UNIT - 2
Entrepreneurship and micro, small and medium Enterprise
SHORT QUESTION ANSWER
2 MARKS
1.What is Micro enterprise?
1. Ans: A micro enterprise is a small business which sells goods and/or services to a local area or a local market. It employs less than 10 people generally and is geographically restricted. Typically a micro enterprise starts with some form of funding-known as micro credit or micro finance.
Micro enterprises are usually a trademark of a developing country and economy, like India's. There is a dearth of jobs in the formal sector and micro enterprises aim to fill in the gap. They help the economy by not only creating jobs but also lowering production costs, increasing purchasing power and providing convenience.
2. Give two objectives of micro enterprise?
Ans: a. Micro enterprises aim to create large-scale employment in the economy, separate from the formal sector. And they can achieve this target with very limited finances and investment.
b. Another objective is to spread industries and trade in an economically backward area. This helps in the development of the overall economy.
3. Give the Role of Micro Enterprises in the Development of the Indian Economy.
Ans: The improvement and subsequent development of small scale industries and micro enterprises in the country have led to a significant increase in the per capita income in our economy. This can be developed as economic development.
Also, micro enterprises majorly contribute to the employment of our country. They help with the economic development of smaller towns and villages and close the development gap between rural and urban economies.
4. Define Small scale Industry.
Ans: Small scale industries (SSI) are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. For example, these are the ideas of Small scale industries: Napkins, tissues, chocolates, toothpick, water bottles, small toys, papers, pens. Small scale industries play an important role in social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis. But it does not exceed Rs. 1 Crore,
5. Give two characteristics of SSI?
Ans: a.Ownership: Such units are generally under single ownership. So it is a sole proprietorship or sometimes a partnership. b. Management: Both the management and the control generally is with the owner/owners. So the owner is actively involved with the daily running of the business.
6. Give the Role of Small Scale Industries in the Indian Economy.
Ans: 1. Total Production: These enterprises account for almost 40% of the total goods and services produced in the Indian economy. They are one of the main reasons for the growth and strengthening of the economy.
2. Employment: These small scale industries are a major source of employment in the country. The whole labour force cannot find work in the formal sector of the economy. So these labour-intensive industries provide a livelihood to a large portion of the workforce.
7.State some objectives of small scale industries.
Ans: Some of the important objectives are:
1.Create employment.
2.Improve per capita income of lower income groups and also improve their standard of living.
3.They also help backward regions with economic development.
8.Define Large Scale Enterprise?
Ans: A business can range from a single proprietor enterprise to a large corporation which employs thousands of workers across multiple countries. Based on the scale of business, organizations are classified as micro-enterprises, small-scale enterprises, large scale industries, public enterprises, and multinational corporations. In this article, we will take a quick peek at large scale industries.
9.Give two advantages of large scale Industry?
Ans: 1. They provide an impetus to the industrialization of the country.
2. Large scale industries, usually, produce capital and basic goods
(instruments, machines, chemicals, etc.)
10. What are large-scale industries? Also, what is the minimum fixed asset requirement for an industry to be large scale in India?
Ans: Any industry which employs massive infrastructure with an influx of capital assets is a large-scale industry. Further, in India, an industry needs to have fixed assets worth at least Rs. 10 crore to be a large-scale industry.
11. Give two Business House in India.
Ans: 1. Adani Group: Adani Group is one of the well-known business houses in India. The company has its headquarters in Gujarat. It was founded in the year 1988 as a commodity trading business.
2. Aditya Birla Group: Founded by Seth Shiv Narayan Birla in 1857, the Aditya Birla Group is one of the best business houses in India. The group has its headquarters in Worli, Mumbai. It functional in 40 countries with more than 120,000 employees internationally.
12. Give the role of Business group in India.
Ans: Business Groups are an important part of a nation's economy and a major contributor to the GDP of the country. The industrial scenario of many developing economies is identified by various business groups. They have been an essential part of the economy ever since the emergence of the industrial activity in the latter half of the nineteenth century. In India, 90% of the businesses are family-owned. They have played an important role in the development of the Indian economy by filling the gaps from sluggish markets and institutions.
13. Define philosophy of business?
Ans: The philosophy of business considers the fundamental principles that underlie the formation and operation of a business enterprise; the nature and purpose of a business, and the moral obligations that pertain to it.
14. Define conflict in family business?
Ans: A family conflict can impede business relations and decisions; a difference at work can make interacting in the family more difficult. Business families need to manage issues in all three spheres and be disciplined to not let conflict in one area infect another area of the family's life.
15. Give two Steps to Overcome Conflicts in the Family Business?
Ans: 1. Rivalry: Rivalry may spring between parents and their children, as well as between siblings anyone who has a hand in managing the business. There are varied reasons family members may feel that there's a competition going on between them.
2. Favoritism or Nepotism: Favoritism is a deep-rooted problem among families. Usually, it's the elder children who can easily gain the approval or favor of their parents even if that is not their intention. This creates ill feelings among younger siblings who may feel not appreciated for what they do.
LONG QUESTION ANSWER
5 MARKS
1.Explain the objectives of Micro enterprise?
Ans: 1. Micro enterprises aim to create large-scale employment in the economy, separate from the formal sector. And they can achieve this target with very limited finances and investment.
2. Another objective is to spread industries and trade in an economically backward area. This helps in the development of the overall economy.
3.The objective is to bring the backward areas into the plan for national development. So they aim to promote regional development.
4.Micro enterprises also aim to improve the mobilization of the abundance of natural resources in our country.
5.Also to improve the living conditions of all the citizens of the country, irrespective of where they live and work.
2. Explain the Role of Micro Enterprises in Economic Development ?
Ans: We intend in this article to appreciate the important role played by micro and small enterprises in economic development of India. How do you define economic development? The commonest definition could be 'an increase in real per capita income of a person resulting in improvement in the levels of living'. The development of small-scale industries contributes to the increase in per capita income, i.e., economic development in various ways.
It generates immediate employment opportunities with relatively low capital/investment, promotes more equitable distribution of national income, makes effective mobilisation of untapped capital and human skills and leads to dispersal of manufacturing activities all over the country, leading to growth of villages, small towns and economically lagging regions. This promotes to balanced regional development as well.
Any discussion on the role of micro and small enterprises in economic development of a country will much better be facilitated if we examine it with relevant parameters. However, data classified into micro and small enterprises are so far not available.
We are, therefore, presenting the data under small-scale units which includes micro enterprises also. Obviously, increase in the number, production, employment and exports of small-scale enterprises over a period of time could be commonest parameters to adjudge the role played by these enterprises in the national economy. Table 13.2 bears information on these parameters.
3. Explain the various characteristics of Small enterprise.
Ans: 1. A small or micro enterprise is generally a one-man show. Even the small units which run by a partnership firm or company, the activities are mainly carried out by one of the partners or directors. In practice, the others are simply as sleeping partners or directors who mainly assist in providing funds.
2. In case of micro enterprises, the owner himself/herself is a manager also. Thus, these units are managed in a personalized fashion. The owner has firsthand knowledge of what is actually going on in the business. He takes effective participation in all matters of business decision taking.
3. Compared to large units, a micro industrial unit has a lesser gestation period, i.e. the period after which the return on investment starts.
4. The scope of operation of micro and small Industrial undertakings is generally localized catering to the local and regional demands.
5. Micro units use indigenous resources and, therefore, can be located anywhere subject to the availability of these resources like raw materials, labour etc.
6. Micro enterprises are fairly labour intensive with comparatively
smaller capital investment than the larger units. Let the facts speak.
According to P. C. Mahalnobis, small-scale units require very little capital.About six or seven hundred rupees would get an artisan family started.With any given investment, employment possibilities would be ten or fifteen or even twenty times greater in comparison with corresponding factory system.
4. Explain the five Major Problems of Micro and Small Enterprises?
Ans: 1. Problem of Raw Material: A major problem that the micro and small enterprises have to contend with is the procurement of raw material. The problem of raw material has assumed the shape of
(i) An absolute scarcity,
(ii) A poor quality of raw materials, and
(iii) A high cost
The majority of micro and small enterprises mostly produced items dependent on local raw material. Then, there was no severe problem in obtaining the required raw materials. But, ever since the emergence of modem small-scale industries manufacturing a lot of sophisticated items, the problem of raw material has emerged as a serious problem on their production efforts.
2.Problem of Finance: An important problem faced by micro and small enterprises in the country is that of finance. The problem of finance in micro and small sector is mainly due to two reasons. Firstly, it is partly due to scarcity of capital in the country as a whole. Secondly, it is partly due to weak credit worthiness of micro and small enterprises in the country. Due to their weak economic base, they find it difficult to take financial assistance from the commercial banks and financial institutions.
As such, they are bound to obtain credit from the money lenders on a very high rate of interest and are, thus, exploitative in character. It is a happy augury that ever since the nationalisation of banks in 1969, the credit situation has improved still further.
3. Problem of Marketing: One of the main problems faced by the micro and small enterprises is in the field of marketing. These units often do not possess any marketing organisation. In consequence, their products compare unfavourably with the quality of the products of the large-scale industries. Therefore, they suffer from competitive disadvantages vis-a-vis large-scale units.
In order to protect micro and small enterprises from this competitive disadvantage, the Government of India has reserved certain items for the small-scale sector. The list of reserved items has continuously expanded over the period and at present stands at 824 items.
Besides, the Trade Fair Authority of India and the State Trading Corporation (STC) help the small-scale industries in organising their sales. The National Small Industries Corporation (NSIC) set up in 1955 is also helping the small units in obtaining the government orders and locating export markets.
4. Problem of Under-Utilization of Capacity: There are studies that clearly bring out the gross under-utilization of installed capacities in micro and small enterprises. According to Arun Ghosh, on the basis of All India Census of Small-Scale Industries, 1972, the percentage utilization of capacity was only 47 in mechanical engineering industries, 50 in electrical equipment, 58 in automobile ancillary industries, 55 in leather products and only 29 in plastic products. On an average, we can safely say that 50 to 40 per cent of capacity were not utilized in micro and small enterprises.
The very integral to the problems of under-utilization of capacity is power problem faced by micro and small enterprises. In short, there are two aspects to the problem: One, power supply is not always available to the small units on the mere asking, and whenever it is available, it rationed out, limited to a few hours in a day. Second, unlike large-scale industries, the micro and small enterprises cannot afford to go in for alternatives; like installing own thermal units, because these involve heavy costs.
5. Other Problems: In addition to the problems enumerated above, the micro and small enterprises have been constrained by a number of other problems also. According to the Seventh Five Year Plan (GOI 1985: 98), these include technological obsolescence, inadequate and irregular supply of raw materials, lack of organised market channels, imperfect knowledge of market conditions, unorganised nature of operations, inadequate availability of credit facility, constraint of infrastructure facilities including power, and deficient managerial and technical skills.
There has been lack of effective co-ordination among the various support organisations set up over the period for the promotion and development of these industries. Quality consciousness has not been generated to the desired level despite various measures taken in this regard.
Some of the fiscal policies pursued have resulted in unintended splitting up of these capacities into uneconomic operations and have inhibited their smooth transfer to the medium sector. All these constraints have resulted in a skewed cost structure placing this sector at a disadvantage vis-a-vis the large industries, both in the domestic and export markets.
Entrepreneurship B.COM 3rd Sem UNIT 2 Guwahati University
5. Explain the Characteristics of SSI?
Ans. 1. Ownership: SSI 's generally are under single ownership.So it can either be a sole proprietorship or sometimes a partnership.
2. Management: Generally both the management and the control is with the owner/owners. Hence the owner is actively involved in the day-to-day activities of the business.
3. Labor Intensive: SSI's dependence on technology is pretty limited. Hence they tend to use labour and manpower for their production activities.
4. Flexibility: SSI's are more adaptable to their changing business environment. So in case of amendments or unexpected developments, they are flexible enough to adapt and carry on, unlike large industries.
5. Limited Reach: Small scale industries have a restricted zone of operations. Hence, they can meet their local and regional demand.
6. Resources utilisation: They use local and readily available resources which helps the economy fully utilise natural resources with minimum wastage.
6. Explain Some good business philosophies?
Ans: Some good business philosophies are being given as under:
(i) Dhirajlal Hirachand Ambani, better known as Dhirubhai Ambani "Think big, think fast, think ahead. Ideas are no one's monopoly".
(ii) Aafreen Ansari - "Nothing or nobody else except you can stop you from being an entrepreneur"
(iii) Sachin and Binny Bansal, Flipkart-"The core of any business is to earn money. You have not done your job well until you find a stranger who is willing to open his/her wallet to give you money for the service/products that you are offering."
(iv) Ritesh Agarwal, OYO Rooms - "It is extremely important to build something that a 100 people absolutely love using rather than make something that a 1000 people would just, kind of, like."
(v) Kunal Shah, FreeCharge-"If you fully accept the worst that can ever happen in your journey, fear won't ever be an obstacle in starting-up."
7. Explain five Women Entrepreneurs in India ?
Ans: Some young women entrepreneurs who dared to follow their dreams are
1.Kiran Mazumdar Shaw: "I really believe that entrepreneurship is about being able to face failure, manage failure and succeed after failing." Kiran Mazumdar is an Indian entrepreneur. She is the Chairman & Managing Director of Biocon Limited a biotechnology company based in Bangalore. Kiran Mazumdar-Shaw was born on March 23, 1953 in Bangalore, India.
2.Ekta Kapoor: Ekta Jeetendra Kapoor was born on 7th June 1975. She started her career by taking rupees 50000/- from her father to start a business venture, in which she was not successful. This did not dampen her spirit and with encouragement from her father she is today an Indian TV and film producer.She is the Joint Managing Director and Creative Director of Balaji Telefilms, her production company. She did her schooling at Bombay Scottish School, Mahim and studied at Mithibai College Mumbai.
3. Aishwarya Nair: According to her she was inspired by her grandfather and fondly says "And clearly, our grandfather is our inspiration. First, he set up a successful textile business namely The Leela Palace, right from scratch and then he began the hospitality venture when he was 64 years old. There's no stopping him," Aishwarya says. A brand that is dedicated to luxury, the sisters have added a breath of fresh air to the workplace.With Aishwarya capitalizing on her talent in the bakery department, she is constantly innovating by organizing pastry exhibitions and gourmet pet food in the food and beverage division. She always had a creative flair. And her family recognized it at the right time and channeled it towards food and beverage. She picked up her skill for baking at the Mandarin Oriental Hotel, New York City, where she worked soon after her specialized course in culinary arts management at the Culinary Institute of America, New York. She is also responsible for wine acquisition for the group, she hosts exclusive wine tastings in all the seven operating properties in India. She is also working with two international fine dining brands, Megu and Le Cirque, both of which launched in The Leela Palace, New Delhi.
4. Dr. Swati Pirama 1: Swati A. Piramal is the Vice Chairperson of Piramal Life Sciences Limited and Director of Piramal Healthcare Limited. Dr. Piramal received one of India's highest civilian honour's, the Padmashri award, by the President of India, Ms. Pratibha Patil on 4th April, 2012 She has been nominated as one of the 25 Most Powerful Business Women in India eight times and is now a member of the Hall of Fame of the Most Powerful Women. She was the first woman in 90 years to head the Apex Chamber of Commerce ASSOCHAM in 2009-10. She has contributed towards innovations in Public Health Services and other projects.
5. Ameera Shah - Promoter and MD, Metropolis Healthcare : In 2001, when Ameera Shah, then 21, returned from the US to work for her father Sushil Shah's standalone path lab in Mumbai, she faced skepticism from people she wanted to partner with. Their concern was "We have done 25 acquisitions or partnerships with pathologists, who are usually doctors in their 50s or 60s".
8. Explain the Sources of Conflict in family business?
Ans: 1. Direction for the business: Lack of commonly shared vision and values often leads to disagreements among family members. If the business is not directed towards a set of shared strategic goals, conflicts are bound to arise.
2. Decision-making: Another major source of conflict is lack of clarity on the decisionmaking process and the authority over decisions that respective family members have. In addition, lack of a conflict resolution mechanism in cases of disagreements over major decisions aggravates the situation.
3. Roles and responsibilities: Lack of clarity on the roles and responsibilities of individual members and their understanding of the same are potential sources of conflict. Role-overlaps and poorly described performance expectations also become potential sources of conflicts.
4. Compensation/benefits: Remuneration and rewards are among the most frequent sources of conflict. If these are perceived to be unjust or inequitable, a solid ground for potential conflicts is generated, especially among next generation members.
5. Ownership: Family ownership of business is a major responsibility. The actual ownership of the stake and the terms of its transfer to the next generation need to be clearly documented and communicated to family members. Failure in doing so can result in conflicts.
Entrepreneurship B.COM 3rd Sem UNIT 2 Guwahati University
6. Distributions to non-employee shareholders: Shareholders expect fair treatment and distribution of dividends and earnings. Inequitable distributions are invitations to conflicts.
9. Explain the ways to manage conflict in a family business?
Ans: 1. Leverage formal governance structures to mitigate conflict: One issue that we have seen arise in many family businesses is that family members may lack a forum for discussing issues in the business. Formal structures like family councils, boards and family forums can offer family members a safe, organised way to bring up issues and negotiate conflict. Formal governance can also help mitigate family and financial issues by separating ownership of the business from its management functions.
2.Give family members space (and permission) to air grievances: One problem that we frequently see in businesses with a first-generation matriarch or patriarch is that family members may lack a safe way to express their needs and concerns. When people don't feel listened to or appreciated, seemingly small problems can mushroom into major business and family drama.
To help prevent conflicts, family leaders should actively encourage family members to air concerns constructively and give them the space they need to disagree. Senior leaders should come prepared to listen without judgment and be willing to fairly consider what is being brought up.
3.Don't let business bleed into family time (too much): It's very challenging to keep from bringing business home, but one way that conflicts turn into family drama is by failing to keep them separate. Family business leaders must set the example by separating business and family time as much as possible.
One way to make this separation possible is by having formal spaces and structured times to discuss business issues. Explicitly making other times no-business zones can help family members relax into their personal roles and get away from work.
4.Communicate early and often about issues: Many large complications start as small problems that could have been resolved with early intervention. Sometimes, spotting issues early and addressing them through clear communication can be enough to prevent a conflict from developing.
Even when family members see each other regularly in the business, formal family meetings can be a better place to hash out complex issues, Whether it's at a family retreat or simply at a separate meeting, making a break from daily routine to tackle the big issues can help open lines of communication. A formal setting can also help ensure that issues are not ignored and that members of the family have the opportunity to make their opinions heard.
5. Bring in experts to mediate major conflicts: Some issues simply cannot be resolved internally. When family members become entrenched and constructive dialogue isn't possible, an objective expert who is trained to help resolve conflict can help cut through the emotions and focus on issues. A mediator can also help guide a family through initial conversations all the way to a final resolution.
We have found that many family groups can achieve more in a few hours with an outside expert than they have in years by themselves.
10. Explain five business group in India? Ans: 1. ADANI GROUP: Adani Group is one of the top 10 business groups in India. It was founded in the year 1988. It is headquartered in Ahmedabad Gujarat, India. Its diversified businesses include resources, logistics, agribusiness, and energy sectors. Its subsidiaries are Adani Gas Limited, Adani Ports & SEZ Limited, Adani Power. There are many famous companies under the Adani Group.
2. ADITYA BIRLA GROUP: The Aditya Birla Group is an Indian multinational conglomerate, headquartered in Worli, Mumbai, India. The group was founded by Seth Shiv Narayan Birla in 1857. It is one of the top 10 business groups in India and its operations are spread worldwide. Its product range includes Agribusiness, Cement, E-Commerce, Retail, Tele-Communication, Financial Services, Retail, Textile, Wind Power, Carbon Black, and Chemicals.
3.BHARTI ENTERPRISES: Bharti Enterprises was founded in the year 1976. It was founded by Sunil Bharti Mittal. It is headquartered in New Delhi. The group currently operates in 18 countries across Asia and Africa. Bharti Enterprises owns businesses spanning across telecommunications, agribusiness, financial services, and manufacturing,
4. BIRLA CORPORATION: Birla Corporation Ltd was founded in the year 1910. It was founded by Madhav Prasad Birla and Shri Ghanshyam Das Birla. It is headquartered in Kolkata, West Bengal India. It is one of the top 10 business groups in India. In the 1890s, Birla Corporation was a jute manufacturing company, but over time, it grew to operate four main divisions: cement, vinoleum, jute and auto trim. Formerly it was referred to as Birla Jute Manufacturing Company Limited. The company changed its name in 1998 to Birla Corporation Limited after the expansion of the division. The group has several companies working under it.
5. ESSAR GROUP: Essar Global Fund Ltd is an Indian conglomerate group based in Mumbai, India. It was founded in the year 1969. It is one of the top business houses in India. The group controls a number of assets across the core sectors of Energy (Oil Refining, Oil & Gas Exploration & Production, Power), Infrastructure (Ports, Projects), Metals & Mining, and Services (Shipping, Oilfield Services, IT). It holds near 100% stake in all its investments.
Entrepreneurship B.COM 3rd Sem UNIT 2 Guwahati University
LONG QUESTION ANSWER
10 MARKS
1. Explain the Advantages and Disadvantages of Small-BusinessOwnership?
Ans: Advantages of small-Business ownership
1. Independence: Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business with and what work they will do. They decide what hours to work, as well as what to pay and whether to take vacations. For many entrepreneurs the freedom to control their destiny is enough to outweigh the potential risks.
2. Financial gain Entrepreneurship offers a ater possibility of achieving significant financial rewards than working for someone else. Owning your own business removes the income restraint that exists in being someone else's employee. Many entrepreneurs are inspired by the mega-millionaire entrepreneurs we see today, such as Steve Jobs, Elon Musk, Jeff Bezos, and Mark Zuckerberg.
3.Control: It enables one to be involved in the total operation of the business, from concept to design to creation, from sales to business operations to customer response. This ability to be totally immersed in the business is very satisfying to entrepreneurs who are driven by passion and creativity and possess a "vision" of what they aim to achieve. This level of involvement allows the business owner to truly create something of their own.
4.Prestige: It offers the status of being the person in charge. Some entrepreneurs are attracted to the idea of being the boss. In addition, though, there is the prestige and pride of ownership. When someone asks, "Who did this?" the entrepreneur can answer, "I did."
5. Equity : It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation. It's not uncommon for entrepreneurs to own multiple businesses throughout their life. They establish a company, run it for a while, and later sell it to someone else. The income from this sale can then be used to finance the next venture. If they're not interested in selling the business, the goal may be to build something that can be passed down to their children to help ensure their financial future. One thing is sure: In order to fully reap the financial benefits of a business venture, you need to be the owner.
6. Opportunity: Entrepreneurship creates an opportunity for a person to make a contribution. Most new entrepreneurs help the local economy. A few-through their innovations contribute to society as a whole.
Disadvantages of Small-Business Ownership_
1. Time commitment: When someone opens a small business, it's likely, at least in the beginning, that they will have few employees. This leaves all of the duties and responsibilities to the owner. Small business owners report working more than eighty hours a week handling everything from purchasing to banking to advertising. This time commitment can place a strain on family and friends and add to the stress of launching a new business venture.
2. Risk: Even if the business has been structured to minimize the risk and liability to the owner, risk can't be completely eliminated. For instance, if an individual leaves a secure job to follow an entrepreneurial dream and the business fails, this financial setback can be hard to overcome. Beyond financial risk, entrepreneurs need to consider the risk from product liability, employee disagreements, and regulatory requirements.
3. Uncertainty : Even though the business may be successful at the start, external factors such as downturns in the economy, new competitors entering the marketplace, or shifts in consumer demand may stall the businesses growth. Even entrepreneurs who go through a comprehensive planning process will never be able to anticipate all of the potential changes in the business environment.
4.Financial commitment: Even the smallest of business ventures requires a certain amount of capital to start. For many people starting small businesses, their initial source of funding is personal savings, investments, or retirement funds. Committing these types of funds to a business venture makes them unavailable for personal or family needs. In most cases where a small business receives start-up funding through a loan, the entrepreneur must secure the loan by pledging personal assets, such as a home. Risking the equity in one's home is a financial commitment not all entrepreneurs are willing to make.
2. Explain the characteristics and objectives of Small enterprise?
Ans: Characteristics of Small-Scale Industries_
(i) Ownership Ownership of small scale unit is with one individual in sole-proprietorship or it can be with a few individuals in partnership.
(ii) Management and control: A small-scale unit is normally a one man show and even in case of partnership the activities are mainly carried out by the active partner and the rest are generally sleeping partners. These units are managed in a personalised fashion. The owner is activity involved in all the decisions concerning business.
(iii) Area of operation: The area of operation of small units is generally localised catering to the local or regional demand. The overall resources at the disposal of small scale units are limited and as a result of this, it is forced to confine its activities to the local level.
(iv) Technology: Small industries are fairly labour intensive with comparatively smaller capital investment than the larger units. Therefore, these units are more suited for economics where capital is scarce and there is abundant supply of labour.
(v) Gestation period: Gestation period is that period after which teething problems are over and return on investment starts. Gestation period of small scale unit is less as compared to large scale unit.
(vi) Flexibility: Small scale units as compared to large scale units are more change susceptible and highly reactive and responsive to socio-economic conditions. They are more flexible to adopt changes like new method of introduction of new products etc.
(vii) Resources: Small scale units use local or indigenous resources and as such can be located anywhere subject to the availability of these resources like labour and raw materials.
(viii) Dispersal of units: Small scale units use local resources and can be dispersed over a wide territory. The development of small scale units in rural and backward areas promotes more balanced regional development and can prevent the influx of job seekers from rural areas to cities.
Objectives of Small Scale Industries
The objectives of small scale industries are
1. To create more employment opportunities with less investment.
2. To remove economic backwardness of rural and less developed regions of the economy.
3. To reduce regional imbalances.
4. To mobilise and ensure optimum utilisation of unexploited resources of the country.
5. To improve standard of living of people.
6. To ensure equitable distribution of income and wealth.
7. To solve unemployment problem.
8. To attain self-reliance.
9. To adopt latest technology aimed at producing better quality products at lower costs.
3. Explain the top Business Group in India?
Ans: 1. ADANI GROUP: Adani Group is one of the top 10 business groups in India. It was founded in the year 1988. It is headquartered in Ahmedabad Gujarat, India. Its diversified businesses include resources, logistics, agribusiness, and energy sectors. Its subsidiaries are Adani Gas Limited, Adani Ports & SEZ Limited, Adani Power. There are many famous companies under the Adani Group.
2. ADITYA BIRLA GROUP: The Aditya Birla Group is an Indian multinational conglomerate, headquartered in Worli, Mumbai, India. The group was founded by Seth Shiv Narayan Birla in 1857. It is one of the top 10 business groups in India and its operations are spread worldwide.Its product range includes Agribusiness, Cement, E-Commerce, Retail, Tele-Communication, Financial Services, Retail, Textile, Wind Power, Carbon Black and Chemicals.
3. BHARTI ENTERPRISES: Bharti Enterprises was founded in the year 1976. It was founded by Sunil Bharti Mittal. It is headquartered in New Delhi. The group currently operates in 18 countries across Asia and Africa. Bharti Enterprises owns businesses spanning across telecommunications, agribusiness, financial services, and manufacturing. Bharti is present in many sectors with the largest revenue contribution coming from the telecom industry. There are several companies under the Bharti Group and it is one of the top business houses in India.
4. BIRLA CORPORATION LTD: Birla Corporation Ltd was founded in the year 1910. It was founded by Madhav Prasad Birla and Shri Ghanshyam Das Birla. It is headquartered in Kolkata, West Bengal India. It is one of the top 10 business groups in India.
In the 1890s, Birla Corporation was a jute manufacturing company, but over time, it grew to operate four main divisions: cement, vinoleum, jute and auto trim. Formerly it was referred to as Birla Jute Manufacturing Company Limited. The company changed its name in 1998 to Birla Corporation Limited after the expansion of the division. The group has several companies working under it.
5. ESSAR GROUP: Essar Global Fund Ltd is an Indian conglomerate group based in Mumbai, India. It was founded in the year 1969. It is one of the top business houses in India. The group controls a number of assets across the core sectors of Energy (Oil Refining, Oil & Gas Exploration & Production, Power), Infrastructure (Ports, Projects), Metals & Mining, and Services (Shipping, Oilfield Services, IT). It holds near 100% stake in all its investments.
6. ESCORTS GROUP: Escorts Group was founded in the year 1960. It was founded by Hari Nanda and Yudi Nanda. It is headquartered in Faridabad, Haryana, India. Products offered under this group are Tractors, crop solutions, pick and carry cranes, backhoe loaders, vibratory compactors, railway brake systems, couplers, etc. Escorts Group has marketing operations in more than 40 countries. Escorts manufactures a wide range of tractors, automotive components, railway equipment, and construction & material handling equipment. It is one of the top business houses in India.
7. ITC LTD: ITC Ltd was founded in the year 1910. It is headquartered in Kolkata, West Bengal. Its diversified business includes Hotels, Packaging, Fast-Moving Consumer Goods, Information Technology and Agri-Business. Its product range includes
- Consumer goods
- Tobacco
- Hotels
- Agribusiness
- Paperboards
- Packaging
- Information technology
8. L&T GROUP: Larsen & Turbo was founded in the year 1946 in Bombay Presidency, British India. It is headquartered in Ballard Estate, Mumbai, Maharashtra, India.The company is focusing on various segments like manufacturing goods, information technology, construction, financial services having offices worldwide. As per March 2018, L&T Group comprises of around 93 subsidiaries, 8 associates, 34 joint-venture and 33 joint operations companies.
9. RELIANCE ADA GROUP: Reliance ADA Group was founded in the year 1966 by Dhirubhai Ambani, headquartered in Maharashtra, India. Reliance Group has six listed companies Reliance Power, Reliance Communications, Reliance Infrastructure, Reliance Capital Reliance Entertainment and Reliance Health. It is one of the top 10 business groups in India. The group offers financial services, telecom, construction, power, entertainment, health care, manufacturing, defense, aviation, and transportation services.
10.TATA GROUP: Tata Group was founded in the year 1868 by Jamsetji Tata. One of the top 10 business groups in India, Tata Group is an Indian multinational conglomerate headquartered in Mumbai, Maharashtra, India. Tata Group is owned by Tata Sons. Its range of products include-Automotive, Airlines, Chemicals, Defense, FMCG Electric Utility, Finance, Home Appliances, Hospitality, IT Services, Locomotives, Retail, Real Estate, Steel, and, Telecommunications.
4. Explain The Advantages and Disadvantages of a FamilyBusiness?
Ans: Advantages of Family Firms include
1. Stability: Family position typically determines who leads the business and as a result there is usually longevity in leadership, which results in overall stability within the organization. Leaders usually stay in the position for many years, until a life event such as illness, retirement, or death results in change.
2. Commitment: Since the needs of the family are at stake, there is a greater sense of commitment and accountability. This level of long term commitment leads to additional benefits, such as a better understanding of the industry, organization and job, stronger customer relationships and more effective sales and marketing.
3. Flexibility: You won't hear, "Sorry, but that's not in my job description" in a family business. Family members are willing to wear several different hats and to take on tasks outside of their formal jobs in
order to ensure the success of the company. Estee Lauder, who led one of the world's most famous family businesses and was the only woman on Time magazine's list of the century's business geniuses in 1998, said of her company's success, "I have never worked a day in my life without selling. If I believe in something I sell it, and I sell it hard." Lauder did everything from cooking up pots of cream to ersonally giving free demonstrations, from designing the packaging of her products to training the saleswomen who would sell them.
5. Long-term Outlook: Non-family firms think about hitting goals this quarter, while family firms think years, and sometimes decades, ahead. This "patience" and long-term perspective allows for good strategy and decision-making. In describing his reasons why he didn't want to take his company public, Michael Otto, second- generation CEO of Hamburg, Germany's $18.5 billion retailer Otto Group, said, "We don't have to come up with a good story every quarter for the investors and the press."
6. Decreased Cost: Unlike typical workers, family members working at family firms are willing to contribute their own finances to ensure the long-term success of the organization. This could mean contributing capital, or taking a pay cut. This advantage comes in particularly handy during challenging times, such as during economic downturns, where it's necessary to tighten the belt or personally suffer in order for the business to survive.
Disadvantages of Family Firms include_
1.Family Conflict: Conflict is bound to happen at any firm, but add in long histories, family relationships, and the kind of contempt that comes with familiarity, and the ante has just been upped. Deep-seated, long-lasting bitter fights and quarrels can affect every single person within the firm and can draw divisive lines. Because family members are involved, conflict can be more difficult to solve and can result in difficult endings.
In 2005, a famous dispute between the sons of Reliance Industries founder Dhirubhai Ambani, Mukesh and Anil, divided India's largest petrochemical manufacturer. When all was said and done Mukesh retained control of the petrochemical business, while Anil became chairman of Reliance Capital, Reliance Communications, and Reliance Energy.
2. Unstructured Governance : Governance issues such as internal hierarchies and rules, as well as the ability to follow and adhere to external corporate laws, tend to be taken less seriously at family businesses, because of the level of trust inherent at family firms. Unfor tunately, this can be gravely detrimental. Take the example of Samsung Group, whose chairman, Lee Kun-Hee, was forced to resign in 2008 after being indicted for tax evasion and criminal breach of trust charges. While his three-year sentence was suspended, a fine of $109 million was still imposed. In this situation, a little governance would have gone a long way.
3. Nepotism: Some family businesses are reluctant to let outsiders into the top tier, and the result is that people are given jobs for which they lack the skills, education, or experience. This, obviously, has a far reaching effect on the success of the company. In particular, it's very difficult to retain good talent at lower levels if their performance, and their ability to succeed in the long run, is consistently being affected by incompetence at higher levels. More family firms are recognizing this issue and are taking care to strategically place outsiders in certain positions when necessary.
4. Succession Planning : Many family firms lack succession plans, either because the leader doesn't have the desire to admit that he or she will, one day, need to step down, or because there is too much trust in the family to work this out when it becomes necessary. In fact, because of close relationships and long histories, it is of utmost importance in family firms that a strong succession plan is in place.
Entrepreneurship B.COM 3rd Sem UNIT 2 Guwahati University
5. Explain some Women Entrepreneurs and their values in India?
Ans: Some young women entrepreneurs who dared to follow their dreams are_
1. Kiran Mazumdar Shaw: "I really believe that entrepreneurship is about being able to face failure, manage failure and succeed after failing."Kiran Mazumdar is an Indian entrepreneur. She is the Chairman & Managing Director of Biocon Limited a biotechnology company based in Bangalore. Kiran Mazumdar-Shaw was born on March 23, 1953 in Bangalore, India.
Her Value
i. Belief in herself
ii. Leadership iii. Vision
iv. Go-getter spirit v. Not afraid of failures
2. Ekta Kapoor: Ekta Jeetendra Kapoor was born on 7th June 1975. She started her career by taking rupees 50000/- from her father to start a business venture, in which she was not successful. This did not dampen her spirit and with encouragement from her father she is today an Indian TV and film producer. She is the Joint Managing Director and Creative Director of Balaji Telefilms, her production company. She did her schooling at Bombay Scottish School, Mahim and studied at Mithibai College Mumbai.
Her Values
i. Complete belief in family traditions & family values.
ii. Decisions based on instinct or sixth sense
iii. Persistence
iv. Hard work & diligence
3. Aishwarya Nair : According to her she was inspired by her grandfather and fondly says "And clearly, our grandfather is our inspiration. First, he set up a successful textile business namely The Leela Palace, right from scratch and then he began the hospitality venture when he was 64 years old. There's no stopping him," Aishwarya says. A brand that is dedicated to luxury, the sisters have added a breath of fresh air to the workplace.
With Aishwarya capitalizing on her talent in the bakery department, she is constantly innovating by organizing pastry exhibitions and gourmet pet food in the food and beverage division. She always had a creative flair. And her family recognized it at the right time and channeled it towards food and beverage. She picked up her skill for baking at the Mandarin Oriental Hotel, New York City, where she worked soon after her specialized course in culinary arts management at the Culinary Institute of America, New York. She is also responsible for wine acquisition for the group, she hosts exclusive wine tastings in all the seven operating properties in India. She is also working with two international fine dining brands, Megu and Le Cirque, both of which launched in The Leela Palace, New Delhi.
Values__
i.Zeal to learn
ii. Taking inspiration from family members
iii. Innovation as key to success
4. Dr. Swati Pirama I: Swati A. Piramal is the Vice Chairperson of Piramal Life Sciences Limited and Director of Piramal Healthcare Limited.
Dr. Piramal received one of India's highest civilian honour's, the Padmashri award, by the President of India, Ms. Pratibha Patil on 4th April, 2012 She has been nominated as one of the 25 Most Powerful Business Women in India eight times and is now a member of the Hall of Fame of the Most Powerful Women. She was the first woman in 90 years to head the Apex Chamber of Commerce ASSOCHAM in 2009 10. She has contributed towards innovations in Public Health Services and other projects. Her Values
i. Doing good for society
ii. Extending helping hand
iii. Courtesy & humility
5. Ameera Shah - Promoter and MD, Metropolis Healthcare : In 2001, when Ameera Shah, then 21, returned from the US to work for her father Sushil Shah's standalone path lab in Mumbai, she faced skepticism from people she wanted to partner with. Their concern was "We have done 25 acquisitions or partnerships with pathologists, who are usually doctors in their 50s or 60s".
Values__
i. Hard work
ii. Persistence
iii. Extreme self-confidence
6. Vandana Luthra: Vandana Luthra is an entrepreneur who can be said to be embodiments of her enterprise. She is slim and svelte. She carries herself with the grace that only comes with enormous self confidence. She's the founder and mentor of the VLCC, India's leading slimming, beauty and fitness brand, and one with seven outlets in Abu Dhabi, Dubai and Sharjah, and many more to open. There are VLCC slimming, beauty and fitness centers in Muscat and Bahrain, and by next year there will be a total of some 28 across the Middle East.The largest number of VLCC centers, of course, is in Ms. Luthra's native India - 150 of them in 75 cities. She facilitates professional development through her vocational training school, the VLCC Institute of Beauty, Health & Management, which currently has 43 campuses in 35 cities.Ms. Luthra says "The entrepreneur as an educator-That would be a fair way to characterize me and Fitness and well-being are a matter of education, and for that you need skilled trainers." Her own training after graduating from Delhi University was in nutrition and cosmetology in Germany. Then Ms. Luthra took a series of specialized courses and modules in beauty care, fitness, food and nutrition and skin care in London, Munich and Paris. And then she returned to her middle-class home in New Delhi, India's capital, and started a neighbourhood beauty parlour.
Values:-
i. Good clean business
ii. Doing good to women in particular
iii. Belief in good heath
7. Hamsa Vamanan and Priyanka Narasimhalu: Paaduka is the entrepreneurial venture of two close friends, Hamsa Vamanan and Priyanka Narasimhalu. It was the result of the passion they shared for art. Both of them had learnt art and had hoped to make it their profession. However, despite being good artists they were not too successful at selling their paintings. Eventually, they realized that a career in painting was not working for them.
According to Hamsa "It was a dull and gloomy phase that we went through, we wanted to do something with art but were not sure of what, since we had no artistic or business background. We did not know anything about how to sell art or how to push it." Then one day, they realized that instead of paintings, they should put their creative side to good use and decided to "Paint something that people can afford to buy." That was motivation enough for them. Both were naturally drawn to footwear and thought of painting and embroidering on footwear.
Values__
i. Go-getter spirit
ii. Passion
iii. Achievers
8.Srijayapriya Balasundaram, Srinidhi Sridharan, Aparrna Sivasubramanian and Akshaya Sivaraman - Friends who Turned Business Partners: Srijayapriya Balasundaram, Srinidhi Sridharan, Aparna Sivasubramanian and Akshaya Sivaraman are four friends who were all interested in starting a business. They put their heads together and came up with the idea of doing something ecofriendly.
The four girls were all students of MOP Vaishnav College for Women, in Chennai. MOP has a bazaar every year where all entrepreneurs in the college can put up a stall. The four of them decided to put up a stall with ecofriendly jute and cotton bags made by a women's self-help group. They purchased hand woven bags, customized them and sold them at this bazaar. The feedback was excellent and thus" Diva Bags" was born.
The motivation for them to start the business was the continuation of their friendship. The four girls are now in different parts of India but each contributes to the business and is trying to make it grow in her area of residence now. They run the ness through web sales. The bazaar was just a stepping stone for them. Orders now come in through social media sites as well as corporate houses.
Starting this venture was not an easy task. All four were studying and there were many challenges involved. They had to focus a lot on the business and they have never compromised on either quality or price." Values__
i. Team spirit
ii. Determination to achieve
iii. Dreaming big.
6. Explain Role Models in the Startup Domain?
Ans: 1. Deep Kalra: Deep Kalra is the Founder & CEO ofMakeMyTrip, India's leading online travel portal. An IIM-A alumnus, Deep launched MakeMyTrip in 2000 and has traversed the extremes of the Indian online space. Deep has strongly accentuated on the fact that entrepreneurs should not start-up focusing on exits.
2. Dorai Thodla: Dorai Thodla is a founder of iMorph, Inc. iMorph builds tools and provides services for gathering technology intelligence, market intelligence and industry intelligence. He has been
an active mentor and guides many startups in getting their act right.
3. Kishore Biyani: Kishore Biyani is the CEO of Future Group, and the MD of Pantaloon Retail. Biyani's Future Group has over 17 million square feet of retail space in 90 cities and 60 rural locations. He managed to raise $170 million by taking venture capital arm Future Ventures public in March 2011. Kishore is also the co-author of the book "It happened in India". It is the story of Pantaloons, Big Bazaar, Central and the Great Indian Consumer, co-authored with Dipayan Baishya. Surely a role model for many across India.
4. Mahesh Murthy: Mahesh Murthy is a founding partner at Seed-fund, and has over 26 years of marketing and communications experience, of which 15 years are in online marketing. After dropping out of college, Mahesh sold vacuum cleaners from door to door, worked with Grey in India and Ogilvy in Hong Kong, where he won notoriety and awards as a creative director on HP, The Economist, Pepsi and MTV For whom he wrote and directed a spot voted "Asia's best commercial of the decade".
5. Naveen Tewari : Naveen Tewari is the Founder of InMobi, the world's largest independent mobile advertising network. This is no small feat and Naveen feels that a lot depends on the entrepreneur's mindset. One of the most successful entrepreneurs of the new age, Naveen has inspired many to dream big and achieve things entrepreneurs usually thought to be out of their reach.
6. Phanindra Sama : Phanindra Sama is the Founder & CEO of redBus(dot)in, the leading online bus ticketing portal. Phanindra Sama is be better known as "Phani" in the startups space and has been able to build a vastly successful company. It is under his leadership that redBus achieved the feat of selling 10 million bus tickets.
7. Sachin and Binny Bansal: The Bansals are the poster boys of the Indian startup ecosystem, with their e-commerce firm Flipkart pegged to be the Amazon of India. Although mired in a few controversies off late, Flipkart remains the biggest e-Commerce venture in India. YourStory visited the Flipkart's Bangalore office during the firm's early days and caught up with this duo then. From then till today, their growth has been phenomenal coupled with multiple rounds of funding which has kept them head and shoulders above the rest. No surprise that the Bansal brothers are the role models for many.
8. Sanjeev Bikhchandani : Sanjeev Bikhchandani, an IIM-A - Alumnus, is the Founder of Naukri(dot)com, India's leading online job portal. An early catcher of the Internet market in India, Sanjeev sees high potential in the consumer internet and mobile. He is another widely respected entrepreneur, who has built a company with sheer grit and determination.
Entrepreneurship B.COM 3rd Sem UNIT 2 Guwahati University
7.Explain the Problems Plague Family Businesses?
Ans: 1. Family Conflicts : Not all families agree on everything- that is normal. If a family has a conflict, they don't necessarily need to agree, but they do need to agree to move forward for the sake of the family and the business. Families need to make sound business decisions that are not dictated by emotions or grudges.
2. Poor Planning: Like estate planning, things can get hairy when families fail to plan for the owner's disability or death. When a family fails to plan, the business can shift in a less than ideal direction, which can impact the business's sustainability and success, not to mention the family legacy.
3. Undefined Expectations: When a business owner intends to hand their business to a child or other family member, there needs to be a mutual understanding about the owner's expectations. When the owner's succession goals are undefined or vague, or when the owner refuses to share power, it can lead to resentment which can harm the family and the business.
4. Sense of Entitlement: We often see this when Mom and Dad give a child power in the company but they've done little, if anything to earn it. When parents fail to have their children work in the trenches alongside the employees, the kids can become poor leaders with unrealistic expectations. The employees can resent the kids and they can quit because they no longer respect their superiors. When the time comes for the kids to take over, they are incapable and they put the business at risk.
5. Poorly Defined Responsibilities: When the responsibilities in a company are poorly-defined, it will lead to extra work, lost productivity, and disorganization. In all businesses, including family businesses, people need to have a common understanding of who does what. When roles and responsibilities are poorly-defined, they will contribute to mismanaged expectations and chaos.
6. Poor Communication: Because families are more comfortable with each other, they can let poor communication get in the way of running their business. If family members cannot communicate effectively with each other; for example, if they blow up, give one another the silent treatment, or storm away from a conversation, the business will not move forward. To keep this from happening, family members need to treat each other with dignity and respect and walk each other through their individual perspectives until a resolution is reached.
Resolution to conflict on Family Business
1. Family meetings: One of the single most effective practices that a family which works together can implement is to hold periodic family meetings. Holding periodic family meetings helps to ensure that there is a forum for family (and often also for ownership) issues to be discussed.
2. Establish shared family values, goals & objectives: Shared family values help to provide "family glue" and become a tool in joint decision making. Shared goals and objectives for the business put everyone on the same page.
3. A conflict resolution process: Conflict is inevitable. A clearly agreed conflict resolution process for raising and working through conflicts might include_
- First, an agreement to attempt to resolve conflicts though facilitation or through the input of family elders.
- Second, engage in a formal mediation process with professionally qualified mediators;
- Third, that the dispute be resolved through binding private arbitration; and If all of the above fails, then litigation in the court system.
4.A code of conduct: It is very useful for families to develop a code of conduct which specifies the behaviour expected of family members. Important code of conduct rules can include commitments that each family member will__
- Take responsibility for managing their own emotional reactions.
- Invest time in the relationships with their fellow family shareholders.
- Speak with one voice to the non-family directors, staff and the public.
5. Family business policies: Many family business conflicts are predictable. Preparing written family policies before conflicts arise will mean there are specified ways to resolve conflicts if and when they do occur.
Family business policies help to define the boundary between family and business, and to strike a fair balance between ownership and business.
Examples include a family employment policy, a dividend policy, a liquidity policy and a compensation policy.
6. An exit plan: This is a process through which a family member shareholder can sell some shares in the family business, reducing their stake or ultimately completely exiting from ownership.
It is usually documented in a legally binding shareholders agreement.
An exit plan gives shareholders a way out if they do not believe in the direction that the business is being taken. An exit plan can prevent disagreements over the valuation of
shares.
7. Outside directors: One of the best ways to strengthen a family business is to ensure that there are several non-family, non
executive directors on the board of the company.
Outside directors can help to bring an objective view, particularly with respect to the performance and skills of family members in management roles. family Outside directors can help to mediate disputes between members.
8. Family elder: In many Asian families, there is often a communication gap between the generations.
Electing someone who can be trusted by both the senior generation and by the next generation is a good way to help to bridge this communication gap.A family elder can be an uncle, aunt or an in-law; or they could even be a well trusted non-family member.
A family elder can help to mediate disputes between family members.
9. Family education & development: Family members that plan to work together should invest time to attend external training and development activities to learn tangible skills, such as:
- Listening skills.
- Conflict resolution skills
- Approaching difficult conversations Developing greater selfawareness Understanding people
- Understanding family personalities. Understanding family dynamics owned businesses.
10. A family constitution: A family constitution is a written document, developed collaboratively by the family members, usually incorporating all of the above tips & tools.
The family constitution can either include key family policies, or it can define the process for developing family policies. It should set out a fair decision making process for the family to follow. The process of creating a family constitution will also provide an opportunity for the family members to clarify the different roles and responsibilities that exist within their family business.
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