Short Type Questions - Enterprise Growth Strategies, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download

Q1. What is value addition ? Explain by giving examples. (TBQ) (3 marks)
Ans. Businesses add value to goods and services by modifying them in a particular way to create a new product of greater value to customers. This is called value addition, e.g., :
(i) Turning cotton into fabric,
(ii) Designing a mobile phone that can also take photographs.

Q2. What are the requirements of value chain analysis ? (3 marks)
Ans.
(i) Coordination and collaboration.
(ii) Technology investment.
(iii) Organizational process.
(iv) Leadership.
(v) Employee/Human resources.
(vi) Organizational culture and attitudes.

Q3. State the areas of primary activities and supporting activities : (4 marks)
Ans.
Primary activities :
(i) Inbound logistics.
(ii) Operations.
(iii) Outbound logistics.
(iv) Marketing and sales.
(v) Service Supporting activities :
(i) Procurement.
(ii) Technology development.
(iii) Human Resource Management.
(iv) Infrastructure.

Q4. Explain the steps to be performed in value chain analysis. (4 marks)
Ans.
(i) Analysis of own value chain : Measure cost related to every single activity and value it is adding.
(ii) Analysis of customer value chain : How does our product fit in the values expected by customers from our products.
(iii) Identification of potential cost advantages in comparison with competitor.
(iv) Identification of potential value added for the customer, i.e., how our product is giving more value than competitor.

Q5. How value addition effect the profit margin ? (3 marks)
Ans. Margin implies that organization realise a profit margin. This profit margin depends upon organization’s ability to add value at every activity. If more and more value is added at every activity, the customer will be willing to pay higher price and company’s profit will increase.