Question

Define small enterprises and explain its characteristics

Answer 1

mall business may be defined in various ways e.g. in terms of investment, number of persons employed, volume of output and sales, technique of production etc.

However, in India, small business is defined by Government, as consisting of the following four types of businesses:

(i) Small Scale Industries:

The investment in plant and machinery is up to Rs. 1 crore.

(ii) Ancillary Industrial Undertakings:

The investment in plant and machinery not to exceed Rs.1crore; and the undertaking must sell not less than 50% of the its output to other industrial undertakings.

(iii) Export-Oriented Units:

The investment in plant and machinery is up to Rs. 5 crores; and the unit must export at least 30% of its output by the end of three years from the commencement of production.

(iv) Tiny Units:

The investment in plant and machinery is up-to Rs.25 lakhs.

Characteristics of Small Business Enterprises:

Some of the salient characteristics of small business enterprises are stated below:

(i) Limited Investment:

In a small business enterprise, capital is supplied by an individual or a small group of individuals. As per a census of small scale units in India, mostly small business enterprises are run as sole- proprietorship and partnership.

(ii) Personal Character/Owner-Management:

A small business is identified with its owners; who themselves act as managers. Managers as such have maximum motivation to work; as they themselves happen to be the owners also, at the same time.

(iii) Labour-Intensive:

Small business enterprises are mostly labour-intensive. The machinery and equipment used are not very sophisticated and are operated manually.

(iv) Unorganised Labour:

Small business enterprises employ less number of workers as compared with big business enterprises. Workers of these units do not form labour unions and remain unprotected.

(v) Local Area of Operations:

The area of operations of small units is generally local as they have less capital and less marketing facilities at their disposal. There is a local touch between employer and employees; and between employer and customers though products of some small scale enterprises are exported to many countries of the world.

Answer 2

Answer:

1. Production or Procurement of Goods and Services: Business exists to satisfy the wants of the consumers. Thus, every business enterprise either manufactures the goods (pen, textbook, furniture, etc.) or acquires them from producers, to be further sold to consumers or users.