Generation and Screening of Project

7/28/2019 Generation and Screening of Project

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GENERATION AND SCREENING OF PROJECT

A project is required for a successful venture so every

venturist first search for a project .AS modern

business is illusive in nature so it is difficult to find

out the opportunities .To find out the opportunitiesthere are so many steps which have to culture.

Generation and screening of project ideas consists nine

steps


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continued

1 Generation of ideas

2 Monitoring the environment

3 Corporate appraisal

4 Tool for identify investment opportunities

5 Preliminary Screening

6 Project rating Index

7 Sources of positive net present value

8 Self questions of entrepreneur


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1 Generation of ideas

It is always seen that the ideas are based on existing

field of technology to offer various present product

or services. but sometimes the specializedtechnology and marketing expertise or some other

competence feels that he can produce a productwhich carter to a presently unmeet need or serve amarket where demand exceeds supply or effectively

compete with similar product. then the idea

supported by the associate and approved byfinancial institutions bank assist the project .it is theSWOT analysis which is used to stimulate the

project idea.


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Examples

Two successful companies which have been

exceptionally in tapping the creativity ofemployees are

Bell telephone laboratory and 3m telephone

Hindustan uniliver in India is one of the companywhich follows the pattern


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2 Monitoring the environment

Competitive abilities of a firm depend on itsenvironment it is one of instrument to accessthe ability of the firm. So a corporate appraisalis needed for monitoring the environment .for

monitoring the environment business sectordivided

Into six parts


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1 Economic sector

State of economics

Overall rate of growth

Growth rate of different

sector

Linkage with world

economy

Balance of payment

2 Governmental Sector

Industrial policy

Governmentprogrammes and

projects

Tax framework

Import and export

policy

Financing norms


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3 Technological sector

Emergence of new

technology

Access to technological

knowhow

4 Sociodemographic

sector

Population trends

Age shift in population

Income distribution

Educational profile

Employment of women


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5 competitive sector

No of firms in industry

Entry barriers

Degree of homogeneity

Comparison with

substitutesMarketing policies

6 supplier sector

Availability of cost of

productAvailability of cost of

money

Availability of chain of

supply


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3. corporate appraisal

For identifying better investment opportunity

appraisal of strength and weakness is necessary.

Broad areas of corporate appraisals are

Marketing and distribution

Market image

Product line

Market share

Customer loyalty

cont


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Production and operation

Condition and capacity of plant and machinery

Availability of raw material

Degree of vertical integration

Cost structureResearch and development

Research capability of the firm

Track record of new product

Laboratories and testing facilities


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Corporate resources and personnel

Corporate image

Clout with government and regulatory authority

State of industrial relation

Accounting and finance

Financial leverage

Tax situationCost of capital

Relation with share capital


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4. Tools for identifying investment

opportunity

There are various framework for identifying various

promising investment opportunity

These are

o life model cycle approach and experience curve

oPorters model; profit potential of industries


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Porters model ; profit potential of

industries

Michel porters has argued that profit potential

of industry depends on the combined

strength of the following five competitive

forces Threats of new entrants

Rivalry among existing firm

Pressure from substitute product

Bargaining power of buyer

Bargaining Power of seller


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life cycle approach

There are mainly four stages of life of a product

1 pioneering stage; in this stage theproduct and the technology are

introduced and lured by promisingentrepreneurs as a resultcompetition arises and only new

entrants are survives .cont


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2 Rapid growth stage

The chaotic development stage over ,the firms are

survive and then they applied different marketing

tricks to increase their sales and profits.

3 Maturity and stabilization stage

After enjoying a rate of growth the industry enter into

the maturity stage then after some extent of maturityit enter into stabilization stage.

4 Decline stage; with the due course of time the

customer demand and preferences changes

encroachment of new product occurred then theexisting product demand down slow and the market

share of the product declined


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The experience curve

For long term survival of the firm optimumutilization of resources and minimization ofcost is necessary .The experience curve is a

useful tool for planning such investments.

The experience curve shows how the cost perunit behaves with respect to the accumulated

volume of product.

The accumulated production means the totalnumber of unit produced cumulatively fromvery beginning


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5 scouting for project idea

It is hard to difficult to get a good project idea

because it is illusive in nature

Analyze the performance of existing industry;

A study of existing industries in terms ofprofitability ,capacity ,utilization can indicate

Promising investment opportunity investment

.knowledge of capacity utilization providepotentiality for further investment.

cont


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Examine the input and output of various industry

Review import and export;

Study plan outlays and government guidelines

Look at the financial decision of financial

institutions and developmental agencies

Analyze economic and social trendsStudy of new technological development

Attained trade fairs


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6 .Preliminary screening

When feedback phase is over a preliminary screening isrequired to eliminate the ideas which are notpromising in nature. Following aspects are taken carefor screening.

Comparability with the promoter

Consistency with government priorities

Availability of inputs

Adequacy of market

Reasonableness of cost

Acceptance of risk factor


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Acceptability of risk level;

Following points are consider for checking risk

level

Vulnerability to business cycles

Technological changes

Competition from imports

Shifts in consumer preference

Govt control over price and distrubution


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Compatibility with the promoter; The idea must be

matched with the interest ,personality and resources of

the entrepreneur.

A real opportunities have three capabilities

i. It fits with personality of the entrepreneur

ii. It is accessible to himiii. It offers him the prospectus of rapid growth.

Consistency with governmental priorities

The project idea must be feasible given the nationalgoals and governmental regulatory framework.

Like

h j i i h i l l d


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Is the project consistent with national goals and

priorities

Are there any environmental effects contrary to

govt regulations

Can the foreign exchange requirement may easily

fulfilled.

Will be there any difficulty in obtaining the

license for the project.

Availability of inputs;

The resources required must be reasonably assured


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Adequacy of market;

To judged the adequacy of market following

factors have to be examined

Total present domestic market

Competitors and their market share

Export markets

Competitors and their market shares

export markets Sales and distribution system

Barriers to the entry for new units


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7 project rating index

For screening the proposal project rating isknown as one of the best method and so

many steps are involve in it.

Identify factors relevant for project rating

Assign weight to the factor

Use suitable rating scale or and rate various

factors

Multiply factor rating with factor weight

Add all to get proper rating


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8 sources of positive net present value

The imperfection in entry barriers cause positiveNPVs .there are six main entry barriers

Economics of scale

Cost advantages

Marketing research

Technological change

Government policy


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9 .on being an entrepreneur

Being an entrepreneur various self orientedquestions are asked.

Thank you

Dr.Namita mishra

Documents

Generation and Screening of Project