GENERATION AND

SCREENING OF
PROJECT IDEAS

GENRATION OF IDEAS
Stimulating the Flow of Ideas
SWOT Analysis
Clear Articulation of Objectives
E.g. Cost Reduction, Productivity
Improvement, Expansion, Increase
in Capacity Utilization
Fostering a Conducive Climate

MONITORING THE
ENVIRONMENT
Economic Sector

State of the Economy

Overall Rate of Growth
Growth Rate of Primary, Secondary and
Tertiary Sectors
Cyclical Fluctuations
Linkage with the World Economy
Trade Surplus / Deficit
Balance of Payment Situation

MONITORING THE
ENVIRONMENT
Governmental Sector

Industrial Policy
Government Programmes & Projects
Tax Framework
Subsidies, Incentives and Concessions
Import & Export Policies
Financing Norms
Lending Conditions of Financial
Institutions and Commercial Banks

MONITORING THE
ENVIRONMENT
Technological Sector
Emergence of New Technologies
Access to Technical Know-How, Foreign
as well as Indigenous
Receptiveness on the Part of Industry

MONITORING THE
ENVIRONMENT
Socio-Demographic Sector

Population Trends
Age Shifts in Population
Income Distribution
Educational Profile
Employment of Women
Attitudes Towards Consumption and
Investment

MONITORING THE
ENVIRONMENT
Competition Sector
Number of Firms in the Industry and
the Market Share of the Top Few
Degree of Homogeneity and
Differentiation Among Products
Entry Barriers
Comparison with Substitutes in Terms
of Quality, Price, Appeal and Functional
Performance
Marketing Policies and Practices

MONITORING THE
ENVIRONMENT
Supplier Sector
Availability and Cost of Raw Materials
and Sub-Assemblies
Availability and Cost of Energy
Availability and Cost of Money

CORPORATE APPRAISAL
Marketing and Distribution

Market Image
Product Line
Market Share
Distribution Network
Customer Loyalty
Marketing and Distribution Cost

CORPORATE APPRAISAL
Production and Operations
Condition and Capacity of Plant and
Machinery
Availability of Raw Materials, SubAssemblies and Power
Degree of Vertical Integration
Locational Advantage
Cost Structure

CORPORATE APPRAISAL
Research and Development
Research Capabilities of Firm
Track Record of New Development
Laboratories and Testing Facilities
Co-ordination Between Research &
Operations

CORPORATE APPRAISAL
Corporate Resources and Personnel
Corporate Image
Clout with Governmental and
Regulatory Agencies
Dynamism of Top Management
Competence and Commitment of
Employees
State of Industrial Relations

CORPORATE APPRAISAL
Financial and Accounting
Financial Leverage and Borrowing
Capacity
Cost of Capital
Tax Situation
Relations with Shareholders and Creditors
Accounting and Control System
Cash Flows and Liquidity

PROFIT POTENTIAL OF
INDUSTIRES PORTER MODEL
Potential
Entrants
Threat of New
Entrants

Suppliers

Bargaining Power
of Suppliers

THE INDUSTRY
Rivalry Among
Existing Firms
Threat of
Substitute
Products
Substitutes

Bargaining Power
of Buyers

Buyers

SCOUTING FOR
PROJECT IDEAS
Analyze the Performance of Existing
Industries
Examine the Inputs and Outputs of
Various Industries
Review Imports and Exports
Study Plan Outlays and
Governmental Guidelines

SCOUTING FOR
PROJECT IDEAS
Look at the Suggestions of Financial
Institutions and Development Agencies
Investigate Local Materials and
Resources
Analyze Economic and Social Trends
Study New Technological
Developments
Draw Clues for Consumption Abroad

SCOUTING FOR
PROJECT IDEAS
Explore the Possibilities of Reviving
Sick Units
Identify Unfulfilled Psychological
Needs
Attend Trade Fairs
Stimulate Creativity for Generating
New Product Ideas

PRELIMINARY SCREENING
Compatibility with the Promoter
It Fits the Personality of the
Entrepreneur
It is Accessible to Him
It offers him the Prospect of Rapid
Growth and High Return on the
Invested Capital

PRELIMINARY SCREENING
Consistency with the Government
Priorities
Is the Project Consistent with the
National Goals and Priorities?
Are there any Environmental Effects
Contrary to Governmental Regulations?
Can Foreign Exchange Requirements of
the Project be Easily Accommodated?
Will there be Any Difficulty in Obtaining
the License of the Project?

PRELIMINARY SCREENING
Availability of Inputs
Are the Capital Requirements of the Project
within Manageable Limits?
Can Technical Know-How Required for the
Project be Obtained?
Are the Raw Material Required for the
Project Available Domestically at a
Reasonable Cost? If the Raw Materials Have
to Be Imported, Will there be Problems?
Is the Power Supply for the Project
Reasonably Obtainable from External
Sources and Captive Power Resources

PRELIMINARY SCREENING
Adequacy of Market
Total Present Domestic Market
Competitors and Their Market Share
Export Markets
Sales and Distribution System
Projected Increase in Consumption
Barriers to the Entry of New Units
Economic, Social and Demographic
Trends
Patent Protection

PRELIMINARY SCREENING
Reasonableness of Cost

Cost of Material Inputs

Labour Costs
Factory Overheads
General Administrative Expenses
Selling and Distribution Cost
Service Cost
Economies of Scale

PRELIMINARY SCREENING
Acceptability of Risk Level

Technological Changes
Competition from Substitutes
Competition from Imports
Governmental Control Over Price and
Distribution

PROJECT RATING
INDEX

Steps in determining
1) Identify the factors relevant for project rating
Project
Rating
Index
2) Assign weights to these factors on the basis
of their relative importance.
3) Rate the project proposal on various factors
using a 5 point scale.
For each factor, multiply the factor rating with
the factor weight to get the factor score.
Add all the factor scores to get the overall
project rating index

SOURCES OF POSITIVE
NET PRESENT VALUE
Economies of Scale
Product Differentiation
Effective Advertising and Superior
Marketing
Exceptional Service
Innovative Product Features
High Quality and Dependability

SOURCES OF POSITIVE
NET PRESENT VALUE
Cost Advantage
Accumulated Experience and
Comparative Edge on the Learning Curve
Monopolistic Access to Low Cost
Materials
A Favourable Location
More Effective Cost Control and Cost
Reduction

SOURCES OF POSITIVE
NET PRESENT VALUE

Marketing Reach
Technological Edge
Government Policy

Restrictive Licensing
Import Restrictions
High Tariff Walls
Environmental Controls
Special Tax Reliefs