Long Type Questions - Entrepreneurial Opportunity, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download

Q1. What is assessed by an entrepreneur under ‘Market Assessment’ at the time of selection of a Product or Service ? Explain any four. (CBSE 2012 Comptt.) (6 marks)
Ans.
(i) Demand of Product or Service : The demand assessment will be based on the size of market being targeted.
It may be local market, market at state level or national/international market. It will also involve a study of the target groups of consumers, their preferences, tastes and other related variables like age, level of income, etc.
(ii) Supply Position and Extent of Competition in the Market : By supply position we mean the total of quantities of the product made available in the market by all the existing players. The entrepreneur should also take into account future suppliers from possible entrants in the field. If demand for a particular product or service is seasonal, suppliers will normally work on temporary increase in demand. Such changes in demandsupply have to be taken into consideration. All the suppliers constitute competitors to the entrepreneur. So their manufacturing capacity, chances of increase or decrease in suppliers, their financial position etc. need to be examined closely.
(iii) Cost of Production : The cost of producing a product plays an important role in the choice of product by the entrepreneur. It is the cost of production that will determine the price of the product and its comparison with available products in the market. Cost variables of competitors in terms of transportation delays, wastage, storage, etc. have also to be analysed to find out cost advantages, if any.
(iv) Technological Innovation and Change : The entrepreneur must make a forecast of technological innovations and change in the concerned field to visualise changes in product quality and cost of production.

Q2. Describe the process of testing ideas for assessing their opportunity potential. (CBSE 2009, A.I.)
Or
Explain any six steps which help in identifying a feasible product or process. (CBSE 2010, Delhi 2008 A.I)
Or
Discuss the steps involved in the investigation of ideas. (TBQ) (6 marks)
Ans. The process of testing ideas for assessing their opportunity potential can be divided into following steps :
(i) Product Identification : Identification of product or service is the first step. The idea provides the concept of the product or service. Already existing products guide the entrepreneur in understanding the scope of innovations that can be undertaken. If a totally new product is to be launched then the policy related with advertising, sales promotion, popularizing are to be effectively prepared. A critical analysis of the product in light of the competition to be faced, choices of the customers, extent of the customers, etc. is to be made.
(ii) Evaluation of Use and Application : The present use of the product/service is to be found out. This helps in innovating the existing product and in increasing the dependability on the product.
(iii) Level of Operation : Depending on the nature of the enterprise, the production is undertaken, the enterprise can be small scale, medium scale or large scale industry. Quantity of production is considered. Requirement of labour, technical experts, skilled labour, etc. all are to be considered.
(iv) Cost : The per unit cost of production is different for different level of operations. “Is the cost competitive ?” This is to be answered as the price of the product depends on it.
(v) Competition : The extent, intensity and trends in competition are to be analysed. This has direct impact of production capacity and supply.
(vi) Selection of Technique of Production : Labour intensive or Capital intensive technique–a choice is made between the two. If Capital technique is to be utilized then the availability of skilled labour and their sources are to be ascertained.
(vii) Annual Turnover : The idea of annual turnover is to be examined. This means to determine the market share of the product or service. Fixation of annual turnover has a impact on profit margin.
(viii) Profit Margin : A minimum amount has to be produced for earning minimum possible profit. The calculations regarding break even point are to be kept ready.

Q3. Explain by giving any four points, why market assessment is needed for an entrepreneur. (CBSE 2011, 2008)
Or
Explain any four important aspects to be considered while doing market assessement by an entrepreneur. (5 marks)
Ans. Market assessment is important for an entrepreneur for the following reasons :
(a) Estimating Demand or Demand Analysis : Demand of product or service has to be assured for stabilizing the production process. The size of the categories of consumers, tastes and preferences, etc. are to be kept in mind for fixing the production capacity.
(b) Understanding Supply and Competition in the market : The extent of competitions has a direct impact on the supply of the product. Further, supply can be planned out on the basis of competitions. Financial position has to be accordingly varied and enhanced.
(c) Determing cost of the product : Cost of the product has to be critically analysed as the price of the product is dependent on it. A comparison of cost variables, like wastage, procurement, transportation delay, etc. of the competitors helps gaining upper hand in the competition.
(d) Determing price of the product : Minimising of cost not only helps in keeping the price low but also in maximizing profit.
(e) Helps in project innovations and changes : Existing innovations guide the entrepreneur in creating new innovations in his product. Suitable and favourable changes can be brought in the present product.

Q4. What do you understand by trend spotting ? What are the ways by which entrepreneurs can spot trends ? (TBQ) (6 marks)
Ans. Trend spotting means identification of new trends. It helps the entrepreneur to understand the market and produce goods or provide services in syncronisation with the market trends. Ways by which entrepreneurs can spot trends are as follows :
(i) Read Trends : Entrepreneurs regularly read the leading publications and websites affecting their business.
(ii) Talk Trends : Talking to people is an equally important trend spotting tactic.
(iii) Watch Trends : Entrepreneurs go out in the market place to see what customers want.
(iv) Think Trends : Entrepreneurs absorb and think about what they have read, heard and observed. They start to make connections and observations which lead to business boosting insight.

Q5. Explain the creative process (with a diagram) : (6 marks)
Ans.

(i) Idea germination : This is the seeding stage of a new idea. It is the stage where the entrepreneur recognises that an opportunity exists. The idea germination takes place according to interest, curiosity of the entrepreneur according to which opportunity is explored and exploited to its best potential. Creative idea generates besides the interest, the need of a specific problem or area of study.
(ii) Preparation : On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted. That happens because the seed of curiosity has taken form of an idea, the entrepreneurs forsee the future of the product.
(iii) Incubation : This is the subconscious assimilation of information. This is the transition period. The entrepreneur starts thinking about the idea and implementation in his sub-conscious mind.
(iv) Illumination : In this period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting raw-materials, arranging funds, policy making for the implementation of idea.
(v) Verification : Also called the validation or testing stage. This is where the idea is verified to prove that it has valve. This is to most difficult phase of creativity as obstacles begin to appear. This is the developing stage in which knowledge is developed into application.
(vi) Innovation : It is the process of entrepreneurship which involves the translation of a useful ide a into an application which has commercial value. It takes persistant effort to work out analytically the details of the enterprise or service, to develop marketing strategies, to organise finances and strategize operations.

Value Based Question:
Q. An organization proposes the use of CFLs and LEDs which consumes less electricity than normal bulbs for its lighting arrangements. Which value is attained by the organization ? (3 marks)
Ans.
(i) Save Electricity.
(ii) Reduction in Cost.
(iii) Protection of environment.