Short Answer Type Questions
Q. 1. What is the need of entrepreneurship development?
Ans. Entrepreneurship development aims at individuals who want to start or possibly expand a business
(i) Entrepreneurship development programmes motivate people to establish new business which in turn creates employment opportunities.
(ii) It helps in formation of capital.
(iii) Entrepreneurship development programmes aids in formulation of projects.
(iv) It helps in distributing economic activities in all the areas of the country thus resulting in balanced regional growth.
(v) It also helps the entrepreneur to use local resources
(vi) Entrepreneurship development programmes help in creating employment opportunities which in turn leads to improvement in standard of living.
Q. 2. Define Entrepreneurship Development. State the stages of entrepreneurship development program.
Ans. Entrepreneurship development program is the process of improving the skills and knowledge of entrepreneurs through various training and programs. An Entrepreneurial Development Programme consists of three broad stages:
(i) Pre-training Stage.
(ii) Training or Development stage.
(iii) Post-training or Follow-up stage.
Q. 3. What is Start up India Scheme?
Ans. Start up India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Start ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Start ups to grow through innovation and design.
Q. 4. State and explain any six features of cottage industries.
Ans. The features of cottage industries are as follows:
(i) Simple equipment: Simple equipments are used in the production of goods.
(ii) Indigenous technology: Indigenous technology is used for producing goods.
(iii) Individuals: The industries are organised by individuals having private resources.
(iv) Investment: Small amount of capital is invested in the production.
(v) Simple products: Production of simple products in their own premises.
(vi) Family labour: Cottage industries use family labour and locally available talent.
Q. 5. Explain the classification of small scale industries according to the MSMED Act, 2006.
Ans. As per the MSMED Act, 2006, small enterprises are classified into manufacturing and service enterprises based on their investment in plant and machinery or equipment (excluding land and buildings) as indicated below:
(i) Micro enterprise: Investment limit is upto ₹25 lakhs in case of a manufacturing unit and it is ₹10 lakhs in case of a service unit.
(ii) Small enterprise: For manufacturing units, more than ₹25 lakhs and upto ₹5 crores. For service unit more than ₹10 lakhs and upto ₹2 crores.
(iii) Medium enterprise: In case of manufacturing unit more than ₹5 crores and upto ₹10 crores and in case of service unit more than ₹2 crores and upto ₹5 crores.
Q. 6. ‘Protection of small-scale industries (SSI) by the Government is essential for equality of opportunity’. Comment.
Ans. The given statement is correct. Small-scale industries occupy a very important place in the industrial structure of the country. However, they cannot compete with the big industrial firms. They can flourish only when they are protected from the large firms. The government has reserved production of a number of products for the small scale industry. Moreover, small-scale industries were also given concessions, so steps taken by the Government for their growth are justified.
Q. 7. Explain the role of small business in rural India.
OR
“Small industries are small in size but play a big role in development of rural areas”. Explain the role of small inquiries in rural areas.
Ans. The role of small business in rural India is as follows:
(i) Employment opportunities: Cottage and rural industries create a lot of employment opportunities in the rural areas especially for the traditional artisans and the weaker sections of society.
(ii) Prevents migration: Establishment of these industries in the rural areas prevent migration of rural population to urban areas in search of employment.
(iii) Reduces inequalities: Cottage and rural industries help in reducing inequalities in income, disperse development of industries and establish link with other sectors of the economy.
Q. 8. Explain any three problems faced by small scale business in India.
Ans. The problems faced by small scale business are as follows:
(i) Quality: The weakest point of small scale units is maintaining the quality. These business firms have neither adequate resources to invest in quality research nor the expertise to upgrade technology for improving the quality of their products.
(ii) Technology: The technology used by these firms is usually outdated. As a result, the production is uneconomical and low.
(iii) Capacity utilisation: Many small business firms have to operate below full capacity due to lack of marketing skills or lack of demand. This increases their operating cost and may result in even closure of the business.
Q. 9. Do you think small business units can survive in a competitive market? Explain any three factors which make way for the scope of small business enterprises.
Ans. Yes, small business units can survive in a competitive market. Factors which make way for the scope of small business enterprises are as follows:
(i) Limited resources: Individuals with entrepreneurial spirit but with limited economic means and resources always have an option of starting a small business.
(ii) Flexibility: Small firms are usually owneroperated and this allows them to expand or reduce the scale of operation, try new products, new ideas without requiring lengthy approval procedures.
(iii) Personal touch: Small enterprises are more likely to succeed in areas requiring personal touch in handling customers.
Q. 10. Why is there scope for SSI in developing countries like India?
Ans. Developing countries face the problem of massive unemployment, shortage of finance, unutilized idle resources, regional disparities, lack of industrialisation, dependence on agriculture for livelihood etc. SSIs prefer techniques of production which require less capital and more labour, uses simple technology, can be widely spread without locational constraints, depends on locally available resources, can broaden the industrial base thus addressing the major problems of developing countries. Thus, SSI have immense scope in developing countries.
Q. 11. Write a short note on SIDBI.
Ans. Small Industries Development Bank of India has been set up as an apex bank. The main functions of SIDBI bank are as follows:
(i) To provide both direct and indirect financial assistance to small business units in order to meet their requirements.
(ii) To coordinate the functions of other institutions engaged in similar activities.
(iii) SIDBI has formulated CGFT (Credit Guarantee Fund Trust) to provide guaranteed loan upto ₹10 lakhs.
Q. 12. Write a short note on National Small Industries Corporation (NSIC).
Ans. National Small Industries Corporation (NSIC) was established in the year 1955 in order to promote, aid and foster the growth of small business units in the country. The functions of NSIC are as follows:
(i) To create awareness about technological up gradation.
(ii) To develop technology transfer centres and software technology parks.
(iii) To export the products of small business units in order to develop export worthiness.
(iv) To obtain, supply and distribute indigenous and imported raw materials.
(v) To provide mentoring and advisory services.
(vi) To serve as technology business incubators.
NSIC has also introduced a new scheme of performance and credit rating for small businesses in order to encourage them to maintain good financial track record and to sensitise them about the need for credit rating.
Q. 13. Explain any two special schemes for developing industries in rural, backward and hilly areas.
Ans. Two special schemes for developing industries in rural, backward and hilly areas are as follows:
(i) Priority financing: Under this scheme, Commercial banks, co-operative banks, regional rural banks, KVIC and state financial corporations advance loans to small businesses operating in the above said areas.
(ii) Provision of land and industrial sheds: For establishing industries in rural, backward and hilly areas, the government provides land and industrial sheds for industrial purpose at concessional rates.
Q. 14. Name the organisation which registers local small scale industries and maintains their records. Explain any its of three roles.
Ans. The name of the organisation is District Industries Centre. The roles played by DIC are as follows:
(i) Preparing industrial profile of the district with respect to information about small scale industrial units working in the district in different forms: small, tiny, medium, large and cooperative sectors.
(ii) Assessing local raw materials, manpower availability.
(iii) Assessing availability of various infrastructural facilities and preparing techno-economic feasibility reports on various products which may be produced locally.
Q. 15. ‘Non availability of finance to buy input and plant and machinery deprives many new entrepreneurs from availing opportunities.
(i) Identify the government Institution established to cater to this need of entrepreneurs,
(ii) Mention any three functions of this institution.
Ans. (i) This Institution is NSIC.
(ii) Three functions of NSIC are as follows:
(a) It supplies imported machines and raw material to SSI on hire purchase scheme.
(b) Provides help in up gradation of technology.
(c) It exports the product of small units.
Q. 16. Enlist any three functions performed by NCEUS.
Ans. (i) Provision of micro finance and related services to informal sectors.
(ii) Providing social security for the workers in informal sector.
(iii) Creates growth poles for the informal sector in the form of clusters in order to get external economic aid.
Q. 17. What are the different parameters used to measure the size of business?
Ans. The various parameters used to measure the size of business are :
(i) Number of persons employed in the business,
(ii) Capital invested in the business,
(iii) Volume or value of output of business
(iv) Power consumed for business activities
Q. 18. What is the definition used by Government of India for Small Scale Industries?
Ans. The definition used by the Government of India to describe small industries is based on the investment in plant and machinery .The capital limit of a small scale manufacturing unit is more than ₹25 lakhs and up to ₹5 crores and in case of a service unit more than ₹10 lakh, and upto ₹2 crores.
Long Answer Type Questions
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 ?
Ans. (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.
