Important Short Questions and Answers: Business Plan Preparation

1. What is project identification?

It is the process of identifying opportunities for new business ventures.

2. What is selection of product?

It is the first major step in the setting up of a business enterprise. Choice of the right product is to be produced is the first essential of success in entrepreneurship.

3. What is project formulated?

Project formulated is the systematic development of a project idea for the eventual purpose of arriving at an investment decision. It involves a step by step investigation and development of project idea.

4. What is Technical feasibility?

Identifying the technical specification of the product in terms of its functional design, adaptability of new customer demand, durability, and reliability of performance, acceptable level of obsolescence, safety and standardization.

5. What are the assessments of project feasibility? o Technical Feasibility

o Economic Viability o Financial Feasibility

o Managerial Competence o Implementation Scheme

6. What is financial planning?

Financial planning is the process of formulating policies and strategy relating to the procurement, investment and administration of funds for an enterprise.

7. What is debt equity consideration?

Optimum capital structure implies the most economical and safe ratio between debt and equity. It is the ideal mix of ownership funds and borrowed funds. From a strictly financial point of view, the optimum capital structure is achieved by balancing the financial so as to achieve the lowest average cost of long term funds.

8. What is IFCI?

Industrial Finance Corporation of India is to make medium and long term credits more readily available to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or recourse to capital issue methods is impracticable.

9. What are the objects of ICICI?

To assist in the promotion expansion and modernization of industrial enterprise

Encourage and promote the participation of private capital both Indian and foreign

Promote private ownership of industrial investment and expansion of investment markets

10.            What is Venture capital?

It is a form of equity financing of projects with high risk and return. It is meant for financing high technology projects.

11. What is export finance?

In order to encourage export from small scale sector, export credit is provided to small scale exporters. State Bank of India and other public sector banks provided export finance. The RBI and the IDBI provide refinance facility.

12. What is IDBI?

Industrial Development Bank of India was set up on July 1, 1964 as an apex institution in the field of industrial finance. It provides assistance to small scale units indirectly through its refinance and bills rediscounting schemes.

13. What is the assistance by commercial bank?

Term loan, Installment credit, Special schemes of assistance and credit guarantee scheme.

14.            What are the special characteristics of International Trade?

 Rules and regulation  Risk in transit  Physical Distance

 Credit worthiness of dealers  Difference in language  Currency

15.            What is Tax holiday?

Under section 80 IA of the Income tax Act, 1961, deduction is allowed in computing the taxable income in respect of profits derived from a new industrial undertaking or a ship or the business of a hotel.

16.            What are the basic elements of export procedure?

·        Registration of exporter

·        Selection of export market and buyer

·        Receipt of enquiries

·        Receipt of intend

·        Preparation of goods for export

·        Arranging insurance coverage

·        Obtaining the shipping order

·        Dispatching goods

·        Certificate of origin

17.            How is documentation for exports prepared?

i.  Proforma invoice

ii. Intend

iii. Letter of credit

iv. Packaging list

v.Marine Insurance Policy

vi. Bill of Lading

vii.Commercial invoice

viii.              Bill of exchange

ix. Certificate of origin

18.            What is the role of the Institutional assistance for exporters?

·        Arranging participation in international exhibitions

·        Arranging Indian exhibitions abroad

·        Running show rooms in foreign countries

·        Setting up trade centers in selected important markets outside India

19.            What are the groups of Export credit and Guarantee Corporation?

·        Standard policies issued to exporters to protect them against the risk of trading with overseas buyers on credit terms

·        Financial guarantees issued by banks against the risk involved in providing credit to exporters

·        Special policies

20.            What is International Collaboration?

International / Foreign collaboration implies a business partnership/joint venture between an Indian entrepreneur and a foreign entrepreneur. It may be a technical collaboration where in the participant provides advanced technology and technical know-how to the Indian partner.

21. What is Project?

It is defined as a typically has a distinct mission that it is designed to achieve and a clear termination point, the achievement of the mission.

22. What is Project Appraisal?

It means the assessment of a project. Project appraisal is made both proposed and executed projects.