Business Studies Small Business Class:-XI b

[Audio] Business StudiesSmall Business Class:-XI b.

[Audio] INTRODUCTION In this chapter we will discuss the issue of size of small business with reference to small scale industries and small business establishments. It also discribes the role of small business and major problem faced by the small sector units. Further, the assistance provided by the government to small business, particularly in the rural and hilly areas has been discussed.

[Audio] MEANING AND NATURE OF SMALL BUSINESS Small businesses surround us. They are on every other street and in every corner. Every second thing someone buys comes from a small business. In India where unemployment is a serious issue, small business gains a special position in the industrial structure because of their ability to utilise labour and create employment. Let us learn about meaning and Nature of Small business.

[Audio] MEANING OF SMALL BUSINESS Small businesses are either services or retail operations like grocery stores, medical stores, tradespeople, bakeries and small manufacturing units. Small businesses are independently owned organisations that require less capital and less workforce and less or no machinery. These businesses are ideally suited to operate on a small scale to serve a local community and to provide profits to the company owners..

[Audio] NATURE OF SMALL BUSINESS The nature of small businesses can be classified as follows: Shoestring Budget A sole proprietor or a small group of people operate small businesses. These businesses often run on ' shoestring budget' meaning that small businesses function on a very tight budget. Labour intensive Small businesses are mostly labour intensive. Various types of small business largely rely on labour for their functioning. The primary nature of small businesses is more involvement of physical work rather than intellectual work. The lack of machinery makes the employees manage their operations manually..

[Audio] Community-based Small businesses are started with the motive of satisfying the needs and demands of a local area or community. These businesses demographically target few areas of concentration and are hence community-based. Indigenous technology Due to small businesses being community focused and labour oriented they often thrive upon native methods of operations. In India, there are many businesses in the rural sector that still use outdated technology. This might give uniqueness to the products but hinders the development of the business..

[Audio] MICRO SMALL AND MEDIUM ENTERPRISES It is important to know how size is defined in our country, with reference to MSME establishments. Several parameters can be used to measure the size of business units. These include the number of persons employed in business, capital invested in business, turnover of business, etc. The definition used by the Government of India to describe MSME is based on the investment in plant and machinery and turnover. This measure seeks to keep in view the socio-economic environment in India where capital is scarce and labour is abundant.

[Audio] The emergence of a large service sector has necessitated the government to include other enterprises covering both Small Scale Industries ( SSI) sector and related service entities under the same umbrella. Expansion of the small enterprises was taking place growing into medium enterprises and they were required to adopt higher levels of technologies in order to remain competitive in a fast globalising world. Thus, it was necessary to address the concerns of such enterprises as micro, small and medium and provide them with a single legal framework. The MSMED Act, 2006 came into force w.e.f., October, 2006. The Micro, Small and Medium Enterprises Development ( MSMED) Act, 2006 addressed these issues relating to its definition, credit, marketing and technology up gradation. Medium scale enterprises and service related enterprises also come under the purview of this Act.

[Audio] ROLE OF MSME's MSME in India enjoy a distinct position in view of their contribution to the socio-economic development of the country. The emphasis on MSME has always been an integral part of India's industrial strategy. Development of MSME prevents migration of rural population to urban areas in search of employment and contributes to other socio-economic aspects, such as reduction in income inequalities, dispersed development of industries and linkage with other sectors of the economy. In fact promotion of MSME and rural industrialisation has been considered by the Government of India as a powerful instrument for realising the twin objectives of 'accelerated industrial growth and creating additional productive employment potential in rural and backward areas.' The following points highlight their contribution. ( I) The contribution of these industries to the balanced regional development of our country is noteworthy. Small industries in India account for 95 per cent of the industrial units in the country. (ii) MSME are the second largest employers of human resources, after agriculture. They generate more number of employment opportunities per unit of capital invested compared to large industries. They are, therefore, considered to be more labour intensive and less capital intensive.

[Audio] (iii) MSME in our country supply an enormous variety of products which include mass consumption goods, readymade garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches, etc. Among the sophisticated items manufactured are electric and electronic goods like televisions, calculators, electro-medical equipment, electronic teaching aids like overhead projectors, air conditioning equipment, drugs and pharmaceuticals, agricultural tools and equipment and several other engineering products. (iv) MSME which produce simple products using simple technologies and depend on locally available resources both material and labour can be set up anywhere in the country. Since they can be widely spread without any locational constraints, the benefits of industrialisation can be reaped by every region. They, thus, contribute significantly to the balanced development of the country.

[Audio] PROBLEMS ASSOCIATED WITH MSME The potential of MSME is often not realised fully, because of several problems related to size and operations. We shall now examine some of the major problems that small businesses whether in urban or in rural areas are encountering in their day-to-day functioning. MSMEs are at a distinct disadvantage as compared to largescale industries. The scale of operations, availability of finance, ability to use modern technology, procurement of raw materials are some of these areas.The potential of MSME is often not realised fully, because of several problems related to size and operations. We shall now examine some of the major problems that small businesses whether in urban or in rural areas are encountering in their day-to-day functioning..

[Audio] 1. Finance: One of the severe problems faced by MSME is that of non-availability of adequate finance to carry out its operations. Generally these businesses begin with a small capital base. Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets. As a result, they heavily depend on local financial resources and are frequently the victims of exploitation by the money lenders. These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks. Banks also do not lend money without adequate collateral security or guarantees and margin money, which many of them are not in a position to provide. 2. Raw Materials: Another major problem of MSME is the procurement of raw materials. If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials. Their bargaining power is relatively low due to the small quantity of purchases made by them. Also, they cannot afford to take the risk of buying in bulk as they have no facilities to store the materials Because of general scarcity of metals, chemicals and extractive raw materials in the economy..

[Audio] 3. Quality: Many MSMEs do not adhere to desired standards of quality. Instead they concentrate on cutting the cost and keeping the prices low. They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology. In fact maintaining quality is their weakest point, when competing in global markets. 4. Global competition: Apart from the problems stated above MSME are not without fears, especially in the present context of globalisation. These enterprises face competition is not only from medium and large industries, but also from multinational companies which are giants in terms of their size and business volumes.

INTELLECTUAL PROPERTY RIGHTS AECTEO &PROT€C.

[Audio] INTERECTUAL PROPERTY RIGHTS ( IPR) Over the past two decades, intellectual property rights have grown to a stature from where it plays a major role in the development of global economy. Intellectual property is everywhere, i.e., the music you listen to, the technology that makes your phone work, the design of your favourite car, the logo on your sneakers, etc. It exists in all the things you can see—all are the products of human creativity and skill, such as inventions, books, paintings, songs, symbols, names, images, or designs used in business, etc. All inventions of creations begin with an ' idea'. Once the idea becomes an actual product, i.e., Intellectual Property, one can apply to the authority concerned under the Government of India for protection. Legal rights conferred on such products are called ' Intellectual Property Rights' (IPR). Hence Intellectual property ( IP) refers to products of human mind, hence, just like other types of property, the owners of IP can rent, give or sell it to other people. Specifically, Intellectual property (IP) refers to the creations of the human mind, like inventions, literary and artistic works, symbols, names, images and designs used in business.

[Audio] Why is IPR Important for Entrepreneurs? It encourages creation of new, path- breaking inventions, such as cancer cure medicines. It incentivises inventors, authors, creators, etc., for their work. It allows the work created by a person to be distributed and communicated to the public only with his/her permission. Therefore, it helps in the prevention of loss of income. It helps authors, creators, developers and owners to get recognition for their works.

[Audio] TYPE OF IPR's IPRs are extremely essential for fostering creativity and contribute towards the economic growth of a nation. Such rights allow creators and inventors to have control over their creations and inventions. These rights create incentives for artists, entrepreneurs and inventors to further commit the necessary resources to research, develop, and market new technology and creative works. The changing global economy is creating unprecedented challenges and opportunities for continued progress in human development. There are business opportunities to market or sell IP worldwide. Geographical borders present no impediments— consumers enjoy near immediate access to almost everything. At such exciting times, it is critical that we are aware about the importance of IPRs and how it affects daily life..

[Audio] Copyright Copyright is the right to "not copy". It is offered when an original idea is expressed by the creator or author. It is a right conferred upon the creators of literary, artistic, musical, sound recording and cinematographic film. The copyright is an exclusive right of the creator to prohibit the unauthorised use of the content which includes and distributing copies of the subject matter. The unique feature of copyright is that, the protection of work arises automatically as soon as the work comes into existence. Trademark A trademark is any word, name, or symbol (or their combination) that lets us identify the goods made by an individual, company, organization, etc. Trademarks also let us differentiate the goods of one company from another. In a single brand or logo, trademarks can let you know many things about a company's reputation, goodwill, products and services. A trademark helps in distinguishing similar products in the market from its competitors. A competitor cannot use the same, or similar trademark to sell their product in the market as the same fall under the concept of deceptive similarity which may be defined as phonetic, structural or visual similarity.

[Audio] Patent A patent is a type of IPR which protects the scientific inventions ( products and or process) which shows technical advancement over the already known products. A 'patent' is an exclusive right granted by the Government which provides the exclusive 'right to exclude' all others and prevent them from making, using, offering for sale, selling or importing the invention. For an invention to be patentable, it must be new, non-obvious to any person who is skilled in the relevant field of technology and must be capable of industrial application. (i) It must be new, i.e., it should not already exist in the current knowledge anywhere in the world. (ii) It must be non-obvious to any person who is skilled in the relevant field of technology. That is, the standard is a person reasonably skilled in such field of study ( Inventive Step). (iii) Finally, it must be capable of industrial application, i.e., capable of being used or manufactured in the industry.

[Audio] SUMMARY Role of small business in India: Small Scale Industries play a very important role in the socio-economic development of the country. These industries account for 95 per cent of industrial units, contributing up to 40 per cent of the gross industrial value added and 45 per cent of the total exports. SSIs are the second largest employers of human resources, after agriculture and produce a variety of products for the economy. These units contribute to the balanced regional development of the country by using locally available material and indigenous technology. These provide ample scope for entrepreneurship; enjoy the advantage of low cost of production; quick decision making, and have quick adaptability and are best suited to customised production. Role of small business in rural India: Small business units provide multiple source of income, in wide range of non-agricultural activities and provide employment opportunities in rural areas, especially for the traditional artisan and weaker sections of the society. Entrepreneur: The terms ' entrepreneur,' 'entrepreneurship' and ' enterprises' can be understood by drawing an analogy with the structure of a sentence in English language. Entrepreneur is the person (the subject), entrepreneurship is the process (the verb) and enterprise is the creation of the person and the output of the process (the object)..

[Audio] Presented by: Hunny Sharma.