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Management04_4 – 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.
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Today, we shall cover
• Market assessment
• Project feasibility analysis
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Lets watch
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• 5 marketing tools
Market assessment
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Market assessment
• In a competitive economic system, the success, survival andgrowth of enterprise warrants market assessment
• NeedoDetermine what the customers want – depending on their education,
employment, age, income, status etc
• The important elements are:
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Market demand analysis
Competitive situation
Trade practices
Market demand analysis
• The variables which determine market demand are:
• The entrepreneur should be in touch with vendors, andcustomers
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Product Total volumeTotal
purchased
Customer group
Geographical area
Time period
Marketing environment
Marketing programme
Competitive analysis
• Entrepreneurs should have a clear sense of competitors andknow:oNumber of competitorsoCompetitor market shareoCompetitor product SWOT
oMarket perception and imageoTrade practicesoMajor customers
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Understanding trade practices
• Know the intermediaries:oAgents, brokers, chain stores, malls, export houses etc.
• Important to know trade practicesoDiscountsoPseudo offersoCredit facilitiesoHome deliveryoGifts etc.
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Forecasting market demand
Surveys•Direct oral interviews•Indirect surveys•Mailed questionnaire•Schedules sent through enumerates•Through agencies
Statistical•Time series•Regression•Extrapolation
Leading indicators Others•Market factor analysis•Simulation
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Project feasibility analysis
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Project feasibility analysis
Market analysis
Financial analysis
Technical analysis
Social profitability
analysis
Economic analysis
Managerial analysis
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Market analysis
• Method of screening project ideas as well as evaluating project’sfeasibility in terms of markets:
• Methods used to estimate the market demand are:
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Area of market
Distribution channels
Trade practices
CompetitionExisting demand
SurveySales
experienceMarket
segmentation
Financial & technical analysis
Financial analysis
• Aspects need to be analyzed:oInitial capital requirementoTotal project costoRequirement of fixed capital and
working capital
oCash flows and fund flows
Technical analysis
• Aspects that requireanalysis:oMachinery and equipmentoLocation of the plantoPlant layout
oPower and communicationfacilities
oRaw materialsoWork force etc.
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Others
Social profitability analysis Projects and companies need to be socially aware and help the society by constructing schools, and hospitals and participating in community development projects
Economic analysis •Economic trends•Extent of competition•Price structure•Cost of the project•Demand for the product•Trade cycles
Managerial capability Required for long term feasibility of the project
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Further readings / viewings
• History of corporations (Part 2)
• http://www.abhinavjournal.com/images/Commerce_&_Management/Jan13/13.pdf
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