The management principles are derived in the following two ways:
(i) On the basis of observation Fayol developed
management principles on the basis of observation, e.g. 'division of work' tells us that in order to achieve efficiency, divide the work into small tasks.
How can this analysis be made? It is only made by those managers who observed that division of work leads to specialization.
(ii) On the basis of experimentation All the principles of management establish a cause-and-effect relationship between variables, which means that they are developed on the basis of experimental studies.