UNIT-2

OPPORTUNITY /IDENTIFICATION AND

PRODUCT SELECTION

11/23/2022 BBA 01 Batch(2019-22)

 Learning Objectives
• To identify the business opportunities
- What is a project?
- How projects can be identified?
• To understand procedures to set-up small-
scale industrial unit
- How projects’ feasibility reports are to be made
and why?
• To present a business plan

11/23/2022 BBA 01 Batch(2019-22)

 Identifying business opportunities-
Search for New Ideas
• Opportunity
– To be your own boss
– To provide a product or service
– To implement ideas which generate surplus to the
business
• Qualities of a successful business person are:
– Hard work, skill and Perseverance

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Business Person can be grouped into 2 broad

categories:
1) People who know exactly what they want to
do and are only looking for the opportunities
and resources.
- They have developed many skills those are
needed to get success in their selected field.
- They are also familiar with industry customs and
practices.
11/23/2022 BBA 01 Batch(2019-22)
 Contd…

2) People don’t have definite ideas about what

they’d like to do.
- They may have developed skills during their
education and employment.
- They are not interested.

11/23/2022 BBA 01 Batch(2019-22)

 Potential Sectors for Business Opportunities
- Green Business
- Biotechnology
- Events Mgt.
- IT Enabled Services
- Food Processing Sector
- Mineral Water
- Courier Services
- Insurance sector
- Telecom Sector
- Tourism sector
11/23/2022 BBA 01 Batch(2019-22)
 Project identification

• A PROJECT can be defined as:

“Scientifically developed plan of work with an aim to
achieve a specific objective within a specified time
frame”.
• Three elements of a project are:
- specific objectives
- course of actions
- involve a definite time frame for development

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• A project includes activities which are aimed at:

- Production of goods and/ or services.
- Increase in the capacity of existing plant or
services.
- Increasing the efficiency or productivity of the
existing plant or services.

11/23/2022 BBA 01 Batch(2019-22)

 Classification of Projects

• Quantifiable and Non-Quantifiable projects

QUANTIFIABLE PROJECTS NON-QUANTIFIABLE

PROJECTS
Manufacturing industrial Health Care
development
Power Generation Education
Defence

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Projects named on Sectors

• Agricultural sector
• Transport sector
• Social services sector
• Industry sector
• Mining sector

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Techno-economic projects
a) Intensity factor :
Labour intensive or Capital intensive
b) Demand based:
Based on the demand of the goods whether
raw materials, skills, semi-finished or finished
c) Size of investment based:
For eg: large scale, medium scale or small-scale
projects
11/23/2022 BBA 01 Batch(2019-22)
 Type Mfg. Enterprise Service Enterprise
Micro Up to Rs.25 lakh Up to Rs.10 lakh
Small Rs.25 lakh to Rs.10 lakh to
Rs.5.0 cr. Rs.2.0 cr.
Medium Rs.5.0 cr. to Rs.2.0 cr. to
Rs.10.0 cr. Rs.5.0 cr.

(Values indicate investment in plant & machinery)

11/23/2022 BBA 01 Batch(2019-22)

11/23/2022 BBA 01 Batch(2019-22)
 Project Opportunities

• Peter Drucker an eminent mgt. guru, finds 3

kinds of project opportunities:
- Additive
- Complementary
- Breakthrough

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

i. Additive type:
“An entrepreneur uses the existing
resources and brings change to the existing
business.”
ii. Complementary type:
“Entrepreneur introduces new ideas leading
to changes in the existing business and
evolves new business opportunities.”
11/23/2022 BBA 01 Batch(2019-22)
 Contd…

iii. Breakthrough type:

“Opportunities involves basic changes in both
structure and character of the business.

11/23/2022 BBA 01 Batch(2019-22)

 Identification of project has 3 attributes

• Input characteristics: What project will consume?

Energy, Raw materials, Financial Resources,
Manpower etc.
• Output characteristics: What project is expected to
generate?
• Social cost-benefit characteristics: Impact on
environment, changes in the current equilibrium in
economy and its implications on the society.
11/23/2022 BBA 01 Batch(2019-22)
 Formalities for setting up of a
Small Business Enterprise
1. Selection of a Project
– Product or service selection
– Location selection
– Project feasibility study
– Business plan preparation
– Prepare project profile

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
2. Decide on the constitution
3. Obtain SSI registration
4. Obtain clearances from deptts. as applicable
5. Arrange for land/ shed
6. Arrange for plant and machinery
7. Arrange for infrastructure
8. Prepare project report
9. Apply and obtain finance
10. a. Proceed to implement
b. Obtain final clearance
11/23/2022 BBA 01 Batch(2019-22)
 Product or Service selection

• Careful analysis of business situation

• Examine the pros and cons of the proposed business
• Future demand and supply position of the product

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
• A successful entrepreneur consider following
factors before deciding a suitable project:
- Background and experience of the entrepreneur(s)
- Availability of technology and know-how for the
project
- Marketability of the project/ service
- Investment capacity
- Availability of plant and machinery
- Availability of raw materials
- Availability of proper infrastructure facilities

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
• Many organisations provide information on business
opportunities to get an idea about a product or service:
– District Industry Centres (DICs)
– Technical Consultancy Organisations (TCOs)
– Small Industry Service Institutions (SISIs)
– Banks
– National Industrial Development Corp. (NIDC), New Delhi
– Khadi and Village Industries Commission (KVIC)
– Entrepreneurship Development Institute of India,
Ahmedabad
– National Institute of Entrepreneurship and Small Business
Development (NIESBUD), New Delhi
– SIDBI, Lucknow
11/23/2022 BBA 01 Batch(2019-22)
 Contd…
• In the project conceptualization stage the following factors
related to the product need are to be considered:
- Easy availability of raw-material
- Process technology
- Easy accessibility in the market
- Incentive and support from the Govt.
- Product line - depth, width
- Market information
- Packaging
- Branding
- Warranties
- After sales services

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Products are having export potential, following parameters

need to addressed during selection:
– Export demand conditions
– Internal supply capability
– Complexity of marketing
– Investment limit to penetrate into the market
– Quality specifications are being given by regulatory bodies of various
countries
– Product adaptations
• Some high export potential business areas are:
– Leather garments
– Apparel
– Costume jewellery
11/23/2022 BBA 01 Batch(2019-22)
 Location selection
Some of the major aspects are to be considered:
-- Proximity to market
-- Availability of raw materials
-- Availability of transportation and communication
facilities
-- Availability of incentives/ concessions
-- Govt. policy
-- Availability of suitable infrastructure facilities
-- Convenience for the promoter

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
• A check list of points is to be considered for evaluation
of land/site:
(A) General considerations:
-- Location (city/town/village)
-- Nearest large city (Name and Distance)
-- Distance from major raw material sources
-- Availability of human resource with desired skills
and prevailing wage rates
-- Law and order situation in the area, etc.

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
(B) Industrial infrastructure position:
-- Land: availability and price
-- Existence of an organised industrial estate
-- Water supply (source, distance, quality,
operating authority -PWD, Municipality)
-- Power supply (nearest substation, feeder type
(industrial/rural))
-- Effluent treatment and disposal
-- Bank, transport facility, warehouse facility
-- Professional resource position (various
consultants and advisers)
11/23/2022 BBA 01 Batch(2019-22)
 Contd…
(C) Financial incentive position:
-- Investment subsidy (Central/State govt.)
-- Income Tax Concession
-- Sales Tax Exemption
-- Octroi Exemption, Electricity Duty Exemption,
Local Tax Exemption, etc.

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

(D) Social infrastructure position:

-- Housing: availability, price (ownership and rent),
public housing.
-- Education: Primary, Secondary and University
education facility.
-- Health: Dispensary, Hospitals, Physicians, etc.

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

(E) Site-specific considerations:

-- Direction of town growth w.r.t the site
-- Status of the site (Agricultural/ Non-Agricultural)
-- Access to National/State highway,
-- Proximity to Railway line, National Highway,
State Highway,etc.

11/23/2022 BBA 01 Batch(2019-22)

 Project feasibility study

-- Market analysis
-- Technical analysis
-- Financial analysis
-- Economic analysis (social cost-benefit analysis)
-- Ecological analysis

11/23/2022 BBA 01 Batch(2019-22)

 Market analysis

• It is concerned with two questions:

– What would be the demand of the proposed
product/service in future?
– What would be the market share of the product
under appraisal?

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Therefore the market analyst must provide a wide

variety of info and forecasting methods:
– Consumption trends in the past and present
– Supply position in the past and present
– Production possibilities and constraints
– Product import and export
– Consumer behavior, motivations, preferences, etc
– Distribution channels and marketing policies in use

11/23/2022 BBA 01 Batch(2019-22)

 Technical analysis

• Deals with technical and engineering aspects of a

project.
• It is concerned with:
– Preliminary tests and studies
– Availability of raw materials, power and other inputs
– Appropriate equipment or machinery
– Appropriate Production Process
– Work schedules are realistic
– Proposed technology is appropriate from the social point
of view or not
11/23/2022 BBA 01 Batch(2019-22)
 Financial analysis

• To ascertain whether the proposed project is

financially viable or not.
• Financial appraisal should be conducted on the
following aspects:
– Investment outlay and cost of the project
– Estimated profitability
– BEP
– Cash flows
– PV & NPV
– Levels of risk

11/23/2022 BBA 01 Batch(2019-22)

 Economic analysis

• Social cost-benefit analysis which includes:

– Direct economic benefits and costs of the project
measured in terms of shadow (efficiency) prices
and not in terms of market prices.
– Impact of project on the distribution of income in
the society.
– Contribution of the project towards the
employment in the society.

11/23/2022 BBA 01 Batch(2019-22)

 Ecological analysis

• Projects have ecological implications like power

plants and environment polluting industries like
chemical industries, leather processing industries.
• The main concern in ecological analysis are:
– Possible damage to the environment.
– Cost of restoration.

11/23/2022 BBA 01 Batch(2019-22)

 Project Feasibility study

Generation of ideas

Preliminary work Initial screening

Is the idea prima facie promising

yes No
Plan feasibility analysis Terminate
Analysis
Conduct market analysis Conduct technical analysis
Conduct financial
analysis
YES

Conduct economic & NO

ecological analysis
YES
Evaluation Is the project worthwhile? Terminate
11/23/2022 BBA 01 Batch(2019-22)
Prepare funding proposal
 Business Plan

• Is a document where anyone can plan his/her

business
• Provides an organised and effective response
to a business situation in future
• Necessary for all levels of organisations
(i.e. start-up to growing)
• Used to establish realistic goals or targets to
achieve in future and also determines the
current position of the business
11/23/2022 BBA 01 Batch(2019-22)
 Business Plan Contd…

• A workable business plan has the following

features:
-- Determines where the company needs to go
-- Forewarns of possible roadblocks
-- Formulate responses to contingencies
-- keeps the business on track to reach its
planned goals

11/23/2022 BBA 01 Batch(2019-22)

 Contd…

• Followings points should be keep in mind

while preparing a business plan:
-- Keep target audience in view
-- Business Strategy- core of a business plan
-- Thinking competitively throughout
-- Be realistic
-- Involve people
-- Factual and succinct
• A Business plan should not more than 30-40 pages
including the supportive documents.

11/23/2022 BBA 01 Batch(2019-22)

 Contd…
• A business plan focuses on the following:
- Product, Features, Capacity, Uses
- Market prospects, Selling price and Cost of selling
- Production process and technical arrangements
- Plants and Machinery, suppliers and cost
- Location
- Infrastructure facilities
- Raw material and other requirements
- Manpower
- Working Capital
- Project cost
- Means of finance
- Capacity utilization and income estimates
- Expenditure
- Profit and tax
- Risk analysis
- Other questions (Govt. policy, Govt. clearance and approvals, deadlines of the projects
etc.)

11/23/2022 BBA 01 Batch(2019-22)

 Contents of a business plan

I. Title page
II. Executive summary
III. Company Plan
IV. Marketing plan
V. Financial plan
VI. Supporting documents

11/23/2022 BBA 01 Batch(2019-22)

 Project Profile

• To obtain PRC(Provisional Registration Certificate) from

District Industries Centre (DIC).
• For Land approval from Industrial Areas Development
Board or State Small Industries Development
Corporation (SSIDC) for shed and other infrastructures
like:
– procurement and distribution of scarce raw materials
– supply of machinery on hire-purchase basis
– providing assistance to market the products, etc.

11/23/2022 BBA 01 Batch(2019-22)

 Project Profile Contd…

• Project Profile contains following information heads:

• Introduction
• Promoter (s) background (education, experience, etc)
• Product (s) description (specification, uses, etc)
• Target market and Marketing strategies
• Details of Infrastructure needed
• Plants and Machinery (description, capacity, cost, etc)
• Process details
• Raw materials (requirements, specification, cost, etc)
• Manpower required (types of personnel, their salaries/ wages)
• Cost of the project and means of finance (% of share or bank loans)
• Cost of production and Profitability
11/23/2022 BBA 01 Batch(2019-22)
 Sources of Information
Sources
Unexpected occurrences
Incongruities
Process needs
Industry and market changes
Demographic changes
Perceptual changes
Knowledge-based concepts
11/23/2022
Examples
Unexpected success: Apple Computer
(Microcomputers)
Unexpected tragedy: 9-11 terrorist attack
Overnight package delivery
Sugar-free products
Caffeine-free coffee
Microwave ovens
Health care industry: changing to home health
care
Rest homes or retirement centers for
older people
Exercise (aerobics) and the growing concern
for fitness
Mobile (Cell phone) technology;
pharmaceutical industry; robotics, etc.
BBA 01 Batch(2019-22)
11/23/2022 BBA 01 Batch(2019-22)