MSME and Business Entrepreneurship
Q & A
Class 11 Business Studies
Q1. What is MSME?
Answer: According to the MSME Act, 2006, the Micro, Small and Medium Enterprises (MSME) are classified as follows:
| Type of Units |
Investment in Plant and Machinery |
Turnover |
| Micro Enterprises |
Up to ₹1 Crore |
Does not exceed ₹5 Crore |
| Small Enterprises |
Up to ₹10 Crore |
Does not exceed ₹50 Crore |
| Medium Enterprises |
Up to ₹50 Crore |
Does not exceed ₹250 Crore |
Q2. What is the role of small businesses in India, particularly with reference to rural areas?
Answer: The small business/MSME plays a significant role in the socio-economic development of the country.
The following points highlight its contribution specially in rural areas:-
(i) Balanced regional development
Small businesses are dispersed across the country and use local resources. Thus, balanced regional development is possible and further leads to Industrialisation in rural areas.
(ii) Generation of employment:
MSMEs are the second-largest employer of human resources, after the agricultural sector. It provides employment opportunities in rural areas for traditional workers, such as artisans, handloom weavers, and potters. They are more labour-intensive and thus generate more employment opportunities per unit of capital invested than large industries.
(iii) Variety of products:
MSMEs in our country supply an enormous variety of products, including mass-consumption goods such as readymade garments, hosiery, stationery items, soaps, and detergents. Electric and electronic goods such as televisions, calculators, electro-medical equipment, overhead projectors, air conditioners, etc. Handlooms, handicrafts and other products from traditional village industries are to be exported.
(iv) Prevent Migration:
MSME produces products using simple technologies and local resources, so they can be set up anywhere in the country. The development of small businesses in rural areas prevents population migration to urban areas in search of employment. Thus benefits of industrialisation can be reaped by every region and improve the standard of living in rural areas.
(v) Development of Entrepreneurs:
MSME provides ample opportunity for entrepreneurship. People with skills and talent can convert business ideas into reality with little money and very few formal steps, and start a small business.
(vi) Low cost of production:
Locally available resources are less expensive. The establishment and running costs of small industries are lower due to lower overhead expenses. It gives them competitive strength.
(vii) Quick decision making:
Due to the small size of the organisations, quick, timely decisions can be taken without consulting many people, unlike in large organisations. New business opportunities can be captured at the right time.
Q3: What is the government support for Small Scale Industries? List the incentives provided by the Government for industries in backward and hilly areas.
Answer:
1. Land - Land is offered at a lower price to encourage industries to start in less developed areas. Some states do not charge rent for the first few years, while others let you pay in parts over time.
2. Power – Some states provide electricity at a lower price, and some do not charge for it in the first few years.
3. Water – Water is given at cost price, or with a fifty per cent discount, or sometimes free for the first few years.
4. Raw Material – Factories in less developed areas get first choice when it comes to getting hard-to-find materials like cement, iron, and steel.
5. Finances – These factories can get loans at lower interest rates. They also get 10 to 15 per cent of the cost back when buying items such as machines or buildings.
6. Tax holiday – Exemption from paying tax for 5 – 10 years is given to industries established in backward and rural areas.
Agencies / Institutional Support for Small-Scale Industry
Q: Write a short note on National Small Industries Corporation (NSIC). List its functions.
Answer:
National Small Industries Corporation (NSIC)
National Small Industries Corporation was set up in 1955 to promote, aid and foster the growth of small business units in India.
Its main functions are as follows:
(i) It provides Indian and foreign machines that small businesses can buy in simple monthly payments.
(ii) It helps people learn about new and better technology.
(iii) It helps small businesses sell their products in other countries and get ready for exporting.
(iv) It gives advice and guidance to small businesses.
(v) It rates how well small businesses manage their money to help them keep good financial records.
(vi) It builds places where businesses can use new software and share technology.
Q: Write a short note on District Industries Centres (DICs). List its functions.
Answer:
The District Industries Centres (DICs)
It was set up in 1978 to provide services and support facilities to entrepreneurs for setting up small-scale industries at the district level. It prepares feasibility reports for such units and arranges for credit, machinery and equipment, raw material and other support services.
Functions of DIC:
(i) To identify, select and train potential entrepreneurs with appropriate traits and attributes.
(ii) To provide all services and support facilities to entrepreneurs for setting up small-scale industries
(iii) To provide an integrated administrative Framework at the district level
(iv) To arrange a separate wing to look after the special needs of Cottage and household Industries distinct from small-scale industries
(v) To undertake various programs for investment in promotion at grassroot level, like organising seminars, workshops, extending support, Trade Fair and exhibitions, etc
(vi) To change the attitude of rural entrepreneurs towards economic development in rural and hilly areas
Q. Write a short note on the District Industries Centres (DICs) and their functions.
Answer:
The District Industries Centres (DICs)
It was started in 1978 to help people who want to start small businesses in each district. It creates reports to determine whether these businesses can work and helps arrange loans, machinery, equipment, raw materials, and other necessary services.
Functions of DIC:
(i) To find, choose, and train people who want to start businesses and have the right qualities.
(ii) To provide all services and support facilities to entrepreneurs for setting up small-scale industries
(iii) To set up a single system for managing these activities in each district
(iv) To set up a separate group to take care of the special needs of cottage and home-based businesses, which are different from small-scale industries
(v) To run different programs to encourage investment and promote businesses in local areas, such as holding seminars, workshops, giving support, and organising trade fairs and exhibitions
(vi) To help rural business owners see the value of economic growth in villages and hilly regions
Entrepreneurship
Entrepreneur: A person who sets up their own business or develops an idea to run a business.
Entrepreneurship refers to the process of setting up a business unit, as opposed to employment or practising a profession.
Features / Characteristics of Entrepreneurship
1. Systematic activity: Entrepreneurship does not happen by chance. You need to follow several steps in order to start a business. You also need special knowledge to do this work in an organised way.
2. Innovation: In entrepreneurship, new ways of doing things are created. An entrepreneur
enters the market with new methods, products, materials, and ways to sell that cause the least environmental harm.
3. Lawful and purposeful activity: Entrepreneurship involves establishing a lawful and purposeful business. It aims to provide goods and services to buyers, return value to investors, and generate profit for the entrepreneur. Illegal activities cannot be called entrepreneurship.
4. Organisation of production: Entrepreneurship is when a person brings together different things, like location, timing, and the way products are made, all in one place, to create something new. The entrepreneur also uses new ways to make products.
5. Economic Activity: It is regarded as an economic activity because it is concerned with setting up a business to earn profit by offering quality products to society.
6. Risk-taking: Taking risks is a natural part of any business. Trying new ideas and being creative always involves significant risk. Entrepreneurs take these chances by planning carefully and working hard.
Need for Entrepreneurship
1. Contribution to GDP: An increase in GDP is the most common sign of economic growth. As goods and services are produced, entrepreneurs help generate income by organising their production, whether in farming, factories, or services.
2. Capital Formation
When entrepreneurs decide to start a business, they are making an investment that helps the economy grow. By using their own savings and raising funds from friends and family, entrepreneurs help build the country’s wealth.
3. Generation of employment
Entrepreneurship creates jobs for people with different skills and backgrounds. It gives work to those who do not have money to earn interest or land to earn rent.
4. Generation of business opportunities for others
Every new business creates opportunities for suppliers of inputs and marketers of outputs. E.g., a pen manufacturer would create opportunities for refill manufacturers, as well as for wholesalers and retailers of stationery products.
5. Improvement in economic efficiency.
Efficiency means producing more output from the same input. Entrepreneurs improve economic efficiencies by:
(a) Improving processes, reducing waste, increasing returns
(b) Bringing technical progress by altering the capital-labour ratio
6. Increasing the range of economic activities:
Entrepreneurs gather resources from within the country and from other countries to help the country produce more.
Spreading different types of businesses across different places and using new technology helps the economy grow.
Process of Entrepreneurship Development
1. Identification of business opportunity:
The first step is to actively look for possible business ideas. This can be done by finding new things, drawing on your own product experience, noticing what customers want, or checking what other businesses are doing.
2. Identify a specific product -
The next step is to identify the exact product or service to offer to grasp the opportunity. This is generally achieved by scanning the pros and cons of various available alternatives.
3. Feasibility Analysis-
The next step is to check if the business idea is possible before spending money on it. This means looking at the technical, financial, and economic sides.
4. Business Plan -
The next step is to make a detailed business plan. This includes factors such as the type of business, where the money will come from, and how the business will be set up.
5. Raising Capital-
Now, the entrepreneur needs to raise the funds needed to start the business from the chosen sources. This often involves a lot of paperwork, which can delay things.
6. Starting up the business -
The money collected is now used to put the business idea and plan into action. This includes setting up factories and offices, buying materials, making products, and selling them.
7. Growth -
This step continues to happen after the business starts. It means always working to keep the business steady while also looking for ways to grow and expand.
👉See Also:
Startup India Scheme and Intellectual Property Rights
No comments:
Post a Comment
We love to hear your thoughts about this post!
Note: only a member of this blog may post a comment.