Note on Enterprise

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Introduction

Enterprise
Source:www.utsa.edu
Fig: Enterprise

Any business firm, company or concern investing resources in some economic activities for profit motive is called an enterprise. It consists of agricultural activities, service activities etc. The five main M’s of an enterprise are man, material, money, method, and management. For a better enterprise, above M’s are very important. The business can be classified on the basis of size of capital, nature of business and production orientation.

Types of Enterprise Based on Capital

Some of the enterprises which are based on capital are listed and explained below:

Micro enterprises: The micro-enterprises are the industries which generally have capital investment up to 200,000 and based on local resources.

Cottage industries: This is another type of industry which is based on local skills and resources. For cottage industries, there is no limitation of the investment of capital. This industry is very much suitable for the local people. Some of the examples of cottage industries are handicraft, carpet, Pashmina etc.

Small scale industries: This is another enterprise which has capital investment up to Rs 50,000,000. It is larger than micro-enterprise and cottage industries.

Medium scale industries: This is another type of enterprise which includes industries which have investment more than 5 crores but less than 15 crores. This industry is larger than small scale industries.

Large scale industries: These industries have the capital investment of more than 15 crores. This is the largest industries among the industries in enterprises.

Types of Enterprises Based on the Nature of Works

Enterprises can be divided into two categories based on the nature of works, which are:

  • Services oriented enterprise
  • Production oriented enterprise

Services oriented enterprise: This type of enterprise provides specific services to people and the society. Some of the examples for service oriented enterprises are health services, teaching, telecommunication services. This enterprise provides quality services to the people and makes profit.

Production oriented enterprise: This is another type of enterprise which manufacture intermediary or finished goods. It includes vegetable farming, knitting, weaving, shoe making etc. and makes profit by supplying those goods to market.

Possible Enterprises at the Local Level:

Local people have labour and potentiality to do different and new kinds of activities and also be engaged in some income generating activities but local people can't invest a big amount of money for their businesses. For that kind of local people, small and cottage industries are very suitable.

Reason for the preference of micro enterprises and cottage industries are as follows:

  • Work can be operated at small space.
  • The family members can run that kind of industries.
  • The local market channel is used as sales outlets.
  • Only a small investment is required.
  • Local resources can be used as raw materials for industries.

Best suited enterprises at local level

Some of the enterprises based on local resources and indigenous skill are listed and explained below:

Agro-processing: In this category, dairy industries, jam, jelly, squash, napkin industries etc. can be placed.

Non-timber forest production: This enterprise is based on bamboos, canes, fibers and herbal sanitary products. Herbal medicines, incense sticks etc. fall in this category.

Culture and traditional knowledge based: Wooden crafts, stone crafts, Nepali paper crafts, metal crafts, painting, hosiery, pashmina, carpet etc. fall in this category.

Service oriented: Repairing of tools and equipment, tailoring, Aran, tea-shops, material and food services, tourist guides, health services are the services industry in this category.

Selection rule for an appropriate enterprise:

Many kinds of industries are suitable for local communities as described above, but it would be very difficult to select one of them for the business. Demand can be the golden rule for selection of an appropriate enterprise. For choosing an enterprise, following questions need to be answered:

  • Are you interested in that enterprise?

  • Is the demand for that product or services high?

  • Is the resources or materials to make the goods or provide services available locally?

In the above questions, if the answer is 'yes', then you can select that enterprise, otherwise, you can try the other until you obtain positive reasons.

Business Plans for Establishing an Industry

The formal document which contains the information required to know the details about the business before starting the business is known as a business plan. These plans depend on the type and size of enterprises.

Some of the basic elements of business plans are as follows:

1.Raw materials: The volume, types, source, quantity and cost of raw materials required for the enterprise.

2. Location: Transportation, supplies, power, availability of water, labors etc.

3. Background/context: Objective and importance of the business.

4. Machinery and equipment: Their sources, quality, quantity, name, and sources.

5. Market: A business plan should reflect the potential market places for the produced goods from the enterprise.

6. Investment capital: What amount of money has to be invested should be known in advance. A proper costing of business setup cost should be assessed.

7. Profitability: Business plan should reflect annual production and turnover. Break-even, pay-back period, and pricing should be calculated to get targeted profit.

8. Quality control:Entrepreneur shouldn't compromise in the quality of the produced goods to compete with other goods in the market. A business plan should show how the quality is maintained.

9. Schedule and Checklist: All the activities and tasks to be carried out for business establishment should be scheduled.

10. Production process: Capacity, shifts, process flow should be mentioned. If the production can't meet the demand in the market, it can't sustain.

Promotion and Management of Micro-enterprise

The following aspects should be considered in the management of an enterprise. Some of the important aspects are as follows:

  • Resources analysis: Is there enough resources at the local level? Is it available?
  • Market analysis: Where is the market for the product or service?
  • Entrepreneurship training: How can I get training? Do I have the soft skill to start the business?
  • Professional training: Do I or my employees have a technical idea about that business? If not, how to get training?
  • Industrial relation: How can I provide maximum satisfaction to my employees?
  • Market promotion: How can I promote my product and service to the consumers or users in the market?
  • Acess to credit: How can I find financial resources to start a business? Where and how to get micro-credit?
  • Business counseling: What are the options for persons or institution to go for help when they face any difficulties in running the business?
  • Industrial relations: How can I maintain minimum satisfaction level to my employee?
  • Compliance with rules and regulations: How can I meet formalities to Tax Office and Industry Department?
  • Environment safeguard: How can I cause a minimum disturbance to an environment? How to treat or where to dispose effluents?

  • Any business firm, company or concern investing resources in some economic activities for profit motive is called an enterprise.
  • Services oriented enterprise is a type of enterprises providing specific services to people and the society.
  • Production oriented enterprises is another type of enterprises which manufacture intermediary or finished goods.
.

Very Short Questions

Any business firm, company or concern investing resources in some economic activities for profit motive is called an enterprise.

The five main M’s of the enterprise are man, material, money, method, and management.

Possible enterprises at the local level :

Local people have the  potentiality to do different kinds of activities and are engaged in income generating activities. But, the local people can't invest a big amount of money for their businesses. For that kind of local people, small and cottage industries are very suitable.

Reasons for the preference of micro enterprises and cottage industries are as follows:

  • For operating their works, small space can be enough.
  • Family members without additional labour can run that kind of industries.
  • The local market channel is used as sales outlets.
  • A small investment can start cottage industry and small industry.
  • Local resources can be used as raw materials for industries.
  • Best suited enterprises at the local level.

The formal document which contains the detailed information required about the business before starting the business is known as a business plan.

0%
  • Any business firm, company or concern investing resources in some economic activities for profit motive is called an _____.

    organization
    enterprise
    office
    company
  • Business can be classified into ______________ types.

    5
    4
    2
    3
  • Micro-enterprises are the industries which generally have capital investment up to _________ .

    500000
    200000
    100000
    300000
  • Enterprise which has capital investment up to Rs 50,000,000 is called ________________:

    Cottage industries
    Large scale industries
    Medium scale industries
    Small scale industries
  • Enterprises can be divided into ___ categories.

    one
    two
    four
    three
  • A small investment can start ___________industry.

    small
    cottage
    cottage and small
    medium
  • This enterprise based on bamboos and canes, fiber and herbal sanitary products, herbal medicines, incense sticks etc is known as ________________.

    Service oriented
    Agro-processing
    Herbs farming
    Nontimber forest production
  • The formal document which contains the information required to know details about the business, before starting the business is known as _______ .

    a method
    description
    enterprise
    a business plan
  • Industries which have investment more than 5 crores but less than 15 crores are called ________________.

    Medium scale industries
    cottage industries and small industries
    cottage industries
    small industries
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