Resource Mobilization — Entrepreneurship STD 12 Commerce — Question

Corfam Fake Leather
In the 1960, the company DuPont promoted Corfam, a fake leather substitute. They used the material for women shoes but didn't take into account comfort. The product was although cheaper but was very uncomfortable. Competitors responded by lowering the price of leather and increasing the quality and so, the need for a fake substitute was lost and Corfam failed.

1. What is 'Corfam'?
2. Why was it not a success, even though, it was cheap?

What does inventory mean in general sense?

From the following information calculate return on investment and return on equity. You have newly started a beauty parlour business, you spend ₹ 1,50,000 to open the parlour of which you invested ₹ 70,000 of your own money and borrowed a loan for ₹ 80,000. Interest rate per annum is 7%. Sales revenue per month is ₹ 80,000. Cost of goods sold is ₹ 30,000 per month. Fixed expenses is ₹ 30,000 (salary ₹ 20,000, rent and utility 10,000), depreciation ₹ 3,000 and tax @ 14%.

What are Public Relations?

Source of Finance
Money is Always a Problem
'Air India has defaulted on working capital loan interest payment of 200 crores due to the financial crisis that the airlines is facing' confirms Air India sources on 21st May, 2011. Air India has high-cost loans worth about 40000 crores.
Air India is facing a tight financial situation and is in talks with lenders to restructure its debt of ₹ 40,000 crores. The lenders have agreed to reduce interest rates on part of the debt that is linked to overseas borrowings. The future of the remaining debt is still uncertain, especially because lenders are seeking a conversion of their debt into equity or equity like instruments. This is perhaps the first time that the national carrier has defaulted on its payments to banks. Sources said the airline had approached banks for more loans but they have declined to help because of the airlines' poor financial health.
And they say 'finance is difficult for new entrepreneurs.......... Its always a major concern.

1. Air India' has high cost loans worth about ₹ 40,000 crores. From the above statement, identify the source of finance Air India.
2. Give one advantage and one disadvantage of raising finance through this source.
3. What will be the effect of conversion of debt into equity on the financial health of the company?

Alpha Ltd., a multinational restaurant chain company, gives an exclusive right to four Indian companies to set up the restaurants in metropolitan cities in India in return for their payment of royalties and conformance to standardised operating procedures. Indian companies decided to employ local workers and to distribute left-over food amongst the needy as a provision in the agreement with Alpha Ltd.

1. Identify and give the meaning of the concept discussed in the above para.
2. List the main ingredients of the agreement that Alpha Ltd. will enter into with the Indian companies.
3. Also, identify any one value which the Indian companies want to communicate to the society through the agreement.

How does franchising help start-ups?

A sole proprietor does not require registration, but may require certain general formalities. Name any two such formalities.

Rekha, a sole proprietor has grown her business over the years of selling fashion accessories. She started with one shop but now has three in different localities.
She wants to expand even further but she has limited finances. She is thinking of going into partnership with her friend who is very much interested in joining her.

1. Explain two benefits of remaining a sole proprietor.
2. Explain two benefits and two limitations of partnership.

Ankit is into the business of manufacturing low-cost diesel-cars in Germany. He is earning good profits and ambitiously considering overseas expansion. He scans the environment for finding out the opportunities and threats that may influence his current and future plans. He zeroes down on India as a potential place for his business expansion as Indian Government has announced favourable trade regulations. On selling, the first lot of cars were above the permissible limit. The government asked him to make necessary modifications in his cars if he wanted to continue business in India. He readily agreed to meet the emission norms set by the Indian Government.

1. Quoting the lines from the above para identify any two environmental factors.
2. Also, state any two values which Ankit tried to communicate to the Indian society.