Short and Long Question Answers: Entrepreneurship: Concept and Functions | Entrepreneurship Class 11 - Commerce PDF Download

Q.1. Answer each of these questions in about fifteen words:

(i) What is an enterprise?

An Enterprise is a business entity established by an entrepreneur for

• producing goods and (or) services
• providing employment opportunities
• adding value to the national income d. improving exports
• providing the economic development of the country.

(ii) Who is an Entrepreneur?

An entrepreneur is 

• an innovator of new ideas
  (a) to creates new products or services
  (b) to creates new products or services
• exploits an opportunity
• commercializes his innovation

(iii) Who plays the role of an entrepreneur in a socialist country?

In the countries wherein socialism is dominant, the government or the state owns the entire entrepreneurship activity.

Q.2. Answer each of these questions in about fifty words:

(i) Explain any two advantages of being an Entrepreneur?

The following are few advantages of being an entrepreneur:

• They can work as per their choice and on any idea and not confined to someone’s instructions.
• For the entrepreneurs who love to take high risks, the entire process is an exciting adventurous journey.
• The luxury of being your own boss and freedom working under someone else.
• Their earnings will be worth of their own efforts. They’ll not be judged by a fixed salary for their worth.
• The feeling contributing a product or service that is unique and original

(ii) Explain any two disadvantages of being an Entrepreneur?

The following are few disadvantages of being an entrepreneur:

• Owing to the fact that the enterprise will be entirely innovative and first of its kind, it is difficult to find employees with the right experience. They’ve to tackle the employees who may not have much insight into what is happening or the employees with little or not experience on the given task.
• A consistent income like salary is not guaranteed.
• The entrepreneur being the decision maker, he has to be much more cautious as even a small wrong decision taken can have huge impact on the enterprise. 
• An entrepreneur has to work much more than regular working hours and should be ready to tackle any emergencies at any time.
• The benefits of a salaried job like medical insurance, holidays etc will not be available, especially during the initial phase of starting the enterprise.

(iii) Differentiate between entrepreneur and entrepreneurship.

The following is the differentiation between an entrepreneur and entrepreneurship:

Q.3. Answer each of these questions in about one hundred and fifty words:

(i) Describe entrepreneurial functions of an entrepreneur?

An entrepreneur should possess the following entrepreneurial functions:

• Innovation: An entrepreneur should be innovative enough to bring about the change in a product or service or means of production or raw material used in the production. They should innovate and bring about a change in one or more of these. They should innovative enough to recognize the commercial value in their innovation and extract economic advantage from it.
• Risk-Taking: They should be ready to face any unexpected risk while going through the entrepreneurship process. The should be intelligent enough to diversify the risk in
  (a) production
  (b) investment
  (c) expansion of the enterprise
• Building of Organization: The entrepreneur should have enough organizing and managing skills to utilize the resources with minimum loss and bring down the production costs. Being the sole decision maker for the enterprise, the entrepreneur should be able to make decision regarding which parts of the business need to expanded and where the investment should go to.

(ii) What is the need of entrepreneurship in an economy?

In the developing countries like India, Entrepreneurship plays significant role in the Economic Development of a country. In India, after the Government has make economic reforms in the economy, the role of entrepreneurs has increased considerably. The more the number of innovative entrepreneurs, the better is the rate of economic development in the country. This is the reason why the growth rate has been slower before the economic reforms and the growth rate has increased after the economic reforms.

• Life-line of any country: Entrepreneurs will provide a measure of the development of a country as they contribute to the trade, whose measure in-turn represent the progress of a country. 
• Source of Innovation: Entrepreneurs innovate new ideas, improvements to the existing products or services and opens the possibilities of new markets. They bring about a change to increase the productivity of available resources. Thereby they contribute to the economic development of a country.
• Growth Spirit: The entrepreneur molds the changing environment to the advantage of the enterprise. They help in overcoming the challenges posed for the automation and the complexities of advanced technology.
• Increased profit margins: Entrepreneurs with their innovative methods and practice reduce the cost of product/operation and increase the profits. There by they lay the foundation for future growth and development.
• More Jobs: Entrepreneurship involves establishment or expansion of an enterprise. This creates more employment opportunities.
• Social Gain: As entrepreneurship results in improved products and services at a reduced cost, there by improving the standard of living. It facilitates optimum utilization of the scarce resources, and encourages peace and prosperity in the society.

(iii) Mehak wants to start a textile unit near Gurgaon. Discuss the commercial functions which she will require to plan and perform for the same.

The following are the commercial functions which Mehak will require to plan and perform the start of a textile unit near Gurgaon. In fact, these are the commercial functions that any entrepreneur should possess to start an enterprise.

• Production: Production, being the key commercial function for any undertaking, involves manufacturing of goods or delivering the services. Regardless the size of the enterprise, the activities performed in production can be classified as
  (a) Manufacturing
  (b) Ancillary or support activities (the activities that support the primary activities)
  (c) Advisory Depending on the size of the enterprise, these activities can be performed by a single person or a number persons grouped into separate departments.
• Finance: Finance being the most important commercial function of any enterprise, all the business activities are focused around finance. An entrepreneur should plan for the inflow of funds and arrange them on a need basis. Finance plays a key role right from setting up of enterprise, running the enterprise and also during the expansion of the enterprise.
• Marketing: Marketing involves the deliver of goods and services from the enterprise to the end user. Marketing is an important step to promote the activities of the enterprise. Entrepreneur should have a good marketing plan to overcome the competition and take a top notch position in the market.
• Personnel: The commercial function involves
  (a) Recruiting the workforce
  (b) Development and training
  (c) Salaries
  (d) Working atmosphere
  (e) Welfare like safety, health etc
• Accounting: The commercial function would help the entrepreneur to gauge the financial position of the enterprise at any point of time, by just going through the accounting records. It involves systematic recording of all the financial transactions of the enterprise.

(iv) Explain any four managerial functions of an entrepreneur?

The following are the managerial functions of an entrepreneur: 

• Planning: Planning is the primary and essential managerial function, an entrepreneur should possess. A good planning helps the entrepreneur to initiate actions required to achieve their goal. Planning reflects the decision making mentality of the entrepreneur regarding various tasks in achieving his goal. A plan should have answers to the following questions for each of the tasks.
  (a) What should be done?
  (b) When should be done?
  (c) How should we do it?
  (d) Who should do it? 
• Organizing: All the employees in an organization work towards achieving the objectives or goals set for the enterprise by the entrepreneur. An entrepreneur will organize the various tasks in an enterprise through
  (a) arranging
  (b) coordinating
  (c) controlling
  (d) directing
  (e) and guiding.
• Staffing: The organizational process requires various duties performed by various levels of staff. The human resources department of the enterprise will recruit the staff. Staffing basically involves
  (a) Human Resources(HR)
  (b) manpower planning
  (c) recruiting the employees
  (d) selection and appointment of employees
  (e) human resources development
  (f) promotion for good performers
  (g) transfer based on the requirement (to various department or divisions in the enterprise)
  (h) appraisal or promotions
  (i) Fixing of the salaries
• Directing: The entrepreneur should be capable of directing the staff towards organizing and executing the planned activities, in the most efficient manner.
• Communication: Communication means exchange of
  (a) emotions
  (b) feelings
  (c) ideas
  (d) information
  (e) knowledge
  with others. On average, 75% to 90% of an entrepreneur’s time goes in communicating with others. So, effective communication is a very critical managerial function that an entrepreneur should exhibit.
• Motivation: An entrepreneur should be capable of motivating his staff. Effective motivation inspires the staff to exhibit increased levels of performance. The entrepreneur motivate his staff in a manner which is
  (a) competitive
  (b) comprehensive
  (c) flexible
  (d) and productive.
  While motivating his staff, the entrepreneur should keep in mind the
  (a) economic
  (b) ego
  (c) psychological
  (d) safety
  (e) social factors for his staff.
• Supervision: Entrepreneur should be capable of supervising the subordinate to ensure that
  (a) work is getting done as per the given instructions
  (b) All the available resources are being utilized with at most efficiency
  (c) Take the appropriate action whenever there is a deviation from the planned organizational goal.
• Co-ordination: The entrepreneur should co-ordinate the work done in various divisions of the enterprise, to ensure that all the divisions are working towards the organizational goals and according to the plan. Corrective actions should be initiated whenever there is any deviation from the plan.
• Controlling: Controlling involves
  (a) Setting measurable standards
  (b) Measuring the current performance
  (c) Comparison of the actual performance with the set standards
  (d) Measure the deviations
  (e) Take the appropriate measures to bring the performance to the level of standards

(v) Explain any four promotional functions of an entrepreneur?

The following are the various essential promotional functions to be exhibited by the entrepreneur:

• Discovery of an idea: The entrepreneur should be innovative to discover innovative ideas and commercially exploit them. The ideas could be related
  (a) Innovative or more effective utilization of natural resources
  (b) An innovative venture with high profitability
  (c) Opportunities to tap more profitability from an existing enterprise.
  After innovating the idea, the entrepreneur discusses the feasibility of his idea with the experts in those areas. Once approved further analysis can be carried out.
• Exhaustive investigation/analysis: After confirming the feasibility of commercial prospects of an idea, the entrepreneur will do a thorough analysis of various factors and come up with estimates. The following are the primary components which require estimates.
  (a) money
  (b) man power
  (c) materials
  (d) machines
  (e) power requirement
• Accumulation of resources: After confirming the feasibility of the commercial implementation, the entrepreneur will start
  (a) gathering the business partners
  (b) if the product/service is innovative he should apply and get the patent.
  (c) Identify and acquire the location
  (d) Gather the machines
  (e) Contact the vendors for raw material supply. 
• Financing the proposition: After estimating the investment requirement into various factors of implementation, the entrepreneur will start looking into various sources of financing. He will decide
  (a) Long term
  (b) Short term
  financing options.
  He will also decide about the type of the financing sources like
  (a) Debenture
  (b) Loan
  (c) Share

Q.4. Answer each of these questions in about two hundred and fifty words:

(i) Describe the process of entrepreneurship?

• Self-Discovery: One should first discover that one has potential to become an entrepreneur and what it takes to be an entrepreneur. A careful analysis
  (a) What makes one enjoy?
  (b) What are their strengths?
  (c) What are their weaknesses?
  (d) What is their experience?
  (e) How closely they can relate their expertise to commercially viable opportunities. 
• Identifying the opportunities: The next step is to identify the opportunity. This can be done through careful analysis of
  (a) Wants
  (b) Needs
  (c) Day-to-day problems
  (d) Day-to-day challenges and then tackle those which are not yet addressed or which require significant improvement.
• Generate the ideas and Evaluate them: In this step innovative ideas to address the opportunities in the previous step are generated. The entrepreneur’s experience and creativity plays a critical role in this step. The various ideas thus generated as further filtered down to one.
• Planning: In this step the entrepreneur performs extensive research and determines the various resources to convert his ideas into a commercial enterprise. He then prepares a business plan to market his venture.
• Raising the initial capital: The business plan is then discussed with various partners, investors and venture capitalists. To convince the fund contributors and gain their confidence, the entrepreneur might required to present a prototype of the product or service or he may have to test-prove the marketing strategy.
• Start-Up: In this phase the entrepreneur will
  (a) Start the enterprise
  (b) Building a customer base
  (c) Ensuring that the marketing is going good.
  (d) Develop a plan for carrying out the regular operations of the enterprise.
• Growth: In this phase the entrepreneur will
  (a) Develop a strategic plan
  (b) Implement the plan
  (c) Making changes to accommodate the changes in the market
• Harvest: In this phase, once the enterprise is stable and running profitably, the entrepreneur will sell out his enterprise and harvest the rewards. After this many entrepreneurs start focusing on their next venture to tackle new problems/wants/needs/challenges. It is an ongoing process.

(ii) What is the need of entrepreneurship in an economy? Give at least six benefits.

The economic development of any nation depends on the rate of innovation in the economic field. The innovation is inherent to entrepreneurs. So, the primary need of entrepreneurship in any economy is to promote Economic Development. This is clear from the fact that during the first four decades after independence, where in the number of entrepreneurs were very low, the rate of economic development was very slow. But once the number of entrepreneurs have increased significantly, the economic development has boomed in India.
The key players in the entrepreneurship are as follows:

The following are the advantages of entrepreneurs for any country:

• They are the life-line of the country: The economic development of any country is closely tied up with the number of entrepreneurs. As entrepreneurs promote development through their innovation, they’re in-turn promoting the development of the country’s economy. 
• Promotes Innovation: Innovation of new or improved products or services is the inherent characteristic of the entrepreneurs. This opens up new
  (a) Products
  (b) Services
  (c) Technology
  (d) Markets
  The take risk, bring their ideas to reality and contributes to economic development.
• Change of environment and subsequent growth: The entrepreneurs adopts the changing environment/technology into their enterprise. There by they increase productivity by adopting the automation. The changes the entire environment and directs everyone to adopt the growth process.
• More revenue generation: As entrepreneurs always strive towards betterment of products/services, the demand is increased, the cost is reduced and profits are increased. There by they contribute to the economy and promote economic development.
• More employment opportunities: Establishment of a new enterprise always create more number of jobs. Further, when these enterprises grow in size, they provide more employment opportunities.
• Social Benefits: Entrepreneurship, through its inherent characteristic of innovation brings in better products/services at reduced prices (For example a person can afford a better phone at reduced prices). Thus the society will be able to increase standard of living. Entrepreneurship also ensures that all the available resources are utilized in the most optimum ways. They also peace and prosperity as they provide a solution to the most critical problem of any nation i.e., unemployment.

Q.5. HOTS: (Higher Order Thinking)

(i) Differentiate between Entrepreneurial functions and Managerial functions of an Entrepreneur?

(ii) “Innovation is the hallmark of Entrepreneurship”. Why is “innovation” referred as the basic function of an entrepreneur?

• Entrepreneurship involves spotting an opportunity and evaluate its economical viability and convert it into economically profitable enterprise. It is the innovative function of an entrepreneur that helps him to come up with innovative ideas and products to economically exploit an opportunity. Thus innovation is at the core of the entrepreneurial functions. It helps an entrepreneur to challenge the status quo of the existing products or services, improve them to by adding more value and strive for consumer satisfaction.
• It is only when innovation is put into a product or service, a person becomes an entrepreneur. Otherwise, a person is just a regular businessman. The economic success of a nation depends upon the rate of innovation in the economic field. This in turn depends upon the number of people in the society who exhibit innovative function. In India, after independence, there were very less number of innovations, for the first forty years. It is only after the innovative spirit of entrepreneurs started to boom, the country started to move ahead economically. Thus entrepreneurs are at the core of economic development.

(iii) “Entrepreneurs, in their drive and pursuit to create something new, at times, results in causing major loss to the Nation‟s natural resources. Shouldn‟t they be discouraged? Justify giving reasons for your answers.

• Entrepreneurs, in pursuit of their goal, take risk. But the amount of risk is minimized to a greater extent when there is very good planning. Usually entrepreneurs will not deploy all the funds centrally at one place. They diversify their investment in various areas. Also, entrepreneurs, by nature, have the ability to gauge uncertainties likely to occur in the future. In case of any disaster, they usually will have a plan to mitigate the effects. So, they should be encouraged though there is always a possibility of the economic loss.
• On the other hand, entrepreneurs are innovative. They are always exploring for new ventures and improving the products and services. Unless they’re in the business where in natural resources are experimented, there is no significant impact on the environment. As the nature of the businesses is shifting towards the service oriented approach, they seldom cause any loss to the Nation’s natural resources. They usually have a plan to encounter unforeseen contingencies thus minimizing the loss. Moreover, the benefits of the innovation far outweigh the loss that is likely to occur. 
• Also, there is always risk associated with any venture. But when there is success in their attempts to experiment with the natural resources, there is huge impact on the economic condition of a nation. So, they should always be encouraged, provided they’ve extreme measures to mitigate any losses that’re likely to occur. Also, the government policies ensure that the entrepreneurs take appropriate whenever there is an impact on the ecological system. For instance, when the entrepreneurs have to establish an enterprise in a forest area where there is endangered wild life, they should first ensure that the wild life is rehabilitated before they establish their enterprise. Similarly, when they’re establishing an industry in a place close to a lake or river, they should ensure that the industrial wastage is treated well before releasing it out. When these precautions are taken, there won’t be any loss of natural resources and there is significant improvement in the economic development of a country.

(iv) Starting a venture is not an easy task. A series of activities needs to be planned and undertaken to create an enterprise. Discuss them briefly.

• Self-discovery: 
  (a) Identify what makes us motivate
  (b) Our expertize in the area being explored
  (c) Potential opportunities in that area
  (d) Our core strengths
  (e) Weaknesses
• Spotting the potential opportunities: A careful examination/study of the surroundings for
  (a) ideas
  (b) challenges
  (c) needs
  (d) problems of people in the society.
• Formation of ideas and looking for viable opportunities: With the experience at hand innovate a solution to improve a product or service.
• Prepare a plan: Prepare a plan that includes
  (a) Evaluation of the available resources and exploiting them
  (b) Business plan
  (c) Marketing plan
• Accumulation of funds: Depending upon the nature of venture prepare prototype of the product or conduct a sample marketing. Presenting this to the partners or investors or venture capitalists, gather the required funds to start up the enterprise.
• Launch the enterprise: 
  (a) Start the enterprise
  (b) Increase the reach to the customers
  (c) Make changes in the strategy depending upon the various dynamic factors.
• Expansion plans: Improve the business by adopting the changes as per the changes in the market.
• Reaping the benefits: Reap the fruits of the enterprise by selling it. Repeat the process by spotting a new venture.

(v) Why are Entrepreneurs called ‘agents of progress’ for a nation? What role do they play in the Nation’s development?

The entrepreneur contributes to the overall development of a country through the following:

• Available resources (which might have been lying idle till now) are put to use through their creative thinking, thus adding/improving the sales and thereby contributing to the national economy.
• Balanced regional development. They establish the enterprise in under developed areas, there by contributing to the development of those areas.
• Concentration of economic power is reduced. The wealth is distributed among many individuals instead of few.
• Demand for a product or service is increased both in-house and abroad.
• Employment opportunities are created at a larger scale.
• Foreign exchange reserves are increased when an enterprise dealing with exports is established.
• GNP of a nation is increased.
• Higher standards of living, by reducing the cost products or services through their innovation.