entpreneurial management (em04_02 ) starting up a small scale industry - 2

Management04_2 – Starting a small industry

Suhas Dutta

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.

Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.2

Setting up a small industry


Initiating the business


Product life cycle

Idea Stage

Idea

Evaluation

Concept Stage

Laboratory Development

Evaluation

Product Development

Stage

Pilot Production Run

Evaluation

Idea Stage

Semicommerci-al Plan Trials

Evaluation

Introduction Growth Maturity Decline


10 myths of entrepreneurship

E:/VIDEO/BMA/The 10 Myths of Entrepreneurship.mp4

E:/VIDEO/BMA/The 10 Myths of Entrepreneurship.mp4

Consumer adoption of product


Awareness Interest Evaluation

Adoption Trial

Obtaining new products

• New products can be obtained by internal innovation, oracquisition.oInternal development‐ Discovering, innovating, inventing within the organization

oLicensing‐ Sourcing the right to produce

oAcquisition‐ Buying the organization which produces and assimilating


Product planning and development strategy

EXISTING MARKETS NEW MARKETS

EXISTING PRODUCTS

Market PenetrationExpansion of sales of existing products in existing markets by selling more to current customers and acquiring new customers

Market DevelopmentExisting product introduced to a new market or segment. Finding new applications for existing products.

NEW PRODUCTS

Product DevelopmentIntroducing new products to an existing market

DiversificationEntry into new market with new product.


CONSERVATIVE CHOICE

RADICAL CHOICE

Product planning and development strategy

Market 1 Market 2 Market n

Product 1

Product 2

Product n

• Factors influencing newproduct introduction into anew market are:oMarketabilityoDurabilityoProductive abilityoGrowth potential


Market development

Pro

du

ct d

evel

op

men

t

Ma

rket pen

etratio

n

New product ideas

• Development, testing andlaunches are the mostexpensive stages.

• Why is a launch expensive?


0

2

4

6

8

10

12

14

0%

10%

20%

30%

40%

50%

60%

70%

80%

Time, Cost involved in Idea generation

Time Cost Ideas

Idea to commercialization


Idea Generation

Idea Screening

Concept development &

Testing

FeasibilityTests

Business Analysis

Product Development

Program

Commercialization

& Evaluation

Test Marketing

Financial, Commercial, Technical

Product planning and development process


New Product Ideas

Visualization of detailed features of the new product. Start with a larger number of ideas to get to the final chosen one.

Idea Screening

Evaluate ideas and inventions

Concept Development & Testing

• Precise description of the chosen product sets.

• Incorporate consumer preferences• Concept testing to choose among

alternate products

Business Analysis

• Evaluate market potential, capitalinvestment, rate of return

• Market research and CBA

Product Development Programme

• Prototype development• Consumer testing• Branding packaging and labelling

Test Marketing

Try out entire marketing program at a smaller scale and gather customer reactions

Commercialization

• Finalization of all features of the product• Full scale marketing

Projects and classifications


Projects

• “the smallest unit of investment activity to be considered in thecase of programming”

• “an approval for a capital investment to develop facilities toprovide goods and services”

• “any scheme or part of a scheme for investing resources whichcan be reasonably analysed and evaluated as an independentunit. It may be any item of investment activity which can beseparately evaluated”

Project

• Is characterised byoObjectiveoSizeoTime limitoLocationoSchemeoOrganizationoInternal rate of returnoSocial benefits

• A project is an economic activity with well defined objectivesand having a specific beginning and end


Project classification

• Projects are classifieddifferently by authorities andscholars depending on thecause of classification.


Sectoral

• Agricultural & Allied• Irrigation & Power• Industry & Mining• Transport &

Communication• Social Service• Others

Quantifiable and non-quantifiable

Techno-economic

• Factor intensity-oriented• Causation-oriented• Magnitude-oriented

Financial Institution based

• New• Expansion• Modernisation• Diversification

Services

• Welfare• Service• Research & Development• Educational

Project dimension, and their impact


Catalytic agents for economic development

Provide framework for future entrepreneurial activity

Shape future pattern of services

May involve substantial financial outlays

Initiate development of infrastructure

Bring in change in society in the long term and accelerate the process of socio-cultural development

READ UP ON ASPECTS OF

PROJECTS, IN YOUR BOOKS

Project cycle


Identification

Pre-sanction follow up

AppraisalImplementation

FeedbackSupervision,

Follow-up&

Recovery

Project objectives

• The basic objectives of a projectshould be:oMaximization of market value of

equityoMaximization of net present valueoMaximization of returnoIncrease in IRR at low riskoIncrease in NPV of monetary flows

• The essential requirementsfor project objectives are:

• SpecificoMeasurable, tangible and

verifiableoRealistic & attainableoEstablished within resource

boundsoConsistent with resources

availableoConsistent with organizational

plans, policies and procedures


Planning and approach

Indicators

Summary of objectives Objectively verifiable

Overall goal to which the project contributes

that goals are reached

Project purpose which show the achievement of project purpose

Results / outputs Describing results

Activities Specs of quantities & costs for each activity

• Approach typeso Sub-sector or product based

o Functional

o Regional

• All of them however have the sameapproach of gradual development ofthe economy of the country.


Every project must have the features of:• Simplicity and clarity• Readily available technology for project implementation• Integration of basic production services• Compatibility of project within the existing administrative mix

Phases of a project

Project Management Institute Other approach

Initiation Identification

Planning Formulation

Execution Appraisal

Closure Selection

Control Implementation

Management


Please note, these are distinct approaches and the phases are not parallel

• And lets watch the remaining half of the documentary from lasttime.


E:/VIDEO/BMA/The Startup Kids.mp4

E:/VIDEO/BMA/The Startup Kids.mp4

entpreneurial management (em04_02 ) starting up a small scale industry - 2

Documents

nayan consulting

businesscontent c copyright

new product introduction

new applications

product nfactors

market nproduct

development strategymarket

technicalproduct planning