Description
project management, project life cycle, production planning and development strategy, how to prepare financial plan and product/services offered.
Project Appraisal
Nature of Project Management
• • • • Long Term investment Exchange of current funds for future benefits Benefits (anticipated) over a long period Futuristic; a planning exercise. All variables are estimated • Investment irreversible • High degree of risk • Requires judicious decision
Importance of Project Management
• Affects the value of the company:
– Strategic investment decisions – Significant changes in company's expected profits
• Determines future cost structure • Not Easily reversible • Limited resources
A Project
• Project is a plan to achieve a specific objective with an authority to implement it. • Three basic attributes:
– The input characteristics: what the project will consume – The output characteristics: what the project will generate – The social cost benefit characteristics: what the society will have to sacrifice and what will be the gains
Types of Projects
• Financial institutions in India classify projects on basis of purpose:
– New projects – Expansion projects – Modernisation projects – Diversification projects
• Related : Concentric • Unrelated: Conglomerate
Project life cycle
• Pre-investment phase:
– the planning phase
• Construction phase:
– developing the infrastructure for the project and creation of assets
• Normalisation phase:
– Performing the activity for which project established
Project life cycle
Generation of new ideas
Information
Evaluation
Screening all feasible ideas on basis of profitability
Concept Development and testing
Consumer preferences
Business analysis
Technical, financial and commercial feasibility
Evaluation & feedback
Continue/ expand /exit
Commercialization
Advertising, promotion, distribution
Product development
Prototype, branding, packaging
Selecting a business idea
• Always work on multiple ideas
– Continuous flow of information – Comparative evaluation
• Select an idea which has
– – – – – a ready market Technology known Raw material in plenty Low competition High profitability
Market Analysis
• Industry characteristics and trends • Target Market
– Current size and potentials
• Sales forecasts • Competitors • Marketing strategies
Production/Operations Plan
• Suppliers • Regulations/licenses • Layout • Inventory controls • Equipment • Quality assurance
Product Planning and Development Strategy
Existing Products New Products
Market penetration Product Development Existing Markets
Market Development Diversification New Markets
Financial Plan
• Estimated Income • Estimated Costs • Cash Flow Planning • Financial Resources • Financing Options
Financial Papers
• • • There are four kinds of financial papers that should be included in the plan: Information about sources of funds: summary of financial needs and a statement detailing allocation of money. "Pro forma" statements are projections about income and cash flow;
– might include a cash flow statement or budget, a multi-year projection of income, break-even analysis, predictions about fixed and variable costs, as well as projections about total sales.
•
"Actual performance statements" are the records that show how business has performed in the past;
– include balance sheet, snapshot of assets, liabilities, and net worth as of a specific date, a profit and loss statement and loan applications, if any.
•
Analysis of financial statements shows the relationship between income and balance sheet; might include liquidity and profitability analysis.
Management Plan
• • • • Legal Issues Support Systems Organizational Systems Employee Management
Description of the Business
• • • • Goals and Objectives Products/Services Unique Competitive advantages Growth Opportunities
Ownership
• Form of business • Equity positions • Deal structure
Products/Services
• If You Make a Product
– Describe the things, from raw material to finished product. – include a time line or a flow chart to help explain the process. – list suppliers, their location, and the costs associated with buying the raw materials and transporting them to business location. – note any contingency plans in case there is a break in the production chain – Quality control and after-the-sale customer service issues.
Products/Services
• If You Are a Retailer
– Talk about sources of supplies, – what you are going to sell – how you select vendors.
• If You Provide a Service
– Describe the service , the customers, and the way the service will be provided. – The amount of time the work takes, supplies, and equipment – warranty on goods and services, if any.
Specific Objectives
Objectives
Sales Profitability Market share Market position Productivity Product/service quality Innovation Employee morale Training & development Social responsibility Effectiveness Qualitative Long term Measurement of objectives Efficiency Quantitative Time frame Short Term
doc_817765287.ppt
project management, project life cycle, production planning and development strategy, how to prepare financial plan and product/services offered.
Project Appraisal
Nature of Project Management
• • • • Long Term investment Exchange of current funds for future benefits Benefits (anticipated) over a long period Futuristic; a planning exercise. All variables are estimated • Investment irreversible • High degree of risk • Requires judicious decision
Importance of Project Management
• Affects the value of the company:
– Strategic investment decisions – Significant changes in company's expected profits
• Determines future cost structure • Not Easily reversible • Limited resources
A Project
• Project is a plan to achieve a specific objective with an authority to implement it. • Three basic attributes:
– The input characteristics: what the project will consume – The output characteristics: what the project will generate – The social cost benefit characteristics: what the society will have to sacrifice and what will be the gains
Types of Projects
• Financial institutions in India classify projects on basis of purpose:
– New projects – Expansion projects – Modernisation projects – Diversification projects
• Related : Concentric • Unrelated: Conglomerate
Project life cycle
• Pre-investment phase:
– the planning phase
• Construction phase:
– developing the infrastructure for the project and creation of assets
• Normalisation phase:
– Performing the activity for which project established
Project life cycle
Generation of new ideas
Information
Evaluation
Screening all feasible ideas on basis of profitability
Concept Development and testing
Consumer preferences
Business analysis
Technical, financial and commercial feasibility
Evaluation & feedback
Continue/ expand /exit
Commercialization
Advertising, promotion, distribution
Product development
Prototype, branding, packaging
Selecting a business idea
• Always work on multiple ideas
– Continuous flow of information – Comparative evaluation
• Select an idea which has
– – – – – a ready market Technology known Raw material in plenty Low competition High profitability
Market Analysis
• Industry characteristics and trends • Target Market
– Current size and potentials
• Sales forecasts • Competitors • Marketing strategies
Production/Operations Plan
• Suppliers • Regulations/licenses • Layout • Inventory controls • Equipment • Quality assurance
Product Planning and Development Strategy
Existing Products New Products
Market penetration Product Development Existing Markets
Market Development Diversification New Markets
Financial Plan
• Estimated Income • Estimated Costs • Cash Flow Planning • Financial Resources • Financing Options
Financial Papers
• • • There are four kinds of financial papers that should be included in the plan: Information about sources of funds: summary of financial needs and a statement detailing allocation of money. "Pro forma" statements are projections about income and cash flow;
– might include a cash flow statement or budget, a multi-year projection of income, break-even analysis, predictions about fixed and variable costs, as well as projections about total sales.
•
"Actual performance statements" are the records that show how business has performed in the past;
– include balance sheet, snapshot of assets, liabilities, and net worth as of a specific date, a profit and loss statement and loan applications, if any.
•
Analysis of financial statements shows the relationship between income and balance sheet; might include liquidity and profitability analysis.
Management Plan
• • • • Legal Issues Support Systems Organizational Systems Employee Management
Description of the Business
• • • • Goals and Objectives Products/Services Unique Competitive advantages Growth Opportunities
Ownership
• Form of business • Equity positions • Deal structure
Products/Services
• If You Make a Product
– Describe the things, from raw material to finished product. – include a time line or a flow chart to help explain the process. – list suppliers, their location, and the costs associated with buying the raw materials and transporting them to business location. – note any contingency plans in case there is a break in the production chain – Quality control and after-the-sale customer service issues.
Products/Services
• If You Are a Retailer
– Talk about sources of supplies, – what you are going to sell – how you select vendors.
• If You Provide a Service
– Describe the service , the customers, and the way the service will be provided. – The amount of time the work takes, supplies, and equipment – warranty on goods and services, if any.
Specific Objectives
Objectives
Sales Profitability Market share Market position Productivity Product/service quality Innovation Employee morale Training & development Social responsibility Effectiveness Qualitative Long term Measurement of objectives Efficiency Quantitative Time frame Short Term
doc_817765287.ppt