Entpreneurial Management (EM04_03 ) Before starting up a small scale industry - 1
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The document outlines essential steps for starting a business venture, including evaluating business opportunities, market assessments, product selection criteria, and the importance of financial and technical feasibility. It emphasizes the significance of market research methods and data analysis in understanding consumer behavior and the competitive landscape. Additionally, it discusses the steps involved in setting up a venture, from selecting a location to obtaining the necessary financing and permits.
Entpreneurial Management (EM04_03 ) Before starting up a small scale industry - 1
- 1. Management 04_3 – Before starting the project Suhas Dutta
- 2. 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
- 3. Today, we shall cover • Product selection criteria • Market survey, research • Location selection • Types of finance Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.3
- 4. Product selection criteria - internal Area 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.4
- 5. Product selection criteria - external Area 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 Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.5
- 6. Market survey and research • “the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services” Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.6 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
- 7. Marketing research areas Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.7 Consumer Motivation Market SalesProductAdvertising & Promotion PolicyDistributionPricing Understanding Market Research for Small Business
- 8. Market research Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.8
- 9. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Problem Formulation oWhat set of problems are being addressed? oIt is one problem or a set of them? oWhich one is prioritised? Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.9
- 10. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Developing a research design oMaster plan or a model for conducting the formal survey oProvides a framework. oThe steps are: ‐ Defining the objectives ‐ Planning and determining the scope ‐ Developing alternative methods of collection, analysis and interpretation ‐ Time estimation ‐ Administrative set up ‐ Budgets ‐ Formulating the research proposal Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.10
- 11. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Sample designing oEssential to substantiate and interpret data in a representative, proportionate and adequate way. Some of the techniques are: ‐ Systematic sampling ‐ Stratified sampling ‐ Sequential sampling ‐ Convenience sampling ‐ Judgement sampling ‐ Random sampling ‐ Cluster sampling Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.11
- 12. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Data collection oComprehensive research requires both primary and secondary data. oMay be collected by surveys, observations or experimentation. ‐ Primary data may be unpublished, but latest and relevant to the problem ‐ Secondary data may be published or unpublished. Might not be latest, but is unbiased. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.12
- 13. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Data analysis oIs required to assimilate data oMust be processed within specified parameters, before analysis Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.13
- 14. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Interpreting the data oCorrect interpretation makes the research meaningful and purposeful oTechnical competence, broad understanding and intimate knowledge of the problem at hand are important Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.14
- 15. Steps for market research Drafting Report Interpreting the Data Data analysis Data collection Sample designing Developing a research design Problem formulation • Drafting the report oOf the types: ‐ Executive report ‐ Technical report ‐ Data report ‐ Popular report oSummarizes all the findings along with recommendation Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.15
- 16. Methods and techniques of marketing research Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.16 Survey Observation Experimentation Interviews Projective techniques Methods Techniques
- 17. Method - survey • Refers to all methods of obtaining the needed information through asking questions to the respondents. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.17 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
- 18. Method - observation • Is usually done by trained observers – intrusively or otherwise. • Could be done by using: oHidden cameras oEye cameras oCCTVs oPsycho-galvanometers oAudio meters etc. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.18
- 19. Method - Experimentation • Usually related to a product or a service of a company oProduct testing oPsychological techniques oConsumer panels oPilot marketing oRoad shows etc. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.19
- 20. Techniques In – depth interview • Not survey based • Usually a free flowing conversation in a free atmosphere • Researcher may probe the sub conscious mind, feelings, needs, conflicts, fears, motives, attitudes, habits and taboos of the respondents Projective techniques • Tests conducted wherein respondents are required to project their feelings, attitudes, impressions, motives, reactions etc. to a third individual. Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.20
- 21. Steps in setting up a venture Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.21 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 materialQuota Apply for power connection Place orders for machinery Recruit staff Install machinery Connect machinery Procure raw materials Trial run
- 22. Location Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.22
- 23. Selection of location • Considerable emphasis required, to ensure it maximizes operative efficiency • Take note of zoning, land use regulations and environmental issues • Location of project often determined by government licensing regulations Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.23 Selection of region Selection of community Selection of exact site Selection of optimum site
- 24. Selection of region Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.24 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
- 25. Selection of community Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.25 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
- 26. Others Exact site • Topography • Soil conditions Optimum site • Urban • Rural • Sub-urban Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.26
- 27. Financing Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.27
- 28. Types of finance Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.28 • 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
- 29. Sources of finance Internal sources • Owners’ capital • Deposit and loans given by others • Personal loans taken by entrepreneurs on LIC policies, PF, NSC’s • Mortgage loans External sources • Borrowings from banks • From specialized financial institutions like IDBI, ICICI, IFCI etc • From government and finance corporations e.g. LIC, SFCs, HDFC, HUDCO, NABARD and SIDBI Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.29
- 30. Further readings / viewings • History of corporations Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.30
- 31. Assignments presentation Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.31
- 32. Next 3 weeks • No class on 26th Sep, 3rd Oct and 10th Oct. • Assignments will need to be done oAssignment 3c oAssignment 4a • Presentation of work done so far. Assignments 03, and o4a on 17th October • 25th September, monthly test • Your current grades for the class will be sent out to the principal at the end of this week Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.32