Chapter 8 SMALL BUSINESS AND ENTERPRICES - BST class 11th

A

Traditional

1

Handlooms हथकरघा

2

Handicrafts -  हस्तशिल्प

3

Coir - नारियल-जटा

4

Sericulture - रेशम के कीड़ों का पालन

5

Khadi-

6

Village Industries

B

Modern

Small scale industries - लघु उद्योग (छोटे पैमाने की औद्योगिक इकाइयाँ /

Machine made product

Small Scale Industries (SSI) are those industries in which the manufacturing, production and rendering of services are done on a small or micro scale. These industries make a one-time investment in machinery, plant, and equipment, but it does not exceed Rs.10 crore and annual turnover does not exceed Rs.50 crore.

Bakeries

School stationeries

Water bottles

Leather belt

Small toys

Paper Bags

Photography

Beauty parlours

Other Services

Inn above all six cases if businessmen starts

one-time investment in machinery, plant, and equipment, upto  Rs.10 crore and annual turnover upto  Rs.50 crore then it will be termed as small scale industries.

8

Power looms- बिजली करघे

a loom powered by water, steam, or electricity rather than by hand.

"the textile industry's increasing use of power looms"

1

Number of persons employed in business

2

Capital invested in business

3

Volume of output or value of output of business

4

Power consumed for business activities

1

Manufacturing Enterprises

2

Service Enterprises

1

Micro Enterprises

2

Small Enterprises

3

Medium Enterprises

1

Micro Enterprises

2

Small Enterprises

3

Medium Enterprises

Categories

Investment limit

1

Micro Enterprises

where the investment in plant and machinery does not exceed 25 lakh.

2

Small Enterprises

Where the investment in plant and machinery is more than 25 lakh but does not exceed 5 crore

3

Medium Enterprises

where the investment in plant and machinery is more than 5 crore but does not exceed 10 crore

1

Micro Enterprises

- where the investment in equipment does not exceed 10 lakh.

2

Small Enterprises

where the investment in equipment is more than 10 lakh but does not exceed   2 crore

3

Medium Enterprises

-where the investment in equipment is more than 2 crore but does not exceed 5 crore

Category

Manufacturing Investment Limit

Providing of Services Investment Limit

Micro enterprise

25 lakh

10 lakh

Small enterprise

Between 25 lakh and 5 crore

Between 10 lakh and 2 crore

Medium enterprise

Between 5 crore and 10 crore

Between 2 crore and 5 crore

1

Employment

45%

2

Exports

45%

3

Industries

90%

4

Product items

6,500

5

GDP

10%

1

Best suited for customised production

2

Balanced regional development

3

Advantage of low cost of production

4

Adaptability and a personal touch

5

Provide ample opportunity entrepreneurship

6

Generation of employment-

7

Supply an enormous variety of products

8

Quick and timely decision-making

9

Output generation

1.B

Best suited for customized production:

Small industries are best suited for customized production. i.e., designing the product as per the tastes/ preferences/needs of individual customers, say for an example tailor-made shirt or trouser. They can produce according to the needs of the customers as they use simple and flexible production techniques.

2.B

Balanced regional development:

Small industries which produce simple products using simple technologies and depend on locally available resources both material and labor can be set up anywhere in the country. Since they can be widely spread without any locational constraints, the benefits of industrialization can be reaped by every region. They, thus, contribute significantly to the balanced development of the country.

3.A

Advantage of low cost of production:

Small industries also enjoy the advantage of low cost of production. Locally available resources are less expensive. Establishment and running costs of small industries are on the lower side because of low overhead expenses. In fact, the low cost of production which small industries enjoy is their competitive strength.

4.A

Adaptability and a personal touch

small industries have inherent strength of adaptability and a personal touch and therefore maintain good personal relations with both customers and employees. The government does not have to interfere in the functioning of a small-scale unit.

5.P

Provide ample opportunity entrepreneurship:

Small industries provide ample opportunity for entrepreneurship. The latent skills and talents of people can be channeled into business ideas which can be converted into reality with little capital investment and almost nil formalities to start business

6.G

Generation of employment:

Small industries are the second largest employers of human resources, after agriculture. They account for 95 per cent of the industrial units in the country. They generate more number of employment opportunities per unit of capital invested compared to large industries. They are, therefore, considered to be more labour intensive and less capital intensive. This is a boon for a labour surplus country like India.

7.S

Supply an enormous variety of products:

Small industries in our country supply an enormous variety of products which include mass consumption goods, readymade garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches, etc.

Among the sophisticated items manufactured are electric and electronic goods like televisions, calculators, electro-medical equipment, electronic teaching aids like overhead projectors, air conditioning equipment, drugs and pharmaceuticals, agricultural tools and equipment and several other engineering products. A special mention should be made of handlooms, handicrafts and other products from traditional village industries in view of their export value.

8.T

Quick and timely decision-making:

Due to the small size of the organizations, quick and timely decisions can be taken without consulting many people as it happens in large sized organizations. New business opportunities can be captured at the right time.

9.

Output generation:

Small industries in India contribute almost 40 per cent of the gross industrial value added and 45 per cent of the total exports (direct and indirect exports) from India.

1

Multiple source of income

2

Mobilisation of local resources

4

Reduction in poverty unemployment and income inequalities:

4

Prevent migration

5

Accelerated industrial growth and creating employment potential in rural and backward areas

1.M

Multiple source of income:

Small businesses generate multiple source of income to the rural households. They engage in wide range of non-agricultural activities such as self-employment in commerce, manufacturing and services, along with traditional rural activities of farming and agriculture. Pipe manufacturing , pole manufacturing :

2.M

Mobilisation of local resources:

Small business facilitates mobilisation and utilisation of local resources and skills which might otherwise remain unutilised.

3.R

Reduction in poverty unemployment and income inequalities:

Small industries are significant as producers of consumer goods and absorbers of surplus labour, thereby addressing the problems ot poverty and unemployment. These industries contribute amply to other socio-economic aspects, such as reduction in income inequalities, dispersed development of industries and linkage with other sectors of the economy.

4.P

Prevent migration:

Development of rural and village industries can also prevent migration of rural population to urban areas in search of employment.

5. Accelerated

Accelerated industrial growth and creating employment potential in rural and backward areas:

Promotion of small-scale industries and rural industrialization has been considered by the Government of India as a powerful instrument for realizing the twin objectives of accelerated industrial growth and creating additional productive employment potential in rural and backward areas.

1

National Small Industries Corporation (NSIC)

2

District Industrial Centers (DICs)

Mentoring and advisory services

Creating awareness on techno-logical upgradation

Developing software technology parks and technology transfer centers

Export the products of small business units and develop export worthiness

Procure, supply and distribute indigenous and imported raw materials

Supply indigenous and imported machines on easy hire-purchase terms

Serve as technology business incubators

1

National Small Industries Corporation (NSIC)

2

District Industrial Centers (DICs)

1.U

To update MSMEs about the prevalent market scenario and its impact on their activities.

2.S

To showcase the competencies of MSMEs.

3.E

To enhance marketing capabilities and competitiveness of the MSMEs.

4.E

To enrich the marketing skills of the micro, small and medium entrepreneurs.

5.P

To provide platform to MSMEs for interaction with large institutional buyers.

6.D

To disseminate/propagate various programmers of the Government.

7.F

To facilitate the formation of consortia of MSMEs for marketing of their products and services

1

Buyer-Seller Meets:

2

Intensive Campaigns and Marketing Promotion Events

3

Organizing International Technology Exhibitions in Foreign Countries by NSIC and Participation in International Exhibitions/Trade Fairs

4

Organizing Domestic Exhibitions and Participation in Exhibitions/Trade Fairs in India

5

Other Support Activities

6

Support for Co-sponsoring of Exhibitions Organized by other Organizations/Indus try Associations/Agencies.

1

Buyer-Seller Meets:

The Railways, Defense, communication departments and large companies are invited to participate in buyer-seller meets to bring them closer to the MSMEs for enhancing their marketing competitiveness.

2

Intensive Campaigns and Marketing Promotion Events

to disseminate information about the various schemes for the benefit of the micro, small and medium enterprises. They are also facilitated to enrich their knowledge regarding latest developments, quality standards etc.

3

Organizing International Technology Exhibitions in Foreign Countries by NSIC and Participation in International Exhibitions/Trade Fairs

with a view to providing broader exposure to Indian micro, small and medium enterprises to facilitate them in exploring new business opportunities in emerging and developing markets.

4

Organizing Domestic Exhibitions and Participation in Exhibitions/Trade Fairs in India

to help the MSMEs in enhancing their marketing avenues by way of capturing new markets and expanding existing markets.

Other Support Activities

Support for Co-sponsoring of Exhibitions Organized by other Organizations/Indus try Associations/Agencies.

1

National Small Industries Corporation (NSIC)

2

District Industrial Centers (DICs)

1

Identification of suitable schemes

2

Preparation of feasibility reports

3

Arranging for credit, machinery and equipment

4

Provision of raw materials and other extension services

1

Land

2

Power

3

Water-

4

Goods and Services Taxes (GST

5

Raw materials

6

Finance-

1

Meaning  of Entrepreneurship Development

2

Characteristics of Entrepreneurship

3

Need for Entrepreneurship

4

Process Of Entrepreneurship Development

1

 Meaning  of Entrepreneurship Development

2

Characteristics of Entrepreneurship

3

Need for Entrepreneurship

4

Process Of Entrepreneurship Development

1

Lawful and Purposeful Activity:

2

Innovation:

3

Organisation of Production:

4

Risk-taking:

5

Systematic Activity:

Lawful and Purposeful Activity:

The object of entrepreneurship is lawful business. Purpose of entrepreneurship is creation of value for personal profit and social gain.

Innovation:

From the point of view or the firm, innovation may be cost saving or revenue enhancing. If it does both it is more than welcome. Even if it does none, it is still welcome as innovation must become a habit!

Entrepreneurship is creative in the sense that it involves creation of value. In the absence of entrepreneurship 'matter' does not become a resource. By combining the various factors of production, entrepreneurs produce goods and services that meet the needs and wants of the society. Every entrepreneurial act results in income and wealth generation.

Even when innovations destroy the existing industries (for example, zerox machines destroyed carbon paper industry, mobile telephony threatens landline/ basic telephony)net gains accruing to the economy lend such entrepreneurial actions as commendable as the acts of creative destruction.

Entrepreneurship is creative also in the sense that it involves innovation- introduction of no products, discovery of new markets and sources of supply of inputs, technological breakthroughs as well as introduction of newer organisational forms for doing things better, cheaper, faster and, in the present context, in a manner that causes the least harm to the ecology/environment.

It is possible that entrepreneurs in developing countries may not be pioneering/ innovative in introducing path-breaking radical innovations. They may be the first or second adopters technologies developed elsewhere. That does not make their achievement small.

Organisation of Production:

Production requires the combined utilisation of diverse factors of

production, land, labour, capital and technology. Entrepreneur, in response to a perceived business opportunity mobilises these resources into a productive enterprise or firm.

The entrepreneur may not be possessing any of these resources; he may just have the 'idea' that he promotes among the resource providers. In an economy with a well-developed financial system, he has to convince just the funding institutions and with the capital so arranged he may enter into contracts of supply of equipment, materials, utilities (such as water and electricity) and technology.

What lies at the core of organisation of production is the knowledge about availability and location of the resources as well as the optimum way to combine them. An entrepreneur needs negotiation skills to raise these in the best interests of the enterprise.

Organisation of production also involves product development and development of the market for the product.

Risk-taking:

As the entrepreneur contracts for an assured supply of the various inputs for his

project, he incurs the risk of paying them off whether or not the venture succeeds. Thus, landowner gets the contracted rent, capital providers gets the contracted interest, and the workforce gets the contracted wages and salaries. However, there is no assurance of profit to the entrepreneur.

It may be pointed out that the possibility of absolute ruin may be rare as the entrepreneur does everything within his control to de-risk the business. What is generally implied by risk-taking is that realised profit may be less than the expected profit. It is generally believed that entrepreneurs take high

risks. Yes, individuals opting for a career in entrepreneurship take a bigger risk that involved in a career in employment or practice of a profession as there is no "assured" payoff.

It is said that the entrepreneurs thrive on circumstances where odds favouring and against success are a even, that is 50:50 situations. They are so sure of their capabilities that they convert 50% chances into 100% success. They avoid situations with higher risks as they hate failure as anyone would do; they dislike lower risk situations as business ceases to be a game/fun! Risk as such more than a financial stake, becomes a matter of personal stake, where less than expected performance causes displeasure and distress.

5

Systematic Activity:

Entrepreneurship is a systematic, step-by-step and purposeful activity. It has certain temperamental, skill and other knowledge and competency requirements that can be acquired, learnt and developed, both by formal educational and vocational training as well as by observation and work experience.

1

 Meaning  of Entrepreneurship Development

2

Characteristics of Entrepreneurship

3

Need for Entrepreneurship

4

Process Of Entrepreneurship Development

1

Generation of Employment

2

Generation of Business Opportunities for Others

3

Improvement in Economic Efficiency

4

Increasing the Spectrum and Scope of Economic Activities

5

Contribution to GDP

6

Capital Formation:

1.G

Generation of Employment

Every new business is a source of employment to people with different abilities, skills and qualifications. As such entrepreneurship becomes a source of livelihood to those who do neither have capital to earn interest on nor have the land to earn rent.

2.G

Generation of Business Opportunities for Others

Every new business creates opportunities for the suppliers of inputs (this is referred to as 'backward linkages) and the marketers of the output (what is referred to as forward linkages'). For example, a pen manufacturer would create opportunities for refill manufacturers as well as wholesalers and retailers of stationery products.

3.I

Improvement in Economic Efficiency

Efficiency means to have greater output from the same input. Entrepreneurs improve economic efficiency by:

(a) Improving processes, reducing wastes, increasing yield and

(b) Bringing about technical progress, that is, by altering labour-capital ratios. If labour is provided with good implements (capital), its productivity increases.

4.I

Increasing the Spectrum and Scope of Economic Activities

Development does not merely mean 'more' and 'better' of the existing, it also and more crucially means diversification of economic activities- across the geographic, sectoral and technological scope. Entrepreneurs mobilise local and even overseas resources to augment the productive capacity of a country. Indian Multinational Giants is fast becoming a reality.

5.C

Contribution to GDP

Increase in the Gross Domestic Product or GDP is the most common indicator of economic development. Income is generated in the process of production, which 15 distributed among the factors of production where land gets rent, labour gets wages and salaries,

capital gets interest and the residual income accrues to the entrepreneur in the form of profits. As rent and interest accrue to those few who have land and capital respectively whereas larger masses are destined to earn their incomes via wage employment, the biggest contribution of the entrepreneurship lies in capital formation and generation of employment.

6.C

Capital Formation:

The entrepreneurial decision, in effect, is an investment decision that increases the productive capacity of the economy and hence results in capital formation. In fact, GDP

formation are related to each other via Capital Output Ratio (COR); more precisely incremental Capital Output Ratio (ICOR) that measures the percentage increase in capital formation required obtaining a percentage increase in GDP. So, if a country desires to grow 10 % p.a. and its ICOR is 2.5, then it must ensure capital formation 25% p.a. Entrepreneurs, by investing their own savings and informally mobilising the savings of their friends and relatives contribute to the process of capital formation. These informal funding supplements the funds made available by the formal means of raising resources from banks, financial institutions etc.

1

 Meaning  of Entrepreneurship Development

2

Characteristics of Entrepreneurship

3

Need for Entrepreneurship

4

Process Of Entrepreneurship Development