generating and screening of project ideas p.f.3 (final)

8/4/2019 Generating and Screening of Project Ideas P.F.3 (Final)

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Satish verma


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To stimulate the flow of ideas, the followingare helpful.

1.SWOT Analysis.

2.Clear articulation of objectivesa. Cost reductionb. Productivity improvement

c. Increase in capacity utilization.d. Improvement in contribution margine. Expansion into promising fields.


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Fostering a Conducive Climate


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Economic sectors:

1.State of the economy.2.Overall rate of growth.3.Gorwth rate of primary ,secondary andtertiary sectors.4.Cyclical Fluctuations.5.Linkages with the world economy.

6.Trade surplus/deficit7.Balance of payment situation.


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Industrial policy .Government programmes and

projects.Tax framework.Subsidies, incentives ,and

concessions.

Import and export policies.Financing norms.Lending conditions of financial

institutions.


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Emergence of new technologies

Access to technical know-how,foreign as well as indigenous.

Receptiveness on the part of industry.


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Population trendsAge shift in populationsIncome distributionEducation profiles.Employment of women.Attitudes towards consumption and

investment.


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Number of firms in the industry andthe market share of the top few.

Degree of homogeneity anddifferentiation among products.

Entry barriers.Comparison with substitutes in terms

of quality ,price, appeal, andfunctional performance.

Marketing policies and practices.


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Availability and cost of raw materialsand sub-assemblies.

Availability and cost of money.


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Realistic appraisal of corporatestrengths and weakness is essentialfor identifying investmentopportunity.

The broad areas of corporate

appraisal and the important aspectsto be considered under them are asfollows.


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Market Image.Product line.Market share.Distribution network.Customer Loyalty.Marketing and distribution costs.


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Condition and capacity of plant andmachinery.

Availability of raw materials, sub-assemblies, and power.

Degree of vertical integration.Location advantages

Cost structure.


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Research capabilities of the firm.Track record of new product

developments.Laboratories and testing facilities.Coordination between research and

operations.


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Corporate image.Clout with governmental and

regulatory agencies.Dynamism of top management.Competence and commitment of

employees.

State of industrial relations.


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Financial leverage and borrowingcapacity

Cost of capitalTax situation.Relations with shareholders and

creditors.

Accounting and control system.Cash flows and liquidity.


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Porter Model: Profit potential of IndustriesProfit potential of an industry depends oncombined strength of following five

competitive forces.1.Threat of new entrants2.Rivalry among existing firms.3.Pressure form substitute products.

4.Bargaining power of buyer.5.Bargaining power of sellers


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Threat from entrants ,profit potential ofindustry would be low.entry barrier are high when.

1.Entrants have to invest substantialresources.

2.Economies of scale are enjoyed.3.control of distribution channel, productdifferentiation.

4.Switching cost are high.5.Government policy limits or even prevents

new entrants.


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Industry compete on basis of price, qualitypromotion ,service ,warranties.

rivalry is high when.

1.No.of competitors in industry is Large.2.atleast few firms are balanced and capablefor sustained competition.

3.industry growth is sluggish.

4.Level of fixed cost is high.5.Chronic overcapacity in the industry.6.Industry confronts high exit barriers.


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The threat from substitutes productsis high.1.price-performance trade off isattract active.

2.Switching cost are minimal.3.Substitutes products produced with

superior profits.


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Bargaining power of buyer group ishigh when.

1.It purchase are large relative toseller.

2.Switching cost are low.3.Poses a strong threat of backward

integration.


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Supplier have strong bargainingpower when.

1. Few supplier dominate ,supplier

group is more concentrated.2. No viable substitutes for theproduct supplied.

3.Switching cost of buyer is high.4.Supplier is threat of forwardintegration.


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Following are wide variety of sourcestapped to identify them.Analyze the performance of ExistingIndustries.

1. Capacity utilization and profitabilitystudy.

2.More useful for region-wise, forproductswith high transportation cost.


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Materials, purchased parts, Supplierare distant places.

Study of output of existing industriesmay reveal opportunities .


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Analysis of import reports of 5 to 7years.

Benefits: 1. improves balance ofpayment.

2.Generate employment.

3.Provide market forsupporting industries and services.


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Gudelines to industires byDepartment of Industrialdevelopment, Government of India.

Provides information about Structureand location, production

performance, licensed and installedcapacity, exports,and Future scope ofvarious industries.


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Look at the suggestions of financialinstitutions and DevelopmentalAgencies.

State industrial developmentcorporations, the developmental

bodies prepare feasibility report, offersuggestion.


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Changing economic conditions andconsumer preference.

E.G.demand for time saving products.(Oven, food items, Powered vehicles)

Desire for leisure and recreational

products and services.


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Large network of researchlaboratories under The council ofScientific and Industrial Research .

New products,New processed andTechnologies for existing products

developed.


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Identify projects for the manufactureof products or supply of services usedin abroad.

Automatic vending machine,Entertainment parks, Prefabricated

houses, robots.


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Adding value to local availablematerial.

Skills of local artisans.

National Council of Applied Economic

Research (NCAER),public surveys forpotential for industrial developmentin various regions.


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Have shorter gestation period.

Marginal efforts would suffice to

revive such units.


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National and International trade fairsfor New products and Development.


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By thinking along the line:Modification

,Rearrangement,Reversal,Magnification,Reduction,Substitution,Adaptation,Combination.


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For well established products likebathing soap, Detergents ,cosmetics,toothpaste to find out unfulfilled

psychological needs of consumers.


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Joseph Kamoo Mecca finder.

Nrupendar Rao and KVk Raju

packing needs.


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For preliminary screening followingaspects may be looked into.

1.Compatibility with the promoter.

2.Consistency with governmentalpriorities.

3.Adequacy of market.

4.resonableness of cost.5.Accepability of risk level.


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Comatible with interest,personaliltyandresources of entrepreuner.


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Is the project consistent with nationalgoals.

Environmental effects contrary to

governmental regulation.Foreign exchange requirements can

be accommodated.

Difficulty in obtaining License for theproject.


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Capital requirement of the projectwithin manageable units.

Technical know-how required for the

project be obtained.Raw material available domestically,

any problem for imports.

Power supply obtainable.


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To judge adequacy following factorshave to be examined.1 Total present domestic market.

2.Competatiors and their marketshare.3.Sales and distributive system.

4.Projected increase in consumption.5.Patent Protection.


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Cost structure to realize acceptableprofit.

1.Costs of material inputs.

2.labour costs.3.Factory overheads4.General administration expenses.

5.Selling and Distribution costs.6.Service costs7.Economies of scale.


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Following factors should beconsidered.1.Vulnerability to business cycles.

2. Technological changes.3.Competition from substitutes.4.Competition from imports.

5.Govermenntal control over priceand distribution.6.Shifts in consumer preferences.


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Preliminary evaluation translated intoa project rating Index.

1.Indentify factors relevant for project

rating.2. Assign weights to these factors.3.Rate the proposal on various

factors.(5 Pt.)4.Factor rating into Factor weight.5.Add all the factor scores get project

rating Index.


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Economies of ScaleProduct Differentiation

Effective Advertising and Superior

Marketing Exceptional Service

Innovative Product Features

High Quality and Dependability


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Cost Advantage Accumulated Experience and Comparative

Edge on the Learning Curve

Monopolistic Access to Low Cost Materials A Favourable Location

More Effective Cost Control and CostReduction


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Marketing ReachTechnological Edge

Government Policy Restrictive Licensing

Import Restrictions

High Tariff Walls

Environmental Controls Special Tax Reliefs


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1. Are my goals Well Defined? Personal Aspirations Business Sustainability and Size Tolerance for Risk

1. Do I have the Right Strategy Clear Definitions Profitability and Potential for Growth Durability Rate of Growth


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3. Can I Execute the Strategy? Resources

Organizational Infrastructure

The Founders Role


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Willingness to Make SacrificesLeadershipDecisivenessConfidence in the ProjectMarketing OrientationStrong Ego


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Thank you

generating and screening of project ideas p.f.3 (final)

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