entpreneurial management (em04_03 ) before starting up a small scale industry - 1
TRANSCRIPT
Syllabus coverage
• To understand what constitutes a business opportunity,scanning the environment for opportunities, evaluation ofalternatives and selection based on personal competencies.
• An overview of the steps involved in starting a businessventure – location, clearances and permits required,formalities, licensing and registration procedures
• Assessment of the market for the proposed project
• To understand the importance of financial, technical and socialfeasibility of the project.
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Today, we shall cover
• Product selection criteria
• Market survey, research
• Location selection
• Types of finance
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Product selection criteria - internalArea Description
Cost Compare cost of existing product / service with proposed product/service
Finance Selection of products through basic, luxury, semi-luxury etc. depends on the entrepreneur’s financial capacity
Experience
Differentiation Recommended that the selected product is differentiated from the competitors
Support extended by functional departments
Coordination of functional departments is necessary
Personal competencies
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Product selection criteria - externalArea Description
Customers demand Identify and respond to customer demand, or create it
Competition Identify and do a SWOT for competitors
Suppliers Cautiousness required while selecting suppliers
Technology Need to be updated with technological advancements to have a better product and efficient production process
Demographic factors Population, age, education of consumers
Economic factors Purchasing power, income, credit availability etc.
Political factors Helpful government, and stability of the government should be considered for the product
Environmental factors Consider norms and regulations to not have products /services which are detrimental to the environment
Social factors Produce products / services which do not negatively impact the sentiments of the society
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Market survey and research
• “the systematic gathering, recording and analysing of dataabout problems relating to the marketing of goods and services”
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Objectives of market research
Know the buyers Measure impact of promotional efforts
Define probable market
Know consumer response Master external factors Estimate potential buying power
Know market costs & profits
Design & implement marketing control
Estimate future sales
Marketing research areas
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Consumer Motivation Market
SalesProductAdvertising & Promotion
PolicyDistributionPricing
Understanding MarketResearch for Small Business
Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Problem FormulationoWhat set of problems are being
addressed?oIt is one problem or a set of
them?oWhich one is prioritised?
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Developing a research designoMaster plan or a model for
conducting the formal survey
oProvides a framework.
oThe steps are:‐ Defining the objectives
‐ Planning and determining thescope
‐ Developing alternative methods ofcollection, analysis andinterpretation
‐ Time estimation
‐ Administrative set up
‐ Budgets
‐ Formulating the research proposal
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Sample designingoEssential to substantiate and
interpret data in arepresentative, proportionateand adequate way. Some of thetechniques are:‐ Systematic sampling
‐ Stratified sampling
‐ Sequential sampling
‐ Convenience sampling
‐ Judgement sampling
‐ Random sampling
‐ Cluster sampling
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Data collectionoComprehensive research
requires both primary andsecondary data.
oMay be collected by surveys,observations orexperimentation.‐ Primary data may be unpublished,
but latest and relevant to theproblem
‐ Secondary data may be publishedor unpublished. Might not be latest,but is unbiased.
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Data analysisoIs required to assimilate dataoMust be processed within
specified parameters, beforeanalysis
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
• Interpreting the dataoCorrect interpretation
makes the researchmeaningful and purposefuloTechnical competence,
broad understanding andintimate knowledge of theproblem at hand areimportant
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Steps for market research
Drafting Report
Interpreting the Data
Data analysis
Data collection
Sample designing
Developing a research design
Problem formulation
•Drafting the reportoOf the types:
‐ Executive report‐ Technical report‐ Data report‐ Popular report
oSummarizes all thefindings along withrecommendation
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Methods and techniques of marketing research
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Survey Observation Experimentation
InterviewsProjective techniques
Methods
Techniques
Method - survey
• Refers to all methods of obtaining the needed informationthrough asking questions to the respondents.
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Method Merits Demerits
Personal Interviews
•Considered superior•Maximum information collection•Accuracy•Supplementary information collection
possible
•Expensive•Time consuming•May be biased
Mail Interviews
•Economical•Time saving•Covers a wide area•More objective
•Possibly poor responses• Inaccurate data
Telephonic Interviews
•Economical•Unbiased•Best for collecting data from a specific
group
•Of limited use•Possibility of no response•Lack personal observations
Method - observation
• Is usually done by trained observers – intrusively or otherwise.
• Could be done by using:oHidden camerasoEye camerasoCCTVsoPsycho-galvanometersoAudio meters etc.
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Method - Experimentation
• Usually related to a product or a service of a companyoProduct testingoPsychological techniquesoConsumer panelsoPilot marketingoRoad shows etc.
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Techniques
In – depth interview
• Not survey based
• Usually a free flowing conversation in afree atmosphere
• Researcher may probe the subconscious mind, feelings, needs,conflicts, fears, motives, attitudes,habits and taboos of the respondents
Projective techniques
• Tests conducted whereinrespondents are required to projecttheir feelings, attitudes,impressions, motives, reactions etc.to a third individual.
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Steps in setting up a venture
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Industry Selection
Viability / Feasibility
Arranging know-how
Prepare project report
Selection / Procurement of
premises
Apply to DI for NOC, registration
and power allotment
Apply for Financing – fixed assets, working capital, export
finance
Apply to local body for NOC and permissions
Apply for Raw material Quota
Apply for power connection
Place orders for machinery
Recruit staff
Install machinery
Connect machinery
Procure raw materials
Trial run
Selection of location
• Considerable emphasis required, to ensure it maximizesoperative efficiency
• Take note of zoning, land use regulations and environmentalissues
• Location of project often determined by government licensingregulations
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Selection of region
Selection of community
Selection of exact site
Selection of optimum site
Selection of region
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Raw material •Should have adequate and continuous supply of raw material in geographical proximity•Should have relaxed quotas on raw material procurement
Motive power •Should have cheap and un-interrupted power
Market •Access to market, and nearness along with market behaviour
Transport •Availability of transportation facilities and suitable storage location near railway stations, ports, airports etc.
Climate •Climate may be suitable for production, but not entirely fit for labour
Government policy
•Tariff protection, incentives and subsidies etc
Selection of community
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Labour •Skilled labour availability
Water •Adequate supply of water, and cheap
Waste disposal •Facilities required for treatment of effluents
Civic amenities •Schools, colleges and hospitals required in the vicinity for employees
Ecology & environmental factors
•Norms need to be adhered to•Extra efforts may earn carbon credit points
Political conditions •Stability required for industrial growth
Others
Exact site
• Topography
• Soil conditions
Optimum site
• Urban
• Rural
• Sub-urban
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Types of finance
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• Finance required for a period up to one year
• Includes borrowings for working capitalShort term
• Finance required for a period of one to five years
• Used for renovations, replacement and modificationsMedium term
• Finance required for five to twenty years
• For establishment of new ventures and investment on fixed assets
Long term
Sources of finance
Internal sources
• Owners’ capital
• Deposit and loans given by others
• Personal loans taken by entrepreneurson LIC policies, PF, NSC’s
• Mortgage loans
External sources
• Borrowings from banks
• From specialized financialinstitutions like IDBI, ICICI, IFCI etc
• From government and financecorporations e.g. LIC, SFCs, HDFC,HUDCO, NABARD and SIDBI
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Further readings / viewings
• History of corporations
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Next 3 weeks
• No class on 26th Sep, 3rd Oct and 10th Oct.
• Assignments will need to be doneoAssignment 3coAssignment 4a
• Presentation of work done so far. Assignments 03, and o4a on17th October
• 25th September, monthly test
• Your current grades for the class will be sent out to the principalat the end of this week
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