MSME and Business Entrepreneurship Class 11 Notes: CBSE Business Studies Chapter 9

Micro, Small and Medium Enterprises - Introduction

Micro Small and Medium Enterprises are those enterprises that:

• Acts as a crucial link in the process of industrialization.

• Contributes to the growth of developing countries.

• Helps in generating employment opportunities.

• Low investment requirement.

• Are Labour intensive.

• Are an important element of the value chain.

• Makes use of local raw materials.

• Make use of indigenous skills.

• Provides a wide variety of consumer and specialised goods.

MSMED ACT

Micro, Small, and Medium Enterprises Development Act, 2006 deals with issues and provides rules and regulations for micro, small, and medium enterprises in the manufacturing and service sectors.

Investment and Turnover Limits Under MSMEs

As against the earlier bifurcation of MSMEs into manufacturing and service sectors, now both are treated as the same and are defined under a common metric.  The investment and turnover limits are:

• Village Industries: The Industries are located in rural areas with investment in fixed assets as per the rules of the central government.

• Cottage Industries: Traditional industries are run normally by families with small capital investments.

Role of Small Business in India

• Employment Opportunities: After the agriculture sector, small industries provide the largest employment opportunities.

• Diverse Variety: Small businesses provide a wide variety of consumer and specialised products using simple technology and local resources.

• Optimum Utilisation of Resources: Small business facilitates the optimum utilisation of resources through locally available resources and simple technology.

• Encourage Locals: It provides and encourages local people for entrepreneurship, and makes the best use of their handicraft and other artistic skills.

• Less Costly: The cost of production is low, as production is because of low overhead costs, and making use of inexpensive locally available resources.

• Quick Decisions: It facilitates quick and timely decisions due to the small size of the business.

• Rural Development: Through the provision of employment opportunities, and encouraging locals to use their skills, regional development is made possible.

• Balanced Development: 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 the balanced development of the country.

Role of Small Business in Rural India

• Encourages people in rural areas to set up agro-based industries.

• Providing employment opportunities to traditional artisans or workers.

• Helps in the reduction of income inequalities.

• It prevents the inclination and migration of rural populations to urban areas.

• Helps in the industrialization and development of rural areas.

Problems Associated with MSMEs

• Finance: There is limited finance availability with these enterprises which makes day-to-day working difficult. Also raising finance from banks is a challenge because of these enterprises' poor creditworthiness.

• Raw Materials:  Due to the 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: A 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 not capable of managing the enterprises on their own, nor they can hire people for such work due to a shortage of financial resources.

• Labour: Production with the help of unskilled or semi-skilled workers.

• Marketing: It is difficult for these enterprises to maintain direct contact with customers, hence they have to depend on middlemen, who in return pay lower prices or delay the payment, thus exploiting them to no limits.

• Quality: Due to traditional methods of production, these enterprises struggle to maintain standardised quality.

• Technology: The use of outdated technology creates issues in terms of high cost and low quality.

• Global Competition: They have to face competition with large-scale industries and multinational companies.

• Capacity Utilisation: Under utilisation of resources takes place due to a lack of managerial skills and sufficient demand to make full use of the production capacity of the machines.

MSME and Entrepreneurship Development:

Entrepreneurship is the process of setting up a business that is owned, managed, and controlled by a person who takes the initiative to take the risk, as well as add creativity and innovation to start an enterprise, this person is known as an entrepreneur.

Characteristics of Entrepreneurship

• Systematic Activity: Entrepreneurship requires certain skills, knowledge, and competencies that can be developed by training, observation, and work experience.

• Lawful and Purposeful Activity: Lawful business is the objective of entrepreneurship and the entrepreneur aims to create and operate the enterprise by performing legitimate actions and satisfying customers' needs and wants following the legal and ethical code of conduct.

• Innovation: Entrepreneurship involves creating something new according to the changing business environment or maybe reducing costs and enhancing profits.

• Organization of Production: Entrepreneurship brings various factors of production for a productive activity and coordinates and controls the factors of production as well as the efforts of the person engaged in the enterprise. 

• Risk Taking: An entrepreneur guarantees wages to employees, and interest to investors in the hope of earning profits, assuming the uncertainty of the future.

Startup India Scheme: The Scheme Aims to:

• Encouraging people towards entrepreneurship.

• Encourages more dynamic startups.

• Supports early phases/stages of development of MSMEs.

• Developing backward communities, scheduled castes and women, etc.

Intellectual Property Rights:

1. Intellectual Property Rights refers to the legal rights regarding intellectual property. 

2. Intellectual Property refers to the creation of the human mind, like inventions, artistic works, etc.

3. The intellectual property is intangible.

4. A trade secret is an intellectual property right that refers to confidential information that provides a competitive edge to the company holding it.

5. Intellectual property is bifurcated into two main categories: 

• Industrial Property: Patents, trademarks, geographical indications, and industrial designs are included in this.

• Copyrights: It includes artistic and literary works such as poems, books, plays, films, drawings, photographs, etc.

6. IPs which are recognized in India are:

• Copyright, 

• Trademark, 

• Geographical Indication, 

• Patent, 

• Design, 

• Plant Variety, 

• Semiconductor Integrated Circuit Layout Design

Why is IPR Important for Entrepreneurs?

• IPR are important for entrepreneurs to promote and protect their inventions and creations.

• Creators, authors, inventors, etc., will get benefits for their hard work only if their work is distributed or shared with the public with their permission.

• IPR protects the work from being copied by others and can also be defended in court for the rights to use, make, or sell it.

Types of Intellectual Property

1. Copyright: Copyright is the right of the creator that prohibits the use of content by unauthorised persons. The registration of content is optional but it is necessary to use exclusive rights in case of infringement.

2. Trademark: It helps in differentiating the products of different companies like labels, logos, etc. Trademarks may be categorised as conventional and nonconventional trademarks.

• Conventional Trademark: Includes words, label logo shape of good packaging, etc.

• Non Conventional Trademark: Includes those marks which got recognition with time.

3. Patent: Patents protect the making, selling, and importing of scientific inventions. A patent is an exclusive right granted by the government which provides the 'right to exclude' for 20 years.

4. Design: Design includes shape, pattern, colour, and arrangement of any good. The design can be protected for 10 years which can be renewed for further 5 years after expiry.

5. Plant Variety: It helps farmers conserve, improving available genetic resources. Plant variety encourages Indian farmers, and cultivators to produce high-quality seeds and planting material, leading to the growth of the seed industry.

6. Semiconductor Integrated Circuits Layout Design: The products that make use of and are formed on a semiconductor material. It is an integral part of computer chips.

Important Topics of Business Studies Class 11 Chapter 9  MSME And Business Entrepreneurship

Learnings of Class 11 Chapter 9 of Business Studies

• Understanding MSMEs: Definition, significance, and the role of MSMEs in economic growth and employment generation.

• MSMED Act, 2006: Overview of the act, rules, and regulations governing MSMEs.

• Investment and Turnover Limits: Criteria defining MSMEs based on investment and turnover.

• Role of Small Business in India: Contributions of small businesses to the economy, rural development, and balanced regional development.

• Problems Associated with MSMEs: Challenges faced by MSMEs, including finance, raw materials, managerial skills, and global competition.

• Entrepreneurship Development: Characteristics and significance of entrepreneurship in MSME growth.

• Intellectual Property Rights (IPR): Importance and types of IPR in protecting innovations and creations in MSMEs.

• Startup India Scheme: Government initiatives to encourage entrepreneurship and support MSMEs.

Importance of Revision Notes for Class 11 (Business Studies) Chapter 9

• Summarises Key Points: Condenses important concepts for quick review.

• Saves Time: Provides a fast way to revise before exams.

• Highlights Essentials: Focuses on crucial topics and definitions like Excretion in plants and animals.

• Improves Memory: Helps in better retention of information.

• Enhances Exam Prep: Targets weak areas for more effective study.

• Clarifies Concepts: Simplifies complex ideas for easier understanding.

• Includes Visuals: Uses diagrams and charts for better grasp as explained for blood circulation in the Human body.

• Boosts Confidence: Prepares students thoroughly for exams.

Tips for Learning the BST Class 11 Chapter 9  MSME And Business Entrepreneurship

1. Focus on core processes with illustrations and examples.

2. Draw and label diagrams for clarity.

3. Create summaries of each process.

4. Connect concepts to everyday examples.

5. Solve past exam questions to test understanding.

6. Explain concepts to others to reinforce learning.

7. Revisit material frequently to retain information.

8. Utilise platforms like Vedantu for additional support.

Conclusion

Chapter 9 gives an overview of how MSMEs are the backbone of India's economy, driving industrialisation, creating employment opportunities, and contributing to rural and regional development. Despite the challenges they face, including financial constraints, outdated technology, and competition from larger firms, MSMEs continue to thrive due to their flexibility, use of local resources, and entrepreneurial spirit. Government initiatives like the MSMED Act, 2006, and the Startup India Scheme further support their growth. Protecting intellectual property is crucial for fostering innovation and sustaining the competitive edge of MSMEs.

Related Study Materials for Class 11 Chapter 9 MSME And Business Entrepreneurship

Revision Notes Links for Class 11 Business Studies

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Other Important Study Material Links for Class 11 Business Studies

You can also access chapter-wise Revision Notes for Class 11 Business Studies from the links below and kick-start your preparation for Class 11  exams.