Q. Discuss five problems of small-business units in India. (5marks) (2015/2018)
-> Small scale industries are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. Small scale industries play an important role in social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis.
Following are the various problems faced by small scale industries:-
1) Finance- One of the severe problems faced by Small scale industries is scarcity of finance in the development of small scale units. The position of small scale industries in this regard is even worse. These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks. Banks also do not lend money without adequate collateral security or guarantees and margin money, which many of them are not in a position to provide.
2) Raw material- Another major problem of the Small scale industry is the procurement of raw materials. The majority of small scale and cottage industries depend on local sources for their raw material requirements. Their bargaining power is relatively low due to the small quantity of purchases made by them. Also, they cannot afford to take the risk of buying bulk as they have no facilities to store the materials.
3) Marketing- One of the main problems faced by the small scale units is in the field of marketing. Their units often do not possess any marketing organisation and consequently products compare unforgettably with the quality of the products to the large scale industries.
4) Labour- Small business firms cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more. Thus, productivity per employee is relatively low and employee turnover is generally high. Because of lower remuneration offered, attracting talented people is a major problem in small business organisations.
5) Other problems- In addition to the problems enumerated about the small scale industries face a number of other problems like efficient management, non availability of cheap power, unchanging and unresponsive production pattern, burden of local taxes, competition from large scale industries, etc.
6) Managerial skills- Small business is generally promoted and operated by a single person, who may not possess all the managerial skills required to run the business. Many of the small business entrepreneurs possess sound technical knowledge but are less successful in marketing the output.
Q. Explain the role of small-scale industries in rural areas. (5marks) (2017)
-> Small scale industries are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. Small scale industries play an important role in social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis.
Role of Small-scale industries in rural areas:-
1) Small industries provide employment opportunities in rural areas.
2) They are the second largest employers of human resources.
3) They contribute nearly 40% of the gross industrial value added.
4) The development of village & rural industries leads to industrialization in rural areas.
5) They ensure equitable distribution of national income & wealth by reducing income inequalities between rural & urban areas.
6) They help in mobilization & utilization of local resources & skills.
7) They help generate multiple sources of income to the rural households.
8) They prevent migrations of the rural population to urban areas in search of employment.
Q. Explain any five factors to be considered for choice of form of business enterprise. (5marks) (2015)
-> The following factors will be taken into account before choosing the form of business organisation are:
a. Ease of Formation- A good form of organisation, as judged from the point of view of ease of formation, is one which involves the least expenses in formation and minimum of legal formalities. Besides, it should involve the least difficulty in the choice of proper associates for running the business.
b. Limit to Liability- From the point of view of risk, the businessman will naturally prefer that form of business organisation where his liability is limited.
c. Flexibility of Operation- A good form of organisation offers the maximum flexibility and adaptability. This means that the organisation should lend itself to change and adjustment without much difficulty as the need be. In choosing a form of organisation, the entrepreneur will consider whether it will add to the flexibility and efficiency of management to associate some more persons as part owners or as employees.
d. Ease of financing- Another important feature of a good form of organisation is the facility of raising the required amount of capital.
e. Retention of Business Secrets- The entrepreneur will also have to be careful to ensure that the form of organisation chosen by him will allow vital business secrets to be retained without being leaked out to the competitors. This will naturally mean that he will have to select his associates with utmost care.
Q. What are the different types of cooperative societies? Discuss. (8marks) (2016)
-> Types of cooperative societies:-
- Consumers cooperative societies- These types of business are owned by the customer for their mutual benefits. Its basic aim is to eliminate middlemen and sell goods at a cheaper rate to its members.
- Credit cooperative societies- Credit cooperative societies are established for providing easy credit on reasonable terms to the members. The members comprise persons who seek financial help in the form of loans.
- Producers cooperative societies- These societies are formed for the purpose of marketing, support and purchasing of goods of its members who are performing similar products.
- Marketing cooperative societies- Such societies are established to help small producers in selling their products. The members consist of producers who wish to obtain reasonable prices for their output.
- Farmers cooperative societies- This is a cooperative where farmers pool their resources such as land, machinery, and marketing of farm products.
- Credit cooperative societies- Credit cooperative societies are established for providing easy credit on reasonable terms to the members. The members comprise persons who seek financial help in the form of loans.
- Housing cooperative societies- Housing cooperative societies are established to help people with limited income to construct houses at reasonable costs. The members of these societies consist of people who are desirous of procuring residential accommodation at lower costs.
