PROJECT IDENTIFICATION AND CLASSIFICATION

Introduction
Difficult task faced by an entrepreneur Identifying a business opportunity Two major ingredients of a business opportunity are:
Good market scope Attractive and acceptable ROI

Choosing an Idea
Idea must not only be good for the market, but also good for the project as well as entrepreneur Develop 5-10 ideas, not just one. Weigh intrinsic capabilities in finalising an idea Get suggestions from customers, competitors, distributors, etc

Selection of A Product
Experience of the entrepreneur in manufacturing and marketing Degree of Profitability Import restrictions or banned items Incentives or concessions Products reserved for SSI Export potential Licensing Locational advantage Ancillary product

Project Cycle
Project Identification Project Preparation and appraisal Project Implementation Evaluation

Preliminary Evaluation
Compatible with promoter Availability of Raw material Compatible with government regulation and policies Cost of a project Potential Market Risk inherent in the project

Project Classification
Quantifiable and Non Quantifiable Projects Techno Economic Projects
Magnitude oriented Classification- Size of Investment Causation oriented Classification- demand based or raw material based Factor intensity oriented Classification- capital intensive or labour intensive project

Sectoral Projects: According to Indian Planning Commission

Agriculture and allied sector Industry and mining sector Social Service sector Transport and communication sector Irrigation and Power sector Miscellaneous sector

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Classification by Financial Institutions
New Projects Expansion Projects Diversification Projects Modernisation Projects Educational Projects R&D Projects Service Project Welfare Projects

Steps Prior to Implementation

Define Aim Self Evaluation Specifying requirements
Space Plant and machinery Manpower Power required Electrical installation Technical soundness Marketing ability How to generate funds and organise finance How to shoot trouble

Four major factors

Project identification
According to Perter Drucker, there are three kinds of opportunities:
Additive Complementary Break through

Project identification is concerned with the collection, compilation and analysis of economic data for eventual purpose of locating possible opportunities for investment. Project has 3 characteristics:
Input Output Social cost and benefit

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Techniques of Project Identification:
Desk Research Techno Economic Survey

Constraints:
Internal
Formulation of feasibility report Availability of resources on time Achieve unrealistic objectives Cost and time schedule
Nature size and location Government policies and regulation Cumbersome procedure

External

Criteria for selecting a project

Investment size Technology Marketing Equipment

Classification of Industries
As published under KVIC: Industries based on Minerals Industries based on Forest Material Industries based on Polymer and Chemicals Industries based on Engineering and NonTraditional Power Textile Industry Service Sector Industry Demand based industries Resource based industries

Scope of Entrepreneurship in Small Business Sector

Industrial Sector Agricultural allied industries sector Service Sector

Industrial Sector
Small scale industry occupies an important place in the industrial sector. It has contributed over 40% in the gross industrial production in 1998 basic objectives underlying the development :
Increase in the supply of manufactured goods Promotion of capital formation The development of indigenous entrepreneurial talents and skills Creation of broader employment opportunities

There are 384 items for exclusive purchase from the SSI Problems faced:
Outdated technology Shortage of finance Shortage of raw material Inadequate marketing facilities

Agricultural allied industries sector

Vast scope exists for entrepreneurial activities in this sector. A link between agriculture and allied industries can exploit opportunities in areas of farming, agricultural processing and marketing. Government has given priority to IRDP programme and ensured adequate flow of credit to small and marginal farmers through refinancing facilities

Service Sector
Service sector includes business such as:
Hotel Tourist services Personal services (dry cleaning, beauty shops, photographic studies, etc) Retailing

It is a rapidly expanding sector

Steps taken by the government

Establishment of a network of industrial estates throughout the country. Reservation of number of products for exclusive production to small scale sector. Introduction of ancillarisation programme. Supply of machines on hire purchase basis on easy terms of payment. Technical counseling to small units.

PROJECT FORMULATION AND FEASIBILITY ANALYSIS

Introduction
Step by step investigation of resources and development of project idea Project formulation means feasibility study. It aims at systematic analysis of project potential with the ultimate objective of arriving at an investment decision.

It is the process of examining technical, financial, economic and commercial aspects of a project

Problems faced by Entrepreneur in Project formulation

Selection of Appropriate technology Influence of External Economies

Resource mobilisation
Dearth of Technically qualified personnel Knowledge about Government Regulations

Stages of Project Formulation

Feasibility Analysis Techno-Economic Analysis

Project Design and Network Analysis

Input Analysis

Financial Analysis

Cost Benefit Analysis

Pre-Investment Appraisal

Project Selection
Ideas are translated into project profiles after screening. A project profile consists of following items:
Economic size Profitability Government Policy Utility requirements Capital Cost Cost of Production Raw Material availability Status of Industry or Scope Infrastructure facilities needed

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Criteria for selecting a project: Investment Size Equipment Technology Location Economic Viability Labour Component Working Capital Requirements Power and Water Marketing

SWOT
S - Strengths W- Weaknesses O- Opportunities T-Threats
Of the Organization

Of the Environment

Project Report
Contents of a Project Report:
Introduction Background of the Promoter/entrepreneurs Product Market and Marketing Location Production Process Raw Material Utilities Transport and Communication Manpower Requirement Land and Building Plant and Machinery Cost of Project and Source of Finance Financial Viability of the Project

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Advantages of Project Report:
Submitting proposals for loans, license and permission Quick reference Controlling device Modification and improvement Serves as a road map Foresees requirements Base for feasibility study Indicates profitability Aids in decision making Guides the course of action

PROJECT APPRAISAL

Introduction
Analysis of cost and benefits of a proposed project. Determine viability of the project.

Multi dimensional Analysis.

Generally done by Banks and FIs.

Aspects of Project Appraisal

Economic Organizational

Managerial
Technical
location, site, size and technical feasibility

Financial

Market/commercial

BUSINESS OPPORTUNITIES

Try this! Read aloud, as quickly as possible, the colour in which the words are written but not the actual words

If you merely read the words, you are likely to be using right brain. Whereas, if you read the colours, you are using your left brain.

Attributes
Left Hemisphere
Conscious
Unconscious Rational

Right Hemisphere

Non Rational
Analytical Intuitive Logical Synthesizing

Left Brain and Right Brain

Using left brain skills to harvest right brain ideas. People using left part of the brain are usually logical and analytical. While those who use the right half of the brain are creative, innovative and imaginative.

Creativity and Innovation

Creativity is the ability to bring something new into existence Innovation is the process of doing new things The Creativity process:
Idea Germination Preparation Incubation Illumination Verification

Innovation and Entrepreneurship

Creativity is the seed that inspires entrepreneurship and innovation is the process or entrepreneurship. Innovation is a process that consists of the following elements:
Analytical planning Organising resources Implementation Commercial Application

Technological Innovation
Common problem of technological innovation is the battle between rational, left brain and creative right brain. For a technological innovation to succeed, there are three important people involved and seven important conditions to satisfy:
People:
Creative Source Champion Sponsor

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Conditions:
An outstanding person in an executive leadership position to support strategic decisions that encourage creativity and innovation development. An operational leader to carry out the essential tasks of converting knowledge into a commercial application. A clear need for the application by potential customer to warrant the commitment of resources to the innovation The realization of the product, process or service as useful innovation providing value to the society. Good co-operation among the crucial players and among the diversified functions in the organizations Availability of resources as well as supporting technology in order to succeed in the endeavor. Cooperation and support from external sources who can influence the success of an innovation

ENTREPRENEURIAL OPPORTUNITIES IN SERVICE INDUSTRIES

Introduction to Services
Services are the activities, benefits or satisfaction which are offered for sale or are provided in connection with the sale of goods.

Characteristics of Services
Intangibility Perishability Inseparability Heterogeneity Ownership Simultaneity Quality Measurement Nature of Demand

Business opportunities in Service Sectors

Event Management IT Enabled Services Courier Services Tele Communication Insurance Sector Travel and Tourism Services