MANIPAL UNIVERSITY JAIPUR

BACHELORS OF BUSINESS ADMINISTRATION (BBA)

SMALL BUSINESS MANAGEMENT– DBB3115
SEMESTER-5 ASSIGNMENT
NAME: BATUL MOHAMMADI PUNJAKHAN
ROLL NO.: 2214102125

SET 1
Q.1 Ans:
Small enterprises are critical to the Indian market, serving as the economy's backbone and
promoting economic growth, employment, and innovation. These businesses, which are primarily
distinguished by their small-scale operations, limited capital investment, and localized reach,
operate in a variety of industries including as retail, manufacturing, services, and agriculture. Small
enterprises play an important role in India's GDP, job creation, and regional development.

One distinguishing trait of Indian small companies is their diversity. They cover everything from
traditional crafts and cottage enterprises to current internet startups. This diversity contributes to
balance economic growth between urban and rural areas, creating job opportunities, and
eliminating regional disparities. Furthermore, the entrepreneurial spirit is strong in India, with
many people starting businesses to capitalize on the country's enormous market and increasing
middle class.

Government measures such as the Micro, Small, and Medium Enterprises Development
(MSMED) Act of 2006, as well as schemes like the Pradhan Mantri Mudra Yojana (PMMY),
have helped small enterprises thrive. These policies provide financial aid, training, and
infrastructure development, which are critical for the survival and growth of small businesses.

However, small enterprises in India confront additional problems such as restricted access to
capital, inadequate infrastructure, and regulatory hurdles. Despite these limitations, their resilience
and flexibility are outstanding. Digital transformation, pushed by increased internet penetration
and government policies like Digital India, is offering new paths for growth, helping small firms
to reach larger markets and function more efficiently.

Variety of challenges that hinder their operations and growth include:

 • Lack of planning: A business without a well-thought-out plan is likely to fail. It’s essential
to have a plan for your business that outlines goals, strategies and tactics.

• Lack of capital: Small firms frequently struggle to obtain loans from banks due to strict
lending standards, a lack of collateral, and high interest rates. This financial limitation
reduces their ability to invest in technology, infrastructure, and skilled workers.

• Limited Awareness of Government Schemes: Many entrepreneurs are unaware of these

programs or find the application processes excessively time-consuming. Because of the
lack of understanding and accessibility, many small enterprises do not take advantage of
available resources.

• Market Access and Competition: Small firms frequently struggle to compete with larger
companies that benefit from economies of scale, superior marketing resources, and existing
brand awareness. Furthermore, logistical difficulties and a lack of market knowledge might
make it difficult to enter larger markets, both domestic and foreign.

• Lack of differentiation: There’s a lot of competition in the market, so it’s important to find
ways to differentiate your business. Without a differentiated value proposition, you’ll
struggle to attract and keep customers.

• Poor marketing: It will be difficult to make sales even with a fantastic product or service
if no one knows about it. Gaining customers and increasing brand recognition requires
effective marketing.

Q.2 Ans:
Porter’s Five Forces Model
Michael E. Porter introduced the five-force analysis concept in 1980. The
methodology is designed to assess external threats to a firm. This
analysis identifies five forces that play an important role in
shaping any industry and must be fully understood.

Threat of New Entrants: The likelihood of new entry into

profitable marketplaces is always high, which may reduce the
profitability of all existing participants in a sector. To mitigate
the threat posed by new entrants, multiple entrance barriers must
exist. These include economies of scale, government laws,
intellectual property (patents, copyrights, etc.), strong customer
loyalty to current brands, limited access to distribution channels, and so on.

Threat of substitutes.: Substitutes are items or services that customers buy in place of the main
product they frequently purchase. The existence of close substitutes enhances the likelihood of
customers moving to the alternate product in the event that the main product's price rises. As a
result, suppliers' power might be significantly lowered.

Bargaining power of suppliers: Supplier bargaining power is another major factor that influences
market structure for a company. These suppliers supply raw materials, labor, and other input
services for the production of finished goods for consumption. In general, suppliers have an
advantage because there are fewer substitutes for enterprises in the market to buy raw materials
from.

Bargaining power of buyers: While developing a business plan, companies should consider the
level of power held by customers/buyers.

Competitive competition between existing firms has a considerable impact on market

attractiveness. Entering a highly competitive market involves a significant investment, making it
difficult for new entrants. Intense rivalry reduces profit margins and threatens a company's overall
viability, making strategic planning critical.

SWOT Analysis
SWOT analysis is a powerful tool for small businesses, offering a
systematic way to assess internal and external factors that impact their
operations. By identifying strengths, businesses can focus on leveraging
their unique advantages to enhance competitiveness. Recognizing
weaknesses enables them to address and improve areas that could hinder
performance.
Analyzing opportunities allows small businesses to identify market trends,
emerging technologies, and potential partnerships that can drive growth.
Understanding threats, such as new competitors, economic fluctuations, or
regulatory changes, helps in developing strategies to mitigate these risks.

This comprehensive analysis aids in strategic planning by providing clear

insights into the business environment. It helps small businesses make
informed decisions, allocate resources effectively, and set achievable goals.
Moreover, it enhances their ability to adapt to market changes and improves
overall resilience. In summary, SWOT analysis is essential for small businesses to navigate
challenges and seize growth opportunities in a structured and strategic manner.

Q.3 Ans:
Marketing Mix
Marketing mix is a critical component of marketing and a valuable tool for understanding the
marketing function. It is a model that includes numerous combinations of activities, techniques,
and strategies that an organization uses to promote its product, brand, or services in the market.
The term "marketing mix" refers to the various types of decisions that an organization must make
throughout the process of bringing a product or service to market. It is an area that focuses on
creating a precise marketing strategy. The marketing mix relates to a classification known as the
4Ps, which are product, pricing, placement, and promotion.

 Product: The goods or services provided,

including quality, design, and features.
 Price: Pricing strategy determined by costs,
competition, and market demand.
 Place: Distribution networks that ensure product
availability.
 Promotion: Activities that promote the product,
such as advertising and public relations.

The additional 3Ps of the marketing mix are also critical

for building effective marketing strategy. These are:

 People: Employees and salespeople who influence customer happiness.

 Process: Procedures that provide consistent and high-quality service delivery.
 Physical evidence: refers to tangible features that assist clients evaluate a service.

These components assist firms improve their client experience and operational efficiency.

Business plan – consider these points (A business plan is not prepared with certain fixed
norms and can be changed according to the type and needs of the business)

When creating a company strategy, several crucial factors must be carefully evaluated to ensure
its efficacy and feasibility. To begin, clearly describe the business concept, which includes the
product or service offered, the target market, and the distinctive value proposition. Conduct
extensive market research to better understand industry trends, client demands, and competitive
strategies.

Next, develop a thorough marketing strategy that includes pricing, distribution methods, and
promotional activities. Create accurate financial projections that take into account initial costs,
revenue expectations, and cash flow management. It is critical to discover prospective financing
sources and develop a sound plan for financial stability.

Create a detailed operating plan that includes day-to-day tasks, staffing needs, and significant
milestones. Consider legal and regulatory requirements to ensure compliance with applicable laws
and regulations.

Finally, conduct a risk assessment to identify potential obstacles and mitigation strategies.
Regularly examine and update the business strategy to reflect changing market conditions and new
opportunities.

Entrepreneurs can construct a strong business plan that acts as a road map for success by carefully
addressing these issues.

SET 2
Q.4 Ans:
Types of Manufacturing Process
The most prevalent industrial processes are divided into four categories. The type of manufacturing
method used is determined by the product type, market demand, raw material supply, and other
production parameters.

Job Production
Job production entails manufacturing custom-made products to meet unique customer needs. Each
item is often unique, and manufacture is done in small batches. This technology is commonly used
in industries like as custom furniture, tailored apparel, and specialty machinery.

Batch Production
Products are manufactured in groups or batches, with each batch having a predetermined quantity.
The equipment is set up to create a certain number of units before moving on to the next batch.
This strategy uses resources more efficiently than job production and is appropriate for
commodities with moderate demand, such as medications, baked goods, and electronics.
Mass production
This refers to the high-volume manufacture of standardized products utilizing assembly line
processes. It entails the continuous production of huge quantities of similar things, resulting in
economies of scale and lower production costs per unit. Mass production is popular in industries
such as automobiles, consumer electronics, and fast-moving consumer items.

Continuous production
Also known as continuous flow production, refers to industrial operations that run continuously,
around the clock. Materials flow through the manufacturing line without interruption, resulting in
high-speed and high-volume output. This technology is common in industries such as oil refining,
chemical processing, and steel production.

Importance of Financial Management

Financial planning involves developing a comprehensive financial strategy for the organization,
including setting goals, estimating future needs, and devising methods to achieve them. A well-
constructed financial plan charts a path for the organization's long-term growth and sustainability.

Resource allocation is a critical aspect of financial management, focusing on efficiently

distributing financial resources. This entails evaluating investment opportunities, weighing costs
and benefits, and directing funds towards projects with the highest potential returns. Effective
resource allocation optimizes fund utilization and enhances the organization's financial
performance.

Risk management is integral to financial management, encompassing the identification,

assessment, and mitigation of financial risks. This involves analyzing market, credit, liquidity, and
operational risks to safeguard the organization against potential setbacks and ensure operational
continuity.

Financial management provides tools and metrics for measuring the organization's financial
performance, including analyzing statements, calculating ratios, and conducting assessments.
These measurements offer insights into profitability, liquidity, solvency, and efficiency, aiding in
identifying areas for enhancement.

Financial management furnishes crucial financial information for decision-making, supporting

evaluations of investment opportunities, project viability, and overall financial decisions. By
considering factors such as cash flow, profitability, and risk, it facilitates strategic decision-making
aligned with organizational objectives.
Effective cash flow management, another facet of financial management, involves overseeing cash
inflows and outflows, optimizing working capital, and maintaining sufficient liquidity. This is vital
for sustaining day-to-day operations, ensuring financial stability, and fostering organizational
growth.

Q.5 Ans:
Understanding financial analysis techniques such as vertical and horizontal analysis is critical in
small business management for making sound decisions and evaluating performance. These
strategies provide insights into a company's financial health and patterns, which can help with
strategic planning and resource allocation.

Vertical Analysis, also known as common-size analysis, is the process of expressing each line
item on a financial statement as a percentage of a base item. In the case of a small business, this
could imply expressing each expense category as a proportion of total revenue or each asset
category as a percentage of overall assets. This facilitates the comparison and evaluation of the
relative proportions of various components in the financial statements. For example, a small
business owner can utilize vertical analysis to determine whether the percentage of operational
expenses to sales is increasing over time, indicating potential inefficiencies or cost management
issues.
• Cost Structures: Helps identify cost components in relation to total revenue, which aids in
cost control.
• Benchmarking: A comparison of financials to industry norms might reveal overspending
or underinvestment.
• Profit Margin: Determines profit margins by stating important KPIs as a proportion of
revenue.
• Asset utilization: measures asset deployment efficiency by expressing assets as a
percentage of total assets.
• Financial Ratios: Makes it easier to calculate key ratios that provide insights into financial
health.

Horizontal analysis, also known as trend analysis, is the process of analyzing financial data over
several time periods to detect trends, patterns, and changes throughout time. Small business owners
can utilize horizontal analysis to track changes in revenue, expenses, and profitability across
multiple accounting periods. This assists in identifying areas for improvement or concern, such as
slowing revenue growth or rising operating costs. By monitoring patterns, small business owners
can make informed judgments about pricing strategies, cost constraints, and investment objectives.
 • Trend Identification: Identifies patterns in financial performance over time, such as growth
or decline.
• Growth Rates: Calculates growth rates to evaluate business expansion and establish growth
goals.
• Seasonal Variations: By comparing data from different seasons, you can better predict
revenue swings.
• Investment Returns: Analyzes ROI trends to help guide future investment decisions.
Anomaly Detection: Identifies abnormalities in financial data and recommends further
research and resolution.

Q.6 Ans:
Activity Based Costing - Definition
Activity Based Costing (ABC) is a powerful performance evaluation method based on the
assumption that products consume activities, which in turn utilize resources that were purchased
at a cost. This strategy provides clear visibility into an organization's expense flows, which is
particularly useful for effective cost
management. ABC is mostly used in
manufacturing to improve the dependability
of cost data and produce more accurate cost
predictions. ABC facilitates the
development of optimal pricing strategies
by allocating indirect and overhead costs to
products and services based on specific
activities. ABC is fundamentally based on activities, with the goal of appropriately allocating costs
by realizing that goods drive activities. This methodological focus on activities permits exact
allocation of resources and overheads to specific products and services. Cooper, Kaplan, and
Horngren emphasize the focus of ABC in their definitions.

Managerial Skills - Basic skills, abilities and knowledge of the managers to operate a business
in the most effective manner

Planning
Proficient managers foresee future possibilities and
problems. To direct their groups and companies toward
accomplishing long-term goals, they create strategic plans.

Setting goals
Supervisors need to set specific, attainable, and time-bound objectives. These objectives offer
guidance and a system for gauging success and advancement.
Organising
In order to do this, resources and activities must be organized to maximum effectiveness and
efficiency. The availability of appropriate resources at the appropriate moment to accomplish
corporate goals is guaranteed by effective organization.

Risk assessment
Determining possible hazards and assessing their consequences is essential for making well-
informed decisions. Managers who are actively seeking business possibilities must devise plans to
reduce these risks.

Team building
Supervisors have to promote a cooperative and welcoming atmosphere. Creating cohesive teams
improves output, creativity, and work happiness. Utilizing individual skills and comprehending team
dynamics are essential to effective team building.

Managing time and stress

Setting priorities and adhering to deadlines need effective time management. To keep a productive
workplace, managers must also identify and manage stress in both themselves and their workers.

Emotional intelligence
Effective leadership requires an understanding of and ability to
control one's own emotions as well as those of others.
Relationships at work are strengthened through the use of
emotional intelligence, which improves empathy,
communication, and dispute resolution.

Problem solving and decision-making

Decisions made by managers must frequently be made quickly
and intelligently. They can evaluate circumstances, recognize
possibilities, and successfully apply solutions when they possess strong problem-solving abilities.

Creativity
Creative thinking is the engine of innovation. To produce original
solutions and keep a competitive edge, managers should foster
creativity within their teams.

Communication & listening

Effective communication is essential to any managerial task. By
making sure managers are aware of their team members'
viewpoints, active listening promotes an environment of
transparency and confidence.