Professional Documents
Culture Documents
Project Ideas
Generation of ideas Monitoring the environment Corporate appraisal Profit potential of industries : Porter model Scouting for project ideas Preliminary screening Project rating index Sources of positive net present value On being an entrepreneur
Generation of Ideas
To stimulate the flow of ideas, the following are helpful SWOT analysis Clear articulation of objectives
Business Environment
Competitor
Corporate Appraisal
Marketing and distribution
Porter Model
According to Michael Porter the profit potential of an industry
depends on the combined strength of the five basic competitive forces as shown below
Forces Driving Industry Competition
Potential Entrants Threat of New Entrants Bargaining Power of Suppliers
THE INDUSTRY Rivalry Among Existing Firms
Suppliers
Buyers
Decline stage
Investment in the pioneering stage, per se, may have a low
Most products evolve through a life cycle. The broad stages and the investment returns in these stages are as follows:
Stage Investment Returns May have negative NPV but may create options for participating in growth stage
Pioneering
Rapid growth
Maturity Decline
Positive NPV
NPV - neutral Negative
Experience Curve
The experience curve shows how the cost per unit behaves with respect to the accumulated volume of production
100
80
60 40
10 20 40 80
The key factors that contribute to decline in unit cost with respect to the accumulated volume of production are learning effects, technological improvements, and economies of scale
Preliminary Screening
Compatibility with the promoter Consistency with governmental priorities Availability of inputs Adequacy of market Reasonableness of cost Acceptability of risk level
Add all the factor scores to get the overall project rating index
Economies of scale Product differentiation Cost advantage Marketing reach Technological edge Government policy
Are my goals well defined ? Personal aspirations Business sustainability and size Tolerance for risk Do I have the right strategy? Clear definition Profitability and potential for growth Durability Rate of growth
Can I execute the strategy Resources Organizational infrastructure The founders role
Qualities and Traits of a Successful Entrepreneur It appears that a successful entrepreneur has the following qualities and traits :
Willingness to make sacrifices Leadership Decisiveness Confidence in the project Marketing orientation Strong ego Open-mindedness