Please see Chapter 9 Small Business and Entrepreneurship Class 11 Business Studies below. These important questions with solutions have been prepared based on the latest examination guidelines and syllabus issued by CBSE, NCERT, and KVS. We have provided Class 11 Business Studies Questions and answers for all chapters in your NCERT Book for Class 11 Business Studies. These solved problems for Small Business and Entrepreneurship in Class 11 Business Studies will help you to score more marks in upcoming examinations.
Exam Questions Chapter 9 Small Business and Entrepreneurship Class 11 Business Studies
Very Short Answer Type Questions
Question. A micro small scale industry has investment of Rs. 24 lakhs and engaged in manufacturing business. Now, it wants to increase its investment byRs. 4 Lakhs. what type of small Business will it become and what is the maximum investment limit in such cases?
Answer : It will become small type of small business and can invest upto 5crore
Question. Name areas where SSLs feel threatened from global enterprises
Answer : It is difficult to withstand the quality standards, technological skills, financial creditworthiness, managerial and marketing capabilities
Question. What different parameters are used to measure the size of service business?
Answer : In the case of enterprises engaged in providing or rendering of services there are three types of enterprises:
Micro enterprise: investment in equipment does not exceed ten lakh rupees.
Small enterprise: investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.
Medium enterprise: investment in equipment is more than two crore rupees but does not exceed five crore rupees
Question. State any feature of cottage industries.
Answer : Cottage industries are characterised by certain features like the following:
- these are organised by individuals, with private resources;
- normally use family labour and locally available talent;
- the equipment used is simple;
- capital investment is small;
- produce simple products, normally in their own premises;
- production of goods using indigenous technology
Short Answer Type Questions
Question. What is the aim of NSIC.
Answer : National Small Industries Corporation (NSIC) aims at providing:
♦ Supply indigenous and imported machines on easy hire-purchase terms.
♦ Procure, supply and distribute indigenous and imported raw materials.
♦ Export the products of small business units and develop exportworthiness.
♦ Mentoring and advisory services
Question. Write any three problems of small business in India
Answer :
Finance:
• Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets.
• They are exploited by the money lenders
• These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks
Raw Material:
• If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials
• They cannot afford to take the risk of buying in bulk as they have no facilities to store the materials
Managerial Skills
• Promoted and operated by a single person, who may not possess all the managerial skills required to run the business
• They may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers
Question. On the basis of capital contribution identify the type of SSI from the following:
a) Capital contribution on plant and machinery is Rs. 9 lakh.
b) Capital contribution on plant and machinery is Rs. 7.5crore
c) Capital contribution on plant and machinery is Rs. 2650000/-
Answer :
a) Capital contribution on plant and machinery is Rs. 9 lakh is a Micro enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951
b) Capital contribution on plant and machinery is Rs. 75000/- is a Medium enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951
c) Capital contribution on plant and machinery is Rs. 2650000/- is a Small enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951
Long Answer Type Questions
Question. Preet food Industries set up food and beverages processing plant in the rural area of Haryana and opted for labour intensive technique due to easy availability of labour and to provide employment to local people. Board of director decided to invest 50 lakhs to acquire plant & machinery, Rs. 1 crore to buy land, Rs. 20 Lakhs to buy raw material and Rs. 20lakhs to maintain day to day expenses.
(a) Name the Act of Industries which is applicable to the above industry.
(b) which category of part (a) will the above industry came?
(c) State the investment limit in this category.
(d) what value have been followed by the above company.
[Hints:-MSMED Act, 2006, Small Scale Industry, Rs. 5 crores, Employment Generation, Balanced Regional Development, concern for social
Answer :
a) The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 addresses these issues relating to definition, credit, marketing and technology upgradation. Medium scale enterprises and service related enterprises also come under the purview of this Act. The MSMED Act, 2006 came into force w.e.f., October, 2006. Accordingly, enterprises are classified into two major categories viz., manufacturing and services
b) It is a small scale industry
c) In the case of enterprises engaged in the manufacture or production of goods pertaining to any industries specified in the first schedule to the Industries (Development and Regulation) Act, 1951, Small enterprise: investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees
d)Values followed by the company are as follows:
1. Employment generation: The company opted for labour intensive technique due to easy availability of labour and to provide employment to local people
2. Balanced Regional Development: The company set up food and beverages processing plant in the rural area of Haryana thereby helping in balanced regional development
3. Concern for society: The company opted for labour intensive technique thereby showing concern towards the society
Question. Expain in detail the problems faced by the small business?
Answer :
Finance:
• Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets.
• They are exploited by the money lenders
• These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks
Raw Material:
• If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials
• They cannot afford to take the risk of buying in bulk as they have no facilities to store the materials
Managerial Skills
• Promoted and operated by a single person, who may not possess all the managerial skills required to run the business
• They may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers
Labour
• They cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more
• Unskilled workers join for low remuneration but training them is a time consuming process
Marketing
• These organisations have to depend excessively on middlemen, who at times exploit them by paying low price and delayed payments
• They lack the necessary infrastructure for direct marketing
Quality
• They concentrate on cutting the cost and keeping the prices low.
• They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology
Capacity Utilisation
• They have to operate below full capacity due to which their operating costs tend to increase.
• Gradually this leads to sickness and closure of the business.
Technology
• Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.
Sickness
• The causes of sickness are both internal and external.
• Internal problems include lack of skilled and trained labour and managerial and marketing skills.
• Some of the external problems include delayed payment, shortage of working capital, inadequate loans and lack of demand for their products.
Global Competition
• Competition is not only from medium and large industries, but also from multinational companies which are giants in terms of their size and business volumes
• It is difficult to withstand the quality standards, technological skills, financial creditworthiness, managerial and marketing capabilities
• There is limited access to markets of developed countries due to the stringent requirements of quality certification like ISO 9000
Question. Write notes on the following:
a) NABARD
b) SFURTI
c) RSBDC
d) DIC’S
e) SIDBI
f) NCEUS
Answer :
a) National Bank for Agriculture and Rural Development (NABARD): It has been adopting a multi-pronged, multi-purpose strategy for the promotion of rural business enterprises in the country. Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans using credit and non-credit approaches. It offers counselling and consultancy services and organizes training and development programmes for rural entrepreneurs
b) Scheme of Fund for Regeneration of Traditional Industries (SFURTI): To develop clusters of traditional industries in various parts of the country. To build innovative and traditional skills, improve technologies and encourage public-private partnerships, develop market intelligence etc., to make them competitive, profitable and sustainable. To create sustained employment opportunities in traditional industries.
c) The Rural Small Business Development Centre (RSBDC): It aims at providing management and technical support to current and prospective micro and small entrepreneurs in rural areas. RSBDC has organized several programmes on rural entrepreneurship, skill upgradation workshops, mobile clinics and trainers training programmes, awareness and counselling camps
d) The District Industries Centers (DICs): Provides all the services and support facilities to the entrepreneurs for setting up small and village industries. Identification of suitable schemes, preparation of feasibility reports, arranging for credit, machinery and equipment, provision of raw materials and other extension services are the main activities undertaken by these centers.
e) Small Industries Development Bank of India (SIDBI): It is set up as an apex bank to provide direct/indirect financial assistance under different schemes, to meet credit needs of small business organisations. It coordinate the functions of other institutions in similar activities
f) The National Commission for Enterprises in the Unorganised Sector (NCEUS): To recommend measures considered necessary for improving the productivity of small enterprises in the informal sector. To generate more employment opportunities on a sustainable basis, particularly in the rural areas. To enhance the competitiveness of the sector in the emerging global environment. To develop linkages of the sector with other institutions in the areas of credit, raw materials, infrastructure, technology upgradation, marketing and formulation of suitable arrangements for skill development.