EPS

MODULE 1:
3 marks
1) What is the support for innovation and entrepreneurship from Government of India?
2) Which are the important criteria that GEDI adopts to release Global Entrepreneurship Index of
various countries?
3) Differentiate between Entrepreneur and Intrapreneur.
4) Explain the need for entrepreneurial development programmes
5) How does a manager differ from an entrepreneur
6) Explain different Types of entrepreneurs
7) What distinguishes an entrepreneur from other business professionals?
8) Explain any one motivation theory in detail

14 marks
1) a) Describe the types of entrepreneurs. Which one do you think most suitable for India
b) Explain McClelland achievement and acquired needs theory
2) a) Present the major points of distinction between an entrepreneur and a manager.
b) Explain Maslow’s need hierarchy theory of motivation
3) a) Explain the requirements for being a successful entrepreneur
b) Illustrate government policy actions towards entrepreneurial motivation
4) a) Compare rural and urban entrepreneurship.
b) Discuss entrepreneurial motivational theories
5) a) Explain Maslow’s need hierarchy theory of motivation
b) Explain the growth of Entrepreneurship in India.
6) a) Describe Entrepreneurship development programs.
b) Explain McClelland achievement and acquired needs theory
7) a) Explain Maslow’s and McClelland’s need theory.
b) Write notes on rural and urban entrepreneurship
8) a) Explain the role of Entrepreneurial Development Programme (EDP)
b) Examine the growth of entrepreneurship in India over the past decade.

ANSWERS
1) What is the support for innovation and entrepreneurship from Government of India?
Name any six (0.5 marks each)
Start up India • Make in India • Atal Innovation Mission (AIM) • Support to Training and
Employment Programme for Women (STEP) • Jan Dhan- AadhaarMobile (JAM) •
Digital India: • Biotechnology Industry Research Assistance Council (BIRAC) • Stand-
Up India • Trade related Entrepreneurship Assistance and Development (TREAD) •
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) • National Skill Development Mission
• Science for Equity Empowerment and Development (SEED)
2) Which are the important criteria that GEDI adopts to release Global Entrepreneurship
Index of various countries?
Name any six (0.5 marks each)
1. Opportunity perception (whether the population can identify opportunities to start a
business); 2. Start-up skills; 3. Risk acceptance; 4. Networks; 5. Cultural support; 6.
Opportunity start-up (whether entrepreneurs are motivated by opportunity rather than
necessity); 7. Technology absorption; 8. Human capital; 9. Competition; 10. Product
innovation; 11.Process innovation; 12.High growth (business intention to grow);
13.Internationalization and 14.Risk capital availability

3) Differentiate between Entrepreneur and Intrapreneur.

 Meaning: An Entrepreneur is a person who sets up their own business with a new idea
or concept. An Intrapreneur is an employee of an organization who is in charge of
undertaking innovations in product, service, process, etc., within that existing company.
 Approach: An Entrepreneur's approach is described as Intuitive. An Intrapreneur's
approach is described as Restorative.
 Resources: An Entrepreneur uses their own resources. An Intrapreneur uses
resources provided by the company.
 Capital: Capital is raised by the Entrepreneur themselves. For an Intrapreneur, it
is financed by the company.
 Enterprise: An Entrepreneur establishes a newly established enterprise. An Intrapreneur
works within an existing one.
 Dependency: An Entrepreneur is Independent. An Intrapreneur is Dependent on the
company.
 Risk: Risk is borne by the entrepreneur themselves. For an Intrapreneur, risk is taken
by the company.
  Intrapreneurs are generally given autonomy for their project, are typically highly
motivated with specific skills, leadership abilities, and innovative vision, and may
eventually become entrepreneurs themselves.

4) Explain the need for entrepreneurial development programmes (EDPs).

the need for EDPs includes:

 Helping in removing unemployment, promoting small scale units,

developing industrial regions, and contributing to overall economic development.
 Giving confidence to entrepreneurs and enabling them to face and solve various
problems while running their business units.
 Being the key to the baffling problems of the Indian economy.
 Making the youth conscious about the role of entrepreneurs in accelerating economic
growth and enhancing the quality of life of people.

5) How does a manager differ from an entrepreneur?

 Motive: The main motive of an Entrepreneur is to start a venture/enterprise for personal

gratification. The main motive of a Manager is to render services in an enterprise already
set up by someone else.
 Status: An Entrepreneur is the owner of the enterprise. A Manager is a servant in the
enterprise owned by the entrepreneur.
 Risk-bearing: An Entrepreneur, being the owner, assumes all risks and uncertainty
involved in running the enterprise. A Manager, as a servant, does not bear any
risk involved in the enterprise.
 Rewards: The reward for an Entrepreneur is profit, which is highly uncertain. The
reward for a Manager is salary, which is certain and fixed.
 Innovation: An Entrepreneur thinks about what and how to produce goods to meet
changing customer demands and acts as an innovator or 'change-agent'.
A Manager simply executes the plans prepared by the entrepreneur, translating the
entrepreneur's ideas into practice.
 Qualification: An Entrepreneur needs qualities like high achievement motive,
originality in thinking, foresight, and risk-bearing ability. A Manager needs distinct
qualifications in terms of sound knowledge in management theory and practice.

6) Explain different Types of entrepreneurs.

7) What distinguishes an entrepreneur from other business professionals?

 Focus on Creation and Innovation: They try to create something new and act as
innovators. Managers typically execute existing plans
  Risk-Bearing: They undertake risks and handle the economic uncertainty involved in the
enterprise. Managers generally do not bear the financial risks of the enterprise
 Primary Motive & Ownership: Their primary motive is to start a venture, and they are
the owners .Managers render services within an existing structure
 Independence: They often desire independence and do not like to be guided by others'
rules in matters of their business
 Need for Achievement: Entrepreneurs, particularly those identified by McClelland's
theory, have a high need for achievement, characterized by setting moderate/realistic
goals, taking calculated risks, preferring personal responsibility, needing feedback, and
finding intrinsic satisfaction in accomplishment.
 Reward Structure: Their reward is typically profit, which is uncertain, as opposed to a
fixed salary often earned by managers
 Key Roles: They uniquely combine the roles of risk-taker, organizer, and innovator

8) Explain any one motivation theory in detail.

Maslow's Need Hierarchy Theory of Motivation

 Origin: Proposed by Abraham Maslow in his 1954 book "Motivation and Personality".
 Core Concept: Humans have a hierarchy of five needs. Motivation stems from the desire
to fulfill these needs, starting from the most basic and moving upwards.
 The Hierarchy
1. Physiological Needs: Basic survival needs like breathing, food, water, sex, sleep,
homeostasis, excretion.
2. Safety Needs: Security of body, employment, resources, morality, family, health,
property.
3. Love/Belonging Needs: Friendship, family, sexual intimacy.
4. Esteem Needs: Self-esteem, confidence, achievement, respect of others, respect
by others.
5. Self-Actualization Needs: Morality, creativity, spontaneity, problem-solving,
lack of prejudice, acceptance of facts. This is the motivation to reach one's full
potential. Basic needs must be met before this level can be achieved.
 Features of the Theory
o Human needs are wide-ranging and interrelated.
o Needs are arranged hierarchically; lower-level needs must be at least partially satisfied before
higher-level needs become dominant motivators.
o A satisfied need is not a motivator; only unsatisfied needs motivate action.
o Humans generally want to move up the hierarchy, not stop at lower levels.
o Needs are interdependent; a higher-level need can arise even before a lower-level one is
completely satisfied.
 Limitations of the Theory
o Needs are dynamic and change with circumstances (e.g., cultural differences in prioritizing
needs).
o Little evidence suggests people satisfy only one need level at a time, except in conflict
situations.
o The model might be an oversimplification of complex human needs.
o Behavior is influenced by factors beyond needs alone, such as expectations, experiences, and
perceptions.

14 marks:
1) a) Describe the types of entrepreneurs. Which one do you think most suitable for India
Based on the Type of Business
1. Trading Entrepreneur: As the name itself suggests, the trading entrepreneur undertake
the trading activities. They procure the finished products from the manufacturers and sell
these to the customers directly or through a retailer. These serve as the middlemen as
wholesalers, dealers, and retailers between the manufacturers and customers.
2. Manufacturing Entrepreneur: The manufacturing entrepreneurs manufacture products.
They identify the needs of the customers and, then, explore the resources and technology
to be used to manufacture the products to satisfy the customers’ needs. In other words,
the manufacturing entrepreneurs convert raw materials into finished products.
3. Agricultural Entrepreneur: The entrepreneurs who undertake agricultural pursuits are
called agricultural entrepreneurs. They cover a wide spectrum of agricultural activities
like cultivation, marketing of agricultural produce, irrigation, mechanization, and
technology.
Based on the Use of Technology
1. Technical Entrepreneur: The entrepreneurs who establish and run science and
technology-based industries are called ‘technical entrepreneurs.’ Speaking alternatively,
these are the entrepreneurs who make use of science and technology in their enterprises.
Expectedly, they use new and innovative methods of production in their enterprises.
2. Non-Technical Entrepreneur: Based on the use of technology, the entrepreneurs who
are not technical entrepreneurs are non-technical entrepreneurs. The forte of their
enterprises is not science and technology. They are concerned with the use of alternative
and imitative methods of marketing and distribution strategies to make their business
survive and thrive in the competitive market.
Based on Ownership
1. Private Entrepreneur: A private entrepreneur is one who as an individual sets up a
business enterprise. He / she its the sole owner of the enterprise and bears the entire risk
involved in it.
2. State Entrepreneur: When the trading or industrial venture is undertaken by the State or
the Government, it is called ‘state entrepreneur.’
3. Joint Entrepreneurs: When a private entrepreneur and the Government jointly run a
business enterprise, it is called ‘joint entrepreneurs.’
 Based on Gender
1. Men Entrepreneurs: When business enterprises are owned, managed, and controlled by
men, these are called ‘men entrepreneurs.’
2. Women Entrepreneurs: Women entrepreneurs are defined as the enterprises owned
and controlled by a woman or women having a minimum financial interest of 51 per cent
of the capital and giving at least 51 per cent of employment generated in the enterprises
to women.
Based on the Size of Enterprise
1. Small-Scale Entrepreneur: An entrepreneur who has made investment in plant and
machinery up to ` 1.00 crore is called ‘small-scale entrepreneur.’
2. Medium-Scale Entrepreneur: The entrepreneur who has made investment in plant and
machinery above ` 1.00 crore but below ` 5.00 crore is called ‘mediumscale
entrepreneur.’
3. Large-Scale entrepreneur: The entrepreneur who has made investment in plant and
machinery more than ` 5.00 crore is called ‘large-scale entrepreneur.’

b) Explain McClelland achievement and acquired needs theory

McClelland achievement and acquired needs theory
Power
Wants to control and influence others.
Likes to win arguments.
Enjoys competition and winning.
Enjoys status and recognition.
Strength of McClelland’s needs theory: Provides a clear picture for the organization and
managers,Provides an understanding to deal with employees, More empirical evidence.
2) a) Present the major points of distinction between an entrepreneur and a manager.
 b) Explain Maslow’s need hierarchy theory of motivation

3) a) Explain the requirements for being a successful entrepreneur

Successful entrepreneurs often achieve success through education, hard work, and planning. Key
requirements and characteristics include:

 Hard Work: A willingness to work hard, often endlessly.

 Desire for High Achievement: A strong drive to achieve high goals in business,
overcoming obstacles and anxieties.
 Optimism: A positive approach, not being discouraged by present problems and
believing future situations will be favourable.
 Independence: A preference for autonomy, not liking to be guided by others' rules and
resisting being pigeonholed.
 Foresight: The ability to anticipate future business environments, including market
changes, consumer trends, and technological developments, and take timely action.
 Good Organizer: The ability to bring together various required resources (often owned
by different people) to set up an enterprise and produce goods.
 Innovative: Initiating research and activities to produce goods that satisfy changing
customer requirements and demands.
  Perseverance: Possessing tremendous perseverance, not giving up despite failures,
learning from them, and applying more effort.
 Team Spirit: The ability to build teams and work effectively with teammates,
recognizing that team results lead to synergy (Together Everyone Achieves More).

b) Illustrate government policy actions towards entrepreneurial motivation

Government policy actions aimed at motivating entrepreneurs, particularly in India, include:

 Industrial Policies: Starting with the first Industrial Policy in 1948, the government
aimed to promote, assist, and develop industries, recognizing the role of the private
sector. Key measures included ensuring proper distribution of economic power,
encouraging the spread of entrepreneurship to diverse locations, and disseminating
entrepreneurial acumen beyond dominant communities.
 Incentives and Concessions: Since the Third Five Year Plan (1961-1966), the
government provided various incentives like capital, technical know-how, market access,
and land to potential entrepreneurs, especially to reduce regional imbalances.
 Institutional Support: Establishing institutions like the Directorate of Industries,
Financial Corporations, Small-Scale Industries Corporations, and Small Industries
Service Institute to facilitate new entrepreneurs.
 Economic Policy Reform (1991, expanded 2022): This included:
o Liberalization: Easing restrictions to boost the private sector, including banks
and stock markets.
o Privatization: Disinvesting public firms to reduce burden and promote national
entrepreneurs.
o Globalization: Welcoming Foreign Direct Investment (FDI) and Foreign
Portfolio Investment (FPI), creating Special Economic Zones (SEZ) and
Economic Corridors.
 Startup Initiatives (e.g., 2016 Startup Initiative): Providing support for
entrepreneurship development, including:
o MSME Ministry Support: Assisting small and micro startups.
o Make in India: Encouraging entrepreneurship within India.
o NITI Aayog Scheme: Developing skills and training resources.
 Financial Assistance: Establishing mechanisms like the MUDRA bank (2015) to
financially assist entrepreneurs, particularly rural ones, potentially offering concessional
interest rates.

4) a) Compare rural and urban entrepreneurship.

 Location: Rural entrepreneurship involves starting and running businesses in rural areas
(villages/towns with populations <= 20,000 and investment <= Rs. 3 Crore in
plant/machinery). Urban entrepreneurship occurs in cities and larger towns.
  Resource Focus: Rural entrepreneurship often focuses on utilizing local resources like
raw materials and labour specific to the area (e.g., agro-based, forest-based, mineral-
based industries, handicrafts).Urban entrepreneurship may have access to a wider, more
diverse resource pool but less reliance on purely local, traditional resources.
 Challenges: Rural entrepreneurs face specific challenges like limited access to capital
(often relying on money lenders), lack of qualified employees (due to migration to urban
areas), poor infrastructure (roads, electricity, communication), adverse socio-cultural
environments (caste systems, superstitions), paucity of market information, difficulty
finding skilled labor, producing potentially inferior quality products due to resource/tool
limitations, fear of investment, marketing problems (reliance on middlemen), and intense
competition from larger organizations and urban entrepreneurs. Urban entrepreneurs
likely face different challenges like higher competition density, higher operating costs,
and different regulatory hurdles, but generally better infrastructure and access to skilled
labor and markets.
 Impact: Rural entrepreneurship aims to address issues like rural unemployment,
migration to urban areas, promoting local crafts, and stimulating rural economic
development. Urban entrepreneurship contributes to urban economies but can also
exacerbate issues like pollution and slums if not managed well.
 Opportunities: Rural entrepreneurship opportunities often lie in areas like mineral,
forest, agro-based industries, polymers/chemicals, engineering, textiles (including
Khadi), and services tailored to rural needs. Urban opportunities are typically more
diverse, often focusing on technology, large-scale manufacturing, and specialized
services.

b) Discuss entrepreneurial motivational theories

two main entrepreneurial motivational theories:

1. Maslow's Need Hierarchy Theory:

o Proposes a five-level hierarchy of human needs: Physiological, Safety,
Love/Belonging, Esteem, and Self-Actualization.
o Motivation arises from unsatisfied needs. People aim to satisfy lower-level needs
before higher-level needs become primary motivators.
o Lower needs (Physiological, Safety) must be partially met before moving to
higher needs (Social, Esteem, Self-Actualization).
o A satisfied need ceases to be a motivator.
o The theory suggests humans inherently want to progress up the hierarchy towards
self-actualization (reaching one's full potential).
o Limitations include the dynamic nature of needs, potential oversimplification,
lack of strong evidence for strict sequential satisfaction, and the influence of
factors other than needs on behavior.
2. McClelland's Acquired Needs Theory:
 o Proposes that specific needs are acquired over time, shaped by life experiences,
and influence motivation and job effectiveness.
o Identifies three key motivational needs:
 Need for Achievement (nAch): Drive to excel, accomplish challenging
goals, take calculated risks, seek feedback, often prefer working alone.
This need is considered particularly dominant in entrepreneurs.
 Need for Power (nPow): Desire to control and influence others, win
arguments, enjoy competition and winning, seek status and recognition.
 Need for Affiliation (nAff): Desire to belong to a group, be liked, favor
collaboration over competition, dislike high risk or uncertainty.
o People possess these needs in varying degrees. Entrepreneurs, specifically, are
often characterized by a high need for achievement, setting realistic goals, taking
personal responsibility, and valuing personal accomplishment intrinsically more
than just economic rewards.

5) a) Explain Maslow’s need hierarchy theory of motivation

Abraham Maslow proposed that human motivation is driven by a hierarchy of five needs. These
needs are arranged in a pyramid structure, and individuals are motivated to fulfill lower-level
needs before progressing to higher-level ones. The hierarchy consists of:

1. Physiological Needs: These are the most basic needs for survival, such as air, food,
water, shelter, sleep, and clothing.
2. Safety Needs: Once physiological needs are met, the need for security and safety
becomes prominent. This includes personal security, employment, resources, health, and
property.
3. Love/Belonging Needs: After safety, humans seek social connection. This level includes
the need for friendship, intimacy, family, and a sense of connection.
4. Esteem Needs: This level involves the need for respect, self-esteem, status, recognition,
strength, and freedom. It includes both self-respect and the desire for respect from others.
5. Self-Actualization Needs: This is the highest level, representing the desire to become the
most that one can be, fulfilling one's potential, seeking personal growth and peak
experiences.

Key principles of the theory are that needs are wide-ranging and interrelated, lower needs must
be at least partially satisfied to motivate behavior towards higher needs, a satisfied need loses its
motivational power, and people generally strive to move up the hierarchy. However, the theory is
also criticized for potential oversimplification and the dynamic nature of needs.

b) Explain the growth of Entrepreneurship in India.

The growth of entrepreneurship in India can be traced through distinct phases:

  Pre-Independence: Entrepreneurship existed early on, particularly in handicrafts
nurtured by craftsmen. Organized industrial activity was seen in certain cities (Banaras,
Allahabad, etc.), often supported by Royal Patronage ('Kharkhanas'). Specific regions
were famous for products like silk, cotton fabrics, and metal wares. However, cottage and
small industries declined towards the end of the 18th century due to factors like the
disappearance of royal courts, British policies, competition from British goods, transport
development favouring imports, and changing local tastes. Entrepreneurial growth gained
some momentum after World War II.
 Post-Independence: The government took an active role starting with the Industrial
Policy of 1948. It aimed to promote industries, balance public/private sector roles, and
spread entrepreneurship geographically and socially. Incentives (capital, tech know-how,
markets, land) and institutions (Directorate of Industries, Financial Corporations, SSI
Corporations, SISI) were established. This led to significant growth in small-scale units
(e.g., from ~121,000 in 1966 to ~190,000 in 1970). Family entrepreneurship units like
Tata and Birla also grew significantly.
 Transformation (Post-1991): The Economic Policy Reform of 1991 (Liberalization,
Privatization, Globalization) marked a major turning point. This boosted the private
sector, welcomed foreign investment (FDI, FPI), and helped in adopting new
technologies. It spurred the rise of tech companies (Infosys, TCS, Wipro) and growth in
sectors like automobiles (Maruti, Tata, Mahindra). This policy favoured larger companies
but set the stage for further growth.
 Growth of Startups (Mid-2010s onwards): Around 2015-2016, startups began to grow
significantly, supported by initiatives like Startup India (2016), Make in India, MSME
ministry support, and the NITI Aayog scheme. India became known as an emerging
market hub, particularly in technology, creating a more favourable environment for
investment and new ventures, although challenges remain for smaller startups.

6) a) Describe Entrepreneurship development programs (EDPs).

Entrepreneurship Development Programmes (EDPs) are techniques designed to increase

motivation, working capacity, and knowledge among prospective and existing entrepreneurs,
enabling them to manage their enterprises efficiently and effectively. They are based on the idea
that entrepreneurial attitudes and skills can be developed.

 Purpose & Objectives: To accelerate industrial development by increasing the supply of

entrepreneurs, inculcate entrepreneurial qualities, motivate potential entrepreneurs,
industrialize rural/backward areas, and improve managerial skills.
 Need & Relevance: EDPs help remove unemployment, promote small units, develop
regions, boost economic growth, give entrepreneurs confidence, solve business problems,
and make youth aware of entrepreneurship's role.
 Course Contents: Tailored to the needs of participants, contents typically include
knowledge about entrepreneurship, motivational training, basics of management, project
study, information on support systems, guidance on initiating ventures, and practical
 exposure through factory visits/plant training. Training methods include lectures,
discussions, case studies, project report preparation, and workshops.
 Key Activities: EDPs involve a balance of stimulating (education, publicity, training,
project identification), supporting (registration, funding, licensing, tax relief,
consultancy), and sustaining (expansion, diversification, modernization, quality control)
activities.
 Phases: EDPs typically follow distinct phases:
1. Pre-training: Selecting faculty, designing curriculum, advertising, selecting
participants, arranging infrastructure.
2. Training: Delivering the course content, aiming to motivate participants, change
outlooks, impart skills and knowledge.
3. Post-training (Follow-up): Reviewing progress, providing counselling,
guidance, escort services, assistance with project reports, and site selection.
4. Evaluation: Assessing the effectiveness of the program by reviewing all phases
and determining how many participants successfully started enterprises.
Evaluation considers factors like socio-cultural background, motivation,
knowledge/ability, financial strength, and environmental variables.

b) Explain McClelland achievement and acquired needs theory

David McClelland's Acquired Needs Theory, proposed in his 1961 book 'The Achieving
Society', suggests that individuals acquire specific needs over time based on their life
experiences. These needs act as motivators and influence effectiveness in certain roles. The three
key acquired needs are:

1. Need for Achievement (nAch):

o Characterized by a strong desire to set and accomplish challenging goals.
o Individuals prefer tasks with moderate, calculated risks where they can achieve
success.
o They like regular feedback on their progress and accomplishments.
o Often prefer to work alone.
o For entrepreneurs, this need is often dominant. They set realistic goals, take
calculated risks, prefer personal responsibility for problem-solving, need concrete
feedback, and find personal accomplishment intrinsically satisfying, often more
so than just money or social recognition.
2. Need for Power (nPow):
o Driven by a desire to control and influence others.
o Individuals enjoy being in charge, winning arguments, and competition.
o They seek status and recognition.
3. Need for Affiliation (nAff):
o Motivated by the desire to establish and maintain friendly relationships and
belong to a group.
 o Individuals want to be liked and often prioritize group harmony, favoring
collaboration over competition.
o They tend to dislike high-risk or uncertain situations.

The theory posits that people possess these needs in varying degrees, and the combination
influences their behavior and suitability for different roles. It provides a framework for
understanding employee motivation and is noted for having empirical evidence, though questions
about the validity of measuring individual need levels exist.

7) a) Explain Maslow’s and McClelland’s need theory.

Both Maslow's and McClelland's theories focus on needs as drivers of motivation, but they differ
in their approach:

 Maslow's Need Hierarchy Theory: Proposes that needs are innate and arranged in a
universal, fixed hierarchy of five levels (Physiological, Safety, Love/Belonging, Esteem,
Self-Actualization). Motivation progresses up the hierarchy as lower-level needs are
satisfied. Unsatisfied needs are the primary motivators, and individuals inherently strive
towards self-actualization. It assumes a sequential progression, though acknowledges
overlap.
 McClelland's Acquired Needs Theory: Argues that needs are not innate or hierarchical
in the same way but are acquired or learned through life experiences. It focuses on three
specific needs relevant to workplace motivation: Achievement (nAch), Power (nPow),
and Affiliation (nAff). The relative strength of these needs varies between individuals
based on their experiences and shapes their motivation and behaviour. It emphasizes that
these needs can be developed and are particularly relevant for understanding roles like
entrepreneurship (high nAch) or management (varying levels of nPow, nAff, nAch).

In essence, Maslow presents a universal, step-by-step hierarchy of innate needs, while

McClelland focuses on specific, individually varying needs acquired through experience that
drive behavior, particularly in work contexts.

b) Write notes on rural and urban entrepreneurship

Rural Entrepreneurship:

 Definition: The process of starting and running a business in a rural area (population <=
20,000, investment <= Rs. 3 Crore).
 Industries: Often based on local resources; examples include mineral-based, forest-
based, agro-based, polymer/chemical, engineering, textile (Khadi), and service industries.
 Benefits: Utilizes local resources, generates employment for rural people, can help
reduce migration to urban areas, promotes traditional arts and crafts, checks social evils
associated with poverty/slums, encourages rural youth, stimulates overall rural economic
 development, potentially earns foreign exchange, fosters entrepreneurial spirit in rural
areas, and can improve the standard of living.
 Risks: Includes technical risks (lack of know-how), economic risks (market fluctuations,
resource availability), social risks (developing new relationships), and environmental
risks (dealing with unfamiliar cultures/systems).
 Challenges: Significant hurdles include limited access to capital, lack of qualified/skilled
employees, scarcity of enterprising skills/risk-bearing ability, poor infrastructure (roads,
power, storage, communication), adverse socio-cultural factors (caste, fatalism), lack of
market information, difficulty producing high-quality products, fear of investment,
marketing problems (distribution, pricing, promotion, middlemen), and competition from
larger urban businesses/MNCs.
 Remedies: Suggested solutions involve creating finance cells (like MUDRA bank),
offering concessional interest rates, ensuring proper raw material supply, providing
training facilities, setting up marketing co-operatives, educating potential entrepreneurs,
and improving infrastructure.

Urban Entrepreneurship:

 Location: Occurs in cities and large towns.

 Characteristics: Generally benefits from better infrastructure, easier access to capital
(though competition may be high), a larger pool of skilled labor, and closer proximity to
larger markets compared to rural areas.
 Focus: Likely involves a wider range of industries, including technology, large-scale
manufacturing, specialized services, and finance.
 Challenges: May include higher operating costs, intense competition, complex
regulations, and potential contribution to urban problems like pollution and congestion if
not managed sustainably. Rural-to-urban migration, often driven by lack of rural
opportunities, highlights the perceived advantages (employment, perceived better
standard of living) of urban centres, even if challenges exist there too.

8) a) Explain the role of Entrepreneurial Development Programme (EDP)

The role of Entrepreneurial Development Programmes (EDPs) is multifaceted and crucial for
fostering entrepreneurship:

 Increase Supply of Entrepreneurs: Their primary role is to enlarge the pool of capable
entrepreneurs, thereby accelerating industrial and economic development.
 Develop Entrepreneurial Qualities: EDPs aim to identify individuals with potential and
inculcate necessary entrepreneurial traits, skills (like management), and attitudes.
 Motivate and Build Confidence: They motivate prospective entrepreneurs to start
ventures and provide them with the confidence needed to face and overcome business
challenges.
  Facilitate Venture Creation: EDPs assist participants through various stages, from
identifying viable projects and preparing reports to understanding support systems and
initiating the venture.
 Promote Balanced Regional Development: By encouraging entrepreneurship in rural
and backward areas, EDPs help reduce regional imbalances and industrialize
underdeveloped regions.
 Address Economic Problems: They are seen as key to tackling issues like
unemployment (by promoting self-employment and small units) and improving the
overall quality of life.
 Skill Enhancement: EDPs improve managerial and technical skills relevant to running
an enterprise efficiently.
 Provide Knowledge and Exposure: They offer knowledge about entrepreneurship,
management basics, support systems, and practical exposure through visits and
workshops.
 Support Network: They create platforms for entrepreneurs to share experiences,
problems, and successes, fostering a supportive community.

Essentially, EDPs act as a catalyst, transforming potential into actual entrepreneurship by

providing motivation, knowledge, skills, and support.

b) Examine the growth of entrepreneurship in India over the past decade.

 Impact of Liberalization: The effects of the 1991 economic reforms (Liberalization,

Privatization, Globalization) continued to shape the environment, fostering a more robust
private sector and increased foreign investment (FDI/FPI), which brought capital and
advanced technology understanding.
 Rise of the Startup Ecosystem: The mid-2010s (around 2015-2016) saw a significant
surge in startup activity. India became recognized as a major startup hub and an
'emerging market'.
 Government Initiatives: Policies and initiatives like Startup India (2016), Make in
India, and NITI Aayog schemes were launched specifically to support and provide
infrastructure for this growing startup culture, aiming to develop skills and encourage
domestic entrepreneurship.
 Tech Hub Emergence: India solidified its position as a technology hub, with Indian tech
talent and companies (like Infosys, TCS, Wipro, HCL) playing significant roles both
domestically and internationally. This spurred tech-based entrepreneurship.
 Increased Private Sector Activity: The policies facilitated the growth of private banks
and increased lending, providing more financial avenues for new entrepreneurs.
 Diversification: While challenges remain, particularly for small and new startups, there
has been a move towards more diverse entrepreneurial ventures beyond traditional
sectors, including growth in areas like engineering, electronics, and energy (as noted in
the context of women entrepreneurs shifting from '3Ps' to '3Es').
  Favourable Market: The overall environment has become increasingly favourable for
investment and company growth, attracting both domestic and foreign interest.
MODULE-2
3 marks
1. What are the different types of cooperative society?

2. Which are the various types of private limited companies?

3. State the advantages of partnership companies

4. “In proprietorship form of business, both entrepreneur and manager are the same person”.
Comment your views on the above statement
5. Describe the purpose of a partnership deed?
6. Explain the structure of co-operative society.
7. Differentiate between small scale, medium-scale, and large-scale enterprises.
8. Describe the characteristics of cooperative enterprises.
14 marks
1) a) Describe the characteristics of SSI.
b) Write the advantages of partnership?
2) a) What is sole proprietorship? Write its features and disadvantages.
b) Explain micro-small and medium enterprises (SMEs) in India and the role of MSMEs
in India
3) a)Describe the role of small enterprises in the economic development of a country.
b) Illustrate the impact of cooperative societies in rural India
4) a) Classify the ownership structures associated with entrepreneurship
b) Summarize how Small-Scale Industries help in entrepreneurship development
5) a) Examine the role of small-scale industries in Indian economy
b) List the features of limited companies
6) a) Classify different types of business ownerships.
b) Explain the various sources of finance in cooperative society
7) a) Explain the various types of ownership available to entrepreneurs. Discuss each form
in brief.
b) Explain the capital structure of limited companies, including the issuance of shares
and types of shares. How do limited companies raise capital, and what factors influence their
decisions on capital structure?
 8) a) Explain the process of forming a sole proprietorship.
b) Discuss the formation, governance, and capital structure of a partnership business.
What are the key considerations when entering into a partnership agreement, and how do
partnerships differ from other ownership structures?

ANSWERS
1. What are the different types of cooperative society?

2) Which are the various types of private limited companies?

3. State the advantages of partnership companies

Partnerships offer several advantages:

 They involve minimal statutory formalities for setting up.

 Partners can pool their own resources, facilitating the inflow of required funds.
 They benefit from increased manpower and expertise compared to sole proprietorships.
 Partners tend to take personal attention, leading to better management and profitability.
 The watchfulness of partners ensures proper supervision, higher productivity, and better
customer service.
 Financially sound partnerships may secure loans from financial institutions more easily.
 Tax rates applicable to partnerships are generally lower than those for proprietorships and
companies.

4. “In proprietorship form of business, both entrepreneur and manager are the same
person”. Comment your views on the above statement

This statement is accurate based on the typical structure of a sole proprietorship. The sole
proprietor is the individual who invests their own and borrowed funds (acting as the entrepreneur
taking the risk) and also uses their own skills and abilities to manage the firm's affairs. They hold
exclusive control, make immediate decisions, and are solely responsible for the operation. This
fusion of roles means the owner directly manages the business. However, this also leads to
limitations, such as the owner bearing an excessive burden, potentially lacking specialized
managerial skills, and the business's stability being heavily dependent on the owner's personal
attributes and health.

5. Describe the purpose of a partnership deed?

While the specific term "partnership deed" isn't explicitly detailed, the formation of a partnership
is based on a contractual agreement among the individuals involved. The purpose of this
agreement is to establish the terms of the business relationship, defining the common ownership
structure and the plan for managing the venture. A key objective outlined in this relationship is
the agreement to share profits (or losses) generated by the business.

6. Explain the structure of co-operative society.

A cooperative society is structured based on the philosophy of self-help and mutual help. Key
structural elements include:

 Formation: Requires at least ten individuals to form; there is no upper limit on

membership.
 Registration: It must be registered with the registrar of Cooperative Societies in the state
where its office is located.
 Governance: It operates under the provisions of the cooperative societies act and rules.
 Membership Contribution: All members typically contribute capital and labour.
  Management: It is managed democratically by a committee directly elected by its
members.
 Objective: Primarily aimed at the economic upliftment of its members, often focusing on
weaker or exploited sections of society, by organizing themselves for mutual benefit.
 Liability: The liability of each member is limited to the extent of their investment in the
society.
 Continuity: Its existence is not affected by the retirement, death, or insolvency of any
member.

7. Differentiate between small scale, medium-scale, and large-scale enterprises.

The differentiation is based primarily on the scale of operations, investment levels, and
characteristics:

 Micro, Small, and Medium Enterprises (MSMEs): Classified under the MSMED Act,
2006, based on investment limits:
o Manufacturing Sector (Investment in Plant & Machinery):
 Micro: Does not exceed ₹25 lakh
 Small: More than ₹25 lakh but does not exceed ₹5 crore
 Medium: More than ₹5 crore but does not exceed ₹10 crore
o Service Sector (Investment in Equipment):
 Micro: Does not exceed ₹10 lakh
 Small: More than ₹10 lakh but does not exceed ₹2 crore
 Medium: More than ₹2 crore but does not exceed ₹5 crore
o Characteristics (especially Small Scale): Often owned by one or few
individuals, managed directly, shorter gestation period, localized operations, use
local resources, labour-intensive, flexible, decentralized.
 Large Scale Enterprises:
o Definition: Characterized by huge infrastructure, significant raw material
requirements, high manpower needs, and large capital investments. Specific
investment thresholds are not provided in the same way as MSMEs.
o Characteristics: More systematic, involve massive capital investment,
manufacture in bulk, operate more efficiently, contribute significantly to the
economy, offer better employment opportunities and job security, and invest in
research and design.

8. Describe the characteristics of cooperative enterprises.

Cooperative enterprises have distinct characteristics:

 Philosophy: Based on self-help and mutual help among members.

 Formation & Registration: Requires a minimum of 10 individuals and must be
registered under the relevant Cooperative Societies Act.
  Democratic Management: Managed by a committee elected by the members, ensuring
member control.
 Member Contribution: Members contribute capital and often labour.
 Primary Objective: To serve the members' economic interests, facilitate their
upliftment, and provide goods/services at fair prices, often on a no-profit-no-loss basis for
service cooperatives.
 Limited Liability: Members' liability is limited to their capital contribution.
 Continuity: The enterprise continues to exist regardless of changes in individual
membership.
 Voluntary Service: Members often provide voluntary services, potentially reducing
operational costs.
 Fair Dealings: Aim to provide quality goods, services, or fair prices/loans to members,
protecting them from exploitation.
 Specific Focus: Often organized around specific needs like production, consumption,
marketing, credit, or services (e.g., Industrial producers', Agricultural, Consumers',
Handloom Weavers', Service Cooperatives).
 Potential for Government Support: May receive assistance from the government.
 Potential Limitations: May lack specialized technical or managerial expertise among
members and can be prone to coordination issues or mismanagement if not run
effectively.

14 marks
1) a) Describe the characteristics of SSI.
a) Ownership: SSI’s generally are under single ownership. So it can either be a sole
proprietorship or sometimes a partnership.
b) 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.
c) Labor Intensive: SSI’s dependence on technology is pretty limited. Hence they
tend to use labour and manpower for their production activities.
d) 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.
e) Limited Reach: Small scale industries have a restricted zone of operations. Hence,
they can meet their local and regional demand.
f) Resources Utilization: They use local and readily available resources which helps
the local economy.
g) Employment: SSI’s are a major source of employment for developing countries
like India. Because of the limited technology and resource availability, they tend
to use labour and manpower for their production activities.
 h) Total Production: These enterprises account for almost 40% of the total
production of goods and services in India. They are one of the main reasons for
the growth and strengthening of the economy.
i) Make in India: SSI’s are the best examples for the Make in India initiative. They
focus on the mission to manufacture in India and sell the products worldwide.
This also helps create more demands from all over the world.
j) Export Contribution: India’s export industry majorly relies on these small
industries for their growth and development. Nearly half of the goods that are
exported from India are manufactured or produced by these industries.
k) Public Welfare: These industries have an opportunity to earn wealth and create
employment. SSIs are also important for the social growth and development of
our country.
l) Seedbed for Large Scale Industries: SSI acts as the seedbed for Large Scale
Industries (LSI) as it provides conducive conditions for the development and
growth of entrepreneurs. Small enterprises require low investment and simple
technology and use local resources to meet local demands through personal
contacts. Thus, it creates scope for the growth and development of LSI.
b) Write the advantages of partnership?
Easy Formation – An agreement can be made oral or printed as an agreement to enter as a
partner and establish a firm.
Large Resources – Unlike sole proprietor where every contribution is made by one
person, in partnership, partners of the firm can contribute more capital and other
resources as required. Flexibility – The partners can initiate any changes if they think it is
required to meet the desired result or change circumstances.
Sharing Risk – All loss incurred by the firm is equally distributed amongst each partner.
Combination of different skills – The partnership firm has the advantage of knowledge,
skill, experience and talents of different partners.
2) a) What is sole proprietorship? Write its features and disadvantages.
Proprietorship:
Sole proprietorship is one of the oldest and easiest Business Structure to start in
India. A proprietorship is a type of business that is owned, managed, and
controlled by one person - who is the proprietor. As the proprietorship and
proprietor are one and the same, it is very easy to start and there are very minimal
compliance requirements.
Proprietorship Features
• Simple form of Organization • Owners freedom to take decisions • High
Secrecy • Tax Advantage • Easy dissolution • Formation and Closure • Sole Risk
Bearer and Profit Recipient • Control
Proprietorship-Disadvantages
• Limited resources • Limited Ability • Unlimited liability • Limited life of
enterprise form.
b) Explain micro-small and medium enterprises (SMEs) in India and the role of MSMEs
in India
Micro-Small and Medium enterprises (SMEs) in India:
The Indian micro, small and medium enterprises (MSMEs) sector has emerged as a key sector in
the growth of the Indian economy. The role of SMEs in the Indian economy is significant. The
sector has contributed greatly to employment generation, exports, innovation and inclusive
growth of the economy. In short, the Indian small and medium enterprise sector (SMEs) has been
the backbone of socio-economic development in India. It has made up almost 45% of industrial
production, 40% of total exports and makes a significant contribution to India’s total Gross
Domestic Product (GDP).
Role of MSMEs in India
• Small Scale Industries Provides Employment • Facilitates Women Growth • Brings Balanced
Regional Development • Helps in Mobilization of Local Resources • Paves for Optimisation of
Capital • Promotes Exports • Complements Large Scale Industries • Meets Consumer Demands •
Ensures Social Advantage • Develops Entrepreneurship

3) a) Describe the role of small enterprises in the economic development of a country.

Small enterprises play a crucial role in economic development through several key contributions:

 Employment Generation: They utilize labour-intensive technology, creating significant

employment opportunities, which is vital in countries with large populations and capital
scarcity. A given amount of capital creates more jobs in small enterprises than in large
ones.
 Self-Employment: They provide numerous opportunities for individuals to start their
own ventures, fostering self-reliance and reducing unemployment.
 Optimum Use of Capital: They require relatively less capital compared to large
enterprises, making them suitable for economies where capital is scarce. They contribute
to a high output-capital ratio.
 Facilitate Entrepreneurial Development: They nurture entrepreneurship by providing
avenues for educated unemployed individuals to start businesses, reducing dependency
on government jobs.
 Use of Local Resources: They effectively mobilize and utilize local resources like raw
materials, savings, and entrepreneurial skills that might otherwise remain idle.
 Balanced Regional Development: By setting up in rural and backward areas, they help
disperse industrial activity, reducing regional imbalances and mitigating problems like
industrial slums and pollution in urban centers. They help raise the standard of living in
these areas.
 Conservation of Foreign Exchange: They primarily use local resources and machinery,
reducing dependence on costly imports. They also contribute significantly to exports
(around 35% of India's total exports mentioned), earning valuable foreign exchange.
 Equitable Spread of Income and Wealth: Unlike large industries that can concentrate
wealth, small enterprises promote a wider, more equitable distribution of income and
wealth across different regions and populations, fostering social justice.
  Supporting Large Scale Industries: They often act as ancillary units, supplying parts,
components, and accessories to large industries, playing a complementary role in
industrial development.
 Contribution to National Economy: They produce a wide range of consumer goods and
contribute significantly to the national output (nearly 50% of manufacturing output
mentioned), playing a vital role in the overall economy.

b) Illustrate the impact of cooperative societies in rural India

Cooperative societies have a significant impact on rural India by:

 Supporting Agriculture: Agricultural cooperatives empower farmers by helping them

obtain necessary inputs like seeds, fertilizers, implements, finance, and warehousing
facilities. They also assist in marketing produce, potentially securing better prices.
 Empowering Weaker Sections: They provide a platform for weaker and exploited
sections, such as small producers or weavers (like Handloom Weavers' Cooperatives), to
organize, pool resources, and improve their economic condition through self-help and
mutual support.
 Promoting Local Production & Marketing: Cooperatives like Handloom Weavers'
Cooperatives, often aided by government support and marketing networks, help market
products woven manually or on power looms by individual weavers, sustaining
traditional crafts and rural livelihoods.
 Providing Essential Goods & Services: Consumers' or Retail cooperatives can procure
essential goods directly from manufacturers and distribute them in rural areas at cheaper
prices. Service cooperatives provide facilities like housing, healthcare, storage, and
maintenance on a no-profit-no-loss basis, improving the quality of life.
 Facilitating Economic Upliftment: The core objective is the economic upliftment of
members, encouraging them to work together for shared benefit and providing access to
resources, finance (loans at concessional rates), and markets they might not access
individually.
 Utilizing Local Resources: By organizing local producers and consumers, they
encourage the use of local capital, labour, and raw materials.

4) a) Classify the ownership structures associated with entrepreneurship

The main ownership structures associated with entrepreneurship are:

1. Proprietorship (Sole Proprietorship)

2. Partnership
3. Limited Companies (including Private Limited and Public Limited)
4. Co-operatives

b) Summarize how Small-Scale Industries help in entrepreneurship development

Small-scale industries (SSIs) significantly aid entrepreneurship development primarily by
providing widespread opportunities for self-employment. They enable individuals, particularly
the educated unemployed, to start their own ventures instead of seeking traditional jobs. This
reduces overdependence on the government for employment and allows individuals to pursue
creative and independent business activities, thereby fostering a culture of entrepreneurship.

5) a) Examine the role of small-scale industries in Indian economy

Small-scale industries (SSIs), or MSMEs, play a vital and multifaceted role in the Indian
economy:

 They are major generators of employment due to their labour-intensive nature, crucial
for India's large workforce.
 They promote self-employment and cultivate entrepreneurship.
 They ensure optimum utilization of capital, which is relatively scarce in India.
 They facilitate balanced regional development by dispersing industries to rural and
backward areas.
 They help in the effective use of local resources (materials, savings, skills).
 They contribute significantly to foreign exchange earnings through exports (around
35% mentioned) and conservation by reducing import dependence.
 They promote equitable distribution of income and wealth, countering concentration.
 They support large-scale industries by acting as ancillary units.
 They make a substantial contribution to the national economy, producing a wide range
of goods and accounting for a large share (nearly 50% mentioned) of manufacturing
output.

b) List the features of limited companies

Limited companies (or Joint Stock Companies) have the following features:

 Association of Individuals: Formed by multiple individuals contributing to a common

capital.
 Share Capital: Capital is divided into equal parts called shares.
 Shareholders: Individuals contributing capital are known as shareholders.
 Limited Liability: A shareholder's liability is limited to the face value of their
shareholding.
 Free Transferability of Shares: Shares (especially in public limited companies) can
generally be sold and transferred freely without the consent of others.
 Perpetual Existence: The company's existence continues indefinitely and is not affected
by the retirement, death, or insolvency of members.
 Management: Managed by a Board of Directors elected by shareholders.
 Separation of Ownership and Management: Shareholders generally do not participate
in the day-to-day management.
  Separate Legal Entity: (Implied by features like owning property) It has rights, like
acquiring and transferring property in its own name.
 Voting Rights: Equity shareholders typically have voting rights.
 Risk Bearing: Can undertake risky ventures due to limited liability.
 Shareholder Responsibility: Shareholders are not personally responsible for the acts of
the company.

6) a) Classify different types of business ownerships.

The different types of business ownerships are:

1. Sole Proprietorship
2. Partnership
3. Limited Companies (Private and Public)
4. Co-operatives

b) Explain the various sources of finance in cooperative society

Based on the information provided, the sources of finance for a cooperative society primarily
include:

 Member Contributions: Members contribute capital towards the society's operations.

 Government Assistance: Cooperatives may receive financial aid, grants, or subsidies
from the government.
 Loans: Members may be entitled to get loans at concessional interest rates, implying the
cooperative manages or facilitates these funds. While not explicitly stated as a source for
the society itself, retained earnings from profitable ventures or service charges (if
applicable) could also contribute. External borrowing (like from banks or financial
institutions) might be possible, similar to other enterprises, especially if they have a
sound financial position, but member capital and government aid are more distinct
features.

7) a) Explain the various types of ownership available to entrepreneurs. Discuss each form
in brief.

Entrepreneurs can choose from several forms of ownership:

1. Sole Proprietorship:
o Ownership: Owned and controlled by a single individual.
o Formation: Very easy to start and close, with negligible legal formalities.
o Liability: The owner has unlimited personal liability for business debts.
o Management: Owner manages the business, makes all decisions, and bears all
risks.
 o Continuity: Business continuity depends entirely on the owner's health and
existence.
o Suitability: Best for small businesses with low investment and risk.
2. Partnership:
o Ownership: Owned by two or more individuals (subject to limits) based on a
contractual agreement.
o Formation: Relatively easy to form with minimal statutory formalities compared
to companies; requires an agreement.
o Liability: All partners generally have unlimited personal liability for business
debts.
o Management: Managed by all partners or one/few acting for all; potential for
divided authority.
o Continuity: Dissolution can occur upon death, retirement, or insolvency of a
partner. Ownership transfer requires consent.
o Suitability: Suitable when more capital, skills, and risk-sharing are needed than a
proprietorship allows.
3. Limited Company (Joint Stock Company):
o Ownership: Owned by shareholders who contribute capital. Can be Private (2-50
shareholders, restricted share transfer, no public invitation) or Public (min 7
shareholders, no max limit, shares freely transferable, can invite public
subscription).
o Formation: More complex and burdensome procedure involving registration and
statutory requirements.
o Liability: Shareholders have limited liability, restricted to the value of their
shares.
o Management: Managed by an elected Board of Directors; separation of
ownership and management.
o Continuity: Has perpetual existence, unaffected by changes in shareholders.
o Suitability: Suitable for larger operations requiring significant capital, leveraging
limited liability to attract investors, and needing professional management.
4. Co-operatives:
o Ownership: Owned and controlled by members (minimum 10) based on
principles of self-help and mutual benefit.
o Formation: Requires registration under the Cooperative Societies Act.
o Liability: Members generally have limited liability up to their investment.
o Management: Managed democratically by an elected committee.
o Continuity: Has continuity irrespective of changes in membership.
o Suitability: Formed to meet specific economic needs of members (e.g., credit,
supplies, marketing, services), often for weaker sections, operating on principles
of service rather than solely profit maximization.
b) Explain the capital structure of limited companies, including the issuance of shares and
types of shares. How do limited companies raise capital, and what factors influence their
decisions on capital structure?

Capital Structure: The capital structure of a limited company refers to the specific mix of long-
term sources of funds used to finance the enterprise. It is the composition of debt and equity in
the company's overall capital, often expressed as a debt-equity ratio. An optimum capital
structure aims to minimize cost, maximize yield, maintain flexibility, ensure control, and stay
within the company's repaying capacity.

Issuance and Types of Shares (Equity Capital):

Equity capital represents the owners' investment. It is raised by issuing shares:

 Equity Shares: These are ordinary shares representing ownership. Holders typically
have voting rights, participate in management selection, and receive dividends based on
profits, but only after preference shareholders are paid. They bear higher risk but have
potential for higher returns.
 Preference Shares: These shares grant preferential rights to holders. They receive
dividends at a fixed rate before equity shareholders. They also have priority in capital
repayment if the company dissolves. They usually do not carry voting rights.

How Limited Companies Raise Capital:

Limited companies raise capital through:

1. Equity Capital: Selling equity and preference shares to the public (public limited
companies) or private individuals/groups.
2. Debt Capital: Borrowing funds that must be repaid. This includes:
o Term Loans: Loans from banks or financial institutions, often secured, with
fixed repayment schedules.
o Debentures: Debt instruments issued to the public, can be secured or unsecured,
repayable after a fixed period.
o Bonds: Fixed-income instruments issued by the company (or government) to the
public, with a fixed maturity date for principal repayment plus interest.

Factors Influencing Capital Structure Decisions:

Several factors influence a company's choice of debt-equity mix:

 Nature of Business: Stable businesses (like consumer goods) can handle more debt than
businesses with fluctuating sales (like AC manufacturing).
 Size of the Enterprise: Larger companies often have easier access to debt markets than
smaller, riskier firms.
 Cash Flow: Stronger, more predictable cash flows support higher levels of debt.
  Purpose of Financing: Productive investments generating additional profits can justify
external debt.
 Flexibility: The need to retain capacity for future financing needs.
 Cost: Debt is often cheaper initially (interest is tax-deductible) but carries fixed
obligations.
 Risk: High debt increases financial risk (risk of default).
 Control: Issuing new equity can dilute existing shareholders' control.
 Repaying Capacity: Debt levels must be manageable within the company's ability to
generate funds for repayment.
 Market Conditions: Investor appetite for debt or equity can vary.

8) a) Explain the process of forming a sole proprietorship.

The formation of a sole proprietorship is generally very simple. Normally, no major legal
formalities are required to start the business. The individual owner invests their own or
borrowed funds, uses their skills, and begins operations. Similarly, shutting down the firm also
involves minimal formal procedures.

b) Discuss the formation, governance, and capital structure of a partnership business.

What are the key considerations when entering into a partnership agreement, and how do
partnerships differ from other ownership structures?

Formation:
A partnership is formed when two or more individuals (within legal limits – typically 10 for
banking, 20 for others under the referenced Act) associate through a contractual agreement to
carry on a business with common ownership and management. Setting up involves minimal
statutory formalities compared to a company. While not explicitly stated as mandatory in the
slides, this agreement (often called a Partnership Deed) is crucial.

Governance:
The business must be managed by all the partners or by anyone among them acting for all, as
defined in their agreement. Authority can be divided, which may lead to conflict if not managed
well. Decision-making and control rest with the partners.

Capital Structure:
Partners typically mobilize their own resources (equity contribution) to fund the venture. This
pooling of resources facilitates the inflow of required capital. Additionally, partnerships,
especially those with a sound financial position, may secure loans (debt) from financial
institutions or other external sources. The specific debt-equity mix isn't rigidly defined like in
corporate finance but depends on partner contributions and borrowing capacity.

Key Considerations for Partnership Agreement:

  Profit/Loss Sharing: How profits and losses will be divided.
 Capital Contributions: Amount of capital each partner will invest.
 Management Roles & Responsibilities: Who will manage what aspects of the business.
 Duration & Dissolution: Terms under which the partnership operates and can be
dissolved.
 Admission/Retirement of Partners: Procedures for adding new partners or for existing
ones leaving.
 Dispute Resolution: Mechanisms for handling disagreements.
 Liability: Acknowledging the unlimited personal liability of each partner for all
business debts.
 Transferability: Understanding that ownership rights (shares) are not freely
transferable and require consent from other partners.

Differences from Other Structures:

 vs. Sole Proprietorship: Partnership involves multiple owners, pooled resources, and
shared decision-making/risk, unlike the single-owner structure.
 vs. Limited Company: Partnerships lack separate legal identity, partners have unlimited
liability (shareholders have limited), ownership transfer is restricted (freely transferable
in public ltd.), and formation is simpler.
 vs. Co-operative: Partnerships are typically profit-motivated for the partners, while co-
ops focus on member service/benefit; co-ops have democratic member control (one
member, one vote typically) and limited liability, unlike the partner-managed structure
with unlimited liability.

MODULE -3
1. Describe any three central government projects providing institutional support towards the
development of entrepreneurship in India
2. Enlist the important government schemes for women entrepreneurship.
3. What are the needs for institutional networking in enterprise setting.
4. Explain the role of non-government institutions in supporting entrepreneurship development
5. Discuss various functions of NABARD.
6. List the women entrepreneurial development schemes in India
7. What strategies have been implemented to address the challenges faced by rural
entrepreneurs in India?
8. Explain about the institutions and centres administered by SIDO (Small Industries
Development Organisation)

14 marks
1)a) Describe about the institutional support system towards the development of
entrepreneurship in India by the Central Government.
b) What are the benefits of entrepreneurial networks?
2) a) What are the advantages of providing incentives to entrepreneurs.
b) Write about the advantages & disadvantages of business networking.
3) a) Discuss any four central government supporting institutions.
b) Examine the role of technical consultancy organizations in entrepreneurship development
4)a) Describe different promotional schemes for women entrepreneurship
b) Explain Government incentives for promotion of entrepreneurship in India
5) a) Explain the challenges faced by women in starting and successfully running an enterprise.
b) Write short notes on government policies to foster entrepreneurship
6 a) Outline the specific government programs implemented in India aimed at stimulating and
supporting the start-up ecosystem
b) Describe any three state government institutions created for supporting entrepreneurship
7) a) Explain the functions of various Non Government Institutions.
b) Write a short note on women entrepreneurs with examples
8)a) How has the regulatory environment in India evolved to facilitate entrepreneurship, and
what reforms have been introduced in recent years?
b) Explain the various women entrepreneurship schemes of the government in detail

ANSWERS
1. Describe any three central government projects providing institutional support towards
the development of entrepreneurship in India
Startup India: Launched in 2016,to promote and support start up ventures in the country.
Include benefits such as tax exemptions, funding, and other support services for eligible
start ups.
Stand-Up India: Launched in 2016 to provide financial support to women and SC/ST
entrepreneurs. This Include loans offered between Rs. 10 lakh and Rs. 1 crore for setting
up new enterprises.
Atal Innovation Mission: Started in 2016 , to promote innovation and entrepreneurship in
the country by facilitating initiatives such as Atal Tinkering Labs, Atal Incubation
Centers, and Atal New India Challenges to support startups and innovators.
 Pradhan Mantri Mudra Yojana: Commenced in the year 2015 , to provide financial
support to small and micro enterprises. By this,loans offered up to Rs. 10 lakh to eligible
entrepreneurs. Make in India: To promote manufacturing in India, the project launched in
2014 .Include incentives and benefits offered to entrepreneurs who set up manufacturing
units in the country.
Digital India: To promote digital literacy and e-governance in the country, Digital India
scheme is launched in 2015. In this project, benefits offered to entrepreneurs who use
digital technology for their businesses.
2. Enlist the important government schemes for women entrepreneurship.
Bharathiya Mahila Bank Business Loan
Dena Shakti Scheme
Udyogini Scheme
Women Entrepreneurship Platform (WEP)
Annapurna Scheme
Pradhan Mantri Mudra Yojana Scheme

3. What are the needs for institutional networking in enterprise setting?

Institutional networking is needed in enterprise settings for several key reasons:

 Effective Coordination: To ensure policies and programs of various government levels

(Central, State) and different institutions (Financial Institutions, Ministries, Banks) work
together efficiently.
 Inter-Institutional Linkages: To create connections between different support
organizations for the benefit of the sector (e.g., small-scale sector).
 Liaison and Avoiding Duplication: To maintain proper communication between related
bodies (like Ministries, Planning Commission, FIs) and avoid overlapping efforts.
 Comprehensive Support Delivery: To provide a wider range of services, often through
allied institutions or collaborative setups (like the TCO network set up by IDBI and other
FIs).
 Access to Opportunities & Resources: To provide platforms (like ISTSL, CWEI) where
enterprises can connect with domestic and global opportunities, technology,
collaborations, and funding sources.
 Bridging Gaps: To connect different parts of the ecosystem, such as linking industry
with academia (BIRAC) or national labs with grassroots innovators (SEED).
 Building Synergies: To create combined effects greater than individual efforts,
especially across different sectors and states (National Skill Development Mission).
 Facilitating Cooperation & Collaboration: To enable business cooperation, technology
transfer, and joint efforts nationally and internationally (WASME, CII).
 Leveraging Collective Expertise: To bring together diverse expertise (NGOs, SHGs,
Institutions, etc.) for common benefit (CWEI) or access specialist knowledge (SEED,
WASME).
4. Explain the role of non-government institutions in supporting entrepreneurship
development.

Non-government institutions, including non-government organizations (NGOs) and industry

associations, play a significant role in supporting entrepreneurship, particularly for small-scale
industries. Their roles encompass:

 Advocacy and Representation: Acting as a voice for entrepreneurs, safeguarding their

interests (LUB), representing them on government bodies (LUB, FASII, FICCI), and
influencing policy (FICCI, ASSOCHAM).
 Training and Development: Providing entrepreneurial training (LUB, ICSI, EDII), skill
development programs (RSBDC), and manpower training (WASME, CWEI).
 Technical, Managerial & Consultancy Support: Offering consultancy services (ICSI,
FASII, WASME, RSBDC, EDII), managerial support (ICSI), technical assistance
(RSBDC), and promoting technology transfer and upgradation (LUB, ISTSL, WASME).
 Financial Facilitation: Assisting in accessing finance (FIWE), implementing credit
guarantee schemes to ease credit flow (CGFTMSI), and helping identify investment
opportunities (FIWE).
 Market Access and Promotion: Providing marketing services (LUB), helping with
export marketing (FIEO, FIWE), organizing trade fairs and exhibitions (SME Chamber,
FASII), facilitating buyer-seller meets, and acting as marketing information clearing
houses (WASME).
 Networking and Collaboration: Facilitating networking within the country and abroad
(FIWE, WASME), providing platforms for collaboration (ISTSL, CWEI), establishing
linkages (FASII), and enabling international cooperation (CII).
 Information Dissemination & Research: Collecting and disseminating information
(ICSI, FASII, FIEO, SME Chamber), conducting studies and surveys (FASII, ICSI), and
promoting research (ICSI).
 Specialized Support: Focusing on specific groups like rural entrepreneurs (RSBDC),
women entrepreneurs (FLO, FIWE, CWEI, WAWE, WIT, SEWA, AWAKE, SHGs), or
specific sectors like technology (ISTSL).
 Infrastructure and Testing: Establishing trade centres, display centres, test centres,
laboratories, and common facility centres (FASII).

5. Discuss various functions of NABARD.

NABARD (National Bank for Agriculture and Rural Development) performs several critical
functions as an apex development bank:

 Credit Facilitation: Providing credit flow and refinance facilities to commercial banks,
Regional Rural Banks, Cooperative Banks, Land Development Banks, and other FIs (like
KVIC) for agriculture, small-scale industries, cottage and village industries, handicrafts,
and other rural economic activities.
  Policy, Planning & Operations: Dealing with all matters concerning policy, planning,
and operations related to credit for agriculture and rural economic activities.
 Coordination: Coordinating the rural credit financing activities of various institutions
engaged in development work at the field level.
 Liaison: Maintaining liaison with the Government of India, State Governments, RBI, and
other national-level institutions involved in policy formulation.
 Improving Credit Delivery: Enhancing the absorptive capacity of the credit delivery
system through monitoring, formulating rehabilitation schemes, restructuring credit
institutions, and training personnel.
 Planning: Preparing rural credit plans annually for all districts in the country.
 Promotion and Development: Supporting the non-farm sector, promoting allied
economic activities in rural areas, attracting youth to the rural non-farm sector, preparing
District Industries Rural Projects (DRIP), and implementing Rural Entrepreneurship
Development Programs (REDP). It also sponsors institutions like RSBDC.
 Research: Promoting research in rural banking, agriculture, and rural development.
 Fund Raising: Raising funds through various means including bonds, debentures,
borrowing from RBI/Govt., and external sources.
 Support for Women: Evolving exclusive schemes for women like ARWIND (non-farm
development), MAHIMA (marketing assistance), and providing grants for Women
Development Cells.

6. List the women entrepreneurial development schemes in India.

Several schemes specifically target or significantly benefit women entrepreneurs in India:

 Support to Training and Employment Programme for Women (STEP): Focuses on

skill training, especially for rural women.
 Stand-Up India: Mandates loans for at least one woman entrepreneur per bank branch
for greenfield enterprises.
 Trade related Entrepreneurship Assistance and Development (TREAD): Enables
credit availability for underprivileged women through NGOs.
 SIDBI Schemes:
o Mahila Vikas Nidhi (MVN): Fund for NGOs providing training/employment to
women.
o Mahila Udam Nidhi (MUN): Equity support for women setting up
new/rehabilitating tiny/small units.
o Marketing Fund for Women (MFW): For women entrepreneurs/organizations
involved in marketing their products.
 NABARD Schemes:
o Assistance to Rural Women in non-farm Development (ARWIND)
o Assistance for Marketing of Non-farm Products of Rural Women (MAHIMA)
o Grant assistance for setting up "Women Development Cells"
 Commercial Bank Schemes:
 o SBI Sthree Shakti Package
o Bank of India Priyadarshini Yojana
 General Schemes (also assist women):
o Prime Minister's Rojgar Yojana (PMRY)
o Self-Employment Programme for Urban Poor (SEPUP)
o Swarnajayanti Gram Swarojgar Yojana (SGSY)
o Integrated Rural Development Programme (IRDP)
o Micro-finance through Rastriya Mahila Kosh (RMK)
 Entrepreneurship Development Scheme (MSDE): Includes promotion of women
entrepreneurship as an element.

7. What strategies have been implemented to address the challenges faced by rural
entrepreneurs in India?

Several strategies, supported by various institutions and schemes, have been implemented to
address the challenges faced by rural entrepreneurs:

 Enhanced Financial Access: Institutions like NABARD provide core funding and
refinance for rural activities. Schemes like MUDRA target micro-units, CGFTMSI
provides credit guarantees reducing lender risk, and specific programs like Stand-Up
India and SIDBI's SMILE offer loans, potentially benefiting rural ventures. NABARD
also prepares district-level rural credit plans.
 Skill Development & Training: Programs like NABARD's REDP, training by
SISI/NISIET, dedicated rural centers like RSBDC (providing EDPs, skill workshops,
clinics), and schemes like STEP (esp. for rural women) aim to enhance skills and
entrepreneurial capabilities.
 Infrastructure Support: District Industries Centres (DICs) act as single-window
agencies at the grassroots. Industrial Estates are often established in backward/rural areas.
The Integrated Infrastructure Development (IID) scheme includes reservation for rural
areas. KVIC focuses infrastructure on village industries.
 Technical & Marketing Assistance: NABARD supports project preparation (DRIP) and
non-farm activities. SIDO/SISI offer consultancy and market information. NSIC helps
with raw material supply and marketing. KVIC, Coir Board, and RSBDC provide
specific technical and marketing support relevant to rural industries. SEED connects rural
innovators with technical expertise.
 Dedicated Institutional Focus: NABARD serves as the apex bank for rural
development. KVIC, MGIRI, and Coir Board focus specifically on khadi, village, and
coir industries, predominantly rural. DICs operate at the district level. RSBDC is
dedicated to rural small business development.
 Policy Measures: Policy packages have included measures like rural reservations in
infrastructure schemes (IID). NCEUS was formed to examine issues in the unorganized
sector, which is largely rural.
  Targeted Group Support: Specific schemes target rural women (STEP, TREAD,
NABARD's ARWIND/MAHIMA) and the unorganized sector workforce (SEWA).

These strategies collectively aim to overcome challenges related to credit scarcity, lack of skills,
inadequate infrastructure, poor market linkages, and limited technical know-how in rural areas.

8. Explain about the institutions and centres administered by SIDO (Small Industries
Development Organisation).

SIDO administers a network of institutions and centres across the country to provide support
services to small-scale industries:

 Small Industries Service Institutes (SISI): These are set up in the capital cities of the
states. They function under the Ministry of SSI and provide a wide range of consultancy
and training services to small and prospective entrepreneurs. Their functions include
assisting in project proposal preparation, obtaining finance, technical and managerial
counseling (machinery selection, quality standards), conducting surveys, preparing
techno-economic reports, providing market exposure, advising governments on policy,
conducting Entrepreneurship Development Programmes (EDPs), assisting in testing raw
materials/products, recommending financial assistance, and identifying ancillary
development potential.
 Product-cum-Process Development Centres (PPDC): These centres are promoted to
provide specific services to small-scale units, particularly in areas with dense industry
clusters. They function as research and development institutions, encouraging product
design and innovation, developing new processes, upgrading technology, providing
technical and managerial support, and acting as centres of excellence in their respective
fields.
 Regional Training Centres (RTC): Located in major cities, these centres focus on
conducting quality awareness programs and assisting field testing stations that provide
testing services to SSI units. Their primary engagement is in systematic testing and
providing technical consultancy services.
 Training Institutes: SIDO also controls the affairs of key training institutes responsible
for arranging training facilities for entrepreneurial trainers. These include the National
Institute for Small Industry Extension Training (NISIET) in Hyderabad, the National
Institute for Entrepreneurship and Small Business Development (NIESBUD) in New
Delhi, and the integrated training centre (Industries) at Nilokheri.

14 marks
1)a) Describe about the institutional support system towards the development of
entrepreneurship in India by the Central Government.
a) Central Government Institutions:
National Board for Micro, Small and Medium Enterprises (NBMSME):
The Government Formulated the Micro, Small and Medium Enterprises Development Act in
2006 and established this. This Board examines the factors affecting promotion and development
of MSMEs and reviews policies and programmes from time to time relating to these enterprises,
and makes recommendations to the Government in formulating the policies for the growth of
MSMEs.
National Commission for Enterprises in the Unorganised Sector (NCEUS): The Government of
India constituted the National Commission for Enterprises in the Unorganised Sector (NCEUS)
to examine the problems of the enterprises in the unorganized/informal sector. The Commission
has made recommendations to provide technical, marketing and credit support to these
enterprises.
Small Scale Industries Board (SSIB): It was established in 1954 to provide effective coordination
and inter- institutional linkages for the benefit of small scale sector
National Bank for Agriculture and Rural Development (NABARD): NABARD is designated as
an apex development bank in the country. This national bank was established in 1982 by a
Special Act of the Parliament, with a mandate to uplift rural India by facilitating credit flow in
agriculture, cottage and village industries, handicrafts and small-scale industries. It is also
required to support non-farm sector while promoting other allied economic activities in rural
areas. NABARD functions to promote sustainable rural development for attaining prosperity of
rural areas in India.
Small Industries Development Organisation (SIDO): It was constituted in 1954 to develop
support services for promotion of SSS. Over the years, it has seen its role evolve into an agency
for advocacy, hand holding and facilitation for the small industries sector.
National Small Industries Corporation (NSIC): The National Small Industries Corporation
(NSIC) Ltd. was established by the Government as a Public Sector Company in 1955. It deals
with arrange supply of machinery and equipments, provision of financial assistance, arrangement
of raw materials, establishment of technology transfer centres. etc.
Industrial Development Bank of India: The objective of the IDBI includes: Coordinating,
supervising, and controlling the activities of Finacial Institutions like ICICI, LIC, etc. The
Collection of resources for other financial institutions and providing financial assistance.
Planning and promoting key industries to enhance industrial growth
b) What are the benefits of entrepreneurial networks?
Benefits of Entrepreneurial Networks
1. Strong Professional Ties
2. Access to Job Opportunities
3. Career And Profile Advancement
4. Exchanging New Ideas
5. Gained Knowledge
6. Higher Confidence
7. Improved Creative Intellect
8. An Answer to Most Questions
9. Polished Communication And Social Skills
10. Career Advice and Support.
2) a) What are the advantages of providing incentives to entrepreneurs.
1. Decentralization of economic power Incentives encourages prospective entrepreneurs to take
up industrial ventures and results in decentralization of economic power in few hands.
2. Balanced regional development Incentives are given to entrepreneurs establishing industries in
backward areas. Hence, it results in the dispersal of industries over India’s geographical area and
contributes to regional balanced development.
3. Transformation of Technology Incentives help in the transformation of traditional technology
into modern technology. Traditional technology is characterized by low skill; low productivity
and low wages, whereas modern technology is subsequently characterized by improved skills,
high productivity, raising wages and a higher standard of living.
4. Overcomes Difficulties The package of incentives and concessions are given to entrepreneurs
for setting up units both in backward as well as developed districts. But generally it is given for
setting up units in backward area. It is provided to offset the disadvantages prevailing in such
places. Advantages of providing Incentives to Entrepreneurs
5.Generates Industrialization Industrial policy uses incentives both to correct the market
imperfections and to accelerate the process of industrialization in the country. Regional balances
can also lead to effective utilization of regional resources, removal of disparities in income and
levels of living and contribute to a more integrated society.
6. Encourages Entrepreneurship The new entrants in the field face many obstacles on account of
inadequate infrastructures. The new entrepreneur is supported by the government agencies
through various incentives. Being a new entrant, an entrepreneur may lack marketing and
entrepreneurial skills. An entrepreneur requires support from government agencies to compete
with competitors. The subsidies and concessions motivate the entrepreneur both financially and
non financially and promotes entrepreneurship in the country by removing economic constraints.
7. Helps to Overcome Competition Incentives help the entrepreneur to survive and compete with
the competitors. Some of the incentives are concerned with the survival and growth of industries.
Several incentives are confined to the first few years of the establishment of the unit while a few
of them are made available over a long period.
b) Write about the advantages & disadvantages of business networking.

3) a) Discuss any four central government supporting institutions.

Four key central government institutions supporting entrepreneurship in India, as detailed in the
notes, are:

1. National Bank for Agriculture and Rural Development (NABARD): Established in

1982, NABARD is the apex development bank focused on uplifting rural India. It
facilitates credit flow for agriculture, cottage and village industries, handicrafts, SSIs, and
 the non-farm rural sector. Its role includes policy formulation, planning, coordinating
rural credit, improving the credit delivery system, preparing district credit plans,
promoting research, and implementing specific programs like the Rural Entrepreneurship
Development Program (REDP). It holds a 99% stake by the Government of India.
2. Small Industries Development Organization (SIDO): Constituted in 1954, SIDO is the
apex body for formulating, coordinating, and monitoring policies and programs for the
promotion and development of small-scale industries (SSIs). Its objectives include policy
formulation, coordinating state government policies, disseminating information,
providing extension services (technical, consultancy, training, marketing), and promoting
technology upgradation. It operates through a network including Small Industries Service
Institutes (SISIs), Regional Testing Centres, and Product-cum-Process Development
Centres (PPDCs).
3. National Small Industries Corporation Ltd. (NSIC): Established in 1955, NSIC works
to promote, aid, and foster the growth of SSIs in India and abroad. It actively promotes
modernization, technology upgradation, quality improvement, and export enhancement
for SSIs. Key functions include providing machinery on hire-purchase, equipment
leasing, export marketing support, participation in government bulk purchases,
distributing raw materials, and imparting industrial training. It offers Marketing, Credit,
Technology, and other support services through its network of offices and centres.
4. Small Industries Development Bank of India (SIDBI): Established in 1990 (initially as
an IDBI subsidiary), SIDBI aims to strengthen the institutional arrangements for meeting
the credit requirements of SSIs and tiny industries. It provides direct lending and
refinance through various primary lending institutions (like SFCs, Banks). It encourages
venture capital for hi-tech SMEs, provides assistance for setting up new units,
technological upgradation, quality improvement, market development, infrastructure
development, and coordinates the functions of various institutions financing SSIs.

b) Examine the role of technical consultancy organizations in entrepreneurship

development.

Technical Consultancy Organizations (TCOs) play a crucial role in entrepreneurship

development by providing a comprehensive set of specialized services primarily to small and
medium enterprises (SMEs) and individual entrepreneurs. Their role includes:

 Project Planning & Appraisal: Preparing project profiles and conducting techno-
economic appraisals of projects, helping entrepreneurs assess feasibility and plan
effectively.
 Market Assessment: Undertaking industrial potential surveys and carrying out market
research to help entrepreneurs identify opportunities and understand market dynamics.
 Entrepreneur Identification & Development: Identifying potential entrepreneurs and
conducting Entrepreneurship Development Programs (EDPs) to nurture entrepreneurial
skills.
  Technical & Managerial Assistance: Providing essential technical and managerial
guidance to entrepreneurs, including assistance in modernization, technology
upgradation, and rehabilitation programs for sick units.
 Information Support: Organizing information cells and data banks concerning
industrial and economic activities, making relevant information accessible to
entrepreneurs.
 Implementation Support: Offering project supervision and rendering technical and
administrative assistance during the implementation phase.
 Specialized Services: Developing industry clusters, offering vocational training,
providing Merchant Banking services, and offering consultancy for export-oriented
enterprises.

By offering these services, TCOs bridge knowledge and skill gaps, reduce risks associated with
new ventures, improve operational efficiency, and ultimately foster the growth and success of
entrepreneurial ventures. They act as critical support systems, particularly for SMEs that may
lack in-house expertise.

4)a) Describe different promotional schemes for women entrepreneurship.

The notes highlight several promotional schemes and initiatives specifically designed to
encourage and support women entrepreneurship in India:

1. Support to Training and Employment Programme for Women (STEP): Launched by

the Ministry of Women and Child Development, this scheme trains women (especially
rural) who lack access to formal skill training facilities, preparing them for employment
and entrepreneurship in various sectors like agriculture, crafts, IT, etc.
2. Trade related Entrepreneurship Assistance and Development (TREAD): This
program specifically addresses the issue of credit access for underprivileged women by
enabling credit availability through Non-Governmental Organizations (NGOs). Women
receive support from NGOs for accessing loans and also get counseling and training to
start enterprises, promoting non-farm activities.
3. Mahila Vikas Nidhi (MVN) (under SIDBI): This is a specially designed fund aimed at
the economic development of women. It provides financial assistance to accredited
NGOs that offer training and employment opportunities, particularly to poor rural
women.
4. Mahila Udam Nidhi (MUN) (under SIDBI): This scheme provides equity support to
enterprising women setting up new projects in the tiny and small-scale sector or for
rehabilitating viable sick SSI units. It aims to help women meet the equity requirements
for projects costing up to Rs. 10 Lakhs.
5. Marketing Fund for Women (MFW) (under SIDBI): This fund supports women
entrepreneurs and organizations involved in marketing products manufactured by women,
helping them increase their market share both domestically and internationally.
 6. NABARD's Schemes: NABARD has exclusive schemes like Assistance to Rural
Women in non-farm Development (ARWIND) and Assistance for Marketing of Non-
farm Products of Rural Women (MAHIMA). It also supports the setting up of "Women
Development Cells" in banks through grant assistance.
7. SBI Sthree Shakti Package: Introduced by SBI, this package includes exclusively
designed EDPs for women, support from bank staff, collateral-free loans up to Rs.
25,000, interest concessions, and aims for faster loan sanctioning.
8. Bank of India Priyadarshini Yojana: This scheme provides financial assistance to
women entrepreneurs in various categories like small businesses, retail trade, transport
operations, and professional/self-employed activities, offering term loans and working
capital.

These schemes collectively aim to address challenges faced by women entrepreneurs related to
skills, finance, market access, and confidence-building.

b) Explain Government incentives for promotion of entrepreneurship in India.

The Indian government, at both Central and State levels, provides various incentives and
facilities to promote entrepreneurship, particularly for Small Scale Industries (SSIs):

 Fiscal Incentives:
o Tax Holiday: Under Section 80IB, SSIs could claim deductions on profits for the
first 10 years (rates varied based on ownership structure).
o Excise Concessions: SSI units up to a certain turnover (Rs. 100 lakhs mentioned)
were exempted from excise duties, with simplified procedures for smaller units.
o Sales Tax Concessions: State governments offer concessions on sales tax for
new/sick units for a period ranging from three to fifteen years.
o Exemption from Stamp Duty & Local Taxes: Exemption from stamp duty on land
allotted by the government and exemption from octroi/other local taxes on
machinery, raw materials, etc. for new units.
 Subsidies:
o Interest Subsidy: State governments provide subsidies on interest for term loans
obtained from specified financial institutions.
o State Transport Subsidy: Provided at notified rates on the transportation of raw
materials and finished goods in certain states/areas.
o Subsidy for Technical Know-how: Subsidy on the cost of obtaining technical
know-how from reputed R&D organizations (prior permission required).
o Air Freight Subsidy: Provided by some state governments to SSI units on their
finished goods for any destination.
 Infrastructure & Utility Related Incentives:
o Rebate in Electricity & Water Charges: Provided by State Governments to new
and existing units.
 o Allotment of Land/Shed: Facilitated, often in industrial estates, sometimes with
exemptions like stamp duty.
 Marketing Support:
o Government Purchase Preference: Government departments and organizations
give preference to products manufactured by local SSI units. Specific items were
reserved for exclusive purchase from SSIs/KVIC etc.
o Price Preference: A price preference (up to 15% mentioned) is given to SSI
products in government procurement for selected items.
 Policy-Based Incentives:
o Reservation Policy: Reserving certain items for exclusive production by the SSI
sector (though this has been reduced over time).
o Delicensing & Deregulation: Simplification of procedures and removal of
licensing requirements for SSIs as part of policy reforms (e.g., IPR 1991).
 Special Group Incentives:
o Incentives for NRIs: Special incentives offered by some states for setting up
industries.
o Facilities for Export Oriented Units: Special packages including incentives and
better infrastructure.

These incentives aim to reduce the cost of setting up and running businesses, improve
competitiveness, provide market access, and encourage investment in specific areas or by
specific groups.

5) a) Explain the challenges faced by women in starting and successfully running an

enterprise.

Based on the provided notes, women entrepreneurs in India face several significant challenges:

 Low Economic Participation: Despite constituting about 50% of the population,

women's participation in economic activities is significantly lower (mentioned as only
34%), indicating underrepresentation in the entrepreneurial sphere.
 Occupational Segregation: Women are often concentrated in low-paid and low-status
occupations, suggesting marginalization within the labor force which can extend to
entrepreneurship.
 Social Prejudices and Stereotypes: There's a common assumption that men are the
primary breadwinners and a social prejudice that a woman's primary focus should be the
family and household. This can limit support, opportunities, and aspirations for
entrepreneurship.
 Lack of Recognition: Women's work, especially in the unorganized sector where many
operate, is often not counted or remains invisible, undermining their economic
contribution and access to support.
  Resource Constraints (esp. Rural): In rural areas particularly, women face a lack of
access to education, health care facilities, and effective employment or entrepreneurial
opportunities.
 Barriers to Finance: Accessing credit is a significant barrier for women entrepreneurs,
explicitly mentioned as a challenge NABARD seeks to address.
 Operational Difficulties: Women face problems and constraints in identifying viable
business opportunities and in the management of their enterprises at various stages.

These challenges stem from a combination of societal attitudes, systemic barriers, and lack of
access to necessary resources like finance, education, and networks.

b) Write short notes on government policies to foster entrepreneurship.

Government policies provide the overarching framework to foster entrepreneurship in India. Key
examples highlighted in the notes include:

 Industrial Policy Resolutions (IPRs): Successive IPRs (e.g., 1948, 1956, 1977, 1990,
1991) outlined the government's approach. Early policies focused on utilizing local
resources and integrating SSIs with large industries. IPR 1977 emphasized decentralized
promotion (cottage/village industries), reservation of items for SSIs, and introduced
DICs. IPR 1991 marked a shift towards liberalization, focusing on simplifying
regulations, delicensing, deregulation, and promoting market orientation to enhance
competitiveness.
 MSME Development Act, 2006: This act provided a legal framework for the Micro,
Small, and Medium Enterprises sector, establishing the National Board for MSMEs
(NBMSME) to advise on policies and address developmental issues, thereby formalizing
support structures.
 Reservation Policy: Historically, certain products were reserved for exclusive
manufacture by SSIs to protect them from large-scale competition. While this fostered
initial growth, the policy has been gradually relaxed over time to improve
competitiveness and align with liberalization.
 Government Purchase & Price Preference Policy: These policies aimed to provide
assured markets for SSI products by mandating government departments to procure
certain items exclusively or preferentially from SSIs, sometimes offering a price
advantage (up to 15% mentioned) over other suppliers.
 Comprehensive Policy Packages (e.g., 2000, 2001-02, 2004-05): These packages
periodically introduced specific measures like enhancing investment limits, increasing
excise exemptions, boosting credit guarantee schemes, launching market development
assistance, and increasing composite loan limits to address contemporary needs and
improve the sector's competitiveness.
These policies, evolving over time, reflect the government's strategic intent to create a conducive
environment for entrepreneurship through protection, promotion, liberalization, and targeted
support measures.

6 a) Outline the specific government programs implemented in India aimed at stimulating

and supporting the start-up ecosystem.

Several specific government programs mentioned in the notes aim to stimulate and support the
start-up ecosystem:

1. India Aspiration Fund (IAF): Launched by SIDBI (Aug 2015), this Rs. 2000 crore fund
was created specifically to boost the start-up fund ecosystem by investing in various
venture capital funds that meet the equity requirements of MSME start-ups.
2. SIDBI Make in India Loan for Small Enterprises (SMILE): A Rs. 10,000 crore
scheme launched to catalyze equity investment in start-ups and MSMEs. It provides soft
loans (quasi-equity/term loans) to help start-ups meet debt-equity ratio norms, focusing
on 'Make in India' sectors.
3. SETU (Self Employment and Talent Utilization): Operated from NITI Aayog, this is a
Techno-Financial, Incubation, and Facilitation Programme designed to support all aspects
of start-up businesses and self-employment, particularly in technology-driven areas. It
aims to build a vibrant entrepreneurial ecosystem by focusing on policy, access to capital,
entrepreneurial hubs, culture, and collaboration.
4. Stand-Up India: Launched in 2015, this scheme promotes greenfield enterprises (often
start-ups) by facilitating bank loans (Rs. 1 million - 10 million) for at least one SC/ST
and one woman borrower per bank branch. It also includes a digital platform providing
information on financing and credit guarantees for small entrepreneurs.
5. Biotechnology Industry Research Assistance Council (BIRAC): A public-sector
enterprise set up to strengthen and empower emerging biotechnology enterprises (often
start-ups) by embedding strategic research and innovation and bridging the industry-
academia gap.
6. MUDRA (Micro Units Development Refinance Agency) Bank: Set up in 2015, it
encourages entrepreneurship by providing refinance for loans to micro-units (Rs. 50,000
to Rs. 10 lakhs). Its 'Shishu' loan category often caters to the initial funding needs of
start-ups.
7. Support via NSIC: NSIC provides support through Science and Technology Parks and
Technology Business Incubators, which are critical infrastructure for nurturing start-ups.
8. Entrepreneurship Development Scheme (MSDE): This scheme includes elements like
developing entrepreneurship hubs (ehubs) and networking platforms, which are crucial
for supporting the start-up community.

These programs collectively address key start-up needs like funding (equity, debt, soft loans),
incubation, policy framework development, and ecosystem building.
b) Describe any three state government institutions created for supporting
entrepreneurship.

Three key types of state government institutions supporting entrepreneurship are:

1. State Financial Corporations (SFCs): These are state-level financial institutions

established primarily to provide medium and long-term finance to industries within their
respective states. Their main objectives include providing term loans for acquiring fixed
assets (land, building, plant, machinery), promoting self-employment, encouraging
specific groups like women entrepreneurs, supporting industry expansion, and providing
seed capital assistance. They act as a crucial source of funding for entrepreneurs at the
state level.
2. State Small Industries Development Corporations (SSIDCs): Set up as state
government undertakings under the Companies Act, SSIDCs cater to the primary
developmental needs of small, tiny, and village industries within their jurisdiction. Their
functions typically include procuring and distributing essential raw materials, supplying
machinery on a hire-purchase basis, constructing industrial estates to provide ready
infrastructure, and providing assistance in marketing the products of SSIs.
3. District Industries Centres (DICs): While operating at the district level, DICs function
under the State Directorate of Industries. They are designed as single-window agencies to
provide most services and support required by small and village industries at the
grassroots level. Their objectives include identifying prospective entrepreneurs and viable
projects, conducting resource assessments, preparing project reports, providing guidance,
recommending financial proposals to banks/SFCs, assisting in land/shed allotment,
recommending power connections, arranging EDP training, facilitating marketing
assistance, and monitoring local industrial health.

These institutions form the backbone of the state-level support system, providing finance,
infrastructure, raw materials, marketing support, and guidance directly to entrepreneurs within
the state.

7) a) Explain the functions of various Non Government Institutions.

Non-Government Institutions (NGOs, industry associations, specific foundations/trusts) perform

a wide range of functions to support entrepreneurship:

 Advocacy and Representation: They act as the collective voice of entrepreneurs,

representing their interests and concerns to government bodies (e.g., FICCI,
ASSOCHAM, LUB, FASII) and participating in policy formulation.
 Training and Capacity Building: They conduct entrepreneurial training programs, skill
development workshops, and provide vocational training to enhance the capabilities of
entrepreneurs and their workforce (e.g., LUB, ICSI, EDII, RSBDC, WASME).
  Consultancy and Mentoring: Offering technical, managerial, and financial consultancy
services, providing guidance, and sometimes mentorship to help entrepreneurs navigate
challenges (e.g., ICSI, FASII, WASME, EDII, RSBDC).
 Networking and Collaboration: Creating platforms for entrepreneurs to connect with
peers, potential partners, buyers, and suppliers, both domestically and internationally
(e.g., FIWE, WASME, CII, ISTSL).
 Market Access and Promotion: Assisting with marketing strategies, organizing trade
fairs and exhibitions, facilitating buyer-seller meets, and supporting export activities
(e.g., LUB, SME Chamber, FASII, FIEO, FIWE).
 Information Dissemination and Research: Collecting, analyzing, and distributing
relevant market information, policy updates, and technical knowledge; conducting studies
and surveys to understand the sector's needs (e.g., ICSI, FASII, FIEO, WASME).
 Financial Facilitation: Assisting entrepreneurs in accessing finance, sometimes
managing specific funds or facilitating linkages with financial institutions, and helping
implement schemes like credit guarantees (e.g., FIWE, CGFTMSI).
 Technology Transfer and Upgradation: Promoting the adoption of new technologies,
facilitating technology transfer, and supporting innovation (e.g., LUB, ISTSL, WASME).
 Specialized Support: Focusing on the needs of specific groups like women
entrepreneurs (FLO, FIWE, CWEI, WAWE, WIT, SEWA, AWAKE), rural entrepreneurs
(RSBDC), or specific industries.
 Infrastructure Support: Some associations may establish common facilities like testing
centres, laboratories, or trade centres (e.g., FASII).

These institutions complement government efforts by providing flexible, often grassroots-level

support, fostering a sense of community, and advocating for the needs of entrepreneurs.

b) Write a short note on women entrepreneurs with examples.

Women entrepreneurs represent a significant potential force in the Indian economy, although
their participation has historically been lower than men's due to various social and economic
challenges. These challenges include societal expectations often limiting their roles to the
household, lack of access to education and resources (especially in rural areas), difficulties in
accessing finance, and sometimes operating in low-visibility sectors.

Recognizing their potential and the need for empowerment, considerable focus has been placed
on promoting women entrepreneurship through government policies, dedicated schemes, and
specialized support institutions. These initiatives aim to provide skill training, facilitate credit
access, offer marketing support, and create networking opportunities.

Examples of women entrepreneurs, as reflected in the organizations supporting them or the types
of work mentioned, include:

 Women running small businesses like beauty parlors, laundries, or lending libraries.
  Retail traders operating fair price shops or general stores.
 Professionals and self-employed women like chartered accountants, lawyers, and doctors.
 Women engaged in allied agricultural activities.
 Individuals involved in the unorganized sector, such as:
o Hawkers and vendors (selling vegetables, fish, food items, household goods).
o Home-based workers (weavers, potters, bidi/agarbatti workers, papad rollers,
readymade garment workers, artisans processing agricultural products).
o Manual labourers and service providers (agricultural/construction workers,
domestic workers).
 Women leading or participating in enterprises supported by organizations like FLO
(Federation of Ladies Organisation), FIWE (Federation of Indian Women Entrepreneurs),
CWEI (Consortium of Women Entrepreneurs of India), SEWA (Self-Employed Women's
Association), and AWAKE (Association of Women Entrepreneurs of Karnataka).
 Women benefiting from Self-Help Groups (SHGs) to start home-based businesses.

Promoting women entrepreneurship is seen not just as an economic activity but as a crucial step
towards women's empowerment, enhancing their economic status, social standing, and decision-
making power.

8)a) How has the regulatory environment in India evolved to facilitate entrepreneurship,
and what reforms have been introduced in recent years?

The regulatory environment in India for entrepreneurship, particularly concerning SSIs/MSMEs,

has evolved significantly over the decades, moving from a more protectionist and controlled
regime towards greater facilitation and liberalization.

 Early Phase (Post-Independence to ~1990): Characterized by protectionist measures

like the Reservation Policy (reserving items for SSIs), licensing requirements, and
specific support structures (like DICs introduced in IPR 1977). While intended to nurture
the sector, this sometimes led to inefficiencies and lack of competitiveness.
 Liberalization Era (Post-1991): The Industrial Policy Resolution of 1991 marked a
major shift. The focus moved to simplifying regulations and
procedures through delicensing (SSIs exempted from licensing for all articles)
and deregulation. Barriers like investment ceilings were gradually raised, and restrictive
equity participation norms were relaxed. The aim was to improve competitiveness and
integrate SSIs more effectively with the broader economy.
 Continued Simplification & Targeted Support (2000s): Policy packages continued this
trend by further increasing investment limits, raising excise duty exemptions, enhancing
credit guarantee schemes, and simplifying procedures (e.g., replacing the Excise Gate-
Pass system with manufacturer invoices). The Reservation Policy saw significant
dereservation of items. The MSME Development Act, 2006 provided a formal legal
framework, defining the sector and establishing coordinating bodies like the NBMSME.
  Recent Reforms (Post-2014 Focus): Recent initiatives like 'Make in India' emphasized
replacing "obsolete and obstructive frameworks with transparent and user-friendly
systems". Schemes like 'Stand-Up India' and 'SETU' highlight the focus on creating a
conducive "entrepreneurial eco system" through catalytic government policy and
regulatory frameworks. This includes efforts towards ease of doing business, faster
clearances (though specific recent reforms like GST, IBC etc., are not detailed
in this text, the direction towards simplification is evident). The introduction of schemes
like MUDRA and specific funds like IAF also reflect a focus on streamlining access to
finance, a key regulatory-related challenge.

In essence, the evolution has been from direct control and protection towards creating an
enabling environment characterized by less licensing, simpler rules, greater financial access, and
more transparent systems to foster entrepreneurial growth.

b) Explain the various women entrepreneurship schemes of the government in detail.

The government has introduced several schemes specifically aimed at promoting and supporting
women entrepreneurs, detailed as follows:

1. Support to Training and Employment Programme for Women (STEP):

o Objective: To train women who lack access to formal skill training, especially in
rural India, enhancing their employability and potential for self-employment.
o Target Group: All Indian women above 16 years of age with no access to formal
training.
o Mechanism: Imparts skills in sectors like agriculture, horticulture, food
processing, handlooms, traditional crafts, tourism, hospitality, computer, and IT
services. Guidelines were redrafted to adapt to current needs.
o Implementing Body: Ministry of Women and Child Development (redrafted
with Min. of Skill Dev. & NITI Aayog).
2. Trade related Entrepreneurship Assistance and Development (TREAD):
o Objective: To address the critical issue of credit access for underprivileged
women entrepreneurs.
o Mechanism: Enables credit availability by working through registered Non-
Governmental Organizations (NGOs). Women receive support from these NGOs
to access loan facilities and also receive counseling and training opportunities to
kick-start their proposed enterprises, particularly non-farm activities.
3. Mahila Vikas Nidhi (MVN) (under SIDBI):
o Objective: A specially designed fund for the economic development of women.
o Mechanism: Provides financial assistance to accredited NGOs. These NGOs use
the funds to provide training and employment opportunities to women, with a
focus on the rural poor.
o Operating Agency: SIDBI, through associated institutions like SFCs, SIDCs,
Banks.
 4. Mahila Udam Nidhi (MUN) (under SIDBI):
o Objective: To support enterprising women in setting up new projects in the tiny
and small-scale sector and assist in the rehabilitation of viable sick SSI units run
by women.
o Mechanism: Provides equity support to women entrepreneurs. The total cost of
the project should not exceed Rs. 10 Lakhs.
o Operating Agency: SIDBI, through associated institutions.
5. Marketing Fund for Women (MFW) (under SIDBI):
o Objective: To help women entrepreneurs and organizations involved in
marketing products manufactured by women increase their market share in both
domestic and international markets.
o Target Group: SSI units owned/managed by women; marketing service
providers/organizations supporting women-owned enterprises.
o Mechanism: Provides funding to eligible borrowers involved in marketing
activities.
o Operating Agency: SIDBI.
6. NABARD's Schemes (ARWIND & MAHIMA):
o Objective: To support rural women in non-farm activities and marketing.
ARWIND focuses on non-farm development, while MAHIMA assists in
marketing non-farm products of rural women.
o Mechanism: Provides assistance (nature not fully specified, likely
financial/support). NABARD also provides grant assistance to banks (RDBs/Co-
operatives) to set up "Women Development Cells".
7. SBI Sthree Shakti Package:
o Objective: To develop women entrepreneurs (introduced 1989).
o Mechanism: Conducts exclusive Entrepreneurship Development Programmes
(EDPs); Branch Managers/Field Officers provide support; offers financial
assistance up to Rs. 25,000 without collateral security; provides a discount of
0.5% on interest charged; aims for loan sanction within 30 days.
8. Bank of India Priyadarshini Yojana:
o Objective: Provide financial assistance to women entrepreneurs across various
categories (small business, retail, transport, professionals, allied agriculture).
o Mechanism: Offers term loans up to Rs. 2 lakhs and working capital up to Rs. 1
Lakh. Assets acquired are hypothecated as security. Repayment period is typically
3-5 years.

These schemes provide a multi-pronged approach, addressing needs related to skill development,
credit access (including equity and working capital), marketing support, and general business
assistance for women entrepreneurs.

MODULE -4
1. What is a project report? What it consists of?
2. Give the structure of a project design
3. List the steps associated with project identification.
4. Explain the criteria to be followed while performing project selection
5. Explain the different stages of project design.
6. Explain why project evaluation is important.
7. How does project identification differ in the public and private sectors?
8. Why is project evaluation an essential step in the project management lifecycle?

14 marks
1)a) Analyse this investment using NPV method . Arun needs Rs.1000 now and will pay you
back Rs.1350 in a year. Is that a good investment when you can get at 10% per year. ? Justify
your answer
b) Explain the significance of market analysis in project report and its impact on project
formulation
2) a) Explain Internal Rate of Return(IRR) and Net Present Value (NPV) method
b) How can network analysis techniques like the Critical Path Method (CPM) and Program
Evaluation and Review Technique (PERT) be applied in project planning?
3) a) Explain different steps involved in project formulation
b) Explain the comprehensive components that should be incorporated into a project report to
ensure its effectiveness and clarity
4) a) Describe project network analysis techniques used in project management
b) Illustrate Net Present Value and Internal rate of return with an example.
5) a) Explain the need for network analysis in project management.
b) Describe any two methods of network analysis used in project management
6) a) Demonstrate Net Present Value method and Internal Rate of Return method with an
example
b) Explain different stages of project appraisal
7) a) What are the merits and demerits of critical path method?
b) Distinguish between PERT (Program evaluation and review technique) and CPM (Critical
path method) of network techniques.
8)a) What is project evaluation and what are the various evaluation methods? Explain any two
methods. b) What are the benefits of project evaluation?
ANSWERS
1)What is a project report? What it consists of?
Project Report
A Project Report is a document that contains the information about the proposed project and it
contains all the details of the project. The project report details the project proposal in order to
assess the feasibility of the planned plan/activity. A Project Report is a written document that is
related to a particular investment or a project. It consists of information on economic, technical,
financial, managerial and production aspects. It enables the entrepreneur to know the inputs and
helps him to obtain loans from banks or financial Institutions.
2)Give the structure of a project design
Structure of Project Design
• Define the Vision • Understand the Problem • Plan the Resources • Define Project Goals •
Propose Project Strategy • Build Contingency Plan • Create Proper Budget • Provide Project
Proposal

3) List the steps associated with project identification.

Project identification begins with idea generation. An entrepreneur needs to generate several
ideas for possible projects. This process is crucial because without knowing the potential product
or service, determining the market or other factors is difficult. Project ideas can be discovered
from various internal and external sources, including:

 Knowledge of potential customer needs

 Watching emerging trends in demands
 Scope for producing substitute products
 Reading professional magazines
 Success stories of other entrepreneurs
 Visits to trade fairs and exhibitions
 Meetings with government agencies
 Ideas from knowledgeable persons
 Knowledge of government policies, concessions, and incentives
 New products introduced by competitors

Methods specifically used for generating these ideas include Focus Groups, Problem Inventory
Analysis, Brainstorming, Reverse Brainstorming, Synectics, Gordon Method, Checklist Method,
Matrix Charting, Big-dream Approach, and Parameter Analysis.

4) Explain the criteria to be followed while performing project selection.

Project selection follows project identification. Once several project ideas have been generated,
they need to be analyzed. The primary criteria and process involve:

 Analysis in Context: Evaluating the ideas in light of existing economic conditions,

government policy, and other relevant factors.
 SWOT Analysis: Utilizing SWOT analysis is a key tool. The entrepreneur analyzes the
Strengths, Weaknesses, Opportunities (or competitive advantages), and Threats (or
challenges) associated with each project idea.
 Selection of the Most Suitable Idea: Based on the outcome of the SWOT analysis and
consideration of economic and policy factors, the most suitable or promising idea is
finally selected to be developed into an enterprise. This is sometimes referred to as the
"zeroing in process."

5) Explain the different stages of project design.

The notes describe Project Design (often discussed alongside Network Analysis) as a critical
component of project formulation. While not broken down into discrete numbered
stages within Project Design itself, its key elements and functions constitute the process:

 It is considered the heart of the project entity.

 It involves defining the sequence of events for the project.
 It includes allocating time for each activity.
 It is often presented visually in the form of a network drawing (like PERT or CPM).
 Crucially, it helps to identify project inputs, the finance needed, and the cost-benefit
profile of the project.
 Overall, Project Design deals with the organizing, planning, and scheduling of projects
and encompasses activities like measurement and metrics, management activities, project
planning, scheduling, tracking, and risk management, always considering budget and
schedule constraints.

6) Explain why project evaluation is important.

Project evaluation is important for several reasons:

 Informs Management: It helps those managing project resources and activities to

enhance development results, providing systematic, reliable, and valid information on the
project's conduct, impact, and effectiveness.
 Improves Implementation: It aids in improving the ongoing implementation of a project
by identifying areas needing correction or adjustment.
 Aids Future Planning: The findings and lessons learned from evaluation are crucial for
planning future projects more effectively.
  Supports Decision Making: Evaluation provides essential data that feeds into the
decision-making process for the organization regarding the project (e.g., continuing,
stopping, modifying).
 Assesses Performance: It allows for the examination of immediate outcomes, long-term
impacts, and the overall performance of the project against its objectives.
 Ensures Accountability and Learning: It supports accountability through a transparent
process and fosters organizational learning.

8) Why is project evaluation an essential step in the project management lifecycle?

Project evaluation is essential within the project management lifecycle because:

 Integral to Management: It is a fundamental part of results-based project management,

alongside design and monitoring.
 Supports Project Control: Monitoring and Evaluation are integral to project control,
providing feedback that informs the decision-making process.
 Facilitates Learning and Improvement: It allows the organization to learn from the
project's progress and results, enabling improvements during the current project lifecycle
and for future projects.
 Verifies Progress & Performance: It helps verify if project implementation is
progressing as planned, ascertains actual costs against budgets, and ensures quality
standards are met.
 Enables Corrective Action: By identifying deviations in performance or unexpected
problems, evaluation allows management to take timely corrective measures.
 Assesses Achievement of Objectives: It determines the relevance and level of
achievement of project objectives, effectiveness, efficiency, impact, and sustainability,
providing a comprehensive assessment of the project's success within its lifecycle.
 Informs Stakeholders: It provides the basis for reporting project progress and status to
stakeholders, including customers or investors.

14 marks

1) a) Analyse this investment using NPV method. Arun needs Rs.1000 now and will pay you
back Rs.1350 in a year. Is that a good investment when you can get at 10% per year?
Justify your answer

To analyze this investment using the Net Present Value (NPV) method, we need to compare the
present value (PV) of the cash inflow to the present value of the cash outflow.

 Cash Outflow (Now): Rs. 1000. The present value of money spent now is Rs. 1000.
 Cash Inflow (in 1 year): Rs. 1350.
  Required Rate of Return (Discount Rate): 10% per year.

We need to find the present value of the Rs. 1350 inflow received in one year, using the 10%
discount rate. The notes provide examples using present value factors. In Example 1 on page 77,
the discount factor for Year 1 at 10% is shown as 0.909.

 PV of Cash Inflow: Rs. 1350 * 0.909 = Rs. 1227.15

Now, calculate the NPV:

 NPV = PV of Cash Inflows - PV of Cash Outflows

 NPV = Rs. 1227.15 - Rs. 1000
 NPV = Rs. 227.15

Justification: According to the NPV decision rule if the NPV is positive, the investment
proposal is considered acceptable. Since the NPV is Rs. 227.15 (positive), this investment is
good. It promises a rate of return higher than the required 10%.

b) Explain the significance of market analysis in project report and its impact on project
formulation

Market analysis is a significant component of a project report and plays a crucial role in project
formulation.

Significance in Project Report: The project report needs to include information on:

 Economic aspects: This covers the present market conditions and scope for growth,
justifying the investment.
 Market position and trends: This details the current production capacity, potential
demand, export prospects, import/export trends, and price structure.

Impact on Project Formulation: Project formulation involves stages like Feasibility Analysis
and Techno-Economic Analysis. Market analysis directly impacts these stages:

 Feasibility Analysis: Understanding the market helps screen the project idea against
external constraints (like lack of demand).
 Techno-Economic Analysis: This stage explicitly involves estimating the potential
demand for the goods or services the project will offer. Market analysis provides the
necessary data for this estimation.
 Decision Making: Information about market size, potential demand, competition
(implied through capacity and trends), and pricing structures derived from market
analysis helps determine if the project is viable and informs decisions about the scale,
 technology, and overall design of the project during the formulation process. Without a
positive market assessment, the project is unlikely to proceed.

2) a) Explain Internal Rate of Return(IRR) and Net Present Value (NPV) method

 Net Present Value (NPV) Method: The NPV method is a capital budgeting technique
that considers the time value of money. It calculates the difference between the present
value of future cash inflows expected from a project and the present value of the cash
outflows (usually the initial investment).
o Calculation: NPV = PV of Cash Inflows - PV of Cash Outflows.
o Decision Rule: If NPV is positive, the project is acceptable as it earns more than
the required rate of return. If NPV is zero, it's acceptable (earns exactly the
required rate). If NPV is negative, the project is rejected. It is used to evaluate
investment projects like purchasing equipment or expanding operations.
 Internal Rate of Return (IRR) Method: The IRR is the discount rate at which the Net
Present Value (NPV) of a project equals zero. It represents the expected percentage rate
of return that the project will generate on the investment.
o Concept: It's the rate where the present value of future cash inflows equals the
initial investment outlay.
o Use: It's used in capital budgeting to compare and rank projects based on their
yield; projects with higher IRRs are generally preferred. It helps ascertain the
exact rate of return the project earns.
o Decision Rule: If the IRR is higher than the cost of capital (or required rate of
return), the project is generally accepted (for independent projects).

Both methods consider the time value of money and analyze cash flows over the project's life.

b) How can network analysis techniques like the Critical Path Method (CPM) and
Program Evaluation and Review Technique (PERT) be applied in project planning?

Network analysis techniques like CPM and PERT are specifically used for the planning,
management, and control of projects. They are applied in project planning through a structured
process:

1. Defining Activities: The project is broken down into significant activities or tasks.
2. Determining Relationships: The dependencies between activities are identified (which
activities must precede or follow others).
3. Drawing the Network: A network diagram is created, visually representing the activities
and their relationships, ensuring each activity has unique event numbers (nodes). PERT
charts provide this graphic illustration using nodes (circles/rectangles for
events/milestones) and vectors (lines for tasks).
 4. Estimating Time/Cost: Time durations (and potentially costs) are assigned to each
activity.
5. Identifying the Critical Path (CPM): CPM calculates the longest path through the
network. This "critical path" determines the shortest possible project completion time.
Activities on this path have no slack. CPM also calculates the earliest and latest start and
finish times for each activity.
6. Planning and Scheduling: The network diagram and critical path analysis help in:
o Determining the overall project duration.
o Scheduling activities logically.
o Identifying which tasks are critical and must be managed closely to avoid delays.
o Understanding where parallel activities can occur.
o Assessing resource needs for different activities and timings.
o Setting task priorities.

Essentially, these techniques provide a roadmap and timeline during the planning phase,
allowing for efficient scheduling and resource allocation.

3) a) Explain different steps involved in project formulation

Project formulation is the process of developing a project idea into a concrete investment
proposition.

1. Feasibility Analysis: The initial stage involves examining the project idea to see if it
warrants a detailed investigation. It screens for major constraints and concludes whether
the idea seems feasible, not feasible, or requires more data.
2. Techno-Economic Analysis: This stage screens the idea further, focusing on estimating
market potential (demand) and selecting the optimal technology. It provides a basis for
detailed project design.
3. Project Design and Network Analysis: Considered the heart of the project, this stage
defines the sequence of project activities, allocates time to each, and often uses network
diagrams (like CPM/PERT). It identifies inputs, finances needed, and the cost-benefit
profile.
4. Input Analysis: This assesses the requirements for inputs like materials and human
resources during both construction and operation. It evaluates feasibility based on
resource availability and helps estimate project costs.
5. Financial Analysis: Involves estimating project costs, operating costs, and funding
requirements. It uses tools like discounted cash flow (NPV), cost-volume-profit analysis,
and ratio analysis to assess financial viability and compare proposals.
6. Cost-Benefit Analysis: This stage considers the overall worth of the project by
evaluating the costs borne by all entities against the benefits connected to the project,
using the project design as a basis.
 7. Pre-Investment Analysis: The final stage consolidates the results from previous stages
to arrive at clear conclusions. It helps the project sponsors and implementing bodies
decide whether to accept or reject the project proposal.

b) Explain the comprehensive components that should be incorporated into a project

report to ensure its effectiveness and clarity

To be effective and clear, a project report should incorporate comprehensive information

covering various aspects of the proposed venture. these components include:

 General Information: Objectives and scope of the report.

 Product/Service Details: Product characteristics (design, specifications, quality
standards, uses, applications), justification for product choice, and export worthiness.
 Market Aspects: Economic context (present market, scope for growth), market position
and trends (current capacity, potential demand, export/import trends, price structure).
 Technical Aspects: Manufacturing process, production schedule, technology/technique
used, plant and machinery details (types, infrastructure support, cost), raw materials
(types, quality, sources, price).
 Location and Infrastructure: Land and building requirements, building construction
schedule, choice of location, and associated costs.
 Financial Aspects: Total investment needed (fixed and working capital), entrepreneur's
contribution, project cost breakdown, capital structure, projected profitability, return on
capital.
 Operational Aspects: Production details, marketing channels (trade practices, marketing
and advertising strategy).
 Managerial Aspects: Qualifications and experience of people needed for managerial
posts, personnel requirements (staff, skilled/unskilled labor), salary and wage structure.

Including these details ensures the report provides a thorough overview for evaluation by
entrepreneurs, financial institutions, and other stakeholders.

4) a) Describe project network analysis techniques used in project management

Project network analysis encompasses techniques used for planning, scheduling, managing, and
controlling projects. The two main techniques are:

1. Critical Path Method (CPM): This is a mathematically based algorithm primarily used
for scheduling project activities.
o It identifies the sequence of activities that determines the longest path through the
project network, known as the "critical path."
o The length of the critical path dictates the minimum total time required to
complete the project.
 o CPM calculates the earliest and latest start and finish times for each activity,
allowing managers to determine which tasks have slack (can be delayed without
affecting the project end date) and which are critical (have no slack).
o It's widely used in various projects like construction, software development, and
engineering.
2. Program Evaluation and Review Technique (PERT): PERT is described as a
statistical tool used to analyze and represent the tasks involved in a project.
o It uses a network diagram (PERT chart) to provide a graphic illustration of the
project.
o The diagram consists of nodes (representing events or milestones) and labeled
vectors/arrows (representing the tasks or activities required to move between
milestones).
o It clearly shows the sequence and dependencies among tasks.
o While the notes call it a statistical tool, they primarily focus on its use for
representation and analysis of tasks in the provided text.

Both techniques help visualize the project, understand dependencies, estimate duration, and
manage activities effectively.

b) Illustrate Net Present Value and Internal rate of return with an example.

 Net Present Value (NPV) Example (Based on Example 1, pages 65-67):

o Scenario: A company considers buying equipment costing $6,000. It will
increase annual cash inflow by $2,200 for 6 years. The required rate of return is
20%. No salvage value.
o Calculation:
1. Identify Outflow: Initial Investment = $6,000 (PV = $6,000).
2. Identify Inflows: $2,200 per year for 6 years (this is an annuity).
3. Find PV Factor: The example uses a PV of annuity factor for 6 years at
20%, which is 3.326.
4. Calculate PV of Inflows: $2,200 * 3.326 = $7,317.
5. Calculate NPV: NPV = PV Inflows - PV Outflow = $7,317 - $6,000 =
$1,317.
o Illustration: Since the NPV is positive ($1,317), the project's return is greater
than the required 20%, making it an acceptable investment according to the NPV
method.
 Internal Rate of Return (IRR) Example (Based on Example 1, pages 77-78):
o Scenario: Project A requires a $136,000 investment. Cash inflows over 5 years
are $30k, $40k, $60k, $30k, $20k. We need to find the IRR. The example
calculates NPV at 10% and 12%.
 o Calculation:
1. Calculate NPV at 10%: Sum of (Annual Cash Inflow * 10% Discount
Factor for each year). The example shows PV of inflows = $138,280.
NPV @ 10% = $138,280 -
136,000=+136,000=+

2,280.

2. Calculate NPV at 12%: Sum of (Annual Cash Inflow * 12% Discount

Factor for each year). The example shows PV of inflows = $131,810.
NPV @ 12% = $131,810 -
136,000=−136,000=−

4,190.

3. Interpolate: Since NPV is positive at 10% and negative at 12%, the IRR
lies between these rates. The example uses an interpolation formula: IRR
= R1 + {[NPV1-INVESTMENT]/[NPV1-NPV2]}*[R2-R1] (adapted to
the formula shown: IRR = %10 + 2280 / (138280 - 131810) * (12 - 10) =
10% + (2280 / 6470) * 2 = 10% + 0.7%).
IRR ≈ 10.7%.
o Illustration: The IRR is approximately 10.7%. This is the estimated discount rate
at which the project's NPV would be zero. If the company's cost of capital is less
than 10.7%, the project would likely be accepted.

5) a) Explain the need for network analysis in project management.

Network analysis is needed in project management for several critical functions:

 Planning and Scheduling: It provides a structured way to plan the sequence of activities
and schedule them over time.
 Visualization: Techniques like PERT offer a graphic illustration of the project, making
complex task relationships easier to understand.
 Identifying Critical Activities: CPM identifies the critical path – the sequence of tasks
that dictates the project's minimum duration and cannot be delayed without delaying the
entire project. This helps prioritize management attention.
 Time Management: It helps estimate the shortest possible time to complete the project
and calculate float (slack) time for non-critical activities.
 Resource Allocation: Understanding task timings and dependencies aids in planning
resource requirements and allocation.
 Monitoring and Control: The network serves as a baseline plan against which actual
progress can be monitored, enabling better control over the project execution.
  Task Management: It helps analyze and represent all the tasks involved, defining their
scope and relationships.
 Effective Management: Overall, it's an effective tool for managing complex projects by
breaking them down, analyzing dependencies, and establishing a clear plan for execution.

b) Describe any two methods of network analysis used in project management

The two primary methods of network analysis are:

1. Critical Path Method (CPM):

o Focus: Scheduling project activities based on time estimates.
o Technique: It's a mathematical algorithm that analyzes the sequence and duration
of activities to determine the longest path through the network, known as the
critical path.
o Output: Identifies the minimum project duration, critical activities (those with
zero slack), and the earliest and latest start/finish times for all activities.
o Use: Helps managers focus on critical tasks, manage schedules, and understand
the impact of delays.
2. Program Evaluation and Review Technique (PERT):
o Focus: Analyzing and representing project tasks and their dependencies.
o Technique: It uses a network diagram (PERT chart) as a graphic illustration.
Nodes (circles or rectangles) represent project events or milestones, and vectors
(directional lines or arrows) represent the tasks needed to achieve those
milestones.
o Output: A visual map of the project showing the flow of activities and their
interrelationships.
o Use: Helps understand the sequence of work, identify dependencies, and
communicate the project plan visually. (The notes also mention it's a statistical
tool, but focus description on its representative nature).

6) a) Demonstrate Net Present Value method and Internal Rate of Return method with an
example

(This question is identical to 4b. Please refer to the answer provided for 4b for the
demonstration using examples from the notes.)

b) Explain different stages of project appraisal

1. Project Formulation: This process, essentially an appraisal of the project idea's

potential, includes the following stages:
o Feasibility Analysis (Initial screening)
 o Techno-Economic Analysis (Market demand, technology choice)
o Project Design and Network Analysis (Activity sequencing, timing)
o Input Analysis (Resource requirements and availability)
o Financial Analysis (Costs, funds, profitability)
o Cost-Benefit Analysis (Overall worth assessment)
o Pre-Investment Analysis (Consolidated conclusion for accept/reject decision)
2. Project Evaluation: This assesses an ongoing or completed project, but its methods (like
NPV, IRR) are also used in the appraisal phase (specifically within Financial Analysis of
Formulation). The evaluation process itself has stages:
o Planning the Evaluation (Defining scope, methods, etc.)
o Carrying Out the Evaluation (Implementing the plan, data collection)
o Analyzing and Interpreting Data (Making sense of collected data, drawing
conclusions)

Project Financial evaluation methods like NPV and IRR are key tools used within this appraisal
process, particularly during the Financial Analysis stage.

7) a) What are the merits and demerits of critical path method?

CPM-Merits & Demerits Merits
1. Enhanced project management
2. Clear identification of critical tasks
3. Clear communication of project plans
4. Accurate determination of project length
5. Precise scheduling
6. Imprved cost control
7. Improved allocation of human resources
Demerits
1. May offer a lack of flexibility
2. Greater potential for delays
3. Increased complexity
4. Reduced resource allocation
5. Great potential for misusing float
b) Distinguish between PERT (Program evaluation and review technique) and CPM (Critical
path method) of network techniques.

8)a) What is project evaluation and what are the various evaluation methods? Explain any two
methods.
Project evaluation Project evaluation is the systematic assessment of a project’s worth or merit,
usually intending to determine whether it was successful. This can be done during or after the
project is completed, and it involves looking at different factors such as time, cost, and resources
used.
Project Evaluation methods
• Internal rate of return (IRR)
• Net present value (NPV)
• Return on Investment (ROI)
• Cost-Benefit Analysis (CBA)
• The Payback Period
• Benefit-Cost Ratio (BCR)
• Risk-Adjusted Discount Rate (RADR)
b) What are the benefits of project evaluation?
Better Project Management: Project evaluation helps you easily find areas of improvement when
it comes to managing your costs, tasks, resources and time.
Improves Team performance: Project evaluation allows you to keep track of your team’s
performance and increases accountability.
Better Project Planning: Helps you compare your project baseline against actual project
performance for better planning and estimating.
Helps with Stakeholder Management: Having a good relationship with stakeholders is key to
success as a project manager. Creating a project evaluation report is very important to keep them
updated

MODULE 5
1. Explain raising and managing capital.
2. What does the term ‘job requirement’ mean?
3. Explain the key objectives of management of enterprises
4. Differentiate between shares and debentures.
5. What are the key management functions in relation to entrepreneurship
6. Explain the need for human resource planning.
7. Explain the concept of job analysis and its role in matching the right talent to specific job
roles
8. Differentiate between shares, bonds and debentures

14 marks
1)a) What is working capital? Why is it important for any enterprise? Explain
b) Discuss, with suitable examples, the functions of modern marketing.
2) a) Explain the objectives and functions of management.
b) Write short notes on training, recruitment and selection
3)a) Elaborate the principles underlying scientific management.
b) Explain the steps involved in raising and managing capital for a business at an operational
level? 4) a) Write short notes on Break even analysis and balance sheet analysis
b) Describe the different process involved in recruitment and selection process in an
enterprise.
5) a) Explain the Process of strategic management and its benefits
b) Discuss the goals of marketing
 6)a) Classify the Organizational dimension of enterprises
b) Explain different types of capital raising
7) a) Discuss the significance of marketing in the growth and sustainability of an enterprise.
b) What is break-even analysis, and how does it help enterprises determine profitability and
risk levels?
8)a) How does the process of workforce planning contribute to effective human resource
management?
b) How can balance sheet analysis aid in assessing an enterprise and financial health and
identifying areas for improvement?

ANSWERS

1. Explain raising and managing capital.

A: Enterprise financing involves planning, organizing, directing, and controlling the financial
activities of the enterprise. The main contents are funding, investing, capital operating, and
profits distributing.

 Raising Capital: This refers to acquiring funds. Sources of finance mentioned include
friends, family, savings, credit cards, loans, banks, finance companies, and investment
companies. Capital raising is the process where a company raises funds from external
sources for strategic goals like business development or asset investment. It can be done
through Debt Raising, Equity Raising, or Hybrids of Debt and Equity.
o Debt financing means borrowing money from an outside source and promising to
pay it back with interest by a set future date.
o Equity financing means someone puts money or assets into the business in
exchange for some percentage of ownership.
 Managing Capital: While not explicitly defined as a separate process, managing capital
is implied within enterprise financing's scope of planning, organizing, directing, and
controlling financial activities, including investing funds, operating capital, and
distributing profits. It also involves understanding different financial instruments like
shares, debentures, and bonds, and financial concepts like break-even analysis and
balance sheet analysis to assess the financial health and performance of the enterprise.

2. What does the term ‘job requirement’ mean?

A: Based on the definition of Job Analysis, 'job requirements' refer to the specific duties and
nature of a job, as well as the kinds of people (in terms of skills and experience) needed to
perform it. Job analysis provides data on these requirements, which are then used to develop job
descriptions (what the job entails) and job specifications (what kind of people to hire).

3. Explain the key objectives of management of enterprises.

A: The key objectives of management of enterprises are:

1. Getting Maximum Results with Minimum Efforts: Utilizing human, material, and
financial resources efficiently for the best combination.
2. Increasing the Efficiency of factors of Production: Improving efficiency through
proper utilization of production factors, reducing spoilage and wastage, saving time,
effort, and money.
3. Maximum Prosperity for Employer & Employees: Providing maximum benefits like
good working conditions, suitable wages, and incentive plans for employees, while
ensuring higher profits for the employer.
4. Human betterment & Social Justice: Serving as a tool for the upliftment and
betterment of society.

4. Differentiate between shares and debentures.

A: The key differences between shares and debentures mentioned are:

 Ownership vs. Debt: Shares represent ownership in a company, while debentures are
debt instruments (you become a creditor).
 Holder Status: Owning shares makes you a partial owner. Buying debentures makes you
a creditor.
 Returns: The primary return on shares is through dividends and share price appreciation.
Debentures provide returns in the form of fixed interest.
 Payment Priority: Debenture holders are paid interest irrespective of profit/loss.
Shareholders are paid dividends only if the company makes a profit. In liquidation,
debenture holders are paid first (creditors) before shareholders (owners).
 Voting Rights: Shareholders usually have voting rights, while debenture holders do not.
 Convertibility: Shares generally cannot be converted into debentures. However, some
debentures (convertible debentures) can be converted into shares.
 Risk: Shares are considered riskier than debentures due to variable returns.

5. What are the key management functions in relation to entrepreneurship?

1. Planning: Establishing goals and the course of action to achieve them (includes goals,
policies, procedures, budgets, strategies). Essential for resource utilization.
2. Organizing: Grouping activities, assigning duties/responsibilities, delegating authority,
and establishing relationships to work effectively towards objectives.
 3. Staffing: Manning the organization structure through effective selection, appraisal, and
development of employees.
4. Leading: Communicating with and motivating employees to achieve organizational
goals.
5. Controlling: Setting standards, measuring performance, and taking corrective actions to
ensure progress aligns with plans.
6. Coordinating: Harmonizing different functions, departments, and individual goals with
organizational goals.

6. Explain the need for human resource planning.

A: The need for Human Resource Planning (HRP) arises because:

 Forecast future personnel needs: To avoid future surplus or deficiency of manpower by

planning in advance.
 Cope with change: Enables the enterprise to adapt to changes in competitive forces,
markets, technology, products, and regulations.
 Creating highly talented personnel: Helps prevent shortages of skilled labor (especially
in intellectual/professional jobs) caused by attrition.
 Protection of weaker sections: Allows for planning to accommodate and protect the
interests of SC/ST, physically handicapped, and other specific groups as per equal
opportunity principles.
 International strategies: Becomes crucial for organizations operating globally to
integrate HRP closely with overall strategy.
 Increasing investments in HR: Ensures effective utilization of employees (human
capital) throughout their careers.
 Resistance to change & move: Addresses difficulties in moving employees due to
resistance, loyalty issues, etc.
 Other benefits: Provides a better view of HR dimensions, anticipates imbalances, allows
time to find talent, includes diverse groups in growth plans, aids manager development
planning, and helps manage local labor market demands. Essentially, without clear HRP,
estimating HR needs becomes mere guesswork.

7. Explain the concept of job analysis and its role in matching the right talent to specific job
roles.

A:

 Concept of Job Analysis: Job analysis is the procedure used to determine the duties and
nature of jobs, and the kinds of people (in terms of skills and experience) who should be
hired for them. It involves collecting data on job requirements. The outputs of job
analysis are typically job descriptions (detailing what the job entails) and job
specifications (detailing the kind of people needed).
  Role in Matching Talent: Job analysis plays a crucial role in matching talent to roles by
providing the necessary information for various HR functions:
o Recruitment and Selection: It clarifies what the job entails and the human
requirements needed, forming the basis for attracting and selecting candidates.
o Placement and Orientation: It helps match job requirements with the abilities,
interests, and aptitudes of new hires.
o Organizational Design: Helps classify jobs and understand interrelationships.
o Manpower Planning: Defines labor needs and responsibilities.
o Training and Development: Provides information needed to design effective
training programs.
o Performance Appraisal: Helps establish standards against which performance is
compared.
o Job Evaluation and Compensation: Provides information to determine the
relative worth of jobs for compensation purposes.

By defining the job and the required qualifications precisely, job analysis ensures that the
recruitment and selection processes can effectively identify and place individuals who possess
the necessary skills and attributes for successful performance in specific roles.

8. Differentiate between shares, bonds and debentures.

A: Based on the provided notes:

 Shares:
o Represent ownership (equity) in a company's capital.
o Holders are partial owners.
o Returns come from dividends (if profits are made) and capital appreciation.
o Typically carry voting rights.
o Considered riskier due to variable returns and last claim during liquidation.
 Debentures:
o Are debt instruments used by companies to raise capital.
o Holders are creditors to the company.
o Returns are in the form of fixed interest payments, paid irrespective of profit.
o Do not carry voting rights.
o Holders are paid before shareholders during liquidation.
o Can be secured (backed by collateral) or unsecured. Some are convertible into
shares.
o Generally considered less risky than shares but may be higher risk than bonds
depending on security.
 Bonds:
o Are a kind of loan offered to an issuer (government or company) upon which
interest is earned.
o The issuer returns the principal and interest at maturity.
 o Funds raised are often used for specific projects, refinancing debt, etc.
o Holders are creditors (lenders) to the issuer.
o Considered less risky compared to market-linked instruments like equities
(shares).
o Interest payments are typically made (coupon payments), except for Zero Coupon
Bonds which trade at a discount and pay a lump sum at maturity.
o Can be issued by governments or corporations.
o Compared to debentures, bonds are often secured (though the notes state
debentures can be secured or unsecured) and may be considered less risky
comparatively. Liquidity priority might favor bonds, and interest might be lower
compared to debentures.

14 marks

1) a) What is working capital? Why is it important for any enterprise? Explain

A:

 What is Working Capital: Working capital is defined in the notes as: Total current
farm assets - Total current farm liabilities. It represents the amount ($) left after
selling all current assets and paying off all current liabilities. It is mentioned as a measure
of Liquidity.
 Importance: Liquidity (which working capital measures) is the ability to meet financial
obligations as they come due, without disturbing normal revenue-generating activities. It
reflects the ability of the firm to generate cash for running the business. A positive
working capital figure provides a margin of safety (in $ value) indicating the enterprise
can cover its short-term debts with its short-term assets. Lenders use balance sheet
analysis, including liquidity measures like working capital, to make lending decisions and
monitor financial progress. Therefore, having sufficient working capital is important for
meeting short-term obligations, maintaining operations, and securing financing.

b) Discuss, with suitable examples, the functions of modern marketing.

A:

1. Research & Development Function: Researching the target market (size, behavior,
demands etc.) and developing products/services accordingly. Example: Identifying a need
for smaller packaging in urban markets and developing such packaging.
2. Buying Function: Assisting the purchase department by specifying required materials to
ensure timely and quality inputs for production. Example: Marketing specifies the grade
of leather needed for a new line of shoes.
 3. Standardization & Grading: Setting quality standards for product uniformity
(Standardization) and classifying products based on benchmarks like size or quality
(Grading). Example: Grading apples as Grade A, B, or C based on size and appearance.
4. Packaging and Labeling: Protecting goods during transit and using packaging/labeling
to establish brand image and provide product/producer information. Example: Designing
distinctive packaging for a premium coffee brand with details about its origin.
5. Branding: Stamping a product with an identification name, mark, or
combination. Example: Naming a new software product "Innovate Suite".
6. Pricing: Determining the product price based on cost, desired profit, rival prices, and
government policy. Example: Setting the price for a new car model considering
production costs and competitor pricing.
7. Promotion Function: Designing strategies (advertising, personal selling, publicity, sales
promotion) to inform consumers about product availability and persuade them to
buy. Example: Running TV commercials and offering introductory discounts for a new
detergent.
8. Physical Distribution: Activities to transfer ownership and make goods available at the
right place and time. Example: Establishing a network of retailers to sell consumer
electronics.
9. Transportation: Facilitating the physical movement of persons, goods, and
services. Example: Using trucking services to move finished goods from the factory to
warehouses.
10. Warehousing: Storing goods produced/procured in advance to meet expected demand
and protect them from damage. Example: Storing seasonal clothing in warehouses before
the relevant season begins.
11. Risk- taking function: Addressing the financial risks inherent in producing/handling
goods (e.g., price falls, spoilage, obsolescence). Example: Hedging against price
fluctuations for raw materials.
12. Customer Support Services: Developing services like after-sales support, complaint
handling, credit facilities, maintenance to ensure customer satisfaction and
loyalty. Example: Offering a warranty and repair service for electronic appliances.

2) a) Explain the objectives and functions of management.

A:

 Objectives of Management:
1. Getting Maximum Results with Minimum Efforts: Utilizing resources
efficiently.
2. Increasing the Efficiency of factors of Production: Enhancing productivity by
reducing waste.
3. Maximum Prosperity for Employer & Employees: Providing benefits to
employees and profits to employers.
4. Human betterment & Social Justice: Contributing to societal upliftment.
  Functions of Management:
1. Planning: Establishing goals and action plans.
2. Organizing: Grouping activities, assigning roles, delegating authority.
3. Staffing: Recruiting, selecting, appraising, and developing employees.
4. Leading: Communicating with and motivating employees.
5. Controlling: Setting standards, measuring performance, taking corrective action.
6. Coordinating: Harmonizing different functions and goals.

b) Write short notes on training, recruitment and selection

A:

 Training: Training refers to a planned effort by a company to facilitate employee’s

learning of job-related competencies. Its goal is for employees to master and apply the
knowledge, skills, and behaviors emphasized in training programs to their daily activities.
It helps ensure the availability of a skilled and willing workforce.
 Recruitment: Recruitment is the process of searching for prospective employees and
stimulating and encouraging them to apply for actual or anticipated organizational
vacancies. It is a step that precedes selection and involves discovering potential
applicants to create an application pool.
 Selection: Selection is the process of choosing qualified individuals who are available to
fill positions in an organization. It follows recruitment and involves evaluating candidates
from the application pool, rejecting unsuitable ones, and leaving only the best to be hired,
often using a series of steps or hurdles.

3) a) Elaborate the principles underlying scientific management.

A: The principles underlying scientific management are:

1. Analyze work scientifically: Develop the best way of doing a job through scientific
analysis, replacing old 'rule of thumb' methods based on worker practices.
2. Divide work and responsibility: Management takes responsibility for scientifically
planning work methods, while workers are responsible for executing the work according
to these methods.
3. Select workers best suited to perform the specific tasks: Choose workers based on
their suitability for the job requirements.
4. Provide guidelines for worker performance: Train and develop each worker in the
most efficient method for doing their job.
5. Achieve support and cooperation from workman: Arrange conditions, services,
guidance, and provide greater economic rewards to gain worker cooperation.

b) Explain the steps involved in raising and managing capital for a business at an
operational level?
A:

 Raising Capital:
o Identify the need for funds (implied from planning).
o Determine the source of finance (e.g., Friends, Family, Savings, Loans, Banks,
Finance/Investment companies).
o Choose the type of capital raising: Debt Raising (borrowing), Equity Raising
(selling ownership), or Hybrids.
 Managing Capital (as part of Enterprise Financing):
o Planning: Planning financial activities, including funding needs, investments,
operations, and profit distribution. Researching wage trends, labor markets, etc.
(part of HRM planning impacting finance).
o Organizing: Organizing financial resources (manpower, materials) and creating
authorities/responsibilities.
o Directing: Issuing orders/instructions related to financial operations (implied).
o Controlling: Regulating financial activities and policies according to plans,
observing and comparing deviations. This includes using tools like accounting
(Financial, Cost, Management), break-even analysis, and balance sheet analysis to
monitor performance and financial health.
o Investing: Making decisions on where to allocate capital.
o Capital Operating: Managing the day-to-day financial operations.
o Profits Distributing: Deciding how to use profits (e.g., reinvestment, dividends).

4) a) Write short notes on Break even analysis and balance sheet analysis

A:

 Break-even analysis: This is a technique used in production management and

accounting. It categorizes costs into fixed (not related to production volume) and variable
(change with production volume). It compares total costs with sales revenue to find the
level of sales volume or value where the business makes neither a profit nor a loss – this
point is the "break-even point". It helps understand the relationship between costs,
volume, and profit.
 Balance Sheet Analysis: This is used to measure the financial condition of a business at
a specific point in time. It involves comparing the business to similar businesses or to
itself over time. Lenders use it for lending decisions and monitoring financial progress.
Key analysis components include Measures of Liquidity (e.g., Current Ratio, Working
Capital) assessing short-term ability to pay debts, and Measures of Solvency (e.g.,
Debt/Asset Ratio, Equity/Asset Ratio, Debt/Equity Ratio) assessing long-term ability to
pay debts and the balance between debt and equity financing.

b) Describe the different process involved in recruitment and selection process in an

enterprise.
A:

 Recruitment Process Stages:

1. Requisition: Personnel department receives requests from other departments
detailing the position, number needed, duties, qualifications, terms, and timeline.
2. Source Identification: Locating and developing sources (internal/external) for
the required number and type of employees.
3. Identifying Prospects: Identifying potential employees with the required
characteristics from the sources.
4. Attracting Candidates: Using techniques (e.g., company goodwill, publicity,
attractive salaries/facilities) to encourage applications.
5. Evaluation: Evaluating the effectiveness of the recruitment process itself.
o (The overall recruitment process also involves elements like having a Recruitment
Policy, deciding on Recruitment Organisation (centralized/decentralized),
choosing Sources, selecting Methods, and Evaluating the Programme).
 Selection Process Steps (Successive Hurdles Technique):
1. Application Pool: Gathering candidates through the recruitment process.
2. Preliminary Screening and Interview: Scrutinizing applications to eliminate
unqualified candidates; conducting initial interviews to sort prospects and provide
job information.
3. Application Blank or Application Form: Collecting detailed information
(biographical, educational, work experience, salary, etc.) from applicants.
4. Selection Tests: Using various tests (Aptitude, Personality, Interest, Performance,
Intelligence, Knowledge, Achievement, Projective) to assess candidate suitability.
5. Interview: Conducting formal interviews (structured, unstructured, selection,
stress, situational, behavioral) to gather more information and assess potential.
6. Background Investigation: Verifying information provided (contacting former
employers, references, checking education).
7. Physical Examination: Conducting medical tests to ensure fitness for the job.
8. Approval by Appropriate Authority: Recommending suitable candidates for
final approval by designated authorities (e.g., personnel committee, functional
heads, board of directors).
9. Final Employment Decision: Offering employment via an appointment letter
detailing terms and conditions; potentially includes a probation period.
10. Evaluation: Periodically auditing the effectiveness of the selection process.

5) a) Explain the Process of strategic management and its benefits

A:

 Process of Strategic Management: Strategic management is a dynamic, continual,

evolving, iterative process involving four major phases:
 1. Establishment of Strategic Intent: Defining the organization's foundation
(vision, mission, business definition, business model, objectives).
2. Formulation of Strategies: Developing strategies at corporate, business, and
operational levels. Steps include framing mission, SWOT analysis, setting
objectives, gap analysis, framing/evaluating alternatives, and choosing the best
strategy.
3. Implementation of Strategies: Putting the strategic plan into action through sub-
processes like project, procedural, resource allocation, structural, behavioral, and
functional implementation. Key steps involve formulating plans,
identifying/grouping activities, and organizing/allocating resources.
4. Strategic Evaluation: Appraising strategy implementation and organizational
performance. Steps include setting standards, measuring performance, comparing
actual vs. target, analyzing deviations, and taking corrective actions.
 Benefits of Strategic Management:
1. Helps select the best strategy option.
2. Improves employee efficiency by clarifying tasks.
3. Enables SWOT analysis (identifying strengths, weaknesses, opportunities,
threats).
4. Aids in framing realistic plans.
5. Helps organize resources effectively through proper allocation/utilization.
6. Assists in evaluating plans/strategies.
7. Facilitates communication and coordination.
8. Enables development of effective strategies to face competition.

b) Discuss the goals of marketing

A: The primary goal of marketing, as stated in the notes, is selling its products or services to
customers. Marketing is described as a form of communication between a business and its
customers with this goal. The various functions of marketing (research, pricing, promotion,
distribution, etc.) all support this overarching objective of facilitating the exchange and sale of
goods or services.

6) a) Classify the Organizational dimension of enterprises

b) Explain different types of capital raising

A three main types of capital raising:

1. Debt Raising: This involves borrowing money from an outside source with the promise
to repay it with interest by a future date. (Examples include loans, debentures, bonds).
2. Equity Raising: This involves someone putting money or assets into the business in
exchange for a percentage of ownership. (Example includes issuing shares).
 3. Hybrids of Debt and Equity: This category combines features of both debt and equity
financing (though specific examples like convertible debentures fit here, the notes don't
elaborate on this category separately beyond naming it).

7) a) Discuss the significance of marketing in the growth and sustainability of an enterprise.

A:

 Customer Connection: Marketing acts as the communication link between the business
and its customers, essential for understanding needs and facilitating sales.
 Product/Service Development: Through R&D, marketing ensures products/services
meet target customer needs, fostering demand and growth.
 Revenue Generation: Functions like Pricing, Promotion, and Physical Distribution
directly aim to achieve sales, which is fundamental for revenue, profitability, and
sustainability.
 Brand Building: Branding, Packaging, and Labeling help create a distinct image and
customer loyalty, contributing to long-term sustainability.
 Market Adaptation: Research helps the enterprise understand market dynamics (size,
behavior, demands), allowing it to adapt and remain relevant.
 Operational Support: Marketing assists other functions like purchasing (Buying
Function) and manages key activities like transportation and warehousing, ensuring
smooth operations necessary for sustained business.
 Customer Satisfaction: Providing customer support services enhances satisfaction and
loyalty, crucial for repeat business and long-term survival.
 Risk Management: The risk-taking function acknowledges and addresses market risks,
helping the enterprise navigate uncertainties for better sustainability.

Essentially, marketing drives sales, builds customer relationships, adapts the enterprise to its
market, and supports operations, all vital for growth and long-term sustainability.

b) What is break-even analysis, and how does it help enterprises determine profitability
and risk levels?

A:

 What is Break-Even Analysis: Break-even analysis is a technique comparing total

variable and fixed costs with sales revenue to determine the level of sales volume or
value at which the business makes neither a profit nor a loss. This specific point is called
the "break-even point" (BEP). It relies on categorizing costs as fixed or variable.
 Determining Profitability and Risk:
o Profitability: The break-even point itself shows the minimum level of activity
required to avoid losses. Any sales volume/value above the BEP indicates a profit,
while levels below indicate a loss. The analysis helps visualize the potential profit
 or loss at different levels of activity. The angle of incidence (angle between the
sales line and total cost line at BEP) on a break-even chart indicates the rate of
profit being made (larger angle implies higher profitability rate).
o Risk: The BEP highlights the risk associated with sales volume. A high BEP
means the enterprise needs to sell a lot just to cover costs, making it riskier if
sales targets aren't met. The Margin of Safety (MOS), calculated as the
difference between actual/projected sales and the break-even sales, quantifies how
much sales can drop before the company starts making a loss. A larger MOS
indicates lower risk, while a smaller MOS indicates higher risk.

8) a) How does the process of workforce planning contribute to effective human resource
management?

A: Workforce planning, referred to as Human Resource Planning (HRP) , contributes

significantly to effective Human Resource Management (HRM) by:

 Aligning HR with Objectives: HRP facilitates the realization of company objectives by

ensuring the right type and number of personnel are available when needed.
 Systematic Staffing: It provides the foundation for recruitment and selection processes,
moving from guesswork to a planned approach based on forecasted needs.
 Managing Talent Supply: It helps anticipate and prevent labor shortages or surpluses,
ensuring a stable and appropriately skilled workforce.
 Adapting to Change: HRP enables the organization to cope with changes in the business
environment (markets, technology, competition) by planning workforce adjustments.
 Developing Employees: Better planning of assignments through HRP aids in developing
managers and utilizing employee potential effectively throughout their careers.
 Cost Effectiveness: Anticipating imbalances before they become unmanageable and
expensive helps control HR costs.
 Diversity and Compliance: Allows for planned inclusion of diverse groups (women,
minorities, weaker sections) aligning with social and legal requirements.
 Foundation for HRM Activities: HRP provides the necessary input (future demand and
supply estimates) for subsequent HRM activities like recruitment, selection, training, and
development.

In essence, HRP makes HRM proactive rather than reactive, ensuring that the organization has
the human resources it needs to achieve its goals effectively and efficiently.

b) How can balance sheet analysis aid in assessing an enterprise and financial health and
identifying areas for improvement?

A: Balance sheet analysis aids in assessing an enterprise's financial health and identifying areas
for improvement by:
 Measuring Financial Condition: It summarizes the financial condition (Assets =
Liabilities + Owner Equity) at a point in time, providing a snapshot of health.
 Assessing Liquidity: Through measures like the Current Ratio (Current Assets /
Current Liabilities) and Working Capital (Current Assets - Current Liabilities), it
assesses the enterprise's ability to meet its short-term obligations using its short-term
assets. Low liquidity might indicate problems paying bills or needing short-term
financing, highlighting an area for improvement (e.g., better cash management, reducing
short-term debt).
 Assessing Solvency: Using measures like the Debt/Asset Ratio (Total Liabilities / Total
Assets), Equity/Asset Ratio (Total Equity / Total Assets), and Debt/Equity Ratio (Total
Liabilities / Total Equity), it assesses the enterprise's ability to meet its long-term
obligations and the extent to which it relies on debt versus owner financing. High debt
ratios might indicate excessive financial risk and dependence on lenders, suggesting a
need to reduce debt or increase equity.
 Benchmarking: Comparing these ratios over time for the same business or against
similar businesses helps identify trends and relative performance. Deteriorating ratios
signal potential problems, while comparisons with peers can reveal areas where the
enterprise is underperforming (e.g., higher debt levels, lower liquidity).
 Informing Decisions: Lenders use this analysis for credit decisions. Management can
use it to identify weaknesses (e.g., poor liquidity, excessive leverage) and make strategic
decisions to improve financial structure, manage assets/liabilities more effectively, and
enhance overall financial stability.