CHAPTER 1

Q-1 what is management?

- Ans - defines management as a process consisting of planning, organizing,
actuating and controlling performed to determine and accomplish the objectives
by the use of people and resources.
- Management of an organization is the process of establishing objectives and goals
of the organization periodically, designing the work system and the organization
structure, and maintaining an environment in which individuals, working together
in groups, accomplish their aims and objectives and goals of the organization
effectively and efficiently
Q-2 level of management
Ans - People in an organization are arranged in an hierarchy and they all have the
relationship of superior-subordinates. Every manager in an organization performs all five
management functions. The relative importance of these functions varies along the
managerial levels. There may be as many levels in the organization as the number of
superiors in a line of command. Some of these levels are merged into one on the basis of
nature of functions performed and authority enjoyed. E.F.L. Brech has classified
management levels into three categories Top Management, Middle Management and
Supervisory/Lower Level as shown in fig 1.3.
Board of Directors, Chairman, Chief Executive
Top
Middl
e

Department Heads, Divisional Heads, Section

Heads

Lowe
r

Senior Supervisor, Front Line Supervisors

Fig. 1.3: Levels of management

Top management of an organization consists board of directors, chairman and chief

executive officer. Top level management determines goals and objectives. It performs
overall planning, organizing, staffing, directing and controlling. It integrates organization
with environment, balances the interest groups and is responsible for overall results.
Middle management stands between top management and supervisory management level.
Middle level management establishes programs for department and carries out functions
for achieving specific goals. The other functions of middle level management are training
and development of employees, integrating various parts of the department. Supervisory
management is concerned with efficiency in using resources of the organization. A
supervisor is an executor of policies and procedures making a series of decisions with

well-defined and specified premises.

Q-3 function of management

Ans
(1) Planning: Planning is the primary function of management. It is looking ahead
and preparing for the future. It determines in advance what should be done. It is
conscious determination of future course of action. This involves determining why to take
action? What action? How to take action? When to take action? Planning involves
(2) Organizing: Organizing is the distribution of work in group-wise or section-wise
for effective performance. Once the managers have established objectives and developed
plans to achieve them, they must design and develop a human organization that will be
able to carry out those plans successfully. Organizing involves dividing work into
convenient tasks or duties, grouping of such duties in the form of positions, grouping of
various positions into departments and sections, assigning duties to individual positions
and delegating authority to each position so that the work is carried out as planned.
According to Koonz ODonnel, Organization consists of conscious coordination
of people towards a desired goal. One has to note that different objectives require
different kinds of organization to achieve them. For example, an organization for
scientific research will have to be very different from one manufacturing automobiles.
(3)
Staffing: Staffing involves managing various positions of the organizational
structure. It involves selecting and placing the right person at the right position. Staffing
includes identifying the gap between manpower required and available, identifying the
sources from where people will be selected, selecting people, training them, fixing the
financial compensation and appraising them periodically. The success of the organization
depends upon the successful performance of staffing function.
(4)
Directing: Planning, organizing and staffing functions are concerned with the
preliminary work for the achievement of organizational objectives. The actual
performance of the task starts with the function of direction. This function can be called
by various names namely leading, directing, motivating, activating and so on.
Directing involves these sub functions:
(a)
Communicating: It is the process of passing information from one person
to another.
(b)

Leading: It is a process by which a manager guides and influences the

work of his subordinates.
(c)
Motivating: It is arousing desire in the minds of workers to give their best
to the enterprise.
(5)
Controlling: Planning, organizing, staffing and directing are required to realize
organizational objectives. To ensure that the achieved objectives confirm to the preplanned objectives control function is necessary. Control is the process of checking to

determine whether or not proper progress is being made towards the objectives and goals
and acting if necessary to correct any deviations. Control involves three elements:
(a)
Establishing standards of performance.
(b)
Measuring current performance and comparing it against the established
standard.
(c)
Taking action to correct any performance that does not meet those
standards.
(6)

Innovation: Innovation means creating new ideas which may be either results in
the development of new products or finding new uses for the old ones. A manager who
invents new products is an innovator. A salesman who persuades Eskimos to purchase
refrigerator is an innovator. One has to note that innovation is not a separate function but
a part of planning.

(7)

Representation: A manager has to spend a part of his time in representing his

organization before various groups which have some stake in the organization. A manager
has to be act as representative of a company. He has dealings with customers, suppliers,
government officials, banks, trade unions and the like. It is the duty of every manager to
have good relationship with others.
Q-4 roles of ,manager

Roles of Manager

Interpersonal Roles

Information Roles

Decisional Roles

Figurehead
Leader
Liaison

Monitor
Disseminator
Spokesperson

Entrepreneur
Disturbance handler
Resource Allocator
Negotiator

Interpersonal role: This role is concerned with his interacting with people both
organizational members and outsiders. There are three types of interpersonal roles:
(1) Figure head role: In this role manager has to perform duties of ceremonial
nature such as attending social functions of employees, taking an important
customer to lunch and so on.
(2) Leader role: Managers leader role involves leading the subordinates motivating
and encouraging them.

(3) Liaison: In liaison role manager serves as a connecting link between his
organization and outsiders. Managers must cultivate contacts outside his vertical
chain to collect information useful for his organization.
Information roles: It involves communication. There are three types of informational roles:
(1) Monitor: In his monitoring role, manager continuously collects information
about all the factors which affects his activities. Such factors may be within or
outside organization.
(2) Disseminator: In the disseminator role, manager possesses some of his
privileged information to his subordinates who otherwise not be in a position to
collect it.
(3) Spokesperson: As a spokesperson manager represents his organization while
interacting with outsiders like customers, suppliers, financers, government and
other agencies of the society.
Decisional roles: Decisional role involves choosing most appropriate alternative
among all so that organizational objectives are achieved in an efficient manner. In his
decisional role manager perform four roles:
1. Entrepreneur: As an entrepreneur, a manager assumes certain risks in terms of
outcome of an action. A manager constantly looks out for new ideas and seeks to
improve his unit by adopting it to dynamic environment.
2. Disturbance handler: In this role manager works like a fire-fighter manager
contains forces and events which disturb normal functioning of his organization.
The forces and events may be employee complaints and grievances, strikes,
shortage of raw materials etc.
3. Negotiator: In his role of negotiator, manager negotiates with various groups in
the organization. Such groups are employees, shareholders and other outside
agencies.
Readers are advised to note that management functions and roles do not exist
opposite to each other but these are two ways of interpreting what managers do. All these
roles can be integrated with earlier classification of management which is presented in
fig. 1.2.
Planning
Interpersonal Role
Organizing

Informational Role
Staffing
Directing
Decisional Role
Controlling
Fig. 1.2: Functions and roles of manager
In planning a manager performs informational and decisional role as he has to collect
information on the basis in which he makes decisions. Similarly in performing other
functions some or the other roles are performed by manager.
Q -5 skill of engineer as manager
In addition to fulfilling numerous roles the manager also need a number of
specific skills if he wants to be succeed. The most fundamental management skills are
technical. Interpersonal, conceptual, communication decision making and time
management skills.

Figure: Managerial Skill (For All Level Managers)

Technical Skills:
Technical skills are the skills necessary to accomplish or understand the specific kind of
work being done in an organization. Technical skills are especially important for first line
managers. These managers spend most of their time training subordinates and answering
question about work related problems. They must know how to perform tasks assigned to
those they supervise if they are to be effective managers.

Interpersonal Skills:
Managers spend considerable time interacting with people both inside and outside the
organization. For obvious reasons then the manager also needs interpersonal skills- the
ability to communicate with, understand and motivate both individuals and groups. As a
manager climbs the organizational ladder, he or she must be able to get along with
subordinates, peers and those at higher level of the organization. Because of the multitude
of roles manager must fulfill, a manager must able to work with suppliers, customers,
investors, and others outside of the organization. Although some managers have
succeeded with poor interpersonal skills, a manager who has good interpersonal skills is
likely to be more successful.

Conceptual Skills:
Conceptual skills depend on the managers ability to think in the abstract. Managers need
the mental capacity to understand the overall working of the organization and its
environment, to grasp how all the part of the organization fit together, and view the
organization in a holistic manner. This allows them to think strategically, to see the big
picture, and to make broad based decisions that serve the overall organization.

Diagnostic Skills:
Successful managers also possess diagnostic skills, or skills that enable a manager to
visualize the most appropriate response to a situation. A physician diagnoses a patient
illness by analyzing symptoms and determining their probable cause. Similarly, a
manager can diagnose and analyze a problem in the organization by studying its
symptoms and then developing a solution.

Communication Skills:
Communication skills refer to the managers ability both to effectively convey ideas and
information to others and to effectively receive ideas and information from others. This
skills enable a manager to transmit ideas to subordinates so that they know what is
expected, to coordinate work with peers and colleagues so that they work well together
properly, and to keep higher level managers informed about what is going on. In addition,
communication skills help the manager listen to what others say and to understand real
meaning behind letters, reports, and other written communication.

Decision-Making Skills:
Effective managers also have good decision making skills. Decision making skills refers
to the managers ability to correctly recognize and define problems and opportunities and
to then select an appropriate course of action to solve the problems and capitalize on
opportunities. No manager makes the right decision all the time. However, effective
managers make good decision most of the time. And when they do make a bad decision,
they usually recognize their mistake quickly and then make good decision to recover with
as little cost or damage to their organization as possible.

Time-Management Skills:
Finally, effective managers usually good time management skills. Time management
skills refer to the managers ability to prioritize work, to work effectively, and to delegate
appropriately. As already noted, managers face many different pressures and challenges.
It is too easy for a manager to get bogged down doing work that can easily be postponed
or delegated to others. When this happens, unfortunately, more pressing and higher
priority work may get neglected.

Q-6 planning is pervasive

Planning is pervasive and it extends throughout the organization. Planning is the
fundamental management function and every manager irrespective of level, has a
planning function to perform within his particular area of activities. Top management is
responsible for overall objectives and action of the organization. Therefore it must plan
what these objectives should be and how to achieve them. Similarly a departmental head
has to devise the objectives of his department within the organizational objectives and
also the methods to achieve them. Thus planning activity goes in hierarchy as shown in
fig 2.2.
Corporate or Organizational Plan
Divisional Plan
Departmental Plan

Sectional Plan
Fig. 2.2: Planning at various levels

CHAPTER 2
Q- 7 What is CSR And dimension of it
Ans: Corporate social responsibility (CSR), is the idea that business has a duty to
serve society in general as well as the financial interests of stockholders.
Dimenions:
The environmental (sustainability) dimension of CSR
Environmental sustainability (according to the World Bank) means ensuring that the
over-all productivity of accumulated human and physical capital resulting from
development actions more than compensates for the direct or indirect loss or degradation
of the environ-ment, or (according to the Brundtland Report from the United Nations) it
is meeting the needs of the present without compromising the ability of future
generations to meet their own needs. Put more directly, it is generally taken to mean the
extent to which business activity negatively impacts on the natural environment. It is
clearly an important issue, not only because of the obvious impact on the immediate
environment of hazardous waste, air and even noise pollution, but also because of the less
obvious, but potentially far more damaging issues around global warming.
The social dimension of CSR
The fundamental idea behind the social dimension of CSR is not simply that there is a
con-nection between businesses and the society in which they operate (defined broadly)
that is self-evident. Rather it is that businesses should accept that they bear some
responsibility for the impact they have on society and balance the external societal
consequences of their actions with the more direct internal consequences, such as profit.

The economic dimension of CSR

If business could easily adopt a more CSR-friendly position without any economic consequences, there would be no debate. But there are economic consequences to taking
socially responsible decisions. Some of these will be positive, even in the short term.
Others will be negative in the sense that managers believe that there is a real cost in the
short term (to their companies specifically). Investment in CSR is a short-term issue,
whereas payback from the investment may (possibly) be well into the future, although
this is no different from other business investment, except for the uncertain payback and
timescale.
The stakeholder dimension of CSR
. The groups included shareholders, directors and top manage-ment, staff, staff
representative bodies (e.g. trade unions), suppliers (of materials, services, equipment,
etc.), regulators (e.g. financial regulators), government (local, national, regional), lobby
groups (e.g. environmental lobby groups), and society in general. In Chapter 16 we took
this idea further in the context of project management (although the ideas work throughout operations management) and examined how different stakeholders could be managed
in different ways. However, two further points should be made here. The first is that a
basic tenet of CSR is that a broad range of stakeholders should be considered when
making busi-ness decisions. In effect, this means that purely economic criteria are
insufficient for a socially acceptable outcome. The second is that such judgements are not
straightforward. While the various stakeholder groups will obviously take different
perspectives on decisions, their perspective is a function not only of their stakeholder
classification, but also of their cultural background.
Q-8 Stakeholder?
Ans :There are several definitions. The most common ones are:
Those groups without whose support the organization would cease to exist
Any group or individual who can affect or is affected by the
achievement of the organization's objectives

We can see from these definitions that a lot of people can be a stakeholder
to an organisation. The most common groups who we consider to be
stakeholders include:
Managers ,Employees ,Customers,Investors ,Shareholders ,Suppliers , The
environment

Then there are some more generic groups who are often included:
Government ,Society at large ,The local community
Q -8 (B) social responsibility of business.
Ans:i. Responsibility towards owners: Owners are the persons who own the business.
They contribute capital and bear the business risks. The primary responsibilities of
business towards its owners are to:
b. Proper utilisation of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.
e. Run the business efficiently.
ii. Responsibility towards investors: Investors are those who provide finance by
way of investment in debentures, bonds, deposits etc. Banks, financial institutions,
and investing public are all included in this category. The responsibilities of
business towards its investors are :
a. Ensuring safety of their investment,
b. Regular payment of interest,
c. Timely repayment of principal amount
iii. Responsibility towards employees ;Business needs employees or workers to
work for it. These employees put their best effort for the benefit of the business. So
it is the prime responsibility of every business to take care of the interest of their
employees. If the employees are satisfied and efficient, then the only business can
be successful. The responsibilities of business towards its employees include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions and welfare amenities.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group
insurance, pension, retirement benefits, etc.
f. Better living conditions like housing, transport, canteen, crches etc. g. Timely
training and development
iv. Responsibility towards suppliers; Suppliers are businessmen who supply raw
materials and other items required by manufacturers and traders. Certain suppliers,
called distributors, supply finished products to the consumers. The responsibilities
of business towards these suppliers are:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.
v. Responsibility towards customers: No business can survive without the support

of customers. As a part of the responsibility of business towards them the business

should provide the following facilities:
a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
d. Price of the goods and services should be reasonable and affordable.
e. All the advantages and disadvantages of the product as well as procedure to use
the products must be informed do the customers.
f. There must be proper after-sales service.
g. Grievances of the consumers, if any, must be settled quickly.
h. Unfair means like under weighing the product, adulteration, etc. must be avoided
vi. Responsibility towards competitors: Competitors are the other businessmen or
organizations involved in a similar type of business. Existence of competition helps
the business in becoming more dynamic and innovative so as to make itself better
than its competitors. It also sometimes encourages the business to indulge in
negative activities like resorting to unfair trade practices. The responsibilities of
business towards its competitors are
i.
not to offer exceptionally high sales commission to distributers, agents etc.
ii.
ii. not to offer to customers heavy discounts and /or free products in every
sale.
iii.
iii. not to defame competitors through false or ambiguous advertisements.
vii. Responsibility towards government :
Business activities are governed by the rules and regulations framed by the government.
The various responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government.
h. Not to indulge in corruption through bribing and other unlawful activities
viii. Responsibility towards society: A society consists of individuals, groups,
organizations, families etc. They all are the members of the society. They interact with
each other and are also dependent on each other in almost all activities. There exists a
relationship among them, which may be direct or indirect. Business, being a part of the
society, also maintains its relationship with all other members of the society. Thus, it has
certain responsibilities towards society, which may be as follows:
a. to help the weaker and backward sections of the society
b. to preserve and promote social and cultural values
c. to generate employment
d. to protect the environment
e. to conserve natural resources and wildlife
f. to promote sports and culture
g. to provide assistance in the field of developmental research on education, medical
science, technology etc.

Q-9 what is bussines ethics ?

Ans:- Business Ethics can be defined as the critical, structured examination of how
people & institutions should behave in the world of commerce. In particular, it
involves examining appropriate constraints on the pursuit of self-interest, or (for
firms) profits, when the actions of individuals or firms affect others.

.
CHAPTER 3
Q-10 types of costs?
Ans :Cost: The total money, time, and resources associated with a purchase or activity.
Fixed cost: Includes all costs that do not vary with activity for an accounting period.
Variable cost: All other costs that are some function of activity.
Total costs are usually expressed as Fixed + Variable Total Cost
Definition 1: In accounting, the sum of fixed costs, variable costs, and semi-variable
costs. Definition 2: In the context of investments, the total amount spent on a particular
investment, including the price of the investment itself, plus commissions, fees, other
transaction costs, and taxes.
Direct cost: Costs that can be identified directly with a particular process, project,
or program.
Indirect cost: Costs associated with an enterprise, activity, etc. which are not
identified as direct costs, but which may be included in the accounting.
Marginal Cost: The cost associated with one additional unit of production or use,
also called incremental cost.
CAPITAL BUDGETING
Capital budgeting is the process of analysing potential projects, and one of the most
important decisions which managers make.
Investment appraisal the process of appraising the potential investment projects.
Assessment of the level of expected returns earned for the level of expenditure made.
Estimates of future costs and benefits over the projects life.

Investment Appraisal Techniques

1. net present value method

2. accounting rate of return method

3. payback method

4. internal rate of return method

Net Present Value :

It is the primary capital budgeting decision criterion. NPV is used to rank and
evaluate investment options, and estimate how much wealth to the stockholders a
prospective investment will attain. NPV equals the net cash flow's present value in
future, discounted at the cost of capital. (Birgham and Houston, 2013).
Moreover, the NPV is the difference between the market value and the cost of an
investments. (Ross, et al., 2006).
1.1. Advantages
1.1.1.
1.1.2.
1.1.3.
1.1.4.
1.1.5.

It is the most powerful appraisal technique.

The time value of money is considered.
It helps in maximizing the shareholders wealth.
Its analysis are based on cash flow.
Risk is considered through the discounting process.

1.2. Disadvantages
1.2.1. It is of complex calculations, and difficult to understand.
1.2.2. Difficult to identify the discount rate which is key element in determining
present values.
1.2.3. It does not suit projects of different effective lives.
1.3. Accept/Reject criteria
If NPV is positive (high return), the project is accepted. Furthermore, the project
is accepted, if the present value of cash inflows exceeds that value of cash
outflows, and vice-versa. (Paramasivan and Subramanian, 2009).

Payback Period
Payback period method is defined as the number of years required to retrieve the
initial investment, in other words, time needed to recover the cost of a project from
operating cash flows. The calculation begins with the cost, and then add each year

cash inflow till the accumulative cash flow becomes positive. The duration of
payback is the duration before full recapture plus a fraction equals the shortfall at that
duration's end divided by the cash flow throughout the full recapture duration.
(Brigham and Houston, 2007).
1. Advantages
1. Simple to calculate and easy to understand.
2. It adds some improvements over the accounting rate of return.
3. Payback reduces the possibility of loss on account of obsolescence
(Paramasivan and Subramanian, 2009).
2. Disadvantages
1. Time value of money is abandoned.
2. Cash inflows post the payback period are not considered
3. It is deemed one of the misleading methods of capital budgeting
evaluation (Paramasivan and Subramanian, 2009).
3. Accept /Reject criteria
1. If the actual payback period is longer than the predetermined payback
period, the project is rejected, and vice-versa (Paramasivan and
Subramanian, 2009).
2. When comparing between several mutually exclusive projects, their rating
is based on the speed of payback where the faster payback the better
(Lumby and Jons, 2001).

Internal Rate of Return

IRR is the discount rate at which project NPV equals zero.

"Managers frequently ask: 'What rate of return am I getting on my investment?' To
calculate the correct return or yield requires us to find the rate that equates the present
value of future benefits to the initial cash outlay."
(Pike and Neale, 2006, p. 125).

4.1. Advantages
4.1.1. IRR is based on percentage rate of return and cash flow to assess an
investment with the consideration of the time value of money over the
project life
4.1.2. It considers the risk of project.
4.1.3. When discount rate is anonymous, it is not true using the IRR in deciding
whether or not to take the project, even though is true for IRR calculation
which is considered merit.
(Damodaran, 2011), (Paramasivan and Subramanian, 2009).

Disadvantages
4.1.1. Difficult to calculate without computer.
4.1.2.
The decision process could be muddled, as IRR generates multiple
rates.
4.1.3.
Its calculation takes long time by changing the discount rate using
'trial and error'.
4.1.4.
Projects can be incorrectly evaluated in case of non-standard cash
flows.
(Damodaran, 2011), (Paramasivan and Subramanian, 2009).
Accept /Reject Criteria
4.1.1.

Project is acceptable if IRR is equal or more than the cost of

capital. However, if IRR is greater than the cost of the project capital by an
amount, this amount runs to the company shareholders. Vice-versa, if the
cost of capital is greater than IRR, the stock-market price of company's
share would be less, unless the shareholders intervene to make-up this
shortage (Brigham and Houston, 2007).
4.1.2.
When choosing between projects of equivalent risk, the project
with higher IRR is better (Damodaran, 2011).

CHAPTER 4
Q-11

define enterprenuar and function and characterisite of it.

Ans:Entrepreneur:- an entrepreneur can be defined as a person who tries to create

something new, organizes production and undertakes risks and handles economic
uncertainty involved in enterprise.
Function of Entreprenuer:
An Entrepreneur has to perform a number of functions right from the generation of idea
up to the establishment of an enterprise. He also has to perform functions for successful
running of his enterprise. Entrepreneur has to perceive business oppor-tunities and
mobilize resources like man, money, machines, materials and methods. The following are
the main functions of an Entrepreneur.
1. Idea generation: The first and the most important function of an Entre-preneur is
idea generation. Idea generation implies product selection and project
identification. Idea generation is possible through vision, insight, keen
observation, education, experience and exposure. This needs scanning of
business environment and market survey.
2. Determination of business objectives: Entrepreneur has to state and lay down the
business objectives. Objectives should be spelt out in clear terms. The
Entrepreneur must be clear about the nature and type of business, i.e. whether
manufacturing concern or service oriented unit or a trading business so that he
can very well carry on the venture in accordance with the objectives determined
by him.
3. Rising of funds: All the activities of the business depend upon the finance and
hence fund rising is an important function of an Entrepreneur. An Entrepreneur
can raise the fund from internal source as well as external source. He should be
aware of different sources of funds. He should also have complete knowledge of
government sponsored schemes such as PMRY, SASY, REAP etc. in which he
can get government assistance in the form of seed capital, fixed and working
capital for his business.

4. Procurement of machines and materials: Another important function of an

Entrepreneur is to procure raw materials and machines. Entrepreneur has to
identify cheap and regular sources of raw materials which will help him to

reduce the cost of production and face competition boldly. While procuring
machineries he should specify the technical details and the capacity. He should
consider the warranty, after sales service facilities etc before procuring
machineries.
5. Market research: Market research is the systematic collection of data regarding
the product which the Entrepreneur wants to manufacture. Entrepreneur has to
undertake market research persistently to know the details of the intending
product, i.e. the demand for the product, size of the market/customers, the
supply of the product, competition, the price of the product etc.
6. Determining form of enterprise: Entrepreneur has to determine form of
enterprise depending upon the nature of the product, volume of investment etc.
The forms of ownership are sole proprietorship, partnership, Joint Stock .
Company, co-operative society etc. Determination of ownership right is essential
on the part of the entrepreneur to acquire legal title to assets.
7. Recruitment of manpower: To carry out this function an Entrepreneur has to
perform the following activities.
(a) Estimating man power requirement for short term and long term.
(b) Laying down the selection procedure.
(c) Designing scheme of compensation.
(d) Laying down the service rules.
(e) Designing mechanism for training and development.
8. Implementation of the project: Entrepreneur has to develop schedule and action
plan for the implementation of the project. The project must be implemented in a
time bound manner. All the activities from the conception stage to the
commissioning stage are to be accomplished by him in accordance with the
implementation schedule to avoid cost and time overrun. He has to organize
various resources and coordinate various activities. This implementation of the
project is an important function of the Entrepreneur.
All the above functions of the Entrepreneur can precisely be put into three categories
of innovation, risk bearing, and organizing and managing functions.

CHARACTERISTICS OF ENTREPRENEUR :An entrepreneur is a highly achievement oriented, enthusiastic and energetic
individual. He is a business leader. He has the following characteristic:
1) An entrepreneur brings about change in the society. He is a catalyst of change.
2) Entrepreneur is action-oriented, highly motivated individual who takes risk to
achieve goals.
3) Entrepreneur accepts responsibilities with enthusiasm and endurance.

4) Entrepreneur is thinker and doer, planner and worker.

5) Entrepreneur can foresee the future, seize market with a salesmans persuasiveness,
manipulate funds with financial talent and smell error, frauds and deficiencies with
an auditors precisions.
6) Entrepreneur undertakes venture not for his personal gain alone but for the benefit of
consumers, government and the society as well.
7) Entrepreneur builds new enterprises. He possesses intense level of determination
and a desire to overcome hurdles and solves the problem and completes the job.
8) Entrepreneur finds the resources required to exploit opportunities.
9) Entrepreneur does extraordinary things as a function of vision, hard work, and
passion. He challenges assumptions and breaks rules.
10) Although many people come up with great business ideas, most of them never act on
their ideas.

NATURE AND CHARACTERISTICS OF ENTREPRENEURSHIP:

Features of entrepreneurship are summarized as follows:
1)

It is a function of innovation.

2)

It is a function of leadership.

3)

It is an organization building function.

4)

It is a function of high achievement.

5)

It involves creation and operation of an enterprise.

6)

It is concerned with unique combinations of resources that make existing methods

or products obsolete.

7)

It is concerned with employing, managing, and developing the factors of

production.

8)

It is a process of creating value for customers by exploiting untapped

opportunities.

9)

It is a strong and positive orientation towards growth in sales, income, assets, and
employment.
RISKS INVOLVED WITH ENTREPRENEURSHIP:
Entrepreneurship involves the following types of risks.
1) FINANCIAL RISK: The entrepreneurship has to invest money in the enterprise
on the expectation of getting in return sufficient profits along with the investment.
He may get attractive income or he may get only limited income. Sometimes he
may incur losses.

2) PERSONAL RISK: Starting a new venture uses much of the entrepreneurs

energy and time .He or she has to sacrifice the pleasures attached to family and
social life.
3) CARRIER RISK: This risk may be caused by a number of reasons such as
leaving a successful career to start a new business or the potential of failure
causing damage to professional reputation.
4) PSYCHOLOGICAL RISK: Psychological risk is the mental agonies an
entrepreneur bears while organizing and running a business venturesome
entrepreneurs who have suffered financial catastrophes have been unable to bounce
back.
QUALITIES OF A SUCCESSFUL ENTREPRENEUR:
In order to organize and run it successfully, the entrepreneur must possess some qualities
and traits. They are as following:
1) Willingness to Make Sacrifices and Assume Risks: - A new venture is full of
difficulties and unanticipated problems. In such an inhospitable environment
entrepreneur has to be prepared to sacrifice his time, energy and resources in order to
carry out the venture and make it success.
2) Hard Work: - Willingness to work hard distinguishes a successful
entrepreneur from an unsuccessful one. For example, Assim Premji (chairman of Wipro)
works in his office fourteen hours every day. He is a successful entrepreneur. He is one of
the richest persons in India.
3) Optimism: - Successful entrepreneurs are not worried by the present problems
that they
face. They are optimistic about the future. This enhances their confidence and drives
them towards success. Some of the worlds greatest entrepreneurs failed before they
finally succeeded.
4) Self Confidence: - This is the greatest asset of a successful entrepreneur. He
must have the confidence to make choices alone and bounce back when he fails.
5) Leadership: - Successful entrepreneur generally has strong leadership
qualities. He should be a good judge of human nature and a good leader. He must be able
to select, train and develop persons who can properly manage and control the labour
force. McClelland identified two main characteristics in an entrepreneur- (1) Doing
things in a new and better manner. (2) Decision making under uncertainty. A successful
entrepreneur must be capable and well-informed, a successful leader of men, a keen
judge of things, courageous and prudent. Above all he must be gifted with a large
measure of practical common sense. There are not many Fords, Tatas, Birlas, Thapars and
Ambanis in the world. Entrepreneurship is not limited to any class, community or
religion. There is no age bar, for any person who possesses certain behavioural traits and
attitudes can work to become an entrepreneur.

Q- 12 Difference bet Entrepreneur and manager

Often the two terms namely entrepreneur and manager are considered as synonym.
However the two give different meaning. The major points of distinction between the two
are presented in table 5.2.

Table 5.2: Distinction between entrepreneur and manager

Points

Entrepreneur

Manager

1. Motive

The main motive of an entrepreneur is to

Main motive of a manager is to
start a venture for his personal gratification. render services in an enterprise
already set by someone else.

2.Status

Owner

Servant

3.Risk

Assumes risk and uncertainty

Manager does not bear any risk

involved in enterprise.

4.Rewards

Profits, which are highly uncertain and not

fixed.

Salary which is certain and fixed.

5.Innovation

Entrepreneur himself thinks over what and A manager simply executes plans
how to produce goods to meet the changing prepared by the entrepreneur.
needs of the customers. Hence he acts as
innovator / change agent.

6.Qualification

An entrepreneur needs to possess qualities

and qualifications like high achievement
motive, originality in thinking, foresight,
riskbearing ability etc.

Rewards for an Entrepreneur

1. Freedom to work.
2. Satisfaction of being own boss.
3. Power to do things as he likes.

A manager needs to possess distinct

qualifications in terms of sound
knowledge in management theory
and practice.

4. Rewards of ownership and retirement assurance.

5. Respect of family and friends.
Penalties for an Entrepreneur
1. Constraints of financiers, laborers, customers, suppliers, and debtors curtail his
freedom.
2. Frustration due to availability of limited capital and other resources.
3. Social and family life is affected due to hard long hours of working.
4. Frustration due to non-achievement of full objectives.
5. Risk of failure.

TYPES OF ENTREPRENEUR :
Entrepreneurs may be classified in a number of ways.
A. ON THE BASIS OF TYPE OF BUSINESS.
Entrepreneurs are classified into different types. They are
1) Business Entrepreneur: He is an individual who discovers an idea to start a
business and then builds a business to give birth to his idea.
2).Trading Entrepreneur: He is an entrepreneur who undertakes trading activity
i.e; buying and selling manufactured goods.
3) Industrial Entrepreneur:
manufacturing
activities.

He

is

an

entrepreneur

who

undertakes

4) Corporate Entrepreneur: He is a person who demonstrates his innovative skill

in organizing and managing a corporate undertaking.
5)

Agricultural Entrepreneur: They are entrepreneurs who undertake agricultural

activities such as raising and marketing of crops, fertilizers and other imputs of
agriculture. They are called agripreneurs.
B. ON THE BASIS OF USE OF TECHNOLOGY: Entrepreneurs are of the following
types.

1) Technical Entrepreneur: They are extremely task oriented. They are of

craftsman type. They develop new and improved quality goods because of their
craftmanship. They concentrate more on production than on marketing.
2)
Non-Technical Entrepreneur: These entrepreneurs are not concerned with the
technical aspects of the product. They develop marketing techniques and distribution
strategies to promote their business. Thus they concentrate more on marketing aspects.

3)

Professional Entrepreneur: He is an entrepreneur who starts a business unit but

does not carry on the business for long period. He sells out the running business and
starts another venture.

C. ON THE BASIS OF MOTIVATION:

Entrepreneurs are of the following types:
1) Pure Entrepreneur: They believe in their own performance while undertaking business
activities. They undertake business ventures for their personal satisfaction, status and
ego. They are guided by the motive of profit. For example, Dhirubhai Ambani of
Reliance Group.
2) Induced Entrepreneur: He is induced to take up an entrepreneurial activity with a view
to avail some benefits from the government. These benefits are in the form of assistance,
incentives, subsidies, concessions and infrastructures.
3) Motivated Entrepreneur: These entrepreneurs are motivated by the desire to make use
of their technical and professional expertise and skills. They are motivated by the desire
for self-fulfillment.
4) Spontaneous Entrepreneur: They are motivated by their desire for self-employment and
to achieve or prove their excellence in job performance. They are natural entrepreneurs.
D. ON THE BASIS OF STAGES OF DEVELOPMENT: They may be classified into;
1) First Generation Entrepreneur: He is one who starts an industrial unit by
means of his own innovative ideas and skills. He is essentially an innovator. He is
also called new entrepreneur.
2) Modern Entrepreneur: He is an entrepreneur who undertakes those ventures which suit
the modern marketing needs.
3) Classical Entrepreneur: He is one who develops a self supporting venture for the
satisfaction of customers needs. He is a stereo type or traditional entrepreneur.
E. CLASSIFICATION ON THE BASIS OF ENTREPRENEURIAL ACTIVITY:
They are classified as follows:
1) Novice: A novice is someone who has started his/her first entrepreneurial
venture.
2)

Serial Entrepreneur: A serial entrepreneur is someone who is devoted to one

venture at a time but ultimately starts many. He repeatedly starts businesses and grows
them to a sustainable size and then sells them off.

3)

Portfolio Entrepreneurs: A portfolio entrepreneur starts and runs a number of

businesses at the same time. It may be a strategy of spreading risk or it may be that the
entrepreneur is simultaneously excited by a variety of opportunities.
F. CLASSIFICATION BY CLARENCE DANHOF: Clarence Danhof, On the basis of

American agriculture, classified entrepreneurs in the following categories:

1) Innovative Entrepreneurs: They are generally aggressive on experimentation
and cleverly put attractive possibilities into practice. An innovative entrepreneur,
introduces new goods,
inaugurates new methods of production, discovers new markets and reorganizes the
enterprise. Innovative entrepreneurs bring about a transformation in lifestyle and are
always interested in introducing innovations.
2)

Adoptive Or Imitative Entrepreneurs: Imitative entrepreneurs do not innovate

the changes themselves, they only imitate techniques and technology innovated by others.
They copy and learn from the innovating entrepreneurs. While innovating entrepreneurs
are creative, imitative entrepreneurs are adoptive.

3)

Fabian Entrepreneurs: These entrepreneurs are traditionally bounded. They

would be cautious. They neither introduce new changes nor adopt new methods
innovated by others entrepreneurs. They are shy and lazy. They try to follow the footsteps
of their predecessors. They follow old customs, traditions, sentiments etc. They take up
new projects only when it is necessary to do so.

4)

Drone Entrepreneurs: Drone entrepreneurs are those who refuse to adopt and
use opportunities to make changes in production. They would not change the method of
production already introduced. They follow the traditional method of production. They
may even suffer losses but they are not ready to make changes in their existing
production methods.

Q-13 ROLE OF ENTREPRENEURSHIP IN ECONOMIC

DEVELOPMENT
Economic development essentially means a process of upward change whereby the real
per capita income of a country increases for a long period of time. The economic history
of the presently developed countries, for example, USA and Japan tends to support the
facts that the economy is an effect for which the entrepreneurship is the cause. The
crucial role played by the entrepreneurs in the western countries has made the people of
underdeveloped countries conscious of the significance of entrepreneurship in economic
development. After the Independence, India has realized that, for achieving the goal of
economic development, it is necessary to increase the entrepreneurship both qualitatively
and quantitatively in the country. Parson and Smelter described entrepreneurship as one
of the two necessary conditions for economic development, the other being increased
output of capital. Y.A. Say high describes entrepreneurship as a necessary dynamic force
for economic development. The important role that an entrepreneurship plays in the
economic development of an economy can be put in a more systematic manner as
follows.

1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the

public.
2. It provides immediate large-scale employment. Thus it helps to reduce
unemployment in the country.
3. It provides balanced regional development.
4. It helps reduce the concentration of economic power.
5. It stimulates the equitable redistribution of wealth, income and even political
power in the interest of the country.
6. It encourages effective resources mobilization of capital and skill which might
otherwise remain unutilized and idle.
7. It also induces backward and forward linkages which stimulated the process of
economic development in the country.
8. It promotes countrys export trade i.e. an important ingredient for economic
development.
BARRIERS TO ENTREPRENEURSHIP:
A large number of entrepreneurs particularly in the small enterprises fail due to several
problems and barriers. The greatest barrier to entrepreneurship is the failure of success.
Karl. H. Vesper has identified the following entrepreneurship barriers:
1. Lack of a viable concept
2. Lack of market knowledge
3. Lack of technical skills
4. Lack of seed capital
5. Lack of business know how
6. Complacencylack of motivation
7. Social stigma
8. Time presence and distractions
9. Legal constraints and regulations
10. Monopoly and protectionism
11. Inhibitions due to patents

Q-15 Rural entrepreneurship and the problems to it development.

Ans:- Rural Entrepreneurship can be defined as entrepreneurship emerging at village
level which can take place in a variety of fields of Endeavour such as business, industry,
agriculture and acts as a potent factor for economic development.

Classification of Rural Industries:All rural industries have been classified intothe following six categories:-

1. Mineral-based industries.
2. Forest-based industries.
3. Agro-based industries.
4. Engineering and non-conventional industries.
5. Textile industry (including Khadi), and
6. Service industry.

Problems faced by it:Developing rural entrepreneurship is important but notso easy. The general bottlenecks in the
development of village industries are :
Financial constraints.
Lack of technical know-how
.Lack of training and extension services
Management problems
Lack of quality control.
High cost of production due to high input cost.
Lack of communication and market information.
Poor quality of raw materials
.Lack of storage and warehouses.
Obsolete and primitive technology
.Lack of promotional strategy.

Woman entrepreneurship: Women Entrepreneur It may be defined as a woman or group of women who initiate,
organise and run a business enterprise.

Women who innovate initiate or adopt business actively are called women
entrepreneurs.
J. Schumpeter
Women entrepreneurship is based on women participation in equity and
employment of a business enterprise.
Ruhani j. alice

QUALITIES OF WOMEN ENTREPRENEURS:

Accept challenges
Ambitious
Hard work
Patience
Motivator

Adventurous
Conscious
Educated
Intelligent

FUNCTIONS OF WOMEN ENTREPRENEUR:-

organization

planning

innovation
Risk bearing

Decision making

PROBLEMS OF WOMEN ENTREPRENEURS:-

General
problems

Problem of
raw
material

Problem of
finance

Marketing
problem

Infrastruct
ure
problem

Stiff
competitio
n

Problem
specific to
women
entrepreneur

Male
dominated
society

Low risk
taking ability

Lack of
education

Lack of
business
information

Family
problems

 REMEDIES TO SOLVE THE PROBLEMS:-

Finance cells

Markiting co-opratives
Supply of raw material
Education and awareness
Training facility

MOTIVATIONAL NEEDS:

Economic necessity
Independence
Education and qualification
Family occupation
Success stories of friends & relatives

Q-16 Essential of corporate report writing?

Defination:Corporate financial reporting is a series of activities that allows companies to record operating data and
report accurate accounting statements at the end of each month and quarter.

Importance: Corporate financial reporting is an important function because it enables organizations to present
accurate accounting statements
It helps firms conform to international financial reporting standards and U.S. generally accepted
accounting principles.

Report types: Balance Sheet

A corporate balance sheet is also known as a statement of financial condition or statement of
financial position. It provides information about a company's assets, liabilities and equity capital.
Income Statement
An organization's income statement is an important report on which investors, financial analysts
and corporate business partners rely to measure a company's economic health.
Cash Flow Statement
A cash flow statement indicates liquidity movements within a company's operations. In other
words, the report tells the tale of the company's cash payments and receipts over a period of time.
Equity Statement
Also known as a statement of retained earnings, a corporate equity statement provides insight
into the ownership of a company. In short, the report helps identify who owns the company.

1.
2.
3.
4.
5.
6.
7.

How to Write a Corporate Report:Identify the audience for your report and its purpose.
Find out if your organization has a required format for corporate reports and use it.
Collect the data needed to write all sections of the report.
Create a list of key points for each report section.
Draft each section of the report.
Write a summary or abstract and a conclusion.
Read the entire report for clarity and consistency
1. Ask someone to review the report for grammar and readability.
2. Edit the corporate report using feedback from reviewers.

 Users of corporate reports:: Corporate report is relevant to the company's shareholders, whose concern is with profit figures
Also its important for auditors
External users like banks