entpreneurial management (em04_03 ) before starting up a small scale industry - 1

Management04_3 – Before starting the project

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

Today, we shall cover

• Product selection criteria

• Market survey, research

• Location selection

• Types of finance


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


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


Market survey and research

• “the systematic gathering, recording and analysing of dataabout problems relating to the marketing of goods and services”


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


Consumer Motivation Market

SalesProductAdvertising & Promotion

PolicyDistributionPricing

Understanding MarketResearch for Small Business

E:/VIDEO/BMA/Understanding Market Research for Small Business.mp4

E:/VIDEO/BMA/Understanding Market Research for Small Business.mp4

Market research


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?



Drafting Report


Data analysis

Data collection

Sample designing


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



Drafting Report


Data analysis

Data collection

Sample designing


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



Drafting Report


Data analysis

Data collection

Sample designing


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.



Drafting Report


Data analysis

Data collection

Sample designing


Problem formulation

• Data analysisoIs required to assimilate dataoMust be processed within

specified parameters, beforeanalysis



Drafting Report


Data analysis

Data collection

Sample designing


Problem formulation

• Interpreting the dataoCorrect interpretation

makes the researchmeaningful and purposefuloTechnical competence,

broad understanding andintimate knowledge of theproblem at hand areimportant



Drafting Report


Data analysis

Data collection

Sample designing


Problem formulation

•Drafting the reportoOf the types:

‐ Executive report‐ Technical report‐ Data report‐ Popular report

oSummarizes all thefindings along withrecommendation


Methods and techniques of marketing research


Survey Observation Experimentation

InterviewsProjective techniques

Methods

Techniques

Method - survey

• Refers to all methods of obtaining the needed informationthrough asking questions to the respondents.


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.


Method - Experimentation

• Usually related to a product or a service of a companyoProduct testingoPsychological techniquesoConsumer panelsoPilot marketingoRoad shows etc.


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.


Steps in setting up a venture


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

Location


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


Selection of region

Selection of community

Selection of exact site

Selection of optimum site

Selection of region


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


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


Financing


Types of finance


• 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


Further readings / viewings

• History of corporations


E:/VIDEO/BMA/alli-corporation-Recomp.mkv

E:/VIDEO/BMA/alli-corporation-Recomp.mkv

Assignments presentation


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


entpreneurial management (em04_03 ) before starting up a small scale industry - 1

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