1

The correct answer is Option (1) → Discipline

  • Option (1) Discipline — Correct. The employees worked extra hours, and Aahana promised them a special incentive within a year. When business did well, she honoured her commitment and gave the bonus. Fayol says discipline needs good superiors at all levels and clear and fair agreements. For example, workers put in extra hours, management promises higher wages, and discipline means that both sides honour their commitments. Discipline applies to the boss too, not only to the workers.

  • Option (2) Order — Incorrect. Order is about having a fixed place for people and materials. Keeping a promise is not about place.

  • Option (3) Equity — Incorrect. Equity means treating all employees fairly and without bias. The line is about keeping a promise made to all the employees, not about treating one group better than another.

  • Option (4) Unity of Direction — Incorrect. Unity of direction means one head and one plan for each group of activities with the same objective. Giving a promised bonus has nothing to do with this.

NCERT (2026-27 Edition): “Discipline: Discipline is the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.”

“Suppose management and labour union have entered into an agreement whereby workers have agreed to put in extra hours without any additional payment to revive the company out of loss. In return the management has promised to increase wages of the workers when this mission is accomplished. Here discipline when applied would mean that the workers and management both honour their commitments without any prejudice towards one another.”

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