Small Business Class 11 Notes CBSE Business Studies Chapter 9 (Free PDF Download)

Micro, Small and Medium Enterprises- Introduction

Micro Small and Medium Enterprises are those enterprises that:

• Acts as a crucial link in the process of industrialization.

• Contributes to the growth of developing countries.

• Helps in generating employment opportunities.

• Low investment requirement.

• Are Labour intensive.

• Are an important element of the value chain.

• Makes use of local raw materials.

• Make use of indigeneous skills.

• Provides a wide variety of consumer and specialized goods.

MSMED ACT

Micro, Small and Medium Enterprises Development Act, 2006 deals with issues and provides rules and regulations for micro, small and medium enterprises in manufacturing and service sector.

Investment and Turnover Limits Under MSMEs

As against the earlier bifurcation of MSMEs into manufacturing and service sector, now both are treated as one and the same, and are defined under a common metric.  The investment and turnover limits are:

• Village Industries

The Industries located in rural areas with investment in fixed assets as per the rules of central government.

• Cottage Industries: 

Traditional industries run normally by family with small capital investment.

Role of Small Business in India

• Employment Opportunities: After the agriculture sector, small industries provide the largest employment opportunities.

• Diverse Variety: Small businesses provide a wide variety of consumer and specialized products using simple technology and local resources.

• Optimum Utilisation of Resources: Small business facilitates optimum utilization of resources through locally available resources and simple technology.

• Encourage Locals: It provides and encourages local people for entrepreneurship, and makes the best use of their handicraft and other artistic skills.

• Less Costly: The cost of production is low, as production is because of low overhead costs, and making use of inexpensive locally available resources.

• Quick Decisions: It facilitates quick and timely decisions due to the small size of the business.

• Rural Development: Through the provision of employment opportunities, encouraging locals to use their skills, regional development is made possible.

• Balanced Development: These business units can be set up anywhere at any location and region, as they are dependent on locally available resources, simple technology, and labour class people. This facilitates balanced development of the country.

Role of Small Business in Rural India

• Encourages people in rural areas for setting up agro based industries.

• Providing employment opportunities to traditional artisans or workers.

• Helps in reduction of income inequalities.

• It prevents the inclination and migration of rural population to urban areas.

• Helps in industrialization and development of rural areas.

Problems Associated with MSMEs

• Finance: There is limited finance availability with these enterprises that makes the day to day working difficult. Also raising finance from banks is a challenge because of these enterprises' poor credit worthiness.

• Raw Materials:  Due to unavailability of certain raw materials, these enterprises have to adjust and compromise either in terms of poor quality raw material, or high price raw material. Both situations add to the problems of such enterprises.

• Managerial Skills: Business run by a single person or family, which lacks managerial skills, technical skills and entrepreneurial skills. Also due to no education, things become even more difficult. Hence neither they are capable to manage the enterprises on their own, nor they can hire people for such work due to shortage of financial resources.

• Labour: Production with the help of unskilled or semi skilled workers.

• Marketing: It is difficult for these enterprises to maintain direct contact with customers, hence they have to depend on middlemen, who in return pay less prices or delay in the payment, thus exploiting them to no limits.

• Quality: Due to traditional methods of production, these enterprises struggle to maintain standardized quality.

• Technology: Use of outdated and obsolete technology creates issues in terms of high cost and low quality.

• Global Competition: They have to face competition with large scale industries and multinational companies.

• Capacity Utilization: Under utilization of resources takes place due to lack of managerial skills and sufficient demand to make the full use of production capacity of the machines.

MSME and Entrepreneurship Development: 

Entrepreneurship is the process of setting up a business which is owned, managed and controlled by a person who takes the initiative to take the risk, as well as add creativity and innovation to start an enterprise, this person is known as an entrepreneur.

Characteristics of Entrepreneurship

• Systematic Activity: Entrepreneurship requires certain skills, knowledge and competency which can be developed by training, observation and work experience.

• Lawful and Purposeful Activity: Lawful business is the objective of entrepreneurship and entrepreneur aims to create and operate enterprise by performing legitimate actions and satisfaction of customers needs and wants following the legal and ethical code of conduct.

• Innovation: Entrepreneurship involves creating something new according to the changing business environment or may be for reducing cost and enhancing profits.

• Organization of Production: Entrepreneurship brings various factors of production for a productive activity and coordinates and controls the factors of production as well as the efforts of the person engaged in the enterprise. 

• Risk Taking: An entrepreneur guarantees wages to employees, interest to investors in the hope of earning profits, assuming the uncertainty of future.

Startup India Scheme: The Scheme Aims to :

• Encouraging people towards entrepreneurship.

• Encourages more dynamic startups.

• Supports early phases/stages of development of MSMEs.

• Developing backward communities, scheduled castes and women etc.

Intellectual Property Rights: 

• Intellectual Property Rights refers to the legal rights regarding intellectual property. 

• Intellectual Property refers to the creation of the human mind, like inventions, artistic works, etc.

• The intellectual property is intangible.

• Trade secret is an intellectual property right which refers to confidential information that provides a competitive edge to the company holding it.

• Intellectual property is bifurcated into two main categories: 

• Industrial Property: Patents, trademarks, geographical indications and industrial designs are included in this.

• Copyrights: It includes artistic, literary works such as poems, books, plays, films, drawings, photographs etc.

• IP’s which are recognized in India are:

• Copyright, 

• Trademark, 

• Geographical Indication, 

• Patent, 

• Design, 

• Plant Variety, 

• Semiconductor Integrated Circuit Layout Design

 Why is IPR Important for Entrepreneurs?

• IPR are important for entrepreneurs to promote and protect their inventions and creations.

• Creators, authors, inventors, etc., will get  benefited for their hard work only if their work is distributed or shared to the public with their permission.

• IPR protects the work from being copied by others and can also defend in court  for the rights to use, make or sell it.

Types of Intellectual Property

• Copyright: Copyright is the right of the creator which prohibits use of content by unauthorized persons. The registration of content is optional but it is necessary to use exclusive rights in case of infringement.

• Trademark: It helps in differentiating the products of different companies like, label, logo, etc. Trademarks may be categorised as conventional and non conventional trademarks.

• Conventional Trademark: Includes words, label logo shape of good packaging etc.

• Non conventional Trademark: Includes those marks which got recognition over the course of time. 

• Patent: Patents protect the making, selling and importing of scientific inventions. A patent is an exclusive right granted by the government which provides the 'right to exclude' for 20 years.

• Design: Design includes shape, pattern, colour and arrangement of any good. The design can be protected for 10 years which can be renewed for further 5 years after expiry.

• Plant Variety: It helps farmers in conserving, improving available genetic resources. Plant variety encourages Indian farmers, cultivators to produce high quality seeds and planting material, leading to growth of the seed industry.

• Semiconductor Integrated Circuits Layout Design: The products that make use of and are formed on a semiconductor material. It is an integral part of computer chips.

Class 11 Business Studies Chapter 9 Revision Notes - Small Business

Highlights of Business Studies Class 11 Notes Chapter 9

• Meaning and nature of small business

• Administrative setup for the small scale, agro and rural industries

• Role of small business in India

• Role of small business in rural India

• Problems of small business

• Government assistance to small industries and small business units

What are the Categories in Which Enterprises are Classified Into?

In class 11 Business Studies chapter 9 notes enterprises have been classified into two major categories which are as follows:

1. Manufacturing- There are three types of manufacturing enterprises which are micro, small enterprise, and middle enterprise.

2. Services- Also, there are three types of service enterprises which are micro, small enterprise, and middle enterprise. These enterprises have been clearly explained in business studies class 11 chapter 9 notes. 

Notes of Chapter 9 Business Studies Class 11: Role of Small Businesses in India

The small business in India plays a significant role in the Indian economy that has been discussed in ch 5 BST class 11 notes. The students will get to learn from the notes that the small industries are the second largest employers of human resources after agriculture. Further, they have 95% of the industrial units besides contributing 40% of the gross industrial value. Other than this, they also provide a significant opportunity for entrepreneurship and customized production. 

Small business also involves low-cost production. In rural India, small businesses give rural households the opportunity for highly varied and multiple sources of income. These small businesses also pave the path for the development of rural and village industries that also prevents migration of the rural population. The majority of the small businesses are producers of consumer goods and absorbers of surplus labour which appropriately addresses the issues of poverty and unemployment. Lastly, these small businesses fulfill the objective of accelerating industrial growth and creating additional productive employment potential.

Various Kinds of Problems for Small Businesses

There are various kinds of problem of small businesses which are as follows:

• Finance

• Raw material

• Managerial skills

• Labour

• Marketing

• Quality

• Capacity Utilisation

• Technology

• Sickness

• Global Competition

What Are The Various Kinds of Incentives Given to Small Industries By The Government?

The various kinds of incentives are given to small businesses as parts of government assistance are as follows:

• Land

• Power

• Water

• Sales Tax

• Octroi

• Raw materials

• Finance

• Industrial estates

• Tax holiday

Five Core Objectives of Marketing Assistance Scheme

The following is a list of the five important objectives of a marketing assistance scheme:

• To present the MSME competition

• To catalyze the competitiveness of MSME and also their capabilities

• To provide the opportunity of interaction with large institutional buyers

• Update and impact of the recent market trends on MSMEs

• To propagate various program of the government

For more details on the administrative setup for the small-scale, agro, and rural industries refer to the class 11 BST st chapter 9 notes. They have all the required information about this chapter written as per CBSE standards.

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