Proper understanding of management principles is necessary because of the following reasons:
(a) Provides useful insight to managers. The knowledge of principles improves the understanding of managers about the ways and means of managing an organization. Management principles are helpful in taking decisions and handling situations arising in course of management.
(b) Helps in thoughtful decisions making. Management principles help in thoughtful decision-making. They emphasize logic rather than blind faith. Management decisions taken on the basis of principles are free from bias and prejudice. They are based on the objective assessment of the situation.
(C) Optimum utilization of resources. Resources should be put to use in such a manner that they should give maximum benefit with minimum cost. Principles equip the managers to foresee the cause and effect relationships of their decisions and actions.
(d) Direction for training of managers. The principles are helpful in identifying the areas of management in which existing and future managers should be trained. The principles of management help the universities and professional institutes to impart teaching and training in the theory and practice of management.
(e) Role of management. The principles focus on matters on which greater managerial attention is required. Principles act as ready reference for the managers to check whether their decisions are appropriate or not.