Entrepreneurship Short Answer Type Questions

Entrepreneurship Short Answer Type Questions

Question 1.
Explain the term entrepreneurship. Bring out of the characteristics of entrepreneurship.
The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit is called entrepreneurship.
The characteristics of entrepreneurship are as follows:
(1) Innovation: Innovation involves problem solving and the entrepreneur is a problem solver. According to Schumpeter entrepreneurship is a creative activity. An entrepreneur is basically an innovator who introduces something new in the economy.

(2) High Achievement: People having high need for achievement are more likely to succeed as entrepreneurs. Various studies on psychological roots of entrepreneurship reveal the presence of high achievement among successful entrepreneurs.

(3) Managerial Skill and Leadership: A person who is to become an industrial entrepreneur must have more than the drive to earn profit. He must have the ability to lead and manage.

(4) Organization Building: Organization building ability is the most critical skill required for industrial development. This skill means the ability to ‘multiply oneself’ by effectively delegating responsibility to others.

(5) Gap Filling Function: The most significant feature of entrepreneurship is gap filling. It is the job of the entrepreneur to fill the gap or to makeup the deficiencies which always exist in the knowledge above the production function.

(6) Goal-orientated: Entrepreneurs are all about setting goals and putting their efforts in achieving them; the are determined to make their business succeed and will remove any burdens that may stand in their way.

Question 2.
Explain the meaning and importance of the term “Entrepreneur”.
A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk is called entrepreneur.

The importance of entrepreneur is as follows:

  • Catalyst of development.
  • Enhances economic growth.
  • Initiate action towards achieving goals.
  • Stimulator of social economic change.
  • Creates employment opportunities.
  • Introduces innovative technology.
  • Enhances quality standards.
  • Enhances living standards.
  • Enhanced productivity.
  • Optimum use of local resources.

Question 3.
Distinguish between entrepreneur and enterprise.

Entrepreneur Enterprise
1. Entrepreneur refers to a person 1. Enterprise refers to a process
2. Entrepreneur is a visualiser 2. Enterprise considers to the vision statement.
3. Entrepreneur is a creator 3. Enterprise is a creation process.
4. Entrepreneur is a organiser. 4. Enterprise is a organisation
5. Entrepreneur is a innovator 5. Enterprise is a innovation process
6. Entrepreneur is a technician 6. Enterprise implement the technology through the technician
7. Entrepreneur is a decision maker. 7. Enterprise takes decision through entrepreneur.
8. Entrepreneur is a planner 8. Planning is a function of enterprise
9. Entrepreneur is a leader 9. Enterprise need leadership process through the leader
10. Entrepreneur is a administrator. 10. Enterprises is a administration process.

Question 4.
Compare and contrast between private company and public company.
Difference between private company and public company are:

Private Company Public Company
1. A Private Ltd. the company is one that is not listed on a stock exchange and is held privately by the members. 1. The public company refers to a company that is listed on a recognized stock exchange and traded publicly.
2. As against this, the private company can be started with minimum two members. 2. There must be at least seven members to start a public company.
3. A private company can have a maximum of 200 members, subject to certain conditions. 3. There is no ceiling on the maxi mum number of members in a public company.
4. Private Ltd. company can have a minimum of two directors. 4. A public company should have at least three directors.
5. There is no compulsion in the case of a private company. 5. It is compulsory to call a statutory general meeting of members, in the case of a public company.
6. In the case of Private Ltd. Company, that number is 2. 6. In a Public Ltd. Company, there must be at least five members, personally present at the Annual General Meeting (AGM) for constituting the requisite quorum.
7. The issue of prospectus/ statement instead of the prospectus is not mandatory in case of the private company. 7. The issue of prospectus/statement instead of the prospectus is mandatory in case of a public company
8. A private company can start its business just after receiving a certificate of incorporation. 8. To start a business, the public company needs a certificate of commencement of business after it is incorporated.

Question 5.
Explain the functions of an entrepreneur.
The functions of an entrepreneur are classified into five broad categories:
(1) Risk-bearing function: Risk bearing or uncertainty bearing still remains the most important function of an entrepreneur which he tries to minimize by his initiative, skill and good judgment.

(2) Organizational Function: The organizational function includes the following:

  • Various factors of production.
  • Ensures continuing management.
  • Coordination.
  • Supervision.

(3) Innovative Function: The basic function of an entrepreneur performs is to innovate new products, services, ideas and information’s for the enterprise. As an innovator, the entrepreneur foresees the potentially profitable opportunity and tries to exploit it. He is always involved in the process of doing new things.

(4) Managerial Function: The managerial function includes the following:

  • Determination of business objectives.
  • Formulation of production plans.
  • Product analysis.
  • Market research.
  • Organization of sales procuring machine and material.
  • Recruitment of men and undertaking.
  • Planning.
  • Organizing.
  • Co-coordinating.
  • Staffing.
  • Directing.
  • Motivating
  • Controlling.

(5) Decision Making Function:
The decision making function includes the following:

  • Determines the business objectives suitable for the enterprise.
  • Develops an organization and creates cordial atmosphere.
  • Securing adequate financial resources for the organization.
  • Development of a market for products.

Question 6.
Discuss various roles of Entrepreneur for Economic Development.
Dec 2019
The various roles of Entrepreneur for economic development are as follows:
a. Promotes capital formation: Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises.

b. Helps in creation of wealth: Through formation of capital and creation in employment opportunities entrepreneurs add value and create wealth.

c. Creates large scale employment opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed. With the setting up of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others.

d. Promotes balanced regional development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas.

e. Reduce concentration of economic power: By setting up business enterprises and mobilization of wealth in the less developed regions, entrepreneurs reduce the concentration of power among just the big industrialists.

f. Increases gross national product and Per capita Income: They explore and exploit opportunities, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country.

g. Improvement in Standard of living: Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost.

h. Promote Country’s export trade: Entrepreneurs help in promoting a country’s export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement.

Question 7.
State the characteristic features or qualities of an Entrepreneur.
The characteristic features which make up a successful entrepreneur are as follows:
(i) Mental ability: It consists of intelligence and creative thinking. An entrepreneur must be reasonably intelligent, and should have creative thinking and must be able to engage in the analysis of various problems and situations in order to deal with them.

(ii) Clarity of objectives: An .entrepreneur should be clear as to the exact nature of the goods to be produced and subsidiary activities to be undertaken.

(iii) Achievement Motivation: This is the most important characteristic of an entrepreneur since all other characteristics emanate from this motivation. He must have a strong desire to achieve business goals.

(iv) Human Relations ability: An entrepreneur must maintain good relations with his customers if he is to establish relations that will encourage them to continue to patronise his business.

(v) Prudence: A successful entrepreneur must be prudent in all his dealings. He should have the ability to work out the details of the venture from all angles, assess the favourable factors and pitfalls and take suitable measures to overcome the pitfalls.

(vi) Risk taking: An entrepreneur is not a gambler and hence he should not assume high risks. However, he must love a moderate risk situations, high enough to be exciting, but with a fairly reasonable chance to win.

(vii) Secrecy Maintenance: A successful entrepreneur must be capable of maintaining and guarding all his business secrets. Leakage of business secrets to trade competitors will definitely lead to the downfall of his business. Hence, he should be very careful in selecting his subordinates.

(viii) Communication skill: Good communication skill enables them to put their points across effectively and with clarity and thereby helps them to win customers.

(ix) Keen Foresight: An entrepreneur must have keen foresight to predict the future business environment. He should have the capacity to visualise the likely changes to take place in the market, customer attitude, technological developments, government’s policy etc. and take timely actions accordingly.

(x) Innovativeness: The entrepreneurs should initiate research and innovative activities to produce new goods and services. It is a never ending process.

Question 8.
What are the barriers to entrepreneurship?
The barriers to entrepreneurship are as follows:

  • Lack of viable concept.
  • Lack of market knowledge.
  • Lack of technical skills.
  • Lack of seed capital.
  • Lack of business knowhow.
  • Complacency- lack of motivation.
  • Social stigma.
  • Time presences and distractions.
  • Legal constraints and regulations.
  • Monopoly and protectionism,
  • Inhibitions due to. patents.

Question 9.
Why is the growth of entrepreneurship slow in India?
There are various reasons for slow growth of entrepreneurs in India. These can be divided into internal and external reasons as follows:


  • Social system and social set-up.
  • Customs and traditions.
  • Faulty planning.
  • Poor Project Implementation.
  • Non availability of skilled labour.
  • Lack of vision and strategies.
  • Lack of motivation.


  • Lack of Basic Infrastructure.
  • Non availability of capital.
  • Non availability of raw material and finished goods.
  • Government policies, regulations, and taxation.
  • Administrative hurdles.
  • Rampant corruption.
  • Competitive & volatile environment.

Question 10.
Distinguish between “Entrepreneur” and “Manager”.

Basis of differences Entrepreneur Manager
Motivation level 1. The entrepreneur is a person who is motivated to satisfy a high need for achievement in innovative and creative activities. An entrepreneur is the owner of the enterprise which he establishes by himself. 1. A manager acts in the capacity of a servant in the enterprise. The primary motives of a manager being promotion and traditional corporate rewards. They are power motivated.
Reward 2. The reward for an entrepreneur is profit which is highly uncertain. 2. The reward for a manager is salary and his salary is certain and fixed.
Risk bearing 3. As a owner, the entrepreneur has to bear all risks and uncertainties involved in running the business. 3. As a servant, the manager need not bear any risk involved in the enterprise.
Functions 4. An entrepreneur has to perform many functions in order to run the enterprise successfully. 4. A manager renders only the managerial services in an enterprise.
Role 5. An entrepreneur mainly acts as an innovator and prepares plans for execution. 5. A manager mainly acts as an executor of plans pre prepared by the entrepreneur.
Objectives 6. The entrepreneur differs from the professional manager. He undertakes a venture for his personal gratification. 6. A Manager undertakes a venture as a duty towards job.

Question 11.
Write a short note on women entrepreneurs.
Women entrepreneurs are the woman or group of women who initiate, organise and operate a business enterprise. The Government of India has defined women entrepreneur as ” an enterprise owned and controlled by a woman having a minimum financial interest of 51% of capital and giving atleast 51% of the employment generated in the enterprise to women.”

The women entrepreneurs in India can be classified into 3 categories:
(i) Women with adequate education and professional qualification: Majority of these entrepreneurs live in cities and are engaged in medium and large industrial units and non-traditional establishments like electronics, engineering and services.

(ii) Middle class women: These women are engaged in handicrafts and cottage industries and produce low value added items such as knitting, garments, dolls and toy-making etc.

(iii) The third category of women are those who are forced to take up business enterprise because of financial difficulties and family circumstances. They are mostly illiterate, financially weak and are engaged in family business such as horticulture, fisheries etc.

Question 12.
Explain any five strategies for the development of women entrepreneur.
The five strategies for the development of women entrepreneur are as
1) Training: The training to be extended to women community that enables them to understand the production process and production management. The training on professional competence and leadership skill to be extended to women entrepreneurs.

2) Working capital assistance: The financial institutions should provide more working capital assistance both for small scale ventures and large scale ventures.

3) Support from NGO’s: Involvement of Non-governmental Organizations in women entrepreneurial training programs and counseling.

4) Support from government: Better educational facilities and schemes should be extended to women folk from government part.

5) Guidance Cell: A Women Entrepreneurs Guidance Cell may be set up to handle the various problems of women entrepreneurs all over the state.

Question 13.
What are the problems faced by the women entrepreneurs in India? OR State the psycho-social barriers faced by women entrepreneurs.
Indian women entrepreneurs face the following problems in setting up and running business units:
1) Less Confidence: Women entrepreneurs are not confident about their strength and competence. Their family members don’t stand by their entrepreneurial growth. In recent years, though the situation is changing, yet the women have to face further change for increased entrepreneurial growth.

2) Non-Availability of Finance: They have lack of access to funds, because they do not possess any tangible asset and credit in the market. Very few women have the tangible property in hand. So, they are suffering from inadequate financial resources and working capital.

3) Socio-cultural Disturbance: Women have to manage both home and business duties at a time. Such obligations may become a great barrier for some women in succeeding as an entrepreneur.

4) Lack of Managerial Skills: It is argued that women entrepreneurs have low level of management skills. They have to depend on other persons like office staff and middle men to get things done, particularly marketing function.

5) Competition from Male Entrepreneurs: Competition from male counterparts develops hurdles to women entrepreneurs in business management process. Women entrepreneurs have to face the constraints of competition form male entrepreneurs due to less organizational skills than men.

6) Production Problem: Production in a manufacturing enterprise involves coordination of a number of activities. While some of these activities are in the control of entrepreneur, there are others over which she has little control.

7) Lack of Knowledge of Availability of Raw Materials: For running business, entrepreneur requires to have knowledge of alternative source of raw material availability and high negotiations skills. Women entrepreneurs have lack of such knowledge and skills which affect their business adventures.

8) Lack of Education and Awareness: In a country like India, the literacy rate of women is found at low level compared to male population. So, they have not sufficient knowledge of technologies; know how, etc. that affect their business ventures adversely.

9) Low Level of Risk Taking Attitude: It is normally believed that women being feminist gender have low risk taking ability. Because of this, they are suppressed by the protected environment and are not allowed most of the time to take any type of risk even if she has capacity to bear it.

Entrepreneurship Very Short Answer Type Questions

Entrepreneurship Very Short Answer Type Questions

Question 1.
Define “entrepreneurship”.
The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit is called entrepreneurship.

Question 2.
Define the team “entrepreneur”.
A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk is called entrepreneur.

Question 3.
Who is an intrapreneur?
Intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment.

Question 4.
What is Enterprise?
Enterprise is an organisation engaged in a business activity. It is an integrated whole of values, orientation, vision of entrepreneur and his workforce, mission, major objectives and strategic interest.

Question 5.
What is entrepreneurial culture?
Entrepreneurial culture implies vision, values, norms and traits that are conducive for the development of the economy.

Question 6.
What is innovation?
The process of translating an idea or invention into a good or service that creates value or for which customers will pay is called innovation.

Question 7.
Three barriers to entrepreneurship are as follows:

  • Lack of viable concept
  • Lack of market knowledge
  • Lack of technical skills

Question 8.
State any four functions of Entrepreneur.
The functions of entrepreneur are as follows:

  • Risk-bearing function.
  • Decision making function.
  • Innovative function
  • Managerial function

Question 9.
Mention any two roles of Entrepreneur for Economic Development.
The two roles of Entrepreneur for Economic development are as follows:

  • Promotes capital formation by mobilizing the idle savings of the public.
  • Create large scale employment opportunities.

Question 10.
Mention any two factors influencing Entrepreneurship.
The two factors influencing entrepreneurship are as follows:

  • Creativity.
  • Leadership

Question 11.
Mention the psychological factors of entrepreneurship.
The psychological factors influencing entrepreneurship are as follows:

  • Confidence.
  • Positive attitude.
  • Leadership qualities.
  • Cultural values.

Question 12.
State any two Pros of being an Entrepreneur.
The two pros of being an entrepreneur are as follows:

  • Freedom.
  • Control.

Question 13.
State any two Cons of being an Entrepreneur.
The two cons of being an entrepreneur are as follows:

  • Bear risks.
  • Pressure to be competitive.

Question 14.
Mention the qualities of a true entrepreneur.
The qualities of a true entrepreneur are intelligence, imagination, capacity to innovate, willingness to work hard, the ability to turn visions into realities, and the ability to assume risks.

Question 15.
Who is innovating entrepreneur?
Innovating Entrepreneur is a person who habitually creates and innovates to build something of recognized value around perceived opportunities.

Question 16.
Who is Fabian entrepreneur?
A fabian entrepreneur is the one who adopts a great caution and scepticism in introducing any change in the business. He doesn’t take any risk at all and imitates only when it is clear that failure to do so would result in heavy loss for him, A technocrat entrepreneur develops new and improved quality of goods as a result of his craftsmanship. He is highly skilled in production techniques.

Question 18.
Who is a technical entrepreneur?
A technical entrepreneur demonstrates his innovative capabilities in matter of production of goods and rendering of services. He concentrates more on production than marketing. Spontaneous Entrepreneurs are the entrepreneurs start their business because 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 inborn ability.

Question 20.
Who is an agricultural entrepreneur?
Agricultural entrepreneurs refer to those entrepreneurs who invest in agriculture sectors and help to provide education and employment opportunities to people especially those located in struggling regions.

Question 21.
What do you mean by women entrepreneur?
Women entrepreneurs are the women or group of women who initiate, organise and operate a business enterprise. The GOI has defined women entrepreneur as “an enterprise owned and controlled by a woman having a minimum financial interest of 51% of capital and giving atleast 51% of the employment generated in the enterprise to women.”

Question 22.
Write any two successful women entrepreneurs.

  • Kiran Majumdar
  • Sudha Murthy

Question 23.
Who is a Rational Entrepreneur?
A rational entrepreneurs who plans, develops and manages in a rational way. He demonstrates his innovative skill in organising and managing in a suitable manner.

Marketing Mix Short Answer Type Questions

Marketing Mix Short Answer Type Questions

Question 1.
What are the essential features of the product?

  • Product should have the features of tangibility shape colour taste size weight etc., are the physical features of the product which help to identity the product.
  • Product also includes intanginble form of service like repair, banking service, insurance service.
  • It is identified and selected by the buyer on the basis of brand, package, warranty delivery terms etc.
  • Every product would have its own product life cycle.
  • Product are exchanged for money or some other things by the buyer from the seller.
  • Product should have an ability to satisfy the needs of customer.
  • Product must give customer satisfaction and business satisifaction.

Question 2.
Analyse the steps to an effective marketing plans.
The steps involved in developing effective marketing plan are –
→ Define product/service: This is the first step in developing effective plan. What product /service the company is going to develop should be clearly defined & should be communicated to customer

→ Identity target audience: The company has to describe target market in forms of age, income, geographic location & lifestyle.

→ Define the brand it has to describe the message it wants to direct to target customer

→ Setting price: estimate monetary value the customer will receive.

→ Establish marketing budget: define specific amount the company require to Maximise the return on investment.

→ Choose marketing strategies: company should develop strategic fnarketing tools to deliver the message to the target audience

→ Determine tactices: list the specific action steps to achieve each strategy.

→ Establish Timing: to implement strategy specify timetable

→ Measure results: continuously measure results to implement effectively.

Question 3.
Why companies go for new products introduction? OR
What are the importance of product innovation?
Every company wants to grow in the market there for company changes its product features and makes certain innovation in products quality and characteristics to introduce the product as new to customers.

Following are the importance of product innovation:
(a) Company growth:
Company growth and development is largely on new precuts. New product introduction creates new customers and also helps to expand the business.

(b) Higher profit margins:
New product development and introduction of new product in the market helps to increase sales and also helps to earn more amount of profit company must prepare good plan for product innovation because market is always covered by large number of competitions. Therefore it is inevitable to company to change product characteristics again and again.

(c) Business planning:
Company prepares plan for development of its position in the market. Technological innovations makes the company to go for new product development.

(d) Utilization of excess capacity:
Company produces good by converting raw materials into finished goods. To make the best use of by products in production process company is going for introduction of new product.

(e) Recycling of waste product:
Recycling of waste product in mass production lines, like scrap, waste, rejected materials etc. help the company by reducing the burden of costs. It may result in product innovation.

(f) Increases sales:
Re modeling or improvement inexisting products give more satisfaction to customers. It also helps for increase in sales of the company.

Question 3.
Why new product fails in the market?
The following are the reasons for failure of new product in the market.

  • In adequate market analysis and market appraisal.
  • Insufficient and effective marketing support.
  • Wrong timing of introduction of new product.
  • Failure to recognize rapidly charging market environment.
  • Absence of formal product planning and development procedure.
  • Failure of the product to satisfy consumer needs and desires.
  • Poor product design.
  • Technological and production problem.
  • Product defects:
  • Failure to estimate strength of competitors.
  • Higher cost of production.
  • Sudden change in market conditions.
  • Delay in product launch.
  • Lack of innovation and novelty in product.
  • Poor marketing and sales promotion strategies.

Question 4.
Explain the essentials of goods brand name.
A good brand name must possess following features:

  • It should be simple and easy to recoquise.
  • It should be easy to pronounce and remembers.
  • It should point out producer.
  • It should be original.
  • It should be legally protectable.
  • It should reflects directly or indirectly / product benefits functions, results and so on.
  • It should differentiate the product from those of competitors.
  • It should be meaningful and appropriate to products.

Question 5.
Briefly explain the types of brands.

  • Individual Brands: under this method each product of a manufactures has a separate brand name.
  • Family Brand: Under this method all products of a manufacture has only one Brand Name, but restricted to a particular line.
  • Umbrella Brand: Irrespective of nature, use, price etc., if brand name is used by manufactures of different types of products, It becomes umbrella brand.
  • Combination device: Under this method a product has both company’s name and product name.
  • Private or middlemen brand: Under this method, products are not branded by the manufactures but by the middle men. Who have control over distribution.

Question 6.
Explain the functions of packaging?

  • The basic function of packaging is to protect the contents of it from damage, dust, dirt, leakage etc.
  • It maintains intrinsic values or the quality standards for a larges period of time.
  • It facilitates for easy transportation of goods from one place to another place.
  • Attractive package enhances the market for product.
  • Good packaging can sell more easily and quickly because it works as a promotional tool.
  • Good package helps for easy identification of the product.
  • Package features communicate and motivate consumer to buy product.
  • It makes product handling easier and safe.
  • Good package reduces the risk of loss and helps the company to each more profit.
  • Packaging also used by the advertiser as a promotional tool.

Question 7.
What are essentials of good package?
(a) It should protect the content:
Packaging must protect the contents of it against the natural and artificial factors of damage. Such as dust, dirt, watering, evaporation, shrinkage leakage fire, flood etc.,

(b) It should be attractive:
Good package design should be capable of catching the attention of people, package design, weaight material, colour combinations, picture, illustrations etc., are to be pleasing to eyes and appealing to brain, cosmetics, foods, Jewellary are packed in costly packages and these products are purchased by customers because of colourful attractive package.

(c) It should be convenient:
The package should grant high degree of convenience to manufacturer, distributor and consumer alike good packaging helps for ease in handling, transporting, storing, and using the package, consumers convenience is a more important thing in designing package.

(d) It should guarantee economy:
Good packaging helps for reducing packing and packaging expenses. It brings down the other expenses such as transport, warehousing, handling etc.,

(e) It should assure adjustability:
A good packaging has the ability of flexibility or is capable of being put to alternative uses paper packages are less expensive and plastic, metal, glass, packages are useful to house different types of product.

(f) It should be pollution free:
Consumable and reusable package should be used to minimize pollution problems. Because now a days. Packaging has environmental problems, particularly discarded packaging.

(g) It should be informative:
It should provide adequate information on package contents and facilitates handling for both. Consumer and those associated with distribution. It must identify the amount of product in the package the contents, brand name and other relevant information for the consumer.

Question 8.
Explain the objectives of pricing?
Following are the objectives of pricing:

  • Standard or right price helps to increase sales.
  • Price also makes influence on covering more market share to a product or service.
  • Profit is the main object of pricing.
  • It helps to face competition in the market.
  • It helps the financial manager to take decision on cash flow management.
  • Stabilizing price and profits can be a long term objective of a firm.
  • Good pricing helps for survival and development of a company.
  • It is used as a promotional tool by the advertising department incase of sales promotion.
  • Pricing are set to get good return on investment.

Question 9.
What are features of promotion?

  • All promotional activities are designed to inform the target customers about the firm’s offering.
  • Promotional activities help the consumer in his intelligent buying.
  • The main purpose of promotion is to persuade the people to buy.
  • Promotion aims at attracting customers using competition brand to its product.
  • Promotional expenditure is an investment for increasing sales.
  • Promotion reminds the customers in purchasing product.
  • Promotion provides information about the product.
  • Promotion includes advertisement personal selling, sales promotion publicity and public relation.

Question 10.
What are the importance of promotion?

  • It attracts more customers to the product.
  • It encourages the intermediaries to buy and store goods of popular brand name.
  • It encourages the sales force by offering incentives to salesmen.
  • It boosts sales in the market.
  • It reinforces the brand image-with the customers.
  • Promotion is responsible for the creation of demand for company’s product through the exercise of conveying information to buyers to buy.
  • Promotion is essential for creating demand for new product.
  • Promotional activities are inevitable during the period of stiff competition.
  • Promotional activities helps to increase sales and also facilitates for mass production.

Question 11.
Explain the features of advertising?

  • It is a means of non-personal or mass communication informing about goods or services.
  • It helps to introduce new product quickly.
  • It is also called as non-personal salesmanship because it performs similar functions like personal salesmanship.
  • It is giving sales message to public.
  • It is paid communication.
  • Advertising message communicate the information to large number of persons at a time.
  • Advertising aims at developing favorable consumer attitude towards the product.
  • The impart of adverting is longterm and cumulative.

Question 12.
Distinguish between advertising and personal selling.
The differences between advertising and personal selling are –

  • It is an impersonal attempt to persuade the people to buy goods or services.
  • Through advertising, a large number of people can be contacted.
  • It cannot clarify the doubts of the consumers.
  • In case of advertising, demonstration of the product is not possible.
  • It is a one-way means of communication.
  • It saves much time.

Personal selling:

  • It is a personal attempt to persuade the people to buy goods or services.
  • Through personal selling, only limited number of people can be contacted.
  • It can clarify the doubts of the consumers.
  • In case of personal selling, demonstration of the product is possible.
  • It is a two way means of communication.
  • It is a time-consuming process.

Question 13.
Analyse the attributes of a good advertisement copy.
The important attributes of a good advertisement copy are –
(i) Attention value:
It must draw the attention of the consumers and induce them to read the advertising message. Therefore, attractive colours, attractive pictures, bold letters should be used in the advertisement copy.

(ii) Suggestive value:
It must suggest the consumers about the advantage of using the advertised products. This can be done by presenting the advertising matter with suitable suggestive pictures.

(iii) Memorising Value:
It should leave lasting impression on the reader’s mind. This canbe done by using slogans in the advertisement copy and by repeating the advertisement.

(iv) Convincing value:
It must convince the consumers that the advertisement is the right thing they want. There should not be any misleading advertisement.

(v) Some mental Value:
It must awaken the interest of the consumers in the advertised products and induce them to buy the advertised product.

(vi) Educational value:
Advertisement should be capable of introducing new habits and should attract the people towards new products.

(vii) Simplicity:
It must be as simple as possible i.e., it should contains few words which can give more information.

Question 14.
Explain the features of personal selling?
(a) Direct communication:
Personal selling is a two way communication process under this method of promotional tool. Persons are convinced by the salesman to buy product and service.

(b) Order presentation:
Personal selling is an art of communication. People are getting clarification for their doubts oral communication makes more impress on the public.

(c) Salesmanship is persuasion:
Sales persons are persuading public to buy the goods. This persuasion is not pressuring the public. It is an act of convincing the’consumer to buy goods.,

(d) Salesmanship is winning the buyers confidence:
Modern salesmanship aims of winning the confidence of the buyer by providing a solution to the buyer’s problem, and educating him.

(e) Salesmanship aims at mutual bench:
Salesmanship is not the art of making a profit at the cost of the buyer. It should benefit both. The buyer and the seller the buyer obtains a solution to his problem and satisfaction of his want salesman ship help in obtaining the maximum return for the money he spends.

(f) Salesmanship is an education process:
Salesmanship educates the people about this needs and their sales function. It also provide information about the products available their special features and their utility in satisfying needs of customers.

(g) Salesmanship is a creative process:
Salesmanship is responsible for creation of demand through problem solving approach. It studies customer needs and problems through customer view point and then suggest a solution to his problem.

(h) Customer feed back:
It helps in securing customer feed back. It also helps the manufacturer to understand about customer problem and tries to get solution for it.

Question 15.
What are the essentials of effective selling?
Following are the prerequisites for effective selling:
(a) Knowledge of company:
Salesman must have knowledge of the company. He should collects details about objective of the company, types of products produced, market share of the company etc. It helps the salesman to do work confidently.

(b) Product knowledge:
Salesman should have knowledge of the products produced by the company, raw materials used for producing product, features of the product, customer benefits, etc. without adequate knowledge of the product a salesman cannot convince the public and convert them into a customers.

(c) Knowledge of competition :
The salesman should study the products offered by his competitors and determine their strength and weaknesses in comparison to his product. Awareness of competition enables a salesman to compare his product with that of competitors to give more investing knowledge about the product to buyers.

(d) Knowledge of customers:
A salesman must have adequate knowledge about both the customers wants and desires and the products offered by the firm to satisfy customers.

(e) Knowledge of selling process:
Selling process runs closely parallel to consumer’s buying process.

The salesman uses AIDAS formula – Attention, Interest, Desire, Action and Satisfaction. He undertakes the works of selling process through:

  • Collecting information functions of marketing
  • identifying buyers willingness to buy.
  • Matching functions of marketing with supply and demand.
  • Collecting feed back from customers.
  • Reducing customer dissatisfaction and assure repeat orders.

(f) Self knowledge:
The salesman should be clear about his strength and weakness. It must help him to continue his work confidently.

Question 16.
What is product differentiation? Describe its advantages.
Meaning of Product differentiation:
Product differentiation means making an attempt to induce or direct demand to adjust itself to the manner in which supply has been segmented. Product differentiation is done through branding and-packaging. The seller thinks that demand can be directed to his differentiated market offering.

Advantages of Product differentiation:

  • It helps in effective utilization of existing selling and distributing facilities.
  • It helps in satisfying the changing needs of customers and industries.
  • It helps in total exploitation of distribution channel.
  • It helps in improving the turnover and profit of the existing products along with new ones developed.

Question 17.
State the advantages of intensive distribution.
The advantages of intensive distribution are –

  • It provides greater security and stability in sales volume since the loss of one or few outlets does not impair the selling activity.
  • There is a minimum waste of communication as it reaches a large number of buyers.
  • Overheads distribution cost is spread over a wider network of dealers and safes volume.
  • In this method of distribution, a number of retail outlets are open for mass distribution, which helps the consumers in immediate satisfaction of their needs.
  • Opening of a large number of outlets throughout the country, indirectly helps in advertising and creating awareness about its product among the public.

Question 18.
What are the objectives of publicity?
The objectives of publicity are:

  • To obtain favourable publicity for the company.
  • To build up a good corporate image for the company.
  • To handle adverse and false rumours and stories that break out.
  • To place newsworthy information to the news media.
  • To counsel or advise management about public issues and company positions and image.
  • To promote internal and external communications to promote understanding the institutions.

Question 19.
Briefly explain any two pricing methods.
Methods of pricing:
(1) Price in line (pricing at the market):
The sale at current market price is desirable under free competition and when a traditional or customary price level exists. It is preferable when product differentiation through branding is minimum, buyers and sellers are well informed and we have a free market economy.

(2) Market plus (pricing above the market):
The sales above the market price under free competition is profitable only when your product is distinctive, unique and it has prestige or status in the market. Customer is inclined to put a greater value on the product if the package is very good or the brand is well known.

(3) Market minus (Pricing below the market):
The sale below the market price, particularly at the retail level, is profitable only to large chain stores, self, service stores and discount houses. These large retailers can sell well known nationally advertised brands 10 to 30% below the suggested retail prices, List prices or fixed resale prices by the manufacturers. If you have lower costs because your product is of inferior quality. You may have to fix lower price.

(4) Right pricing:
In the long run, the best pricing policy in a competition market is the market based method of pricing. It is safer to follow the prices of important competitors who dominate the market such a price policy will prevent price war and assure normal profit.

(5) Non price competition:
The seller should rely more on non – price factors to capture the consumer demand At present in many countries business firms avoid price reduction as a means of competition. With or without price competition, increasing emphasis is being given on the various weapons of non-price competition. Non-price competition devices are Branding, packaging, advertising etc

(6) Skim:
The cream price (high pricing) a manufacturer introduction a new product may adopt this pricing strategy deliberately to build up the image of quality and prestige for his new product. In the earlier stage of product life cycle, a strategy of high price associated with heavy expenditure on promotion and at the later stage of the PLC a strategy of lower prices with normal promotional expenditure pays a rich dividend.

(7) Penetration pricing:
This a pricing strategy of charging low price at introduction stage of a product if the product has greater elasticity of.demand, mass production provides substantial reduction in unit cost of production. Very strong competition is expected soon after the product enters the market. High income section of the population is not adequate. We have bulk of the population In the middle and lower income group.

(8) Uniform pricing:
A seller will charge all similar types of buyers exactly the same price and there will be no discrimination or difference among the buyers of the same commodity. There is no question of negotiation, bargaining. No favouritism is shown to any buyers. Terms of sale are the same for similar quantities of the product.

(9) Price discrimination:
The seller will sell same quantities to different buyers at different prices. Certain favoured customers are offered lower prices.

(10) Cost plus or mark up pricing:
This method is considered the best approach to pricing. It is based the seller per-unit cost of the product plus an additional margin of profit. There are four items in determining the sales price (1) cost of producing or acquiring goods (2) cost of operating (3) Interest, dipreciation Etc. (4 expected % of profit.)

Question 20.
Briefly explain the importance of pricing.
Various objectives of pricing are:
(a) To achieve target rate of return on investments: An adequate return on investment on net sales is an important pricing objective. This idea is to secure a safficient return on capital employed after concerning costs of production and distribution on estimate is made of the profits requid and according to profits required prices are set.

(b) Price stability: In the objective a firm seeks to cut or eliminate cyclical price fluctuation and to avoid price wars. The aim is to live and let to live.

(c) Market share: Maintaining or improving the market share is a more worth while objective of pricing in governing markets. For ex. Firms manufacturing refrigerators, washing machine, etc. reduce price to capture a large share of the growing demand in India.

(d) Meet or prevent competition: In a market characterised by cut throt competition, firms aften take pricing decisions to meet or precent competition. An established firm may cut the prices drastically to prevent competitions from entering a market.

(e) Profit maximisation: Firms parsuing this objective try to earn as much as money as possible. Small and little known firms may try to change as much price as the customers can bear. Due to high profits, new entrepreneurs will be attracted into the industry and prices will come down in the long run.

(f) Survival: Survival is the fundamental objective of pricing most firms are ready to tolerate short term losses and other difficulties which are essential for continuous existence. Under this objective the price is fixed to achieve sales volumes that can meet the firms expenses.

(g) Public image:
Good public image is necessary for success in business pricing policy exercises a significant influence on the company imgae. A company with an established reputation based on existing price policy may introduce a new product line at any price.

Importance of Pricing as follows:
(1) Survival: Companies pursue survival as their Major objectives if they are plagued with overcapacity, intense competitor or changing consumer wants.

(2) Maximum Current profit: Many companies try to get the price that Maximize current profit. They estimate the demand & cost associated with alternative prices & choose the price that product maximum current profit flow or rate of investment.

(3) Maximum Sales Growth:
Some companies want to Maximize units sales. They believe that a higher sales. Volume will lead to lower unit cost & higher longrun profit. They set the lower price, assuming the market price is sensitive.

Question 21.
Analyse the attributes of a good advertisement copy.
The important attributes of a good advertisement copy are –
(i) Attention value:
It must draw the attention of the consumers and induce them to read the advertising message. Therefore, attractive colours, attractive pictures, bold letters should be used in the advertisement copy.

(ii) Suggestive value:
It must suggest to the consumers the advantage of using the advertised products. This can be done by presenting the advertising matter with suitable suggestive pictures.

(iii) Memorising Value:
It should leave lasting impression on the reader’s mind. This canbe done by using slogans in the advertisement copy and by repeating the advertisement.

(iv) Convincing value:
it must convince the consumers that the advertisement is the right thing they want. There should note be any misleading advertisement.

(v) Sentimental Value:
It must awaken the interest of the consumers in the advertised products and induce them to buy the advertised product.

(vi) Educational value:
Advertisement should be capable of introducing new habits and should attract the people towards new products.

(vii) Simplicity:
It must be as simple as possible i.e., it should contains few words which can give more information.

Corporate Meetings Very Short Answer Type Questions

Corporate Meetings Very Short Answer Type Questions

Question 1.
What is statutory meeting?
It is the first meeting of members of a company. Every public company limited by shares, by guarantee, and having a share capital must hold this meeting within a period of not less than one month and not more then six months from the date of commencement of business.

Question 2.
Mention the contents of notice of meeting?
Notice of general meeting to share holders. Contains:

  • Place and date of meeting
  • Time of meeting
  • Object of the meeting
  • Proxy form enclosed.

Question 3.
Give the meaning of proxy.
Proxy is a person appointed or nominated by the share holders of the company to represent him at the general meeting of the company to attend and vote.

Question 4.
What is an agenda?
Agenda is the list of Business programmes to be transacted at the meeting.

Question 5.
What is quorum?
It refers to the specified minimum number of qualified persons required for transacting legally binding business at the meeting.

Question 6.
What is motion.
Motion is proposal put before a meeting for its consideration.

Question 7.
What is resolution?
It is a formal expression of the decision of a meeting.

Question 8.
What is extra ordinary general meeting.
It is convened to transact special business which are extra ordinary in nature.

Question 9.
What is statutory report?
It is a report contain at the necessary information relating to company formation financial position, etc.

Question 10.
Define meeting?
Meeting is defined as any gathering assembly of persons coming together at particular place for the transaction of some lawful business of a company.

Question 11.
Define minutes.
Minutes may be defined as the written record of the business done at the meeting. It is an official record of the proceedings and decision taken at the meeting.

Question 12.
What is class meeting?
It is the meeting held by particulars class of shareholders to make changes in the articles of the company as regards their rights and privileges.

Question 13.
What is special resolution?
It is one which is required for transferring special business and it is to be passed by a 3/4 majority.

Question 14.
What is ordinary resolution?
It is a resolution passed by a simple majority of vote cast by the members of the company.

Question 15.
Name any two matters requiring special notice of resolution.

  • Resolution at the annual general meeting to appoint, as auditor a person other than the retiring auditor.
  • To remove a director and to appoint a new one at his place.

Question 16.
Name the different kinds of company meetings.
The following are the different types of meetings of a joint stock company:
1) Board Meeting

2) Shareholders Meetings

  • Statutory meeting
  • Annual General meeting
  • Extra-Ordinary General meeting
  • Class meeting

3) Meetings.of Debenture holders.

4) Meetings of Creditors.

Question 17.
What is casting vote?
Casting vote refers to the opinion of members regarding the proposal. The members may take decision either in favour of it or against it by casting vote.

Question 18.
Give any reasons for adjournment of meeting?
The chairman can adjournment of meeting under following reasons.

  • When a quorum is not present.
  • When the members demand it.
  • When the meeting becomes disorderly.
  • When the chair man thinks that it is the best interest of the company.

Question 19.
What is sense of the meeting?
When a motion is discussed at a meeting the decision in favour of it or against it is taken by votes. This method is known as ascertaining the sense of the meeting. There are several methods by which the chairman can ascertain the sense of the meeting.

Question 20.
What is point of order.
Point of order is an objection raised by any member against not the irregularly in the proceedings of the meeting.

Question 21.
What are the types of proxies?
Proxies are of two types they are:

  • General proxy : He is a person who is authorized to vote in all the motions or all the proposals of the meeting.
  • Special proxy : He is person authorized to vote only on particular proposal or motion.

Question 22.
What are different kinds of minutes?

  • Minutes of resolution or decisions: It does not contain any reference to the discussion voting etc. that take place at a meeting.
  • Minutes of narration: It contains adequate information about the discussion pertaining to a resolutions that takes place at a meeting. It is very useful in understanding resolution.

Question 23.
Mention any 4 Statutory Books.

  • Register of members
  • Minutes Books
  • Register of debenture
  • Register of directors

B.Com 1st Sem Indian Financial System Previous Papers

B.Com 1st Sem Indian Financial System Previous Papers

B.Com 1st Sem Indian Financial System Question Paper May 2013 with Answers

Time : 3 hours
Max. Marks : 100


I. Answer any ten sub questions. Each question carries two marks. (10 x 2 = 20)

Question (a)
What is a Bank?

Question (b)
Who is an Indigenous Banker?

Question (c)
Expand SHCIL.

Question (d)
What is SLR?

Question (e)
Give the meaning of ‘Liquidity’.

Question (f)
What is meant by Financial System?

Question (g)
What is IDBI?

Question (h)
State any four financial resources of SFC.

Question (i)
What is call money market?

Question (j)
State two credit controls used by RBI.

Question (k)
Give the meaning of capital market.

Question (l)
What is consumer finance?


II. Answer any four questions. Each question carries eight marks. (4 x 8 = 32)

Question 2.
What are the functions and objectives of EXIM Bank?

Question 3.
Explain tile components of money market.

Question 4.
What is Commercial Bank? State its functions.

Question 5.
State the functions of Secondary Market.

Question 6.
Explain the importance of financial services.


III. Answer any three questions. Each question carries 16 marks. (3 x 16 = 48)

Question 32.
Briefly explain the objectives and functions of SEBI.

Question 33.
Discuss the recommendations of Narasimham Committee Report banking sector reforms.

Question 34.
Discuss the types of financial market and differentiate between the money market and capital market.

Question 35.
Briefly explain the functions of R.B.I.

B.Com 1st Sem Indian Financial System Question Paper with Answers


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
What is a private sector bank?

Question (b)
What is housing finance?

Question (c)
What is acceptance market?

Question (d)
What is overdraft?

Question (e)
What is commercial bank?

Question (f)
What are the three objective RBI?

Question (g)
What do you mean by inter bank term money?


II. Answer any Three questions. Each question carries 6 marks. (3 x 6 = 18)

Question 2.
Explain the features of financial services.

Question 3.
Discuss briefly the organisational structure of RBI.

Question 4.
State the general utility functions of commercial banks.

Question 5.
Write a note on Exim Bank.

Question 6.
Distinguish between capital and money market.


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 7.
Write a note on National Bank for agriculture and Rural Development (NAB ARD).

Question 8.
What is a commercial bank? Explain the primary functions of commercial banks.

Question 9.
Explain the advantages of investing in mutual funds.

Question 10.
Explain the various money market instruments.

Question 11.
Explain the important financial services.

B.Com 1st Sem Indian Financial System Question Paper November 2014 with Answers


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
What is a Money Market?

Question (b)
Classify the financial assets with examples.

Question (c)
Expand the following:

  • IDBI
  • SIDCs


  • IDBI = Industrial Development Bank of India
  • SIDCs = The State Industrial Development Corporations

Question (d)
What are the various utility services provided by banks to the public?
Banks performs the service like factoring, venture capital, leasing, hire purchase, mutual funds debit and credit cards, foresee services etc.

Question (e)
Define Non-performing Asset.
Non performing assets refers individually or collectively to sub standard, doubtuful and loss assets. Non peroforming assets pose problems as regards the recovery of principal and interest.

Question (f)
What is monetary policy?

Question (g)
What is Mutual Fund?


II. Answer any Three questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
List out the functions of indigenous banks.
Indigenous banks are established by private persons and money lendors. These banks are under the control of private people. Following are the functions of indigenous banks.

  • Indigenous banks provide the short term financial assistance to needy borrower.
  • The rate of interest charged by these moneylenders are very high.
  • These indigenous banks give quick financial loans to borrowers.
  • These indigenous banks help to develop the rural economy by providing finance to poor people in advance.
  • These banks provide loan for the development of agriculture, trade, commerce, industry and other productive activities in rural areas.
  • It provides loan facilities to small scale industries to buy seasonal raw material.
  • It collects the deposits with in the local area as resources for lendings.

Question 3.
State the functions of EXlM Bank.

Question 4.
Mention six functions of RBI.

Question 5.
Describe the organizational set up to of the Reserve Bank of India.

Question 6.
What is factoring? State any 4 functions of factoring.


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 41.
Discuss the role and functions of financial markets.

Question 42.
Explain the functions of IDBI.

Question 43.
Define Commercial Bank. Also discuss the functions of Commercial Bank.

Question 44.
Describe the quantitative and qualitative credit control weapons available with the RBI.

Question 45.
Write short notes on:
(a) Housing and vehicle finance
(b) Venture capital.
(a) Housing and vehicle finance:
Lending is one of the primary function of banking. Banks provide loans to its customers for different purposes. Banks lend financial helps to purchase house and vehicles.

Following are the procedure for availing housing loan:

  • Customers of bank need to file an application and apply for home or vehicle loan.
  • These applied applications are verified by the banks to see the requirements are met or not.
  • Banks receive the quotation of vehicle or value of site to grant loan.
  • The amount of loan sanctioned depends on the estimate given by the rulers.
  • Banks also design repayment schedule.
  • Banks give cheque or demand draft in the name of applicant.
  • Now a day’s banks are tie up with big builders or vehicle companies and pro vide loans to buyers.

(b) Venture capital

B.Com 1st Sem Indian Financial System Question Paper November 2015 with Answers


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
What is Capital Market?

Question (b)
Give the meaning of Financial Institutions.

Question (c)
What is Group Bank?

Question (d)
Expand the following.
(i) LIC (ii) S.I.D.C.s

  • LIC: Life Insurance Corporation
  • S.I.D.C.s: State Industrial Development Corporation

Question (e)
State any two functions of IDBI.

Question (f)
Mention any two objective of Integrated Rural Development Programme (IRDP).
Integrated Rural Development programme is a major mechanism for the alleviation of rural poverty.
The main objectives of IRDP are –

  • To raise families of identified target group below poverty line.
  • To create sustainable opportunities for self employment in the rural sector.
  • To give assistance in the form of subsidy by the government.
  • To reach the move vulnerable sectors of the society.

Question (g)
What is factoring?


II. Answer any Three questions. Each question carries 6 marks. (3 x 6 = 18)

Question 17.
Explain, briefly the features of a developed money market.

Question 18.
Write a note on Differential Rate of Interest Scheme (DRI).
DRI scheme is implemented by all Indian Scheduled commercial banks. The main objective of DRI schedule is to provide finance at concessional rate to the weaker section of the community of engaging in productive and gainful activities to improve their economic conditions. This scheme is implemented throughout the country. This is a social banking activities introduced by commercial banks to neglected sectors like agriculture, small scale industries, services etc., with special emphasis on borrowers of small means. These borrowers are provided credit facilities to achieve the objective of nationalisation. This scheme is introduced by banks to play the role of social upliftment in an effective and systematic manner in all districts in the countries.

The banks provide benefits to SC and ST category people at not less than 40% of their DRI. There is no collateral securely or third party guarantee is required to grant loans. The loan repayment should be made with in 5 years of sanction and a grace period of two years are granted in case of special cases.

Question 19.
State the functions of SEBI.

Question 20.
Give the classification of venture capital funds.
Venture capital is a type of private equity capital typically provided for early stage, high potential, and growth companies in the interest of generating a return through an eventual realisation event such as a trade scale of the company. Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms.

There are three types of venture capital:
(a)Early stage financing: Early stage financing includes seed financing. Start up financing and first stage financing. Seed financing is a start up loan provided by financial institutions in small amount for the purpose of beginning of business. Start up financing is given for the purpose of finishing the development of production and services. This type of venture capital is used for initial marketing activities of company. Companies need this capital for beginning business activities at the full scale.

(b) Expansion financing: Expansion financing is also called as second stage financing. It is provided to companies for the purposes of begining their expansion. It is also known as mezzanine financing. It is provided basically for the purpose of assisting a particular company to expand in a major way. It is provided with small rate of interest for major business.

(c) Acquisition or buy out financing: Acquisition or buyout financing is categorized into acquisition finance or leveraged buyout financing. Acquisition financing, assists a company to acquire certain parts or an entire company. Management or leveraged buyout financing helps a particular management group to obtain a particular product of another company.

Question 21.
What are the features of Financial Services?


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 7.
What is Secondary Market? Explain its functions.

Question 8.
What is a mutual fund? Explain the different types of mutual funds.

Question 9.
What are the objectives and functions of EXIM Bank?

Question 10.
What is Credit Control? Explain the different method of Selective Credit Control.

Question 11.
Explain the changing role of Commercial Banks in Indian Economy.

B.Com 1st Sem Indian Financial System Question Paper November 2016 with Answers


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
Give the meaning of financial asset.

Question (b)
What are marketable securities? Give any two examples.
Marketable securities are financial instruments that can be converted into cash. Or redeemed with in a year. These securities are classified as marketable equally security and marketable debt security.
Example: Government bonds, Common Stock or Certificate of deposit.

Question (c)
Expand NBFC and NABARD.

  • NBFC = Non Banking Finance Companies.
  • NABARD = National Bank for Agriculture and Rural Development.

Question (d)
State any four primary functions of commercial banks.

Question (e)
When is a bank considered as Scheduled Bank?

Question (f)
Mention any two objectives of RBI.

Question (g)
State any two features of financial service.


II. Answer any Three questions. Each question carries 6 marks. (3 x 6 = 18)

Question 2.
Briefly explain any six functions of financial system.

Question 3.
Discuss any three distinctions between capital market and money market.

Question 4.
Bring out any three distinctions between Banking Companies and Non-Banking Finical Companies.
Difference between banking Companies and Non-Banking Companies, are as below Banking companies and non banking financial companies are key financial intermediaries offers scholar services to customers. But –

  • Banks are started under the banking companies act. But non banking financial companies are started under company act 1956.
  • Banking companies receiver deposits and landing loans and advances. But non – banking financial companies cannot accept demand deposits.
  • Banking companies issues self drawn cheques and demand draft. But non-banking companies cannot issues self drawn cheques and demand draft.
  • Banking companies are government authorised financial intermediary that aims at providing. Banking services to the general public. But non banking financial companies provides banking services to people without holding a banking licence.
  • In banking companies maintenance of reserve ratio is compulsory. But in non banking finance companies maintenance of reserve ratio is not required.

Question 5.
Explain any three credit control measures of RBI.

Question 6.
Give the meaning of liquidity and explain the types of liquidity with reference to a commercial bank.
It is one of the factor affecting the investment policy of a commercial bank. The term liquidity refers to ability of a banks in meeting its withdrawals of its depositors and its capability in securing the confidence of depositing public and run the business smoothly Types of liquidity with reference to commercial bank.

Liquidity means it can be easily be converted into cash to meet financial obligations on short notice without any loss. Banks should maintain a liquidity level to meet all its anticipated and unanticipated expenses.
There are two common types of liquid assets in banks they are –

  • Finds in servings accounts.
  • Marketable services such as stocks and bonds.

Commercial banks are following liquidity methods they are –

  • Cash balance account: This is highest form of liquidity but it does not earns any amount of interest.
  • Overdraft arrangements with banks.

This facility in available to current account holders.
(a) Marketable securities: These are short term securities which can be easily converted into cash without any redactions in principal amount which can qualify for short term investments.

(b) Factoring: Factoring is the out right sale of account receivables to a banks finance company without recourse the advantages of factoring are that it offers immediate cash and there helping liquidity.

(c) Inter company deposits: It is a short term deposits with other companies and attractive form of short term investment.


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 7.
Give the meaning of financial system and briefly explain its components.

Question 8.
What is stock exchange? Discuss the features and advantages of stock exchange.
In a financial market, where the existing securities are traded is referred as stock ex-change market. Stock exchange market companies of equity and the debt markets. All securities whether government or corporate which are already floated in the securities market, are dealt in stock exchange market.
(I) Features of Stock Exchange Market:

  • It deals with securities already existing in the market.
  • The activities in the secondary market is restricted to a specific area e.g. Stock Ex-change activities of Mumbai will be dealt which are listed on it.
  • Only transfer of Securities takes place.
  • Only those companies can enter into the ‘Tray’ which are listed or already has issued capital.
  • Totally under the control of specific Administration.
  • Example – Bombay Stock Exchange is controlled by its Bye-laws.
  • Subject to regulations of specific company whose, securities are dealt in.
  • No such creation of securities, it largely depends sale purchase activities. Companies which have easy liquidity.
  • The entire financial strengths depends on the volume of transactions per day. More transactions means more fund mobilisation.

(II) Advantages of Stock Exchange Market:

Question 9.
Explain the meaning, features and types of mutual funds.

Question 10.
Discuss the meaning and primary functions of commercial banks.

Question 11.
Write a note on the following:
(a) Factoring
(b) Leasing and
(c) Venture capital

B.Com 1st Sem Indian Financial System Question Paper November 2018 with Answers


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
Give the meaning of financial system.

Question (b)
What do you mean by Income Funds?
Income fund are type of mutual fund or exchange traded fund that emphasises current income either monthly or quarterly basis. These funds are usually holds money market instruments of different government departments.

Question (c)
Define banking.

Question (d)
What is Statutory Liquidity Ratio?

Question (e)
State any two objectives of RBI.

Question (f)
State any two distinguishing points between Primary Market and Secondary Market.

Question (g)
What is Venture Capital?


II. Answer any Three questions. Each question carries 6 marks. (3 x 6 = 18)

Question 2.
Explain the functions of money market.

Question 3.
State the functions of LIC.

Question 4.
Discuss the primary functions of Commercial Banks.

Question 5.
Discuss the powers of SEBI.

Question 6.
Explain in brief the capital Market Instruments.


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 56.
Write in detail the various money market instruments.

Question 57.
Explain various types of financial services.

Question 58.
Explain in detail the various types of mutual funds.

Question 59.
Explain functions of RBI.

Question 60.
Write short notes on:
(a) Factoring
(b) Leasing
(c) Consumer Finance
(d) Housing Finance


I. Answer any Five questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
What is Primary Market?

Question (b)
Expand IDBI, EXIM.

  • IDBI – Industrial Development Bank of India
  • EXIM – Export Import Bank.

Question (c)
What is Mutual Fund?

Question (d)
What is Cash Credit?

Question (e)
What is SLR?

Question (f)
What is Lease Financing?
Lease Financing is one of the important sources of medium and long term financing in which the owner of an asset gives right to another person to use asset against periodical payments the owner of the asset is known as lessor and the user is called lesser.

Question (g)
Give the meaning of Letter of Credit.


II. Answer any Three questions. Each question carries 6 marks. (3 x 6 = 18)

Question 2.
What is Capital Market? Explain the characteristics of Capital Markets?

Question 3.
Explain the Objectives and functions of LIC.

Question 4.
Write a note on Investment Policy of Commercial Banks.

Question 5.
Briefly explain the role of RBI in the Economic Development of the Country.

Question 6.
Write a note on Factoring.


III. Answer any three questions. Each question carries 14 marks. (3 x 14 = 42)

Question 61.
Explain the structure and components of Indian Financial System.

Question 62.
Explain in detail various functions of modern commercial banks.

Question 63.
What is SEBI? Explain the functions of SEBI.

Question 64.
Explain in detail the important Financial Services.

Question 65.
What is Credit Control? Discuss the quantitative and qualitative Credit Control Techniques of Reserve Bank of India.

Introduction to Service Management Short Answer Type Questions

Introduction to Service Management Short Answer Type Questions

Question 1.
Briefly explain the various forces that shape the service market.
Growth in services sector can be seen in nearly all developing and developed countries across the globe. Infact, all the advanced economies are moving towards predominantly producing services. The factors which influence the growth of service sector in India are as follows –
(i) Demographic Factors:
The various demographic factors which influences the growth of service sectors in India are growth rate of population, scope for childcare centers, educational institutions, life expectancy etc.

(ii) Economic Factors:
Economic factors such as growth of corporate sector, stock market, economic liberalization, resource mobilization through capital market, change in the consumer purchasing power and spending pattern are responsible for the growth of the .service sector in the economy.

(iii) Political and legal factors:
Deregulation of the economy has opened many service industries in India. Similarly other factors such as infrastructural development, increased trade relationships between nations, etc. also influences the growth of service sector in India. Legal factor for example, Service Act also influence the growth of service sector in an economy.

(iv) Social Factors:
The various social factors which influence the growth of service sector in an economy are increase in single person household, smaller families, change in male-female working ratio, availability of time for travel and entertainment etc.

(v) Technological Factors:
Technological factors like developments in computer science, Information Technology influence the growth of service sector. Growth of service sector is directly related to the growth of technology in an economy.

(vi) Due to globalization of the business activity has made tremendous growth in world market due to when demand for services such as communication, transport and information services are increased.

(vii) Change in information technology has also contributed for the growth of service sectors. Many electronic instruments developed Which contributed services to customers and delighted them. Internet, multimedia and computer applications made business operation very easy. This had given scope for research and increased operation in service marketing.

(ix) Economic changes have given wide scope for the development of specialized services like advertising, education, personal care, health care services.

(x) Due to increase in working, child care services are increased because working women can’t take care of their children property. So they depend on organization like play home which are paid services.

(xi) Due to change in life style, income and behavior of the people, has given scope for development of tourism industry. During holidays people are ready to spend their time in other places which led to increase in tounsm industry which in turn increased other related services.

The above discussed were some of the most important factors which influences the growth of service sector in an economy. At present , India is becoming increasingly dependent on the service sector for their economic development and well being and this trend is like to continue in the coming futures.

Question 2.
Give a brief note on customer involvement in service processes.
People Processing:
It is services which are directed at people’s bodies i.e., the customer physical presence is necessary to receive the desired benefits of such services, if the customers wants the benefit that a people processing service has to offer, they must be prepared to spend time and co-operate actively with the service operation.

Examples : Doctors treatment, hair dressing, passenger transportation etc., The output from these services can be examined by knowing whether the customer has reached his destination (in case of transportation of passengers) or now he is looking clean and having stylish hair cut (in case of hair dressing) etc.

(i) Possession Processing:
It involves services which are directed at Physical possession i.e., the object requiring processing must be present but the customer need not be. In this type of service, customers are less physically involved. The output in this case can be examined by knowing the how far the customer is satisfied with the solution he has received.

It includes lawn moving, cleaning services, repairs and maintenance, refueling, freight transportation etc.

(ii) Mental stimulus processing:
It involves services which are directed at people’s mind i.e., the customer must be mentally present where the service is rendered to receive the desired benefits of the service. If a customer wants to receive these services he must be ready to spend time.

It includes services such as advertising, arts and entertainment, education programmes, music concerns, voice telephone etc.

(iii) Information processing:
It involves services which are directed at intangible assets, i.e., the involvement of the customer to get the benefit of the service is either minimum or almost negligible. In this service process, only little direct involvement with the customer may be needed initially when the service is to be started, and even that can be undertaken remotely by mail, phone, internet etc:,

It includes, accounting services, banking, insurance, legal services, software consulting etc.

Question 3.
Discuss in detail “Targeting Customer”.
Targeting customers means the process of identifying market segments, targeting one or more of these segments and developing services and marketing programs to suit each selected segments. In short, it the process of identifying the group of peoples at whom the organization wants to aim its organizational marketing efforts to achieve the goals of marketing.

The steps involved in targeting services are as follows:
(i) Identifying the basis for segmenting the market:
The first and the foremost step in targeting services is to identify the basis for segmenting the market. The common bases used for segmenting the market are geographical segmentation, demographic segmentation, psychographic segmentation, behavioural segmentation, use related segmentation etc.

(ii) Developing profiles of resulting segments:
This is the next step involved in targeting services. The relevant data which helps to differentiate one segment with the other should be collected and studied properly. It is very important for the service marketer to clearly understand how and whether the segment differ in their profile.

(iii) Developing measures for segment attractiveness:
The third step in the targeting services is to evaluate the segments in terms of their attractiveness. This evaluation can be done on the basis of segment size, segment growth, segment structure, company objectives and resources. The segment selected by the service marketer must be accessible to adds and other marketing programmes.

(iv) Selecting the target segments:
The fourth step in targeting services is to select the target segments that need to be served. The segment selected must be profitable and has the scope of further growth. The selection of target segment is generally done viewing the current and potential customers, relative power of buyers and supplier, number of substitute services available in market etc.

(v) Ensuring that the target segments are compatible:
This is the last and final step in targeting of customers. The service provides should ensure that the segments are compatible with each other as the services are often performed in the presence of customers. The above said steps which are involved in targeting of customers must be cautiously taken other wise any mistake or error may result in negative influence or result.

Question 4.
Discuss briefly the classification of services.
The various classification of services are as follows –
(A) On the bases of Tangibility:

  • Completely Intangible.
  • Partially Intangible.

(B) On the basis of Inseparability:

  • Completely Inseparable
  • Partially separable

(C) On the basis of Marketability:

  • Marketable services
  • Unmarketable services

(D) On the basis of people orientation:

  • Complete people orientation services
  • Partially people orientation services
  • Complete Machine/self orientation services

(E) On the basis of importance of the service to the purchaser:

  • Important to the purchaser
  • Not important to the purchaser

(F) On the basis of Status of the service within the Total Product Offer:

  • High Status Services
  • Low status services

(G) On the basis of the pattern of service Delivery:

  • One – off transactions services,
  • Non one off transactions services

(H) On the basis of end user of the service proved:

  • Consumer Services
  • Business services
  • Producer services

(I) On the basis of Expertise:

  • Professional Services
  • Non professional services

(J) On the basis of Profit orientation:

  • Non Profit services
  • Profit Services

For explanation to all the different services mentioned –
(a) Business Services:
It refers to those services which are bought by a business from another business for its own use.
Example: Advertising agencies and printing.

(b) Producers Services:
It refers to those services which are bought by a business not for their consumption but in order that it can produce something else of economic benefits.
Example: Plant and machinery repair service and installation service.

(c) Consumers services:
It refers to those services which are provided for individuals,, who set up the services for their own enjoyment or benefit.
Example: Health care and Travel.

(d) Marketable Services:
It refers to those services which are provided for the public benefit or people and they are charged for it. It refers to the services which can be exchanged for money.
Example: Banking and Insurance.

(e) Unmarketable Services:
It refers to those services which are provided for the public or people and no attempt has been made to change users of the service.
Example: Use of local footpaths and childcare in private households.

(f) Professional Services:
Services which are provided by the professionals such as engineering, consultancy services etc are called professional services.

(g) IIT, IISc, IIM and XLRI:

  • IIT = Indian institute of Technology
  • IISc = Indian Institute Of Science
  • HM = Indian Institute of Management
  • XLRI = Xavier Labour Reliance Institute

(h) Big retailers in India:
They are –

  • The Food World
  • Life Style
  • Fab Mall
  • Forum

IT can be defined as a convergence of various information based, broadcast and mass media communication technologies.

Non-professional services:
They are –

  • Babysitting
  • Catering

Question 5.
State the reason for growth of service sector.
Following are the reason for growth of service sector
(a) Economic reason:
Fast economic growth in the world market due to globalization of business is one of the reason for service development, globalization of business activity has created greater demand for services such as communication transport and information sectors. Information’s technology has also will booted transport and information sectors. Information’s for the growth of service sector. Many number of electronic have also appeared in the information field. Therefore economic scope for the development of specialized services and this marketing in every economy.

(b) Political reason:
In development of a country made them to give scope for the creation of huge intra structure and in turn creating a great demand for legal and transport services. Even the banking and financial services are also assuming the new dimension in the process and are creating more employment opportunities.

(c) Demographic changes:
Demographic changes are also providing scope for expansion of some service sectors raise in the standard of living of the people in society has given scope „ for raising tourism. Hotel industry etc. Raise in life expectancy has expanded the retired population. The growing number of retired people has given scope for raising health care services, nursing, tourism, hospitality old age home. Etc.

(d) Social changes:
Now a days female population is increasing in the employment sector. Majority of the mailer have Working women. This has created

  • Increased income to the family.
  • Heavy workload for there working women.

They have work both tn the house and in the office. Many service areas have emerged to help these working women. Fast food service is one area which is growing very fast to help these women work face. Social changes also give scope for international tourism. Even the hospitality service (Hotels) are also in the growing stage.

Change in the level of income, and quality of thinking facilitated for growth of service sector specialized services like advertising recruitment transport computer services, catering training the employees have general recognition and every business house is looking for such services to professionalise their business operations.

Question 6.
Explain types of services.
(a) Marketable and unmarketable services:
It means some services are charged and they are called as marketable services eg Railway postal service etc. and some services are not changed by government it gives free service to poor people had it is called as unmarketable service.

(b) Produces services and consumer services:
Consumer services are for enjoyment and producer services add value to the product like door to door delivery of goods.

(c) The magnitude of service in the product:
Intangible aspects are more and tangible product is negligent in some kind of service eg. Teaching, consulting etc., But is independent service. Service is added to product to make product more attractive eg. Interior decoration of house, Hotels, business house etc. Financial family is also a kind of service given by businessman by giving credit family to customer in purchase of costly product like care, scooter etc.

(d) Degree of consumer participation:
Certain services require direct participation of consumers to receive services eg. Beauty parlor, doctor service etc. in these case consumer involvement is more. In some other services consumers involvement is very less eg. Colour wash to house.

(e) Mode of supply:
Some services are required to customer continuously eg. Communication service. Some other services are required and obtained by customers casually. Example – Services of music, singer etc.

(f) Machine oriented and person oriented service:
Some services are people oriented eg. Doctor service, teacher service and some other services are machine oriented like telephone, Xerox, Computer service etc.

Question 7.
What are the difference between goods and service.

  • Goods are tangible in nature and services are intangible in nature.
  • Goods is an object a device a thing but service is a deed a performance an effort.
  • Goods are directly received by the consumer or by others but services enjoyed by the person individually.
  • Goods are tangible asset on which buyer can exercise the ownership but services are intangible in nature on which seller cannot enjoy ownership for a long period time.
  • Quality of goods is not vary from one product to another.
  • Quality of goods is not vary from one product to another. But quality of service may very depending on who provides it as well as when and. how it is provided.
  • Quality of goods can be determined prior to purchasing a product, such as colour style shape taste etc. But it is difficult to evaluate in advance the quality of service.

Question 8.
Explain the steps involved in service delivery process or system.
Serve delivery system includes several activities these activities are explained below:
(a) Service strategy:
It is the in step in designing a successful delivery process specific service delivery strategy is developed by identifying and understanding the specific needs of the customers. In this stage target market can be identified to determine consumer expectation from a particular type of service. It is necessary to service provider to understand the exact-needs of target customers.

(b) Service concept:
It is me stop of actual design of the service delivery process this service concept connects the. link Between the service concept describes about customer requirements. It also focus on identifying the needs of customers.

Service concept encompasses on four elements they are

  • The service operation
  • The service experience
  • The service outcome
  • The value of service

(c) Service blue printing:
Service blue print is an operational planning to that provides guidance. on how a service will be provided specifying the physical evidence staif action and support system needed to deliver the service across the different channels service blueprints are process flow charts that are used for designing Service operations.

(d) Supporting process:

  • Technology used to delivery the intended service
  • Defining self servicing facilities of any (like ATM)
  • Work force configuration
  • Expected output quality of the service
  • Policies and procedures of the company
  • Hours of operations
  • Organizational structure

Question 9.
Give the meaning of service blue print? What are the importance of blueprinting?
Service flow chart is a effective tool of depicting the different steps required in the completion of service process. Service blue prints help in identifying toe points in the service process.

  • It is one of the important powerful tool for creating competitive advantage in service.
  • It is a detail description of people process and system involved in delivering a service.
  • It provides a way to break the service into logical components anti to depict the steps in processes.
  • The objective of service blueprint is to enhance service quality and customers satisfaction.

Question 10.
What are the key concepts of blue printing?
There are five components in a service blue print there are –
(a) Customer action:
Line of external interaction. It includes all the activities and steps taken by a customer during the service delivery process. Customers actions are the central includes steps, choices, activities and interactions that customer performs in the process of purchasing consuming and evaluating the service.

(b) Line of visibility:
It includes visible actions taken by employees. These actions are the face to face contacts with the customers during the service delivery during this period customer judge the quality of service rendered by the organisations and make decisions regarding future purchases.

(c) Line of internal interaction:
It is the back stage action taken by the employees that are not visible to the customers. Service blue print includes backstage invisible actions of employees – that import on customers backstage employee services are separated from on stage service delivery by the time of visibility in a hotel visible actions are food supplies and invisible actions are preparing a quality meal.

(d) Support Service:
It is the fourth component of service blue print. Support service processes are all the activities contributed by employees with in the company who do not contact customers.

(e) Physical evidence:
Physical evidence of service delivery at each point of customers contact is recorded at the top of the blue print.

Question 11.
Explain the steps in developing service blueprint.
Following are the steps involved in building a service blue print.
(a) Identify the process to be blue printed:
In this stage the company should clearly mention the service process that should be blue printed. Company should have a clear idea of the objective behind bule printing after the identification of the service process the others a requirements are possible to arrange neatly.

(b) Identifying the customers segment is a vital aspect of service blue printing. The contact of the service delivery system and provision of facilities are largely dependent on the selected customers segment.

(c) Map the process from the customer’s point of view:
Service blue print aims at providing maximum customer convenience and satisfaction. This step is taken as main point in designing process

(d) Map the contact employee actions outstage and back stage:
Service designs process describe in detail the duties and responsibilities for all the individuals involved in the service delivery system. There must not be, any ambiguity in the statement of roles and responsibilities.

(e) Link customer and contact persons activities to need support functions: Each activity performed is expected to produce some value to the customer if any activity performed is not adding any value to the customers it will be treated as unnecessary and can be eliminated from the service design. In the place of unnecessary activities improved activities can be introduced.

(f) Add evidence of service at each customer action step: It is necessary to illustrate to the customers what he sees and receives at each stage of customers encounters and experience. This can be done through photos and videos. This helps customers in knowing the expected service and the service received by him.

B.Com 5th Sem International Financial Management Questions and Answers

B.Com 5th Sem International Financial Management Questions and Answers

Unit 1 The Finance Function

Unit 2 Working Capital Management

Unit 3 Investment Appraisal

Unit 4 Business Finance

Unit 5 Business Valuation

Unit 6 Risk Management

B.Com 5th Sem International Financial Management Notes

B.Com 5th Sem International Financial Management Syllabus

Financial management and financial objectives – The economic environment for business – Financial markets, money markets, and institutions.

The nature, elements, and importance of working capital – Management of inventories accounts receivable accounts payable and cash determining working capital needs and funding strategies.

Investment appraisal techniques – Allowing for inflation and Taxation in investment appraisal – Adjusting for risk and uncertainty in investment appraisal – Specific investment decisions (lease or buy; asset replacement, capital rationing)

Sources of, and raising business finance – Estimating the cost of capital – Sources of finance and their relative costs – Capital structure theories and practical considerations.

Nature and purpose of the valuation of the business and financial assets – Models for the valuation of shares – The valuation of debt and other financial assets – Efficient market hypothesis (EMH) and practical considerations in the valuation of shares.

The Nature and Types of Risk and approaches to Risk Management- Causes of Exchange Rate differences and Interest rate fluctuations – Hedging techniques for foreign Currency risk – Hedging techniques for Interest rate risk.

Preparing The Business Plan Short Answer Type Questions

Preparing The Business Plan Short Answer Type Questions

Question 1.
Discuss the need or importance for business plan.
The importance of business plan is as follows:

  • It helps to define the business plan.
  • It helps in establishing goals.
  • It helps to manage risk and uncertainty.
  • It ensures effective planning.
  • It helps in developing organization structure.
  • It helps in establish strategy.
  • It helps in allocating resources.
  • It helps in decision making.
  • To establish the right steps to starting a new business.
  • It helps in developing new business alliance.
  • To determine the potential to make a profit.
  • It creates competitive advantage.

Question 2.
What are the financial aspects of the business plan?
Before preparing the business plan, the entrepreneur must have a complete evaluation of the profitability of the venture. The assessment will primarily tell potential investors if the business will be profitable, how much money will be needed to launch the business and meet short term financial needs, and how this money will be obtained (Example: Stock or debt).
There are traditionally three areas of financial information that will be needed to ascertain the feasibility of the new venture:
(1) Expected sales and expense figures for atleast the first three years: Determination of the expected sales and expense figures for each of the first twelve months and each subsequent year is based on the market information. Each item of expense should be clearly identified.

(2) Cashflow figures for the first three years: Estimates of cashflow consider the ability of the new venture to meet expenses at designated time of the year. The forecasted cashflow should identify cash at the beginning, expected accounts receivable and other receipts, and all payments on a monthly basis for the entire year.

(3) Current balance sheet figures and proforma balance sheets for the first three years: Current balance sheet figures reflect the financial conditions of the business at any particular time. They identify th? assets of the business, the liabilities (what is owed), and the investment made by the owner or other partners.

Question 3.
Explain marketing aspect of a business plan.
The marketing aspect of a business plan includes the following:
(i) Well defined market: A market that is well-defined will make it easier to target it at the right people, project market size and determine subsequent market goals for the new venture.

(ii) Channel Strategy: It is also necessary to take into account the channel strategy i.e. how the product/service will reach the consumers. The choice of the channel will depend on the nature of product/service to be sold and the industry in which it is operating.

(iii) A positioning statement then needs to be prepared. A positioning statement will put forth the attributes/benefits of the product/service and create a favourable image in the minds of customers. It will also describe, in what way the product has been designed and tailored to meet the needs of the target customer.

(iv) The pricing strategy needs to be explained i.e. on what basis is the price determined and why it will be effective with target customers. Also, the discounts offered at each level of the channel need to be considered.

(v) Communication strategy communicates the benefit of using the product/service to the consumer via media advertising, outdoor advertising, p- o-p, public relations, e-commerce and the like. Brand name, logo, tagline, colour scheme, packaging etc. will all go in creating a brand image.

(vi) sales strategy: Last but not the least, the sales strategy will describe the manner in which the product/service will be sold i.e. through salesforce, telemarketing, direct mail, etc. The procedure of generating leads, recruiting, training and compensating the salesforce also need to be established.

Question 4.
Explain the marketing problems of Small Scale Industries.
Small scale industries are not in a position to play their role effectively due to various constraints. The various constraints, the various problems faced by small scale industries are as under:
(1) Finance: Finance is one of the most important problem confronting small scale industries Finance is the life blood of an organisation and no organisation can function proper 6 in the absence of adequate funds. The scarcity of capital and inadequate availability of credit facilities are the major causes of this problem.

Firstly, adequate funds are not available and secondly, entrepreneurs due to weak economic base, have lower credit worthiness. Neither they are having their own resources nov are others prepared to lend them. Entrepreneurs are forced to borrow money from money lenders at exorbitant rate of interest and this upsets all their calculations.

After nationalisation, banks have started financing this sector. These enterprises are still struggling with the problem of inadequate availability of high cost funds. These enterprises are promoting various social objectives and in order to facilitate then working adequate credit on easier terms and conditions must be provided to them.

(2) Raw Material: Small scale industries normally tap local sources for meeting raw material requirements. These units have to face numerous problems like availability of inadequate quantity, poor quality and even supply of raw material is not on regular basis. All these factors adversely affect t e functioning of these units.

Large scale units, because of more resources, normally corner whatever raw material that is available in the open market. Small scale units are thus forced to purchase the same raw material from the open market at very high prices. It will lead to increase in the cost of production thereby making their functioning unviable.

(3) Idle Capacity: There is under utilisation of installed capacity to the extent of 40 to 50 percent in case of small scale industries. Various causes of this under-utilisation are shortage of raw material problem associated with funds and even availability of power. Small scale units are not fully equipped to overcome all these problems as is the case with the rivals in the large scale sector.

(4) Technology: Small scale entrepreneurs are not fully exposed to the latest technology. Moreover, they lack requisite resources to update or modernise their plant and machinery Due to obsolete methods of production, they are confronted with the problems of less production in inferior quality and that too at higher cost. They are in no position to compete with their better equipped rivals operating modem large scale units.

(5) Marketing: These small scale units are also exposed to marketing problems. They are not in a position to get firsthand information about the market i.e. about the competition, taste, liking, disliking of the consumers and prevalent fashion.

With the result they are not in a position to upgrade their products keeping in mind market requirements. They are producing less of inferior quality and that too at higher costs. Therefore, in competition with better equipped large scale units they are placed in a relatively disadvantageous position.

In order to safeguard the interests of small scale enterprises the Government of India has reserved certain items for exclusive production in the small scale sector. Various government agencies like Trade Fair Authority of India, State Trading Corporation and the National Small Industries Corporation are extending helping hand to small scale sector in selling its products both in the domestic and export markets.

(6) Infrastructure: Infrastructure aspects adversely affect the functioning of small scale units. There is inadequate availability of transportation, communication, power and other facilities in the backward areas. Entrepreneurs are faced with the problem of getting power connections and even when they are lucky enough to get these they are exposed to unscheduled long power cuts.

Inadequate and inappropriate transportation and communication network will make the working of various units all the more difficult. All these factors are going to adversely affect the quantity, quality and production schedule of the enterprises operating in these areas. Thus their operations will become uneconomical and unviable.

(7) Under Utilisation of Capacity: Most of the small-scale units are working below full potentials or there is gross underutilization of capacities. Large scale units are working for 24 hours a day i.e. in three shifts of 8 hours each and are thus making best possible use of their machinery and equipments. On the other hand small scale units are making only 40 to 50 percent use of their installed capacities. Various reasons attributed to this gross under utilisation of capacities are problems of finance, raw material, power and underdeveloped markets for their products.

(8) Project Planning: Another important problem faced by small scale entrepreneurs is poor project planning. These entrepreneurs do not attach much significance to viability studies i.e. both technical and economical and plunge into entrepreneurial activity out of mere enthusiasm and excitement.

Question 5.
Explain the HRM’aspect of business plan.
An efficient and competent team of people is a prerequisite to the success of any organisation. The talents and experience that the team brings to the business is very valuable. A description of the organisational structure along with organisational chart is needed.

The HRM aspect of business plan are as follows:
(i) Top Management: The structure of the top management should be listed down. It is the apex body which makes policies, sets goals, pool the resources etc.

(ii) Middle Management: Middle management is responsible for putting the plans into action.

(iii) Operations Management: Operations management has people who are working at the operational level, be it the shop floor in case of manufacturing, on the field in case of sales and service personnel, and in different branches in case of service providers. These are the people who interact with the customers and vendors directly.

(iv) Supporting staff: The support staff plays an important role in the organisation. Hence its duties need to be clearly laid down.

(v) Advisors: Advisory services in case of matters such as legal, quality, finance, and auditing are required. These services are needed because an entrepreneur requires expert opinion from time to time.

The following information about human resources in the business plan will add clarity:

  • Number and type of employees.
  • Pay structure.
  • Training methods.
  • Job descriptions.

Question 6.
Explain technical aspect of business plan.
When outlining the plan of technology, it should be borne in mind how the company might grow or change. Also the technology chosen should be simple and flexible. Technology can be used in:

  • Accounting, taxes, finance.
  • Order taking and tracking.
  • Inventory management.
  • Database management.
  • Presentations.
  • Human Resource Management,
  • Internet marketing etc.

Following factors should be borne in mind while choosing technology:

  • Functions.
  • Ease of use.
  • Security.
  • Flexibility.
  • Maintainability.
  • Financial consideration.

Question 7.
Explain the social aspects of the business plan.
A business has certain social responsibilities in addition to the objective of maximising profits. An ideal business firm should:

  • Take the welfare of society into consideration.
  • Focus on values of society.
  • Optimise the use of resources.
  • Protect the environment, ecology by undertaking anti-pollution measures.
  • Participate in social welfare programmes, make charitable contributions, undertake social forestry, adopt villages for their all round development and the like.
  • Share the gains arising out of improved production technique with all those who have interests in the business.
  • Assist in the establishment of an egalitarian social order.