Entpreneurial Management (EM04_02 ) starting up a small scale industry - 2

Management
04_2 – Starting a small industry
Suhas Dutta

Syllabus coverage
• To understand what constitutes a business opportunity,
scanning the environment for opportunities, evaluation of
alternatives and selection based on personal competencies.
• An overview of the steps involved in starting a business
venture – 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 social
feasibility 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

Consumer adoption of product
Awareness Interest Evaluation
Adoption Trial

Obtaining new products
• New products can be obtained by internal innovation, or
acquisition.
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 Penetration
Expansion of sales of existing
products in existing markets by
selling more to current
customers and acquiring new
customers
Market Development
Existing product introduced to a
new market or segment. Finding
new applications for existing
products.
NEW
PRODUCTS
Product Development
Introducing new products to an
existing market
Diversification
Entry 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 new
product introduction into a
new market are:
oMarketability
oDurability
oProductive ability
oGrowth potential
Market development
Productdevelopment
Marketpenetration

New product ideas
• Development, testing and
launches are the most
expensive 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
Feasibility
Tests
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, capital
investment, 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 the
case of programming”
• “an approval for a capital investment to develop facilities to
provide goods and services”
• “any scheme or part of a scheme for investing resources which
can be reasonably analysed and evaluated as an independent
unit. It may be any item of investment activity which can be
separately evaluated”

Project
• Is characterised by
oObjective
oSize
oTime limit
oLocation
oScheme
oOrganization
oInternal rate of return
oSocial benefits
• A project is an economic activity with well defined objectives
and having a specific beginning and end

Project classification
• Projects are classified
differently by authorities and
scholars depending on the
cause 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
ASPECTSOF
PROJECTS, INYOUR
BOOKS

Project cycle
Identification
Pre-
sanction
follow up
AppraisalImplementation
Feedback
Supervision,
Follow-up
&
Recovery

Project objectives
• The basic objectives of a project
should be:
oMaximization of market value of
equity
oMaximization of net present value
oMaximization of return
oIncrease in IRR at low risk
oIncrease in NPV of monetary flows
• The essential requirements
for project objectives are:
• Specific
oMeasurable, tangible and
verifiable
oRealistic & attainable
oEstablished within resource
bounds
oConsistent with resources
available
oConsistent 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 types
o Sub-sector or product based
o Functional
o Regional
• All of them however have the same
approach of gradual development of
the 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 last
time.

Entpreneurial Management (EM04_02 ) starting up a small scale industry - 2

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Entpreneurial Management (EM04_02 ) starting up a small scale industry - 2

Similar to Entpreneurial Management (EM04_02 ) starting up a small scale industry - 2 (20)

More from Suhas Dutta

More from Suhas Dutta (20)

Entpreneurial Management (EM04_02 ) starting up a small scale industry - 2