t3 Generation (1)

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    GENERATION AND SCREENINGOF PROJECT IDEAS

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    IDENTIFICATION OFFEASIBLE

    PROJECTS.

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    GENERATION OF IDEAS

    MONITORING THE ENV. CORPORATE APPRAISAL

    SCOUTING FOR PROJECT IDEAS

    PRELIMINARY SCREENING

    PROJECT RATING INDEX

    ON BEING AN ENTREPRENEUR

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    GENERATION OF IDEAS

    SWOT analysis

    Clear articulation of objectives

    Fostering a conducive climate

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    Clear articulation of objectives

    Cost reduction Productivity improvement

    Increase in capacity utilization

    Expansion into promising fields

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    Fostering a conducive climate

    Motivate employees to think creatively bysuggestion schemes, unconstrainedenvironment, etc.

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    MONITORING THE ENV.

    Economic sector

    Govt.

    Technological

    Socio-demographic

    Competition

    Supplier

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    Economic sector

    State of economy

    Growth rate of different sectors

    Inflation

    World economy

    Cyclical fluctuations Balance of payment

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    Govt.Sector

    Industrial Policy

    Tax framework

    Subsidies Incentives

    Concessions

    Exim policy

    Lending conditions of banks &

    financial institutions.

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    TechnologicalSector

    Emergence of new tech.

    Access to tech know-how

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    Socio-demographicSector

    Population trends

    Income distribution

    Educational profile Age shifts in population

    Women employment

    Attitude towards consumption &investment

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    Competition sector

    Market share

    No. of firms in the industry

    Entry barriers

    Comparison with substitute interms of quality, price, appeal,functional performance

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    Suppliersector

    Availability & cost of raw material

    Availability & cost of energy

    Availability & cost of money

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    CORPORATE APPRAISAL

    Marketing &distribution

    Production &

    operation Corporate resources

    & personnel

    Finance & accounting R& D

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    Marketing & distribution

    Market image

    Market share

    Distribution network Customer loyalty

    Marketing & distribution costs

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    Production & operation

    Condition & capacity of Plant & m/c

    Raw material availability

    Locational advantage Degree of vertical integration

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    Corporate resources & personnel

    Corporate image

    Top management dynamism

    Employee commitment & competence Clout with govt. & regulatory agencies

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    Finance & accounting

    Cost of capital

    Tax situation

    Borrowing capacity Relations with shareholders & creditors

    Cash flows & liquidity

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    R& D

    R&D capabilities of firm

    Lab & testing facilities

    Track record of new product development

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    SCOUTING FOR PROJECT

    IDEAS

    1.Analyse the performance of existing industries

    2.Examine the inputs & outputs of various

    industries 3.Review imports & exports

    4.Study plan outlays & Govt. guidelines

    5.Look at the suggestions of financial institutions& developmental agencies

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    6.Investigate local materials & resources

    7.Analyse economic & social trends 8.Study new technological developments

    9.Draw clues from consumption abroad

    10.Explore the possibility of reviving sickunits

    11.Identify unfulfilled psychological needs

    12.Attend trade fairs 13.Chance factor might favour

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    1.Analyse the performance of

    existing industries

    Profitability & capacity utilization ofexisting industries which are profitable &risk free.

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    2.Examine the inputs & outputs ofvarious industries

    Raw materials, parts, supplies as inputs

    Products, waste product, by product asoutputs

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    3.Review imports & exports

    Study of statistics of last 5 to 7 years ofimports & exports.

    It improves balance of payment

    Generates employment

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    4.Study plan outlays & Govt.guidelines

    Guidelines to industries by department ofindustrial development, govt of indiapublished annually .

    Gives information regarding structure,location, production performance, licensed& installed capacity , exports, future scope

    of various induatries.

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    5.Look at the suggestions offinancial institutions &

    developmental agencies

    Mckinsey

    PWC KSATECHNOPAK

    CII

    FICCI

    IBEF

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    6.Investigate local materials &

    resources The national council of applied economic

    research (NCAER) publish surveys

    regionwise regarding potential of industrialdevelopment, resources , men, material,infrastructure facilities, etc.

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    7.Analyse economic & social trends

    Study of economy & social trends can giveideas

    Time saving products, leisure &recreational activities, etc.

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    8.Study new technologicaldevelopments

    Council of scientific & industrial researchdevelop new products, technology,process, etc.which can be

    commercialised.

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    9.Draw clues from consumptionabroad

    Products or services which are not knownin India but famous abroad can be studied.

    Pre fabricated house, entertainment parks,etc.

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    10.Explore the possibility of

    reviving sick units

    Close or on the verge of it can be revivedby:

    Sound management system

    Infuse further capital

    Shorter gestation period

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    11.Identify unfulfilled psychologicalneeds

    Unfulfilled psychological needs can becatered to.

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    12.Attend trade fairs

    It gives latest information about newproducts, developments, etc.

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    13.Chance factor might favour

    Sometimes by chance one might comeacross an idea with commercial viability.

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    PRELIMINARY SCREENING

    After considering the above mentionedfactors one can generate number of ideasfor project.

    They require preliminary screening.

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    PRELIMINARY SCREENING

    It consists of :

    Compatibility with the promoter

    Consistency with govt. priorities Availability of inputs

    Adequacy of the market

    Reasonableness of cost

    Acceptability of risk level

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    1.Compatibility with the promoter:

    Idea must be compatible with the

    interest , personality & resources

    of entrepreneur . Gives him chance to grow with

    less risk.

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    2.Consistency with govt. priorities:

    Is project consistent with national

    goals

    Environmental effects Obtaining license

    Foreign exchange requirement

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    Availability of inputs

    Resources(raw materials,capital,power,technology,etc

    .) are easily & reasonablyavailable.

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    Adequacy of the market

    Present market(domestic,international)

    Sales & distribution

    Economic,social,demographic trends. Growth potential ROI

    Competitors & their shares Barriers to entry

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    Reasonableness of cost

    The cost structure of theproject must enable it to

    realize an acceptable profitwith a competitive price.

    Cost ofinputs,labour,overheads,distribution,service,etc.

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    Acceptability of risk level

    Tech change

    Substitute

    Competition from imports Business cycle

    Governemnt control over price& distribution.

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    PROJECT RATING INDEX

    Identify factors relevant for project rating

    Assign weights to these factors

    Rate the project proposal on variousfactors , using a suitable rating scale

    Factor score=factor ratingxfactor weight

    Add all the factor scores to get the overallproject rating index

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    PROJECT RATING INDEX

    FactorFactorweight

    Rating FactorScore

    VG5 G4 A3 P2 VP1

    ON BEING AN ENTREPRENEUR

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    ON BEING AN ENTREPRENEUR

    Willingness to make sacrifices

    Leadership

    Decisiveness Confidence in the project

    Marketing orientation

    Strong ego

    Open mindedness