Previous Year: Long Questions with Answers - Sources of Business Finance Commerce Notes | EduRev

Business Studies (BST) Class 11

Commerce : Previous Year: Long Questions with Answers - Sources of Business Finance Commerce Notes | EduRev

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Q. 1. Explain the process of entrepreneurship development program.
Ans. 
An entrepreneurship Development Programme consists of three broad stages-
(i) Pre-training Stage.
(ii) Training or Development stage.
(iii) Post-training or Follow-up stage.
(i) I Stage : Pre-training Stage
The first stage of Entrepreneurial Development Programme is the pre-training stage. It includes the preparations required to launch the programme. This stage involves the following main activities :
(a) Creation of Infrastructure for training.
(b) Development of training syllabus.
(c) Selection of faculty.
(d) Designing tools and techniques for selection of trainees
(e) Formation of selection committee.
(ii) II Stage : Training or Development
The process of training helps an entrepreneur in gaining written and practical knowledge and to accept new technology. ED training is usually more effective when linked to finance and other services such as marketing, quality assurance and productivity improvement. During this stage the training programme is implemented to develop motivation and skills among the participants. Some methods of training are:
(a) Lecture method
(b) Individual instructions
(c) Group instructions
(d) Demonstration method
(e) Seminars
(f) Meetings
(g) Conferences, etc.
(iii) III Stage: Post Training or Follow-up
The third stage of Entrepreneurial Development Programme is the post -training stage. This phase involves follow up meeting and a follow up register to ensure the success of the entrepreneurial development programme. It includes preparing and maintaining a separate file for each trainee. Passing the desired information to the entrepreneur well in time.

Q. 2. Write about the administrative setup for small scale, agro and rural industries.
Ans.
Administrative setup for small scale, agro and rural industries is as follows:
(i) The ministry of small scale industries and agro and rural industries has been created by the government of India for formulation of policy for the promotion and development of small scale industries in India.
(ii) In September 2001, this ministry was separated into two ministries i.e., ministry of small scale industries and ministry of agro and rural industries.
(iii) Ministry of agro and rural industries is concerned with designing of policies, programmes and schemes for growth and development of village and khadi industries, tiny and micro enterprises both in urban and rural areas.
(iv) Many development projects and schemes to provide a number of supporting incentives for the development and promotion of small scale industries are executed by the state governments in their respective states.
(v) The schemes are implemented by the State Directorate of Industries.

Q. 3. Write the features of small scale industries (SSI).
Ans.
The features of small scale industries are as follows:
(i) Personal character: SSIs enjoy personal character. It is generally owned by a single entrepreneur or partnership.
(ii) Simple managerial structure: It is managed by owners only. Thus, can reap the benefits of direct motivation, secrecy, flexibility, etc.
(iii) Labour intensive techniques: There is predominance of labour. These units use labour intensive techniques of production instead of mechanised methods of production.
(iv) Local area of operations: The operations of a unit are localised. It depends mainly on local resources but products are exported all over the world.
(v) Simple technology: The machinery and equipment used for production of goods are operated manually and are not very sophisticated.

Q. 4. Jaya, Rohit and Raman are three friends who have completed a vocational course in entrepreneurship after their school education. Finding the job market tough, they were contemplating the idea of setting up a small business using the skills they had learnt in their course. They came across a notification given by the District Industries Centre located near the Industrial Estate in VKIA Jaipur, Rajasthan regarding a seminar on Government assistance for a small business. They attended the seminar and got useful information about Government assistance to SSIs. Jaya decided to open a micro enterprise as a fruit processing in her village. Rohit planned to start business of providing courier services in Jaipur city, Raman planned to start a small shoe manufacturing factory, in backward area of Odisha.
(i) Give the limit of Investment in plant and machinery for Jaya’s small business.
(ii) What is the limit of investment in plant and machinery in case of Service Enterprises according to MSMED Act.
(iii) Why promotion of Small Scale Industries is considered as a powerful instrument for development ?
An
s. (i) Jaya is running micro enterprise of manufacturing nature in which the investment limit in plant and machinery can’t exceed `25 lakh.
(ii) Service Enterprise has following investment limit if it is:
(a) Micro enterprise: Doesn’t exceed `10 lakh.
(b) Small enterprise: More than `10 lakh but doesn’t exceed `2 crores.
(c) Medium enterprise: More than `2 crores but does not exceed `5 crores.
(iii) SSIs are promoted by the Government as a powerful instrument for rural development as SSIs.
(a) Generates employment for rural artisans and seasonal employment for agricultural labour.
(b) Prevents migration of rural population to urban areas.
(c) Accelerates rural industrialisation.
(d) Contributes to socio-economic development of rural areas.
(e) Addresses the problem of poverty, income inequalities.

Q. 5. Explain any six problems being faced by small business in India. (KVS 2013) (NCT 2010)
Ans. 
Following are the main problems faced by small businesses:
(i) Finance: Non-availability of adequate funds in order to carry out business operations is one of the major problems. Due to lack of credit worthiness, many of these units fail to raise funds from the capital market. Banks also hesitate to lend money to these units because many of these units fail to provide adequate collateral security or guarantees.
(ii) Raw materials: Obtaining good quality raw material is another important problem faced by these industries. They have to either compromise on the quality or have to pay a high price to get good quality materials. Bargaining power is relatively low because of the small quantity of purchases made by them.
(iii) Managerial skills: A small business is established and managed by a single individual. Hence, he/ she may not possess all the managerial skills needed to run the business. Due to shortage of funds, they cannot afford to employ professional managers.
(iv) Labour: Due to shortage of funds, these enterprises are not in a position to afford high salaries to the employees. As a result, the productivity per employee is low and the rate of labour turnover is high. Therefore, attracting talented and skilled employees is a major problem faced by these units.
(v) Marketing: In many small scale units, marketing is a weak area. Direct marketing is not feasible for these units since they lack the necessary infrastructure. Hence, they have to depend on middlemen who sometimes exploit them by paying low prices and delaying the payments.
(vi) Sickness: Many of these units are becoming sick because of various internal and external problems. Lack of talented and skilled labour and managerial and marketing skills are the various internal problems while delayed payments, inadequate loans, lack of demand for their products, etc. are various external problems faced by these units.

Q. 6. Explain the role of small business in India.
Ans.
The role of small business in India is as follows:
(i) Major portion in industrial units: About 95% of the industrial units in the country consists of small industries and 40% of the total industrial output is contributed by these industries. 45% of the total exports (direct and indirect) from India are contributed by them.
(ii) Low cost of production: The cost of production in these industries is very low. Because of low overhead expenses, both establishment and running costs are low.
(iii) Quick decisions: Small size of the organisations enables the business firms to take quick and timely decisions and to capture new business opportunities at the right time.
(iv) Good personal relations: Inherent strengths like adaptability and personal touch enables the small scale industries to maintain good personal relations with both the customers and the employees.
(v) Simple and flexible production techniques: Simple and flexible production techniques are used by these enterprises which make them very much suitable for customised production, which means designing a product according to the tastes, preferences and requirements of the customers.
(vi) Second largest employment provider: After agriculture, these industries are the second largest provider of employment in India. As compared to large industries, they generate more number of employment opportunities per unit of capital invested. Hence, these industries are a boon for an overpopulated country like India.

Q. 7. What are the incentives provided by the government for setting up industries in backward and hilly areas ?(KVS 2014)
OR
What are the incentives provided by the government for small scale business ?(NCT 2010)
OR
Explain any six incentives being provided by central/state government for setting up small the business units in backward areas. (NCT 2009)
Ans.
The incentives provided by the government are as follows:
(i) Land: Developed plots are offered by every state for establishing industries.
(ii) Power: Some states supply power at a concessional rate of 50%, while some give it free of cost during the initial years.
(iii) Water: Water is either supplied at 50% concession or is totally free for a period of 5 years.
(iv) Finance: Small business units are offered loans at a very low rate of interest i.e. 10 to 15% subsidy is given for building capital assets.
(v) Raw material: Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials like cement, iron, steel, etc.
(vi) Octroi: Many states have abolished Octroi

Q. 8. Discuss the institutional support provided by the government to small business.
Ans.
The institutional support provided by the government are as follows:
(i) National Bank for Agriculture and Rural Development (NABARD):
(a) This bank was established in the year 1982 with the main aim to promote rural development. It has designed and implemented many strategies and schemes for the development of rural business.
(b) Besides agriculture, it supports cottage and rural industries and rural artisans by offering counselling and consultancy services and easy credit facilities.
(c) It also organises training and development programmes for rural entrepreneurs.
(ii) The Rural Small Business Development Centre (RSBDC):
(a) This centre was established by the World Association for Small and Medium Enterprises. (WASME) NABARD sponsors this centre.
(b) The main objective of this centre is to provide management and technical support to current and prospective entrepreneurs in rural areas.
(c) Several programmes on rural entrepreneurship, mobile clinics and trainings, awareness and counselling camps, etc. have been organised by RSBDC in various villages.
(iii) The National Commission for Enterprises in the Unorganised Sector (NCEUS): It was set up in September 2004. Following are its main objectives:
(a) To create more employment opportunities particularly in the rural areas.
(b) To increase the competitiveness of the small units in the emerging global environment.
(c) To recommend measures for improving the productivity of small enterprises in the informal sector.
(iv) Rural and Women Entrepreneurship Development (RWED):
(a) The main objective of this development programme is to promote a conducive business environment and to build institutional and human capacities that will encourage the entrepreneurial initiatives of rural people and women.
(b) To create a business environment in order to encourage initiatives from rural and women entrepreneurs.
(c) To enhance human and institutional capacities needed to develop entrepreneurship ability and hence increase productivity.

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