ED Unit 3 Part (A&B) (Q&A)
ED Unit 3 Part (A&B) (Q&A)
ED Unit 3 Part (A&B) (Q&A)
Department of Management
Ans:-Every new business, new product or service, and new marketing approach has started
with an idea. Generating new ideas can be a very burdensome task. Putting them into practice
can be much harder. Business ideas are all around you.
Ans:-The terms creativity and innovation are often used to mean the same thing, but each has
a unique connotation. Creativity is the ability to bring something new into existence.
Innovation is the process of doing new things.
Ans:-A pre-feasibility study examines “whether the business meets minimum financial
requirements, whether or not there is a market for the finished product and whether it is
technically feasible”.
Ans:- (i)It must suggest as high an overall ‘rating’ as possible of the venture’s product
development and team sophistication.
(ii)It must contain believable financial projections, with the key data explained and
documented.
6.Describe business ownership.
Ans:-A business started by only one person is called sole proprietorship. The business started
by a group of persons can be a partnership firm, cooperatives or Joint Stock Company.
7.Give the importance of capital budgeting.
Ans:- (i)Long-Term Effects (ii)Risk and uncertainty (iii)Large Funds
(iv)Corporate Image
(ii) Product characteristics, i.e., the specifications, uses and applications, standards, quality,
etc.
(iii) Market position and trends, i.e., the installed capacity, production and anticipated
demand, export prospects and information on import and export, price structure and
trends.
Break –Even analysis is a useful tool to study the relationship between fixed costs, variable
costs and returns. The Break – even point defines when an investment will generate a
positive return.
12.List down the areas that are covered in a feasibility study
A legal form of business created through law that empowers a business a legal entity ie
artificial person company has a perpetual life unimpeded by the biological life span of
investors and through stock ownership, investors can realize limited liability.
A small –scale unit when ie. any of its borrow accounts has become a doubtful advance
i.e. principal or interest in respect of any of its borrow accounts has remained overdue
for a period exceeding 2and ½ years and (ii) their is erosion in the net worth due to
accumulated cash losses to the extent of 50 percent or more of its peak net worth during
To generate immediate and large scale employment opportunities with relatively low
Investment, To eradicate unemployment problem from the country, To encourage
dispersal of industries to all over country covering small towns , villages and economically
lagging regions, To bring backward areas too in the mainstream of national development, To
promote balanced regional development in the whole country, To encourage effective
mobilization of country’s untapped resources, To improve the level of living of in the country.
Quantifiable and non quantifiable projects, Sect oral projects, Techno Economic projects.
1. General information , 2. Promoter, 3. Location 4. Land and building ,5. Plant and
machinery, 6. Production process,.7. Utilities, 8. Transport and communication, 9. Raw
material, 10. Manpower, 11. Products , 12. Market , 13. Requirement of working capital, 14.
Requirement of funds.
23. Write the Concept of project appraisal.(Nov/Dec 2006)
Project appraisal is a costs and benefits analysis of different aspects of proposed project with
an objective to adjudge its viability.
competence.
25. Write down the Small Scale sector –Policy support.(Nov/Dec 2007)
1. The investment limit for the tiny sector is25 lakhs. 2. The investment limit for the SSI is
Rs 1 crore. 3. For specific list of high –tech and export industries which would require the
investment limit to be raised up to Rs 5 crore to admit suitable technology up gradation and
to enable them to maintain their competitive edge. 4. The limited partnership Act will be
drafted quickly and got enacted . Attempt will be made to bring the bill before the next
session of the parliament.
To improve the competitiveness of small scale sector , the exemption for excise duty limit
raised from Rs 50 lakhs to 1 crore.
CPM PERT
CPM works with fixed deterministic time PERT works with probabilistic time
CPM is useful for repetitive and non PERT useful for non repetitive and
complex projects with a certain degree of complex projects with uncertain time
time estimates estimates
CPM includes time-cost trade off PERT is restricted to time variable
CPM for construction projects PERT used for R&D programs.
PART-B (16 MARKS)
Fund: The size of the funds that can be mobilized is another important factor. Adequate fund is
needed to develop, produce, promote, sell and distribute the product selected.
Availability of and Access to Raw Materials: Different products require different raw
materials. The source quality and quantity of the raw materials needed are factors to be seriously
considered, Are the raw materials available in sufficient quantities? Where are the sources of raw
materials located? Are they accessible? Could they be sources locally or imported? Satisfactory
answers should be provided to these and many other relevant questions.
Technical Implications: The production process for the product needs to be considered. There is
need to know the technical implications of the selected product on the existing production line,
available technology and even the labour force. The choice of a particular product may require
either acquisition of the machineries or refurbishing of the old ones. The product itself must be
technically satisfactory and acceptable to the user.
Profitability/Marketability: Most often, the product that has the highest profit potential is often
selected. However, a product may be selected on the basis of its ability to utilize idle capacity or
complement the sale of the existing products. The product must be marketable.
Government Policies: This is quite often an uncontrollable factor. The focuses of government
policies can significantly influence the selection of product. For instance, a package of incentives
from government for a product with 100% local input contents can change the direction of the
business’s R & D and hence the product selected.
Government objectives: The contributions of the product to the realization of the company’s
short and long range objectives must be considered before selection. For instance, the company
goal maybe the achievement of sale growth, sales stability or enhancement of the company’s
social value.
Licensing System: As per industrial policy, government formulates licensing policy from time
to time. In certain product it is a must for the entrepreneur to seek necessary licenses from the
government authorities. Capacity addition is also regulated by the license under certain
conditions. Generally in case of a licensed product license seeking process is also quite
cumbersome. Thus, problem is seeking for these licenses also affect the selection of the product.
Locational Advantage: There are certain products which are meant for production only in free
trade zones, export promotion zones, special export promotion zones, Government also provides
export incentives and tax concessions, etc to these nit so it would be better for the entrepreneur
to select these items for production purposes. Availability of big consumer market in nearby
areas also affects favorably in selection of a product.
2.Evaluation of the Business Environment: Management surveys the factors that exist
independently of the enterprise but which it must consider for profitable advantage.
Management also evaluates the relationships among department in order to coordinate their
activities. Some general areas of the external environment considered by management include:
5.Stating Actions and Resources Required: With the objectives and forecasts in place,
management decides what actions and resources are necessary in order to bring the forecast in
line with objectives. The basic steps management plans to take in order to reach an objective are
its strategies. Strategies exist at different level in an organization and are classified according
to the levels at which they allocate resources. The overall strategy outlines how to pursue
objectives in light of the expected business environment and the business’s own capabilities.
7. Assessing Alternative Strategic Plans: Because of the financial implications inherent in the
allocations of resources, management approaches the evaluation of strategic alterative and plans
using comprehensive profit planning and control. Management quantifies the relevant strategies
in Proforma statement that demonstrate the possible future financial impact of the various
courses of action available. Some examples of proforma statement are: budget income
statements, balance sheet and cash flow statements.
8.Conrtolling the Plan through the Annual Budget: Control of the business entity is
essentially a managerial and supervisory function. Control consists of those actions necessary to
assure that the company’s resources and operations are focused on attaining established
objectives, goals, and plans. Control compares actual performance to predetermined standards
and takes action when necessary to correct variances from the standards. Exercised
continuously, control flags potential problems so that crises may be prevented. It also
standardizes the quality and quantity of output, and provides managers with objectives
information about employees performance.
1. General Information:
The feasibility report should include an analysis of the industry to which the project belongs. It
should deal with the past performance of the industry. The description of the type of industry
should also be given, i.e., the priority of the industry, increase in production, role of the public
sector, allocation of investment of funds, choice of technique, etc. This should also contain
information about the enterprise submitting the feasibility report.
This should contain present data on the gap between demand and supply for the outputs which
are to be produced, data on the capacity that would be available from the projects that are in
production or under implementation at the time the report is prepared, a complete list of all
existing plants in the industry, giving their capacity and level of production actually attained, a
list of all projects for which letters of intents/ licenses have been issued and a list of proposed
projects.
3. Project Description:
The feasibility should provide a brief description of the technology /process chosen for the
project. Information relevant to determining optimality of the location chosen should also be
included. To assist in the assessment of the environmental effects of a project, every feasibility
report must present the information on specific points, i.e., population, water, air, land, flora and
fauna; effects arising out of project’s pollution, other environmental discretions, etc.
The report should contain a list of the operational requirements of the plant, requirements of
water and power, requirements of personnel, organisational structure envisaged, transport costs,
and activity-wise phasing of construction and factors affecting it.
4. Marketing Plan:
c. The method and data used for main estimates of domestic supply and selection of the market
areas should be presented. Estimates of the degree of price sensitivity should be presented.
The estimates should be reasonably complete and properly estimated. Information on all items of
costs should be carefully collected and presented.
Operating costs are essentially those costs which are incurred after the commencement of
commercial production. Information about all items of operating cost should be collected.
Operating costs relate to the cost of raw materials and intermediates, fuel, utilities, labour, repair
and maintenance, selling expenses, and other expenses.
7. Financial Analysis:
The purpose of this analysis is to present some measures to assess the financial viability of the
project. A proforma Balance Sheet for the project data should be presented. Depreciation should
be allowed for on the basis of specified rate by the Bureau of Public Enterprises (BPE). Foreign
exchange requirements should be cleared by the Department of Economic Affairs (DEA).
The feasibility report should take into account income-tax rebates for priority industries,
incentives for backward areas, accelerated depreciation, etc. The sensitivity analysis should also
be presented. The report must analyse the sensitivity of the rate of return of change in the level
and pattern of product prices.
8. Economic Analysis:
Social profitability analysis needs some adjustment in the data relating to the costs and returns to
the enterprise. One important type of investment involves a correction in input and costs, to
reflect the true value of foreign exchange, labour and capital. The enterprise should try to assess
the impact of its operations on foreign trade. Indirect costs and benefits should also be included
in the report. If they cannot be quantified, they should be analysed and their importance
emphasised.
9. Miscellaneous Aspects:
The preceding three areas are deemed appropriate to almost every new small enterprise.
Notwithstanding, depending upon the size of the operation and peculiarities of a particular
project, other items may be considered important to be applied out in the project report. To
mention a few, probable use of minicomputers or other electronic data processing services, cash
flow statements, method of accounting etc., may be of great use in some micro and small
enterprises.
11.Font Size
To try and include as much detail as possible, the use of smaller font sizes may be considered.
While it does allow for more information on the page, it does get to a point where it is difficult to
read. Remember, this will be different for each individual. Keeping above 10pt or 12pt is
recommended (8pt for PowerPoint presentations). This also helps ensure that updates are kept
concise.
12.Late Publication
After you have invested time in preparing a good report, don’t ruin the impact by publishing
late. If the report has a defined publication date, make sure it is met. If the report will be
reviewed at a meeting, aim to publish at least 24 hours (ideally 48 hours) ahead of the meeting.
This will give time for the report to be reviewed.
The engineering feasibility of the project in viewed in the technical feasibility. Certain important
engineering aspects are covered which are necessary for the designing of the project like civil,
structural and other relevant aspects. In certain examples especially when projects are in third
world countries, technology capability of the projected technologies and the capabilities of the
personnel to be employed in the project are considered. Technical transfer between cultures and
geographical areas should be analyzed. By doing so productivity gain (or loss) and other
implications are understood due to the differences in fuel availability, geography, topography,
infrastructure support and other problems.
Managerial Feasibility Study
Economic Feasibility Study
Economic feasibility refers to the feasibility of the considered project to produce economic
benefits. A benefit-cost analysis is needed. Furthermore the economic feasibility of a project can
also be evaluated by a breakeven analysis. In order to facilitate the consistent basis for the
evaluation, the tangible and intangible facet of a project must be translated into the economic
terms. Economic feasibility is critical even when the project is non-profit in nature.
Financial Feasibility
Financial feasibility must be differentiated from economic feasibility. The ability of the project
management to raise sufficient funds required to implement the proposed project is included in
the financial feasibility. Additional investors and other sources of funds are considered by the
project proponents for their projects in many cases. In such situations feasibility, sources,
soundness and applications of these project funds may be a hindrance. Other aspects of financial
feasibility should also be viewed, if appropriate, like credit worthiness, loan availability, equity,
and loan schedule. The implications of land purchase, leases and other estates in land are also
reviewed in the financial feasibility analysis.
Cultural Feasibility Study
The compatibility of the proposed project with the cultural environment of the project is included
in the cultural feasibility. Planned operations should be integrated with the local cultural beliefs
and practices in labor intensive projects. For example what a person is willing to perform or not
perform is influenced by his religious beliefs.
Social Feasibility Study
The affect that a proposed project may have on the social system in the project environment is
addressed in the social feasibility. It may happen that particular category of employees may be
short or not available as a result of ambient social structure. The influence on the social status of
the participants by the project should be evaluated in order to guarantee compatibility. It must be
identified that employees in the particular industries may have specific status symbols within the
society.
Safety Feasibility Study
Another important aspect that must be considered in the project planning is the safety feasibility.
Safety feasibility involves the analysis of the project in order to ascertain its capacity to
implement & operate safely with least unfavorable effects on the environment. Mostly in
complex projects, environmental impact assessment is not properly addressed.
Political Feasibility Study
The directions for the proposed project are mostly dictated by the political considerations. This is
certainly correct for large projects with potential visibility that may have important political
implications and government inputs. For example, regardless of the merit of project, the political
necessity may be a source of assistance for a project. On the other hand because of political
factors, value able projects may face uncontrollable opposition. An evaluation of the objectives
of project with the current objectives of the political system is required in the political feasibility
analysis.
Environmental Feasibility Study
Environmental aspect is very crucial in making any potential project successful or failed. In the
very early stages of the project, this aspect should be considered. All the environmental concerns
raised or forecasted should be addressed in environmental feasibility so that proper actions can
be taken to cover relevant issues of the environment. The ability of the project to timely acquire
the required permits, licenses and approvals at a reasonable cost should also be included in this
area.
Market Feasibility Study: Market feasibility must not be mixed up with the economic
feasibility. The potential influence of market demand, competitive activities and available market
share should be considered in the market feasibility analysis. During the start up, ramp up and
commercial start up phases of the project, possible competitive activities (local, regional,
national and international) should be analyzed for early contingency funding and impacts on the
operating costs.
The first step for any marketing research activity is to clearly identify and define the problem
you are trying to solve. You start by stating the marketing or business problem you need to
address and for which you need additional information to figure out a solution. Next, articulate
the objectives for the research: What do you want to understand by the time the research project
is completed? What specific information, guidance, or recommendations need to come out of the
research in order to make it a worthwhile investment of the organization’s time and money?
It’s important to share the problem definition and research objectives with other team members
to get their input and further refine your understanding of the problem and what is needed to
solve it. At times, the problem you really need to solve is not the same problem that appears on
the surface. Collaborating with other stakeholders helps refine your understanding of the
problem, focus your thinking, and prioritize what you hope to learn from the research.
Prioritizing your objectives is particularly helpful if you don’t have the time or resources to
investigate everything you want.
Step 2: Develop a Research Plan
Once you have a problem definition, research objectives, and a preliminary set of research
questions, the next step is to develop a research plan. Essential to this plan is identifying
precisely what information you need to answer your questions and achieve your objectives. Do
you need to understand customer opinions about something? Are you looking for a clearer
picture of customer needs and related behaviors? Do you need sales, spending, or revenue data?
Do you need information about competitors’ products, or insight about what will make
prospective customers notice you? When do need the information, and what’s the time frame for
getting it? What budget and resources are available?
Once you have clarified what kind of information you need and the timing and budget for your
project, you can develop the research design. This details how you plan to collect and analyze the
information you’re after. Some types of information are readily available through secondary
research and secondary data sources. Secondary research analyzes information that has already
been collected for another purpose by a third party, such as a government agency, an industry
association, or another company. Other types of information need to from talking directly to
customers about your research questions. This is known as primary research, which
collectsprimary data captured expressly for your research inquiry. Marketing research projects
may include secondary research, primary research, or both.
Conducting research can be a fun and exciting part of the marketing research process. After
struggling with the gaps in your knowledge of market dynamics—which led you to embark on a
marketing research project in the first place—now things are about to change. Conducting
research begins to generate information that helps answer your urgent marketing questions.
Typically data collection begins by reviewing any existing research and data that provide some
information or insight about the problem. As a rule, this is secondary research. Prior research
projects, internal data analyses, industry reports, customer-satisfaction survey results, and other
information sources may be worthwhile to review. Even though these resources may not answer
your research questions fully, they may further illuminate the problem you are trying to solve.
Secondary research and data sources are nearly always cheaper than capturing new information
on your own. Your marketing research project should benefit from prior work wherever possible.
After getting everything you can from secondary research, it’s time to shift attention to primary
research, if this is part of your research plan. Primary research involves asking questions and
then listening to and/or observing the behavior of the target audience you are studying. In order
to generate reliable, accurate results, it is important to use proper scientific methods for primary
research data collection and analysis. This includes identifying the right individuals and number
of people to talk to, using carefully worded surveys or interview scripts, and capturing data
accurately.
Analysis starts with formatting, cleaning, and editing the data to make sure that it’s suitable for
whatever analytical techniques are being used. Next, data are tabulated to show what’s
happening: What do customers actually think? What’s happening with purchasing or other
behaviors? How do revenue figures actually add up? Whatever the research questions, the
analysis takes source data and applies analytical techniques to provide a clearer picture of what’s
going on. This process may involve simple or sophisticated techniques, depending on the
research outcomes required. Common analytical techniques include regression analysis to
determine correlations between factors; conjoint analysis to determine trade-offs and priorities;
predictive modeling to anticipate patterns and causality; and analysis of unstructured data such as
Internet search terms or social media posts to provide context and meaning around what people
say and do.
Once the report is complete, the presentation is delivered, and the recommendations are made,
the marketing research project is over, right? Wrong.
What comes next is arguably the most important step of all: taking action based on your research
results.
If your project has done a good job interpreting the findings and translating them into
recommendations for the marketing team and other areas of the business, this step may seem
relatively straightforward. When the research results validate a path the organization is already
on, the “take action” step can galvanize the team to move further and faster in that same
direction.
Things are not so simple when the research results indicate a new direction or a significant shift
is advisable. In these cases, it’s worthwhile to spend time helping managers understand the
research, explain why it is wise to shift course, and explain how the business will benefit from
the new path. As with any important business decision, managers must think deeply about the
new approach and carefully map strategies, tactics, and available resources to plan effectively.
By making the results available and accessible to managers and their execution teams, the
marketing research project can serve as an ongoing guide and touchstone to help the organization
plan, execute, and adjust course as it works toward desired goals and outcomes.
Idea screening takes the less attractive, infeasible and unwanted product ideas out of the
running. Unsuitable ideas should be determined through objective consideration, including
through early testing and feedback with consumers.
Concept development and testing is vital. The internal, objective analysis of step two is
replaced by customer opinion in this stage. The idea, or product concept at this point, must be
tested on a true customer base. The testers' reactions can then be leveraged to adjust and further
develop the concept according to the feedback. One example of concept development is the
concept cars developed by car manufacturers. These prototypes are made of clay and shown at
auto shows for consumer feedback.
Market strategy/business analysis identifies the strategy of how to optimally market and sell
your product or service. It is comprised of four P's, which are product, price, promotion and
placement.
Product -- The service or good that's been designed to satisfy the demand of a target audience.
Price -- Pricing decisions affect everything; profit margins, supply and demand, and market
strategy.
Promotion -- The goals of promotion are to present the product to the target audience --
increasing demand by doing so -- and to illustrate the value of the product. Promotion includes
advertisements, public relations and marketing campaigns.
Placement -- The transaction may not occur on the web, but in today's digital economy, the
customer is generally engaged and converted on the Internet. Whether the product will be
provided in bricks-and-mortar or clicks-and-mortar shops, or available through
an omnichannel approach, the optimal channel, or channels, for placement must be determined if
the targeted potential customers are to become actual customers.
Test marketing, or market testing, differs from concept or beta testing in that the prototype
product and whole proposed marketing plan, not individual segments, are evaluated. The goal of
this stage is to validate the entire concept -- from marketing angle and message to packaging to
advertising to distribution. Test marketing is often performed by offering your product to a
random sample of your target market. By testing the entire package before launch, the company
can critically review the reception of the product before a full go-to-market investment is made.
Market entry/commercialization is the stage in which the product is introduced to the target
market. All the data obtained throughout the previous seven stages of this approach are used to
produce, market and distribute the final product to and through the appropriate channels. The
product is now available to everyone and the "product lifecycle" begins. The life of the product is
shaped by the reception of the target market, the competition and subsequent enhancements to
the product offering.
Product development is an always-evolving and fluid process, and just as some steps will
change, depending on the nature of the project, so will the person who manages product
development. In some organizations, there is a dedicated team that researches and tests new
products. Some smaller organizations may outsource their new product development to a design
team. In midsize organizations, the product manager is often the person in charge of product
development, and he or she may be part of the marketing team, while tech shops selling
business-to-business (B2B) products and services that have very technical requirements may
have their product managers report to engineering. Regardless of what framework is used and
who is in charge of new product development, the new part is just one aspect of the entire
product lifecycle management (PLM).
• Even with such a wide variety of sources available, coming up with an idea to serve as the
basis for a new venture can still be problematic. The entrepreneur can use several methods to
help generate & test new ideas such as:
• Focus groups
• Brainstorming
• Publication
• Day Dreaming
• For generating new ideas, the focus group is an excellent method for initially screening
ideas & concepts.
• The group of 8-14 participants is stimulated by comments from each other in creatively
conceptualizing & developing a new product idea to fill a market need.
• E.g. one company interested in the women’s slipper market received its new product
concept for a “warm & comfortable slipper that fits like an old shoe” from a focus group of 12
women from various socioeconomic backgrounds in the Boston area.
• It is based on the fact that people can be stimulated to greater creativity by meeting
with others and participating in organized group experiences.
• The characteristics of this method are keeping criticism away; free wheeling of idea,
high quantity of ideas, combinations and improvements of ideas. Such type of session should be
fun with no scope for domination and inhibition. Brainstorming has a greater probability of
success when the effort focuses on specific product or market area.
Brain writing: (created by Bend Rohr Bach in 1960 & named Method 635)
• The participants write their ideas on special forms or cards that circulate within the group, that
consists of usually 6 members.
• Each group member generates & writes down three ideas during a 5 minute period, until each
form has passed all participants.
• The leader monitors the time interval & can reduce or lengthen the time given to participants
according to the need of the group
Problem inventory & analysis: A method for obtaining new ideas & solutions by focusing on
problems.
• This analysis uses individuals in a manner that is analogous to focus groups to generate new
product ideas. However, instead of generating new ideas themselves, the consumers are provided
with list of problems and then asked to have discussion over it and it ultimately results in an
entirely new product idea.
Publication:
Publication of different organisation contain lot of information about products and services sales
broachers, catalogues, advertisement, publicity posters, etc., are some of the sources which can
easily provide valuable ideas.
Daydreaming: Productive day dreaming focuses towards a specific goal. It does not matter if it
appears like an impossible task. Many famous inventors have done so in the past and have
sparked off ideas that led to life-changing invention, most notably, the airplane.
Since the capital budgeting is related to the long-term investments whose returns will be fetched
in the future, certain traditional and modern capital budgeting techniques are employed by the
firm to judge the feasibility of these projects.
The traditional method relies on the non-discounting criteria that do not consider the time value
of money, whereas the modern method includes the discounting criteria where the time value of
money is taken into the consideration.
The payback period, though, disregards the time value of money. It is determined by counting
the number of years it takes to recover the funds invested. For example, if it takes five years to
recover the cost of the investment, the payback period is five years.
Net present value (NPV) of a project represents the change in a company's net worth/equity that
would result from acceptance of the project over its life. It equals the present value of the project
net cash inflows minus the initial investment outlay. It is one of the most reliable techniques used
in capital budgeting because it is based on the discounted cash flow approach.
• Net after-tax cash flows equals total cash inflow during a period, including salvage value
if any, less cash outflows (including taxes) from the project during the period.
• The initial investment outlay represents the total cash outflow that occurs at the inception
(time 0) of the project.
• The present value of net cash flows is determined at a discount rate which is reflective of
the project risk. In most cases, it is appropriate to start with the weighted average cost of
capital (WACC) of the company and adjust it up or down depending on the difference
between the risk of the specific project and average risk of the company as a whole.
i
R is the net cash inflow expected to be received in each period;
i is the required rate of return per period (i.e. the hurdle rate, discount rate);
n are the number of periods during which the project is expected to operate and generate cash
inflow
The Internal Rate of Return (IRR) is the discount ratethat makes the net present value
(NPV) ... In other words, it is the expected compound annual rate of return that will be earned
on a project or investment. In the example below, an initial investment of $50 has a 22% IRR
The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at
the firm's cost of capital and that the initial outlays are financed at the firm's financing cost. ...
The MIRR, therefore, more accurately reflects the cost and profitability of a project.
Original investment
A Project Report needs to be done / prepared with great care & consideration. The Important
Contents of a Good Project Report are given below :
b) Promoter(s) : His / Her / Their Educational Qualification , Work Experience , Project related
experience, special achievements.
c) Location : Exact proposed location of the Project, lease or freehold, location advantages
d) Land & Building : Land areas, built up area, type of construction, cost of construction, detailed
plan & cost estimate along with Plant layout.
e) Plant & Machinery : Details of Machinery reqd , Capacity, Suppliers, Cost, Various Alternatives
Available, Cost of other Miscellaneous Assets.
f) Production Process : Description of Production Process , Process Chart, Technical Know How,
Technology Alternatives Available, Production Programme etc.
g) Utilities : Water , Power, Steam, Compressed Air Requirements, Fuel, Coal / Oil etc., Cost
Estimates, Sources of Utilities.
i) Raw Material : List of Raw Materials reqd by Quality & Quantity , Sources of Procurement, Cost of
Raw Materials, Tie Up Arrangements, if any , for Procurement of Raw Materials, Alternative Raw
Materials , if any.
j) Man Power : The Requirement such as Skilled, Semi Skilled, & Un Skilled (Helpers), Places of
Manpower Availability, requirement of Training & its Cost.
k) Products : Product Mix, Product Standard, Estimated Production & Sales Figures, Alternative
Product Substitutes , if any.
l) Market : End – Users of Products, Distribution of Market as Local, National, International, Trade
Practices, Sales Promotion devices etc.
m) Requirement of Working Capital : Working Capital Reqd , Sources of Working Capital, need for
Collateral Security, Nature & extent of Credit facilities offered & available.
n) Requirement of Funds : Break up of Total Project Cost in terms of Costs of Land, Building,
Plant & Machinery, Misc. Fixed Assets, Preliminary & Pre -Operative Expenses, Contingencies &
Margin Money for Working Capital, Financial Arrangements for meeting the Cost of Setting up of the
Project.
o) Cost of Production & Profitability of first five years, Break Even Analysis, Schedule of
Implementation etc .
Executive Summary – This is a brief overview of the entire business plan. This section of the
business plan decides whether the stakeholders or investors will continue reading the plan or not.
It includes a brief overview of the business idea, the offering, business goals, target market,
competition, USP, the team and the financial outlook for the business.
Company Description & Synopsis – This section of the business plan explains the company’s
mission, philosophy, goals, industry, legal structure, and USP briefly but is more elaborate than
the executive summary. The details are followed by the problem the company is solving for the
customers and the solution which makes it stand out of the competition.
Market Overview – This section explains the current market scenario of the industry – the size
of the market, market trends, success stories, what is working and what isn’t, and what is being
favoured and expected by the customers in the market. This section gives the readers a reason to
believe why the company chose the market stated. Usually, everything in this section is
supplemented with a bundle of facts, stats, and figures to prove that the entrepreneurs have done
their research before choosing this as an apt market for their offering.
Customer Analysis – The customer analysis sections include the persona of the (prospective)
customer, which includes his/her demographics, geographics, psychographics, needs, wants,
desires, buying habits, etc.
Product/Service Overview – This is a section dedicated to the offering the company is (or will
be) providing to the customers. It answers all the what, why, where, and when questions related
to the product and reiterates the previous stance of why it is the perfect solution for the problem
stated.
Business Model – The business model is the conceptual structure that explains how the company
works or will work. This section will answer the question of how it will provide the offering in
the market and why is the offering viable. If the company were Uber, this section would include
how it would partner with cab drivers and how would its business structure be viable for both the
taxi drivers and its customers.
Revenue Model – The revenue model explains how the company is planning to earn money
using the business structure explained in the business model section. It explains the intricacies of
the expenses and revenue sources of the company.
Competitive Analysis – This section is dedicated to explaining who are the competitors, what
are their USPs, and what are the strategies used by the business to tackle them.
Marketing Plan – The marketing plan acts as an inference of all the details explained earlier.
This section provides the details on how the company plans to use the information mentioned
above in formulating and executing their marketing strategies. The marketing plan is an
important section of the business plan as it explains how the company is planning to reach out to
the customers and stand out of the competitors. That being said, the marketing plan isn’t limited
to the promotion of the offering. It includes a holistic strategy to market the offering right from
production to post-sales.
Management Team – This section gives the information of all the members on board, their
qualifications, experience, and their posts in the company.
Funding & Financials – Funding and financials form the conclusion, but it is the most
important section of the business plan for startups as it states the cost of the execution of the
business plan. It includes all the short-term and long-term financial requirements and funding
goals and how the investors can help the company achieve them
New businesses should detail the steps to start the new enterprise with a start-up business
plan. This document typically includes sections describing the company, the product or service
your business will supply, market evaluations and your projected management team. Potential
investors will also require a financial analysis with spreadsheets describing financial areas
including, but not limited to, income, profit and cash flow projections.
Internal business plans target a specific audience within the business, for example, the marketing
team who need to evaluate a proposed project. This document will describe the company’s
current state, including operational costs and profitability, then calculate if and how the business
will repay any capital needed for the project. Internal plans provide information about project
marketing, hiring and tech costs. They also typically include a market analysis illustrating target
demographics, market size and the market’s positive effect on the company income.
A strategic business plan provides a high-level view of a company’s goals and how it will
achieve them, laying out a foundational plan for the entire company. While the structure of a
strategic plan differs from company to company, most include five elements: business vision,
mission statement, definition of critical success factors, strategies for achieving objectives and an
implementation schedule. A strategic business plan brings all levels of the business into the big
picture, inspiring employees to work together to create a successful culmination to the
company’s goals.
Operations plans are internal plans that consist of elements related to company operations. An
operations plan, specifies implementation markers and deadlines for the coming year. The
operations plan outlines employees’ responsibilities.
Growth plans or expansion plans are in-depth descriptions of proposed growth and are written
for internal or external purposes. If company growth requires investment, a growth plan may
include complete descriptions of the company, its management and officers. The plan must
provide all company details to satisfy potential investors. If a growth plan needs no capital, the
authors may forego obvious company descriptions, but will include financial sales and expense
projections.