Short Answer Type Question- Entrepreneurial Planning | Entrepreneurship Class 12 - Commerce PDF Download

Forms of Business Organization

Question.1: What is PAN ? Why is it required ?

PAN stands for Permanent Account Number. PAN is a ten digit alpha numeric number, issued by the Income Tax Department. PAN enables the department to link all financial transactions of the ‘person’ who has obtained PAN with the department.

Question.2: Explain any three characteristics of a Company.

Characteristics of a Company:

1. Voluntary association: At least two persons, voluntarily, must join hands to form a private company, while a minimum of seven persons are required for a public company.
2. Artificial person: A company is created by law. Though, it has no body and no conscience, it still exists as a person, having a distinct personality of its own. Because like a human being it can buy, sell and own property, sue others, be sued by others, hence called as an artificial person.
3. Separate legal entity: A company has an independent status, different from its members. This implies that a company cannot be held liable for the actions of its members and vice-versa. Company has a distinct entity separate from its members.
4. Common seal: Being an artificial person, company cannot sign the documents. Hence, it uses a common seal on which its name is engraved. Putting the common seal on papers is equivalent to that of signatures of a human being, making them binding on the company.
5. Limited liability: The liability of the shareholders of a company is normally limited to the amount of shares held or guarantee given by them.
6. Transferability of shares: No shareholder is forever wedded to the company. Subject to certain conditions, the shares are freely transferable. The private companies do impose some restrictions on the transfer of shares.
7. Diffusion of ownership and management: In this form of organisation, entrepreneur should clearly understand that there exists separation of ownership from management.
   As the Shareholders could be scattered across the country, they give the right to the directors to manage the company’s affairs.

Question.3: What are the two conditions for existence of Joint Hindu Family Business?

The two conditions are:

1. Minimum two male members must be there in the family.
2. Existence of some ancestral property.

Question.4: Vineet, Vipul and Virad were good friends. Each had property of ₹5 lakhs, ₹4 lakhs and ₹6 lakhs respectively. They started a business of exporting ready-made garments in the name of V3 friends and decided to share profits equally. They were earning good profits and thus decided to diversify their business. For this, they took a loan of ₹10 lakhs from ‘Vishad Finance Ltd’. Suddenly they incurred heavy losses in their business and was not in a position to repay the loan. ‘Vishad Finance Ltd’. filed a case against V3 Friends. Before the decision of the court, Virad transferred his share in the name of his son - ‘Kavi’ without the consent of Vineet and Vipul. The court ordered to recover the loan amount from the private property of Vineet, Vipul and Virad.

(i) Name the form of business organisation run by Vineet, Vipul and Virad.

(ii) Identify and explain the two characteristics highlighted in the above para of the identified business organisation.

1. Partnership is the form of organisation run by Vineet, Vipul and Virad.
2. (a) Profit sharing: The objective of the partnership business is to make profits and distribute the same amongst partners as per the agreement between them.
   (b) Unlimited Liability: Liability of the partners of a firm is unlimited. Their personal properties can be disposed off to pay the debts of the firm if required.

Question.5: Rajiv and Ramesh entered into a verbal agreement to form a firm. They agreed to share its profits. Their business was running smoothly. One day a dispute arose between Rajiv and Ramesh regarding the profit sharing ratio. Rajiv decided to move the court and enforce his rights against the firm and Ramesh.
Will Rajiv succeed? Give reasons in support of your answer.

No, because the firm is not registered and the partners of an unregistered firm cannot enforce their rights against the firm and other partners.

Question.6: Hemant was engaged in toy manufacturing business and was earning good profits. Out of his profit, he purchased two houses in a good residential locality.
Nimesh, Hemant’s friend asked him to sell one of his houses to him as Nimesh was in need of the same. Hemant agreed and sold one of his houses to Nimesh at a good profit.
Giving reason in support of your answer, state whether the sale of house by Hemant will be treated as business. State any two essential features of a business.

No, the sale of house by Hemant cannot be treated as business as sale of house is not done regularly one time transaction is not business.

Two essential features of a business are :

1. Profit earning: Profit is the reward for undertaking a business activity without it a business can’t survive.
2. Economic activity: Business is an economic activity done with an objective to earn profits.

Question.7: Ashok is engaged in the production of ready-made garments using cotton cloth. Identify the business activity in which Ashok in involved. Also name and define the utility created by Ashok.

Form utility. 

Changing the form of raw material into finished products creates form utility.

Question.8: The business assets of an organization amount to ₹50,000 but the debts that remain unpaid are ₹80,000. What course of action can the creditors take if:

1. The organization is a sole proprietorship firm.
2. The organization is a partnership firm with Anthony and Akbar as partners. Which of the two partners can the creditors approach for repayment of debt? Explain giving reasons.

1. They can claim over the personal property of sole proprietor as his liability is unlimited.
2. Creditors can approach both Anthony and Akbar and they are liable to pay back in their profit sharing ratio but in case one of the partners becomes insolvent then creditor can claim from other partner also.

Question.9: What is meant by business? List the different categories in which business activities can be classified.

Business is a continuous human economic activity with an objective to earn profit by production, buying and selling of goods and services.
Business can be classified in three broad categories:

1. Manufacturing: It includes all those processes which lead to production of goods/merchandising using human and/or mechanical power. It means conversion of raw material into finished goods by use of machines tools, mechanical processing along with labour.
2. Service: Services are those separately, identifiable essentially intangible activities which provide want satisfaction. This service sector includes commercial firms engaged in banking, transport, insurance etc.
3. Trading: Trading is buying or selling or exchanging goods or services for value/price.

Question.10: When should an entrepreneur choose company form of business organization ? List any four points.

An entrepreneur should choose a company form of business organisation provided his/her:

1. Venture is heavy and basic industry type.
2. Large scale operations are involved.
3. Business requires huge funds.
4. Enterprise involves heavy risk.

Question.11: What is meant by ‘Partnership’? State the consequences of non-registration of a partnership firm.
OR
Deepak and Gaurav joined the prestigious law university in Ahmedabad in the year 2010. During the course of study they became good friends and they both realized that their common interest lies in the field of corporate law. After completion of their degree they decided to start a firm of corporate of their own, namely ‘Corpo Law Firm’ wherein both of them will be co-owners dividing the profit and loss. After successfully running the firm for a year, they realized that there are certain rights which are denied to their firm as it is not registered.

Explain the consequences of non-registration of their firm.

Meaning of Partnership: “A partnership is a relationship between persons, who have agreed to share the profits of a business carried on by all or any of them acting for all.”

According to Indian Partnership Act, 1932, consequences for non-registration of a partnership firm are:

1. A partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or any right conferred by the Partnership Act.
2. A case cannot be filed against a third party for claiming any right conferred by a contract.
3. The firm or any of its partners cannot claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.

Question.12: What is TAN ? Who must apply for TAN ?

TAN (Tax Deduction and Collection Account Number) is a 10 digit alpha numeric number required to be obtained by the persons who are responsible for deducting or collecting tax at source on behalf of tax department.

Question.13: State any two types of utilities created by business activities.

Two types of utilities created by business are :

1. Form utility: changing the form of raw material into finished products creates form utility.
2. Place utility: from the place of production, transporting goods to the place of consumption results in place utility.

Question.14: Two years ago Gopal started manufacturing low fat, sugar-free ice-cream on a small scale basis in his home town, Vishakhapatnam. After some time, his ice-cream became popular among health conscious young customers and old persons specially those having diabetes or some heart ailment. Because of the popularity of the ice cream the demand has increased many fold. Gopal is unable to meet the same because of his limited managerial ability and limited capital. Gopal also felt that whenever he fell sick his business was temporarily closed. To overcome this problem, he decided to admit in the business his friend Mohan who has recently completed his MBA and is ready to invest money for the expansion of the business. Mohan advised Gopal to get their firm registered.

(i) State three limitations indicated in the above para from which Gopal’s business suffered.

(ii) Why did Mohan advise Gopal to get the firm registered?

(i) Three limitations indicated in the above para are:

1. Limited managerial ability.
2. Limited finance availability.
3. No separate legal entity/lack of continuity of business.

(ii) Mohan advised Gopal to get the firm registered because if the firm does not get registered following rights are denied to them.

1. A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
2. A right arising from a contract cannot be enforced in any court by or on behalf of the firm against any third party.
3. The firm or any of its partners cannot claim a set off (i.e., mutual agreement of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.

Question.15: State four legal formalities involved in sole proprietorship.

1. Business Name;
2. Service Tax Registration;
3. VAT/CST Registration;
4. Payment of Taxes.

Question.16: Karim after completing his XII exam from his village school joined the course of electrician in an ITI in a town near his village. On completion of this course, he tried for a government job but could not get the same. He, therefore decided to help as worker to a renowned electrician in that area. After working with him for two years he decided to start his own electrician shop in the village. For this, he purchased equipment for ₹ 10,000 and hired a shop at a monthly rent of ₹ 2000. He decided to manage the shop by himself.

1. Identify the form of business organisation started by ‘Karim’.
2. State any four characteristics of such a form of business organisation.

1. Sole Proprietorship.
2. (any four characteristics in statement form)
   Individual ownership; individual management and control; individual financing; no separate legal entity; unlimited liability; sole beneficiary; easy formation and closure; limited area of operation.

Characteristics:

1. This business is exclusively owned by a single person.
2. What is to be done, how it is to be done, and when it is to be done - all affairs are managed and controlled by the sole proprietor. Though, competent people can also be employed for efficient management.
3. All investment is made by the proprietor. Though, if required he/she has access to loans and debts to procure funds for business.
4. Legally, the proprietor and proprietorship are one and the same business and owner exists together, thus with owner’s death, business too dies.
5. The proprietor is liable/responsible for all losses arising from business. In case the business assets are insufficient to pay off liabilities, his/her personal property can be called upon to pay his business debts.
6. The sole proprietor alone is entitled to all the profits and losses of business. So he/she puts his/her heart and soul to increase his/her profits.
7. Sole proprietorship is subjected to minimum legal formalities and regulations both at the time of commencing and/or closing.
8. This form of business generally has a limited area of operation due to limited finance availability and limited managerial abilities.

Question.17: Before operationalisation of a Hindu Undivided Family Business, its Karta has to fulfil certain legal formalities. Explain any three such legal formalities.

Legal formalities involved:

1. Capital and Members: For an HUF to be created the major requirements is the capital and persons. Capital can be in the form of ancestral property, assets gifted by relatives and friends or received by the HUF through a will. The minimum number of members required is two.
2. Select a Suitable Name: The HUF to be created should have proper name. Entrepreneur should select a proper name for the HUF, ensuring it does not violate the laws or have any negative impact.
3. Form a Deed: Formation of HUF should be embodied in a deed which provides that a proper legal deed or agreement is required before creating a HUF, disclosing the name of Karta, Coparceners address and source of funds in the corpus.

Question.18: Describe an example of successful sole proprietorship/one man show.

In 1960, Monaghan and his brother Jim borrowed $900 and bought a foundering Pizzeria in Ypsilanti, Michigan. Jim left within a year, but Tom hung on, survived two bankruptcies and a fire. Monaghan worked for eighteen hours of all seven days a week, that too wholeheartedly making Domino’s Pizza—A GIANT MNC, a house hold name all over the world, started as a sole proprietor and today a MNC—along successful journey of ‘one big man’.

Question.19: “Human life is built around works”. Identify the form of Business Organization being talked about in the following sentences:

1. “The one-man control is the best in the world if that man is big enough to manage everything.”
2. “Two heads being better than one.”
3. “Self-help as well as mutual help system.”
4. “The birth of this legal person is by law and can be put to death by law only.”

1. Sole proprietorship
2. Partnership
3. Co-operative
4. Company

Question.20: Name and define the form of business organisation in which liability of its members is limited. State one more feature of this form of business organisation.

1. Joint stock company: It is an association of persons who contribute money in the shape of shares and the company gets a legal entity and enjoys a permanent existence.
2. It has the following features:
   • voluntary association; artificial person; separate legal entity; common seal; limited liability; transferability of shares; diffusion of ownership and management; number of members; limitation of action; winding up.

Question.21: List any six factors that may affect the selection of a form of business enterprise.

Six factors that may affect the selection of a form of business enterprise are as follows:

1. Cost and ease in setting up the organisation: From the point of view of initial cost, therefore, sole proprietorship is the preferred form as it involves least expenditure. Company form of organisation on the other hand, is more complex and involves greater costs.
2. Liability: In case of sole proprietorship and partnership firms, the liability of the owners/ partners is unlimited. In Joint Hindu Family Business, only the Karta has unlimited liability, in co-operative societies and companies, however liability is limited.
3. Continuity: In case business needs a permanent structure, company form is more suitable. For short term ventures, proprietorship or partnership may be preferred.
4. Management ability: A sole proprietor may find it difficult to have expertise in all functional areas of management. In other forms of organisations like partnership and company, there is no such problem.

5. Capital considerations: Companies are in a better position to collect large amount of capital by issuing shares. But the resources of sole trader are limited.

6. Degree of control: If direct control and absolute decision making power is required, sole proprietorship may be preferred.

Question.22: What are the systems of inheritance under the Hindu Law ?

Under the Hindu Law there are two systems of inheritance:

1. Dayabhaga: This system prevails only in West Bengal. As per this school of law, the son acquires the right in family property only after the death of his father.
2. Mitakshara: This system prevails all over India except West Bengal under which the son acquires the right in family property right from his birth.

Question.23: State the conditions when sole proprietorship form of business is considered most suitable ?

Sole proprietorship form of business is suitable when :

1. Capital requirement is limited.
2. Secrecy is very important.
3. There is only local market.
4. Goods involved in business are of customized nature.
5. Business demands quick decision.
6. The size of venture is small.

Question.24: Explain the following features of a co-operative society: 

(i) Democratic management,

(ii) Capital and return thereon,

(iii) Distribution of surplus.
or
Explain any three features of cooperative organisation.

Features of a ‘Co-operative Organisation’:

1. Democratic Management: The management is vested in the hands of the managing committee elected by the members on the basis of one member-one vote.
2. Capital and returns: The capital is procured from its members in the form of share capital. A member can subscribe subject to a maximum of 10% of the share capital. Shares cannot be transferred but surrendered to the organization.
3. Distribution of surplus: The profits are distributed among the members on the basis of goods purchased by each member of the society.
4. Voluntary Organization: It is an association of persons desirous of pursuing a common objective. They can come and leave the organization at their own will without any coercion.
5. Service Motive: The primary objective of this organization is to render services to its  members rather than to earn profits.
6. Government control: The activities are regulated by Co-operative Societies Act and State Co-operative Societies Act. The organizations are required to submit their annual report to registrar of co-operatives.

Various Plans

Question.1: Rahul wants to start a small shoe manufacturing factory. As a part of his business plan he prepared an ‘entertaining slide show and oral narrative’ that was meant to trigger discussion and create interest in potential investors for reading the written presentation. What type of business plan is prepared by Rahul ? Explain.

Pitch deck with oral narrative: It is an executive summary and a few key graphs showing financial trends and key decision making benchmark

Question.2: Gopal is a young man of 23 years. He has completed a tailoring course from an industrial training institute. He wants to start a big size tailoring shop in a posh colony where young men and women working in various multinational companies live. He went to one of his friends who had completed a B.Tech. course in textile designing to discuss about the opening of the tailoring shop. His friend advised him to prepare a written document describing formally all the relevant external and internal elements involved in starting a new venture. It will not only help in understanding the feasibility and viability of the proposed venture but also facilitate in assessing and making provisions for the bottlenecks in the progress and implementation of the idea.

State any six points of importance of the concept discussed by Gopal with his friend.
or
Mahesh is a young man of 20 years. He has completed a tailoring course from an industrial training institute. He wants to start a big-size tailoring shop in a modern locality where young men and women working in various multinational companies live. He went to one of his friends who had completed a diploma course in textile designing to discuss about the opening of the tailoring shop. His friend advised him to prepare a written document describing formally all the relevant external and internal elements involved in starting a new venture. It will not only help in understanding the feasibility and viability of the proposed venture but also facilitate in assessing and making provisions for the bottlenecks in the progress and implementation of the idea.

State any six points of importance of the concept discussed by Mahesh with his friend.

Importance of Business Plan :

1. Helps in determining the viability of the Venture.
2. Helps in providing guidance.
3. Helps in satisfying the concerns, queries and issues of each group.
4. Provides room for self-assessment and self evaluation.
5. Helps to identify the road blocks or obstacles.
6. It gives the details of the investment, credit worthiness.

Question.3: What is a proforma income statement ?

It is the projected net profit calculated from projected revenue minus projected costs and expenses.

Question.4: Picturising ahead every step in a long series of separate operations, each step to be taken in the right place, of the right degree and at the right time. Each operation is to be done at maximum efficiency. This is the objective of one of the components of a business plan.

1. Identify the component.
2. There are three situations before the venture under this component. Explain briefly those three situations.

(i) Production plan

(ii) The three situations involved in production plan are: 

1. No manufacturing involved: If the new venture does not include any manufacturing function, say it’s a trading firm or a service provider, then this section will stand eliminated from the plan. 
2. Partial manufacturing: If some or all the manufacturing process is to be subcontracted or outsourced, then the production plan should describe: 
   • Name and location of subcontractor(s) 
   • Reasons for their selection 
   • Cost and time involved 
   • Any contracts that have been completed, etc. In such cases, a clear mention of what entrepreneur intends to do himself and what he plans to get it done from outside is required. 
3. Complete Manufacturing: If the manufacturing is to be carried out in whole by the entrepreneur, he/she will need to describe: 
   • the physical plant layout, 
   • the machinery and equipment required to perform the manufacturing operations, 
   • raw materials and suppliers names, addresses, terms and conditions, 
   • cost of manufacturing 
   • any future capital equipment required, etc.

Question.5: Vishnu started his factory for manufacturing plastic items in Daman. As per the advice of his Manager, he appointed ‘Bizmadeeasy’ company to formulate a business plan for his manufacturing unit. The company in it’s business plan mentioned the cost of installing a water waste treatment plant within the premises of the manufacturing unit. Interpret any two socio-economic benefits expected to acquire from the proposed investment.

The socio economic benefits are:

1. Employment generation
2. Import substitution
3. Ancillarisation
4. Export promotion
5. Local resource utilization
6. Development of the area

Question.6: What are the key areas, for a sound financial plan to work ?

Finance is one of the most important pre-requisites to establish an enterprise. Availability of finance required by the entrepreneur facilitates him 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 :

1. Financial requirements
2. Sources of raising funds
3. Exact assessment of the revenue, cost, profits, cash flow dynamics, stock of inventory, loans, etc.

Question.7: Shruti, Neelabh and Shewtabh decided to start their own business of manufacturing steel utensils. They also finalised to set-up the manufacturing unit in Orissa as labour is available there at a very low rate. They also decided about the sources for the procurement of required funds and all the relevant external and internal factors affecting this venture. Identify the document which is required to be prepared by the entrepreneurs for the above decisions. State any one point of importance of this document.

Financial plan. One point of importance of financial plan is that it ensures timely availability of funds in right volume.

Question.8: List the socio-economic benefits that are expected to be acquired by an enterprise from its proposed investment.

Socio-economic benefits expected to be acquired by an enterprise from its proposed investment are:

1. Employment generation – Import substitution
2. Ancillarisation – Export promotion
3. Local resource utilisation – Development of the area.

Question.9: Karan finished his graduation from Polytechnic college in the year 2018. He had specialised in repairing of electronic goods. After few months of his graduation, he met his uncle who has a small factory manufacturing electronic circuits used in Television. His uncle informed Karan that he could no longer run the unit so Karan decided to take over the factory. His uncle had two workers. Karan was able to get a huge order of supplying 10,000 units of electronic circuits every month from a popular TV manufacturing company in India. He knew that to meet the orders timely he has to employ more people. In order to do so he decided to formulate Manpower planning.
Describe the factors that Karan has to keep in mind while formulating manpower plan.

Karan has to formulate manpower planning keeping in mind the following:

1. What kind of people are required? To carry on its work, each organisation needs personnel with the necessary qualifications, skills, knowledge, experience and aptitude for work. Since it is a factory, Karan will need more semi-skilled employees keeping in mind that they will be manufacturing electronic circuits. He will also need a manager to supervise the production work.
2. How many people are required? This question deals with the quantity of personnel the enterprise needs. Presently, the factory has just two employees, so Karan will need at least ten workers to achieve the production target every month. This number of employees will be taken into account keeping in mind the absenteeism and turnover.
3. How to procure personnel? As the next step in manpower planning, entrepreneur clearly mentions the strategies, methods, policies, rules and regulations pertaining to employees. He can approach his own polytechnic college and recruit fresh graduates. He has to properly train the employees so that there is less error in production and the target is completed on time.

Question.10: ‘Keebock’ and ‘KT Shoes’ were two well-known brands in the shoe industry in India. With advancement of technology, sophisticated machines were available in the market to increase the quality and quantity of shoes manufactured. Himanshu, who was running a shoe manufacturing business under the brand name ‘Keebock’, contacted KT shoes, to purchase a sophisticated German machine. KT shoes agreed and a new automatic machine was imported jointly by them from Germany for producing shoes with the latest technology. It not only enhances the quality and quantity of shoes manufactured but also, the goodwill of the business. They also hired a trainer from Germany to procure technical knowledge about the use of the machine.
In the above para, a series of activities were done to create and build value to the shoes manufactured at every step and to improve company’s processes. Quoting the lines from the above para, state any two ways used by ‘Keebock’ and ‘KT shoes’ to improve company’s processes.

1. ‘to purchase a sophisticated German machine’’- Technological development-use of technology to obtain a competitive advantage. 
2. ‘They also hired a trainer from Germany to procure technical knowledge about the use of the machine’- HR management- to recruit train and develop the right people for the organization to be successful.

Question.11: State the important components of a financial plan.

1. Proforma investment decisions;
2. Proforma financing decisions;
3. Proforma Income Statement;
4. Proforma Cash Flow;
5. Proforma Balance Sheet;
6. Break-even analysis.

Question.12: Gaurav started a factory for manufacturing bags for students of nursery and primary classes. He made the instruction plan describing the details that were needed for the operation of machines by the workers.

Identify and explain the format of ‘business plan’ described in the above para.

1. Internal Operational Plan.
2. A detailed plan describing planning details that are required by management but may not be of interest to external stakeholders.

Question.13: How is target market identified while preparing the marketing plan ? State.

1. Deciding what the general market or industry entrepreneur wishes to pursue.
2. Divide the market into small groups.
3. Buying situations.
4. Select segment and develop a marketing plan.

Question.14: An organisation will have to look into three situations while framing the production plan. Explain these three situations

The three situations involved in production plan are: 

1. No manufacturing involved: If the new venture does not include any manufacturing function, say it’s a trading firm or a service provider, then this section will stand eliminated from the plan. 
2. Partial manufacturing: If some or all the manufacturing process is to be subcontracted or outsourced, then the production plan should describe: 
   • Name and location of subcontractor(s) 
   • Reasons for their selection 
   • Cost and time involved 
   • Any contracts that have been completed, etc. In such cases, a clear mention of what entrepreneur intends to do himself and what he plans to get it done from outside is required. 
3. Complete Manufacturing: If the manufacturing is to be carried out in whole by the entrepreneur, he/she will need to describe: 
   • the physical plant layout, 
   • the machinery and equipment required to perform the manufacturing operations, 
   • raw materials and suppliers names, addresses, terms and conditions, 
   • cost of manufacturing 
   • any future capital equipment required, etc.

Question.15: Give the meaning of ‘Business situation analysis’ and ‘Identification of the target market’ as steps in preparing the marketing plan.

Business situation analysis is a review of past performance and achievements of the enterprise. Identifying the target market defines clearly the specific group of potential customers who are needed by the enterprise to fulfil its aims.

Question.16: (i) What is meant by a ‘Business Plan’?

(ii) State any one importance of writing a business plan for each of the given interest groups:
(a) Investors

(b) Entrepreneurs

1. The 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.
2. (a) Investors: As the investors/lenders focus on the four Cs of credit: character, cash flow, collateral and equity contribution, it is the business plan which reflects the entrepreneur’s credit history, the ability to meet debt and interest payments, and the amount of personal equity invested thus serving as an important tool in funds procurement.
   (b) Entrepreneurs:
   • Helps in determining the viability of the venture in a designated market.
   • Helps in providing guidance to the entrepreneur in organizing his/her planning activities as such:
     (i) Identifying the resources required
     (ii) Enabling obtaining of licenses if required etc.
     (iii) Working out with legal requirements as desired by the government.
3. Provides room for self-assessment and self evaluation, requiring entrepreneur to think through various scenario and plan ways to avoid obstacles.

Question.17: Vipul a new generation high tech farmer is involved in organic farming. He realised that there was a huge market for his fruits and vegetable as people have become health conscious and prefer to eat healthy food. Keeping in mind, he decided to open organic fruit juice corner outside central parks and in prominent malls in Jaipur. Now he needed, a ‘road map’ for himself to start the venture.

1. Identify the term used for ‘road map’ by Vipul.
2. Why this road map is required?

1. Road map means business plan.
2. It is required to understand the feasibility and viability of the proposed venture.

Question.18: What is a marketing plan ? Why is it required in business enterprise ?

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:

1. Where have we been?
2. Where do we want to go ?
3. How do we go there ?

Question.19: Sanjiv was developing a business plan for his organization. While working on the financial plan, he realised that his financial requirements will be for fixed assets and their installations, preliminary expenses, working capital, expenses on research and development and investment in short-term assets viz. raw material, level of cash, etc. To decide on the sources of funds for the venture, he tried to ensure the selection of the best overall mix of financing for the enterprise. 

1. Identify the elements of financial plan discussed here. 
2. Why is it important for an entrepreneur to ensure the selection of the best overall mix of financing for the enterprise?

1. (a) Proforma investment decisions
   (b) Proforma financing decisions.
2. The entrepreneur’s job is to ensure the selection of the best overall mix of financing for the enterprise so that:
   • the cost of capital and the financial risk stands minimized,
   • return on investment and profitability stands maximized.