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

Q1. What is an Operational Plan ? Discuss its blue print ? (6 marks)
Ans. Operational plan is a system whereby there is achieved a smooth and cordinated flow of work within the business. The operational plan focuses on the critical operating factors.
Following are the elements of operational plan :
(i) Routing : It is a process which determines the exact path a product has to follow right from raw material till its transformation into finished product.
(ii) Scheduling : It means fixation of time, date & day when each operation has to be commenced.
(iii) Follow-up : It relates to evaluation and appraisal of work performed.
(iv) Dispatching : It involves issuing necessary order, instructions and guidelines, etc.
(v) Inspection : Inspection is the art of comparing materials, product or performance with the established standards.
(vi) Shipping : It describes the flow of goods/services from production level to the ultimate consumers. It is the detailed presentation by the entrepreneurs explaning the steps in completing the business transaction profitably.

Q2. What is a Financial Plan ? What are its objectives ? (5 marks)
Ans. Financial plan is a process of determining firm’s financial needs or goals for the future and the means to achieve them.
Objectives of a financial plan are as follows :
(i) To access the amount of finance required by the enterprise.
(ii) To safeguard the enterprise from financial risk.
(iii) To develop suitable capital structure for the enterprise.
(iv) To make policies related with finance.

Q3. A production plan helps to plan the work in such a manner that one can clearly form an idea about some aspects. Name some of them.
Or
How is production plan helpful ? (5 marks)
Ans. A production plan helps to plan a work in such a manner that one can clearly form an idea about :
(i) Production schedule.
(ii) Machinery, equipment requirement.
(iii) Plant layout.
(iv) Inventory requirement.
(v) Manpower requirement.
(vi) Process involved in manufacturing.
(vii) Time and work study.

Q4. Enlist the activities included in the operation plan. (6 marks)
Ans. Operation plan includes :
(i) Flow of Material : It ensure orderly flow of material in the manufacturing process from the beginning to the end.
(ii) Continuity : Facilitating continuous production, less work-in-process and minimization of wastage.
(iii) Co-ordination : Co-ordinating the work of various department of the organization.
(iv) Flow of Goods : Describing the flow of goods/services from production level to the ultimate consumers.
(v) System : Introducing a proper system of quality control.
(vi) Economic Production Policy : Undertaking the best and most economic production policies and methods.

Q5. Describe the contents of an organizational plan. (6 marks)
Ans. Contents of an organizational plan are as follows :
(i) The term and conditions associated with the selected form.
(ii) Lines of authority and responsibility of members of the new venture.
(iii) The names, designation, addresses and resumes of the new venture.
(iv) Stake of members in the organization.
(v) Roles and responsibilities of each member.
(vi) Procedure for solving conflicts/disputes amongst members.
(vii) Forms of payment for the members of the organization.
(viii) Voting rights, managerial and controlling rights of the members.

Q6. What is a business plan ? Explain its importance. (6 marks)
Ans. Business plan is a comprehensively written down document prepared by the entrepreneur describing formally all the relevant external and internal elements involved in starting a new venture.
Importance of the business plan :
(i) If helps in determining the viability of the venture in a designated market.
(ii) It helps in providing guidance to the entrepreneur in organizing his planning activities such as :
(a) Identifying the resources required.
(b) Enabling obtaining of licenses if required.
(iii) Helps in satisfying the queries, issues and concerns of each group of people interested in the venture.
(iv) Provides room for self-assessment and self evaluation, requiring entrepreneur to think various scenarios and plan ways to avoid obstacles.
(v) Though not desirable, at times, business plan helps to realize the obstacles which cannot be avoided or overcome.
(vi) Business reflects the entrepreneurs credit history, the ability to meet debt and interest payments, thus business plan serving as an important tool in funds procurement.

Q7. What is manpower planning ? Why is it necessary for every business unit ? (6 marks)
Ans. Manpower planning is a process by which an entrepreneur ensures that he/she has the right number of people and right kind of people with appropriate skills, at the right place and the right time to do work for which they are economically most suitable.
It is necessary for every business unit or it helps to access :
(i) What kind of people are required ?
(ii) How many people are required ?
(iii) How will they be selected ?

Q8. What are the features of an efficient marketing strategy ? (6 marks)
Ans. Marketing is a set of activities of an enterprise that are related with acquiring and maintaining market for the firm’s product and for ensuring that the finished product reaches timely to market.
Following are the features of an efficient marketing strategy :
(i) Sufficient but effective advertising.
(ii) Capable of creating market need.
(iii) Make the product easily reachable for customers.
(iv) Providing the best quality of the product to customers.
(v) Effectiveness with respect to cost.
(vi) User friendly product.
(vii) Provides scope for feedback.

Q9. Explain the factors affecting the formulation of a financial plan ? (5 marks)
Ans. Financial plan deals with deciding in advance about the future spending. The formulation of plan is affected by following factors :
(i) Clarity of objectives : A good financial plan has clearly defined objectives. The objectives are expressed in terms of money or quality of products, objects.
(ii) Simple : A good financial plan is simple to understand and implement. It is made simple by consi dering various factors related with the enterprise.
(iii) Flexibility : A good financial plan has a scope for making changes in the future. The plan is made flexible considering future obligations and future plans of the enterprise.
(iv) Risk : A good financial plan keep sufficient scope for the calculated risk rather than to say it is made by keeping the level of risk of the organization.

Q10. What step should be taken after assessing number and types of manpower ? (6 marks)
Ans. After assessing the number and types of manpower, the next step in manpower planning is to decide the strategies, methods, policies, rules and regulations to procure the personnels. It involves :
(i) Recruitment.
(ii) Selection.
(iii) Training.
(i) Recruitment : It refers to inducing the prespective candidates to apply for job. In this, the organization searches for suitable candidates and induces them to apply for job.
(ii) Selection : It refers to choosing the most prominent and suitable candidates to perform the job.
(iii) Training : It refers to equipping the employees with the neccessary skill to perform the job.

Q11. What do you mean by price ? Explain any two pricing strategies. (6 marks)
Ans. Price is the value which the buyer passes to seller in lieu to goods or services.

Two pricing strategies are :
(i) Price Skimming : Under this strategy, a high introductory price is charged for an innovative product and later on the price is reduced when more marketers enter the market with same type of product. Generally, innovators use price skimming stragety to get reward for their research and development.
(ii) Penetration Pricing : This strategy means lower initial price to capture a large market. This forces the custom ers to buy the product and company can capture a very big share and leave very small share for competitors.

Q12. What are the product related factors which affect the choice of a channel of distribution of a commodity ? (6 marks)
Ans. Following are the product related factors which help in deciding the channel of distribution :
(i) Value of Product Line : If the unit value of product is high or if a product is expensive, direct sale from company is preferred while for less costly products, longer channels are preferred.
(ii) Product Complexity : Technically complex product requires expert advice and guidance so direct sale is preferred whereas for simple product longer channels can be used.
(iii) Nature of Product : The customised product or product produced according to instruction of customers require direct interaction of buyer and seller and so no intermediary, whereas standardized product could be sold by using various intermediaries.
(iv) Perishable or Non-perishable Product : Direct selling is used for perishable product whereas non-perishable could be distributed with long channel.

Q13. What are the company related factors, competitive factors, and environmental factors which affect the choice of channel of distribution ? (6 marks)
Ans. Company Related Factors :
(i) Finance : A company which has no financial problem should prefer direct sale while financially weak firms depend upon distribution channels or intermediaries.
(ii) Degree of Control : The firms wanting tight control over the distribution prefer short path or direct sale but firms which do not mind sharing the control appoint intermediaries for sale.
Competitive Factors : A company may select the same channel as selected by the competitor or sometimes the businessman prefers not to select the channel selected by competitor.
Environmental Factors : Environmental factors include trade policy, economic policy, etc. For example, in depressed economy shorter channels are preferred to distribute goods in an economical way.

Q14. Explain the Market Related Factors for the selection of channel of distribution. (6 marks)
Ans. Following are the market related factors :
(i) Nature of Market : In industrial market, direct selling is preferred, whereas in consumer market distribution channels are appointed.
(ii) Size of the Market : If the number of customers are large then more intermediaries are used whereas when market consists of small number of consumers then short or direct channels are used.
(iii) Geographical Concentration : When buyers are concentrated in a limited area direct selling is preferred. If customers are scattered then more channels are used.
(iv) Quantity Purchased : If order size is big then direct supply from firm is preferred whereas for small orders retailers are preferred.

Q15. Write a note on promotion. (6 marks)
Ans. The promotion element of marketing mix is concerned with activities that are undertaken to communicate with customers and distribution channels to enhance the sale of the firm. The promotional communication aims at informing and persuading the customer to buy the product and informing him about the merits of the products.
Promotion mix refers to all the decisions related to promotion of sale of products and services. The important decisions of promotion mix are selecting advertising media, selecting promotional techniques, using publicity measures and public relations, etc. There are various tools and elements available for promotion. These are adopted by firms to carry on its promotional activities. The marketer generally chooses a combination of these promotional tools.
Following are the tools or elements of promotion :
(i) Advertising.
(ii) Sales promotion.
(iii) Personal selling.
(iv) Public relation.

Q16. Explain the steps in preparing the marketing plan. (6 marks)
Ans. Procedure for preparing the marketing plan involves the following steps :
(i) Business Situation Analysis : This helps in finding out “where we have been” Existing organizations review past performance and achievements of the enterprise but now ventures focus on :
(a) Personal profile of the entrepreneur.
(b) Emphasis on product development.
(c) What need it satisfies.
(d) Any other enterprise/experience of the entrepreneur.
(e) Any other market segmentation if planned.
(ii) Identify the Target Market : Target market refers to the group of customers who will be our potent ial buyers. Divide the target customers into smaller groups as per consumers characteristics and buying situations and then develop a marketing plan integrating product, price, plan and promotion.
(iii) Conduct SWOT Analysis : The entrepreneur must consider in the target market his enterprise’s :
(a) Strength
(b) Weakness
(c) Opportunities
(d) Threats
(iv) Establish Goals : Goal is the aim of an enterprise. A firm must set SMART goals.
(v) Define Marketing Strategy : The marketing strategies involve action plan and decisions related to four P’s i.e., product, price, place and promotion.
(vi) Implementation and Mointoring of the Plan : It is important for an entrepreneur to be flexible and be prepared to make adjustments if necessary in the plan.

Q17. Explain two components of Human Resource Plan. (6 marks)
Ans.
(i) Estimating Type of Manpower Planning : Human Resource Planning begins with the estimation of manpower requirement which means finding out the number and type of employees needed by the organization in near future. Manpower requirement not only includes finding out number of people needed but also the type of people required. Type means what should be the qualification, educational background of the people whom we need to appoint. While assessing the type of manpower required, company should also make policy regarding the number of people to be appointed from backward classes, women force, minority, etc.
(ii)  Procuring Personnel : It includes :
(a) Recruitment : It refers to inducing the prospective candidates to apply for job. In this, the organization searches for suitable candidates and induces them to apply for job. The end result of recruitment is recieving applications for jobs.
(b) Selection : It refers to choosing the most prominent and suitable cadidates to perform the job. It involves conducting test, interviews so that suitable candidates can be selected.
(c) Training : It refers to equipping the employees with the necessary skill to perform the job. It also includes overall growth and development of employees.

Q18. Explain the essential areas to be covered while creating a plan. (6 marks)
Ans. Essential areas to be covered while creating a plan are :
(i) Executive Summary : This is the most important section of a business plan. It is often written last but placed at the front of business plan. It must be written carefully. It is a shapshot of the entire business plan. It gives the main points of entire business plan. Executive summary should include the following information :
(a) A brief description of the industry and market environment in which business opportunities will flourish.
(b) The uniqueness of business opportunity and the key strategies for success.
(c) Profile of the company’s team.
(d) Financial requirement and budget allocation.
(e) The anticipated risks and reward of the business.
(ii) Background of Company : It includes a brief history of the company and outline of company’s objective.
(iii) The Product or Service : This explains the company’s product or service. This emphasis on :
(a) Unique Selling Price (USP) of the product.
(b) Stage of development of product.
(c) Patent, trademark and other legal protection of the product.
(iv) Market Analysis and Business Strategy : This section provides the SWOT Analysis. It includes :
(a) What is your share in the market, who are your competitors, what are your strengths and weaknesses.
(b) Distribution channels : Direct or Indirect distribution channel.
(c) Explain historic problems faced by the company and how they overcome such problems. Assess future potential problems and how they will be tackled or avoided.
(v) Management Summary : This section of plan demonstrates that company has quality of management team, who have ability to turn the business plan into reality as without the right management team no other matter can be carried on successfully. This section must include :
(a) Special abilities and attributes of senior managers and highlight how they brought success in previous ventures.
(b) List of your advisor and board of directors.
(c) Your organization’s structure.
(vi) Marketing Plan : This plan includes :
(a) Sale and marketing strategy.
(b) Pricing strategy.
(c) Branding strategy.
(d) Promotion strategy, etc.
(vii) Operational Plan : This focuses on :
(a) Operating factors.
(b) Methods of converting raw material into finished products.
(c) Stages of operating cycle.
(d) Quality standard set up during operating cycle, etc.
(viii) Financial Plan/Financial Projections : Financial plan includes :
(a) Realistic assessment of sale, cost, working capital, cash flow.
(b) Budget statements.
(c) Estimating the amount of capital required.
(d) Sources of capital.
(ix) Appendix : This section of business plan contain the documents attachment. It includes :
(a) Market survey report.
(b) Financial projection report.
(c) Photography.
(d) Organizational chart.
(e) Flow charts, technological specifications, etc.

Q19. What are the factors to be considered before starting a business ? (6 marks)
Ans. The basic factors to be kept in mind before starting a business are :
(i) Selecting the Line of Business : Entrepreneur has to decide the line and type of business he wants to start, whether he wants to set up an industry or involve himself in commercial activities. This decision is taken by analysing the market, customer demand and technology required to carry on the business. Entrepreneur must select the business for which there is more demand and availability of technology.
(ii) Scale or Size of the Business : After deciding the line of business, the businessman must decide whether he wants to set up a large-scale or small-scale business. Before taking this decision, entrepreneur must find out his capacity to arrange capital, demand and scope of business. If he can easily arrange a large amount of capital and there is large scope for expansion of business, then he may plan to set up large-scale business whereas if market conditions are risky then he must start with small scale.
(iii) Choice of Form of Business Organization : The next decision which must be taken by the entrepreneur is finalising the form of business i.e., whether to set up sole proprietorship, partnership or joint stock company. This decision depends upon various factors such as amount of capital, liability, personal touch, legal formalities, etc.
(iv) Location of Business Unit : Entrepreneur must decide the location of office or production unit. Before taking this decision, he must find out availability of raw materials, power, labour, banking, transportation, communication, etc.
(v) Financial Requirement : After deciding the form of business organization, the businessman must analyse the amount of capital he might require to buy fixed assets and the amount required for working capital. After estimating the financial requirement, he must also finalise the various sources from where he will arrange that amount i.e., whether to take loan or issue shares, debentures, etc.
(vi) Physical Facilities : Along with the availability of raw materials, he must decide the type of machinery, equipments and other physical assets required. This decision depends upon the size, scale and type of business activities he wants to carry on.
(vii) Competent and Committed Workforce : Entrepreneur has to finalize the type of and number of employees he will require. He must find out whether he requires skilled or unskilled employees. Along with number and type of employees, he must also decide the ways and means to train and motivate the employees.
(viii) Plant Layout : Plant layout is drawn to show the arrangement of physical assets. Layout means physical arrangement of machines and equipments needed to manufacture a product.
(ix) Tax Planning : Entrepreneur must try to analyse the types to taxes he will have to pay.
(x) Setting up the Enterprise : The entrepreneur must launch and set up the enterprise after arranging all the resources and completing the legal formalities.

Q20. What are the key areas, for a sound financial plan to work ? (TBQ) (6 marks)
Ans. Finance is one of the most important pre-requisites to establish an enterprise. Avaibality of finance facilitates the entrepreneur to bring together man, material, machines and methods to produce goods/services.
As timely availability of funds in right volume is key to entrepreneurial success, the entrepreneur should develop a sound financial plan discussing :
(i) Financial requirements.
(ii) Sources of raising funds.
(iii) Exact assessment of the revenue, cost, profits, cash flow dynamics, stock of inventory, loans, etc.

Q21. What is a marketing plan ? Why is it required in business enterprise ? (TBQ) (6 marks)
Ans. Marketing plan is a guideline regarding the marketing objectives, strategies and activities to be followed by any enterprise. It is required in business enterprise as it represents a significant element in the business plan for a new venture as it effectively establishes how the entrepreneur will complete the operations in the market place by providing answer to the following questions :
(i) Where have we been ?
(ii) Where do we want to go ?
(iii) How do we go there ?