Class 11 Business Studies 2023-24 Notes Chapter 9 - Small Business and Entrepreneurshi
Class 11 Business Studies 2023-24 Notes Chapter 9 - Small Business and Entrepreneurshi
Class 11 Business Studies 2023-24 Notes Chapter 9 - Small Business and Entrepreneurshi
Resource Material
For Session 2023-24
Best Notes
CBSE
CLASS 11 Business Studies
Introduction
A business which operates on a small scale and required less capital, less labour and less
machines is called small business. The goods are produces on a small scale. This business is
operated and managed by the owner of the business. In India, the village and small Industries
sector consists of both traditional Handlooms, Handicrafts, khadi and Village Industries.
Modern small Industries: Small scale industries and Power looms.
According to The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006, a
small-scale enterprise defined as one where the investment in Plant and Machinery is more
than Rs. 25 lakhs but does not exceed Rs. 5 crore.
The definition used by the Government of India to describe small Industries is based on the
investment in plant and machinery. It can be divided as follows:
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agricultural tools and equipment and several other engineering products. Handlooms,
Handicrafts and other products from traditional village industries add to this diverse
production from SSIs.
5. Regional Balance: Small industries contribute significantly to the balanced
development of the country as they produce simple products using simple technologies
and depend on locally available resources both material and labour and can be set up
anywhere in the country.
6. Entrepreneurship Development: Small industries provide an opportunity for
entrepreneurship development in the country. The latent skills and talents of people
can be transformed into business ideas with little capital investment and almost nil
formalities to start a small business.
7. Low Cost of Production: Small industries have the advantage of low cost of production
as they use locally available resources which are less expensive. Establishment and
running costs of small industries are lower because of low overhead expenses.
8. Quick Decision Making: Due to the small size of the organizations, quick and timely
decisions can be taken without consulting many people. New business opportunities
can therefore be captured at the right time.
9. Customized Production: Small industries can design the product as per the
tastes/preferences/needs of individual customers. They can provide customized
production of even non-traditional products such as computers and other such
products. They can produce according to the needs of the customers as they use simple
and flexible production techniques.
10.Personal Touch: Small industries have an inherent strength of adaptability and a
personal touch and therefore maintain good personal relations with both customers
and employees. The government does not have to interfere in the functioning of a
small scale unit.
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5. Equitable distribution of rational Income: Small Scale Industries and cottage Industries
ensure equitable distribution of national income. This helps to reduce the gap between
rich and the poor in the country.
6. Balanced Regional development: These enterprises are often dependent on local
source of production. This way, industries do not just limit themselves to a particular
place but diversify. This helps in balanced regional development.
2. Raw materials: Availability and procurement of raw material is another major problem
faced by the Small-Scale Industries. Their bargaining power is relatively low due to the
small quantity of purchases.
3. Managerial skills: Small Scale Industries are generally promoted and operated by single
person, who may not possess all the managerial skills required to run the business.
They are also not in a position to afford professional managers.
4. Labour: Productivity per employee is relatively low and employee turnover is generally
high due to low remuneration. It also faces lack of specialization.
6. Quality: Many small businesses do not follow the desired standards of quality due to
shortage of finance and resources.
7. Capacity utilization: Many of the small-scale Industries are operating below full
capacity due to lack of marketing skills or demand. It will cause to increase its operating
cost and leads to sickness and closure of the business.
9. Sickness: Due to many internal and external problems, most of the Small-Scale
Industries are in the edge of sickness.
10. Global competitions: Most of the Small-Scale Industries face competitions not only
from medium and large industries, but also from Multinational Companies in the areas
of quality, technology, finance, managerial skills etc.
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Entrepreneurship can be of varying degrees and is not necessarily alike. It can be categorized
into various subcategories, starting with small and home businesses to multidimensional
industries that were started from the ground level.
Characteristics of Entrepreneurship
1. Ability to take Risks: This is the first and foremost trait of entrepreneurship. Starting any
business involves a considerable amount of risk of failure. Therefore, the courage and
capacity to take the said risk are essential for an entrepreneur.
2. Innovation: In a world, where almost everything has been done, innovation is a priceless
gift to have. Innovation basically means generating a new idea with which you can start a
business and achieve a substantial amount of profits. Innovation can be in the form of a
product, i.e., launching a product that no one is selling in the market. It can also be in the
form of process, i.e., doing the same work in a more efficient and economical way. An
easy example of product innovation could be the launching of touch screen cell phones
when the world was still using a keypad on cell phones.
3. Visionary: Every entrepreneur needs to be a visionary. Without a vision for the future of
his venture, he or she would just be working aimlessly without reaching any point of
success.
4. Leadership: An entrepreneur has a vision. However, it takes a lot of resources to turn that
vision into reality. One of these resources are the people that the entrepreneur hires to
perform various functions like production, supplying, accounting, etc.
5. A single person cannot perform all the tasks and therefore it is important to bring some
more people to do it. This also makes leadership very important as a leader provides the
required direction to the efforts of the employees. Without proper leadership, everyone
would be working independently without achieving the desired results.
6. Open Minded: A good entrepreneur realizes that every situation can be a business
opportunity. Thus, can be utilized for the benefit of the organization. For example, Paytm
realized the significance of demonetization and recognized that the need for online
transactions was more than ever during this time and so it utilized and grew massively
during this period.
7. Confident and Well Informed: An entrepreneur needs to be confident about his ideas and
skills. This confidence also inspires the confidence of the people working for him as well as
the other stakeholders involved in his business.
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9. Know your Product: A company owner should know the product offerings and also be
aware of the latest trend in the market. It is essential to know if the available product or
service meets the demands of the current market, or whether it is time to tweak it a little.
Being able to be accountable and then alter as needed is a vital part of entrepreneurship.
2. Startup India Hub: To create a single point contact for the entire startup system and to
enable knowledge exchange and access to funding.
3. Legal support and fast tracking Patent Examination: To give protection for patents,
trademark and designs of innovative startups through SIPP (Startups Intellectual Property
Protections).
4. Easy Exist: In the event of failure and wind up of operations, procedures are adopted to
reallocate capital and resources towards more productive avenues. Thus, the
entrepreneurs can easily exit from the business if required.
5. Incubator setup: The government envisages setting up of incubators across the country
in PPP mode (Private Public Partnership).
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6. Tax exemption: The profit of startup initiatives are exempted from Income Tax for a
period of 3 years.
1. Boot Strapping: Self-financing by the promoters from their personal savings and
resources.
2. Crowd Funding: Pooling resources by a group of people for a common goal especially
through internet platforms.
3. Angel Investment: Angel investors are the individuals with surplus cash who have keen
interest to invest in startups. They also offer mentoring or advice along with capital.
5. Business Incubators and Accelerators: Incubators provide funds for startups in the early
stage of its business, whereas accelerators help the startups to run or to take a giant leap
in business. E.g., Angel Prime, Khosla Labs, Startup Village etc.
products (idea) are called IPR. Once it is allotted to a person by the Govt. authority, he/she
can rent, give or sell it to others.
Intellectual property is divided into two categories: Industrial properties like trademarks,
industrial designs etc. and copyrights which includes literary and artistic works such as novels,
poems, plays, films music, photographs, drawings, paintings, sculptures, architectural designs
etc.
Importance of IPR:
1. Path-breaking inventions: It encourages new inventions in all segments. e.g., Cancer cure
medicines.
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3. Helps to prevent loss of income: It allows the inventor to sell the rights to third parties
and thus he/ she can generate income.
4. Recognition: It helps authors, creators etc. to get recognition for their work.
Types of Ips:
1. Copy Right: It is the right to “not copy” conferred upon the creators of literary, artistic,
musical, sound recording, films etc.
2. Trademark: Any word, name, or symbol that gives an identity to goods or service made
by an individual, company, organization etc.
4. Patent: It is an exclusive right granted by the government to prevent others from making,
using, offering for sale, selling or importing the invention. For an invention to be
patentable, it must be new, non-obvious (not easily discoverable) and having an
industrial application.
5. Design: It includes shape, pattern etc. that is applied to any article. Eg: Design of a car,
house, bottle etc. The term of protection of a design is valid for 10 years, which can be
renewed for further 5 years. After that it will come under public domain.
6. Plant Variety: It is a type of variety which is bred and developed by farmers. Eg: hybrid
versions of potatoes, rice, pepper etc. This lead to the growth of seed industry.
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Important Questions
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(d) 40 percent
Question 7. The small scale industry can enjoy the status of _______ unit if it exports more
than 50% of its production.
(a) Import oriented units
(b) Export Oriented units
(c) Small scale unit
(d) Domestic unit
Question 8. NSIC was setup in
(a) 1982
(b) 1975
(c) 1965
(d) 1955
Question 9. ______ are also known as Rural industries or Traditional industries
(a) Agricultural industry
(b) Food industry
(c) Cottage Industries
(d) None of the above
Question 10. Small scale industries owned and managed by women entrepreneurs have a
share capital of not less than __________
(a) 20 percent
(b) 51 percent
(c) 25 percent
(d) 50 percent
Question 11. Expand DIC
(a) Directorate of Industry corporation
(b) Directorate of Indian Corporation
(c) District Industries Centers
(d) None of the above
Question 12. Which of the following is part of the small-scale sector?
(a) Paper Products and Printing
(b) Food Products
(c) Cotton Textiles
(d) All of the above
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Question 13. Exemption from paying taxes for 5 ot 10 years is known as _________
(a) Tax Deduction
(b) TDS
(c) Value Added Tax
(d) Tax Holiday
Question 14. _____ is defined as one in which the investment in fixed assets of plant and
machinery does not exceed rupees one crore.
(a) Small Scale Industry
(b) Limited Companies
(c) Large Scale industry
(d) None of the above
Question 15. In India, the ‘Village and Small Industries’ Sector consists of both traditional
and modern small industries. This sector has ___________subgroups.
(a) Eleven
(b) Ten
(c) Five
(d) Eight
Very Short –
1. Which type of Industry uses family labour and local available talent while running the
business?
2. A micro small scale industry has investment of Rs. 24 lakhs and is engaged in
manufacturing business. Now, it wants to increase its investment by Rs. 4 Lakhs. What type
of small Business will it become and what is the maximum investment limit in such cases?
3. Which type of enterprise is owned, controlled and managed by a woman or a group of
women holding share capital not less than 51%?
4. Name areas where SSLs feel threatened from global enterprises.
5. Name any 2 merits of SSLs in the export trade of India.
Short Questions –
1. What different parameters are used to measure the size of manufacturing business?
2. State features of cottage industries.
3. Write the objective of the Marketing Assistance scheme?
4. What is the aim of NSIC?
5. Write any two objectives of establishment of NABARD.
6. Write any three problems of small business in India
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1. Read the following text and answer the questions on the basis of the same:
Neeru was a daily wage labourer when she decided to be her own boss and transformed
herself as a successful businesswoman. She started her small scale business of making
Pickles using organic fruits and vegetables with total investment of ₹ 10 lakhs along with few
of her neighbors using their free time at home. She invested ₹ 2 lakhs by selling her
jewellery and using personal savings and ₹ 6 lakhs were contributed by her friends who are
members of her business. They named their venture as ‘Sakhi Aadhaar’. They launched their
new range of pickles using aloe vera, turmeric, and other herbs, for boosting immunity of
the users. They were able to supply the entire district. One of the members suggested that
they should make herbal candies too. The products made by them were well-liked and
appreciated by the people.
(i) Identify the quality of Neeru as an entrepreneur in the above case.
a) Innovator
b) Job provider
c) Risk bearer
d) All of the above
(ii) Identify the essence of entrepreneurship in the light of the given statement.
“...using organic fruits and vegetables with total investment of ₹ 10 lakhs along with few of
her neighbours using their free time at home. She invested ₹ 2 lakhs by selling her jewellery
and using personal savings and ₹ 6 lakhs are contributed by her friends who are the
members of her business.”
a) Arranging resources
b) Risk-taking
c) Vocational training
d) Creating job opportunities
(iii) Entrepreneurship is a process of whose actions?
a) Entrepreneurs
b) Government
c) Workers
d) Capital providers
(iv) Identify the category of small business started by Neeru according to MSMED Act.
a) Micro enterprise
b) Small enterprise
c) Medium enterprise
d) Cottage industry
2. Read the given text and answer the questions that follow: Sensing the business
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opportunities in Food industry, Sagar Bagada after completing his graduation in Agriculture
engineering, decided to open his own enterprise. His dream turned into reality when his
enterprise, “Swaad Food Industries” set up its food and beverages processing plant in
‘Mitrapura’’, one of the rural area of Rajasthan, under Start-up India Scheme launched on
16th January, 2016. The enterprise opted for labour intensive technique, due to easy
availability of labour at lower cost. With in no time, he came in the list of successful
entrepreneurs.
(i) What is the process of creation of an enterprise known as?
a) Venture
b) Project
c) Entrepreneurship
d) Business idea
(ii) “The enterprise opted for labour intensive technique, due to easy availability of labour at
lower cost.” Identify the need for entrepreneurship satisfied in the given statement.
a) Organization of production
b) Generation of employment
c) Economic efficiency
d) Generation of business opportunities for others
(iii) Start-up India Scheme was launched on ____ in the year ______.
a) 16th Jan., 2016
b) 2nd Oct., 2016
c) 17th Sep., 2006
d) 2nd Oct., 2006
(iv) As a successful entrepreneur, identify Sagar ’s contribution to the economy is:
a) Contribution to GDP
b) Generation of employment
c) Capital formation
d) All of the above
MCQ Answers –
1. Answer: (b) Export Oriented units
2. Answer: (b) On May 1, 1978
3. Answer: (c) Ancillary small industry
4. Answer: (c) Quality
5. Answer: (b) Powerlooms
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Turnover
Manufacturing and Service
Upto 5 crore Upto 50 crore Upto 250 crore
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• It offers counselling and consultancy services and organizes training and development
programmes for rural entrepreneurs
6. Ans: The problems are:
• Finance: There is limited finance availability with these enterprises that makes the day
to day working difficult. Also raising finance from banks is a challenge because of
these enterprises' poor credit worthiness.
• Raw materials: Due to unavailability of certain raw materials, these enterprises have
to adjust and compromise either in terms of poor quality raw material, or high price
raw material. Both situations add to the problems of such enterprises.
• Managerial skills: Business run by a single person or family, which lacks managerial
skills, technical skills and entrepreneurial skills. Also due to no education, things
become even more difficult. Hence neither they are capable to manage the
enterprises on their own, nor they can hire people for such work sue to shortage of
financial resources.
7. Ans: (a) The small businesses produce a wide range of products, including mass-market
goods, ready-made clothing, hosiery, stationery, soaps and detergents, household
furnishings, handlooms, and handicrafts.
(b) India's small industries account for 95% of the country's industrial units. They account for
over 40% of India's gross industrial value-added and 45% of the country's total exports.
(c) These business units can be set up anywhere at any location and region, as they are
dependent on locally available resources, simple technology, and labour class people. This
facilitates balanced development of the country.
(d) Small businesses are most suited for customisation, which involves tailoring a product as
per the needs, tastes, demands and preferences of certain customers.
8. Ans: (a) Micro
(b) Small
(c) Medium
Long Answers -
1. Ans: Incentives given by the govt to the industries set up in hurry, backward and rural area
are as follows:
• Land: Every state offers plots for setting up industries, however there might be
differences in the terms and conditions of each state. For example, some states do not
charge rent during the first few years, while others allow instalment payments.
• Power: Power is supplied at a concessional rate of 50 per cent, while some states
exempt such units from parment in the initial years.
• Water: Water is provided on a no-profit, no-loss basis or with a 50% discount or five-
year exemption from water payments.
• Sales Tax: In all union territories, industries are exempt from sales tax while some
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• Upliftment of rural area: The company has set aside 15% of its profits for the
educational and health requirements of its employees and their families in the hilly
region, thereby raising the quality of living and developing the rural area.
4. Ans: The following are some of the issues that small businesses face in rural India:
• Finance: Most small businesses start with a low capital basis. Many of the units in the
small sector lack the creditworthiness needed to raise finance from the markets. As a
result, they rely significantly on local financial resources and are frequently victims of
money lenders' exploitation. These businesses usually lack appropriate operating
capital, either as a result of late payments or because their cash is locked up in unsold
inventories.
• Raw Materials: Obtaining raw materials is another big issue for small businesses.
Because the essential materials are not readily available, they must either
compromise on quality or pay a premium price for high-quality supplies. Due to the
little amount of purchases they make, their bargaining power is limited. They also
can't afford to incur the risk of purchasing in bulk because they don't have the space
to keep the materials.
• Management skills: Small businesses are frequently promoted and operated by lone
entrepreneurs who may lack all of the managerial abilities required to run the
company. Many small business owners have excellent technical understanding, but
they struggle to promote their products. Furthermore, they may not have enough
time to complete all of the necessary tasks. At the same time, they do not have the
financial means to hire competent management.
• Labor: Because small businesses cannot afford to offer greater compensation to their
employees, employees' willingness to work hard and create more is impacted. As a
result, per-employee productivity is poor, and employee turnover is significant.
• Capacity Utilization: Many small businesses are forced to run below full capacity
owing to a lack of marketing skills or a lack of demand, causing their operating costs to
rise. Gradually, this leads to illness and the business's closure.
• Technology: The use of obsolete or outdated technology is a severe issue for the small
industries, thus resulting in low productivity and insufficient output.
• Quality: Due to traditional methods of production, these enterprises struggle to
maintain standardized quality.
• Global Competition: They have to face competition with large scale industries and
multinational companies.
5. Ans: SSi's are at a distinct disadvantage as compared to LSI's, because:
• Multinational corporations, which are giants in terms of size and business volumes,
compete not only with medium and big industries, but also small scale industries.
• Quality standards, technological expertise, financial creditworthiness, management
and marketing competencies are all difficult to overcome on the part of SSI’s.
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• Due to the strict standards of quality certification such as ISO 9000, access to markets
of developed countries is constrained. These businesses are unduly reliant on
middlemen, who might exploit them by paying cheap prices and delaying payments.
They lack the infrastructure required for direct marketing.
Areas where SSI’s need support are:
• Finance: Most small businesses start with a low capital basis. Many of the units in the
small sector lack the creditworthiness needed to raise finance from the markets. As a
result, they rely significantly on local financial resources and are frequently victims of
money lenders' exploitation. These businesses usually lack appropriate operating
capital, either as a result of late payments or because their cash is locked up in unsold
inventories.
• Raw Materials: Obtaining raw materials is another big issue for small businesses.
Because the essential materials are not readily available, they must either
compromise on quality or pay a premium price for high-quality supplies. Due to the
little amount of purchases they make, their bargaining power is limited. They also
can't afford to incur the risk of purchasing in bulk because they don't have the space
to keep the materials.
• Management skills: Small businesses are frequently promoted and operated by lone
entrepreneurs who may lack all of the managerial abilities required to run the
company. Many small business owners have excellent technical understanding, but
they struggle to promote their products. Furthermore, they may not have enough
time to complete all of the necessary tasks. At the same time, they do not have the
financial means to hire competent management.
• Labor: Because small businesses cannot afford to offer greater compensation to their
employees, employees' willingness to work hard and create more is impacted. As a
result, per-employee productivity is poor, and employee turnover is significant.
• Capacity Utilization: Many small businesses are forced to run below full capacity
owing to a lack of marketing skills or a lack of demand, causing their operating costs to
rise. Gradually, this leads to illness and the business's closure.
• Technology: The use of obsolete or outdated technology is a severe issue for the small
industries, thus resulting in low productivity and insufficient output.
• Quality: Due to traditional methods of production, these enterprises struggle to
maintain standardized quality.
• Global Competition: They have to face competition with large scale industries and
multinational companies.
a) NABARD
b) SFURTI
c) RSBDC
d) DIC'S
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e) SIDBI
f) NCEUS
6. Ans: (a) NABARD stands for National Bank for Agriculture and Rural Development, and it is
the Indian rural banking system's apex regulatory organisation. It's a development bank with
the mission of providing and regulating loans in rural areas. In the Indian rural sector,
NABARD promotes and develops agriculture, small scale enterprises, cottage industries, and
other rural crafts.
Apart from agriculture, it supports small industries, cottage and village industries, and rural
artisans using credit and non-credit approaches. It provides counselling and consulting
services to rural entrepreneurs, as well as training and development programmes.
(b) SFURTI was launched by the Ministry of Micro, Small and Medium Enterprises (MSME) to
promote MSME cluster growth in the country. It was launched to make the MSME’s
competitive, lucrative, and sustainable. Also, it works for the provision of long-term job
prospects in traditional sectors, as well as to create sustained employment opportunities in
traditional industries.
(c) The Rural Small Business Development Centre (RSBDC) is a non-profit organisation that
provides management and technical assistance to present and potential micro and small
business owners in rural areas. RSBDC has held a number of rural entrepreneurial seminars,
skill development workshops, mobile clinics and trainers training programmes, as well as
awareness and counselling camps.
(d) The District Industries Centers (DICs) give entrepreneurs all of the services and support
they need to start small and village industries. The identification of feasible schemes, the
preparation of feasibility reports, the organisation of financing, the provision of machinery
and equipment, the provision of raw materials, and other extension services are the main
functions of these centres.
(e) The Small Industries Development Bank of India (SIDBI) was established as an apex bank
to give direct and indirect financial assistance to small businesses through several initiatives.
In comparable operations, it coordinates the functions of other institutions.
(f) The National Commission for Enterprises in the Unorganized Sector (NCEUS) was
established to make recommendations for actions that would improve the productivity of
small businesses in the informal sector as well as to increase long-term job opportunities,
especially in rural areas.
Case Study Answers –
1.
(i) d) All of the above
Solution:
Quality of Neeru as an entrepreneur are:
• Innovator
• Job provider
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• Risk bearer
(ii) a) Arranging resources
Solution: Organizing involves assigning tasks, grouping tasks into departments, delegating
authority, and allocating resources across the organization. During the organizing process,
managers coordinate employees, resources, policies, and procedures to facilitate the goals
identified in the plan.
(iii) a) Entrepreneurs
Solution: The Entrepreneur is a change agent that acts as an industrialist and undertakes the
risk associated with forming the business for commercial use. The entrepreneurship is a
continuous process that needs to be followed by an entrepreneur to plan and launch the
new ventures more efficiently.
(iv) a) Micro enterprise
Solution: A micro enterprise is a small business which sells goods and/or services to a local
area or a local market. It employs less than 10 people generally and is geographically
restricted. Typically a micro enterprise starts with some form of funding – known as micro
credit or micro finance.
2.
(i) c) Entrepreneurship
Solution: The process of action, an entrepreneur undertakes to establish an enterprise is
called entrepreneurship. It is the process of running, designing and launching a new
company or business that is often a small business initially. The individuals who create these
kinds of businesses or companies are called entrepreneurs.
(ii) c) Economic efficiency
Solution: Economic efficiency is when all goods and factors of production in an economy are
distributed or allocated to their most valuable uses and waste is eliminated or minimized.
(iii) a) 16th Jan., 2016
Solution: Launched on 16th January, 2016, the Startup India Initiative has rolled out several
programs with the objective of supporting entrepreneurs, building a robust startup
ecosystem and transforming India into a country of job creators instead of job seekers.
(iv) d) All of the above
Solution:
• Entrepreneurs boost economic growth by introducing innovative technologies, products,
and services. Increased competition from entrepreneurs challenges existing firms to become
more competitive. Entrepreneurs provide new job opportunities in the short and long term.
• Entrepreneurial attitudes are found to stimulate GDP per capita in high-income countries,
while entrepreneurial activity is found to have a negative effect in middle/low-income
economies.
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• Chapter Infrastructure Click here to view animated video
• Chapter Liberalization, Privatization Click here to view animated video
or Globalization an Appraisal
• Chapter Poverty Click here to view animated video
• Chapter Rural Development Click here to view animated video
CLASSROOM TEACHING VIDEOS CLASS 11
SUBJECT : ENGLISH
(Hornbill)
Kindergarten
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