Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 4

Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 4 are the best resource for students which helps in revision.

Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 4

Question 1.
Name any three national standards for products and state what products they refer to?
Three national standards for products are:

  1. ISI Mark: Electrical goods
  2. AG Mark: Agricultural and food products
  3. HALL Mark: Gold jewellery.

Question 2.
Identify the intermediaries involved in the indirect selling mode.
Bihar Board 12th Entrepreneurship Important Questions Short Answer Type Part 4, 1

Question 3.
Why should an enterprise go for public financing? Give any three reasons.
Reasons for an enterprise to go for public financing:

  1. When capital investments are high.
  2. The enterprise goes through a process of expansion.
  3. It provides the image and credibility to the company.

Question 4.
Explain how socio-cultural factor and political factor help in scanning the environment?
Socio-cultural Factor involves a close study of the life styles, beliefs, customs, conventions, practices etc. Expectations of individuals, their preferences on the basis of their family background, age group and education, form a part of the study.

Political Factor: The rule and regulations and the laws that monitor and regulate the market forces are frames by the govt, policies of the govt, in power have to be examined while taking business decision.

Question 5.
Name any three central level financing institutions and explain how they support entrepreneurs?
1. Industrial Finance Corporation of India (IFCI): The first development bank was established as a statutory corporation on 1st July, 1948. Its specific objectives are granting loans and advances to industrial enterprises those repayable within 25 years.

2. Industrial Development Bank of India (IDBI): IDBI was established in July 1964, by passing an act in the parliament. Before 16th February, 1976, it was a wholly owned subsidiary of Reserve Bank of India. Since then it has been delinked from RBI and made an autonomous corporation.

3. Industrial Credit and Investment Corporation of India (ICICI): ICICI was established as a joint stock company under the companies act, 1956 in january, 1955. Now it has been merged with ICICI Bank for the purpose of strengthening the banking activities.

Question 6.
Explain direct and indirect competition and changes in technology as factor influencing growth of an enterprise.
Competition may directly come from other firms manufacturing the same product. To survive the competition the manufacturer has to constantly maintain his competitive edge over others. Indirect competition may be due to availability of cheaper product substitutes. It influences growth.

There is a constant change in the process of production and machinery due to technology change. Entrepreneur needs to keep pace with these changes for the growth of an enterprise.

Question 7.
Why does an entrepreneur need the operational plan?
An entrepreneur needs the operational plan because of the following reasons:

  • Technique of Production: Operational plan shows the method of production adopted by the entrepreneur viz. Labour intensive, capital intensive, small scale production etc.
  • Efficiency: Efficiency with which the resources are utilized, extent of diversion from optimum utilization etc. are known to the entrepreneur.
  • Cost Effectiveness: Cost effectivenss of the enterprise is understood by the entrepreneur. The areas of unnecessary cost increase are known to a potential entrepreneur.
  • Managerial Ability: Managerial capability and prudence is reflected by the operational plan.
  • Synergy: Synergy of team, the areas of lacuna in co-ordination etc. are clearly understood by the entrepreneurs.

Question 8.
State the three basis qualities of a good entrepreneur.
Three basic qualities of a good entrepreneur are:

  1. Understanding the objectives of the business.
  2. Understanding of the business environment.
  3. Clarification of the purpose and goal.

Question 9.
State any six steps to be taken to develop a good human resource for an organisation.
Steps to be taken to develop a good human resources are:

  1. Recruitment of competent personnel.
  2. Training of the personnel.
  3. Motivation for performance.
  4. Providing appropriate organizational climate.
  5. Scope for performance.
  6. Feedback and appraisal.

Question 10.
Values occupy the apex position in sustainable development. Discuss any two values for budding entrepreneur, in context of Present Indian scenario, to follow.
So as to develop into a truly successful venture, it is almost mandatory for every entrepreneur to believe and follow certain basic principles or standards of behaviour. As an enterprise is a reflection of entrepreneur a good, honest dedicated entrepreneur will creates honest enterprise. Thus value form apex of sustainable development.

  1. Social concern
  2. Honesty and fair dealings.

Question 11.
Define a planning paradigm. State the steps required for the planning to be done by the cntcrprcncur at various levels of an enterprise.
Planning Paradigm refers to a model, or a general pattern followed by budding entrepreneurs suggesting them how to progress from an abstract idea to achieving sustained stability and the value added servics. Planning, an intellectual process of thinking in advance what do, how to do, when to do, is done by entrepreneurs at various levels of establishment. It is as follows:

1. Planning before Starting the Operation of Firm: At this elementary level, planning comprise of:

  • All information regarding objectives.
  • Legal aspects pertaining to enterprise.
  • Financial and administrative decisions of the proposal enterprise.
  • Its stage of preparing project report.

2. Executive Level Planning: This level of planning entails:

  • Selecting the objectives and policies of the firm.
  • Establishing programmes and procedures for firm.
  • Manufacturing and marketing locations.
  • long term objectives in market.

3. Operational Level Planning: This level of planning deals with:

  • Planning specific projects, events, processes and programmes of the enterprise.
  • Budgeting programmes and policies.

Question 12.
‘Those who will not change will perish.’ Explain any two activities which can help enterprise to sustain growth.
The growth and development can be sustained by an enterprise through:
1. Modernization: By adopting and changing to new process, technologies, machineries, standards, designs, devises of human resources utilization, etc. in place of outdated, worn-out modes increases product, suitability and reduces its cost thus promoting growth of an enterprise.

2. Expansion: An enprise grows by increasing the volume of its production. Increase investment, a higher turnover, more units at different places, all symbolizes growth.

3. Diversification: A dominant sign of growth, characterised by addition of similar products or services to the original ones, or maybe in the field of totally new products or services or any other allied area.

Question 13.
Differentiate between owner’s fund and borrowed funds on the following basis:
(i) Control over management (ii) Security of assets (iii) Permanence.
Difference between owner’s fund and borrowed fund are as following:

Basis Owners Fund Borrowed Fund
1. Control over management It provides the basis to the owner to acquire their right to control over management. It does not provide the basis to acquire the right to control over management.
2. Security of assets It does not require any security of assets. It require security of assets.
3. Permanence It provides permanent capital. It does not provide permanent capital.

Question 14.
What is relationship between human activities and entrepreneurship?
The relationship between human activities and entrepreneurship can be more simplified by saying entrepreneurial opportunity lies in meeting human needs. Human needs are of various types – 1. Physical, 2. Economic, 3. Social, 4. Political, 5. Spiritual etc.

For fulfilling such needs the human beings are continuously engaged in variety of activities. This creates perpetual opportunity in the society for continuous innovation, production, industrial development increases in per capita income, high standard of living, maintenance, modification and improvement in goods and services to enable people to perform the required human activities.

Question 15.
Who is an Entrepreneur?
Entrepreneur is a person who perceives an idea of establishing a new business enterprise and then brings together manpower, land, equipment, material and arranges necessary capital needed for business. He is a person who takes risk of setting up new enterprises. Although, risk taking is the primary function of an entrepreneur but in modem time he is required to perform other functions also, such as leadership, planning, innovation, control and other related functions. He is always in search of new opportunities.

1. According to Joseph A. Schumpeter, “Entrepreneur is a person who foresees the opportunity and tries to exploit it by introducing a new product, new method of production, a new market, a new market, a new sources of raw material or a new combination of factor of production.”

2. According to Herbton Evans, “The entrepreneur is a person or group of persons who has (or assumes) the task of determining the kind of business to be operated.”

3. According to Forest Frantz, “The entrepreneur is more than a manager. He is an innovator and promoter as well.” ,

Question 16.
State the objectives of identification of business opportunities.
The major objectives of identification of business opportunities are summed up underneath:

  • To make a survey of the location for a business venture by keeping in view the specific demand in the country, and the various regions, on the basis of which the viability of the venture depends. Such feasibilities should be realistic in term of technological and economical aspects.
  • To assess the extent of demand or consumption both in technological and economical terms in a specific area.
  • To identity those areas, notwithstanding the local resources but in view of the inexorable demand, the probability or scope of business can be thought of in economical term.
  • To ascertain the viability of a venture both on long-term or short-term basis.
  • To identity the business opportunities in other areas.
  • To assess the impact of the existing financial institutions in context of the industrial evolution process.
  • To evaluate the involvement of labour, capital investment, material and infrastructure for establishing any commercial venture.

Question 17.
What are the kinds of opportunities?
Commonly, there are two categories of opportunities:
1. Existing Opportunities in the Environment: There are some kind of opportunities which are already existing, e.g., paper, cloth and footwear industry where some innovative devices are required to bring about some modification, novelty and distinction from the existing quality and look. Here the skilled entrepreneurs try to introduce or to incorporate something new.

They continue looking out for some innovative elements to be incorporated so as to do away with the existing shortcomings and change the entire complexion of the existing merchandise to present before the consumer.

2. Created Opportunities: Such opportunities are not pre-existing rather created in view of the aspirations of the consumers, changing fashion trends, technical innovations and according to the prevailing conditions, assume new forms.

Such as, due to continuous innovations in the field of Information Technology, new appliances like television, computer and software etc. always remain exposed to innovation, in the field of Biotechnology new appliances and innovative devices are being exploited for combatting the newly emerging human deadly diseases, manufacturing and research of wonder-drugs, etc., as this phenomenon is unstoppable.

Question 18.
What is Demand Forecast?
What would be the demand for a particular product by a specific group of customers, in a well defined geographical region, during a particular span of time under the planned marketing strategies and the existing market environment, is termed as demand forecast. In other words, how much quantity of a product would be actually purchased by customers in future is demand forecast.

Question 19.
Why is entrepreneurship regarded as a creating activity?
Entrepreneurship is creative in the sense that it involves certain value. We must appreciate that in the absence of entrepreneurship ‘matter’ does not become a resource. By combining the various factors of production entrepreneurs produce goods and services that meet the needs and wants of the society. Every entrepreneurial act results in income and wealth generation. Even when invocations destroy the existing industries for example, zerox machines destroyed carbon paper industry. Such entrepreneurial actions are commendable as the act of creative destruction.

Production, implying creation of form, Place, time and memory combined utilisation of deverse factors of production, land, labour, capital and technology. Entrepreneur, in response to a perceived business opportunity mobilise these resources into a productive enterprise or firm. It may be pointed out that the entrepreneur may not be possessing any of these resources he may just have the idea that promotes among the resource providers.

An entrepreneur needs negotiations skills to raise these in the best interests of the enterprise organisation of production in also involves products development and development of the market for the product. Besides, entrepreneur may be required to develop even the source of supply of requisite inputs. Thus it is rightly said that entrepreneurship is a creative activity.

Question 20.
Why environment scanning is considered to be an important aspect of entrepreneurship?
Environment constitutes forces which influence a business operation Such forces are mainly external and beyond the control of entrepreneurs. It is within the existing environment however, that an enterpresie has to function effectively. This needs a proper assessment and understanding of the current threats and opportunities of a business.

The relationship between a business and environment has three forms:

  1. Input: Environment provides the required input to the organisation, for instance, land, material, human resources, money etc.
  2. Conversion: Resources used to produce goods and services within the given framework.
  3. Output: Products arc sold back to people, goods are transferred and exchange takes place. This is a cyclical process of relationship between environment and enterprise.

The major objectives of environmental analysis are:

  1. An effecting utilisation of resources.
  2. Information about changing trends in market demand.
  3. Need for modernisation, diversification and organisation to meet the emerging problems.
  4. Profitable exploitation of opportunities and development of strategies to defeat the threats.
  5. Improved level of managerial efficiency.
  6. Forecasting future events and preparing in advance for the anticipated development.

Successful entrepreneurship expects environmental scanning on a continuous basis. Only this can give survival and growth to the unit in a profitable manner.

Question 21.
Why an entrepreneur should pay proper attention to marketing of his production?
Marketing is an essential activity of modern business which has wider competition, larger diversification and international distribution. Proper attention to marketing is required due to its following benefits:

  • it helps business units in using its resources for consumer’s satisfaction.
  • it helps in producing what consumers want and assists increased profitability.
  • it leads to long run growth, good will, prosperity and survival give space of the unit.
  • if offers opportunities of product diversification, risk minimisation, out put specialisation and customers support.

Question 22.
What are the objective of identification of business opportunities?
The following are the objective of identifications of business opportunities:

  • To make survey of the location for a business venture by keeping in view the specific demand in the country, and the various regions, on the basis of which the viability of the venture depends. Such feasibilities should be realistic in term of technological and economical aspects.
  • To assess the extent of demand or consumption both in technogical and economical terms in specific areas.
  • To identity those areas, not with standing the local resources in view of the inexorable demand the profitability or scope of business can be thought of in economical term.
  • To ascertain the viability of a venture both on long term or short term basis.
  • To identify the business opportunities in other areas.
  • To assess the impact of the existing financial institution in context of the industrial evolution process.
  • To evaluate the involvement of labour, capital investment, material and infrastructure for establishing any commercial venture.

Question 23.
Write a note on environmental appraisal and analysis.
Environmental appraisal is a process by which a strategic planner, in order to encounter his opportunities and challenges, continue monitoring the economic, social, political, production technological and market condition. The environmental analysis refer to the reactions, environmental factors, anticipations and expectations of an entrepreneur.

To an entrepreneur this analysis is radar, like important by which he is kept informed by the probable risks and threats which enable him to stay prepared for any eventualty and maintain an equilibrium between his strategies and objectives.

It enables an entrepreneur to ascertain about the environmental conditions and also about the implied probabilities and opportunities. It acts like a radar. It keeps a watch on the on going change in the environment.

Environmental analysis is a kind of holistic exercises which includes a complete survey and analysis of the business environment and not by the parts, as such.

Question 24.
What do you mean by market environment?
A company’s marketing environment consists of the factors and forces outside marketing that affect marketing managements ability to develop and maintain successful transaction with its target customers. According to Cravens and other, “Markeing environment in which is external to the marketing management function, largely uncontrolable, potentially relevant to marketing decision making and changing and constraining in nature.”

Question 25.
What is Market Evaluation? Why it is done?
Ascertaining customer incomes, their likes and dislikes and details about their educational qualifications through a survey and producing products to match the above is termed as Market Evaluation. This is undertaken to manufacture the products in accordance with the market requirements.

Question 26.
On which two important points an entrepreneur will pay special attention to select an entreprise?
1. Easy Formation: if an enterprise is soon and conveniently to be established, sole trading is recommended. For a partnership the same-minded

partners with the same idealogy have to be taken into the fold. In case of joint stock company and co-operative society various legal and constitutional formalities are to be furnished along with the registration. Therefore an entrepreneur after careful consideration should make the selection of the enterprise because all the patterns are strewn over with pros and cons.

2. Types of Business Activities: An entrepreneur ought to select his enterprise according to his business activities. If it is a small-scale enterprise or individual service, i.e., barber, tailor, jeweller, etc., sole trading is recommended. In the event of a large enterprise, partnership or a joint enterprise may be opted.

Question 27.
What is the role of Government regulations in selection of an enterprise?
Generally, every business or industry is required to follow certain local and Government rules and regulations. Some of the Government regulations are based upon the size or volume of business while some other regulations are in respect of the ownership of business. Since the proprietor or partnership business is usually small in size and turnover, so Government control over such type of business is comparatively very limited.

While the company form of organisations usually function on a large scale so they are bound to a greater extent by legal restrictions. Each and every activity of such organisation is reviewed under the Companies Act.

Question 28.
Name any two factors to be considered before setting up of an enterprise.
1. Labour or Men: In all the resources of production, the ingredient of labour is the most mobilising element that stimulates all other factors and turns even the most useless thing into a useful one. As such, on the basis of an active labour force, the success of an enterprise can be determined. For the successful operation of an enterprise both kinds of skilled and unskilled labour force are required. In order to make this force workable managerial personnel are required.

In order to make this force workable managerial personals are required. Therefore, the appointment of managerial staff should be made in advance in an efficient manner so that they can ensure the successful working of the plant-machinery at an optimum level. For running efficiently an enterprise it is important to appoint the efficient people failing which amounts to the wastage of time, labour and money. At times the training and motivating schemes also demands attention.

2. Raw Material: If the enterprise is production-oriented a prior arrangement should be emphasised with regard to availability, type, cost/price and a regular supply of the raw materials. For want of the raw materials the production might be jeopardised.

Question 29.
Why the Project Report is essential?
The project report must incorporate all the relevant informations with regard to the project and should be submitted to the government industrial department for registration. On the basis of the project report, the temporary registration will be approved of and the permission for setting up the project will be granted accordingly. At the same time as per the nature of the project, various concessions may also be accorded to.

Therefore, a green signal for establishing the project is accorded and the process of operation starts here on.

Question 30.
What do you mean by motivation?
Motivation means to encourage or inspire the subordinate employees so that they should enthusiastically participate in the organisational affairs and perform to the best of their capacity for facilitating the realisation of the goals of their enterprise. A successful manager exploits various practical techniques to instil enthusiasm and zeal in their subordinates.

Financial incentives and other such offers are some of the good means of motivation. Non-financial or monetary motivational techniques, like appreciation, recognition, freedom to work, etc. are the effective techniques of motivation in certain conditions.

Question 31.
What are the packaging function?
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: (i) Product protection (ii) Enhances to product value, (iii) Product advertisement, (iv) Attraction.

Question 32.
Explain any two steps in the execution of the setting up of an enterprise.
1. Arranging the Site: Prior to setting up of an enterprise, all the facilities which necessiate the project should be carefully considered in terms of water, electricity and geographical approaches etc.

2. Construction of Building: Sometimes, the site or building is provided in the industrial area on rent by the government, otherwise, according to the suitability of the project, either the land or the building can also be obtained on rent from some private agency.

Even if this is not possible the private land can be purchased in which a building can be raised according to the suitability of production, technical infrastructure and other considerations. The building should be erected by keeping in view the future expansion and development.

Question 33.
Mention any three features of planning.
Following are the major features of planning:
1. Definite Object and Goal: Planning aims at achieving the certain objectives and every entrepreneur keeps such objectives in mind and plans accordingly.

2. Forecasting: The second important phase of planning is to look towards future with a sense of anticipation. According to Fayol, “Planning is a synthesis of the forecasts, be they be long term or short term, general or particular forecasts.” As such, he recommends from one year to ten years forecasting. As a Chinese saying goes, “Plan your annual strategies in the spring season and day-to-day strategy is to be planned in everyday morning.”

3. Unity: In Fayol’s words, unity is also an essential feature of planning. At one time only one planning can be executed as any dual planning at one time can lead to chaos and uncertainty.

Question 34.
Mention any three limitations of planning.
Although planning is of utmost importance in a business venture but it cannot be a full proof in every event because of certain limitations which are as follows:
1. Based on Forecasting: Planning is first based on forecasting which may not be realistic. If the circumstances go contrary the planning is bound to go haywire.

2. Political Instability: The plannings are formed on the basis of the government’s industrial, economical and monetary policies. Following a change in the government the policies are subjected to change which renders the plannings useless.

3. Reduction in Initiative Capacity: Every executive and employee has strictly to adhere to the pre-determined policies and is not permitted to take a lead in any activity or decision at his own, resulting in the loss of useful opportunity sometime.

Question 35.
What are the various types of project planning?
1. Extension Projects: Projects referred to extension or expansion are undertaken to facilitate sales and distribution by ascertaining the possibilities of the market which include the planning for extending the market area and in this regard survey of the new markets, market-research, advertisement, sales and informations about the sales of the products in the international markets bre the factors essential for the adoption of the projects.

2. Expansion Projects: The production of new items, establishment of new production units, increase in the production capacity, etc., are the projects which are incorporated in the planning of expansion projects.

Question 36.
Write two essential points of good project planning.
Essentials of Good Project Planning or Preparation: A good project is always Implicit of some essentials in the absence of which a successful completion of it is not possible. The main essentials are:
1. A project planning should be based on the logical and realistic factors.
2. Various aspects in relation to the project must be meticulously analysed.

Question 37.
How break-even point is determined?
Break-even Point: Break-even point is that point which shows no profit or no loss position.
Calculation of B.E.P. as follow :
BEP = \(\frac{\mathrm{F} \times \mathrm{S}}{\mathrm{S}-\mathrm{V}} \times 100\)
where, F = Fixed cost,
S = Projected Sales
V = Variable Cost.

Question 38.
What is fixed capital?
Fixed Capital is also known as fixed assets which refers to that part of the capital which is invested on fixed assets, viz., land, building, machinery, furniture and equipments, etc. The objective of purchasing them is to earn income from them on the long-term basis. These assets remain involved for a long time, thus, called as fixed capital. In the statement of Flancy and Miller which goes on as “Fixed assets are assets of relatively permanent nature used in the operation of business and not intend for sale.”

The reason for terming it as fixed capital because its price remains the same and permanent rather it is used in the long term which lacks liquidity. The fixed capital is obtained by issuing shares, debentures and securities and securing long term loans from various financial institutions.

Question 39.
What for the working capital is required?
Availability of enough working capital is indicative of liquidity of business and capacity to make prompt payments. Working capital is needed for making payment of day to day expenditure, for meeting current liabilities and for availing benefit of cash discounts.

Question 40.
What is the meaning of the term fund?
The word ‘funds’ has different meanings. In the narrow sense, it is defined as cash resources of the business. But ‘funds’ is a broader term than cash. In the broader sense, it includes all resources of the business whether in the form of material, money, machinery, etc.

Flows in cash account are only a part of the wider funds movement and many of these movements such as purchase or sale of goods on credit (i.e. credit transactions) do not involve cash. The third interpretation of the term ‘funds’ is working capital, gross or net. In the context of preparation of fund flow statement, ‘funds’ refers to ‘Net Working Capital.’

Question 41.
What do you mean by Ratio Analysis? Give main objectives of Ratio Analysis.
Or, What are the main objectives of Accounting Ratio?
A ratio is the measure of relationship between two numbers or values. The relationship may be expressed as the quotient of one number divided by another, the ratio then conveys the value of one item per unit of the value of another, or fraction of the other value. For instance, if the ratio of sales to stock (called stock turnover) is 3, it means that the sales value is 3 times the value of stock in hand.

1. According to Robert N. Anthony, “A ratio is simply one number expressed in terms of another. It is found by dividing one number, the base into the other. A percentage is one kind of ratio, in which the base is taken as equaling 100 and the quotient is expressed as per hundred of base.”

2. According to Hunt, William and Donaldson “Ratios are simply a means of highlighting in arithmetical terms the relationship between figures drawn from financial statements.”

Objectives of Ratio Analysis: There are following objects of Ratio Analysis:

  • To help in forecasting.
  • To help in decision-making.
  • To help in communication.
  • To help in co-ordination.

Question 42.
What is the status of profit at the Break-even Point?
Break-even Point is that point of production or sales at which there is no profit-no loss. This is why this point is also known as ‘No profit-No loss Point’.

Question 43.
Write the uses of Break-even Analysis.
Uses of Break-even Analysis:

  • Computation of Break-even point.
  • Computation of Break-even point at various levels of sales.
  • To determine the sales-volume for securing desired profit.
  • To determine unit sales price at a fixed Break-even point.
  • To determine safety margin limit.
  • To make an assessment of the impact of fixed and variable costs on the Break-even Point and sales.
  • Computation of necessary sales for meeting the proposed expenditure.
  • Decision to manufacture or make purchases from third party for marketing.
  • To determine the most suitable product mix.
  • To take decisions relating to changes in production capacity.

Question 44.
Define venture capital.
Venture capital is a strong foundation and structure on basis of which newly developed enterprises are established and the capital provider and the entrepreneur become co-partners. Venture capitalist not only provides finances through purchase of share but also participates in the management of the business and helps in achieving increase in business.

According to Pratt, the venture capital is regarded as, “It is an initial status of finance which is offered to the new and embryonic enterprises who like to grow and consistently expand.”

According to Wan, “The venture capital is also considered as an unsafe risky finance.”

As per I. M. Pandey, “Venture Capital is an investment which is in the form of simple, semi-ordinary and, some time, a straightway credit or compulsorily (like repayment of interest and capital when the sales begin).”

Question 45.
What are the eligibility for venture capital financing?
According to the Government of India the following organisations are capable for getting finance:
1. Technology: New or unexplored technology or the most prevalent or the most recent technology which has just been evolved and just arrived and can bring about a considerate improvement in the existing technology in India.

2. Size: The total investment must not exceed the mark of 100 millions of rupees.

3. Entrepreneur: A new entrepreneur who is professionally skilled and technologically well-versed but has no sources and no funds. The venture financers do not advance loans to trading, broking and investment on financing business or agencies like organisations. In India, a capital financing agency arranges minimum 75% of funds for investment in the form of venture capital and this is to be managed by professionals.

4. Enterprise: The financial assistance is provided only to those organisations which involve more risks in comparison with others, in term of unexplored or the most adequate technology or in which there are new entrepreneurs who are not much experienced but capable and more enterprising and the size of their organisations is also desirable.

5. Assistance: Assistance is generally an ordinary one aft even loan facility can also be provided.

6. Foreign Equity: In the industrial enterprises percentage of foreign equity should not be more than 25% of the toal investment.

7. Debt-Equity Ratio: Minimum debt-equity ratio should be 1 : 15.

Question 46.
What kind of role is played by a Venture Capitalist?
A venture capitalist plays the multiple roles of a Banker, Development Financer and that of the Investor in the stock-market. The venture capitalist not only provides share capital to the entrepreneur through purchase of shars but also helps in increasing the business through his involvement in the management of the business. He not only attempts to nurture the investment made by the entrepreneur but also attempts to increase the level of investment.

Question 47.
What are the causes of need for technology?
Need for Technology: Technology is essential due to the following reasons:

  • The technological standard is essential for being an indicator of the national economic growth.
  • With the help of technology an improvement can be brought about in terms of labour, capital and other factors with regard to the production.
  • Technology is also imperative for economic growth and its technical specification.
  • Technology is an integral source or a means of bringing about innovation for changing the production to consolidate the capital and to upgrade the machinery and infrastructure.
  • It is instrumental in obtaining and exploiting the natural resources for the purpose of their optimum utility.
  • By means of technology, new skills, new sources of production and methods, novel and the latest uses of the raw material and the adequate use and new experimental devices of machines and equipments can be acquired.
  • Technology enables us to strengthen the manpower and its co-ordinate use with the natural and geographical resources.

Question 48.
What are the limitations of capital-intensive technique?
The various limitations of capital-intensive technique are as follows:

  • Due to this technique the society is divided into two categories : haves and have nots.
  • This technique involves a great deal of financial investment which is beyond the capacity of the developing countries.
  • It trends to exploit both the manpower and the consumers.
  • It tends to ignore the balanced development of region.
  • It trends to encourage the adverse use of capital sources.

Question 49.
Is management a profession?
According to some contemporary scholars management is a sort of profession which is gradually tending to be a profession according to whom in the developed and the most advanced nations, like America, Japan, England and Germany and other industrialised countries, management has developed into an absolute profession and the managers are given assignments incommensurate with their management acumen.

In America, an industrial engineer is a professional personnel. It is the same as in case a lawyer or a doctor needs legal and medical knowledge respectively, similarly a manager needs to have the knowledge of management. Even in our country, the capitalist managers are gradually acquiring the status of professional managers.

Question 50.
Is management an art or science?
Management is both art and science. Management in the form of science, provides necessary guidance to managers because of its practical utility and application (in the form of principles) and management in the context of an art helps the management to face very situation (by adopting the best possible way to do any work). Hence, it is logical call management a science as well as an art.