Download - Project formulation and appraisal
PROJECT FORMULATION
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Generation & screening of project ideas
Presented by : Surya C.D
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INTRODUCTION
A project is accomplished by performing asset of activities
The project ideas as a process of identification of process begins with an analytical survey of the economy.
The surveys & studies will give us ideas.
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GENERATION OF IDEAS
The project selection starts with generation of project ideas.
The ideas are based on existing field of technology to offer various present product of syllabus
To stimulate the flow ideas the following are helpful
1) SWOT analysis Strengths Weakness Opportunities & Threats
2) Clear Articulation of objectives
3) Fostering a conducive climate
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MONITORING THE ENVIRONMENT
Competitive abilities of a firm depends on its environment
The firm must systematically monitor the environment and assess its competitive abilities
For purpose monitoring divided into six sectors
Economic sectorGovernmental sectorTechnological sectorSocio-demographic sectorCompetition sectorSupplier sector.
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CORPORATE APPRAISEL
Realistic appraisal of corporate strengths & weakness is essential for identifying investment opportunities
Marketing & distributionProduction & operationsR &DCorporate resource and personnelFinance and accounting
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TOOLS FOR IDENTIFYING INVESTMENT OPPORTUNITY
•Several useful tools that are helpful in identifying promising investment opportunities.
a) Life cycle approachb) Porter modelc) Experience Curve
a) Life cycle approach
Pioneering stageRapid growth stageMaturity and stabilisation stageDecline stage
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b) Porter Model
Profit potential of an industry depends on the combined strength of the following five basic competitive forces:
Threat of new entrants
Rivalry among existing firs
Pressure from substitute products
Bargaining power of buyers
Bargaining power of sellers
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c) The Experience Curve
Accumulated volume of production
Cost
per
un
it (
pre
sen
t v
alu
e)
Experience curve is used to find long term investments aimed at reducing costs
It shows how the cost per unit behaves w.r.t the accumulated volume of production
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SCOUTING OF PROJECT IDEAS
Analyse the performance of existing industries
Examine the inputs and outputs of various industries
Review imports and exports
Study plan outlays and governmental guidelines
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PRELIMINARY SCREENING
By using the suggestions in the preceding section ,it is possible to develop a long list of project ideas
Compatibility with the promoter
Consistency with government priorities
Availability of inputs
Adequacy of market
Reasonableness of cost
Acceptability of risk level
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PROJECT RATING INDEX
Preliminary evaluation may be translated into a Project rating index
STEPS
1. Identify factors relevant for project rating2. Assign weights to these factors3. Rate the project proposal on various factors4. For each factor multiply the factor rating with the factor
weight to get the factor score5. Add all the factor scores to get the overall project rating
index
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SOURCES OF POSITIVE NET PRESENT VALUE (NPV)
There are six main entry barriers that result in positive NPV projects
Economies of scale
Product differentiation
Cost advantage
Marketing reach
Technology edge
Government policy
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BEING AN ENTREPRENEUR
Qualities and traits of a successful entrpreneur
Willingness to make sacrificesLeadershipDecisivenessConfidence in the projectMarketing orientationStrong ego
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CONCLUSION
Thus the main objective of the generation and screening of project ideas is to identify investment opportunities which are feasible and promising and which merit further examination and appraisal
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Query
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