Generation and Screening of Project Ideas

Generation of Ideas
Stimulating Ideas
SWOT
Charting Clear Objectives
Cost Reduction
Productivity enhancement
Increase Capacity Utilization
Improvement in contribution margin
Expansion into promising fields
Fostering a conducive climate
Monitoring the Environment
Economic Sector Government Sector Technology Sector Competition Sector
State of the Eco Ind Policy New Tech # of firms and mkt sh
Rate of GDP Growth Govt Prog Collaboration of top 4
Cycle Tax regime Product Differentiation
Workd Economy link Subsidies, Incentives Socio- demographic Entry Barriers
Fiscal n Trade Surplus Exim policy Population, Age Quality,Price,Appeal
BOP Financing norm Income, Education functionality of product
Supplier Sector Liquidity Women employment Mktg Policy n Practices
Availability and cost of raw materials and empowerment
Availability and cost of energy, telecom, manpower Consumption/investment
Capital, Ancillary units

Corporate Appraisal
A realistic appraisal of firm's strngth and weaknesses
Marketing and Distribution Production n Operation R&D Corp Resources n Manp
Mkt image Condition n Plnt cpty R&D capacity of firm Corp Image
Product lmage RM, Power, sub assembly Track record of new R&D Clout with authorities
Mkt Share Dgre of Vertical Integ Lab and testing facility Dynamism of top mgmt
Distribution network -ration Coordination between Competence and commit
Customer loyalty Location R&D and Operations ment of employees
Mkt n Distribution cost Cost Structure State of Industrial Labour
Relations
Finance and Accounting
Financial Leverage and borrowing capacity Accounting and control system
WACC Tax rate Shareholder Relation and Creditors relation Cash Flows and Liquidity

Tools for Identifying Investment Opportunities

Porter Model
Threat of New entrants Pressure from substitute products
Heavy Initial Investment Price-Performance trade off of substitute
Economies of Scale product is attractive.
Control over distribution channel Low Switching Cost
High switching cost Substitute product firm very profitable
Monopoly and govt policy Bargaining power of buyers
Rivalry among existing firms Price cut, better service and induce competition
# of competitors among vendors, depress profitability
Firms capable of sustained Don't sell too much to one buyer
competative battle Low switching cost
Industry growth sluggish Easy backward integration
High FC pressure to increaee Bargaining power of sellers
capacity utilization Raise RM Price, lower quality, curtain service
Overcapacity Few Suppliers
Price competition No strong substitute product
High Exit Barriers High Switching cost for buyers

Life Cycle Approach

Pioneering Stage
Rapid Growth Stage
Maturity and Stabilisation Stage
Declining Stage
 The Experience Curve
Learning Effect
Technological Improvement
Economies of Scale

Scouting for Project Ideas

Analysing the performance of existing industries
Review of Imports and Exports
Govt Plan outlays
Suggestions by Financial Institutions and Developmental Agencies
Investigate Local materials and Resources
Analyse economic and social trends
Study new tech developments
Draw Cues from consumption abroad
Explore possibality of reviving sick units
Identify unfuilfilled Psychological needs
Attend Trade Fairs
Stimulate Creativity for Generating New Product Ideas
Modification, Rearrangement, Reversal, Magnification
Reduction, Substitution, Adaptation, Combination.
Hope that you chance upon a project idea.

Preliminary Screening
Compatability with Promoter
Legal
Availability of Inputs, Expertise
Availability of Market
Cost
Risk
Project Rating Inxed
Sources for Positive Net Present Value
Economies of scale
Product Differentiation
Effective Advertising and superior marketing
Exceptional Service
Innovative Product Features
High Quality and Dependability
Cost Advantage
Marketing Reach
Technological Edge
Fiscal Barriers, Taxation, Entry Restrictions
On Being an Entrepreneur
Willingness to make sacrifice
Leadership
Decisiveness
Confidence in the Project
Marketing orientation
Strong Ego
Open Mindedness
 Competition Sector
# of firms and mkt sh

Product Differentiation
Entry Barriers
Quality,Price,Appeal
functionality of product
Mktg Policy n Practices

Corp Resources n Manp

Corp Image
Clout with authorities
Dynamism of top mgmt
Competence and commit
ment of employees
State of Industrial Labour

g and control system

Cash Flows and Liquidity

m substitute products
ance trade off of substitute

duct firm very profitable

ower of buyers
er service and induce competition
s, depress profitability
much to one buyer

ower of sellers
e, lower quality, curtain service

g cost for buyers