BSEB Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 5 are the best resource for students which helps in revision.

Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 5

Question 1.
State the meaning of marketing.
Answer:
Marketing is no longer a new term, however it is the most popular and prevalent yet unclear. It is a great irony that the most of the people who remain involved in the act of marketing are not well conversant with the term. Even a sales personnel or a sales manager believes marketing to be a selling. ‘Marketing’ this word has become so endearing and popular that even an unlettered farmer does not feel unconcerned or unfamiliar with it.

If a domestic women is questioned, “What is marketing”? She will promptly react that when she buys food, vegetables, clothing, etc., for her family that shopping Itself is marketing. Thus, to a salesman, marketing means selling. To a farmer, selling of his produce in the market is marketing itself. Several scholars in this context opine that in practical life, the term ‘Marketing’ is used atmost by everybody as per his status, ability need and environment as a new minimal word. All therefore mentioned ideas are the various aspects of marketing.

In fact, marketing not only being restricted to sales, purchase product planning, advertising is a vast term with a multifarious meaning that refers to the entire operation which starts before the production of merchandise or services and their prior activities into their sales, distribution and services after sales, etc. All such activities are included into this term.

Question 2.
Define Marketing Management.
Answer:
The segregation of the term ‘Marketing Management’ poses some difficulty since it is a compound word, as a blend of two different words
1. Marketing and 2. Management. If the meaning of these two words is explicated, the meaning of marketing mangement would become explicit in itself.

1. Meaning of Marketing: Marketing is no longer a new term; however it is the most popular and prevalent yet unclear. It is a great irony that the most of the people who remain involved in the act of marketing are not well conversant with the term. Even a sales personnel or a sales manager believes marketing to be a selling. ‘Marketing’ this word has become so endearing and popular that even an unlettered farmer docs riot feel unconcerned or unfamiliar with it.

If a domestic women is questioned, “What is marketing”? She will promptly react that when she buys food, vegetables, clothing, etc., for her family that shopping itself is marketing. Thus, to a salesman, marketing means selling. To a farmer, selling of his produce in the market is marketing itself.

Several scholars in this context opine that in practical life, the term ‘Marketing’ is used atmost by everybody as per his status, ability need and environment as a new minimal word. All therefore mentioned ideas are the various aspects of marketing.

2. Meaning of Management: Management refers to the technique or art of getting things done through others. According to Koontz and O’ Donnell, “Management is the art of getting things done through people informally organised.”

After getting the clarity of both the words, it can be inferred that “Marketing management is a sum of total marketing activities in a commercial enterprise in terms of execution and controlling overall these related activities.” Marketing represents an active area in business management according to which the product or the services are directed to flow continuously towards the consumers.

Definitions of Marketing Management: Several scholars have defined marketing management in different ways as follows:
1. According to William J. Stanton, “Marketing Management is the marketing concept in action.” Accordingly there are two basic pillars of marketing:

(i) Company’s planning, policies and actions, consumer satisfaction is important, (ii) profit on sales should be the company’s objective. As such the necessary course of actions to facilitate the achievement both of these objectives, must be incorporated in marketing.

2. As per Dr. Rastam S. Davar: Dr. Rustam has tried to define marketing management in the Indian context. According to him, “Marketing management refers to identifying the consumers needs, transforming the needs into products or services and eventually to regulate their supply to customers by which the needs and aspirations of a specific customer or a group or a class of customers are satisfactorily catered and the organisation by sensibly exploiting its infrastructure and resources could earn profit.”

Question 3.
State any three objects of advertisement.
Answer:

  1. To Introduce New Products or Services: It is through advertising that the people are to be informed about any newly launched product and induce them to buy it.
  2. To Increase Sales: Another aim of advertising is to promote sales. A trader always strives to increase sales and with this purpose in mind, he does advertising.
  3. To Create and Develop New Markets: One objective of advertising is to explore and develop new vistas or markets, which is easier to do so by means of advertising.

Question 4.
What is the object of branding?
Answer:
There are the following objects of brand:

  • ‘Brand’ is a broad term which is used to identity a product.
  • Brand, in a concrete or an abstract form establishes the identity of the product of a particular organisation that distinguishes it from that of other competitors.
  • All the means to identify to a brand are included in brand.
  • Brand is a catalyst in the popularity and sales promotion of product.

Question 5.
Define marketing mix.
Or, What is marketing mix?
Answer:
Meaning of Marketing Mix: This concept was basically conceived by a professor of ‘Harvard Business School’, Mr. Neil Bordon, which refers to all kinds of marketing decisions that help encourage and foster the sales, can be termed as ‘Marketing Mix’. It is very crucial in every area of trade, be it an area of price, distribution or production. For instance, let us consider the ‘Price Area’.

Some of the manufacturers or Producers happen to determine the price of a merchandise in conformity with the price leader, and in the event of any variation from it that depends on the kind of ‘marketing strategy’ being followed by a businessman. Such factors have led to the emergence of the concept of ‘Marketing Mix’.

Sometimes the case may be so that the price which is to be determined may be relatively higher because the spending on advertising and marketing is more, then is it justifiable and profitable for the organisation, or if the price is to be reasonably restricted, in this case, not much is to be spent on advertising or other marketing pursuits leaving these circumstances to two options-either to determine the price at a higher level by spending more on advertising and operational costs, or to determine the price at a lower level by spending meagre on other related activities.

In such circumstances, an entrepreneur is supposed to exploit the marketing mix which would be more useful for the trade. It is worth-mentioning that the marketing mix ought to be customer-oriented.

Definitions of Marketing Mix: Following are the important definitions of marketing mix:

  • According to R. S. Davar, “The strategies to be exploited by the producers for ensuring success in market constitute the marketing mix.”
  • According to Philip Kotler, “Marketing mix is a sum of the controlling variables which are exploited by a firm to impress upon its commitment to customers.”
  • According to William J. Stanton, “Marketing mix is the term used to describe the combination of the four inputs which constitute the core of a company’s marketing system, the product, the price structure, the promotional activities and the distribution system.”

Question 6.
What is meant by the term price mix?
Answer:
Price-mix refers to all those decisions which are taken with regard to the product and its price. Price-mix involves the following kind of decisions

  • Strategy of price determining
  • Pricing policy
  • Strategy regarding the price
  • Decision with regard to price change.

Question 7.
What is channels of distribution?
Answer:
Merely the production of goods is not enough but to deliver it to the consumer is also essential. In order to ensure the delivery of the goods to its ultimate consumer, the producers/manufacturers seek the services of several mediators, like wholesalers, retailers or agents which are called as channels of distribution. The distribution channel here refers to the medium or all those means which ensure the access of goods to the ultimate consumers. These channels are also known as vehicles of distribution or business mediators, and have seal of the proprietor.

Question 8.
Distinguish between shares and debentures. Any two.
Or, What are the main difference between Shares and Debentures?
Answer:
Difference between Shares and Debentures:

Basis of Comparison Shares Debentures
1. Capital Share is a part of company’s capital. Debentures are part of company’s loan.
2. Consideration Dividend is paid on shares as considerations. Interest is paid as consideration.
3. Types Shares have two types:
(i) Equity/Ordinary.
(ii) Preference.
Debentures are of many types.
4. Position in Company Shareholders are the owners of the company. Debenture holders are the creditors of the company.
5. Participation in Management Shareholders participate in company’s management. They don’t participate in company’s management.
6. Certainty of Income No certainty or income on shares. Certainty of income on debentures.
7. Risk More risk exist in investing money in shares. Less risk exists in investing money in debentures.
8. Flexible Issue of shares lacks flexibility in capital structure. Issue of debentures brings flexibility in company’s capital structure.

Question 9.
State four functions of packaging.
Answer:
A majority of people feels that the sole objective of packaging is to secure the contents inside but in fact, it is not so. Bata India expects three uses of its packaging-

  1. 1. Product Protection
  2. Enhances to product value
  3. Product Advertisement
  4. Attraction.

Question 10.
State the features of marketing management.
Answer:
Following are the salient characteristics of marketing management:

  • It is the marketing management that arranges the distribution of product/services.
  • It creates the utility.
  • Marketing management is a business process with the help of which the products are manufactured suitable for the market and endorsed by the owner.
  • Marketing management is functional that aims at regulating the supply of merchandise from the manufacturing units to the consumer’s sales outlet.
  • It provides satisfaction to consumers.
  • Marketing management is a branch of management.

Question 11.
What is public deposits?
Answer:
In this arrangement, many commercial organisations invite medium-term deposits from the public on comparatively higher rate of interest, in this way a substantial amount of funds is generated which is used by the company on its medium-term requirements. In this manner, the public deposit private t companies along with the public companies have also started accepted this kind of deposit for meeting their medium-term needs by procuring finance from the public.

Question 12.
What do you understand by ploughing back of profit?
Answer:
Some of the commercial or industrial organisations, in order to meet their financial needs do not distribute their complete profit as earned rather save a little part of it for the development or for buying some technical equipments, machines, this is known as ‘Ploughing back Earned Profits’. The advantage of it is that it strengthens the company’s financial status, while on the other hand, the company’s financial requirement is well met with without any interest.

Question 13.
What is the need of short term finance?
Answer:
An entrepreneur in order to meet his financial requirement for a safe conduct of his business activities, needs short term finance, which is required due to the following reasons:

  • To keep the production till sales
  • To maintain a balance between supply-demand
  • To streamline the supply of product for one year
  • To face temporary but periodical slump in the market
  • For distributing wages or the increasing demand of raw material
  • For credit sales
  • For making up short term losses
  • For renovation and repairs of machines, building or godown, etc.

Question 14.
What is the importance of finance to business?
Answer:
Finance is the base of business. Without it neither a business can be started nor its growth is possible. Finance can be compared with blood in human body. Blood provides strength to the parts of body. Similarly, finance provides the base of success to a commercial organisation. Whether the size of a business is large or small, it needs sufficient finance.

There are following needs of finance:

  • For formulation of business.
  • For operating of business.
  • For development of business in future.
  • For increasing in profit.

Question 15.
Define finance.
Answer:
Finance is the base of business, in the absence of which neither can any business be started nor can grow. The success of a business is attributive to the financial sufficiency and its financial management. It can be compared with the human body. It is as powerful and vital in business as blood circulatory system in human body which provides life and strength to all parts or organs of our body, it is the same way, finance strengths efficiency and operation of any business.

Whatever be the size of any organisation, be it small, medium or large, finance is needed everywhere. In business, right from the beginning to all levels and to the last, finance plays a vital role.

Question 16.
What is long term finance?
Answer:
Long-term finance or permanent one refers to the one, when a company seeks loan for purchasing land, building, machine, etc., on a long term basis and for which the company needs to arrange finance. Such kinds of finances are procured for a period of seven to twenty years, either from banks or other sources, the finance is sought on a long-term basis for meeting the financial requirement.

Question 17.
Mention the meaning of works cost.
Answer:
Works Cost: The raw material when to be converted into a finished product with the help of labour has to undergo various processes. At this stage or in factory, whatever the cost is incurred is known as ‘work overhead’ and when added to the prime cost, it comes to be known as ‘work cost’, which again is of two types:

  • Fixed Cost: The expenditure to be incurred in case of production or no production, can be called as fixed cost, i.e. factory rent, electricity, maintenance etc.
  • Variable Cost: It is that expenditure which increases or decreases according to the production, is known as variable works cost, such as fuel and power, etc.

Question 18.
What is ‘opportunity’ cost and ‘joint’ cost?
Answer:
1. Opportunity cost: If any organisational asset is used somewhere in other work, whatever is gained, is known as the opportunity cost of that asset. For example, instead of operating the machine by self, it is given on lease and whatever the earning is received is known as its opportunity cost.

2. Joint Cost: When two or more products are simultaneously manufactured some of the cost is to be borne separately on each product, which is called as ‘Separate Cost’ but some of the costs are common for all the products, which are called Joint Cost.

Question 19.
What is implicit cost? Give its example.
Answer:
Sometimes, a courageous and a prudent entrepreneur does not consider the cost of the production sources, owned by him, because he does not need to pay for them, such as the cost of land which belongs to the entrepreneur himself, interest on the personal investment, the salary of his own services, etc. This cost is known as Implicit Cost.

Question 20.
Explain the meaning of social cost.
Answer:
Apart from the personal profit, an entrepreneur ought to think in terms of social welfare and the cost on it. In the process of production, the cost which is borne by the entire society, is known as Social Cost. By setting up of an industry which results in environmental pollution costs an adverse effect on the health of the people, cost on washing of the clothes, the effect of chemical flow on water are included in ‘Social Cost’.

Question 21.
State the difference between Fixed and Variable Costs.
Answer:
Difference between Fixed & Variable Costs:

Fixed Costs Variable Costs
1. Expenses incurred on fixed sources of production are called fixed cost. 1. Expenses incurred on variable sources of production are called variable cost.
2. It has no relation with volume of production. 2. It varies according to changes in production.
3. Fixed cost can’t be zero even at the time of no production. 3. It become zero after closing production.
4. Firm can continue production after bearing the loss of FC. 4. A firm continues its production till it receives revenue equal to VC.
5. Examples of Fixed Cost:
(a) Rent of factory building.
(b) Salary of manager.
5. Example of Variable Cost:
(a) Cost of raw material.
(b) Direct labour expenses.

Question 22.
Mention any three objectives of development and growth.
Answer:
There are the following objectives of growth and development:

  1. Accepting newly changing conditions.
  2. To combat the onslaught of the changing conditions.
  3. To retain one’s identity in the market.
  4. To earn profit of large scale.
  5. To aspire for achieving new heights.

Question 23.
Mention any three stages of growth.
Answer:
1. Start-up Stage: First of all in the commercial world the birth of an enterprise takes place and it starts its initial journey at a very limited area and at a smaller scale.

2. Development Stage: Now the enterprise starts moving ahead an gets familiar, more or less in the market. Its production level and the market territory start expanding.

3. Stage of Expansion: At this stage, the entrepreneur holds an opinion that his footing is firm and stable in the market and feels for taking his project a little farther by opening new branches, new unit and new product and in this way he aims at capturing the major part of the market with an intent to bring about expansion of his business domain.

Question 24.
What is the importance of Break-Even point in business management?
Answer:
Break-even point is a level of production and sale where there is zero profit, zero loss. This is the point where cost and revenues derived are always equal.

Break-even point has got its importance due to the following reasons :

  • It helps in fixing the minimum quantity of production.
  • It assists determination of the minimum quantity of sales to be achieved.
  • It guides in estimating the effects of increase or decrease in output upon the profit of the business.
  • It is useful in knowing the product which earns relatively higher, amount of profit.
  • It earns calculation of desired profits.
  • It makes decision easier and faster.
  • It guides in the fixation of revised selling prices of goods and services.

Question 25.
What are the objective of project appraisal?
Answer:
Project appraisal is a tool which estimates the expected costs and benefits of a project. It is also a conscious scrutiny which helps to design a conceptual framework that helps monitor and evaluate the actions.

Project appraisal is under taken by the financial institutions to get important informations on the following aspects:

  • The specific and predicted results of a project.
  • The information necessary to determine the success or failure of a project.

Question 26.
What are uses of the project report?
Answer:
project report is very useful for the entrepreneur. It is a blue print which helps him to explain his idea fuctual turns to his financiers, associate and other. He can find the challenges ahead of him and face it boldly. It helps him to plan his course of action also.

It is very useful for the bankers also before granting finance he evaluates the feasibility and the profitability of the enterprise.

It is also useful for the government legal requirements are executed based on a project report, land tax, sales tax, transport license are have all to be obtained based on the project report only.

Question 27.
What are the major objectives of accounting ratios?
Answer:
The major objective of accounting ratios are as under:

  • To assess the profitability of the business.
  • To measures the operational efficiency of the firm.
  • To determine the solvency of the unit.
  • To assist to process of business forecasting the budgeting.
  • To summaries the accounting information.
  • To help comparative evaluation of Performance.
  • To guide management in decision making.
  • To help future financial planning.

Question 28.
What are the different types of accounting ratios?
Answer:
Accounting ratios are mainly four types which are a under:

  • Solvency ratio
  • Liquidity ratio
  • Profitability ratio
  • Activity ratio

(i) Solvency ratio: Solvency ratio show the financial competence of a firm in meeting its long-term liabilities.

(ii) Liquidity ratio: It shows the present cash position of the business in terms of its current assets and current liabilities whether the term is sound enough to meet its current liabilities without disturbing its fixed assets.

(iii) Profitability ratio: It indicates the financial efficiency of the business as represented by its rate of profit, return or capital employment or earnings per share.

(iv) Activity ratio: It gives the operational efficiency of the business, the level of management of its resources, the sales and profit performance etc.

Question 29.
Mention any three factors sustaining growth.
Answer:
1. Modernisation: In order to keep pace with the business race, an entrepreneur must ensure a constant process of modernisation of his merchandise, by means of colours, types, size, design and modern techniques. In this strategy, where the cost per unit will be low and on the other hand, the desire of the consumers for acquiring new modernised merchandise will also to satisfied.

2. Expansion: A successful, entrepreneur never feels satisfied with the present profit rather continues to explore new vistas in the market for enhancing the rate of production in a better way. He opens new branches and by instal 1 ing a better technical infrastructure, he expands his business.

3. Diversification: The organisations manufacturing the identical products reach a state of saturation which acquires a risky proportion. In wake of the current market conditions, it would be advisable to resort to the strategy of diversification. It is also essential since the life of any product has its own limit and thereafter, it starts disappearing from the market scene. Diversification may be in the product itself or it may be entirely different. It is like the L.G. Company which manufactured television has now diversified to computer, fridge and washing machine, etc. Similarly, L & T which is an engineering company has switched over to the production of cement.

Question 30.
What factors determine the fixed capital requirement of a business?
Answer:
The fixed capital requirements of a business depend upon the following factors:
(i) Nature of Business operations: A small scale industrial unit may need a smaller amount of fixed capital than a large scale industrial enterprise.

(ii) Type of products: Consumer goods like stationary, cofectionary or washing powder may need smaller amount of fixed capital than the production of heavy or costly items like refrigerators, washing machines, car, tracts etc.

(iii) Size of industrial activity: A large scale production unit like cotton textile industry needs heavy plant and machinery involving a large amount of fixed capital than a small scale unit like that of hand loan products.

(iv) Process of production: A business which produces all components required for its finished product will need more fixed capital than a business which assembles parts produced by other business units.

(v) System of acquisition: System of acquisition of fixed assets facilities of obtaining supply of fixed assets without full payment. If a business unit can buy assets on credit, its fixed capital requirements will be less than a unit which is required to pay the price of the assets in full at a time.

(vi) Methods of business responsibility: A firm engaged in the production and distribution of its goods and services need more fixed capital than a company which remains confined to production responsibility only.

To conclude the above we can say that the fixed capital requirement of a business very from unit to unit according to the nature, size, system products and variety of its operations.

Question 31.
Mention any three factors affecting the growth.
Answer:
1. Competition: In the contemporary throttling competition in the market, there are scores of producers who remain engrossed in the sales of their merchandise. The matter of monopoly tends to be a matter of conjecture.

Every competitor tries to complete with his rivals by bringing a better merchandise in the market. Under the circumstances, the growth of any enterprise gets substantially influenced by the competitive menace, because to survive amidst competition, one ought to be exceptionally stronger than others.

2. Changes in Technology: The day-to-day technological innovation has caused a ripple almost in every orbit of life. Any novel merchandise becomes outdated when replaced by any other innovative product and the consumers in? antly switch over to the latest one by leaving the existing product.

Therefore, it is the job of an entrepreneur to keep an eye on such technological changes so as to remain in all preparedness. Thus, the technological innovation docs influence the growth a lot. Anyone who overlooks this consideration, one is bound to lag behind despite growth.

3. Creativity: Creativity here refers to the introduction of such a product/services, the benefit of which is reaped by the consumer with some novelty in it. The entrepreneur who is well-versed in this art, his venture will certainly be moving towards progress and prosperity.

Question 32.
What is innovation? Why it is needed for growth?
Answer:
If an old wine is sealed into a new bottle, the act will soon expose the trick, as such, this strategy cannot lead to growth. Thus, a successful entrepreneur brings about some radical changes in the product/services which was not existing before and the consumers were not much benefited with the pre-existing product. It is the innovation that can guarantee growth.

Question 33.
What do you understand by social obligation and responsibility?
Or, What is meant by social responsibility?
Answer:
Social responsibility is a combination of all those functions by which the interests of the society as a whole are safeguarded. Besides, the personal interests of a particular section of the society should not clash with the interests of the other group of society. Both the groups should be complementary to each other. Awareness of social responsibility teaches the entrepreneur to remain in discipline.

Question 34.
What is provided by an entrepreneur to the society?
Answer:
An entrepreneur provides the following services to society:

  • To provide product/service to consumer.
  • Balance paid to creditors.
  • Salary provide to employees.
  • Rent paid to landlord.
  • Tax paid to Government.

Question 35.
Why discipline is needed?
Answer:
It is the duty of every entrepreneur to abide by the moral-social values within the bounds of business ethics and if he tends to violate these ethical restraints, such as adulteration in the product, sales of spurious goods, overcharging, flawed measuring or under-measurement, labour exploitation, tax-evasion and environmental pollution, etc., that would amount to the violation of discipline. As such, it is significant to take care of discipline in every orbit of life, because of the following:

  • The career of an entrepreneur can be endangered.
  • Long term profit can be an uncertainty or an improbability.
  • The image of the company can be tarnished.
  • Face the ‘consumers’ protest and outburst.
  • Face the disregard of the society.
  • Govt, and society award punitive measures.

In order to protect from these curses, an entrepreneur is supposed to be considerate in terms of discipline by maintaining his clean profile and status in the society by adhering to the norms and codes of social and business ethics.

Question 36.
Mention any five responsibilities of an entrepreneur towards the customers.
Answer:
There are five responsibilities of an entrepreneur towards customers as follows:

  1. To provide quality product at right price in the right measurement/quantity.
  2. To explain the flaws in product clearly.
  3. Not to conceal fact with the help of propaganda, advertising, etc.
  4. To provide post-sales services.
  5. To ensure a good and secured packing.

Question 37.
What are the main responsibilities of an entrepreneur towards his employees?
Answer:
There are five responsibilities of an entrepreneur towards employees as follows:

  1. Employee’s satisfaction with the employer.
  2. Employees must be sufficiently and adequately remunerated.
  3. Working hours and working conditions must be appropriate.
  4. From time to time, there should be a provision of encouraging allowance.
  5. Adequate facilities for leave.

Question 38.
Mention any three responsibilities of society towards an entrepreneur.
Answer:
There are three responsibilities of an society towards entrepreneur:
(i) An employee of an organisation ought to work in a manner that the organisational interest be safeguarded. One must be careful and concerned with not only his benefit rather of the company, too. He must refrain from unnecessary obstinacy, gherao, stop work, etc.

The employees ought to perform their duties with a sense of devotion and dedication by observing their code of conduct. They must extend all the cooperation in every area of their organisational operation with a sense of responsibility.

(ii) It is also true that the customer is the ruler of the market and an entrepreneur has a lot of responsibilities towards him but the ruling customer rather than being a deterrent and contradictory to the prestige, social status and certain compulsions, should adopt a cooperative stand towards the entrepreneur.

The customer must keep the entrepreneur informed about his need, choice and preference. In the event of purchase on credit, the customer should make the payment within the agreed time. He should not think that the entrepreneur does not only sell his merchandise and take money but the customer must understand it that how a shopkeeper meets his requirement at the threshold of his house by arranging the product from far and wide.

(iii) It is the responsibilities of the suppliers to ensure the timely supply of raw materials, products, equipments, etc., in genuine quantity, at right price, and well in time. If some item is found defective, they must be ready to take it back. According to the entrepreneurs need, they should also be prepared to accord credit to him.

Question 39.
Mention the responsibilities of an entrepreneur towards the environment.
Answer:
Any kind of tampering with the environment in terms of filing, pollution, contamination, etc., is a serious offence which is causing a great harm to the present generation. In addition, it is raising a question mark on the fateof the coming generation. No doubt, the industrial units do cause pollution, more or less, to the environment, and it is prime responsibility of an entrepreneur not to harm environment in any way.

The industrial waste, raw residual, etc., must not be thrown into water, its right use should be encouraged. Personal profit should not be the sole consideration here to the extent that the environment be polluted. The Government is very serious about it and does not permit, even then, an entrepreneur ought to be considerate at his own in this regard.

Question 40.
What are the responsibilities of an entrepreneur towards his suppliers?
Answer:
Any entrepreneur, may be dealing in sales-purchase or manufacturing, he is always in need of raw material, necessary equipments which are to be purchased. The one from whom these goods is to be purchased is known as Supplier’. An entrepreneur also does have some responsibilities towards the suppliers which must be taken care of:

  • To encourage good and cordial relations with the suppliers.
  • To ensure a timely payment to them.
  • To entertain their grievances for redressal.
  • To give time enough for supply.
  • To give advance information with regard to requirement.
  • To honour contracts.

Question 41.
What are the main kinds of environment?
Answer:
There are two types of environment:
1. Internal Environment: Internal environment involves those factors which remain under the control of the entrepreneur i.e., land, production, capital, labour, building or venue and infrastructure etc.
2. External Environment: There are the factors on which the entrepreneur has no control i.e., economical, social, political, technical, competitive, clientele, shortage and market etc. These factors do influence the performance and the decision of the entrepreneur.

Question 42.
What is the needs of short term finance? Write four sources name.
Answer:
Short term finance refers to those loans which are procured by a commercial organisation for meeting its short term financial requirements for a period of one year, or less. It is utilized for daily expenses or current assets such as wages to labour, salaries, purchase of raw materials, Godown rent etc.

Following are four sources of short term finance:

  1. Secured loans
  2. Bank overdraft
  3. Unsecured loans
  4. Trade loans.

Question 43.
What are the major requirements of working capital in a business?
Answer:
Capital is the basis of a business operation. Capital, however, may be fixed may be fixed or fluctuating. Working capital is normally required to meet the following purposes in a business:

  • Purchase of raw materials and consumables.
  • Work in a semi-manufactured stage.
  • Completion of finished goods tell they are available for sell.
  • Trade debtors who have obtained supply of products, but have not paid their price.
  • Cost of day-to-day expenses including wages, electricity, telephone, postage, rent and other contingencies which in variably need cash in hand or cash at bank.

Question 44.
What is the purpose of sales promotion?
Answer:
Sales promotion is a form by short term incentive to encourage consumers to buy our production.
The major purpose sales promotion are as under:

  1. To enhance buying response by ultimate consumers.
  2. To increase selling efforts by dealers and sales personal.

Question 45.
What is planning? Write the steps of planning.
Answer:
Planning is a basic managerial function. It is the determination in advance of a line of action by which certain results are to be achieved. If helps in determining the course of action to be followed for achieving the various organisaional objectives.

Planning involves seven steps which are as under:

  • Analysis and situation, environment, resources and critical forces.
  • Setting objectives, recognizing and clearly relating the problem.
  • Controlling and relating facts and information.
  • Searching for alternatives to attain the objectives.
  • Evaluation of the plan and cons associatives.
  • Formulating the plan of action for implementation.
  • Review of the plan.

Question 46.
What communication? Discuss in brief the features of communication.
Answer:
The word communication has been derived from latin word communis mean common. The communication means sharing of ideas in common. It can be defined as exchange of fact, ideas, opinions or emotions between two or more persons to create common ground to understand.

The following are the important features of communication:

  • It is meaningful.
  • Message, idea, instruction must be clear to giver and receiver.
  • It should be appropriate, which means every body can understand easily.
  • Communication should be written.
  • It should be flexible to adjust to the changing environment.
  • There must be two parties for communication system, one is sender and the other is receiver.

Question 47.
Why is project report required?
Answer:
Project report is required to get not only financial aid from banks and other financial institution but also for getting other assistances like registration certificates, allotment of scarce raw materials etc. In normal circumstances, an entrepreneur is highly motivated in the beginning and in his enthusiasm and hurry to venture, may lose track of several vital components for the healthy growth of the enterprise and many after times land in chaos.

In order that he has adequate clarity of what he is doing, why he is doing it, and how he will do that, a project report is necessary. It will enlighten him during the progress of the venture and facilitate him to moderate and harmonize .with various components of the scheme.

Question 48.
Entrepreneurship is a creative activity. Explain it.
Answer:
Entrepreneurship is creative in the sense that it involves creation of value. By combining the various factors of production, entrepreneurs produce goods and services that meet the needs and wants of the society. Every entrepreneurial act results in. income and wealth generation. Even when innovations destroy the existing industries.

Entrepreneurship is creative also in the sense that it involves innovation introduction of new products, discovery of new market and sources of supply of inputs, technological break thoughts as well as introduction of never organisation forms for doing things better, cheaper, faster and in the present context, in a manner that causes the least harm to the environment.

It is possible that entrepreneurs in developing countries may not be pioneering innovative in introducing path-breaking, radical innovations.