Resource Mobilization – CBSE Notes for Class 11 Entrepreneurship
Facts That Matter
1. Resources are the life blood of any economic activity. “Anything or means (physical tangible/ non-physical-tangible) required or required to support the activities of organisation to achieve predetermined organizational goals are referred as Resources.
2. Planning out effective “Resource Mobilization”.
(a) Evaluate and judge the need for resource.
(b) Identify the type of resource required.
(c) Locate the availability of resource.
(d) Effective communication with the suppliers of resources.
(e) Evaluate the quality and quantity of resources required.
(f) Identify problems pertaining to mobilization of resources.
(g) Arrange funds for acquisition of resources.
(h) Plan out inventory management for the procured resources.
3. Basic Resources are: (a) Land (b) Labour (c) Capital.
4. Other Resources vary from enterprise to enterprise, but commonly comprise of:
(a) Entrepreneurship (b) Energy
(c) Expertise (d) Information
(e) Management (f) Machines
(g) Materials and Methods
5. The requirement of resources depends upon:
(a) Nature of activity (b) Size of activity
(c) Product specification (d) Type of business activity
6. Business resources can be grouped as:
(a) Physical (b) Material
(c) Human – (d) Intangible
7. Physical Resources: Meaning, examples and selection process
8. Material Resources: Meaning, examples and important decisions regarding the arrangement of material resources. Points to be considered by an entrepreneur for financial resourcing:
(a) How much finance is needed?
(b) Terms for which finance is required-long term, short-term and medium term
(c) Sources of generating finance-Owners fund’s and borrowed fund’s
(d) Intangible resources
9. Financial Planning: Financial planning is the process of determining objectives, policies, procedures, programmes and budgets to deal with financial activities of an organisation.
10. Objectives of Financial Planning: Raising of funds, deployment of surplus funds.
11. Importance of Financial Planning: Availability of funds at right time, cost effectiveness, Optimum use of funds, Coordination among different business functions, Avoidance of wastages of resources.
12. Types of Capital Requirement: Fixed Capital requirement (invested in fixed assets). Working Capital requirement (invested in current assets for day-to-day operations). Factors affecting working capital requirements and its arrangements:
(b) Capital Structure: Types of sources of finances:
(i) Equity Financing/Ownership financing
(ii) Personal Financing
(iii) Venture Capital
(iv) Debt Financing: Meaning and sources of raising funds.
13. Types of Mentoring:
(a) On the basis of construction mode:
(i) Formal Mentoring
(ii) Informal mentoring
(b) On the basis of delivering mode:
(i) One to One mentoring (iii) Online Mentoring
(ii) Group Mentoring (iv) Peer Mentoring
Information normally comes from:
• Government Agencies
• The Private Sector
Information resources centre Primary, Secondary, Tertiary Methods of collecting data: Census method and Sample method.
Words That Matter
1. Resources are the life blood of any economic activity. “Anything or means (physical tangible/ non-physical-tangible) required or required to support the activities of organisation to achieve pre-determined organizational goals are referred as resources.”
2. A mentor is a trusted guide, advisor, wise, intellect person who uses his mind creatively especially in occupational settings.
3. Mentorship is a developmental partnership through which one person shares knowledge, skills, information and perspective to foster the personal and professional growth of someone else.
4. Business Mentor: The person, well established, capable and willing to offer invaluable advice, support and guidance to a new entrepreneur is referred as ‘Business Mentor’. The term business cycle is also called as economic cycle or boom-bust cycle.
5. Owner’s Fund: This is that part of capital that belongs entirely to the entrepreneur.
6. Borrowed Funds: Entrepreneur can if required raise capital from outsider.
7. Material: All those inputs which are used through a process and output is produced.
8. Goodwill: The difference between the value of the tangible assets of the business and the actual value of the business (some one who is ready to pay for it.)
9. Trade credit: It refers to the credit extended by the supplier (seller) to the buyer. Under this arrangement, credit is not granted in cash. The goods are sold on credit.
10. Gestation Period: The period between the time of initial investment and commercial production.
11. Reputation: It is how your business is perceived through the eyes of your customers, suppliers, employees and other interested parties, such as your bank manager or a potential investor.
12. Finance: It may be defined as the provision of money at the time it’s wanted.
13. Business Finance: It refers to the acquisition and utilization of capital funds in meeting the financial needs.
14. Financial Planning: Financial planning is the process of determining objectives, policies, procedures, programmes and budgets to deal with financial activities of an organisation.
15. Fixed Capital: It is the funds required for the acquisition of those assets that are to be used over and over for a long period.
16. Working Capital: It refers to that part of the capital which is needed for meeting out day- to-day operational expenses.
17. Capitalization: It is the long-term funding that allows a business firm to operate Capital Structure: “The makeup of a firm’s capitalization” is capital structure. (OPM) OTHER PEOPLE’S MONEY-sources of finances from other sources.
18. Equity: It refers to the capital invested in an enterprise by its owners.
19. Retained Profits: It is undistributed profits of the business or retained with the business.
20. Preference Shares: Those shares which are entitled to a priority in the payment of dividend and repayment of capital.
21. Seed Capital: It is initial capital of the enterprise provided to an entrepreneur to prove the feasibility of a project.
22. Start Up: Product development and initial marketing, but with no commercial sales yet funding to actually get company operations started.
23. Personal Financing: The initial investment made by an entrepreneur through his personal cash or converts his assets into cash for investment.
24. Venture Capitalist: These are investors and investment companies whose specialty is financing new, high-technology oriented entrepreneurial ventures.
25. Debt-financing: It is a financing method involving an interest-bearing instruments or it is a loan, the entrepreneur is to pay back the amount of funds borrowed and interest amount within the term period.
26. Debentures: A debenture is a written instrument acknowledging a debt containing fixed rate of interest and repayment of debt after specific period.
27. Public Deposits: When an entrepreneur invests the general public to deposit their savings with his company, for a period not exceeding 36 months with some rate of interest.
28. Overdraft: A temporary arrangement in the form of a permission granted to the customers to withdraw more than the amount standing to his account.
29. Discounting of bills: It is an arrangement, where the bank encashes the customer’s bills before maturity date.
30. Loans and Advances: A loan is a lump sum advance made for a specified period by bank or other financial institutions with certain rate of interest.
31. Grants: When government makes financial assistance available to an entrepreneur encourage enterprise, (tax revenue through payers).
32. Small-Scale (SSI): It means that industrial unit whose investment in plant and machinery does not exceed Rs. 5 crores.
33. Tiny sector: Whose investment in plant and machinery is up to Rs. 25 lakhs.
34. Auxiliary: A small-scale industry unit when it supplies not less than 50% of its production to another unit.
35. Sources of information: An information source is where you got your information from which can be useful for the operational process of an organisation.
36. Primary collection: The data is collected by the investigator himself/herself, for the first time.
37. Secondary collection: Already collected information through or original information, which can be modified, according to requirement or purpose.
38. Census method: When all the units associated with a particular problem are studied.
39. Sample method: Technique of data collected from the sample or group of items taken from the population.
40. Business is an economic activity which involves production or processing and sale or exchange of goods and services at regular basis with an aim of earning profit.
41. Industry: Refers to all economic activities involved in converting raw materials into finished products which are ultimately consumed by consumers.
42. Types of Industry: Primary industry, Secondary industry and Tertiary industry.
43. Producer’s Goods: The goods produced by one enterprise and used by other enterprises as raw material for further production.
44. Consumer Goods: The goods used by final consumers for deriving personal satisfaction.
45. Secondary industries are the industries which are concerned with the changing forms or transformation of the materials provided by primary industries.
46. Commerce refers to all those activities which facilitates exchange of goods/services or relates to the transfer of goods from place of production to ultimate consumers.
47. Components of Commerce are: Trade and Auxiliaries.
48. Trade can be Home or Foreign trade
49. Auxiliaries to trade are transportation, banking, insurance, warehousing, advertisement and salesmanship.