Introduction to Innovation

&
Entrepreneurship
Module

Go to Market Strategy…
Dr. Bhaskar Bhowmick
RMSoEE, IIT Kharagpur
• What is GTM Strategy?
Entrepreneurship Insurgent Shared
mission vision
Vision

Balanced Experimen
team tation

Readiness
Persistence Proactive Leadership Entrepreneurship Innovation to fail

Tolerance
Culture to to
adaptability
calculated
risk
Product-
market-fit
Culture to
Customer pre-empt
focused competition
Keep your definition correct…
Self employed
Specific skillset
Customer base
Specialized operation model

Small business
Existing market place
Initial investment
Existing customer inquiries

Startups
Growth orientation
Quick user acquisition
Long term vision

Entrepreneurs
Innovation to market
Solution to a problem
Impact to society
Let’s hear your stories…Ideas
• Individual/ Groups may present their ideas…

• 2 minutes Pitch deck

• Short summary of your thoughts…Alternatives?

• Select one from your group for presentation

• Refine your ideas after this session is over!!!

Let’s hear their stories…
• Idea 1: 2nd year onwards choice
of career- hence the selection of
courses, up-skill, internships

• Idea 2: Selection of foods in

campus… virtual kitchen

• Idea 3: Making a portal of

rooms available in the
guesthouses/ hotels nearby
campus
The Model Oyo
• Started in March 2003… 19 years
• Oyo Rooms is the largest branded network of hotels.
Currently, OYO rooms are operating with more than
450,000 listings in almost 5,000 cities across India, Malaysia,
UAE, Nepal, China, and Indonesia.
• The man behind the great startup which is popular as OYO
Rooms of Oyo rooms is Ritesh Agrawal. He was born
in Bisham in Cuttack, Orissa in the year 1993 on 16th
November.
• If the cost of 1 room/night = Rs. 3000
Oyo rooms get a discount on the bulk reservation, let’s say
50%
Cost to OYO rooms = 3000*50/100= Rs. 1500
• Oyo resells it at Rs. 1800 to customer
• Profit to customer= Rs. 1200
• Profit to OYO is Rs. 300/room.

• Oravel Stays Pvt.Ltd was Ritesh Agarwal’s first startup. • High Cash burn rate
2013 it was re-named as Oyo Rooms to offer budget • Standardization
accommodation.
• Competition
• It acquired Novascotia Boutique Homes on Sep 28, 2017,
AblePlus Solutions Pvt. Ltd. On July 10, 2018, Weddingz on • Malpractices
Aug 13, 2018, Innov8 Co-working on March 15, 2019,Qianyu
Islands on March 26, 2019, Leisure Group on May 1, 2019. • The New business model of Oyo Rooms is Fully stack and
Franchise Business since 2018.
• OYO has got 12 funding rounds until now. In which it has
raised for about $ 1.7B.
 Idea has no power, unless… converted to
• Customer solution
• Customer Delight- Value the reason to buy

• Customer cost
• Customer Mind- Space

• Customer Convenience

• Customer Moment-Opportunity

• Customer Communication
Go to Market… Relates Ideas to Market
• Understanding the Market need

• Product – Market fit

• Customer Engagement

• Continued Innovation

• Timing of product launching

Market Fit: Failures

Compatibility? Safety? Price? Timing?

Adaptation? Aspiration?
How Start-up Continue with success?
• 42% of the well funded ventures fail as they want to sell something
that does not match with continuous changing demand- Market fit
Remedy: Validated learning

• 29% of the well funded ventures fail as they run out of cash
Remedy: Understand finance and do the projected cash flow.

• 23% fail due to dis-harmony among founders

Remedy: follow the time-tested team building process
Where to fit?

What was the case for Lytt?

Creativity Customer Competition Conceptualizing Climate
Creativity
Find an USP/ Mantra for…

Belief Trust
Design Thinking in a Nutshell…
Identify the Problem statement
• Catch 22 in Business… See the Options not the problems

Learning by Doing

Visualize the option

Select the chosen design

• Any Prior Idea? “No”

• Who invented it? “Brain storm”
• Did you play with it? “Messing
around”
How Ideas are generated?
• R& D outputs

• Pain Points realized

• Opportunities in market

• Technology driven solutions

• And…Brainstorming
Can Creativity be learned?
• Pain Points • Solutions/ Features

Master the Craft

Deep conviction for the solution

Surrender your biases- preconceptions

Technique of inner looking

The Eureka-Aha Moment
Explicate and Replicate
The thinking process
• Design in moving undesirable situation to desirable one (Herbert
Simon)

• People first in a problem solving journey- Start questioning

• Problem being the middle of the Tree, Leaves are the possible effects,
and Roots are the causes

• Question, Do I have everything I need to solve the problem?

• Reframe the problem and get to the root cause of the problem
Build an MVP
• List the pain points

• Identify the Features

• Prioritise the features

• See the technological feasibility

• Draw it on board/ CAD Model/ paper Model

Value Proposition Canvas
Conceptualizing
Conceptualizing Value
Value
Customer
The Customer…
• Existing Customer?
• Segmenting

• Targeting • Future Customer?

• Positioning
• Purchasing Power?
• Communication plan
• Synergy?
Segmenting
• Demography
• Age, Sex, income, occupation family pattern

• Psychographic
• Opinions, attitudes, interests, attentions, life-style

• Behavioral
• Occasions, benefits sought, loyalties, usage rate, user status, buyer
readiness stage
Targetting
Market Positioning
• Unique selling proposition

• Clear differentiation

• Earning credibility

• Clear communication
• Competition
Competition…
• Industry Rivalry? (Too many or Too less)

• Any specific advantages by the players?

• Any existing Barrier to entry? Exit?

• Basis of Competition existing players?

Threat of Rivalry
• Large number of competing firms

• Competing firms having same influence

• Slow industry growth

• Lack of product differentiation

• Large productive capacity increments

• Climate
Climate
• Political

• Economic

• Social

• Legal
How should I evaluate acceptability …
• List your ideas
• Name of your idea (Affiliation / Association)
• Buy a domain name (Raw materials!!!)
• Make a landing page (MVP)
• Make a logo (Prototype)
• Defining your idea (What does your idea do+ What does your idea solve)
• Create a Demo page (Demonstration)
• Sell:
• Market your landing page; Facebook/ Instagram/ Google ….Interest
• Cost per click ….Attention
• Ask Customer detail… Desire
For established companies to evaluate new projects: Go for Value Hierarchy
Go-To- Market – Roll out your Product
• Launching style
• Big Bang
• Limited Roll out
• Launching Time
• Occasions
• Lean
• Launching Follow-up communication
• Sales Feedback
• Service Feedback
A quick Reality check…

• Find the important elements for

starting up your venture and its
future success for example
funding, Team, Idea, Business
plan, Quality etc…

• Prioritize the four elements

• Rank them and write in chat box

Someone from the class join me in doing the Analytics
We are discussing GTM when…
thank you
Let’s crack…

What are the options available?

3 million masks are being disposed every minute across the globe!!!
 Economic Feasibility

Introduction to Innovation and Entrepreneurship

(EP21201)
Module B: Startup Economics
© Dr. Prabha Bhola
RMSoEE, IIT Kharagpur
Feasibility
• Feasibility study, is an analysis of the viability of an idea. It assesses the enterprise’s ability to
carry a project
• This analytical tool used during the planning phase shows how a business would operate under a
set of assumption - technology used, facilities and equipment, capital needs, and other financial
aspects
• The study shows whether the project create a technical and economically feasible concept
• Check whether the enterprise has the required tools, technology, efficient workforce and
necessary resources or not
• The feasibility study also aware of the inherited risks in the project and determines whether the
project is able to generate sufficient returns (ROI) as expected (i.e. the profitability of the project)
Feasibility Study – Examples
Examples of the feasibility study can be observed in our day to day life:
• When a housewife inspects the quality of product she is purchasing from a grocery store,
she is actually doing a material quality feasibility test.
• Farmer in order to eliminate the use of pesticides studies the operational and economic
feasibility of organic methods of farming and its consequences on the output and quality
of the crop.
• Due to increasing fuel rates and air pollution, a team of young entrepreneurs in order to
launch an electric vehicle performs technical, resource and economic feasibility tests.

Economic Feasibility :
• It refers to the analysis of the cost-effectiveness of a project (idea) in order to
determine whether the company (entrepreneur) should undertake the project on the
basis of profitability or not.
IT/ IS Business Idea: Economic Feasibility
• Investments in IT have become crucial for firms to improve the quality of their products/ services.
• “IT spending has grown 166 percent per decade since the 1970s as companies looked to
technology as the “silver bullet” to spur their business growth” (Cohan, 2005)
• Investing in IT/ IS is very crucial for all businesses in every industries. For e.g., foodservice
operators must adopt technology as more than simply a cost of doing business. They must view it
as a tool to help them attain their strategic business objective.
• There are numerous possible IT projects that firms could invest in, such as, ecommerce, ERP
system, new software development, etc.
• Due to limited resources and time, companies must wisely choose to invest. Therefore, the
feasibility study is an integral part during the planning phase of the system development life cycle.
• One of the feasibility factors that need to be assessed is economic feasibility by doing the cost-
benefit analysis, using financial techniques, like time value of money or break-even point analysis.
 Estimation
• Estimation is to figure out the approximate result which is usable even if input data may be incomplete or uncertain. Estimating is
the main part of feasibility analysis.
• In doing the estimation for IT/IS project, there are four major variables that need to be considered - time, requirements,
resources (cost, labor, materials, infrastructure), and risks
• Therefore, making good estimates of time and resources is crucial.
• Underestimating may cause inadequacy of time, money, infrastructure, materials, or people to complete the project while
overestimating needs can lead to reject or postpone the project because it is too expensive.
• According to the article in developer.com, Estimates can be roughly divided into three types:
 Fair estimates: This is a very good estimate. It will be only 25% to 50% off the actual value. It is possible when you are very
familiar with the project as you may have done it many times before, such as maintenance type project where the fixes are
known, and has been done before.
 Rough estimates: The estimate is closer to the actual value. It will be about 50% to 100% off the actual value. Rough estimates
are possible when working with well-understood needs and one is familiar with domain and technology issues.
 Ballpark or order of magnitude: The estimate would fall within two or three times the actual value. Most estimation, especially
for a new project, fall within this type. Some may think that this type of estimation is close to no estimate at all. However, they
are very valuable because they give the organization and project team some idea of what the project is going to need in terms of
time, resources, and money. It is better to know that project is going to take between two and six months to do rather than have
no idea how much time it will take at all.
Detailed estimates for some items rather than others may arise. For e.g., a rough estimate may be provide of the infrastructure need
but give only an order of magnitude of the people and time needed.
 Estimation Technique for new projects (Order of magnitude)
1. Break the project down into different tasks needed.
2. Evaluate each task on two scales: complexity and size
of work. Tasks effectively fall into one of nine
combinations of complexity and size.
• less complex task may still involve a large amount of work, such
as, loading a database from paper forms
3. For each combination, define an expected amount of
time and resources required. For example,
• low complexity and small-size tasks will take one week at most
• medium complexity and small-size tasks will take three weeks
• These weighing factors will differ based on team and project and
should be reviewed after the project to get better values next
time
4. Add together all these values for each task to get an
estimate of time and resources required.
Estimation Technique familiar projects (Rough or Fair)
According to Murthi (2002) article in developer.com, system analyst could estimate familiar projects
by doing Rough or Fair estimates:
1. People who will do the actual work are the best people to do these estimates.
2. One can add up all the estimates from different people to get final estimates.
3. Ensure to collect estimates of time, people, infrastructure, and material needs.
4. Break down tasks to as detailed a level as possible.

Cost Estimation
Top-down approach:
Cost is derived from a business analysis of the major project components, or start with the owner’s expectations on the
range of costs. Then, figure out what you can deliver for those numbers.

Bottom-up approach:
Cost is derived by accumulating estimates from the people responsible for various components. By doing the bottom-up
approach, one would break down a task into small components, estimate each piece, and add the estimate together.
 Description Advantage Disadvantage

Expert Using experts in both software
Judgements development and the application
domain to predict software costs
Estimation by Using the cost of a similar project in
Analogy the same application domain
Relatively cheap Very inaccurate if there are
no experts!
Accurate if experts have
direct experience of similar
systems
Accurate if project Impossible if no comparable
data available project has been tackled

Needs systematically
maintained cost database
Parkinson’s Law Using any available resources No overspend System is usually
unfinished
Pricing to Win The project costs whatever the Get the contract Probability that customer
customer has to spend on it gets the system he or she
wants is small

Costs do not accurately

reflect the work required
Algorithmic Cost Cost is estimated as mathematical
Modeling function derived from study of
historical costing data
Cost/ Benefit Analysis
• When talking about the cost of IT/IS project, first think of the tangible costs that are easily to determine and estimate, such as hardware
and software cost, or labor cost. However, there are also some intangible costs, such as loss of goodwill, or operational inefficiency.
• One methodology for determining the costs of implementing and maintaining IT is Total Cost of Ownership (TCO). It is a financial estimate
to help consumers and enterprise owners assess direct and indirect costs. TCO is holistic assessment which implies an all-encompassing
costs associated with IT investments, including capital investment, license fees, leasing costs, and service fees, direct (budgeted) and
indirect (unbudgeted) labor expenses
• Following cost are identified and offered statement on the financial impact of deploying IT during its whole life-cycle:
End-user computer Hardware & Software Hardware warranties and Server hardware and
Hardware purchase costs deployment costs maintenance costs software costs
Software license purchase Software license Network hardware and Backup and Recovery
costs tracking costs software costs Process costs
Operations Infrastructure Infrastructure (floor IT Personnel costs Technology training
Costs space) costs costs of users and IT
staff
Testing costs Audit costs Diminished performance "C" Level
Insurance costs Migration costs incidents (i.e. users Management Time
having to wait) costs
Cost to upgrade or Cost for electricity and Cost of Security Breaches Costs associated with
scalability cooling (in loss of reputation and failure or outage
recovery cost)

• On the other hand, IT/IS projects can provide many benefits, both tangible and intangible, to an organization. The tangible benefit, such as
cost saving or increase in revenue, would be easier to estimate while intangible benefits are harder to quantify
 Break- Even Analysis
• Break-even analysis is a type of cost benefit analysis to identify at what point (if ever) benefits equal costs
• The break-even point is usually expressed as the amount of revenue that must be realized for the firm to
have neither profit or loss. It expresses a minimum revenue target

𝒀𝒀𝑩𝑩𝑩𝑩𝑩𝑩𝒀𝒀𝒀𝒀 𝑵𝑵𝑵𝑵𝑵𝑵 𝑪𝑪𝑩𝑩𝑪𝑪𝑪𝑪𝑪𝑪𝒀𝒀𝑹𝑹𝑪𝑪 − 𝑶𝑶𝑬𝑬𝑩𝑩𝑩𝑩𝑩𝑩𝒀𝒀𝒀𝒀 𝑵𝑵𝑵𝑵𝑵𝑵 𝑪𝑪𝑩𝑩𝑪𝑪𝑪𝑪𝑪𝑪𝒀𝒀𝑹𝑹𝑪𝑪

𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩 − 𝑬𝑬𝑬𝑬𝑩𝑩𝑬𝑬 𝑹𝑹𝑩𝑩𝑹𝑹𝑹𝑹𝑹𝑹 =
𝒀𝒀𝑩𝑩𝑩𝑩𝑩𝑩𝒀𝒀𝒀𝒀 𝑵𝑵𝑵𝑵𝑵𝑵 𝑪𝑪𝑩𝑩𝑪𝑪𝑪𝑪𝑪𝑪𝒀𝒀𝑹𝑹𝑪𝑪

A system analysts estimate the cost for the new system as

$42,500 one time investment for developing, updating
hardware, and user training. Also, firm needs to pay
$28,500 each year for software maintenance, incremental
communication cost, and supplies. On the other hand, the
system will provide approximately $50,000 per year.
Assume the expected rate of return (discount rate) is 12%.
 Payback Period (PP)
is amount of time required for an investment to generate sufficient cash flows to
recover its initial cost. Payback period is similar to the break-even analysis, except
the fact that payback period ignores the concept of time value of money. (Baker
and Powell)

Profitability Index (PI)

shows the relative profitability of any investment. It equal to the present value of
cash inflow divided by present value of cash outflow. (Baker and Powell)

Break-even point analysis is a measurement system that calculates

the margin of safety by comparing the amount of revenues or
units that must be sold to cover fixed and variable costs associated
with making the sales.

𝑭𝑭𝑹𝑹𝑭𝑭𝑩𝑩𝑭𝑭 𝑪𝑪𝑹𝑹𝑪𝑪𝑹𝑹𝑪𝑪
𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩 − 𝑬𝑬𝑬𝑬𝑩𝑩𝑬𝑬 𝑵𝑵𝑹𝑹𝑹𝑹𝑬𝑬𝑹𝑹 𝑹𝑹𝑬𝑬 𝑼𝑼𝑬𝑬𝑹𝑹𝑹𝑹𝑪𝑪 =
𝑺𝑺𝑩𝑩𝒀𝒀𝑩𝑩𝑪𝑪 𝒑𝒑𝑩𝑩𝑹𝑹𝒑𝒑𝑩𝑩 𝒑𝒑𝑩𝑩𝑩𝑩 𝒖𝒖𝑬𝑬𝑹𝑹𝑹𝑹 − 𝑵𝑵𝑩𝑩𝑹𝑹𝑩𝑩𝑩𝑩𝑽𝑽𝒀𝒀𝑩𝑩 𝒑𝒑𝑹𝑹𝑪𝑪𝑹𝑹 𝒑𝒑𝑩𝑩𝑩𝑩 𝒖𝒖𝑬𝑬𝑹𝑹𝑹𝑹

𝑭𝑭𝑹𝑹𝑭𝑭𝑩𝑩𝑭𝑭 𝑪𝑪𝑹𝑹𝑪𝑪𝑹𝑹𝑪𝑪
𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩 − 𝑬𝑬𝑬𝑬𝑩𝑩𝑬𝑬 𝑵𝑵𝑹𝑹𝑹𝑹𝑬𝑬𝑹𝑹 𝑹𝑹𝑬𝑬 𝑼𝑼𝑬𝑬𝑹𝑹𝑹𝑹𝑪𝑪 =
𝑪𝑪𝑹𝑹𝑬𝑬𝑹𝑹𝑩𝑩𝑹𝑹𝑽𝑽𝒖𝒖𝑹𝑹𝑹𝑹𝑹𝑹𝑬𝑬 𝑴𝑴𝑩𝑩𝑩𝑩𝑴𝑴𝑹𝑹𝑬𝑬 𝒑𝒑𝑩𝑩𝑩𝑩 𝒖𝒖𝑬𝑬𝑹𝑹𝑹𝑹

𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩 − 𝑬𝑬𝑬𝑬𝑩𝑩𝑬𝑬 𝑵𝑵𝑹𝑹𝑹𝑹𝑬𝑬𝑹𝑹 𝑹𝑹𝑬𝑬 𝑫𝑫𝑹𝑹𝒀𝒀𝒀𝒀𝑩𝑩𝑩𝑩𝑪𝑪 = 𝑺𝑺𝑩𝑩𝒀𝒀𝑩𝑩𝑪𝑪 𝒑𝒑𝑩𝑩𝑹𝑹𝒑𝒑𝑩𝑩 𝒑𝒑𝑩𝑩𝑩𝑩 𝒖𝒖𝑬𝑬𝑹𝑹𝑹𝑹 𝑿𝑿 𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩𝑩 𝑬𝑬𝑬𝑬𝑩𝑩𝑬𝑬 𝒑𝒑𝑹𝑹𝑹𝑹𝑬𝑬𝑹𝑹 𝑹𝑹𝑬𝑬 𝑼𝑼𝑬𝑬𝑹𝑹𝑹𝑹𝑪𝑪
 Target Price Cost of goods sold 3.25 INR
How to price your product Production Time 2.00 INR

• Add up your variable costs (per product) Packaging 1.78 INR

Promotional materials 0.75 INR
• Add a profit margin
Shipping 4.50 INR
• Don't forget about fixed costs Affiliate commissions 2.00 INR
Three steps to calculating a sustainable price for your product Total per-product cost 14.28 INR
 how much each unit costs you, is your cost of goods sold 𝑻𝑻𝑩𝑩𝑩𝑩𝑴𝑴𝑩𝑩𝑹𝑹 𝑵𝑵𝑩𝑩𝑹𝑹𝒑𝒑𝑩𝑩 =
𝑵𝑵𝑩𝑩𝑩𝑩𝑹𝑹𝑩𝑩𝑽𝑽𝒀𝒀𝑩𝑩 𝑪𝑪𝑹𝑹𝑪𝑪𝑹𝑹 𝒑𝒑𝑩𝑩𝑩𝑩 𝒑𝒑𝑩𝑩𝑹𝑹𝑭𝑭𝒖𝒖𝒑𝒑𝑹𝑹
 Simple list for per unit variable cost can be as given in the table 𝟏𝟏 − 𝑫𝑫𝑩𝑩𝑪𝑪𝑹𝑹𝑩𝑩𝑩𝑩𝑭𝑭 𝑵𝑵𝑩𝑩𝑹𝑹𝑪𝑪𝑹𝑹𝑹𝑹 𝑴𝑴𝑩𝑩𝑩𝑩𝑴𝑴𝑹𝑹𝑬𝑬 𝑩𝑩𝑪𝑪 𝑭𝑭𝑩𝑩𝒑𝒑𝑹𝑹𝒅𝒅𝑩𝑩𝒀𝒀

 Add a profit margin say you want to earn a 20% profit margin on your product on top of your variable cost. When
you’re choosing this percentage, it’s important to remember two things.
1. You haven’t included your fixed costs yet, so you will have costs to cover beyond just your variable costs.
2. You need to consider the overall market, and make sure that your price with this margin still falls within the
overall “acceptable” price for your market. If you’re 2x the price of all of your competitors, you might find sales
become challenging depending on your product category.
 Once you’re ready to calculate a price, take your total variable costs, and divide them by 1 minus your desired
profit margin, expressed as a decimal. For a 20% profit margin, that’s 0.2, so divide your variable costs by 0.8.
 In this case, that gives you a base price of 17.85 INR for your product, which you can round up to 18.00 INR.
 Economic Feasibility
 Can the bottom line be quantified yet?
 Very early in the project…
 a judgement of whether solving the problem is worthwhile.
 Once specific requirements and solutions have been identified…
 …the costs and benefits of each alternative can be calculated

 Cost-benefit analysis
 Purpose - answer questions such as:
 Is the project justified (I.e. will benefits outweigh costs)?
 What is the minimal cost to attain a certain system?
 How soon will the benefits accrue?
 Which alternative offers the best return on investment?
 Examples of things to consider:
 Hardware/software selection
 Selection among alternative financing arrangements (rent/lease/purchase)
 Difficulties
 benefits and costs can both be intangible, hidden and/or hard to estimate
 ranking multi-criteria alternatives

© Easterbrook 2004
 Benefits
 Tangible Benefits
Readily quantified as $ values
Examples:
 increased sales
 cost/error reductions
 increased throughput/efficiency
 increased margin on sales
 more effective use of staff time
 Intangible benefits
Difficult to quantify
 But maybe more important!
 business analysts help estimate $ values
Examples:
 increased flexibility of operation
 higher quality products/services
 better customer relations
 improved staff morale
 How will the benefits accrue?
When - over what timescale?
Where in the organization?
© Easterbrook 2004
Costs
 Development costs (OTO)
Development and purchasing costs:
 Cost of development team
 Consultant fees
 software used (buy or build)?
 hardware (what to buy, buy/lease)?
 facilities (site, communications, power,...)
Installation and conversion costs:
 installing the system,
 training personnel,
 file conversion,....
 Operational costs (on-going)
System Maintenance:
 hardware (repairs, lease, supplies,...),
 software (licenses and contracts),
 facilities
Personnel:
 For operation (data entry, backups,…)
 For support (user support, hardware and
software maintenance, supplies,…)
 On-going training costs
 Example: costs for small Client-Server project
Personnel:
2 System Analysts (400 hours/ea $35.00/hr) $28,000
4 Programmer/Analysts (250 hours/ea $25.00/hr) $25,000
1 GUI Designer (200 hours/ea $35.00/hr) $7,000
1 Telecommunications Specialist (50 hours/ea $45.00/hr) $2,250
1 System Architect (100 hours/ea $45.00/hr) $4,500
1 Database Specialist (15 hours/ea $40.00/hr) $600
1 System Librarian (250 hours/ea $10.00/hr) $2,500

Expenses:
4 Smalltalk training registration ($3500.00/student) $14,000

New Hardware & Software:

1 Development Server (Pentium Pro class) $18,700
1 Server Software (operating system, misc.) $1,500
1 DBMS server software $7,500
7 DBMS Client software ($950.00 per client) $6,650

Total Development Costs: $118,200

PROJECTED ANNUAL OPERATING COSTS

Personnel:
2 Programmer/Analysts (125 hours/ea $25.00/hr) $6,250
1 System Librarian (20 hours/ea $10.00/hr) $200

Expenses:
1 Maintenance Agreement for Pentium Pro Server $995
1 Maintenance Agreement for Server DBMS software $525
Preprinted forms (15,000/year @ .22/form) $3,300

Total Projected Annual Costs: $11,270

© Easterbrook 2004
 Analyzing Costs vs. Benefits
 Identify costs and benefits
 Tangible and intangible, one-time and recurring
 Assign values to costs and benefits

 Determine Cash Flow

 Project the costs and benefits over time, e.g. 3-5 years
 Calculate Net Present Value for all future costs/benefits
 determines future costs/benefits of the project in terms of today's dollar values
 A dollar earned today is worth more than a potential dollar earned next year

 Do cost/benefit analysis
 Calculate Return on Investment:
 Allows comparison of lifetime profitability of alternative solutions.
ROI = Total Profit = Lifetime benefits - Lifetime costs
Total Cost Lifetime costs
 Calculate Break-Even point:
 how long will it take (in years) to pay back the accrued costs:
@T (Accrued Benefit > Accrued Cost)

© Easterbrook 2004
 Calculating Present Value
 A dollar today is worth more than a dollar tomorrow…
 Your analysis should be normalized to “current year” dollar values.

 The discount rate

 measures opportunity cost:
 Money invested in this project means money not available for other things
 Benefits expected in future years are more prone to risk
 This number is company- and industry-specific.
 “what is the average annual return for investments in this industry?”

 Present Value:
 The “current year” dollar value for costs/benefits n years into the future
 … for a given discount rate i
1
Present_Value(n) = (1 + i)n

 E.g. if the discount rate is 12%, then

 Present_Value(1) = 1/(1 + 0.12)1 = 0.893
 Present_Value(2) = 1/(1 + 0.12)2 = 0.797
© Easterbrook 2004
 Net Present Value
 Measures the total value of the investment
 …with all figures adjusted to present dollar values
NPV = Cumulative PV of all benefits - Cumulative PV of all costs

Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4

Dev. Costs ($100,000)
Oper.Costs ($4,000) ($4,500) ($5,000) ($5,500)
Present Value 1 0.893 0.797 0.712 0.636
Time-adj Costs ($100,000) ($3,572) ($3,587) ($3,560) ($3,816)
Cumulative Costs ($100,000) ($103,572) ($107,159) ($110,719) ($114,135)

Benefits 0 $25,000 $30,000 $35,000 $50,000

T-adj Benefits 0 $22,325 $23,910 $24,920 $31,800
Cumulative Benefits 0 $22,325 $46,235 $71,155 $102,955
Net Costs+Benefits ($100,000) ($81,243) ($60,924) ($39,564) ($11,580)

 Assuming subsequent years are like year 4…

 the net present value of this investment in the project will be:
 after 5 years, $13,652
 after 6 years, $36,168

© Easterbrook 2004
© Easterbrook 2004
 Computing the payback period
 Can compute the break-even point:
 when does lifetime benefits overtake lifetime costs?
 Determine the fraction of a year when payback actually occurs:

| beginningYear amount |
endYear amount + | beginningYear amount |
 For our last example, 51,611 / (70,501 + 51,611) = 0.42
 Therefore, the payback period is approx 3.4 years

© Easterbrook 2004
 Return on Investment (ROI) analysis
 For comparing overall profitability
 Which alternative is the best investment?
 ROI measures the ratio of the value of an investment to its cost.

 ROI is calculated as follows:

ROI = Estimated lifetime benefits - Estimated lifetime costs
Estimated lifetime costs
or:
ROI = Net Present value / Estimated lifetime costs
 For our example
 ROI = (795,440 - 488,692) / 488,692 ≈ 63%,
 or ROI = 306,748 / 488,692 ≈ 63%

 Solution with the highest ROI is the best alternative

 But need to know payback period too to get the full picture
 E.g. A lower ROI with earlier payback may be preferable in some circumstances

© Easterbrook 2004
 Feasibility Study Contents
1. Purpose & scope of the study 5. Possible alternatives
 Objectives (of the study)  …including ‘do nothing’.
 who commissioned it & who did it,
6. Criteria for comparison
 sources of information,
 definition of the criteria
 process used for the study,
 how long did it take,… 7. Analysis of alternatives
 description of each alternative
2. Description of present situation
 evaluation with respect to criteria
 organizational setting, current
 cost/benefit analysis and special
system(s).
implications.
 Related factors and constraints.
8. Recommendations
3. Problems and requirements
 what is recommended and implications
 What’s wrong with the present
 what to do next;
situation?
 E.g. may recommend an interim
 What changes are needed? solution and a permanent solution

4. Objectives of the new system. 9. Appendices

 Goals and relationships between them  to include any supporting material.

© Easterbrook 2004
ABC Pvt. Ltd. wants to invest in a new portable solar electricity product with a life of 8 years.
• Mr. Y, the owner needs to perform an economic feasibility study about the project and submit a report. He collected the
following data to conduct the feasibility analysis:
 State Govt. to promote solar energy provides a tax-free subsidy for $1.25 million on initial capital investment
 The equipment cost at the beginning of the project will be $17.5 million. The project also requires some
additional equipment at the end of the third year for $1.25 million
 The total life of the original equipment is 8 years with zero resale/ salvage value. Life of additional
equipment is 5 years and a salvage value of $125,000
 The working capital requirement at the initiation of the project is $2 million. The working capital will get fully
realized in the ending year
 Full financing for the project is done by issuing equity
 The estimated sales volume over the 8 year period is:
Years 1 2 3 4-5 6-8
Units 72,000 108,000 260,000 270,000 180,000
 Expected Sales price = $120 per unit.
 Variable expenses will amount to 60% of sales revenue
 The fixed operating cost will amount to $1.8 million per year
 The loss of any year will be set- off from the profits of the subsequent two years.
 ABC is subjected to a tax rate of 30%. It follows the straight-line method of depreciation.
Mr. Y calculates the net present value (NPV) of the project by discounting the cash-flows at 12%. If NPV is
positive then the project is feasible and the company can consider the project to be taken.
Solution:
Solar Electricity Project – ABC Pvt. Ltd.

Statement of Initial Cash Outflow Depreciation = Asset Cost – Salvage Value / Useful Life of Asset

Total Depreciation = $2,187,500 + $225,00

Total Depreciation = $2,412,500
Calculation of Depreciation
Given,
Statement of Profit Before Tax (PBT) Statement of Net Cash Inflow

Statement for Calculation of Discounted Cash Flows

• The company incurs losses in its first year; therefore it is liable to pay zero taxes.
• Also, the company is allowed to adjust its losses for two subsequent years for tax
purposes. Hence profit before taxes (PBT) for second year will be reduced by losses
of first year to (i.e. $ 1,197,000 – 532,000 = 665,000)

At the end of year 3, additional Equipment purchased which

caused cash outflow of $1,250,000
At the end of year 8, initially invested amount against working
capital get realized = $2,000,000
At the end of year 8, the additional equipment gets sold at its
salvage value = $125,000
Total cash inflow for year 8 = $ (2000000 + 125000) = $2,125,000
NPV Calculation Advice
• Owner Mr. Y after studying the costs and benefits associated
with the project concluded that since NPV (Net Present
Value) is positive and high, ABC should accept the project on
the basis of Economic Feasibility Analysis.
• However, if the NPV of the project comes out to be negative
(-ve) and the final verdict of Mr. Y suggests to drop the
project and should not produce the solar products, then the
loss incurred by the company is limited to the salary of
project manager and other basic costs. But the valuable
NPV Calculation resources and time are saved and the company can consider
NPV = Trade Discount Cash Inflows – Initial Cash Outflows carrying some other profitable project.
NPV = $ (27,553,937 – 17,000,000)
NPV = $10,553,937

Conclusion
The feasibility study is the most important test that every entity should perform in advance while undertaking a new project or idea
It gives a clear picture of the proposed project and helps the management to choose the best out of various alternatives available by
providing valid reasons to accept one and reject other(s).
Feasibility analysis enhances the rate of success by saving an entity’s resources, time and money.
Feasibility study is applicable in various dynamics, for example,
an automobile prototype is a tool for the feasibility study,
an experiment on rats to develop a new medicine is a procedure of feasibility analysis,
checking the configuration and features before purchasing a laptop resembles feasibility tests.
Role of Entrepreneurial
Finance

0
 Entrepreneurial Finance
• application and adaptation of financial tools and techniques
to the planning, funding, operation, and valuation of an
entrepreneurial venture

• focuses on the financial management of a venture as it

moves through its life cycle, beginning with its development
stage & continuing through to when the entrepreneur exists
or harvests the venture

• Financial distress occurs when cash flow is insufficient to

meet current debt obligations. Anticipating and avoiding
financial distress is one of the main reasons to study and
apply entrepreneurial finance
0
 Financial Planning
● Short run planning involves projecting monthly financial
statements for one to two years indicating whether the venture
is expecting a cash shortage as the venture needs adequate
cash to survive the short run.

● Long term planning involves projecting annual statements five

years forward. While the reliability of longer-term projections
may be lower, it is important to anticipate large financial needs.
Meeting those needs may dictate several rounds of financing in
the first few years of operations.

0
 Successful Venture Life Cycle
● Venture Life Cycle:
stages of a successful venture’s life from
development through various stages of revenue
growth)
• Development Stage:
period involving the progression from an idea to a promising
business opportunity

• Startup Stage:
period when the venture is organized, developed, and an initial
revenue model is put in place

0
0
 Successful Venture Life Cycle

• Survival Stage:
period when revenues start to grow and help pay some, but
typically not all, of the expenses

• Rapid-Growth Stage:
period of very rapid revenue and cash flow growth

• Maturity Stage:
period when the growth of revenue and cash flow continues
but at a much slower rate than in the rapid-growth stage

0
Financing Through the Successful Venture
Life Cycle
1. Development Stage (Seed Financing)
2. Startup Stage (Startup Financing)
3. Survival Stage (First-Round Financing (both
suppliers and customers become important sources of financing) )

4. Rapid-Growth Stage (Second-Round

Financing, Mezzanine Financing, & Liquidity
Stage Financing)
5. Maturity Stage (Obtaining Bank Loans,
Issuing Bonds, & Issuing Stock)

0
 Selected Financing Definitions

● Seed Financing:
funds needed to determine whether the idea can be converted
into a viable business opportunity

● Startup Financing:
funds needed to take the venture from having established a
viable business opportunity to initial production and sales. It is
usually targeted at firms that have assembled a solid
management team, developed a business model and plan, and
are beginning to generate revenues.

0
 Selected Financing Definitions
● Venture Capital:
early-stage financial capital often involving substantial risk of total loss
● Venture Capitalists:
individuals who join in formal, organized firms to raise and distribute
venture capital to new and fast-growing ventures
● Business Angels:
wealthy individuals operating as informal or private investors who
provide venture financing for small businesses
● Investment Banker:
individual working for an investment bank who advises and assists
corporations in their security financing decisions and regarding
mergers and acquisitions

0
 Selected Financing Definitions
● First Round Financing:
equity funds provided during the survival stage to cover the cash
shortfall when expenses and investments exceed revenues

● Second Round Financing:

financing for ventures in their rapid-growth stage to support
investments in working capital

● Mezzanine Financing:
funds for plant expansion, marketing expenditures, working capital,
and product or service improvements

0
 Selected Financing Definitions
● Bridge Financing:
temporary financing needed to keep the venture afloat until the
next offering
● Initial Public Offering (IPO):
a corporation’s first sale of common stock to the investing public
● Seasoned Securities Offering:
the offering of securities by a firm that has previously offered the
same or substantially similar securities

0
0
 Seed & Startup Financing
● Financial Bootstrapping
minimizing need for financial capital & finding unique ways
of financing a new venture
● Business Angels
wealthy individuals who invest money in fledgling ventures
in exchange for the excitement of launching a business & a
share in any financial rewards

0
Lending

0
0
0
 Why Ventures May Not Get Debt Financing

● Large portion of startup assets are intangible

and provide no collateral
● Receivables either don’t yet exist or
collection history is inadequate
● Not economically plausible for bank to use
management involvement in a defaulting new
venture
● Risk characteristics not a good match to
demand deposits or other bank liabilities

0
 Other Government Financing Programs

● There are many state and municipal

agencies that have been charged with
supporting the formation and growth of small
businesses

0
 Design Thinking and Affordable Innovation:
by

Dr. P K Dan
IIT Kharagpur

Course: Introduction to Innovation and Entrepreneurship (EP21201)

(For the 2nd Year Students of IIT Kharagpur)
1
 Report on Value sensitive (Cost & Quality) Emerging Market

According to the Consulting firm, PWC, the Global Emerging Middle

(GEM) is a class of consumers define a critical growth horizon for
companies over the coming decade. Termed as the ‘Next 4 Billion’ in
countries like India, China, Indonesia, Africa and Latin America where
over 4 billion people lived, only few years back when world population
was 7 billion. If the next lowest bracket is considered, it will cross 5 bn.
in a world with a population of 8 Billion (1.4 bn in India alone).
A market of USD 6 Trillion, annually, with India alone at 1 Trillion.

This market, for innovative products or service designed with frugal or

affordability engineering, is actually larger if we consider an immense
opportunity through ‘Reverse Innovation’ process.

Enterprises are challenged, in this market, to come up with new value

propositions with new ways of thinking (Quality and Affordability;
Quality is fulcrum). Innovations / products developed in these countries
can be exported to Western countries (Reverse Innovation).
The term ‘Frugal Engineering ‘ was coined by Carlos Ghosn,
the CEO of Renault-Nissan Alliance (Car Manufacturer), being
inspired by the design and engineering approach of an Indian Car
(Tata Nano)

Frugal and Reverse Innovation:

Frugal Engineering + Indigenous-Need-based Ideation
= Frugal Innovation (usually in Emerging Economies)

Frugal Innovation has the potential to become Reverse

Innovation (in Developed Market)
Frugality, Innovation and Frugal Engineering (Design and Manufacturing)

A definition of Innovation: Executing an idea which addresses a

specific (real) challenge and achieves value for both the company and
customer (summarised by N. Skillicorn)

A definition of Frugal innovation in market: New or significantly

improved products (both goods and services), processes, or marketing
and organizational methods that seek to minimize the use of material
and financial resources in the complete value chain (development,
manufacturing, distribution, consumption, and disposal) with the objective
of significantly reducing the total cost of ownership and/or usage while
fulfilling or even exceeding certain pre-defined criteria of acceptable
quality standards (R. Tiwari and C. Herstatt).
 Frugal Engineering is Ubiquitous
Frugal Engineering practice and Frugal Innovation approach spreads across
High Technology domain to conventional technology domain.

Frugal Design can be applied across the whole ‘Design Space’.

It is applied in developing Space Craft (MoM) as well as for small Refrigerator

(Godrej, Chotukool), which is electrical battery operated where electricity is
not regularly available.

For designing Car (Nano, Kwid or Logan) to designing incubator for infants
(Stanford)

For designing Electrocardiogram Machine to Ultrasonic Scanner (GE)

For X-Ray machine (Siemens) to Prosthetic Limb (Jaipur Foot)

At any technology point in the entire engineering design space. It may

combine AI or IoT, etc, with standard/ existing ones to create Frugal Products.
 Innovative Frugally Engineered products: Examples

Such as, Medical Equipment, Agricultural Tractors, Automotives,

Refrigerators etc with drastic cost reduction while preserving value

MAC 400 ECG Machine: General Electric, for instance, has developed
several healthcare devices for rural markets in emerging economies and
electrocardiogram is one such device. Normal cardiograms are very complex
devices and only trained cardiologists are able to use them, while General
Electric’s frugal cardiogram removed all unnecessary components and
reduced product and process complexity significantly by using substitute
locally available materials, use printers from local bus terminals and off-
the-self components.
 Tractor for Agri-farming
developed with
Affordability (Frugal) Engineering

Small range Diesel engine operated tractor, ‘KrishiShakti’ enabling farm

mechanization in an affordable manner has been developed by CSIR –
CMERI (Central Mechanical Engineering Research Institute). This low-
cost, compact and easily manoeuvrable tractor, perfect for small size lands,
is for farming and transportation.
TATA Nano: One of the most referred frugal engineering outcomes is the
world’s cheapest car

The aim of the design features presented is to lessen complexity of

procurement and production processes and considerably lowering of costs.
 Siemens Multix Select DR (X-Ray Machine)
At nearly one third the price of the products within portfolio
Due to rising cost pressures and a competition, healthcare providers want a
budget-friendly solution for good-quality general radiography. It is a floor-
mounted digital X-ray machine that combines facilities and features
namely, cost-effective room setup with a high level of clinical flexibility.
Outstanding image quality is achieved by selecting from best technologies.
It provides greater financial flexibility with a digital X-ray machine that
offers expert solutions for general radiography in an economical way.
Fetal Heart Monitor and Frugal SMART products from Siemens

Siemens, the Germany based industrial conglomerate through its R&D

centres in emerging economies (India and China), developing frugal
solutions for delivering better value to consumers. Siemens’ engineers at
Indian centre, in collaboration with their German counterpart have
developed a Fetal Heart Monitor, designed with inexpensive
microphone technology instead of using ultrasound technology, which
is pricy.
 US $200 billion global market for SMART portfolio
This Fetal Heart Monitor, affordably engineered, is part of Siemens’
expanded portfolio of frugal solutions, classified as ‘SMART’ (Simple,
Maintenance-friendly, Affordable, Reliable, and
Timely-to-market). SMART products are about 50 percent cheaper
than conventional high-end solutions.

Those are also easier to implement besides being energy-efficient and its
popularity can be guessed from the company’s estimate of a US$200
billion global market for SMART portfolio.

According to Peter Löscher, CEO of Siemens, “Scarcity of resources is not

an impediment but an enabler (of innovation).” as reported by N. Radjou.
 Jaipur Leg/ Jaipur Foot

A low cost prosthetic ‘Jaipur leg’ developed in India, costs only about
$150 to produce, that embodies improvisations by adapting irrigation
piping into the design to reduce cost.
 Infant Warmer/ Incubator designed at Stanford University

‘Embrace’, designed at Stanford University in the US, where a team of

graduate students ideated for creating an inexpensive infant warmer, used
as incubator, that functions as a low-tech device.

Embrace has the potential to save thousands of babies in the developing

world.
 Few more examples…..to understand Unique Value Proposition
ChotuKool fridge: A tiny refrigerator ‘ChotuKool’, sold by Godrej Ltd.(India)
the may have more in common with cooling system used for computers unlike other
refrigerators; it removes the traditional compressor for a computer fan.

Aakash Internet Tablet: Developed by a technology company

‘Datawind’ for Indian government to provide low-cost tablets to students in India.
Frugal innovation is also referred as ‘affordable excellence’ because of its
Unique Value Proposition (UVP)
which are as follows (a ) through (d) - R.Tiwari and C. Herstatt

(a) Reduced cost of ownership: It is just not the price point at purchase,
which anyway is crucial as a factor for success with frugal innovations; it is
more than that; it rather is in significantly reduced ‘overall or total cost of
ownership (TCO)’ that is achieved by the low costs of input usage,
maintenance and repair throughout its service life from acquisition till
disposal.

For example, in automobile industry, it is not just the low price of a

vehicle but also the consideration for high fuel mileage as well as low
maintenance/ repair costs that affect a purchasing decision in the price-
sensitive segments of small cars.
The same is true for a fan or fridge, where power consumption and
maintenance cost is important, besides the price-point.
 Unique Value Proposition (UVP) in Frugal Innovation....Contd.

(b) Robustness: Frugal innovations are often targeted at customers in the

mass market or consumers at the bottom (or base) of the pyramid (BoP)
in the economy.
This may be for people in rural and semi-urban areas in developing
economies or even the BoP consumers in industrialised economy.
For the latter case, a term ‘Reverse Innovation’ in the event of frugally
engineered product is commonplace.
The products need to withstand various infrastructural shortcomings
like voltage fluctuations, abrupt power-cuts, dusty environment, and
extreme temperatures.
Planned obsolescence that seeks to intentionally limit the lifespan of a
product without simultaneously reducing the associated costs for the
customer as in practiced now is not compatible with frugal innovation
approach.
 Unique Value Proposition (UVP) in Frugal Innovation....Contd.

(c) User friendliness: Many (potential) buyers of frugal products have no

prior, first-hand experience of using similar products. Companies cannot
presume a significant level of familiarity on the consumer side in dealing
with their products. Frugal products, therefore, need to be easy-to-use and
fault-resistant.

(d) Economies of Scale: Finally, the need for significant cost reduction,
and the thin profit margins almost necessarily associated with frugal
products necessitate access to voluminous business to reduce unit costs of
development and production.

We, therefore, to embody the Value Proposition, would need to explore

the views concerning frugality and design; Design Thinking.
Design Thinking
• Does the solution • Is this affordable?
show empathy for • Does it make us
end-users? more profitable?
• Is this the simplest • Do we have the
solution that gets skills?
the job done? desirability viability • What is my ROI?
• Is it elegant? human needs business needs
• Is it useful?

feasibility
technical needs

• How quickly can I configure the solution to suit my needs?

• Is the solution easy to maintain?
• Is it consistent with my current system landscape?
• Can the solution be easily supported?
 Design Thinking Steps to Innovation

The five steps

 Stage 1: Empathize

Why to empathize? – for absorbing and understanding the raw information.

- Because we are trained — whether consciously in our schools or
workplaces, or subconsciously from our prior experiences — to form
judgements and opinions about others rather than absorbing and understanding
the raw data.
 How to Gain Empathic Understanding of People
Divide your observations into three categories What - How –Why

We can ask questions to ourselves about our observations based on these three
types of questions to understand people and derive deeper levels of
understanding. Note down details of all your observations in following
categories:E.g.
What (note down the How (describe how the Why (try to interpret the
details of what is person is doing what he or scene)
happening) she is doing)

What is the person Is the person putting in a great
doing? deal of effort?
What is happening in Is the person frowning or
the background? smiling while doing the task?
What is the person Does the person use many ad-
holding? hoc tools to make the task
easier?
Why is she/he doing what
she/he is doing?
Why is she/he behaving so?
Why is she/holding or
using a particular tool?
What is the driving factor
behind it?
 Stage 2: Define the Problem by Synthesizing Information

What is ‘Defining’?
Collection of information gathered in the ‘empathy phase’ followed by
analyzing and synthesizing the observation.

Why it is needed?
It is essential to define a meaningful and actionable problem statement
and to bring clarity and focus into the design space to start ‘ideation’ in
the right direction.
 Stage 3: Ideate

What is ideation?

This stage brings out the best of ideas for solving a defined problem,
through Brainstorming and Worst Possible Idea activities.
Creativity and Innovation are two driving forces behind developing
solutions.
 Stage 4: Prototype

What is prototype?
An early, inexpensive, and scaled down version of a product.
It offers developers the opportunity to bring their ideas to
life, test the practicability of the current design, and to
potentially investigate how a sample of users think and feel
about a product.
Types of Prototyping
Low-Fidelity Prototyping: It involves the use of basic models or
examples of the product being tested. It may be incomplete and
uses a few features of the final intended design. It may be made
of different material rather than the selected material in design.
 Stage 4: Prototype

2. High-Fidelity Prototyping: A prototypes that look and operate closer to

the finished product.
Engaging: the stakeholders can instantly see their vision realised and
will be able to judge how well it meets their expectations, wants and
needs.
Testing will allow the evaluators to gather information with a high
level of validity and applicability. By doing so, the confidence the
design team will have in how people will respond to, interact with and
perceive the design.
It takes much longer time to develop than to develop a low-fi
prototype.
Testing is more inclined to focus and comment on superficial
characteristics.
Change in design takes longer time.
 Stage 5: Test

What is Testing?

Testing in design thinking means getting feedbacks from the users about
the developed prototype. These feedbacks helps to understand the users
more deeply.

Why Testing?

Getting feedback is crucial in design thinking, with out understanding the

needs of the user the iterative process will fail. If the users facing any
problem in the present solution then the design team must rethink and
develop some alternative solution.
Frugal Robots Developed for COVID Hospital

(Student’s Project work @ IIT Kharagpur)

ISRO’s Frugal MoM; Low-cost (80 Million USD) Spacecraft, Mangalayaan, for
Mars Orbiter Mission (MoM) with an outlay of only 10 %, compared to MAVEN,
built by NASA. It is based on Frugal Engineering, as it adopted available
technology as much as possible. The concept was that instead of directly flying to
Mars, the vehicle would orbit the earth for about a month, building up velocity to
slingshot its way out of earth’s gravitation to embark on its 400 million kilometre
journey. The quality and reliability has not been compromised -
the Mangalyaan mission, which was initially meant to last six months, has
completed five years of orbiting Mars and is likely to continue for some more
time.....................................................................