Students can read the important questions given below for Entrepreneurial Planning Class 12 Entrepreneurship. All Entrepreneurial Planning Class 12 Notes and questions with solutions have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS. You should read all notes provided by us and Class 12 Entrepreneurship Important Questions provided for all chapters to get better marks in examinations. Entrepreneurship Question Bank Class 12 is available on our website for free download in PDF.
Important Questions of Entrepreneurial Planning Class 12 Entrepreneurship
VERY SHORT ANSWER TYPE QUESTIONS
Question. Who can write the business plan?
Answer:Any person(s) who wish to start a business venture can write the business plan.
Question. What is the meaning of shipping in the process of operational plan?
Answer: Shipping is a process that describes the flow of goods/services from production to the final consumers.
Question. What is a proforma income statement?
Answer: Proforma income statement is a projected net profit calculated from estimated revenue minus projected costs and expense.
Question. Give any two contents of business plan.
Answer: General introduction and Business venture.
SHORT ANSWER TYPE QUESTIONS I
Question. What is elevator pitch?
Answer: Elevator pitch is a three minute summary of the business plan’s executive summary. This is used to awaken the interest of potential funders, customers, or strategic partners. It is common for start-ups to have three or four formats as follows for the same business plan and elevator pitch is one of it.
Question. Name the factors which affect the operational plan.
Answer: Operation plan is affected by:
(а) Nature of venture
(b) Type of product/service
(c) Scale of operation, and
(d) Technology involved
Question. What is a Business Plan?
Answer: (i) A business plan is a comprehensively written down document prepared by the entrepreneur describing formally all the relevant external and internal elements involved in starting a new venture.
(ii) It is a ‘road map’ required by the venture to evolve from an early start up to a mature business.
(iii) It workout all the relevant external and internal elements involved in starting a new venture and then running it successfully.(iv) It is a formal statement of a set of business goals to be achieved by the enterprise.
SHORT ANSWER TYPE QUESTIONS-II
Question. Describe the contents of organizational plan.
Answer: Organizational plan includes the following:
(i) The terms and conditions associated with the selected form.
(ii) Lines of authority and responsibility of members of the new venture.
(iii) The names, designation, addresses and resumes of the members.
(iv) Stake of members in the organization.
(v) Roles and responsibilities of each member.
(vi) Procedure for solving conflicts/ disputes amongst members.
(vii) Forms of payment for the members of the organization.
(viii) Voting rights, managerial and controlling rights of the members.
Question. Write the steps in preparing the marketing plan.
Answer: Procedure for preparing the marketing plan involves following steps:
(i) Business Situation Analysis
(ii) Identify the Target Market
(iii) Conduct Swot
(iv) Establish Goals
(v) Define Marketing StrategyQuestion
Question. Which common techniques are required to calculate the forecasting income?
Answer: Following are the most commonly adopted techniques for forecasting:
(i) Marketing research
(ii) Industry sales
(iii) Survey of buyers’intentions
(iv) Expert opinions
(v) Financial data on similar start-ups
(vi) Some trial experience of self or others.
LONG ANSWER TYPE QUESTIONS
Question. What is an operational plan? Discuss its blue print.
Answer: Operation plan is a system whereby there is achieved a smooth and coordinated flow of work within the factory so that, by planning and control of all the productive operations in all the stages of manufacture, the final product is completed in accordance with the plans.Wright Following are the elements of operation plan:
(i) Routing: It is a process which determines the exact path a product has to follow right from raw material till its transformation into finished product.
(ii) Scheduling: It means fixation of time, day, date when each operation is to be commenced and completed.
(iii) Dispatching: It is the process of initiating production according to pre-conceived production plan. It involves issuing necessary orders instructions, guidelines, etc.
(iv) Follow-up: It relates to evaluation and appraisal of work performed.A properly planned follow-up procedure is helpful in finding errors and defects in the work.
(v) Inspection: Inspection is the art of comparing materials, product or performance with established standards. This helps to set up laboratories or evolve methods to ensure predetermined quality of product.
(vi) Shipping: It describes the flow of goods/services from production to the consumers. It is a detailed presentation by the entrepreneur explaining the chronological steps in completing a business transaction efficiently and profitably.
Question. How many choices are there to start a business by a business man? Explain each of them.
Answer: Following are the choices available-to a businessman:
(i) Sole proprietorship: Sole proprietorship is a business unit whose ownership and management are vested in one person. The individual assumes all risks of loss or failure of the enterprise and receives all profits from its successful operations.
(ii) Partnership: A partnership is an association of two or more persons to carry on, as co-owners, a business and to share its profits and losses.
(iii) Joint Hindu family: Joint Hindu family or Hindu Undivided Family Business is a unique form of business organisation prevailing only in India. The HUFs have been defined under the Hindu law “As a family, which consists of male lineally descended from a common ancestor and included their wives and unmarried daughters.”
(iv) Co-operative organizations: Co-operation is a form of organisation where in persons voluntarily associate together as human beings on the basis of equality for the promotion of the economic interest of themselves.” Its main motive is mutual help and works with the principle of ‘Each for all’ and ‘All for each’.
(v) Corporation/Joint Stock Company: A joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.
VERY LONG ANSWER TYPE QUESTIONS
Question. Describe the different elements of operational plan.
Answer:Following are the elements of operation plan:
(i) Routing: It is a process which determines the exact path a product has to follow right from raw material till its transformation into finished product.
(ii) Scheduling: It means fixation of time, day, date when each operation is to be commenced and completed.
(iii) Dispatching: It is the process of initiating production according to pre-conceived production plan. It involves issuing necessary orders instructions, guidelines, etc.
(iv) Follow-up: It relates to evaluation and appraisal of work performed. A properly planned follow-up procedure is helpful in finding errors and defects in the work.
(v) Inspection: Inspection is the art of comparing materials, product or performance with established standards. This helps to setup laboratories or evolve methods to ensure predetermined quality of product.
(vi) Shipping: It describes the flow of goods/services from production to the consumers. It is a detailed presentation by the entrepreneur explaining the chronological steps in completing a business transaction efficiently and profitably.
Question. What is a business plan? Explain the importance of business plan.
Answer: A business plan is a comprehensively written down document prepared by the entrepreneur describing formally all the relevant external and internal elements involved in starting a new venture. The business plan:
(i) Viability: It helps in finding the viability of the venture in a designated market
(ii) Guidance: It helps in providing guidance to the entrepreneur in organizing, planning activities as such:
(a) identifying the resources required
(b) enabling obtaining of licenses if required, etc.
(c) working out with legal requirements.
(iii) Queries: It helps in satisfying the queries, and issues of each group of people interested in the venture.
(iv) Evaluation: It provides room for self assessment and self-evaluation.
(v) Planning: It helps entrepreneur to plan ways to avoid obstacles.
(vi) Obstacles: It helps to realize the obstacles which cannot be avoided or overcome, suggesting to stop the venture while still on paper without investing further time and money.
(vii) Credit history: It reflects the entrepreneur’s credit history, the ability to meet debt and interest payments, and the amount of personal equity invested.
Question. Explain the investment decision under the financial plan. In which areas the investment should be done on the basis of priority?
Answer: Enterprise’s funds are invested in different assets so that the enterprise is able to earn the highest possible returns on investment. An estimate of fixed assets and of working capital should be clearly mentioned. Investment is required for:
(i) Land and Building
(ii) Machinery and Plant
(iii) Installation Cost
(iv) Preliminary Expenses
(v) Margin for working capital
(vi) Expenses on research and development
(vii) Investment in short-term assets viz. raw material, level of cash, etc.
Question. What is a marketing plan? Why it is required in business enterprises?
Answer: Marketing plan is a guideline regarding the marketing objectivesstrategies and activities to be followed by the new enterprise. It represents a significant element in the business plan for a new venture as it effectively establishes how the entrepreneur will complete and operate in the market place by providing answers to three basic questions: where have we been,where do we want to go and how do we get there. Marketing plan is required because it describes the strategies related to how:
(i) Products/Services will be distributed,
(ii) The product will be priced
(iii) The product will be promoted.
Question. What is manpower planning? Why is it necessary for every business unit?
Answer: Manpower Planning is a process by which an entrepreneur ensures that he/ she has the right number of people, and right kind of people, at the right place and the right time to do work for which they are economically most suitable. Manpower planning is necessary for every business unit because it helps to assesses:
(i) What kind of people are required?
(ii) How many people are required?
(iii) How will they be selected?
F. HIGH ORDER THINKING SKILLS
Question. A person has decided to start a small leather belt manufacturing unit. He/she is not aware of the various formalities involved in the process of setting up the unit. Explain to him/her the procedure.
Answer: Various formalities are to be followed for starting a business in India:
(i) Obtain PAN Number from Income Tax Department
(ii) Open a Current Account in any commercial bank.
(iii) Register a limited Liability Partnership (LLP).
(iv) Register company (Pvt. Ltd/Public . Limited Company)
The following steps are involved in incorporating a private or public company in India:
(i) Name of the Business Entity
(ii) Register for e-filing at MCA (Ministry of Corporate Affairs) portal
(iii) Apply for Director Identification Number (DIN)
(iv) Obtain Digital Signature Certificate (DSC)
(v) Register DSC at MCA website
(vi) Apply for approval of the name of the company
(vii) Formulate Memorandum of Association
(viii) Formulate Articles of Association
(a) Verify, stamp & sign Articles of Association
(b) Verify the various forms required for incorporation of company
(c) Register for Service Tax
(d) Register for VAT/Sales Tax
(e) Excise Duty (If Applicable): Apply to the nearest Central Excise Division Office in Form A. 1 along with a self-attested copy of the PAN issued by the Income Tax Department.
(f) Shop and Establishment Act: Shops and Establishment Act is a state act and therefore State Specific Shops and Establishment rules should be followed for getting knowledge on registration and maintenance of different registers.
(ix) Customs Duty: Customs Duty is levied on goods imported into India as well as on goods exported from India.
(x) File Entrepreneurship Memo¬randum at DIC (Optional):Entrepreneur may file Part I of Entrepreneurs Memorandum to the District Industries Centre. This may be necessary for claiming certain incentives/subsidies and for certain formalities at the state level.
(xi) Apply for TAN: All persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN.
(xii) Permissions required at the construction stage.
(xiii) Employee’s Provident Fund:Applicable for establishments employing 20 or more persons and engaged in industry.
(xiv) Employee’s State Insurance (ESI) Scheme: The Act is applicable to non-seasonal factories employing 10 or more persons and is extended to shops, hotels, restaurants, cinemas including preview theatres, road- motor transport undertakings and newspaper establishments employing 20 or more persons.
VALUE BASED QUESTIONS
Question. An entrepreneur is doing the industry analysis. While he is analyzing his competitions in the line of business, he realises that the competitions are far better in their business plans and their execution. Should the entrepreneur add unique selling point in the existing plan to get a creative niche above others or should he go for a completely different line of business where the competition is less and he is easily able to place his feet in the market? Give reasons. (Creativity and problem solving)
Answer: Entrepreneur should add unique selling point in the existing plan to get a creative niche above others. This is because of following reasons:
(i) This will indicate that the entrepr eneur has the ability to concentrate on the problem and have a suitable solution.
(iii) Here the entrepreneur will be a problem solver and is not afraid of competition.
(iv) It also reflects that the entrepreneur has got the quality of endurance which is an essential trait for a successful entrepreneur.
Question. According to you, what kind of organisational set up is better – an autocratic form of an organization where there is absolute centralization of power and the communication from top to bottom. OrA democratic form of an organization where power is decentralized and communication from both the ends. Justify.
Answer: In my opinion, the should be democratic form of organization where power is decentralized and communication from both the ends. This is because of following reasons:
(i) Creativity: This will enhance the creativity as there will be ample freedom of expression in the firm.
(ii) Team work: Team work will be enhanced as there will be democratic set up. There will be more positive interaction between the employees and the management.
(iii) Considerationforothers: Democratic set up ensures consideration for others. This will create more belongingness in the enterprise leading to more better working environment.
(iv) Humanism: Human feeling will be more positively and effectively utilised for the betterment of the enterprise and also for enhancing the productivity.
Question. The first stage of a business plan is to come up with a business name supposing you are an entrepreneur, who is in the stage of deciding abusiness name for your enterprise would you:
(i) Keep the name of your enterprise, similar to one of the enterprises that are already doing really well in the same line of business?
(ii) Select/create a completely new name for your enterprise and create a brand name of your own? Give reasons. (Honestly)
Answer: If I am the entrepreneur in the stage of deciding a business name of my product then I will not keep the name of the enterprise, similar to one of the enterprises that is already doing really well in the same line of business. Instead I will go for a completely new name for my enterprise and create a brand name of my own. This is because:
(i) Honesty: Having a new brand name is a honest attempt to start a new venture.
(ii) Creative: Altogether new enterprise will mean that the entrepreneur is creative.
(iii) Initiative: This indicates that the entrepreneur is taking initiative for ! starting a new thing. (iv) Discipline: In this case, by opening a new enterprise with a new brand name indicates that the entrepreneur is well aware of the business ethics and is a strict disciplinarian.
VERY SHORT ANSWER TYPE QUESTIONS
Question. What is the symbol of human life?
Answer: Activity, a symbol of human life.
Question. What are non-economic activities?
Answer: Non-Economic Activities: Those activities which are done out of love, care, affection, self-satisfaction, emotions, sympathy, patriotism, etc. but not for money are known as non-economic activities.
Question.What is employment?
Answer: Employment is an activity in which an individual works regularly for others and get remuneration/compensation in return, undertaking personal services as per the agreement of employment.
Question. Every person is engaged in some kind of activity. Why?
Answer: Humans have recurring needs and wants. Every person is engaged in some kind of activity with a view to earn his living and satisfy the material and social requirements.
Question. What is Business?
Answer: Business may be defined as “an activity in which different persons exchange something of value whether goods and services for mutual gain or profit.” — Peterson and Plowman
Question. Entrepreneurial activities can be divided into which major categories?
Answer: Entrepreneurial activities can be divided into three major categories: Manufacturing, Trading and Service.
Question. Around what human life is built?
Answer: Human life is built around work.
Question. What is Profession?
Answer: According to Webster’s Dictionary. “Profession is that occupation in which one professes to have acquired specialized knowledge, which is used either in instructing, guiding or advising others,”.
Question. Define Partnership.
Answer: A partnership is an association of two or more persons to carry on, as co-owners, a business and to share its profits and losses.
Question. What are economic activities?
Answer: Economic Activities: Those activities which are undertaken to earn monetary gains are called economic. It includes production, distribution and consumption of goods and services
Question. What keeps a businessman vigilant and going?
Answer: Risk element keeps a businessman vigilant and going.
Question. From the entrepreneur’s point of view which are the most commonly opted out forms for starting a new venture?
Answer: From the entrepreneur’s point of view the most commonly opted out forms for starting a new venture are: (i) Sole Proprietorship (ii) Partnership (iii) Company.
Question. Define Joint Stock Company.
Answer:Prof. L.H. Haney defines “A joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.”
Question. Once selected, changing the ‘form’ of business is undesirable . Why?
Answer: Once selected, changing the ‘form’ of business is undesirable because it is quite complex, time consuming and costly affair.
Question. Entrepreneur is involved in which activities?
Answer: An entrepreneur can be involved in manufacturing, trading or in service sector.
Question. Co-operative works on which principle?
Answer:Co-operative works with the principle of each for all and all for each.
Question. What does manufacturing cycle include?
Answer: Manufacturing cycle includes all the activities right from procurement of all materials to the shipping of finished goods.
Questio. Define Joint Hindu Family/Firm (HUFs) as per the Hindu Law.
Answer: The HUFs “Is a family, which consists of male lineally descended from a common ancestor and included their wives and unmarried daughters.”
Question. What do you mean by Sole Proprietorship?
Answer: “Sole proprietorship is a business unit whose ownership and management are vested in one person. The individual assumes all risks of loss or failure of the enterprise and receives all profits from its successful operations.”— Edward Elbourne.
Question. Business either produces or procures goods and services for offering them to consumers. Which are those goods or services?
Answer: They could be: (i) Consumers goods (ii) Producers goods (iii) Services.
Question. Define Operation Plan.
Answer: Operation plan is a system whereby there is achieved a smooth and coordinated flow of work within the factory so that, by planning and control of all the productive operations in all the sta.ges of manufacture, the final product is completed in accordance with the plans.
Question. What do you mean by Joint Sector Enterprises?
Answer: It is a form of partnership between the private sector and the government where management is generally in the hands of private sector, and with enough representation on Board of Directors by the Government too.
Question. Which are the four Cs of Credit on which investors/lenders focus?
Answer: Four Cs of credit on which investors/ lenders focus are Character, Cash flow, Collateral and Equity Contribution.
Question. Name the forms of the ‘Company’ form of organisation.
Answer:An entrepreneur, under the ‘Company’ form of organisation has two choices to incorporate enterprise. These are: (a) Private Company (b) Public Company
Question. Define business plan.
Answer:: A business plan is a comprehensively written down document prepared by the entrepreneur describing formally all the relevant external and internal elements involved in starting a new venture.
Question. What is the main motive of co-operatives?
Answer: Mutual help is the main motive of co-operatives.
Question. What do you mean by organizational plan?
Answer: The organizational plan is that part of the business plan which describes the proposed venture’s form of ownership.
Question. Various forms of business venture has important implications on which areas or aspects?
Answer: Various forms of business has important implications on: (i) Taxes (ii) Liability (iii) Continuity (iv) Financing (v) Ownership.
Question. Desired manufacturing results of operation plan are in which terms?
Answer: The desired results are in terms of: (i) Quantity (ii) Quality (iii) Time (iv) Place, and (v) Cost
Question. What is Routing?
Answer: Routing is a process which determining exact route or path a product/service has to follow right from raw material till its transformation into finished product.
Question. An entrepreneur has access to which forms of business venture?
Answer:The entrepreneur has access to following forms to choose as venture: (i) Sole proprietorship (ii) Partnership (iii) Joint Hindu Family (iv) Cooperative (v) Corporation.
SHORT ANSWER TYPE QUESTIONS
Question. Write a brief note on Value added tax.
Answer: (i) VAT is a multi-point destination based system of taxation, where levied on value addition at each stage of transaction in the production/ distribution chain.
(ii) ‘Value addition’ is the increase in value of goods and services at each stage of production or transfer of goods and services.
(iii) VAT is a tax on the final consumption of goods or services and is ultimately borne by the consumer.
(iv) The State Governments, through Taxation Departments, are carrying out the responsibility of levying and collecting VAT in the respective States.
(v) The Central Government is playing the role of a facilitator for thesuccessful implementation of VAT.
Question. Explain the role of financial planning in financial management.
Answer: Financial planning has a pivotal role in financial management. The importance of it can be explained under following . headings: (i) Securities: For obtaining finance what securities are to be offered it is clearly mentioned in the financial plan. Further which securities to be kept for obtaining working capital or short term loan and which are to be kept for long term finance, this is clearly classified and mentioned. Plan includes the clear policy for rotation of securities for maintaining continuous supply of finance.
(ii) Fulfils requirement: Financial plan fulfils the financial requirement of the enterprise. It specifies the strategy and sources for obtaining finance. The requirement of funds for research, raw materials, payment of wages, are mentioned period wise. This provides target for the financial management.
(iii) Risk: A financial plan clearly mentions the extent of risk that can be undertaken by an enterprise. This provides the limits of working in the financial management.
Question. What do you mean by export and import?
Answer: (i) Import of goods means bringing into India of goods from a place outside India. India includes the territorial waters of India which extend up to 12 nautical miles into the sea to the coast of India. (ii) Export of goods means taking goods out of India to a place outside India.
Question. Describe the activities which are inspired mainly by economic consideration.
Answer: Activities which are inspired mainly by economic consideration are classified as:
(i) Manufacturing: It is the production of merchandise for use and sale.Manufactured goods can used by final consumers. Final consumers can be households or firms.
(ii) Service: It is intangible as it can’t be stored and does not result in ownership. It is consumed at the point of sale. Example— banking, communication, transport, etc.
(iii) Trading: It is an activity of buying, selling or exchanging goods or services. Money is made by buying or selling. Here one thing is exchanged for other.
Question. Explain the factors affecting the formulation of a financial plan.
Answer: Financial plan deals with the deciding in advance about the future spending. The formulation of plan is affected by following factors:
(i) Clarity of Objectives: A good financial plan has clearly defined objectives. The objectives are expressed in terms of money or quality of products, objects. Objectives are presented in simple words.
(ii) Simple: A good financial plan is simple to understand and implement. It is made simple by considering various factors related with the enterprise.
(iii) Flexibility: A good financial plan has a scope for making changes in the future. The plan is made flexible considering future obligations and future plans of the enterprise.
(iv) Risk: A good financial plan keeps sufficient scope for the calculated risk rather to say it is made by keeping the level of risk of the enterprise
Question. Comment on selection of Forms of business organisation.
Answer: Setting up a business is a challenging task for entrepreneurs. Enterprise conduct any type of business activity. Entrepreneur’s objective is accomplished by combining various factors of production. Legal structure of business entity determines the extent of ownership and responsibility of owners.
Any form of business organisation once selected is difficult to be changed due to the complexity, cost and time consuming factors.
Question. Who must have PAN?
Answer: Following person(s) must have PAN:
(i) All existing taxpayers or persons who are required to furnish a return of income, even on behalf of others.
(ii) Any person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year;
(iii) Any person, who intends to enter into financial transaction where quoting PAN is mandatory. (iv) The Assessing Officer may allot PAN to any person either on his own or onhis own or ona specific request from such person.
Question. Give the meaning of ‘Routing’ and ‘Scheduling’ as elements of operational plan.
Answer: Routing: Routing is a process concerned with determining exact route or path a product/service has to follow right from raw material till its transformation into finished product. Scheduling: Scheduling means fixation of time, date, day when each operation is to be commenced and completed.
Question. What are consequences for non-registration of a partnership firm?
Answer: In case of non-registration, following rights are denied—
(i) Filing of suit: Partners cannot file a suit in any court against the partners for enforcement of any right conferred by the Partnership Act.
(ii) Third party: A right arising from a contract cannot he enforced in any court by or on behalf of the firm against any third party.
(iii) Claim: Firm or any of its partners cannot claim a set off in a dispute with a third party.
Question. Who should write the business plan?
Answer: Business plan has coverage of various aspects like marketing, finance, operations, IPR, etc. Entrepreneur require consultancy services of various experts like lawyers, accountants, marketing consultants, friends, relatives, engineers, internet sites, etc.
