Entrepreneurship & Project

Management
Module-3
Dr. Joseph Cherukara
 Contents of module-3
• Concept of Project : Generation and screening of
project idea—Project formulation-
• Market demand and situation analysis–
• Technical analysis;
• Financial analysis, analysis of project risk, firm risk and
market risk,
• Cost benefit analysis, social cost benefit analysis—
• Environmental appraisal of projects– stress on
environment—
• A project report preparation
Entrepreneurship
 What is entrepreneurship
• Entrepreneur is a person who sets up a
business or businesses, taking on financial
risks in the hope of making profit
• Entrepreneurship is the process of designing,
launching and running a new business, which
is often initially a small business. The people
who create these businesses are called
entrepreneurs
 Process of entrepreneurship
• Idea generation
• Evaluation of the idea
– Calculate the gap, cost-effectiveness, risk and
profitability of the idea
– project report (business plan)
• Assume the risk for the sake of profit
• Organise and acquire resources for the business
– Money-Man-Machine-Materials-Market
• Start and run the business
• Remain as the guiding force
Concept of Project : Generation and
screening of project idea-- Project
formulation-
 Concept of project
• As per contemporary business and science a
project is any undertaking, carried out
individually or collaboratively and possibly
involving research or design, that is carefully
planned to achieve a particular aim
 Characteristics of a Project
• Project has a purpose
• Project is a planned activity
• Project has typically a start and end
• Project has a unique set of requirements
• Project is once off endeavour
• Project is not business as usual
• Project is cross functional
• Project has a budgeted cost
 Generation and screening of
project idea
Generation of Idea
• Brainstorm
• Flashed idea
• Ideas generated from long experience
Screening of project idea
• SWOT Analysis
 Project formulation
• Project formulation is the step by step
investigation of resources and development of
project idea for the achievement of an
objective
Market demand and
situation analysis
 Market Demand
• Demand is the quantity of a good or service that
consumers and businesses are willing and able to
buy at a given price in a given time period.
• Market demand is the sum of the individual
demand for a product from buyers in the
market. If more buyers enter the market and
they have the ability to pay for items on sale,
then market demand at each price level will rise.
 Situation Analysis
A situational analysis must be done to know about –
• (a) The preferences and purchasing power of customer
• (b) Action and strategies of the competitors
• (c) Practices of middle man
Specification of objectives helps the organization to move
towards a particular direction. The objectives to be focused
on are:
• (a) Potential buyer
• (b) Total demand
• (c) Break up of demand
• (d) Type of distribution channel
• (e) Prices and warranties
Technical analysis
 What is Technical analysis?
• Technical analysis is the analysis of technical
and engineering aspects of a project. It is the
task of technical expert.
• The purpose of Technical analysis is
– To ensure that the project is technically feasible
– Ensure that all technical inputs required are made
available
– Facilitate most optimal formulation of the project
in terms of technology, size, location, etc
 Technical analysis process
The technical analysis includes
• Manufacturing process/technology
• Technical arrangements (know how)
• Location and site
• Structure and civil work
• Machinery and equipments
• Project charts and layouts
• Plant capacity
• Material inputs and utility
• Product mix
• Environmental aspects
• Schedule of project implementation
Financial analysis, analysis of project
risk, firm risk and market risk,
 What is Financial Analysis?
• Financial analysis is the process of evaluating
businesses, projects, budgets and other finance-
related entities to determine their performance
and suitability.
• Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid or
profitable enough to warrant a monetary
investment.
• When looking at a specific company, a financial
analyst conducts analysis by focusing on the
income statement, balance sheet, and cash flow
statement.
 Analysis of project risk
• Project risk is an uncertain event or condition
that, if it occurs, has an effect on one or more
project objectives
• Risk analysis involves examining
how project outcomes and objectives might
change due to the impact of the risk event.
• Once the risks are identified, they are analysed to
identify the qualitative and quantitative impact of
the risk on the project so that appropriate steps
can be taken to mitigate them.
 Tools for analysis financial risk
• Break-even analysis
• Sensitivity analysis
• Debt service coverage ratio
 Analysis of firm risk and market risk
• Firm risk is the financial uncertainty faced by
an investor who holds securities in a
specific firm
• Market risk is the possibility of an investor
experiencing losses due to factors that affect
the overall performance of the financial
markets in which he or she is involved.
 Cost benefit analysis
• Cost–benefit analysis, sometimes called
benefit costs analysis, is a systematic approach
to estimating the strengths and weaknesses of
alternatives used to determine options which
provide the best approach to achieving
benefits while preserving savings.
 Social cost benefit analysis
To reflect the real value of a project to society, we
must consider the impact of the project on
society.

Thus ,when we evaluate a project from the view

point of the society (or economy) as a whole, it is
called
Social Cost Benefit Analysis (SCBA)/Economic
Analysis.
 Environmental appraisal of projects–
stress on environment
• Environmental Appraisal is the process of
identifying opportunities and threats facing an
organization. It is a systematic approach to
understanding the environment. Business
firms undertake SWOT analysis to understand
the external and internal environment.
 Environment
• Environment means the surroundings,
external objects, influences or circumstances
under which someone or something exists.
• Two types of environment
– External environment
– Internal environment
 Internal environment
• Structure
• Operation procedure
• Finance
• Human resource
• Marketing approach
• R & D etc.
 External Environment
Micro Environment Macro Environment
• Shareholders • Socio cultural
• Employees • Technological
• Suppliers • Economic
• Banks – capitalist
– Socialist
• Customers
• Distribution channels • Political
• International etc.
 Environmental sectors
1. Economic environment
2. International Environment
3. Market Environment
4. Political Environment
5. Regulatory Environment
6. Socio Cultural Environment
7. Supplier Environment
8. Technological Environment
 SWOT Analysis
Internal Environment

STRENGTH WEAKNESS
External Environment

OPPORTUNITIES THREATS