Based on the following case-study, answer the question.

Mr. Arfaaz had been heading the production department of writewell products Ltd., a firm manufacturing stationery items. The firm secured an export order that had to be completed on a priority basis and production targets were defined for all the employees. One of the workers, Mr. Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr. Arfaaz approached Ms Vasundhara, the CEO of the company to file a complaint against Mr. Bhanu Prasad and requested her to terminate his services.

Identify the principle that Ms. Vasundhara should consider while taking her decision.

Management by Exception

The correct answer is option (2)-  Management by Exception.

The principle that Ms. Vasundhara should consider while taking her decision in the case study is "Management by Exception."

Management by Exception is a management principle where managers focus their attention on situations that deviate significantly from the planned or expected results. In this case, the situation involves Mn Bhanu Prasad falling short of his daily production target for two consecutive days. This is an exception to the norm, and Ms. Vasundhara needs to make a decision regarding how to handle this exception.

Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management. Thus, if the plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a manufacturing organisation, only increase in labour cost beyond 2 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action of management on a priority basis.