Generation and Screening of Project Ideas Project Management

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    Generation And Screening Of

    Project Ideas

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    Generation Of Ideas

    o Most of the project ideas

    involve combiningexisting fields oftechnology or offeringvariants of presentproduct or services.

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    Stimulating The Flow of ideas

    o

    SWOT Analysiso Clear Articulation Of Objectives Cost reduction Productivity improvement

    Increase in capacity utilization Improvement in contribution margin Expansion into promising field

    A clear articulation and prioritization of objectives helps

    in channelizing the efforts of employees and productionthem to think more imaginatively

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    Stimulating The Flow Of Idea

    o

    Fostering The Conducive Climate

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    Monitoring The Environmento Firm must systematically monitor the environment

    and access its competitive abilities. For the purposeof monitoring, the business environment may bedivided into six categories:-

    v Economic sectorv Governmental sectorv Technological sectorv Socio-demographic sectorv Competition sectorv Supplier sector

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    Economic Sector

    o

    State Of The Economyo Overall Rate Of growtho Growth rate of primary , secondary and tertiary

    sectoro

    Cyclical fluctuationo Linkage with the world economyo Trade surplus / deficito Balance payment situation

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    Governmental Sector

    o

    Industry Policyo Government Plans and Projectso Tax Frameworko Subsidies, incentives and concessionso

    Import and export policieso Financing normso Lending conditions of financial institutions and

    commercial banks

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    Technological Sector

    o

    Emergence of new technologieso Access to technical know how, foreign as well as

    indigenouso Receptiveness on the part of industries

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    Socio-Demographic Sector

    o

    Population trendso Age shift in populationo Income distributiono Education profileo

    Employment Of Womeno Attitudes toward consumption and investment

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    Competition Sector

    o

    Number of firms in the industry and the market shareof the top few ( four or few)

    o Degree of homogeneity and differentiation amongproducts

    o

    Entry barriero Comparison with substitutes in term of quality, price,

    appeal and functional performanceo Marketing policies and practices

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    Supplier Sectors

    o

    Availability and cost of raw materials and subassemblies

    o Availability and cost of energyo Availability and cost of money

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    Corporate Appraisal

    o A realistic appraisal of corporate strength and

    weakness is essential for identifying investmentopportunities which can be profitably exploited. Thebroad and important aspects are:-

    o Marketing and Distributiono Production and Operationso Research and Developmento Corporate Resource And Personnelo Finance and Accounting

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    Marketing and Distribution

    o

    Market Imageo Product lineo Market Shareo Distribution networko

    Customer Loyaltyo Marketing and distribution

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    Production And Operations

    o

    Condition and Capacity of plant and machineryo Availability of raw materials, sub-assemblies and

    powerso Degree of vertical integrationo

    Location advantageo Cost structure

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    Research and Development

    o

    Research capabilities of the firmo Track record of new product developmento Laboratories and testing facilitieso Coordination between research and operations

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    Corporate Resources andPersonnelo

    Corporate Imageo Clout with governmental and regulatory agencieso Dynamism of top managemento Competence and commitment of employees

    o

    State of industrial relations

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    Finance And Accounting

    o

    Financial leverage and borrowing capacityo Cost of Capitalo Tax Situationo Relations with shareholders and creditors

    o

    Accounting and control systemo Cash flow and liquidity

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    Profit Potential Of Industries:Porter Model

    Profit potential of an industry depends on the combinedstrength of the following five basic competitive forces:-q Threats of new entrantsq Rivalry among existing firms

    q Pressure from substitute productq Bargaining power of buyerq Bargaining power of seller

    Forces Driving Industry

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    Forces Driving IndustryCompetition

    PotentialEntrants

    Suppliers

    Substitutes

    Buyers

    THE

    INDUSTRYRivalryAmongExisting

    Firms

    Threats OfNewEntrantsBargainin

    g PowerOfSuppliers

    BargainingPower OfBuyersThreats

    OfSubstituteProducts

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    Threats Of New Entrantso New entrants add capacity, inflate costs, push prices

    down, and reduce profitability. If an industry faces thethreat of new entrant, its profit potential would belimited. The threats from new entrants is low if theentry barrier confer an advantage existing firm anddeter new entrants.

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    Threats Of New Entrants

    o The new entrants have to invests substantialresources to enter the industry

    o Economies of scale are enjoyed by the industryo Existing firms control the distribution channels,

    benefit from product differentiation in the form ofbrand image and customer loyalty

    o

    Switching costs- these are essentially one time costsof switching from the products of one supplier toanother are high

    o The government policy limits or even prevents new

    entrants

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    Rivalry Between Existing Firmso Firms in an industry compete on the basis of

    price, quality, promotion, service, warrantiesand so on. If the rivalry between the firms inan industry is strong, competitive movesand countermoves dampen the average

    profitability of the industry. The intensity ofrivalry in an industry tends to be high when:-

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    Rivalry Between Existing Firms

    o

    The number of competitors in the industry is largeo At least a few firms are relatively balanced and

    capable of engaging in a sustained competitive battleo The industry growth is sluggish, prodding firms

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