UNIT 3

1. What is a project?

• A temporary process, which has a clearly defined start and ends time, a set of tasks, and a
budget, that is developed to accomplish a well-defined goal or objective.

• A temporary effort of sequential activities designed to accomplish a unique purpose

What is project management?

• PMA, the International Project Management Association, defines a project as “a time and
cost-constrained operation to realize a set of defined deliverables up to quality standards and
requirements”.

Definition of IDEA
An Opinion, A conviction, A thought or conception which exist in the mind. Ideas are
instigators. Ideas are business thought starters. Businesses are based on business ideas & the
more realizable the idea, the more its worth.

Importance of Ideas to Business

“There is no way to create wealth without ideas. Most new ideas are created by newcomers.
So, anyone who thinks the world is safe for incumbents is dead wrong.

Brainstorming
 This is the process of thinking through a specific topic to generate several ideas.
 Brainstorming sessions could be formal or informal
 Brainstorming sessions are usually informal since a relaxed atmosphere produces better
ideas.

Focus Groups
 Focus Groups could be selected from the customer base, employees, a research group or
any group with good knowledge on the subject.
 There is a moderator who enables and challenges the group to give off their best.

Research  Library- Research  Internet- Research

These two sources provide industry information and point to sources of niche in the industry

Customer Advisory Boards

 Companies and organizations could set up customer advisory boards that meet regularly
needs, wants challenges and problems.
 The ultimate goal of customer advisory boards is to find out new ideas to confront the
needs, wants, challenges and problems that face the organization.
 Family, Friends, Experiences Bouncing ideas off  Spouses  Family  Friends  Work
Colleagues Life’s Experiences.  need  Customer service experiences  Pleasant accidents
and surprises

Personal Illumination
 Sometimes ideas drop into the mind of an entrepreneur at the spare of the moment and in
the moment of quietness or while staring at a product or thinking about a service, an idea
pops up.
While pondering over a problem or a challenge, ideas are generated.

2. Identification of Business Opportunities

An entrepreneur is a person who foresees the opportunity and tries to explore it by

introducing a new product, a new method of production, a new market, a new source of raw
material, or a new combination of factors of production. Thus, in terms of the Identification
of business opportunities, the entrepreneur is a person who always discovers changes, reacts
to them, and takes advantage, of an opportunity.

Objectives of Identification of Business Opportunities

As regards the objectives for Identification of business opportunities, it may be said that the
entrepreneur always makes attempts to establish new industries, with his qualities.

Thus, the following are the objectives of the Identification of business opportunities:

1. Identification of opportunities by an entrepreneur, in the context of probable industries and to

decide his own role, the scope of work, and relationships, in accordance with the
opportunities.
2. To keep watch over the possible market of the commodity or service to be produced.
3. To decide a high-level group of managers, so that entrepreneurial ventures may be started.
4. To make an assessment of financial resources by making financial forecasts, for industrial
development.
5. To explore the opportunities for possible entry in other areas.
6. To assess the requirements of labour, capital, and materials for the industries.
7. To find out the possibilities of short term and long-term development in various areas of the
economy.
8. To have the desire for technical knowledge, awareness of new opportunities, and acceptance
of the changes.
9. To see the possibilities of diverting the available resources towards achieving the business
objectives.
10. To identify those industries, which are not based on local sources, but which may be
economically considered, in view of future requirements.
11. In response to it, the following factors affecting the Identification of business opportunities
may be mentioned, which should be considered, while identifying the business opportunities.

1. Analysis of Internal Demand

2. Availability of Raw Materials

3. External Assistance

4. Knowledge about Industrial Development

5. Internal Sources

6. Risk in Business Opportunities

7. Performance of Existing Units

8. Promote Entrepreneurial Activity

3. Components of Feasibility Study in Entrepreneurship

Organizational Feasibility Study

 The goal of organizational feasibility is to evaluate management’s ability and the

availability of resources to bring a product or concept to market.
 The organization should assess its management team’s abilities.
 Founders should be honest with themselves about how they rate these areas.

Financial Feasibility Study

 Any task is impossible to carry out without monetary resources.

 The initial money is one of the most crucial charges.
 The extent to which activity generates monetary gains is developed.
 The probable future cash flows are computed.
 As a result, all of these numbers are condensed into a single document.

Economic Feasibility

 A feasibility study determines the economic advantages that are reaped by the firm. It
contributes to determining the extent to which the economic benefits of the notion
outweigh the financial drawbacks.
 An accurate comparison of all the expenditures to be spent and the benefits to be
gained is performed.
  It not only evaluates the project’s feasibility but also steers the firm toward avoiding
an insufficient allocation of resources.

Market and Marketing Feasibility

 Market feasibility is a crucial component of the feasibility study.

 This section contains all of the information on the particular industry.
 The specific market is also examined, as is the future market potential.
 A comprehensive evaluation is required to ensure the success of the firm.
 The competitive landscape has also been prepared.

Technological feasibility

 Another important aspect is the support system necessary for the firm to run
smoothly.
 Variations in logistics options may be explored. It assists in determining the
availability of resources in terms of labor, materials, and related technology.
 The potential of the firm’s technological resources is estimated.
 An evaluation of the technical team’s abilities is conducted.

Legal Feasibility

 Each country’s legal ramifications are different.

 Any legal constraints that may impede company operation must be taken into account.
 This examination investigates all of the legal issues that may arise as a result of the
planned enterprise.

4. Project report for New Business – Format

Below is the sequence of standard format which should be followed while preparing new
business project report:
1. Background of the business
2. Customer's profile
3. Long and short term Corporate Objectives
o To perform a viability assessment of the proposed new business ideas in terms of
marketability, technical feasibility, financing and authorities
o To be able to prepare a relevant business plan
o To recognize fundamental startup issues
4. Market Analysis
o Market description
o Target clients
o Exports and Imports
 o Price structure
5. Financial Assessment
o Investment expenditure and value of the entire project
o Methods of investment
o Anticipated productivity
o Money flows of the project report
6. Marketing Assessment
o Product
o Price
o Place
o Promotion
7. Operational Plan
o Business models
o Production of goods and services
8. Financial Plan
9. Management Structure
10. Business structure
11. SWOT Analysis
o Significant Success aspects depending on Strengths, Weaknesses, Opportunities and
Threats to be faced by the firm in future
12. Appendices
o Break-Even Assessment
o Profit and Loss Synopsis
o Fund Flow Summary

5. Different methods of Project Appraisal

Project appraisal is a costs and benefits analysis of a proposed project with an objective to
adjudge is feasibility. It involves calculating the feasibility of the project before committing
resources to it. Thus, it helps to select the best project.

There are different methods or techniques for project appraisal. These are as follows:

(1) Economic analysis: Economic cost and benefit analysis deal with costs and benefits from
the point of view of the country as a whole. Economic analysis includes the analysis for the
following aspects:

1. Requirements for raw material,

2. Level of capacity utilization,
3. Anticipated sales,
4. Anticipated expenses, and,
5. Probability of profits
(2) Financial analysis: Assessment of the financial requirements both-fixed capital and
working capital falls under financial analysis.

(3) Market analysis: Before the production actually starts the entrepreneur needs to anticipate
the possible market for the product. He/she has to anticipate who will be the possible
customers for his product and where, when and how his product will be sold.

(4) Technical feasibility: Technical feasibility means the adequacy of the proposed plant and
equipment to the product. It includes the availability of land, building, water, power,
transport, communication facilities, raw materials etc.

(5) Management: Management’s ability or competence plays an important role in making an

enterprise successful. Hence, while doing project the managerial competence or talent of the
promoter should be taken into consideration.