Business Arithmetic — Entrepreneurship STD 12 Commerce — Question

Is vendor management different from employee management? Enumerate.

Vipul made his business plan with the help of an engineer. The plan was in the form of an entertaining slide show complemented with an oral narrative. When he showed his business plan to the bank officials, they were excited about the project and discussed various details. The business plan also had an exceutive summary and important graphs showing financial trends.

1. What type of business plan has been presented by Vipul?
2. Explain two more formats of business plans.

State any two points of importance of 'Goal Setting'.

Why is Return on Investment deemed as a yardstick for the performance of an enterprise? Explain with suitable example.

'Golden Sweets' was a partnership firm, owned by Swati and Sushma. 'Asam Sweets' was another partnership firm owned by Vipan and Pranav. Swati and Sushma were sharing profits in 1:2 ratio and Vipan and Pranav were sharing profits in 2:3 ratio. Both the firms were situated in a famous market of Guwahati and were doing competitive business. Pranav the partner of 'Asam Sweets' observed that many of their customers were from far off areas and if branches of ‘Asam Sweets’ are opened in other parts of the city, the firm may earn huge profits. Similar was the situation of 'Golden Sweets'. One day in a function at a common friends house, the partners of both the firms knew that the internal expansion of their respective firms will be costly. Hence, they decided about the merger of the two firms. For this purpose, they decided to meet again to finalise the conditions of merger. Finally, on 1.1.2016 their respective firms were merged and a new firm ‘Asam Golden Sweets’ was formed with all the four partners Swati, Sushma, Vipan and Pranav. Their new profit sharing ratio was 1:2:2:3. During the year ended 31.12.2016, the new firm opened four new branches in different parts of the city and earned a profit of 30% on sales.

1. Identify the type of merger adopted by the two firms and also give its meaning.
2. Also give the names and meaning of two other types of mergers.

Ashok is engaged in the production of readymade garments using cotton cloth. Identify the business activity in which Ashok is involved. Also, name and define the utility created by Ashok.

Name the specialised institutions which provides leasing and factoring to small scale units.

Subhiksha
Subhiksha was founded in 1997 by R Subramanian, IIT-IIM graduate. It operated over 1600 outlets selling groceries, fruits, vegetables, medicines and mobile phones and positioned itself as value retail chain. It adopted strategy to cut price, focus on lower and upper middle class and opened shops near catchment area of customers. It started with one store in Chennai and within a short span the count reached to 1600 outlets (2008).
Why did Subhiksha super market fail?

1. Rapid store expansion in various formats like groceries, medicines, mobiles, electronics, consumer durables and IT without sufficient fund in hand.
2. Operated on very slim or zero margins resulting in higher cash outflows whereas inflows were almost nil.
3. Not much attention to customers service resulted in bad quality service at store level.
4. Downstream supply chain was not integrated resulting in lower fill rates and customer dissatisfaction.
5. Expanded business through debt (7500 million debt).
6. In October, 2008 the company did not have enough funds to manage its operations.
7. Poor inventory management resulted in defective inventory, breakages, lower fill days and pile up inventory.

1. What were the main reasons for 'Subhiksha's failure? Enumerate the ones given in the chapter.

Quote the lines from the passage which are indicative of the given reasons.

2. Was 'location' one of the factors responsible for 'Subhiksha's failure?
3. What additional factor, other than those discussed in the chapter, was responsible for Subhiksha's failure?

Net working capital can be negative or positive, but gross working capital is always positive. Why?

Why are feasibility plans considered essential?