Chapter 9 : Small Business Studies

1. What are the different parameters used to measure the size of business?


The different parameters that are used to measure the size of a business are:
→ The number of persons employed in business
→ Capital invested in business
→ Volume of output or value of output of business
→ Power consumed for business activities.

2. What is the definition used by Government of India for small scale industries?


The Government of India defines small industries on the basis of their investment in plant and machinery. Industries where the amount invested in the fixed assets (particularly plant and machinery) is less than Rs. 1 crore are regarded as small-scale industries. However, export-oriented units that use modern production techniques are considered as small-scale industries if their investment does not exceed Rs. 5 crore.
3. How would you differentiate between an ancillary and a tiny unit?


Ancillary Unit

Tiny Unit

An ancillary unit is the unit which supplies minimum 50% of its production to the parent unit. A tiny unit is the business enterprise whose investment in plant and machinery is not more than Rs. 25 lakh.
Investment limit in this unit is one crore. Investment limit in this unit is Rs. 25 lakh.
Parent unit assists the ancillary unit by providing technical and financial help. No such assistance is present here.
Industries engaged in the production of machine parts, tools and other intermediate products are example of this industry. Business units such as small shops, boutiques, STD booths and photocopy centres are examples of this industry.

4. State the features of cottage industries.


The features of cottage industries are:

→ These are organised by individuals, with private resources

→ It generally use family labour and locally available talent

→ The equipment used is simple

→ The capital investment is small

→ It produce simple products, normally in their own premises

→ The production of goods using indigenous technology.