Use app×
Join Bloom Tuition
One on One Online Tuition
JEE MAIN 2025 Foundation Course
NEET 2025 Foundation Course
CLASS 12 FOUNDATION COURSE
CLASS 10 FOUNDATION COURSE
CLASS 9 FOUNDATION COURSE
CLASS 8 FOUNDATION COURSE
0 votes
11.6k views
in Entrepreneurship by (52.2k points)
closed by

AB Ltd., manufacturing light bulbs decided to start manufacturing of ceiling fans. They formed a sister concern by the name ‘Cool Air Ltd’. The new company was in need of some investment and for the same they had approached a bank. They had submitted a business plan to the bank stating all the necessary details. They had mentioned very clearly in the plan that they will be manufacturing the blades and have decided to outsource the required motor parts. The plan spoke about the reason for outsourcing along with the contracts with subcontractors. 

a. Explain the Component of the business plan along with its related sub part 

b. The business plan further gave details about the money which will be invested by the owners and how much they are expecting to borrow. Explain the component of the business plan along with its related sub part.

1 Answer

+1 vote
by (54.5k points)
selected by
 
Best answer

a. Production plan, partial manufacturing

Production, the most important activity of an enterprise, because it is here that transformation of raw material into finished product takes place with the help of energy, capital, manpower and machinery. 

Partial manufacturing: If some or all the manufacturing process is to be subcontracted or outsourced, 

then the production plan should describe: 

(i) Name and location of subcontractor(s) 

(ii) Reasons for their selection 

(iii) Cost and time involved 

(iv) Any contracts that have been completed etc. In such cases, a clear mention of what the entrepreneur intends to do himself and what he plans to get it done from outside is required. 

b. Financial plan, proforma financing decision 

Financial plan is a projection of key financial data about: 

(a) The potential investment commitment needed for the new venture, and 

(b) Economic feasibility of the enterprise 

Proforma financing decisions: This section summarizes all the projected sources of funds available to the venture to raise finance from, which you have already studied in previous class. 

Typically, sources of funds are: 

(i) owners i.e. Owner's funds 

(ii) outsiders i.e. Borrowed funds. 

The entrepreneur's job is to ensure the selection of the best overall mix of financing for the enterprise so that: 

(a) the cost of capital and the financial risk stands minimized, 

(b) return on investment and profitability stands maximized.

Welcome to Sarthaks eConnect: A unique platform where students can interact with teachers/experts/students to get solutions to their queries. Students (upto class 10+2) preparing for All Government Exams, CBSE Board Exam, ICSE Board Exam, State Board Exam, JEE (Mains+Advance) and NEET can ask questions from any subject and get quick answers by subject teachers/ experts/mentors/students.

Categories

...