Class: 12 K Chapter: Entrepreneurial Planning

Issue Date:/11/2023 Submission Date: /11/2023

Worksheet
1 Why is a private company more desirable than a public company. Give any 2
two reasons.
Ans
1) Only two members are required to form a private company.
2) Only two directors are required to constitute the quorum to validate the
proceedings of the meetings.
3) Such companies can file a statement in lieu of a prospectus with the
Registrar of Companies.
4) It can commence its business immediately after incorporation.
5) Holding of a statutory meeting or filing of a statutory report is required by a
private company.
6) A non-member cannot inspect the copies of the profit and loss A/c filed with
the Registrar.
7) Limit on payment of maximum managerial remuneration does not apply to
a private company.
8) Restrictions on appointment and reappointment of managing director do
not apply.
9) Maintaining an index of members is not required by a private company.
10) Directors of the private company need not have qualification shares.
2 What does the manpower plan help to assess? 3
Ans.
The manpower plan helps to assess three things.
1. What kind of people are required?
Each organisation needs personnel with the necessary qualifications, skills,
knowledge, experience and aptitude for work. The entrepreneur must clearly
state: (a) what kind/type of person is required to be hired for getting his work
done. (b) State the personnel ranging from managers, supervisors,
administrators, engineers, technical, skilled and unskilled class. (c) Nature of
business activity which will help in deciding the type of manpower required.
2) How many people are required?
This question deals with the quantity of personnel the enterprise needs. The
number of people required for various positions throughout the enterprise gets
affected by: a) The total work to be done. b) How much work can an average
person do in a specified period of time. c) Level of absenteeism expected. d)
Rate of labour turnover. e) The present number of employees. f) The future
plans for expansion and diversification.
3) How to procure personnel?
As the next step in manpower planning, entrepreneur clearly mentions the
strategies, methods, policies, rules and regulations pertaining to persons with
respect to Recruitment, Selection and Training.
3 Explain the first three steps involved in preparing the marketing plan
1) Business situation analysis - A review of past performance and
achievements of the enterprise are stated here in but for a new venture, focus
 shifts rather towards: a) Personal profile of the entrepreneur b) Emphasis on
products development c) What 'need' it satisfies d) Any other
enterprise/experience of the entrepreneur e) Any marketing segmentation, if
planned.
2) Identify the target market - For a new venture, it's very essential to clearly
define the specific group of potential customers whose needs the enterprise
aims to fulfill. This identification of the "target market" is a pretty tedious task
as it involves: a) Deciding what the general market or industry entrepreneur
wishes to pursue is based on market research or industry analysis done and
complied with by competent people or the entrepreneurs. Divide the market
into smaller groups based on: i) Consumer's characteristics viz. Geographic
(State, Country etc.) Demographic (Sex, age, etc.) Psychographics
(Personality, lifestyle, etc.) ii) Buying situations viz. Buying conditions (time
available etc.) Usage Desired benefits (features of product) c) Select segment
or segments to target. d) Develop a marketing plan integrating according to
product, price, distribution, promotion.
3) Conduct SWOT analysis It is important for the entrepreneur to consider in
the 'target market' his/her enterprise's: a) Strengths b) Weaknesses c)
Opportunities d) Threats. Marketing plan needs to consider the strengths and
weaknesses of the new venture to ensure its success.
4 The entrepreneur should develop a sound financial plan as timely availability 3
of funds in the right volume is key to entrepreneurial success.
In the light of the given statement, examine the relevance of a financial plan
for an entrepreneur.
Ans.
Availability of finance facilitates the entrepreneur to bring together men,
material, machines and methods to produce goods/services.
The financial plan should be able to meet all financial obligations and the
company should maintain its liquidity in order to pay off the debts and also
provide good returns on the investment made.
Financial plan must project: a) The potential investment commitment needed
for the new venture, and b) Economic feasibility of the enterprise
The entrepreneur uses various financial projection techniques and tools to
draft the financial plan. The entrepreneur will need to present three years of
projected financial data to satisfy any outside investors.
5 ‘While there are benefits of going public as a source of finance for a company,
it also means additional obligations’. Analyse and justify the statement.
Ans.
Benefits:
1) Access to capital : The primary advantage an entrepreneur stands to gain
by going public is access to capital. In addition, the capital does not have to
be repaid and does not involve an interest charge.
2) Other advantages
i.Mergers and acquisitions: Public stock of a company can be used for
businesses to grow through acquisitions.
ii.Higher valuations: Public companies are typically valued more than private
companies.
iii.Benchmark trading price: The trading price of a public company’s stock
serves as a benchmark of the offer price of other securities.
iv.Capital formation: Raising capital later is typically easier because of the
 extra liquidity for the investors.
v. Less dilution: There is less dilution of ownership control compared to an
IPO.
Drawbacks:
i. Increasing accountability to public shareholders
ii. Need to maintain dividend and profit growth trends
iii. Becoming more vulnerable to an unwelcome takeover
iv. Need to observe and adhere strictly to the rules and regulations by
governing bodies
v. Increasing costs in complying with higher level of reporting
requirements
6 What is the need for a business plan? Elaborate on various formats in 5
presenting a business plan to prospective investors?
Ans.
It helps the entrepreneur to frame a formal statement enlisting a set of
business goals, the reasons as to why they believe that it is attainable and the
plan for reaching those goals along with the background information about the
organization or/and team attempting to reach those goals.
Formats of business plan:
i)Elevator pitch: It is a three minute summary of the business plan's executive
summary. This is often used as a teaser to awaken the interest of potential
funders, customers, or strategic partners.
ii) A pitch deck with oral narrative : A hopeful, entertaining slide show and oral
narrative that is meant to trigger discussion and interest potential investors in
reading the written presentation, i.e. the executive summary and a few key
graphs showing financial trends and key decision making benchmark.
iii) A written presentation for external stakeholders: A detailed, well written,
and pleasingly formatted plan targeted at external stakeholders.
iv) An internal operational plan: A detailed plan describing planning details that
are needed by management but may not be of interest to external
stakeholders.
7 Aarushi finished her Bachelors degree in Management and decided to join 5
Paras Pharmaceuticals. She was placed under the department which
oversaw the exact route of each individual item. Her supervisor Kumar
explained that their department plays a very important function of looking into
the movement of material, performance of machines and operations of labour.
She was surprised and asked Kumar the reason and he further explained that
the department makes a plan for every item which will ensure the orderly flow
of materials from raw material stage to the finished product stage and this will
enable continuous production always.
He further elaborated on various systems used for quality control. Kumar
showed her an existing plan and asked Aarushi to devise a plan incorporating
all that he had explained.
Explain the first five elements involved in this plan.
Ans.
Aarushi had joined the Operations Department and Kumar was explaining to
her about the elements involved in the operational plan. The following are the
first five elements involved in the plan:
1) Routing: It is a process concerned with determining the exact route or path
a product/ service has to follow right from raw material till its transformation
 into finished product.
2) Scheduling: It means fixation of time, day, date when each operation is to
be commenced and completed.
3) Dispatching: The process of initiating production in accordance with a pre-
conceived production plan is said to be dispatching. This includes issuing
necessary orders, instructions, guidelines and/or information to work
pertaining to giving practical shape to the production plan.
4) Follow-Up: This element relates to evaluation and appraisal of work
performed. A properly planned follow-up procedure is helpful in dispatching
errors and defects in the work.
5) Inspection: It is the art of comparing materials, product or performance with
established standards. This element helps the entrepreneur to set up
laboratories or evolve strategies/methods to ensure predetermined quality of
product/service.
8 What is meant by ‘mutual agency of partners’?
The business of partnership can be carried on by all partners or any one of
them acting for all.
9 Although not mandatory, some entrepreneurs may file part I of
entrepreneurs memorandum District Industries Centre. Why?
This may be necessary for claiming certain incentives / subsidiesand for
certain formalities at the state level.
10 Human life is built around works". Identify the form of Business
Organisation being talked about in the following sentences:-
(a)"The one-man control is the best in the world if that man is big enough
to manage everything."
(b)"Two heads being better than one."
(c)"Self-help as well as mutual help system."
(d)The birth of this legal person is by law and can be put to death by law
only.
a..Sole proprietorship. b.Partnership. c.Cooperative. d.Company.
11 Chacko Ltd. has been manufacturing umbrellas since 1980. They are the
market leaders in manufacturing small hand size umbrellas. They have their
production unit in Kochi. The MD’s son- Abraham Chacko took over the family
business in 2010. He had finished graduation from USA. Using his
educational and networking skills , he was able to take up an export order. He
also decided to operate an exclusive export oriented unit in Chellanam. The
production work for this unit began in 2014. A dedicated team framed an
operational plan for the entire process. Abraham visited the plan to evaluate
and take appraisal of the work performed in the unit. State two ways as to
how it will help Abraham
Follow-up element helps the entrepreneurs in:
a) Developing ways to review the present situation with regard to materials,
work-in-progress and finished goods.
b) Evolving ways to expedite the performance of those departments which
lag behind.
c) Removing obstacles in the way of production by suggesting remedial
measures.
12 Explain the following features of a cooperative society:
Democratic management
Capital and return thereon
 Distribution of surplus
Features of Co-operative societies:
1. Democratic management: The management of a co-operative
organisation is vested in the hands of the managing committee
elected by the members on the basis of 'one member-one vote'.
Democracy is, thus, the keynote of the management of a cooperative
society.
2. Capital and return thereon: The capital is procured from its
members in the form of share capital. A member can subscribe
subject to a maximum of 10% of the total share capital or Rs.
1,000 whichever is higher. Shares cannot be transferred but
surrendered to the organisation. The rate of dividends paid to the
members/ shareholders is restricted to 9% as per the Cooperative
Societies Act, 1912.
3. Distribution of surplus: After giving dividends to the members,
the surplus of profits, if any, is distributed among the members
on the basis of goods purchased by each member from the
society.
13 Sanjiv was developing a business plan for his organization. While working
on the financial plan he realised that his financial requirements will be for
fixed assets and their installations, preliminary expenses, working capital,
expenses on research and development and investment in short-term assets
viz. raw material, level of cash, etc. To decide on the sources of funds for
the venture, he tried to ensure the selection of the best overall mix of
financing for the enterprise.
a. Identify the elements of financial plan discussed here.
b. Why is it important for an entrepreneur to ensure the selection of the
best overall mix of financing for the enterprise?
Ans. a. a) Proforma investment decisions
b) Proforma financing decisions
b. The entrepreneur's job is to ensure the selection of the best overall mix
of financing for the enterprise so that:
a) the cost of capital and the financial risk stands minimized,
b) return on investment and profitability stands maximized.
14 Deepak and Gaurav joined the prestigious law university in Ahmedabad in
the year 2010. During the course of study they became good friends and
they both realized that their common interest lies in the field of corporate
law. After completion of their degree they decided to start a firm of their
own, namely ‘Corpo Law Firm’ wherein both of them will be co-owners
dividing the profit and loss. After successfully running the firm for a year,
they realized that there are certain rights which are denied to their firm as it
is not registered.
Explain the consequences of non-registration of their firm.
Ans. Consequences of non-registration of a partnership firm:
a. A partner cannot file a suit in any court against the firm or other
partners for the enforcement of any right arising from a contract or
right conferred by the Partnership Act.
b. A right arising from a contract cannot be enforced in any court by
or on behalf of the firm against the third party.
c. The firm or any of its partners cannot claim a set off or other
 proceedings in a dispute with a third party.
15 Hemant’s grandfather owned a huge agricultural firm in the name of
‘Organica’. The company had huge acres of land in Kerala where it grew
spices. The company planned to expand and was planning to buy land in
Coorg, Karnataka where it will grow coffee. While visiting the place,
Hemant saw that the villagers had to walk more than 10 kms of hilly
terrain to reach the hospital and he also felt that the villagers did not have any
work in the evening apart from doing agricultural work in the morning.
For expansion purposes he required money and the chief financial officer
of his company suggested that they raise the required funds directly from
the public. Hemant also decided to open a hospital and a skill development
centre for the villagers in the evening wherein they can learn a lot of new
skills.Explain the method of raising funds directly from the public and the
primary advantage that Hemant stands to gain from it.
Also state any two values that he wants to spread.
Ans. Public issue- it is the most popular method of raising capital. It can be
raised directly from the public through issue of prospectus. The
entrepreneur is required to comply with all the restrictions and formalities
pertaining to the initial issues.
The primary advantage that an entrepreneur stands to gain is – access to
capital
Values: Teaching the villagers new skills which can lead to more means of
earning money.
Opening a hospital – giving accessible medical facilities
16 Kapish an unemployed graduate got training for automobile repairing and
allied services under PMKVY (Pradhan Mantri Kaushal Vikas Yojana) for
skill development. He is planning to start a digital workshop for which he
needs 25 lacs. Though through MUDRA (Micro Units Development and
Refinance Agency) he is able to get a loan of 10 lacs but still he is falling
short of 15 lacs. He wants to pitch in his idea to potential investors
through his business plan. Explain the different formats in which he can
present his business plan for his start-up.
Ans. It is common, especially for start-ups, to have four formats as follows for
the same business plan.
i) Elevator pitch: It is a three minute summary of the business plan's
executive summary. This is often used as a teaser to awaken the interest of
potential funders, customers, or strategic partners.
ii) A pitch deck with oral narrative : A hopeful, entertaining slide show
and oral narrative that is meant to trigger discussion and interest of
potential investors in reading the written presentation, i.e. the executive
summary and a few key graphs showing financial trends and key decision
making benchmark.
iii) A written presentation for external stakeholders: A detailed, well
written, and pleasingly formatted plan targeted at external stakeholders.
iv) An internal operational plan: A detailed plan describing planning
details that are needed by management but may not be of interest to
external stakeholders.
17 Naveen owns a 10 room building near Indira Gandhi International Airport. He
wants to start a guest house there because he knows that many visitors
require low cost accommodation near the airport. State two things that he has
 to ensure before opting for this opportunity.
Ans.
 To ensure that there is a good market for the service
 The rate of return on the investment is attractive
18 Mohan and Radha want to start a shop to sell Rajasthani Sweets. They did
not know how to enter into the agreement. Therefore, they approached a
Chartered Accountant who advised them to prepare a document which may
stipulate the terms and consolidation of the agreement.
Name the document about which the chartered accountant advised Mohan
and Radha.
Also state any four important items they should include in the agreement
besides the name, nature and place of business.
Ans.
Partnership Deed;
Contents of the deed:
1. Amount of capital to be contributed by each partner.
2. Profit sharing ratio between the partners.
3. Loans and advances from the partners and the rate of interest thereon.
4. Drawings allowed to the partners and the rate of interest thereon.
5. Amount of salary and commission, if any, payable to the partners.
6. Duties, powers and obligations of partners.
7. Maintenance of accounts and arrangement for their audit.
8. Mode of valuation of goodwill in the event of admission, retirement and
death of a partner.
9. Settlement of accounts in the case of dissolution of the firm.
10. Arbitration of case of disputes among the partners.
11. Arrangements in case a partner becomes insolvent. (Any four)
19 Gopi, in order to promote local craftsmen of Gujarat, formed an organization
where in the persons voluntarily associate themselves to promote common
economic interest. The basic purpose of this organization was to help these
craftsmen to find market for their products. It had a managing committee that
was elected on the basis of ‘one member one vote’.
a. Identify the form of business organization set up by Gopi.
b. Quoting the lines form the above para, state any two features of this form of
organization.
Ans.
Co-operative organization;
Features:
a. ‘Formed an organization where in the persons voluntarily associate…..’-
voluntary association, anybody can become a member of a co-operative
society
b. ‘managing committee that was elected in the basis of one member one
vote’- democratic management, the management of the co-operative society
is democratically elected.
c. ‘the purpose of this organization is to help these craftsmen to find market
for their products’- service motive, the main objective of a co-operative society
is to provide service to it’s members and not to earn profits. (Any two)
20 Why is Break-even analysis regarded as a useful element of financial plan? 4
Ans.
Break-even analysis is useful for the entrepreneur as it helps in assessing:
  The minimum level of output to be produced.
 The effect of change in quantity of output upon the profits.
 The selling price of the product.
 The profitable options in line of production
21 Prabhav is a budding entrepreneur who is about to pitch in his idea to a group
of investors. For presenting his business plan he has made a teaser of about
three minutes to awaken the interest of the potential investors. Prabhav is
using __________ format of presenting a business plan.
Ans. Elevator’s Pitch
22 Proforma investment decisions relates to how the enterprise funds are
required in different assets so that the enterprise is able to earn the highest
possible returns on investment.
Ans: True
23 Vishnu started his factory for manufacturing plastic items in Daman. As per 3
the advise of his Manager, he appointed ‘Bizmadeeasy’ company to formulate
a business plan for his manufacturing unit. The company in it’s business plan
mentioned the cost of installing a water waste treatment plant within the
premises of the manufacturing unit.Interpret any two socio-economic benefits
expected to acquire from the proposed investment.
Ans.
The socio economic benefits are:
1) Employment generation 2) Import substitution 3) Ancillarisation 4) Export
promotion 5) Local resource utilization 6) Development of the area
24 Karan finished his graduation from Polytechnic college in the year 2018. He
had specialised in repairing of electronic goods. After few months of his
graduation, he met his uncle who has a small factory manufacturing electronic
circuits used in Television. His uncle informed Karan that he could no longer
run the unit so Karan decided to take over the factory. His uncle had two
workers. Karan was able to get a huge order of supplying 10,000 units of
electronic circuits every month from a popular TV manufacturing company in
India. He knew that to meet the orders timely he has to employ more people.
In order to do so he decided to formulate Manpower planning.
Describe the factors that Karan has to keep in mind while formulating
manpower plan.
Ans.
Karan has to formulate manpower planning keeping in mind the following:
a) What kind of people are required? To carry on its work, each organisation
needs personnel with the necessary qualifications, skills, knowledge,
experience and aptitude for work.
Since it is a factory, Karan will need more semi skilled employees keeping in
mind that they will be manufacturing electronic circuits. He will also need a
manager to supervise the production work.
b) How many people are required? This question deals with the quantity of
personnel the enterprise needs.
Presently the factory has just two employees, so Karan will need at least ten
workers to achieve the production target every month. This number of
employees will be taken into account keeping in mind the absenteeism and
turnover.
c) How to procure personnel? As the next step in manpower planning,
entrepreneur clearly mentions the strategies, methods, policies, rules and
 regulations pertaining to employees. He can approach his own polytechnic
college and recruit fresh graduates. He has to properly train the employees so
that there is less error in production and the target is completed on time
25 An organisation will have to look into three situations while framing the
production plan. Explain these three situations.
The three situations involved in production plan are:
a. No manufacturing involved: If the new venture does not include any
manufacturing function, say it’s a trading firm or a service provider, then this
section will stand eliminated from the plan.
b. Partial manufacturing: If some or all the manufacturing process is to be
subcontracted or outsourced, then the production plan should describe: i)
Name and location of subcontractor(s) ii) Reasons for their selection iii) Cost
and time involved iv) Any contracts that have been completed etc. In such
cases, a clear mention of what entrepreneur intends to do himself and what
he plans to get it done from outside is required.
c. Complete Manufacturing: If the manufacturing is to be carried out in whole
by the entrepreneur, he/she will need to describe: i) the physical plant layout,
ii) the machinery and equipment required to perform the manufacturing
operations, iii) raw materials and suppliers names, addresses, terms and
conditions, iv) cost of manufacturing v) any future capital equipment required
etc.
26 Explain are the various elements of an Operational plan?

a. Routing:
Routing is a process concerned with determining exact route or path a
product/ service has to follow right from raw material till its transformation into
finished product.
b. Scheduling:
It means fixation of time, day, date when each operation is to be commenced
and completed. It is the determination of the time that should be required to
perform each operation.
c. Dispatching:
The process of initiating production in accordance with pre-conceived
production plan is said to be dispatching. This includes issuing necessary
orders instructions, guidelines and/or information to work pertaining to giving
practical shape to the production plan.
d. Follow-Up:
This element relates to evaluation and appraisal of work performed. A
properly planned follow-up procedure is helpful in dispatching errors and
defects in the work. Follow-up element helps the entrepreneurs in: a)
Developing ways to review the present situation with regard to materials,
work-in-progress and finished goods. b) Evolving ways to expedite the
performance of those departments which lag behind. c) Removing obstacles
in the way of production by suggesting remedial measures.
e. Inspection:
Inspection is the art of comparing materials, product or performance with
established standards. This element helps the entrepreneur to set up
laboratories or evolve strategies/methods to ensure predetermined quality of
product/service.
f. Shipping:
 This element is a detailed presentation by the entrepreneur explaining the
chronological steps in completing a business transaction efficiently and
profitably.
27 Sara had established a homemade papad business in Pune. Papads made by
her were very
popular in her locality but being the sole owner and manager of business, she
could neither
introduce many flavours because of limited financial resources.
Which of the following characteristic of her business, does this situation
imply?
a. Individual management and control
b. Easy formation and closure
c. Limited area of operation
d. Unlimited liability
Ans c. Limited area of operation
28 Amaze ltd., is a company engaged in the manufacturing of air- conditioners.
The company has four main departments Purchase, Marketing & Sales,
Finance and Warehousing. As the demand for the product grew, the company
decided to recruit more employees in the Finance department and Marketing
& Sales departments. Identify the component of the business plan which will
help the Human Resource Manager to decide and recruit the required number
of persons for each department.
a. Marketing Plan
b. Financial Plan
c. Manpower Plan
d. Organisational Plan
Ans
c. Manpower Plan
29 Bhawna, Maya, and Advik’s interior design business was taking off in a big
way. Their talent was in high demand. Now, the trio needed to hire more
employees. Since the needs of their company were changing, they reviewed
their personal circumstances, finances, and goals. They decided to legally
organize their organization into one with a limited liability. Identify the type
of organization the trio will form.
a. Partnership
b. Public Company
c. Private Company
d. Company
Ans c. Private Company
30 Amar and Akbar started a partnership firm to help the poor and needy. They
collected money
from various agencies and used it to benefit all those who are in dire need.
Which characteristic are they violating?
a. Agreement
b. Unlimited liability
c. Profit sharing
d. Utmost good faith
Ans c. Profit sharing
31 Surya and his friend Chander are into developing sustainable products that
are environment friendly and at the same time carrying value for the
 customers. They want to develop vegan leather by using Aloe vera. They met
the officials from Venture Angles company that promotes young
entrepreneurs. Hopeful of a positive response they submitted a detailed, well
written, and pleasingly formatted plan.
Identify the format of business plan presentation used by Surya and his friend.
a. Elevator pitch
b. A pitch deck with oral narrative
c. A written presentation for external stakeholders
d. An internal operational plan
c. A written presentation for external stakeholders
32 Prabhu first established Tanvi Foods in Coimbatore, as a partnership firm in
early 2016 with his wife Brindha Vijaykumar and started with mango and
apple juices. The business did well in the first year with a turnover of Rs 40
lakh, and since then its revenue has been growing. While the main
concentrate of the drinks is made at the company’s own 4,000 sq ft
manufacturing unit in Coimbatore, the final product and bottling is done at
third-party units (TPUs) in Coimbatore, Krishnagiri, Dharmapuri, Chennai,
Puducherry, Mysuru, and Aurangabad. This has enabled them to scale up
fast without needing much capital. What kind of manufacturing operation is
followed in Tanvi Foods?
a. No manufacturing involved
b. Partial manufacturing
c. Complete manufacturing
d. Complete outsourcing
Ans b. Partial manufacturing
33 Sankalp Singh Parihar cultivates the world’s most expensive Miyazaki variety
of mangoes at his farm in Dhedagoua village in Madhya Pradesh. The
Miyazaki variety of mangoes he grows at his farm sell at Rs 2.5 lakh per kg in
Japan. In India he got a price of Rs 21000 per kg, but he is yet to launch sales
and is focusing on propagating the variety now. He intends to plant more
saplings and make the mangoes affordable for Indians and sell it for as little
as Rs 2000 per kg. He plans in such a manner that economic feasibility can
be achieved in a few years.
Which part of the business plan highlights economic feasibility?
a. Organisational plan
b. Financial plan
c. Operational plan
d. Marketing plan
Ans b. Financial plan
34 Sindhuja was extremely good at making traditional sweets which she had
learnt from her grandmother. She decided to start selling the sweets through
advertising in social media. Her business picked up and she got a lot of
orders from clients all across India. Seeing her huge success, her friend
Raman advised that she should open a shop in the market area to expand her
business. He expressed interest in the business and was ready to invest
money so that they could do the business together.
What form of business organisation does Raman and Sindhuja start?
a. Sole proprietorship
b. Partnership
c. Private company
d. Public company
Ans b. Partnership