Unit 3,4,5,

Q. define business planning?

Ans. Business means the state of being busy. Business involves activities
concerned with the production of wealth. It is an organized and systematic
human activity involving production and purchase of goods and services with the
object of selling them at a profit.
CHARACTERISTICS OF BUSINESS:

1. Sale or transfer of goods for value: Business involves sale or transfer of good or services for
value. Production of goods or services for personal uses does not come into the purview of
business
2. . 2. Dealing in Goods & Services: Business implies dealing in goods and services. The goods
may be consumer goods like bread, cloth, watches, etc, producer goods like tools,
machinery or services which are goods that are not stored but used by consumers.
3. 3. Recurring of dealings: Business involves recurring or repeated transactions. An isolated
case of buying or selling does not involve in business.
4. 4. Profit Motive: Profit making is the most powerful stimulus for doing business
5. . 5. Risk involved: Business involves risk. Business activities always focus on the future which
is highly uncertain. Profit depends upon the amount of risk involved.

Q. explain the process of environmental analysis?

Ans . Environmental analysis process. Environmental

analysis is the process of assessing and evaluating the
internal and external factors that can have an effect on an
organization's performance and strategy.
The process of environmental analysis are:
1. Scanning: It involves information gathering for assessing the
nature of the environment in terms of uncertainty, complexity,
and dynamics. It includes:
 Identifies early signs of future environmental changes. They are
indicated by trends and events.
 Detects changes already underway. They are happening
2. Monitoring: It involves tracking environmental trends and
events. It is the auditing of the environment. The likely impact
of environmental influences on business performance is
identified.
3. Forecasting: This step forecast what is likely to happen. Its
layout of the path to anticipate changes. This step provides:
 Key forces at work in the environment. They can be political-
legal, economic, social, cultural, and technological.
 Understanding of the nature of key influences and drivers of
change.
 Projection of future alternative paths available.
4. Assessment: This step identifies key opportunities and threats.
The competitive position of a business is analyzed in terms of
how the organization stands in relation to other organizations
competing for some resources of customers.
 Opportunities are a favorable condition that creates risks and
weakens the competitive position.
 The threat is an unfavorable condition that strengthens, the
organization’s competitive position of the organization.

Q. Discuss the stages in starting a new venture?

Ans . Every business involves risk. Therefore it is necessary to plan the

business before venturing in to it. At the very outset, a cost and benefits
analysis has to be done in order to judge the viability of the project. Business
involves employment of resources.

There are methods of appraising projects. They are;

1. Economic Analysis.
2. Financial Analysis
3. Market Analysis
4. Technical Analysis
5. Managerial Analysis.

I. Economic Analysis: Under economic analysis, aspects that are

highlighted are requirement of raw material, level of capacity utilization,
anticipated sales, anticipated expenses and the probable profit. Business
should always envisage a clear margin of profit. The volume of profit will
govern other economic variables such as sales, purchase and other
expenses. Demand for the product also needs to be clearly spelled out
at the very initial stage. The location of the project or business also
needs to be considered. Govt. policies in this regard need to be taken
into consideration. Govt. offers specific concessions and incentives for
setting up industries and business in notified backward areas. Therefore,
it has to be ascertained whether the proposed project comes under this
category or not and whether the Govt. has already decided and specific
location for this kind of enterprise.

II. Financial Analysis: Finance is one of the most important pre-requisites

for establishing any business. All other resources are facilitated by
finance. Proper assessment of both fixed capital as well as working
capital requirement is to be made. Land, building, plant and machinery
are the common examples of fixed capital. All aspects of cost such as
remodeling, repair, maintenance and additions required are also to be
taken into consideration at the time of assessment.

Working capital means current expenditures or current liabilities. They

are those assets which can be converted into cash within a period of one
week. Current liabilities are those obligations that are required to be
paid within one week. Working capital is that amount of funds which is
required for day to day business operations. The assessment of working
capital should be clearly provided for as this is the money on which the
day to day work runs. It is the blood line of the company.

III. Market Analysis: Before production starts, the entrepreneur has to have
a fairly good idea of the market for the product. He will have to
anticipate who is likely to be his buyer and in which area his product is
most likely to be sold. It is necessary to know the consumption pattern
to have optimum profit. To find out the estimated requirement, the
commonly used methods are;
Opinion Polling Method Life Cycle Segmentation Analysis.

I Opinion Polling Method: In this method, the opinion of the

ultimate users i.e., the customers are estimated. It can be done either
through the complete enumeration method, i.e., complete survey of all
customers, or by the sample survey method, i.e., through selective
selection of a few customers.

Complete Enumeration Survey: In this survey all the probable customer

are approached and their view or demand for the product are estimated
and then summed. This is a very simple method as it entails only the
adding up of all the demands of all the customers.

Advantages: This is first-hand and unbiased information.

Disadvantage: To approach all the people scattered over a large area of
the market becomes tedious, costly and cumbersome. Consumers may
not like to divulge their personal choices due to personal reasons. They
may not even be aware of their choices.

Sample Survey: In this method only a small number out of the total
population is approached and data on their probable demand for the
product during the period under consideration is collected and summed.
The total demand of the sample customers is then blown up to generate
the total demand for the product.

Advantage: This method is less costly and tedious.

Disadvantage: This method may not give a real picture of exact demand
as opinions and views are randomly collected. The selected customers
may not be a true representative sample group for the product.

Sales Experience Method: Under this method a sample market is

surveyed before the product is released in the market. The results are
then projected for a total market in order to project anticipated demand
of the product.
Advantage: This is a relatively cheaper method.
 Disadvantage: The survey market should be truly representative. This is
very difficult to get as there are many factors which keep changing and
over which the entrepreneur has little or no control

IV. Technical Feasibility: While considering business, the technical

feasibility of the project also needs to be taken into
consideration.Technical feasibility implies this means the adequacy of
the proposed project to produce products as per proposed norms. It
denotes the availability of raw material, technical and working skill,
proper equipment, and money. The following points need to be kept in
mind;
1. Availability of land and site. 2.
Availability of other inputs like water, power, transport, communication.
3. Service facilities like repair shops, workshops etc.
4. Coping with anti-pollution laws.
5. Availability of required and skilled work force.
6. Availability of raw material as per requirement of quantity and
quality.

V. Management Competence: Management competence and ability plays a very

important role in business. In the absence of management competence, projects
which are otherwise viable, will fail. Sometimes even a poorly devised project
becomes successful because of management competence. Research has shown
that most sick units have become so because of lack of managerial skills. This is
more so in the case of small-scale industries as it is usually a one-man show and it
becomes a jack of all trades and a master in none. LOCATION: Just like human
movement, entrepreneurial movement is caused by social, economic, political
and cultural factors. The present day has seen great fluctuations in the locality of
enterprises. There are certain distinct features which affect the pace and pattern
of movement of location.

Q. what do you understand by project management?

Ans . Project management can be defined as the discipline of

applying specific processes and principles to initiate, plan, execute and
manage the way that new initiatives or changes are implemented within an
 organization. Project management is different to management of business as
usual activity, which is an ongoing process, as it involves creating new work
packages to achieve agreed ends or goals.
Key components of project management are:

 Time – the intended duration of the work

 Cost – the budget allocated for the work
 Scope – what innovations or changes will be delivered by the project
 Quality – the standard of the outcome of the project.

Q. Descibe various type of feasibility in project management?

Ans . Technical Feasibility

Technical Feasibility study of a project analyzes and evaluates its present

resources, including equipment, programming, and necessary innovation.
This technical feasibility analysis provides information about whether the
technologies and resources needed to build the project are available.
Additionally, a feasibility study examines the engineering team's expertise,
the viability of using open systems, the ease of maintaining and upgrading
the technology of choice, and other factors.

Operational Feasibility

Operational Feasibility study examines how well a product will satisfy needs
and how simply it will be used and maintained after implementation. Along
with this, additional operational responsibilities include evaluating the
product's usefulness and the suitability of an application development teams
offered to fix.

Economic Feasibility
The economic market feasibility study examines the project's expense and
value. This implies that a thorough analysis is done to determine the
program's development costs, including the cost of the design process and
operating costs. After that, it is determined if the venture will be profitable.

Legal Feasibility

The project is examined from a legal standpoint in examining Legal

Feasibility. It evaluates project implementation legal obstacles such as
privacy laws or social networking regulations, business certificates, licenses,
trademarks, etc. Ultimately, it can be argued that a legal feasibility study is
an investigation to determine whether a project proposal complies with the
law and ethical guidelines.

Schedule Feasibility

A scheduling feasibility study's primary focus is the project proposal's

schedules and due dates. This assessment involves how long it will take
team members to finish the project, which significantly affects the company
as the program's intended outcome may not be achieved if it cannot be
completed on time.

Q. write the problems of entrepreneurs in detail?

Ans . 1. Cash Flow Management

2. Hiring Employees

3. Time Management

4. Delegating Tasks

5. Choosing What to Sell

6. Marketing Strategy

7. Raising Capital

8. Business Growth

9. Self Doubt