TYBMS SEM 6 Solved Board Papers

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Entrepreneurship April 2013 University Paper Solution

Explain the following concepts:

1) Outsourcing


Outsourcing is defined as transfer or delegation to an external service provider, the operation and day-to-day management of a business process. The customer receives a service that performs a distinct business function that fits into the customer's overall business operation. There are two types of outsourcing, "Traditional Outsourcing" and "Greenfield Outsourcing". In traditional Outsourcing the employees of an enterprise cease to perform the same jobs whereas in Greenfield outsourcing the enterprise changes its business processes without hiring of any personnel by the service provider.

2) SWOT Analysis


SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business or project that give it an advantage over others
Weaknesses: are characteristics that place the team at a disadvantage relative to others
Opportunities: elements that the project could exploit to its advantage
Threats: elements in the environment that could cause trouble for the business or project

3) Entrepreneurial Motivation


Motivation is the force that influences the efforts of the entrepreneur to achieve his objectives. An entrepreneur is motivated to achieve or prove his excellence in job performance. He is also motivated to influence others by demonstrating his power thus satisfying his ego.

(i) Pure Entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.

(ii) Induced Entrepreneur: Induced entrepreneur is one who is induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture. Most of the entrepreneurs are induced entrepreneurs who enter business due to financial, technical and several other facilities provided to them by the state agencies to promote entrepreneurship. A person with a sound project is provided package assistance to his project. Today, import restrictions, and allocation of production quotas to small units have induced many people to start a small-scale industry.

(iii) Motivated Entrepreneur: New entrepreneurs are motivated by the desire for self-fulfillment. They come into being because of the possibility of making and marketing some new product for the use of consumers. If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in terms of profit.

(iv) Spontaneous Entrepreneur: These entrepreneurs start their business out of their natural talents. They are persons with initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity. Such entrepreneurs have a strong conviction and confidence in their ability.

4) Venture Capital

Ans. Venture Capital is a form of equity financing of projects with high risks and high return. It is meant for financing high technology projects. Venture capital helps to convert research and development projects into commercial production. Besides financing high technology, venture capital fosters the growth and development of Industries. The concept of venture capital originated in the USA. It was evolved to help people who are endowed with good product ideas, but lack the necessary funds to translate these ideas into production.

5) Project Appraisal


Project appraisal means the assessment of a project. It is a technique for ex-ante analysis of a scheme or project while preparing to set up an enterprise, the entrepreneur has to carefully appraise the project from the stand point of economic, financial, technical, market, social and managerial aspects to arrive at the most socially-feasible enterprise. To avail the finance from the banks and financial institutions, a comprehensive appraisal of projects carrying techno-economic feasibility aspects should be undertaken by the entrepreneur.

Thus a project which is selected should be technically feasible and economically viable and then only it will be bankable. For this the following appraisals can be performed at the preliminary level

(a) Economic appraisal

(b) Financial appraisal

(c) Technical appraisal

(d) Management appraisal

(e) Organisational appraisal

(f) Operational appraisal

(g) Market appraisal

Long Answers:

1) Do you consider that Entrepreneurship Development Programmes contribute to the development of an economy. Explain?


Meaning of EDP

Entrepreneurs are not necessarily born but they can be developed through education, training and experience. Development of entrepreneurs means inculcating entrepreneurial skills required for setting up and operating business units. Entrepreneurial development is an organised and an ongoing process. Its basic purpose is to motivate persons for entrepreneurial career and to make them capable of perceiving and exploiting business opportunities. Entrepreneurial development is not merely a training programme it is the process of enhancing the motivation, knowledge and skill potential entrepreneurs, arousing and reforming the entrepreneurial behaviour in their day-to-day activities and assisting them in developing their own ventures.

Features & Objectives:

(1) Selection of entrepreneurs: EDPs identify and carefully select person for entrepreneurial training.

(2) Entrepreneur capabilities: EDPs develop the required entrepreneurial capabilities of the trainees for making them successful prospective entrepreneurs.

(3) Managerial skills: EDPs equip the trainees with basic managerial understanding and skills-conceptual, analytical, human, administrative and technical skills.

(4) Viable project: EDPs ensure to offer a viable industrial project for each potential entrepreneur.

(5) Resource mobilisation: EDPs help each trainee to secure necessary financial, infrastructure and related assistance for making the selected project a success.

(6) Low charges: The training cost is highly subsidised and only a token fee is charged.

Objectives of EDP

The important objectives of EDP are as follows

(1) To let the entrepreneur set or reset the objectives of his business enterprise and work individually and with his team for the accomplishment of such objectives.

(2) To prepare the entrepreneur to take strategic decisions.

(3) To prepare the entrepreneurs to bear the unexpected business risks for a long time after training.

(4) To develop a broad vision and provide visionary leadership to his enterprise- to see the "big picture" (whole) of the business and to foresee the future and establish a "fit" between the two.

(5) To make entrepreneurs subscribe to industrial democracy and employee welfare.

(6) To instil in his mind values like honesty, integrity and legal compliance.

(7) To develop in entrepreneurs the art of communication and co-ordination.

(8) To enable the entrepreneur to build an effective organisation to achieve enterprise goals.

(9) To develop and strengthen among the young persons the entrepreneurial competencies or characteristics, especially achievement motivation, hard work, perseverance and optimistic thinking.

(10) To select and develop the product or service to cater to the needs and requirements of a particular market segment.

2) What are some of the barriers faced by women entrepreneurs? What are the initiatives taken by the government to promote women entrepreneurship?


Basic problem of Women Entrepreneurs

The basic problem or difficulty of a women entrepreneur is that she is woman-this pertains to her responsibility towards facility, society and work. With joint families breaking up, many women simply don't have the support of elders. Women have been confronted by such dilemmas ever since they started leaving home for the work place. On the other hand, the attitude of the society towards her and constraints in which she has to live and work are not very conductive.

The problems faced by women entrepreneurs are briefly analysed below:

(i) Start up finance

(ii) Working capital management

(iii) Marketing skills

(iv) Access to technology

(v) Regulatory requirements

(vi) Management skills

(vii) Lack of confidence.

(i) Access to start-up finance is the greatest single issue faced by women entrepreneurs. It is observed that women entrepreneurs face greater problems in this regard than small business in general. As family members are not in favour of supporting their ladies to take up the business in which they have skills, naturally they will be unwilling to support with the finance required for starting a business unit. Men are not willing to stand as surety to the loan granted by financial agencies. Women are not in a position to start the business with own capital. External finance is not so easily Coming forward, and self financing is very meager. This is the greatest hurdle for the development of women entrepreneurs.

(ii) Another key disturbing factor is managing the working capital. Working capital is required for maintaining finished stock to meet the market demand, for production, and for meeting marketing and other administrative expenses. It will be very difficult for women entrepreneurs to avail such loan facilities from financial institutions as they are unable to provide security. Although financial institutions have liberalised lending schemes, women entrepreneurs are not in a position to avail required finance, as family members in most of the cases do not support to raise heavy capital.

(iii) Regarding marketing skills, women entrepreneurs have the problem of access to markets as their marketing skills are weak compared to male entrepreneurs. This is a major barrier for them to expand business or enter into business. Maintaining existing business and access to fresh business requires strategic marketing skills. This is the most commonly repeated problem faced by women entrepreneurs after finance. Therefore, marketing skills, management skills and technology skills have to be improved in female owned businesses. This encourages other women to enter into self-employment.

(iv) Access to technology and adopt it in production process, poses certain problems. Co-ordinating factors of production is really a challenge to women entrepreneurs. To compete with producers, they need guts. Women entrepreneurs cannot easily co-ordinate the production process-particularly with the ever changing technology. Very few women can sustain such production onslaughts. Women who aspire to become entrepreneurs cannot keep pace with technology advancement. This puts down their initiative to become entrepreneurs. Even they feel that women are discriminated by finance providers to a greater or significantly greater extent to upgrade the technology. Whilst many small businesses face difficulties for the finance that they need, organisations specialising in providing support for female entrepreneurs clearly feel that this is one area where their clients face greater difficulties than their male counterparts.

(v) Regarding administrative and regulatory requirements, many feel that this is a significantly greater problem for women entrepreneurs than their male counterparts. Micro enterprises of every type experience these problems. It is because of the disproportionate effect of compliance costs on small companies compared with large firms. Inspite of this, women entrepreneurs do not feel that it is a major issue. But still this is a factor to reckon with.

(vi) Another vital problem encountered by women entrepreneurs is lack of management skills. In majority of the cases, women entrepreneurs lacked management skills. Although this is common to all entrepreneurs, women are particularly disadvantaged in this respect. Because they have lower propensity of previous business experience. Besides this, support providers discriminate against women entrepreneurs to a greater extent in providing these skills. Skills are concerned with and ranged from day to day management to long-term strategic development. As external support to develop managerial skills is not that encouraging. women entrepreneurs have to develop their own seminars and workshops to equip in this area.

(vii) Other problems like society's attitude towards women entrepreneurs, unequal opportunities between men and women and very important amongst all the "Lack of Confidence" in women are also haunting women entrepreneurs.

A brief analysis of various associations and agencies that are functioning at state and national levels to promote women entrepreneurs is made for reference.

1. Self-Help Groups (SHGs)

This is an association of small group of self-employed rural or urban women entrepreneurs who join together to take care of group welfare. The group with the help of financial institutions and other NGOs get their needs satisfied. This is voluntary association. Each member contributes little amount to cover seed money. Rest will be taken care off by FIs or NG0s. Governments also provide funds through FIs. In Karnataka "Stree Shakti" scheme of Government of Karnataka is providing funds for women entrepreneurs through FIs for the last four years.

As discussed so far, to start a small enterprise by women is ` 1 lakh to ` 10 lakhs. In rural parts, today, women form small groups called SGH's and through this group, they avail services required for their activities. They share the platform for satisfying their personal needs. Thus SHG is a small, economically homogenous group which is voluntary in nature, to share the facilities equally between members.

All the member of SHG have to be active, attend all meetings and discuss the programmes and problems. In the initial stages every member has to get training from the identified trainers in their areas of activity. The funds will be provided by members as well as supporting institutions such as NGOs, funding agencies or governments.

SHGs provide facilities to its members in the form of loan or raw material for production or skilled labor etc. These associations are helping small women entrepreneurs to start and develop home-based business. Women belonging to weaker sections of the society have been greatly benefited in their entrepreneural activities.

2. Federation of Indian Women Entrepreneurs (FIWE)

FIWE is the outcome of resolution passed in 4th International Conference Women Entrepreneurs held at Hyderabad. This was founded in 1993. It mainly interacts with various women associations of the country through a network to facilitate the members in diversified activities.

Activities of FIWE are as follows:

To provide network facilities to women entrepreneurs in the country and abroad to develop their business.
To provide facilities to member associations in the areas of marketing, quality control, export management, standardisation etc. The Federation also provides training facilities in these areas.
Facilitates the member associations to participate in national and International conference, fairs, exhibitions, to provide greater exposure to women entrepreneurs in local, regional, national and global business environment and provide an access to various business opportunities available.
Provides facilities to expand the business of members and of member associations. It may be new project or extension of the existing business. Every type requires help for such activity is extended.
Women entrepreneurs can easily access the latest technologies relating to their business through FIWE. Easy availability of know how itself is a boon to WEs.
Other facilities such as providing new business opportunities facilitating financial needs of members, better management of business enterprises etc., are also provided.
3. Women's India Trust (WTI)

This trust was established in 1968. The promoter Kamila Tyabji made a small beginning with two shops in Mumbai and a training and production centre at Panvel. The trust was started with the main objective of helping women entrepreneurs.

Encouraged by the growth of the activities of the trust, it further extended its activities which are as follows.

Establishing Kamila Trust in UK in 1994 to market the products of WTI members. The trust made its beginning by selling the products from door to door and then opened a shop in London under the name "KASHI". Encouraged by its success in London, WIT extended the export activities to Australia, Europe and Germany from 1995 onwards.
Has started educational programme in "Nursing" and Kindergarten training.
Has plans to launch computer training for women.

3) What is a Business Plan? Describe the components of a business plan?


A business plan is a blueprint of your company, presented in standard business format that is logical and well documented. A good business plan is also:
 A strategic vision of your company
 Your most important communication tool
 A document to obtain working capital and/or investments
 A tool for planning, measuring and improving performance
 A basis for sound decision-making
 A way to motivate employees

The Business Plan is a written summary of what you hope to accomplish by being in business and how you intend to organise your resources to meet your goals. It is the road map for operating your business and measuring progress along the way.

Components of a Business Plan

Executive Summary

ü The opportunity

ü The team

ü The risk and rewards

Mission Statement/ Purpose /Company Background

ü Develop a unique product for a fast growing market place

ü What is you unique value proposition

ü Your key customers and competition

ü Creating shareholders value

Team Structure and Organizational Structure

ü Describe staff background, management team and board

ü Education, skills, work experience

ü Describe organizational structure (Tall, flat, organic)

ü Describe wider network of experts, legal, accounting

Product Service or Process

ü Describe product attributes

ü Match product with market opportunities

ü Purchasing and operation systems

Marketing Analysis and Industry

ü Describe the industry and market trends

ü Customer demographics and meeting customer needs

ü How to serve different market segments

ü Competition and new entrants

ü Future growth opportunities

Marketing and Sales Strategy

ü Marketing plan – direct sales or low cost distribution

ü Deal directly with customers or use agents

ü Advertising, promotion, internet to drive sales


ü Product development procedures and cost

ü Manufacturing, outsourcing, production costs

ü How do you buy from suppliers (supply chain management)

ü Coordinating R&D, production, inventory, marketing and sales


ü Sales revenue and profitability

ü Cash flow and balance sheet

ü Working capital requirements


ü Taking advantage of an opportunity

ü Great team and management to execute the business

ü Estimated profits, ROI, and growth potential

4) "Social entrepreneurship is the need of the hour. Bring out the elements of setting up a social entrepreneurship in the country."


Social entrepreneurship is the process of bringing about social change on a major scale. Social entrepreneurs function as the agents of change, questioning the status quo, grabbing the new yet overlooked opportunities, and changing the world for the better. Today, they are making up for the shortcomings of the bureaucracies and government.

The potential entrepreneur would become an entrepreneur only when he owns an enterprise. The business enterprise to be set up can be a manufacturing venture, a trading firm or a service establishment. The manufacturing venture includes the steps required for setting up a trading firm or a service establishment also. The steps in setting up a small unit are as follows:

1. Decision to be Self-employed:

This is the most crucial decision a person has to take shunning wage employment and opting for self-employment or entrepreneurship. He should know the advantages and risks of entrepreneurship.

2. Analysing strengths, weaknesses:

The potential entrepreneur has to analyse his strength, weaknesses, while deciding to go for entrepreneur career. This analysis enables him to know what type and size of business would be the most suitable. The strengths and weaknesses will vary from person to person.

3. Availability of own money:

No business can be created, with zero capital. The 'Own Money' concept means the funds available with an .entrepreneur from his own source or family or friends. The size of the unit depends on the availability of 'Own Money' in short-term and long-term.

4. Scanning of business environment:

It is always essential on the part of an entrepreneur to study and understand the prevailing business environment in which they operate particularly the industrial policy, economic policy, licensing policy, legal environment, technological environment and above all the markets. In order to ensure success of his enterprise, the entrepreneur should scan the business opportunities and threats in the environment. He should study the administrative frame work, procedures, policies, rules and regulations and other formalities implemented by the government.

5. Training:

The person should undergo training for developing skills for entrepreneurship and developing technical, conceptual and managerial skills. Before going to start the enterprise, the potential entrepreneur must assess his own deficiencies, which he can compensate through training. He can attend the Entrepreneurial Development Programmes (EDP) conducted by institutes like DIC, SISI, TC0s, SBI etc. This institutes are providing tailor-made Entrepreneurship Development Programmes (EDP) and skill upgradation training programmes for the benefit of the new entrepreneur, existing entrepreneurs and for the employees of the small scale industries.

6. Product Selection:

The next step and the most important step is to decide what business to venture into, the product or range of products that shall be selected for manufacture and in what quantity. The level of activity will help in determining the size of business and thus form of ownership. One could generate as many project ideas as one can through environment scanning and short list a tew of them. Closely examine with the help of opportunity analysis each one of them and zero in on to a the final product or products.

7. Market Survey:

It is always convenient to manufacture an item but difficult to sell. So it is prudent or rational on the part of the entrepreneur to survey the market thoroughly before embarking upon production and ensure that the product chosen is in sufficient demand and is preferably in the growth phase of a product life cycle.

Market survey means systematic collection of data by the entrepreneur about the product for manufacture, demand-supply lag, extent of competition, frequency of demand, pattern and design of demand, its potential share in the market, pricing, distribution policy etc. The principle is to produce what actually people demand. The entrepreneur can contact for this the concerned authorities.

8. Selection of form of ownership/organisation:

A firm can be constituted as proprietorship, partnership, limited company (public or private) or co-operative society. This will depend upon the type, purpose and size of entrepreneur's business. One may also decide on the form of ownership, on the basis of resources in hand or from the point of view of investment.

9. Location:

The next step will be to decide the location where the unit is to be established. Will it be hired or owned? The size of plot, covered and open area and the exact site will have to be decided.

Decision about the location of unit is very important. Location determines the success or failure of the enterprise. Location is selected after considering such factors such as nearness to market, sources of material and labour, modern infrastructural facilities etc.

10. Technology:

To manufacture any item, technology is used. Information on all available technologies should be collected by the entrepreneur and the most suitable one should be identified. This will also be useful to determine the type of machinery and equipment to be installed. Many institutions of government like DIC, TCO etc. research laboratories, R & D. divisions of big industries and certain consultancy agencies provide the manufacturing know-how.

11. Machinery and equipment:

Having chosen the technology, the machinery and equipment required for manufacturing, the chosen products have to be decided, suppliers have to be identified and their costs have to be estimated. One may have to plan well in advance for machinery and equipment especially if it has to be procured from outside the town, state or country.

12. Preparation of Project Report (Business Plan):

After deciding the form of ownership, location, technology for manufacturing, machinery and equipment, the entrepreneur should be ready to prepare his project report or the feasibility study. The economic viability and the technical feasibility of the product selected have to be established through a project report. A project report that may now be prepared will be helpful in formulating the production, marketing, financial and management plans. It will also be useful in obtaining finance, shed, power connection, water connection, raw material quotas, etc. The entrepreneur has to consider the guidelines given by the Planning Commission in preparing the project report. The project report should indicate the vision of the promoter and short term and long term aspects of the project implementation.

13. Project appraisal:

Project appraisal means the assessment of a project. It is a technique for ex-ante analysis of a scheme or project while preparing to set up an enterprise, the entrepreneur has to carefully appraise the project from the stand point of economic, financial, technical, market, social and managerial aspects to arrive at the most socially-feasible enterprise. To avail the finance from the banks and financial institutions, a comprehensive appraisal of projects carrying techno-economic feasibility aspects should be undertaken by the entrepreneur.

Thus a project which is selected should be technically feasible and economically viable and then only it will be bankable. For this the following appraisals can be performed at the preliminary level

(a) Economic appraisal

(b) Financial appraisal

(c) Technical appraisal

(d) Management appraisal

(e) Organisational appraisal

(f) Operational appraisal

(g) Market appraisal

14. Finance:

Finance is the life-blood of the enterprise. Entrepreneur has to take certain steps and follow specified norms of the financial institutions and banks to obtain money or finance. A number of financial agencies provide capital assistance and venture capital for starting an enterprise. There are some agencies which provide financial assistance on concessional rates. Under PMRY and REGP schemes, financial assistance and subsidies are being provided to the persons who want to set up their own enterprise, which obviates the need for margin money.

15. Provisional Registration:

It is always worthwhile to get the unit registered with the government. The entrepreneur has to obtain the prescribed application form for provisional registration from DIC or Directorate of Industries. After having duly filled in the application form, he has to submit the application with all relevant documents in the local DIC or Directorate of Industries. This will enable the entrepreneur to avail various government facilities, assistance and incentives schemes including financial assistance from NSIC, SFCs, KVIC.

16. Technical know-how:

In some cases, technical know-how may be arranged for setting up enterprises. This can be arranged through TC0s, NSIC, SSIDC, DIC, private consultants, SISI, ED-institutes, foreign collaborators, India Investment Centre and Industry etc. Facilities are also available to SSI for making variety of technical know-how arrangements including turn-key jobs.

17. Power and Water Connection:

The sites where the enterprise will be located, should either have adequate power connections or this should be arranged. The entrepreneur can calculate the total power requirement and determine the nearest pole from which power will be given to the enterprise, as it can materially affect the installation cost. There are two categories of power, namely, the Low Tension (LT) and High Tension (HT). A consumer can avail LT only if the connected load is 75 HP and below. If the connected load is between 75 HP and 130 HP, the consumer has the option to avail either LT supply or HT supply. Most of the SSI units fall under the LT category.

HT power supply may mean additional investment in transformer and sub-station. Most states, need a No Objection Certificate from the concerned Pollution Control Authorities, before the power connection. Similarly, the water connection will have to be obtained or provision should be made for adequate water supply to the firm.

18. Installation of machinery:

Having completed the above formalities, the next step is to procure machinery and begin its installation as per the plant layout.

19. Insurance:

It is necessary to have adequate insurance for the fixed assets at this stage and later on for the current assets as well.

20. Recruitment of manpower:

Once machines are installed, the need for manpower arises to run them. So, the quantum and type of manpower (skilled, semi-skilled, unskilled, administrative etc.) is to be decided. The sources of getting desired labour are also important. This follows the recruitment, training and placement.

21. Procurement of raw materials:

Raw materials are the important ingredients for running an enterprise. The labour will require raw materials to work upon the installed machinery. These materials may be procured indigenously or may have to be imported by the entrepreneur. The entrepreneur has to identify the cheap and assured sources of supply of raw materials for running his own enterprise. Government agencies can assist in case the raw materials are scarce or imported.

22. Production:

The unit established should have an organisational set-up. To operate optimally, the organisation should employ its manpower, machinery and methods effectively. There should not be any wastage of manpower, machinery and materials. If items are exported, then the product and its packaging must be attractive. Production of the proposed item should be taken up in two stages : (i) Trial production (ii) Commercial Production. Trial production will help tackling problems confronted in production and test marketing of the product. This will reduce the chances of losses in the eventuality of mistakes in project conception. Commercial production should be commenced only after the successfully launching the product at the test marketing stage.

23. Marketing:

Marketing is the most important activity as far as the entrepreneurial development is concerned. Various aspects like how to reach the customer, distribution channels, commission structure, pricing, advertising, publicity etc. have to be decided by the entrepreneur. Like production, marketing should also be attempted cautiously, that is, in two stages namely: (i) Test stage (ii) Commercial marketing stage.

Test marketing is necessary to save the enterprise from going into disrepute in case the product launched is not well accepted by the customers. It will also assist the entrepreneur in carrying out modifications or additions in designs and features of the product. Having successfully test marketed the product, commercial marketing can be undertaken. The entrepreneur can contact the Small Industries Marketing Corporation.

24. Quality Assurance:

Before marketing, the product quality certification from BIS (Bureau of Indian Standard) / AGMARK / HALLMARK etc. should be obtained depending upon the product. If there is no quality standards specified for the products, the entrepreneur should evolve his own quality control parameters. After all, quality ensures long-term success.

25. Permanent Registration:

After the small scale unit goes into production and marketing, it becomes eligible to get permanent registration based on its provisional registration from DIC or Directorate of Industries.

26. Market Research:

Once the product or service is introduced in the market, there is strong need for continuous market research to assess needs and areas for modification, upgradation and growth. Market becomes the waterloo for most SSI entrepreneurs as they ignore this vital function. Initial success should not lure the entrepreneur into a sense of complacency.

27. Monitoring:

Periodical monitoring and evaluation not only of markets but also production, quality and profitability helps in knowing where the firm stands in comparison to performance envisaged in the business plan. It also identifies direction of future growth.

5) Short Notes:

i) Incentives and subsidies enjoyed by SMEs


ii) Reasons for Industrial Sickness


Definition of Industrial Sickness

As per the RBI, “A sick unit is one which has incurred a cash loss for last one year, and in the judgement of the bank, is likely to continue incurring cash losses for the incurring cash losses for the current year as well as in the following year and the unit has an imbalance in its financial structure, such as current ratio is less than 1:1 and there is a worsening trend in debt-equity ratio.”

Reasons:Various committee appointed, found out many reasons for the Industrial Sickness. The important reasons are divided into-Internal and External reasons.First one is associated with managerial ineffectiveness, which include poor control on key areas of operations and finance. Improper estimate of demand is another reason. Improper technology, wrong location of Industry, non- flexibility of fixed assets etc.
Defective capital Structure and Shortage of working capital is another reason.

Second reasons regarding external reasons area like High costs of manufacturing compared to Sales revenue, Non-availability of raw material, regular power, fuel etc.

Transportation bottlenecks, General recessionary from in the economy affecting the overall performance of industrial units, Adverse Policies and rules of government. The measures to overcome these reasons of sickness can be suggested as under.

(a) Effective and efficient management skills should be provided.

(b) Technology should be upgraded.

(c) Modernisation and Competitiveness.

(d) Assessment of various factors of Loans etc. can be provided.

(e) Liberal and helpful Policies of Government.

iii) Taxation benefits for SMEs


iv) Role of SIDBI in in the development of SMEs


SIDBI was established in 1989 as a subsidiary of IDBI under a Special Act. The main functions of SIDBI are the promotion and development of small scale industries by way of financing. It commenced its operations from 2 April, 1980 with its head office at Lucknow. The initial authorised capital of SIDBI was 25 crore, which can be .extended upto 1,000 crores.

The functions of SIDBI are as follows :

(a) To promote small scale industries in semi-urban areas to create more employment opportunities.

(b) To undertake technological upgradation and modernisation of existing small scale industries.

(c) To expand the channels for marketing the products of SSI sector on both domestic and international markets.

(d) To extend seed capital or soft loan assistance under National Equity Fund Scheme / Mahila Udyam Nidhi Scheme.

(e) To great direct assistance and refinance for exports of small scale sector.

(f) To provide financial assistance to SFCs, SIDCs, Commercial Banks, RRBs through existing credit delivery system.

(g) To provide factoring and leasing service.

(h) To provide financial assistance to the institutes, organisations for undertaking EDPs.

(i) Special emphasis and the new schemes of assistance for marketing support to the small scale sector.

Content Courtesy: MT UVA BMS

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Its a simple contest, All you have to do is ..

1.) Join our Management Paradise FANPAGE on Facebook
2.) Post your College Name and Nominate yourself
3.) Ask your friends to click on the LIKE button and Nominate your name as a comment.

If you are able to get around 20 people from your college to do this, you get the hard copy Absolutely FREE

You can download the E-BOOK from here, but to free yourself from hassles like download issues, file corrupt, etc etc.. the best way is to WIN the Contest.


:horn: BEST OF LUCK TO ALL TYBMS SEM 6 Students !

PS : The Password for the opening the e-book is ManagementParadise.com - Management Study Guide | Projects | Institutes | MBA Videos | Jobs | Management Students Forum for MBA, BMS, MMS, BMM, BBA students and Aspirants
Thanks for TYBMS SEM 6 solved papers Now I can crack my exams for free.
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Ansari Uzair

New member
I can view the attachments

Thankyou for sharing this!

Can someone share me the imp Questions
of L&scm and ccpr?

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