Professional Documents
Culture Documents
Generation and
Screening of
ideas
Generation of ideas
Cost reduction
Productivity improvement
Increase in capacity utilization
Improvement in contribution margin
Expansion into promising fields
Socio-demographic sector
Population trend
Age shifts in population
Income distribution
Educational profile
Employment of women
Attitudes towards consumption and investment
Corporate Appraisal
A realistic appraisal of corporate strengths
and weaknesses is essential for identifying
investment opportunities which can be
profitably exploited. The broad areas of
corporate appraisal and the important
aspects to be considered are :
Marketing and distribution
Production and operations
Research and development
Corporate resources and personnel
Finance and Accounting
Corporate Appraisal
Marketing and distribution
Market image
Product Line
Market Share
Distribution Network
Customer Loyalty
Marketing and distribution
costs
Corporate Appraisal
Research and
development
Resource Capabilities of
the firm
Track record of new
product development
Laboratories and testing
facilities
Coordination between
research and operations
Corporate Resources
and personnel
Corporate image
Clout with governmental
and regulatory agencies
Dynamism of top
management
Competence and
commitment of
employees
State of industrial
relations
Corporate Appraisal
Finance and Accounting
Financial Leverage and borrowing capacity
Cost of capital
Tax situation
Relations between shareholders and creditors
Accounting and control system
Cash flows and liquidity
Suppliers
Threat of new
entrants
Bargaining power
Bargaining
Of suppliers
The industry rivalry power of buyers
among existing firms
Threat of
substitute
products
Potential Entrants
Buyers
Preliminary screening
Compatibility with the promoter
Consistency with governmental priorities
Availability of inputs
Adequacy of market
Reasonableness of cost
Acceptability of risk level
Economies of scale
Product differentiation
Cost advantage
Market reach
Technological edge
Government policy
On being an Entrepreneur
Questions every entrepreneur must answer
i) Are my goals well defined
Personal aspiration
Business sustainability and size
Tolerance for risk
Clear definition
Profitability and potential for growth
Durability
Rate of growth
Qualities of a successful
Entrepreneur
Situational
Analysis and
Specification of
objectives
Demand
Forecasting
Characterization
of the Market
Conduct of
market survey
Market
planning
Census of India
National sample survey
reports
Plan reports
Statistical abstract of the
Indian Union
India Year Book
Statistical Year Book
Economic Survey
Guidelines to Industries
Annual Survey of Industries
Market Survey
The information sought in the market survey
may relate to one or more of the following:
Demand Forecasting
Estimation of future demand is the next step after gathering
information about various aspects of the market and
demand from primary and secondary sources.
Methods of Demand Forecasting:
Qualitative Methods
Jury of Executive Method
Delphi Method
Demand Forecasting
Casual Methods
Methods of forecasting
Inability to handle unquantifiable factors
Unrealistic assumptions
Excessive data requirement
Technological change
Shift in Government policy
Developments on the International Scene
Discovery of New sources of Raw Material
Vagaries of Monsoon
Market planning
Marketing plan usually has the following
components:
Market Planning
Current market situation examines the
following:
Market situation
Competitive situation
Distribution situation
Macro Environment
Market Planning
Market Strategy covers the following:
Target Segment
Positioning
Product Line
Price
Distribution
Sales Promotion
Advertisement
Technical Analysis
The broad purpose of technical analysis is
a) to ensure that the project is technically
feasible and
b) to facilitate the most optimal formulation of
the project in terms of technology, size,
location and so on.,
The participation of financial analyst is also
essential with the technical analyst in the
project appraisal exercise who should be able
to raise basic issues to technical analyst
using common sense and economic logic.
Choice of Technology
Choice of technology is influenced by a
variety of considerations:
Plant Capacity
Principal inputs
Investment outlay and production cost
Use by other units
Product mix
Latest development
Ease of absorption
Appropriateness of Technology
It refers to those methods of production which
are suitable to local economic, social and
cultural conditions. The advocates of appropriate
technology urge that the technology should be
evaluated in terms of the following questions:
Whether the technology utilises local raw materials?
Whether the technology utilises local man power?
Whether the goods and services produced cater to
the basic needs?
Whether the technology protects ecological balance?
Whether the technology is harmonious with social and
cultural conditions?
Raw Materials
Processed Industrial Materials and components
Auxiliary materials and factory supplies
Utilities
Agricultural products
Mineral products
Livestock and Forest Products
Marine Products
Product Mix
Market requirement guides the choice of product
mix. In the production of most of the items,
variations in size and quality are aimed at
satisfying a broad range of customers. Variation
in quality can enable a Company to expand its
market and enjoy higher profitability. While
planning the production facilities of the firm ,
some flexibility with respect to the product mix
must be sought. The degree of flexibility chosen
may be based on a careful analysis of the
additional investment requirement for different
degrees of flexibility
Plant Capacity
Plant Capacity or Production Capacity refers to
the volume or number of units that can be
produced during a given period.
Feasible normal capacity which is nothing but
the capacity attainable under normal working
conditions.
The nominal maximum capacity is the capacity
which is technically attainable and this often
corresponds to the installed capacity guaranteed
by the supplier of the plant
Climatic conditions
General living conditions
Proximity to ancillary units
Ease in coping with environmental pollution
Plant equipments
Mechanical equipments
Electrical equipments
Instruments
Controls
Internal Transportation System
Others
In addition to the above spare parts and tools list also
has to be prepared
Outdoor works
Environmental aspects
A project may cause environmental pollution in
various aspects. The key issues that need to be
considered in this respect are:
What are the types of effluents and emissions
generated?
What needs to be done for proper disposal of
effluents and treatment of emission?
Will the project be able to secure all
environmental clearances and comply with all
statutory requirements?
Work schedule
Work schedule is nothing but the plan of work
concerning installation as well as initial operations. The
purpose of work schedule is
To anticipate problems likely to arise during the installation
phase and suggest possible means for coping with them
To establish the phasing of investments taking into account the
availability of finances
To develop a plan of operations covering the initial period
Nature of project
Production process
Product quality
Scale of operation and time planning
Location
Technology
Location
Selling Price
Production costs
Financial
Requirements
Profitability
Investment outlay
QUESTIONS???
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