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Chapter: Business Science : Enterpreneurship Development : Management of Small Business

Important Questions and answers: Management of Small Business

Business Science - Enterpreneurship Development - Management of Small Business - Important Questions and answers: Management of Small Business


1. State the Schumpeter’s view of entrepreneur.


An entrepreneur is an innovator who brings economic development through new combinations of factors of production.


2. Define Sickness.


According to Reserve Bank of India, a sick unit is one which incurs cash losses for one year and is likely to continue to incur cash losses for the current year as well as the following year.


3. What are the symptoms of Industrial sickness?


1. Persisting of shortage of cash


2. Deteriorating financial ratios


3. Widespread use of creative accounting


4. Continuous tumble in the price of the shares


5. Frequent request to banks and financial institution for loan


4. What are the consequences of industrial sickness?


Financial loss, loss of employment, industrial unrest, harms to invest, wastage of scarce resources and loss of public revenue.


5. What is an industrial estate?


It is a method of organizing, housing and servicing industry, a planned clustering of industrial enterprises offering standard factory buildings erected in advance of demand and a variety of service and facilities to the occupants.


6. What is self-sufficiency?


Some firms grow to become independent in terms of marketing of raw material or marketing of products. They integrate the various stages of industry or acquire other firms to gain control over the supply of materials and marketing of finished goods.


7. What are the major causes of sickness?


Internal causes mainly relate to the poor quality of top management External causes relate to external factors arising outside the organization.


8. What is the rehabilitation of sick units?


·        Sick Industrial companies Act 1985


·        IDBI‟s Special cell


·        Sick Industrial Undertaking Cell


·        Co ordination committees


·        Quarterly Bank Report


·        Industrial Reconstruction Bank of India


9. What are the roles of government in preventing the sick units?


The number of industrial units in the country has increased enormously after the independence we have diversified industrial structure with widespread entrepreneurship. Government is responsible for this with its effort at creating infrastructure facilities, specialized industrial and packaging of incentives for entrepreneur.


10. What are the institutions supporting the entrepreneurs?


District Industrial center, Small Industries Development Organization, National Small Industries Corporation, National Industrial Development Corporation Ltd., Small Industries Extension Training Institute Hyderabad and State Trading Corporation of India.


11. What are the roles of financial institution in preventing sickness?


Apex financial institution like IDBI, IFCI, ICICI and nationalized commercial banks are in a favorable position to prevent industrial sickness. These are to remain in constant touch with the units with market conditions as well as the funded units are in an excellent position for receiving early warning of sickness.


12.            What are the various EDP’s conducted in India?


·        EDP‟s among non engineers


·        EDP‟s among self employment beneficiaries


·        EDP‟s among women entrepreneur


·        EDP‟s for rural artisans, students, weaker section of the society, physically handicapped person, etc.


13.            Define plant layout?


Plant layout is referred to the arrangements and location of different departments and of the machinery with in a department so that an optimum utilization of space available can be made with a view to enabling plant to function in an effective manner.


14. What is working capital?


It is the amount of funds which an SSI must have to finance its day to day operation.


15. How project report prepared?


A project report is prepared by the entrepreneur himself or by his consultants or associates in order to present relevant facts before the decision makers to enable them to decide whether the project is worthwhile for the investment or not.


16. What is feasibility report?


A feasibility report or a project report of a new enterprise or of an expansion of the existing unit provides in general, primary economic information, financial data and technical data which serve a quite number of discrete economic processes or cost structure of the industry concerned.


17. What is financial ratio analysis?


It is a quantitative technique for assessing the financial health of a unit from the accounting data and helps to describe the significant relationship between two comparable figures in the financial statement.


18. What is Fabian Entrepreneur?


These are traditionally bounded entrepreneurs who would always be cautious and they neither introduce new changes and they neither introduce new changes, nor adopt new methods innovated by the most enterprising entrepreneurs. They are lazy, follow old customs, tradition, sentiments .etc.


19. What is Drone Entrepreneur?


These entrepreneurs never allow any change in their production and the style of functioning. They never explore opportunities and neither prepares to take any risk. They may even meet losses due to obsolete methods of production, but do not change their production methods and continue to adopt traditional ways in production processes.


20.            What are the entrepreneurial performances in India?


(a) socio-cultural background of the entrepreneur


(b) Motivational force


(c) Knowledge and ability of the entrepreneurs


(d) Financial strength


21.            Define Gestation Period.


It is defined as the time gap between the date of incorporation and the date of commencement of commercial production.


22. What are tiny Units?


These refer to undertakings having fixed investment in plant and machinery not exceeding of Rs.5lakhs. These also include undertakings providing services of laundry, repairs etc.




23.            Characteristics of small scale business.


1. Personal character


2. Closely held


3. Local area of operation


4. Labour intensive


5. Indigenous resources


6. Limited scale of operations


24.            What is an Indigenous resource?


Small scale units that use the local resources. Therefore, they have decentralized or dispersed location.



25.            What are the key factors influencing the mobility of entrepreneur?


1. Resources


2. Experience


3. Education


26.            What are the advantages of Internal Evaluations?


The evaluators are very familiar with the work, the organisational culture and the aims and objectives.

Sometimes people are more willing to speak to insiders than to outsiders.

An internal evaluation is very clearly a management tool, a way of self-correcting, and    much less threatening than an external evaluation. This may make it easier for those involved to accept findings and criticisms.

An internal evaluation will cost less than an external evaluation.


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