I understand that by putting in entries into the /etc/inittab file. We can actually call the our scripts during startup.

mkitab "start_server:2nce:sh /scripts/startserver.sh"

Would the system wait for startserver.sh finish executing before it goes to another entry? and how long would it wait before it aborts executing the startserver.sh.

For shutdown,

I gather from the ibm site and understand that /etc/rc.shutdown would be called during shutdown. We can place our shutdown scripts in rc.shutdown.

If the system is doing a reboot, would it execute rc.shutdown too?

Appreciate any inputs

In your mkitab line you specify "start_server:2: once:...". Therefore it will not wait on it, but rather spawn a shell and execute /scripts/startserver.sh within that shell. If you want inittab to wait for this script to finish before moving to the next line in inittab you should change "once" to "wait".