Year: 2020

The competencies may be classified into following categories:

1. Personal entrepreneurial competencies
2. Venture initiation and success competencies

a) Enterprise launching competencies

b) Enterprise management competencies

1. Personal Entrepreneurial competencies

It is the personal characteristics of an individual who possess to perform the task effectively and efficiently.Personal entrepreneurial competencies include the following:

a) Initiative

The entrepreneur should be able to take actions that go beyond his job requirements and to act faster. He is always ahead of others and able to become a leader in the field of business.He Does things before being asked or compelled by the situation and acts to extend the business into new areas, products or services.

b) Sees and acts on opportunities

An entrepreneur always looks for and takes action on opportunities. He Sees and acts on new business opportunities and Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance.

c) Persistence

An entrepreneur is able to make repeated efforts or to take different actions to overcome an obstacle that get in the way of reaching goals. An entrepreneur takes repeated or different actions to overcome an obstacle and Takes action in the face of a significant obstacle.

1. d) Information Seeking

An entrepreneur is able to take action on how to seek information to help achieve business objectives or clarify business problems.They do personal research on how to provide a product or service.They seek information or ask questions to clarify what is wanted or needed.They personally undertake research and use contacts or information networks to obtain useful information.

e) Concern for High Quality of Work

An entrepreneur acts to do things that meet certain standards of excellence that gives him greater satisfaction. An entrepreneur states a desire to produce or sell a top or better quality product or service. They compare own work or own company’s work favourably to that of others.

f) Commitment to Work Contract

An entrepreneur places the highest priority on getting a job completed.They make a personal sacrifice or take extraordinary effort to complete a job.They accept full responsibility for problems in completing a job for others and express concern for satisfying the customer.

g) Efficiency Orientation

A successful entrepreneur always finds ways to do things faster or with fewer resources or at a lower cost.They look for or finds ways to do things faster or at less cost.An entrepreneur uses information or business tools to improve efficiency. He expresses concern about costs vs. benefits of some improvement, change, or course of action.

h) Systematic Planning

An entrepreneur develops and uses logical, step-by-step plans to reach goals.They plan by breaking a large task into subtask and develop plans,then anticipate obstacles and evaluate alternatives.They take a logical and systematic approach to activities.

i) Problem Solving

Entrepreneurs identify new and potentially unique ideas to achieve his goals.They generate new ideas or innovative solutions to solve problems and they take alternative strategies to solve the problems.

j) Self-Confidence

Entrepreneur with this competency will have a strong belief in self and own abilities.They express confidence in their own ability to complete a task or meet a challenge.They stick to their own judgment while taking decision.

k) Assertiveness

An entrepreneur confronts problems and issues with others directly.Entrepreneur with this competency vindicate the claim to asset their own rights on others.They demand recognition and disciplines those failing to perform as expected.They asset own competence,reliability or other personal or company’s qualities.They also assert strong confidence in own company’s or organization’s products or service.

l) Persuasion

Entrepreneurs with this competency successfully pursue others to perform the activities effectively and efficiently.An entrepreneur can persuade or influence others for mobilizing resources, obtaining inputs, organizing productions and selling his products or services.

m) Use of Influence Strategies

An entrepreneur is able to make use of influential people to reach his business goals.Entrepreneurs with this competency influence the environment (Individuals/Institution) for mobilizing resources organizing production and selling goods and services to develop business contacts.

n) Monitoring

Entrepreneurs with this competency normally monitor or surprise all the activities of the concern to ensure that the work is completed by maintaining good quality.

o) Concern for Employee Welfare

Entrepreneurs with this competency take action to improve the welfare of employees and take positive action in response of employee’s personal concerns.

2. Venture Initiation and success Competencies

In addition to personal competencies Entrepreneur must also possess the competencies required to launch the enterprise and for its growth and survival.

It is further divided into two categories of competencies:

1. Enterprise launching competencies
2. Enterprise management competencies

1)  Enterprise launching competencies

• Competency to understand the nature of business

-To analyse the personal advantage of owning a small business.

-To analyse the personal risks of owning a small business.

-To analyse how to maximize the opportunities and minimize the risks of owning a business.

• Competency to determine the potential as an entrepreneur

-To consider the personal qualification and abilities needed to manage own business.

-To evaluate the own potentials for decision-making,problem solving and creativity.

-To determine own potential for management,planning,operations,personnel and public relations.

• Competency to develop a business plan

-To identify how a business plan helps the entrepreneur.

-To recognize how a business plan should be organized.

-To identify and use the mechanisms for developing a business plan.

• Competency to obtain technical assistance

-To prepare for using technical assistance.

-To select professional consultants.

-To work effectively with consultants.

• Competency to a choose the type of ownership

-To analyse the type of ownership of business.

-To follow the steps necessary to file for ownership of the business.

-To define politics and procedures for a successful multi-owner.

• Competency to plan the market strategy

-To use goods classification and life cycle analysis as planning tools for marketing.

-To develop and modify marketing mixes for a business.

-To use decision making tools and aid in evaluating marketing activities.

-To evaluate operations to improve decision making about marketing.

• Competency to locate the business

-To analyse customer transportation,access,parking and so forth. i.e. relative to alternative site locations.

-To complete a location feasibility study for the business.

-To determine the cost of renovating or improving a site for the business.

-To prepare an occupancy contrast for the business.

• Competency to finance the business

-To describe the source of information available to help in estimating the financing necessary to start a new business.

-To determine the finance necessary to start a new business.

-To prepare a project profit and loss statement and a projected cash flow statement for the new business.

-To prepare a loan application package.

• Competency to deal with the business

-To determine the need for legal assistance.

-To select the provisions that is desired in the lease.

-To prepare sales contract(such a s credit sales or long term sales) that may be utilized in the contracts

-To evaluate contracts.

-To determine the need for protection of ideas and intentions.

• Competency to comply with government regulations

-To appraise the effects of various regulations on the business operations.

-To acquire the information necessary to comply with the various rules and regulations affecting the business.

-To develop policies for the business to comply with the Government rules and regulations.

2) Enterprise Management Competencies

• Competency to manage the business

-To plan goals and objectives for the business.

-To develop a diagram showing the organizational structure for the business.

-To establish control practices and procedures for the business

• Competency to manage human resources

-To plan goals and objectives for the business.

-To develop a diagram showing the organizational structure for the business.

-To establish control practices and procedures for the business.

• Competency to manage human resources

-To write a job description for a position in the business.

-To develop a training programme online for employees.

-To develop a list of personnel for employees in the business.

-To develop an outline for an employee evaluation system.

-To plan a corrective interview with an employee concerning a selected problem.

• Competency to promote the business

-To create a long-term promotional plan.

-To describe the techniques used to prepare advertising and promotion

-To analyse competitive promotional activities.

-To evaluate promotional effectiveness.

-To plan a community relations programme.

• Competency to manage sales efforts.

-To develop a sales plan for the business.

-To develop policies and procedures for serving the customers.

-To develop a plan for training and motivating sales people.

• Competency to keep business records

-To determine who will keep the books for the business and how they will be maintained.

-To describe double-entry bookkeeping.

-Select the types of journals and ledges that you will use in the business.

-To identify the types of records that will be used in the business to record sales,cash receipts,cash disbursements,accounts receivable,accounts payable,payroll,petty cash,inventory,budgets and other items.

-To evaluate the business records.

-To identify how a micro-computer may be used to keep he business records.

• Competency to manage the finances

-To explain the importance of cash flow management.

-To identify financial control procedures.

-To describe how to find cash flow patterns.

-To analyse trouble spots in financial management.

-To describe how to prepare an owner’s equity financial statement.

-To analyse financial management ratios applicable to a small business.

-To identify the components of break even point problem.

-To review microcomputer application for financial management.

• Competency to manage customer credit and collection

-To analyse the legal rights and resource of credit guarantors.

-To develop a series of credit collection reminders and the follow up activities.

-To develop various credit and collection policies.

-To prepare a credit promotion plan.

-To discuss information resources and systems that apply to credit and collection procedures.

• Competency to protect the business

-To prepare policies for the firm that will help minimize losses due to employee theft, vendor theft, bad cheques, shoplifting, robbery, injury or product liability.

The Entrepreneur is a change agent that acts as an industrialist and undertakes the risk associated with forming the business for commercial use. An entrepreneur has an unusual foresight to identify the potential demand for the goods and services.

The entrepreneurship is a continuous process that needs to be followed by an entrepreneur to plan and launch the new ventures more efficiently.

Entrepreneurial Process

1. Discovery: An entrepreneurial process begins with the idea generation, wherein the entrepreneur identifies and evaluates the business opportunities. The identification and the evaluation of opportunities is a difficult task; an entrepreneur seeks inputs from all the persons including employees, consumers, channel partners, technical people, etc. to reach to an optimum business opportunity. Once the opportunity has been decided upon, the next step is to evaluate it.

An entrepreneur can evaluate the efficiency of an opportunity by continuously asking certain questions to himself, such as, whether the opportunity is worth investing in, is it sufficiently attractive, are the proposed solutions feasible, is there any competitive advantage, what are the risk associated with it. Above all, an entrepreneur must analyze his personal skills and hobbies, whether these coincides with the entrepreneurial goals or not.

2. Developing a Business Plan: Once the opportunity is identified, an entrepreneur needs to create a comprehensive business plan. A business plan is critical to the success of any new venture since it acts as a benchmark and the evaluation criteria to see if the organization is moving towards its set goals.

An entrepreneur must dedicate his sufficient time towards its creation, the major components of a business plan are mission and vision statement, goals and objectives, capital requirement, a description of products and services, etc.

3. Resourcing: The third step in the entrepreneurial process is resourcing, wherein the entrepreneur identifies the sources from where the finance and the human resource can be arranged. Here, the entrepreneur finds the investors for its new venture and the personnel to carry out the business activities.
4. Managing the company: Once the funds are raised and the employees are hired, the next step is to initiate the business operations to achieve the set goals. First of all, an entrepreneur must decide the management structure or the hierarchy that is required to solve the operational problems when they arise.
5. Harvesting: The final step in the entrepreneurial process is harvesting wherein, an entrepreneur decides on the future prospects of the business, i.e. its growth and development. Here, the actual growth is compared against the planned growth and then the decision regarding the stability or the expansion of business operations is undertaken accordingly, by an entrepreneur.

The entrepreneurial process is to be followed, again and again, whenever any new venture is taken up by an entrepreneur, therefore, its an ever ending process.

Entrepreneurship is a process of turning market gaps into concrete results by putting the following things in place:

Step 1. Idea Generation:

To kick start operations, entrepreneurs must be imbued with rich ideas that can work. In order to generate ideas, entrepreneurs need to have an eye for detail. They should keep a close watch over changing trends in the market place and identify gaps that can be prof­itably exploited.

Step 2. Nature of Business:

The entrepreneur should be clear about the nature of type of business that he wants to be in:

1. What type of business- Wholesale or retail, independent or fran­chise business or simply a trading business.
2. What to offer- Products or services or a mix of both; he wants to trade in these or wants to produce and distribute.
3. In Which sector- Entertainment, construction, software, hardware, fashion, etc.
4. Is it a profitable business or a risky one -Carefully studying the prospects of chosen business. He needs to calculate the gains, the challenges ahead and the type of risks that exist and the viability of business in the long run.
5. Whether inputs, resources and requisite manpower available- It is better to carry out a feasibility study of everything beforehand.
6. Whether the idea will actually work or not- To this end, he has to conduct a feasibility study examining the pros and cons of everything.
7. Prepare the business plan and move ahead with other steps that follow the decision.

Step 3. Determine the Size and Scale of Operations:

The entrepreneur should be clear about what kind of sales could be generated at different price points. He should plan for a volume that recovers his costs fully and generates enough profits for survival initially. Then he can think of expanding volumes, size and scale of operations. A gradual step by step, trial and error process is what most market experts suggest. Rushing into catch a temporary wave of demand created by artificial mismatch between demand and supply might eventually put a very good business also on the stretcher.

For a budding small business venture, size should not be a fascinating option unless the market is totally ignored, unexplored or underserved (like it happened in the case of iodized salt, vegetarian tooth paste, low priced but reasonable quality detergents; multigrain wheat flour, etc.) The size and scale of operations chosen must be in sync with what the entrepreneur has in terms of available capital and other resources at his command.

Step 4. Select a Place for Business:

The entrepreneur must pick up a location that is closer to all the inputs, resources and materials that the business would require. Availability of manpower and transport links also need to be looked into. Other services like banking, telecommunications, and power supply need closer attention of course, different organisations in the same industry may have different facilities requirements.

For example Benetton uses only one distribution centre for the entire world, whereas Wal-Mart has several distribution centres in the United States alone. In any case, a small business owner of retail business must pay close attention to the convenience factor especially from the customers’ point of view.

Step 5. Choose the Form of Ownership:

The entrepreneur must be clear about the form of ownership that is closer to his heart. He could think of a small business owned by him exclusive or start the venture in partnership with someone or create a company with diversified shareholding. To start with, he can pick up the entity that is easy to form, simple to operate, allows freedom to implement his ideas without any legal or taxation problems and gives him enough room to expand further, whenever the opportunity turns out to be big.

Step 6. Determine Financial Requirements:

Here it is a question of calculating the fixed capital and working capital needs of the firm, keeping the present and future plans of the business in mind. The entrepreneur should be clear about the type of expenses that are going to eat up resources at different points of time. Requisite funds for emergency use need to be put in place. The sources of funds also need to be calculated well in advance. How much through bank financing, how much from the long term lending institutions, how much from the general public—if equity is a preferred option—how much from own sources etc.?

Step 7. Plan for Physical Facilities:

This is a question of giving a concrete shape to the business plan by arranging the physical infrastructure required. It includes decisions regarding machines, equipment, factory and of­fice design, choosing furniture, space planning, providing for repair and maintenance, availability of spare parts, degree of sophistication required in terms of modernizing the plant in every way—keeping the availability of skilled hands in the chosen location etc. An appropriate organisation structure must also be designed keeping the space needs of various departments, divisions and plants in mind.

Step 8. Select an Appropriate Plant Layout:

The choice of physical configuration or the layout of facilities is closed related to other operation decisions. A product layout is appropriate when large quantities of a single product are needed. It makes sense to custom design a straight line flow of work for a product when a specific task is performed at each work station as each unit flows past. Most assembly lines use this format.

For example, Dell’s personal computer factories use a product layout. The type of layout depends on the expected volume of production, space available, type of equipment, etc. The chosen layout, in any case, must be in sync with space available and must permit easy flow of production without posing any danger to human life.

Step 9. Determine Human Resource Requirements:

Here it is a question of finding human resource requirements in terms of physical numbers and also in terms of quality such as technical skill sets, managerial competencies, degree of expertise, necessity for people possessing latest knowledge in a high-tech area etc. The necessity for hiring people with qualities of head and heart must be recognized and the small business owner must keep plans ready for this purpose.

Step 10. Keep an Eye on Legal and Procedural Requirements:

All approvals, sanc­tions must be obtained well in advance. The needed paper work must be entrusted to experienced people hired for this purpose. Help from external consultants could also be obtained to avoid surprises of various kinds hitting the budding venture at a later stage. All taxation matters be carefully looked into at this stage. If required, the owner must carry out a drill looking into each and every detail personally.

Step 11. Launch the Business:

The owner should get ready to launch the business formally after acquiring physical and financial resources, providing for infrastructural facilities and hiring the people needed.

i.Observe the Local Market:

The environment would offer vital clues for starting rewarding ventures. For example, it can be retirement homes for ageing population. It could be a holiday resort to entice people earning good salaries. It could be developing a religious spot -emphasizing peace, tranquility, rejuvenation of mind and soul etc.

ii. Look at the Customer:

The changing tastes and preferences of customers would be ready made source of valuable ideas. The need to look good is making many young boys and girls to spend heavily on hair dressing, personal grooming, beauty salons, fitness, power dressing, perfumes, burgers, pizzas, gourmet coffee, designer pens, etc. One needs to have a critical eye for detail in order to exploit the oppor­tunities that present themselves from time to time.

iii. Observe Markets All Over the Globe:

Global market changes could be pointers to a change in trends in local markets as well. When global markets are crazy about latest cell phones, trendy watches, designer clothes, IPads and I-phones, Tablets etc. you can be sure of customers in local markets getting impacted sooner than later. Many entrepreneurs have picked up these trends and made a huge fortune in recent times— especially by joining hands with producers from markets such as South Korea, Taiwan, Singapore, China etc. (known for cheaper varieties of cell phones, tablets etc.)

iv. Look at Existing Products/Services Closely:

The entrepreneur can look at existing products and services offered by Indian as well as foreign companies to find out the ‘gaps’ that could be exploited profitably. You have the famous examples of Chik shampoo in sachets, use and throw kind of perfumes, cheaper detergents in the form of Ghadi, Nirma etc. Think back 30 years ago.

Did you find anyone in the field of anti-virus software, internet service providers, laptops, domestic fire protection devices etc.? One can think of converting raw wood into finished lumber. It can be fine-tuned to get designer beds and almirahs, dining tables, sofas of various kinds and put them all in a Furniture Mall! An existing service can be improved -such as getting fresh vegetables straight from farmers to city population through a home delivery service.

v. Mass Media:

The mass media is a great source of information, ideas and often opportunity. Newspapers, magazines, television, and nowadays the Internet are all examples of mass media. Take a careful look, for example, at the commercial advertisements in newspaper or magazine and you may well find businesses for sale. Well, one way to become an entrepreneur is to respond to such an offer.

Exhibitions another way to find the ideas for a business is to attend ex­hibitions and trade fairs. These are usually advertised on the radio or in newspapers; by visiting such events regularly, you will not only discover new products and services, but you will also meet sales representatives, manufacturers, wholesalers, distributors and franchisers. These are of­ten excellent sources of business ideas, information and help in getting started. Some of them may also be looking for someone just like you.

vi. Surveys:

Surveys conducted by reputed organisation on changing hab­its, tastes, preferences of customers could prove to be valuable sources of business ideas. Sometimes the age profiles of customers living in a locality might prompt an entrepreneur to start a fast food centre near a College, a designer watch show room in a posh locality, a beauty salon near a school etc.

vii. Complaints:

Complaints and frustrations on the part of customers have led to many a new product or service. Whenever consumers complain bitterly about a product or service, or when you hear someone say ‘I wish there was … “or” If only there were a product/service that could …” you have the potential for a business idea. The idea could be to set up a rival firm offering a better product or service, or it might be a new product or service which could be sold to the firm in question and/or to others.

viii. Brainstorming:

Brainstorming is a technique or creative problem-solving as well as for generating ideas. The object is to come up with as many ideas as possible. It usually starts with a question or problem statement. For example, you may ask “What are the products and services needed in the home today which are not available?” Each idea leads to one or more additional ideas, resulting in a good number.

1. Consider the surrounding community

When hunting for a business site, entrepreneurs should consider whether a given community is actively seeking new companies. Contact the local economic development agency to learn about possible incentives, which could include financial support for tenant improvements, municipal programs giving preference to area businesses or local tax and planning department waivers.

Economic development consultant Justin Erickson advised entrepreneurs to lock down incentives prior to signing a lease or making a commitment as “communities sometimes do not follow through with promised incentives once a company has signed a lease or bought a building.”

2. Beware of problem locations

Some locations are great. Others are miserable. Consider the revolving restaurant site, a spot that’s home to a new restaurant every six months: Each new owner believes that he or she has the secret sauce to make the site work only to call it quits after a short stretch. The fact is, not all locations are the same. Regardless of the product, service or business plan, some locations are simply bad for business.

“If you find yourself trying to decide between a better location at a higher rent versus a lesser location for a lower rent my advice is go for the better location,” said commercial lease consultant Dale Willerton. “When I’m consulting to tenants and doing site selection my job isn’t to find the cheapest location  it’s to select a site that will help the tenant maximize sales.”

3. Identify target customers

Entrepreneurs must carefully consider their target clients when developing a business plan. Then they should seek locations abundant with this type and ensure that these areas can provide employees with the needed skills.

“Estimate the market size and the customers’ purchasing power in the primary area,” Morato said. “Driving or walking time to the location should be studied. Also, examine the vehicular and traffic flow and take note of physical barriers and traffic limitations or detours.”

4. Pay a fair price

The ideal location will rarely be one with the lowest price tag. Entrepreneurs should be realistic and ready to pay for a good site. An ideal location will contribute toward the enterprise’s success. A poor one will result in rapid closure. Good locations are not cheap. A business plan should include a realistic projection of the costs involved.

“It may cost us more to do business here, and there are definitely some handicaps to doing business here, but there is a tremendous upside to being near your customers,” said Paul Beach, an executive who runs a company that makes lithium-ion batteries in California.

5. Know the competition

Very rarely will a business be the only game in town. Entrepreneurs must assess the competition and be certain there’s enough business to go around. If a given community is already saturated with similar businesses, consider a new location. Those determined to compete in a tight market must offer a product or service sufficiently game changing to draw enough business to make the operation viable.

“Identifying the competition in a market helps determine if your business idea is feasible,” according to the Iowa State University website. “A competitive assessment also directs how a product/service should be positioned.” This analysis will determine if the company can gain a competitive edge by offering something the existing competition doesn’t.

They say money makes the world go ’round, but the rapid advancements of technology aren’t far behind. Companies worldwide are relying on emerging technology more than ever to help drive innovation, strategy, growth and increase competitive advantage. Technology has become a crucial and indispensable part of almost every kind of business. Without the role of technology in business, many businesses simply could not survive. Just imagine a multinational organization or a small business enterprise trying to operate without the use of a telephone or computer — or even the Internet. Whatever form business technology takes — from video conferencing to the virtual sale of a new car or house or a more secure method for online banking and shopping — the role of technology in business continues to change the way we live and work.

Technology in business allows organizations to improve both the performance and overall effectiveness of products, systems and services, which, in turn, enables businesses to expand quickly and efficiently. Technology has a wide range of potential effects on management, as well as various ways it can impact the operations, productivity, profitability and sustainability of an organization. Modern technology offers numerous tools and applications — such as electronic email and live chat systems — that help managers effectively communicate with staff and oversee projects. Business technology not only improves communication in the workplace but also with clients. Companies use technology systems to improve the way they design and manage customer relationships. Technology such as electronic files speeds up the workflow process and can save space, paper and printing costs. Business technology enhances accounting procedures and recording of financial documents and improves inventory management. Technology in the workplace also improves the efficiency of recruiting, screening and hiring potential candidates. Another importance of the role of technology in business is to provide security to a business. Major advancements in electronic security systems and biometric alarm systems are helping keep businesses safe from hackers and thieves.

The Management of Information Systems

More corporations and small businesses than ever use technology to collect, store, analyze and manage information. Companies effectively use that stored data as part of their strategic planning process and to support their marketing efforts. Management information systems (MIS) enable companies to track sales data, expenses and productivity levels. The information gathered can provide reports on every function of a business, including manufacturing, human resource management, finance and accounting, consumer behaviors, market trends, demographics and competitor pricing. Data also can be used to identify areas of improvement within a business as well as opportunities for change and growth.

The management of information systems involves the planning, designing, organizing, coordinating, operating and control of technological products. Business managers need to have a thorough knowledge of technology tools as well as the field of technology management. If management of information systems is handled well, a business can reduce its costs of operations, create and implement new products, enter new markets, improve customer service, streamline administrative operations and create competitive advantage in the marketplace. The proper management of information systems will benefit both the organization and its customers, which will lead to the growth of that organization.

Technology Feasibility:

The assessment is based on an outline design of system requirements in terms of Input, Processes, Output, Fields, Programs and Procedures. This can be quantified in terms of volumes of data, trends, frequency of updating, etc. in order to estimate whether the new system will perform adequately or not. Technological feasibility is carried out to determine whether the company has the capability, in terms of software, hardware, personnel and expertise, to handle the completion of the project.

When writing a feasibility report the following should be taken into consideration:

1. A brief description of the business
2. The part of the business being examined
3. The human and economic factor
4. The possible solutions to the problems

At this level, the concern is whether the proposal is both technical­ly and legally feasible (assuming moderate cost).

Technical aspects relate to the production or generation of the project output in the form of goods and services from the projects inputs. Technical analysis represents study of the project to evaluate technical and engineering aspects when a project is being examined and formulated. It is a continuous process in the project appraisal system which determines the prerequisites for meaningful commissioning of the project.

Aspects of Technical Analysis

Technical analysis broadly involves a critical study of the following aspects, viz.,

1) Selection of Process/ Technology: For manufacturing a product, more than one process/technology may be available. For example, steel can be manufactured either by the Bessemer process or by the open-health process. Cement can be manufactured either by the wet process or by the dry process.

The choice of technology also depends upon the quantity of the product proposed to be manufactured. It the quantity to be produced is large, mass production techniques should be followed and the relevant technology is to be adopted. The quality of the product depends upon the use to which it is relevant technology is to be adopted. The quality of the product depends upon the use to which it is meant for. A product of pharmaceutical grade or laboratory grade should have high quality and hence sophisticated production technology is required to achieve the desired quality. Products of commercial grad do not need such high quality and the technology can been chosen accordingly.

A new technology that is protected by patent rights, etc., can be obtained either by licensing arrangement or the technology can be purchased outright. Appropriate technology: A technology appropriate for one country may not be the ideal one for another country. Even within a country, depending upon the location of the project and other features, two different technology may be ideal for two similar projects set up by two different firms at two different locations. The choice of a suitable technology for a project calls for identifying what is called the ‘appropriate technology’.

The term ‘appropriate technology’ refers that technology that is suitable for the local economic, social and cultural conditions.

2) Scale of operations: Scale of operations is signified by the size of the plant. The plant size mainly depends on the market for the output of the project. Economic size of the plant varies from project to project. Economic size of the plant for a given project can be arrived at by an analysis of capital and operating costs as a function of the plant size. Though the economic size of the plant for a given for a given project can be theoretically arrived at by above process, the final decision on the plant size is circumscribed by a number of factors, the main factor being the promoter’s ability to raise the funds required to implement the project. If the funds required implementing the project as its economic size is beyond the promoter’s capacity to arrange for and if the economic size is too big a size for the promoter to manage, the promoter is bound to limit the size of the project that will suit his finance and managerial capabilities. Whenever a project is proposed to be to be set up at a size blow its economic size, it must be analyzed carefully as to whether the project will survive at the proposed size (which is below the economic size). Performance of existing units operating at blow economic size will throw some light on this aspect.

3) Raw Material: A product can be manufactured using alternative raw materials and with alternative process. The process of manufacture may sometimes vary with the raw material chosen. If a product can be manufactured by using alternative raw materials, the raw material that is locally available may be chosen. Since the manufacturing process and the machinery/requirement to be used also to a larger extent depend upon the raw material, the type of raw material to be used should be chosen carefully after analyzing various factors like the cost of different raw materials available, the transportation cost involved, the continuous availability of raw material , etc. Since the process of manufacture and the machinery/ equipments required depend upon the raw material used, the investment on plant and machinery will also to some extent depend upon the raw material used, the investment on plant and machinery will also to some extent depend upon the raw material chosen. Hence the cost of capital investments required on plant and machinery should also be studied before arriving at a decision on the choice of raw material.

4) Technical Know-How: When technical know-how for the project is provided by expert consultants, it must be ascertained whether thee consultant has the requisite knowledge and experience and whether he has already executed similar projects successfully. Care should be exercised to avoid self-styled, inexperienced consultants. Necessary agreement should be executed between the project promoter and the know-how supplier incorporating all essential features of the know-how transfer. The agreement should be specific as to the part played by the know-how supplier (like taking out successful trial run, acceptable quality of final product, imparting necessary training to employees in the production process, taking out successful commercial production, performance guarantee for a specified number of years after the start of commercial production, etc). The agreement should also include penalty clauses for non-performance of any of the conditions stipulated in the agreement.

5) Collaboration Agreements: If the project promoters have entered into agreement with foreign collaborators, the terms and conditions of the agreement may be studied as explained above for know-how supply agreement. 
Apart from this, the following additional points the deserve consideration:
(i) The competence and reputation of the collaborators needs to be ascertained through possible sources including thee Indian embassies and the collaborator’s bankers.
(ii) The technology proposed to be imported should suit to the local conditions. A highly sophisticated technology, which does not suit local conditions, will be detrimental to the project.
(iii) The collaboration agreement should have necessary approval of the Government of India.
(iv) There should not be any restrictive clause in the agreement that import of equipment/machinery required for the project should be channelized through the collaborators.
(v) The design of the machinery should be made available to the project promoter to facilitate future procurement and/or fabrication for machinery in India at a later stage.
(vi) The agreement should provide a clause that any dispute arising out of interpretation of the agreement, failure to, comply with the clauses contained in the agreement, etc., shall be decided only by courts within India.
(vii) It must be ensured that the collaboration agreement does not infringe upon any patent rights.
(viii) It is better to have a buy–back arrangement with the technical collaborator. This is to ensure that the collaborator would be serious about the transfer of correct know-how and would ensure quality of the output.

6) Product Mix: Customers differ in their needs and preferences. Hence, variations in size and quality of products are necessary to satisfy the varying needs and preferences of customers, the production facilities should be planned with an element of flexibility. Such flexibility in the production facilities will help the organization to change the product mix as per customer requirements, which is very essential for the survival and growth of any organization.

For example, a plastic container manufacturing industry can be produced according to the market requirement. This will give the unit a competitive edge.

7) Selection and Procurement of Plant and machinery

Selection of machinery: The machinery and equipment required for a project depends upon the production technology proposed to be adopted and the size of the proposed. Capacity of each machinery is to be decided by making a rough estimate, as under; thumb rules should be avoided.

i) Take into consideration the output planned.
ii) Arrive at the machine hours required for each type of operation.
iii) Arrive at the machine capacity after giving necessary allowances for machinery maintenance/breakdown, rest time for workers, set up time for machines, time lost during change of shifts, etc.
iv) After having arrived at the capacity of the machinery as above, make a survey of the machinery available in the market with regard to capacity and choose that capacity which is either equal to or just above the capacity theoretically arrived at.

In case of process industries, the capacity of the machines used in various stages should be so selected that they are properly balanced.

Procurement of Machinery

Plant and machinery form the backbone of any industry. The quality of output depends upon the quality of machinery used in processing the raw materials (apart from the quality of raw material itself). Uninterrupted production is again ensured only by high quality machines that do not breakdown so often. Hence no compromise should be made on the quality of the machinery and the project promoter should be on the lookout for the best brand of machinery available in the market. The performance of the machinery functioning elsewhere may be studied to have a first hand information before deciding upon the machinery supplier.