A Marketing Plan aims at planning the marketing strategies for a company. Preparing a marketing plan involves the task of analyzing market opportunities through Market Research, identifying profitable segments and targeting them through compounded marketing mix strategies (4P`s – Product, Price, Place, Promotion).

Steps in Preparing a Marketing Plan –

(1) Market Research →

It is simply the process of collecting information or facts relevant to the market. Market Research refers to a systematic collection, analysis and interpretation of data and information to make marketing strategies and take relevant marketing decisions, like –

• Whether to enter a market or not ?
• Whether to charge premium prices or not ?
• What kind of discounts will be attractive to customers?

Information collected through Market Research →

• Total size of current market
• Total size of potential market
• Growth rate of the market
• Consumer demographics
• Consumer preference
• Consumer satisfaction
• Consumer buying behaviour
• Price and sensitivity analysis
• Distribution level etc.

Steps in conducting market research →

• Formulating the objectives you want to accomplish
• Select the type of research you want to conduct 
• Collect and tabulate all the data
• Analyse the data 
• Document the relevant facts, figures, conclusions
• Make the decisions

(2) Segmentation – It is the process of dividing the market into groups of people with similar characteristics or behaviour.

A market can be segmented along the following variables – 

• Demographic – age, income, gender, education, occupation
• Psycho-graphic segmentation – life style, personality
• Geographic – (north, south, each, west)
• Behavioral – Occasion, usage rate, benefits, loyalty, user status, buyer readiness

(3) Market Targeting – It is the process of evaluating different segments and identifying the number and type of segment a company wants to target. It consists of 2 steps – (i) Market Evaluation (ii) Target market selection

(i) Market Evaluation – It involves the following tasks:

• Assessment of size of each market
• Assessment of segment growth
• Competitive strengths and weaknesses
• Potential opportunities and threats from competitors, suppliers, buyers, govt., substitutes

(ii) Target Market Selection – It involves the selection of the targeting strategy  for the company. One of the following strategies can be selected. 

• Single segment concentration – The business will target only one market segment. 
• Selective specialization – The business will target few related segments. 
• Product specialization – The business will specialize in a specific product segment. 
• Market specialization – The business will target the needs of the whole market it specializes in.
• Full market leverage – The business will target all customers and satisfy all their needs.

(4) Market Positioning – It is the act of positioning the product/service in such a way that it appears attractive to the customers. The following variables must be considered before positioning a brand/product –

• What image the company wants to project?
• How competitors project themselves?
• The type of product?
• Product life cycle?
• The pricing strategy?
• The packaging of the product?

(5) Developing Marketing Mix Strategies → It is the task of preparing product, price, place and promotional strategies for a business.  

(i) Product Mix → A Product may be physical goods, services, events, experience, place etc.

There are 5 levels of a product –

• Core benefit – The fundamental service a product provides. Eg. Room to stay on a Hotel
• Basic product –  Core benefit or service the product will provide. Eg. Room, Bed, Bathroom
• Expected product – Set of attributes a customer normally expects. Eg. Clean Room, Room Service, Clean Towels
• Augmented product – Set of attributes that exceed customer expectations. Eg. Prompt Service, Bar and Restaurant, Friendly  Staff
• Potential product – Set of attributes that could be added to the product in the future. Eg. Free WiFi, Complimentary Food, Swimming pool 

Decisions related to a product that have to be taken –

• Product width or product line – the different types of product
• Product length – no. of items in product line
• Product Depth – no. of variants in each product line
• Consistency – relation between various product lines
• Branding – building, maintaining and enhancing image of a product
• Packaging and labeling – The following points must be kept in mind while deciding about packaging of a product: 

1. Convenience of carrying/handling the product
2. Safety of the product
3. Packing must compliment the price of the product
4. The packaging must be attractive and easy to open

(ii) Price Mix Strategies – The Pricing strategies are based on –

• Competitors product price
• Cost of product/services
• Demand of the product
• Availability of raw material
• Overall marketing objectives of the company

The different pricing strategies that can be adopted are:

Mark Up Pricing = FC + VC + Mark up desired

Target Return Pricing = Unit cost + Desired return x  ROI

                                                                      Unit Sales

Perceived Value Pricing = Price based on customers perceived value of product

Value Pricing = Value for money pricing

• Going Rate Pricing
• Geographical pricing
• Shimming penetration pricing
• EDLP (Everyday Low Price) etc.

(iii) Place Mix Strategies – It is the process through which the goods are delivered to the final customer. Different distribution channels or networks are developed by and between market intermediaries called channel levels to transport a product from its place of production to the final consumer. Marketing intermediaries are people that help in the final delivery of the product.

There are different levels of distribution channels –

Level 0 – Manufacturer → Customer

Level 1 – Manufacturer → Retailer → Customer

Level 2 – Manufacturer → Distributor → Retailer → Customer

Level 3 – Manufacturer → Wholesaler → Distributor → Retailer → Customer

(iv) Promotional Mix – It is the process of educating customers through various forms of media about Product Utility, Product Quality and Product Price. Promotional Mix Strategies help in successfully positioning the product in the market and building a positive brand image in the minds of the customer.

Things to keep in mind while making promotional mix strategies –

• Promotion and Advertising Cost 
• Type of media to be used
• The message to be advertised
• Buyer behaviour towards different advertising appeals

Selection of promotional strategy – One of the following promotional strategy may be chosen:

• Advertising – Paid and non-personal communication with customers.
• Direct marketing – Reaching out directly to customers
• Sales promotion – Offering incentives to customers to push sales
• Public relations – Communicating and promoting products to prospective customers using direct communication methods

(6) Budgeting the Marketing Strategies →

An effective marketing plan must consider all the costs involved in implementation of feasibility studies and market plan.  Various, monthly, yearly, quarterly costs that must be projected are –

• Cost of Market research
• Cost of New product development
• Cost of Sales and promotion
• Cost of Distribution
• Cost of Thriving competition

Budgeting all the costs helps in creating an effective financial plan and avoid any budget deficits.

(7) Implementing, Monitoring and Reviewing the Marketing plan →

After implementing the marketing strategies, performance standards or benchmarks must be set in order to evaluate the market plan against expected results. Monitoring involves constant analysis of the following   – 

• Market share data 
• Sales figures
• Consumer Feedback
• Employees Feedback
• Feedback from Retailers

(8) Executive Summary →

The last step is to summarize the entire marketing plan. 

The post Preparing a Marketing Plan – Entrepreneurship appeared first on BBA|mantra.

• A healthy unit or healthy industry is one which earns an adequate return on capital invested and is capable of earning profits.  
• A sick unit or sick industry is an Industry which has become inoperative or an industry which is working at very low capacity.

According to Reserve bank of India, “A sick small scale unit is one which fails to generate internal surplus on continual basis and depends for its survival on frequent infusion of external funds”

According to the Sick Industrial Companies Act,  a sick industry is an “Industrial company which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and has also suffered cash losses in such financial year and the financial year proceeding such financial year”

Simply defining, a sick unit is one which incurs heavy cash losses in a particular year and in the opinion of the financial institutions, it is likely to continue incurring losses in the following years.   

Symptoms of industrial sickness  

• Frequent closure of units due to problems of work load, power supply or natural causes.
• Frequent break down of machinery and facilities and inability to repair them at reasonable cost and time.
• Heavy rejection of goods due to quality problems, blockage of funds for inputs, Work in progress
• Increasing cost of production and continuous decline of capacity utilization
• Funding problems and inability to pay statutory obligations of various taxes, rent, electricity bills etc.
• Frequent turnover of employees
• Deteriorating financial ratios
• Use of very old machinery and low employee morale

Causes of Industrial sickness

(i) Internal causes of industrial sickness →

Lack of finance

• Weak equity base and poor utilization of assets
• Inefficient working capital management
• Absence of costing & pricing and budgeting
• Inappropriate utilization of funds

Lack of Marketing

• Faulty Demand Forecasting & Market analysis
• Inappropriate marketing mix
• Absence of product planning
• Wrong Marketing Research
• Poor sales promotion and selling efforts

Bad Production Policies

• Wrong selection of site, layout, processing
• Lack of Plant & machinery
• Lack of quality control
• Lack of research and development
• Under-utilization of capacity

Entrepreneurial incompetence

• Lack of knowledge
• Lack of innovation
• Lack of motivation
• Lack of skill

Inappropriate personnel management

• Poor wages and salary administration
• Bad labour relations
• Lack of behavioral approach
• Low employee morale

Ineffective Corporate Management

• Improper corporate planning
• Lack of integrity in top management
• Lack of coordination and control

(ii) External causes of Industrial sickness →

Personnel constraints

• Lack of skilled labour
• Disparity in wages
• High employee turnover
• Lack of technical or professional skill

Marketing constraints

• Liberal licensing policies
• Restraint on bulk purchases
• Changes in global market scenario
• Excessive tax policies
• Market recession

Production constraints

• Power cuts
• Shortage of raw materials
• Shortage of power
• Shortage of fuel
• High prices of inputs
• Import export restrictions

Financial limitations

• Credit restrains policy
• Delay in disbursement of loans by government
• Unfavourable investments
• Lack of credit facilities
• High interest rates on loan

Government policies

• Unfavourable government policies
• Lack of support from government
• Taxation, licensing

Competition

Small scale industries face competition from big industries associated with the trade. Sickness is caused by:

• Inability of large industries to give work load to small industries
• Inability of large Industries to encourage entrepreneurial
• Lack of interest of large industries to uplift or develop sick units

Consequences of Industrial Sickness

• Loss of GDP of the country
• Decline in production and wastage of scarce resources
• The industrial climate becomes non-conducive to industrial development
• Prospective investors and entrepreneurs get discouraged
• Industrial unrest like strikes, lockouts, unemployment, social unrest etc.
• Loss of interest on borrowings by Financial institutions
• Loss in Tax revenue of Government

Remedial Measures to Overcome Industrial Sickness

• Identifying the sick units at initial stages and avoiding sickness
• Merging sick units together
• Rehabilitating sick units by solving personnel problems, marketing problems, quality problems etc. 
•  Debt restructuring and infusion of external funds for sick units
• Increasing Workers participation in management of sick units
• Having a strict control over costs 

The post Industrial Sickness – Sick Small Scale Units – Entrepreneurship appeared first on BBA|mantra.

Project/Slides/Presentation Transcript

Topic – New Product Development & Product Life-cycle Stages

Slide 1 – New Product Development & Product Life-cycle Stages

Slide 2 – Causes of New Product Failures

—Overestimation of Market Size

—Product Design Problems

—Product Incorrectly Positioned, Priced or Advertised

—Costs of Product Development

—Competitive Actions

—To create successful new products, the company must:

• understand it’s customers, markets and competitors
• develop products that deliver superior value to customers

Slide 3 – New Product Development Process

• —Idea Generation and Screening
• —Concept Development and Testing
• —Marketing Strategy
• —Business Analysis
• —Product Development
• —Test Marketing
• —Commercialization

Slide 4 – New Product Development Process

Step 1 – Idea Generation

Systematic Search for New Product Ideas

• Internal sources
• Customers
• Competitors
• Distributors
• Suppliers

Slide 5 – New Product Development Process

Step 2 – Idea Screening

—Process to spot good ideas and drop poor ones

—Criteria

• Market Size
• Product Price
• Development Time & Costs
• Manufacturing Costs
• Rate of Return

Slide 6 – New Product Development Process

Step 3 – Concept Development & Testing

• Develop Product Ideas into Alternative Product Concepts
• Concept Testing – Test the Product Concepts with Groups of Target Customers
• Choose the Best One

Slide 7 – New Product Development Process

Step 4 – Marketing Strategy Development

Part One – Overall:

• Target Market
• Planned Product Positioning
• Sales & Profit Goals
•  Market Share

Part Two – Short-Term:

• Product’s Planned Price
• Distribution
• Marketing Budget

Part Three – Long-Term:

• Sales & Profit Goals
• Marketing Mix Strategy

Slide 8 – New Product Development Process

Step 5 – Business Analysis

Step 6 – Product Development

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if  they Meet Company Objectives

• If No, Eliminate Product Concept
• If Yes, Move to Product Development

Slide 9 – Last stage of Product Development Process

Step 7 – Test Marketing

StandardTest Market

Full marketing campaign in a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry new products for a fee.

Simulated Test Market

Test in a simulated shopping environment to a sample of consumers.

Slide 10 – Product Life Cycle

Slide 11 – Introduction Stage of the PLC

Slide 12 – Growth Stage of PLC

Slide 13 – Maturity Stage of the PLC

Slide 14 – Decline Stage of the PLC

The post New Product Development & Product Life-cycle Stages appeared first on BBA|mantra.

A small scale industry is defined as “a unit engaged in manufacturing, repairing, processing and presentation of goods having investment in plant and machinery at an original cost not exceeding Rs. 1 crore.”

Small scale industries consists of industrial projects setup on a small scale, which produce goods with the help of small machines, power, hired labour and have a capital investment of less than Rs 1 crore.

Characteristics of Small scale industries

Financial Aspects →

• Capital requirement at the beginning is very low
• Fixed assets form the biggest component of investment
• Owners are profit conscious and try to keep high margins in their pricing
• Due to cash flow problems workers tend to involve in corruption, financial irregularities and siphoning of funds by partners
• Owners usually avoid paying taxes, P.F. And other statutory obligations

Human Resource Aspects →

• Most of Small scale industries have less than 50 employees
• Mostly owned by a single person, therefore, there is dictatorial tendency and employee welfare is neglected
• Merit is not given importance and recruitment is done on the basis of suggestions from friends and relatives
• Exploitation of human resources is very common
• There is no scope for trade unions as workers are very poor, unorganized and worried about job security

General Aspects →

• Very few SSI have good infrastructural facilities
• Lack work load due to dependence on big industries for major work
• They are negligent about pollutants and safety aspects
• Training and development is not taken up
• Lack of growth due to lack of motivation, innovation and financial management
• Infant mortality of Small scale industries is very high
• They lack skilled labour
• Small scale industries have problems in marketing, loans, payments colection
• Require local or indigenous resources
• Ownership is generally with one person
• They are generally setup in Rural and Semi-urban Areas
• Generally use old age technology and traditional production methods
• They have a Short Gestation period

Difference between Small Scale Industries and Large scale Industries

Advantages of Small Scale Industries 

• SSI require a small investment to start in terms of finance, space, manpower and production
• It has a short gestation period of about 2-6 months
• It generates employment with less investment
• It utilizes of local and indigenous resources
• It compliments big industries and new projects
• It requires less paper work and only few regulatory procedures are to be followed
• Small Scale Industries are eligible for subsidies and concessions from government

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Project/Slides/Presentation Transcript

Subject: Entrepreneurship

Topic: Venture Capital

WHAT IS VENTURE CAPITAL?

• Money provided by investors to start-up firms and small businesses with perceived long-term growth potential.
• It is a very important source of funding for start-ups that do not have access to capital markets.
• It typically entails high risk for the investor, but it has the potential for above-average returns. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships.
• This form of raising capital is popular among new companies or ventures which cannot raise funds by issuing debt.

SLIDE 2

• In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, they usually get significant control over company decisions, in addition to a significant portion of the company’s ownership.
• It is a way in which public and private actors can construct an institution that systematically creates networks for the new firms and industries, so that they can progress.
• This institution helps in identifying and combining pieces of companies, like finance, technical expertise, know-hows of marketing and business models.

THE NEED FOR VENTURE CAPITAL

• Venture capitalists provide the capital of investment for entrepreneurs and help them facilitate the start of the business.
• When there is an owner relation between the venture capital providers and receivers, their mutual interest for returns will increase the firms motivation to increase profits.
• Venture capitalists have invested in similar firms and projects before and, therefore, have more knowledge and experience which helps them decide what works and what does not, and how it works.
• Therefore, through venture capital involvement, a portfolio firm can initiate growth, identify problems, and find recipes to overcome them.

SLIDE 5 – STAGES OF VENTURE CAPITAL FINANCING

STAGES OF VENTURE CAPITAL FINANCING

• Early stage financing:

1. Finance provided to companies that have completed development stage and require further funds to initiate commercial manufacturing and sales
2. Also known as seed- funding, the term seed suggests that this is an early investment, meant to support the business until it can generate cash of its own, or until it is ready for further investments.

• Follow-on financing:

1. A follow-on offering is an issuance of stock subsequent to the company’s initial public offering.
2. A follow-on offering can be either of two types: dilutive and nondilutive. 3. The project must proved to be successful.

Stages of Venture capital financing (Contd.)

• Expansion financing:

1. The finance provided to fund the expansion or growth of a company which is breaking even or trading at a small profit.
2. The company must gained market share.

• Replacement financing:

1. A later stage financing whereby finance is provided in lieu of existing equity shares to be sold at a later date when the company goes for listing.
2. This is also known as money out deal.

Stages of Venture capital financing (Contd.)

• Turn-around financing:

1. The process of moving from a period of losses or low profitability into a more profitable stage. 2. A turnaround may be triggered by a number of factors including a better use of assets or the development of new products and services.

• Mezzanine Finance:

1. A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.
2. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full

Process of evaluation

1. Fundamental Analysis:

• History-History of the company, date of incorporation, summary of progress
• Management-Quality, experience, strategy & motivation of management, directors, shareholders.
• Products-Description of company‟s product & services
• Markets-Size nature of business, location, potential competition, USPs
• Manufacturing-Technology used, source of supply, manufacturing capacity
• Risks-Objective analysis of fundamental risks and management‟s plan to cope with the same.

Process of evaluation (Contd.)

1. Financial Analysis:

• Earnings growth potential
• Sensitivity of earnings to sales and margins
• Likely time lag between investment and returns
• Likely impact on cash flows
• Expected value of the company at the notional time of divestment
• Financial risks and management‟s plan to cope with these. III. Portfolio Analysis:
• Size of investment-Amount of money per investment.
• Stage of development- Some investment in start upstage, Some in development stage, Some in maturity stage.
• Geographic location -International diversity should be with a local fund.
• Industry sectors- Diversify portfolio in order to off set problematic or slow growth investment.

BRIDGE FINANCING

• Bridge financing is designed to cover expenses associated with the IPO and is typically short-term in nature. Once the IPO is complete, the cash raised from the offering will immediately payoff the loan liability.
• These funds are usually supplied by the investment bank underwriting the new issue. As payment, the company acquiring the bridge financing will give a number of shares to the underwriters, at a discount of the issue price that equally offsets the loan.
• Bridging finance is a short-term loan that allows the borrower a period to time, before refinancing the loan. That is, it provides a „bridge‟ for the borrower.

TYPES OF BRIDGE FINANCING

• Closed bridge:

1. It refers to a bridging loan where there is a predefined and certain exit that the borrower has in place to repay the bridging loan, before the actual bridging loan is taken out by the borrower. 2. It is less risky for the lender and thus the interest rate charged are lower.

• Open bridge:

1. It refers to a bridging loan whether the borrower does not have a certain exit in place. In this the exit strategy is not certain.
2. Open bridging is higher risk for the lender.

MANAGEMENT BUY -OUT

• A management buyout (MBO) is a form of acquisition where a company’s existing managers acquire a large part or all of the company from either the parent company or from the private owners.
• In most cases, the management will buy out all the outstanding shareholders and then take the company private because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with a venture capitalist to acquire the business because it’s a complicated process that requires significant capital.

SLIDE 14 – Styles of Nurturing

INVESTMENT NURTURING

• Investment Nurturing is a process by which venture capital companies continue to involve themselves in the operations of concerns assisted by them.
• The main elements of nurturing are as follows: Provision of continuing guidance and support to optimize the benefits of investment to both the venture capital companies and the units concerned. Building a joint relationship to tackle operational and other problems of business. Protection of the investment interest of the venture capitalist.

METHODS OF NURTURING

• The extent of participation by the venture capital companies in the affairs of the assisted units constitutes the style of nurturing.
• The style depends upon a variety of factors :-

1. The specialization of the venture capital company
2. The stage of investment.
3. Financing plan.
4. The stage of development of the venture capital industry.

The different styles of nurturing are:-

1. Hands-On
2. Hands-Off
3. Hands-Holdinng

HANDS -ON- NURTURING

• “Hands-on-Nurturing” is basically continuous and constant involvement in the operation of the investee company by way of representation on the board of director.
• Venture capital company provides guidance on long term business planning, technology development, financial planning, marketing strategy etc.
• This style is essential in early stage of the project.
• The nurturing is provided either by in-house-expertise or by a core group of external advisor in specific area.

HANDS-OFF-NURTURING

• In this style the venture capitalist do not normally actively participate in formulating strategies / policy matters , in spite of the right to do so.
• Here the venture capitalist do not appoint nominee directors.
• This style is appropriate in case of Syndicated /Joint/Consortium venture financing.
• It may be appropriate after the initial plan of the venture is over, and the business is running smoothly.

HANDS HOLDING NURTURING

• In this particular style, the venture capital companies take part in the management of the venture only when approached by the units. • Venture capitalist provide either in-house assistance or arrange assistance, from outside expert.

SLIDE 20 – METHODS OF EXIT

Exit Mechanism 

• Every venture capital investment is usually liquidated after accomplishment of the purpose of the venture investment.
• The time of exit is decided in advance at the time of financing the venture companies.
• The methods of exit are as follows: IPO method Sale of shares method Puts and Calls method Trade sales Liquidation

IPO METHOD

• It is also known as going public or flotation method.
• It is the most popular exit route.
• The major benefit of this method: It facilitates liquidity of investment through listing on stock exchange. It commands higher price of securities as compared to private placement. It creates better image & credibility with the public, managers, customers and financial institution.
• The major drawback of this method is: Higher issue cost, increased accountability to shareholders, etc.

SALE OF SHARES METHOD

• Under this method ,sale of shares is undertaken by the venture capitalists to entrepreneurs who have promoted the ventures.
• The entrepreneurs, through employees, can also acquire shares by forming an employee stockownership trust.
• The sources of the trust include contribution by the employees/company and borrowings from financial institutions and banks.

PUTS AND CALLS METHOD

• For this purpose, venture capital companies enter in to a formal exit agreement with the entrepreneurs at a price based on a predetermined formula.
• The put option is the right to sell, while the call option is the right of the entrepreneurs to buy.
• The puts and call values are determined as follows:

1.Book value method (Book value of Net Assets)

2.P/E Ratio (EPS*P/E Ratio)

3.Percentage of sales method (Modified P/E)

4.Multiplier cash flow method (Cash flow*Industry multiplier)

5.Independent valuation (Out side expert)

6.Agreed Price (Price agreed at the time of financing)

Trade sale

• Under this method ,the entire investee company is sold to another company at an agreed price. • This takes place through management buy-in or management buyout.
• MBOs is the acquisition of a company(or the shares in that company) from the existing owners by a team of existing management /employees.
• Management buy-in involves bringing in a management team comprising of outsiders, who are strangers to the company, as opposed to a buy- out, where they are part of the existing team.

LIQUIDATION

• The exit takes place in an involuntary manner.
• This usually happens under circumstances where the assisted unit makes an utter failure to take off due to stiff competition, technology failure/obsolescence of technology, poor management and so on.

SLIDE 27 – Venture Capital Industry in India

The Venture Capital Industry in India

• The story of Indian Venture Capital Investments began in 1999 the then finance minister of India announced that “for boosting high-tech sectors and supporting first generation entrepreneurs, there is an acute need for higher investment in venture capital activities.”
• The government of India Appointed SEBI as the regulator of the Venture Capital Industry In India, the Government of India constituted a SEBI committee headed by K. B. Chandrasekhar to make recommendations to facilitate the growth of VC industry in India.
• SEBI became a regulator for VC‟s to provide a smooth, single window, problemfree regulatory framework for quick and efficient flow of money into VC funds in India.
• By 2009 about 300 VC Funds were Active in India, The VC industry has shown a steep upward curve from investments of about USD 0.5 billion (56 deals) in 2003 to USD 14 billion (439 deals) in 2007. In the year 2008, there was a decline to about USD 11 billion (382 deals).
• Unlike in the early stages of the industry‟s growth (in 2000) when the investments were largely in the IT sector India saw investment in all forms of sectors by 2009 such as infrastructure, media, Real Estate etc.
• As you can see Venture Capital seems to continuously increase and stood at record highs with 56,868 cr by 2011. This was 18.8 per cent higher than the cumulative investment of Rs.47,859 cr up till December 31, 2010, according to the latest SEBI data.
• However within the current year the Investor sentiment seems to dampen due to over regulation, policy paralysis, inflation and the liquidity crunch in the market
• The IPO markets, Equity Markets all seem to give less than expected return, IPO markets are close to non existent this current year. However investments still enter the country with a faith in the India Growth Story.

SEQUOIA CAPITAL

• Sequoia Capital in India has invested in more than fifty companies during the past decade catering to the founders, families and management who have selected them as their business partners.
• Invested Capital – 1 Billion Dollars
• Claim to Fame – Has delivered more than 5 investments with 5x returns
• Obvious wins – Manappuram Finance, Paras Pharma, Cafe Coffee Day
• Investment philosophy – $500,000 to $40 million an investment with a minority stake
• Recently the team has gone for re-structuring because of the poor economy, dead IPO Market and fall in equity markets thus their investments have not grown in value and returns have not increased.

CAFE COFFEE DAY

• Success Level of sequoia with Café Coffee day has been great because as an investment sequoia understood the western culture entering India, they Understood the rising aspirational and lifestyle demands of the average Indian.
• Café Coffee Day has given sequoia an IRR rate of 18 – 20 percent.
• They invested 20 million dollars in CCD in 2006 and are exiting with 50 – 60 million Dollars in June 2012.
• It opened with one outlet in 1996 in Bangalore and approx 700 in 2006 which rose to 1253 in 2012

The post Venture Capital Presentation – Entrepreneurship appeared first on BBA|mantra.

Business Plan

A Business Plan is a blueprint of the step by step procedure that would be followed in order to convert a business idea into a successful business venture. It involves the following tasks –

• Identifying business opportunities and an innovative idea
• Researching the external environment for opportunities and threats
• Identifying internal strengths and weaknesses
• Assessing the feasibility of that idea and
• Allocating resources in the best possible manner

Objectives of a Business Plan

• To give direction to the vision of Entrepreneur
• To objectively evaluate the future prospects of the business
• To monitor the progress after implementation of the plan
• To seek loans from Financial Institutions
• To facilitate the decision making process
• To persuade others to join the business
• To identify strengths and weaknesses present in the internal environment
• To identify opportunities and threats in the external environment
• To assess the feasibility of the business

Preparation of a Business Plan

 A good business plan must identify strengths and weaknesses internal to the business and the challenges in terms of opportunities and threats to assess the viability of the business. It must lay down all the necessary steps that are involved in initiating and operating a proposed business. Preparation of a business plan involves the following steps :-

(I) Preliminary Investigation – In order to create an effective plan an entrepreneur must –

•  Review available business plans
• Draw key business assumptions on which plan is based
• Scan the environment for Strengths, Weaknesses, Opportunities and Threats
• Seek professional advice
• Conduct a functional audit

(II) Idea Generation – It involves generation of a new concept/product/service or value addition to an existing Product or Service. The idea must be such that satisfies the existing demands and future demands of market.

 Sources of ideas –

•  Consumers
• Existing companies
• Research & Development
• employees
• Dealers/Retailers

 Methods of generating ideas –

•  Brain storming
• Group discussion
• Data collection through questionnaires
• Invitation of ideas from professionals
• Value addition to existing Product and Service
• Market research
• Import of ideas from products launched abroad
• Commercializing inventions

Screening of ideas is done to identify practical ones and eliminate impractical one. The most feasible and the most promising idea is selected for further investigation.

(III) Environment Scanning – The internal and external environment must be analysed to study the prospective strengths, weaknesses, opportunities and threats of the business. An entrepreneur must collect information from all formal and informal sources in order to understand the supportive and obstructive factors related to the business enterprise.  

 External Environment –

• Socio cultural appraisal – It involves assessment of the values, beliefs and norms of a particular society in order to understand their perception towards a particular idea or product.

• Technological appraisal – It involves assessment of existing technical know-how and availability of technology necessary to convert an idea into a product.

• Economic appraisal – It assess the economic environment in terms consumer price index, inflation, balance of payments, consumption pattern, per capita income etc.

• Demographic – It involves an assessment of the overall population pattern of a particular region. Variables like age, education, income pattern, sex, occupation, distribution etc. help in identifying the size of target market.

• Government appraisal- It assess various grants, legislations, policies, incentives, subsidies etc. formed by government.

Internal Environment –

• Availability of Raw materials
• Availability of various machines, tools and equipment required for production
• Means of Finance and assessment of opening, maintaining and operating expenses
• Assessment of Present, Potential and Future market
• Assessment of cost, quantity and quality of human resources required

(IV) Feasibility analysis –   Feasibility analysis is done to find out whether the proposed project will be feasible or not. The various variables that are studied include –

(a) Market Analysis – It is conducted to –

•  Estimate the demand of the proposed product in the future
• Estimate the market share of the proposed product in the future

(b) Technical or operational analysis – It is conducted to access the operational ability of the proposed business. It is very important to find out the cost and availability of technology. Under Technical analysis data is collected on following parameters –

•  Material availability
• Material requirement planning
• Plant location
• Plant capacity
• Machinery and Equipment
• Plant layout

(C) Financial analysis – A Financial Feasibility test is carried out to access the financial issues related with the proposed business. The following estimates have to be carried out –

• Cost of land and building
• Cost of plant and machinery
• Preliminary cost estimation
• Provision for contingencies
• Working capital estimates
• Cost of production
• Sales and production estimates

 Based on the above analysis the following projections are made –

• Break-even point
• Cash flow statement
• Balance sheet

(V) Drawing functional plans – If the feasibility plans give a positive indication a draft business plan is formulated. It involves preparation of the following functional plans –

(a) Marketing Plan – A marketing plan lays down strategies for marketing a product/service which can lead to success of business. These strategies are made in terms of marketing mix (4 P’s) i.e. Product, Price, Place and Promotion.

(b) Production/Operation Plan –A production plan is made for a business involved in manufacturing industry while an operation plan is made for business involved in service industry. It includes strategies for following –

• Location and reasons for selecting a location
• Physical layout
• Cost and availability of equipment, machine and raw material
• List of suppliers and distributors
• Cost of manufacturing and running operations
• Quality management
• Production scheduling capacity and Inventory management

(c) Organizational Plan – It defines the type of ownership i.e. it could be a single proprietary, partnership firm, company, private limited or public limited. It also consists of details about the organization structure and norms guiding the organization culture.

(d) Financial Plan – It indicates the financial requirement of the proposed business and furnishes the following details –

• Cost incurred in smooth running of all the financial plans
• Projected cash flows
• Projected income statement
• Projected Break even point
• Projected ratios
• Projected balance sheet

(e) Human Resource Plan – It consists of the details on the following:-

• Manpower requirements
• Recruitment and Selection
• Compensation
• Organization structure
• Wages and Salaries
• Budget
• Remuneration etc.

(VI) Project Report Preparation – It is a written document that describes step by step, the strategies involved in starting and operating a business. It is prepared when environmental scanning has been done and feasibility studies have been carried out.

(VII) Evaluation, Review and Control – In order to keep up with the dynamic environment and  successfully face global competition a business must be continuously evaluated and reviewed. It is necessary to periodically evaluate, control and review a business to keep up with the technological changes and introduce changes in the business strategy.

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Women entrepreneurship is the process in which women initiate a business, gather all resources, undertake risks, face challenges, provides employment to others and manages the business independently. Approximately 1/3^rd of the entrepreneurs in the world are women entrepreneurs.

According to definition given by Government of India – “A women entrepreneur is defined as an enterprise owned and controlled by woman having a minimum financial interest of 51% of the capital and giving at least 51% employment generated to women” 

Women Entrepreneurship refers to business or organization started by a woman or group of women. There has been a change in role of women due to growth in education, urbanization, industrialization and awareness of democratic values.

Industries promoted by Women Entrepreneurs →

• Agarbatti making
• Papad making
• Embroidery
• Handicrafts
• Catering services
• Running restaurant, snack bars etc.
• Small retail shops
• Beauty parlors
• Pickle manufacturing etc.

Women entrepreneurs can be broadly categorized into five categories:-

Affluent entrepreneurs – These are daughters and wives of wealthy businessmen. These women have the financial aid and the necessary resources to start a new enterprise and take business risks.

Pull factors – These are educated women living in urban areas with or without work experience who take the risk of a new enterprise with the help of financial institutions and commercial banks. These women take up a new business as a challenge in order to be financially independent.

Push factors – These women take up some business activity in order to overcome financial difficulties. Generally widows and single women manage an existing family business or develop a new business due to difficult family situations.

Rural entrepreneurs – These women belong to rural areas and choose a business suiting their resources and knowledge. Business carried out involves low investment, minimum risk and does not require any special skills.

Self-employed entrepreneurs – They are uneducated women who fall below the poverty line. They choose tiny and small enterprise which are convenient to manage and adequate for the sustenance of her family.

Reasons for growth of Women Entrepreneurship→

• Growth in Literacy level
• Industrial and economic growth
• Awareness of democratic values
• Organizations promoting women entrepreneurship
• Financial assistance and consultancy services provided by financial institutions

Problems faced by Women Entrepreneurs→

Women’s problem in India – Women entrepreneurs face a difficulty due to specific women problems in India arising due to old traditions, socio-cultural norms, male dominant society, family responsibilities, Indian values and ethics.

Entrepreneurial problems –

• Corruption in government agencies
• Price and availability of raw materials
• High competition in low technology products
• Financial problems
• Face technological obsolesce due to lack of support

Specific problems  to women –

•  Mobility problems
• Family responsibilities and lack of support from family members.
• Exploitation by middle man
• Women have to be dependent on men for doing work which requires muscular strength.
• Women are perceived to be weak in the Indian society; hence men are preferred over women to face troubles and hardships related to an enterprise.

Future of Women Entrepreneurship in India →

The decade 1975 – 85 was declared as `Decade for women` by United Nations Industrial Development Organization (UNIDO). The Topic “Role of women in industrialization in developing countries” was raised in 1878 at conference held by UNIDO at Vienna which aimed at removing social, attitudinal and institutional barriers and increasing participation of women in industrial activities.

United Nations arranged a conference `Decade for women` at Copenhagen on 30th June 1980 aimed at promoting equal opportunities and equal treatment to women in employment.

On November, 1981, a National Conference for Women Entrepreneurs was held at New Delhi, India.

The Seventh five year plan focused on Integration of Women in Development. 

The National Alliance of Young Entrepreneurs organized a conference on Women Entrepreneurs at New Delhi in 1989 which made the following declarations –   

— Nation and state government should promote woman’s participation in social and economic development programmes.

— Financial assistance and consultancy services must be given to women for doing exports.

— Fairs and exhibitions with products manufactured by women entrepreneurs must be widely advertised.

— Education ministries must provide for education and training of women entrepreneurs.

Organizations Promoting Women Entrepreneurship in India

• National Resource Centre for Women (NRCW)
• Women’s India Trust (WIT)
• Women Development Corporation (WDC)
• Association of Women Entrepreneurs of Karnataka (AWAKE)
• Working Women’s Forum (WWF)
• Self- Employed Women’s Association (SEWA)

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Entrepreneurship comes from a french word `Entrependre’ and the German word `Uternehmen’ both meaning individuals who are `undertakers’ i.e. those who took the risk of a new enterprise. Entrepreneurship is a dynamic activity which helps the entrepreneur to bring changes in the process of production, innovation in production, new usage of materials, creator of market etc. It is a metal attitude to foresee risk and uncertainty and do something new in an effective manner to achieve certain goals.

An entrepreneur is an economic change agent with knowledge, skills, initiative, drive and spirit of innovation to achieve goals.  He identifies and seizes opportunity for economic benefits. He is a risk bearer, an organizer and an innovator.

According to Economists → An entrepreneur is the one who brings resources, labour, material and other assets into combination to produce a socially viable product, and also one who introduces changes, innovation and new order.

According to Management → A person with a vision and action plan to achieve it is an entrepreneur.

Functions of an entrepreneur →

• Identification of opportunities
• Introduction of a new product
• Gathering resources or Introducing new methods of production
• Developing new markets

Characteristics of an Entrepreneur →

Vision – He is able to visualize market demand, socio-economic environment and the future of business venture.

Knowledge – He has sound conceptual knowledge about all the technicalities of his business.

Desire to succeed – He has multiple goals and a seeks opportunities to be productive.

Independence – He is independent in work and decision making

Optimism – He knows how to exploit opportunities.

Value addition – He does not follow the conventional rule of thumb, they have a desire to create, innovate and add value.

Initiative – He takes the initiative to make an action plan from limited resources.

Goal setting – He sets realistic goals.

Problem solver – He is creative in problem solving.

Good human relations – He is a good leader, motivator and team builder.

Communication skills – He has the ability to persuade others.

Types of Entrepreneur →

(i) According to Clarence Banhof →

Aggressive/Innovative entrepreneur – The one who uses various combinations of information and factors of production to assemble and engineer new and innovative products.

Immitative/Adoptive entrepreneur – The one who simply adopts a successful innovation introduced by other entrepreneurs.

Fabian entrepreneur – The one who is timid and cautious in making bold decisions. Such an entrepreneur adopts innovations in his business only when he fears that not innovating may damage his business.

Drone entrepreneur – A drone entrepreneur is one who refuses to adopt new innovations even at the cost of reduced returns.

(ii) According to Authur H. Cole →

Empirical entrepreneur – An entrepreneur who does not innovate and follows the rule of thumb.

Rational entrepreneur – An rational entrepreneur is one who keeps himself updated with his business, the market and economic conditions, and introduces revolutionary ideas.

Cognitive entrepreneur – An entrepreneur that seeks advice and services of experts to make changes which are revolutionary and reflect a complete shift from its existing structure.

(iii) According to Ownership →

Public entrepreneurship – These are individuals who partner with the government to create enterprises which serve the public in innovative ways.

Private entrepreneurship – These entrepreneurs are profit oriented and do not enter market which have low monetary rewards associated with it.

(iv) According to Scale of enterprise →

Large scale entrepreneur – Large scale entrepreneurs are usually found in developed countries. These entrepreneurs introduce revolutionary ideas and are able to sustain high profits and develop new technologies as they possess the financial capacity and necessary resources to do so.

Small scale entrepreneur – Small scale entrepreneurs do not have the necessary funds and technology to initiate large scale production and introduce revolutionary ideas.

Nature of Entrepreneurship →

Creation of an enterprise – It involves creation and operation of an enterprise.

Organizing function – It brings together various factors of production for economic use.

Innovation – It is an automatic, spontaneous and creative response to changes in the environment.

Risk bearing capacity – It assumes uncertainty of future.

Managerial and leadership function – It is responsible for controlling and coordinating the human resource and giving direction to an enterprise.

Gap filling – It fills the gap between human needs and available products and services.

Process of Entrepreneurship →

(A) Identify an opportunity – An Entrepreneur senses opportunities and visualizes a market since they are creative and open to new ideas and seek challenges. They look for needs, wants, problems and challenges that are not met or dealt effectively. Since their ideas are innovative they gain first movers advantage which provides product identification and higher credibility in the market.

(B) Establishing a vision – It involves generation of ideas using past experience and creativity to develop new and innovative ways to solve a problem, or satisfy a need. Out of many ideas the most feasible and profitable are chosen and narrowed to one best idea. He evaluates different opportunities and the business environment to assess the (i) Real and Perceived value of the product/service (ii) Risks and rewards associated with the project (iii) and differential advantage in its competitive environment.

(C) Persuade others – He forms a foundation team which consists of a group of individuals who work together to turn his vision into reality. They may be partners, financiers, family members etc.

(D) Gathering Resources – It involves using a business plan to attract investors, venture capitalists, partners, financial institutions, promoters etc.  The main task is to research and identify resources that are needed to turn the idea into a viable venture.

Resources can be categorized into –

• Financial Resources – Personal savings, retained capital, banks, government institutions, family, friends, partnerships, venture capital, public issue.

• Operating Resources – They can be Tangible or Intangible.

Tangible – (a) machines (b) raw materials (c) land and building (d) office equipments (An entrepreneur has to make a decision to buy, rent or hire them).

Intangible resources – (a) company’s image (b) operating procedures (c) transportation (d) management

• Human – Temporary/permanent employees, Amount of man power needed, Recruitment, Selection and Training of staff, Compensation, Organization culture.

• Information – An efficient management information system is needed in order to have timely info about customers, markets, competitors and external environment. All the data is networked on real time basis to speed up actions based on information.

(E) Create new Venture – When all the resources have been arranged, the next step is Creation and establishment of a new venture and running the business venture successfully. It requires a lot of enthusiasm and persuasion to gather optimum resources and it requires a lot of perseverance and passion to believe in self.

(F) Change/Adapt with time – It is necessary to monitor and upgrade the organization with changing market conditions. It requires availability of funds to make changes and the adaptability of human resource towards changed environment.

Functions of Entrepreneurship →

(A) Primary Functions –

• Planning
• Organizing
• Decision Making
• Managing
• Innovating
• Risk bearing

(B) Secondary Functions –

• Diversification of production
• Expansion of the enterprise
• Maintaining cordial employer and employee relations
• Tackling Labour problem
• Co-ordinating and communicating with third parties

(C) Other Functions –

• Managing of scarce resources
• Dealing with public bureaucracy
• Identifying parallel opportunities
• Building Strong customer relations

Barriers to Entrepreneurship →

(i) Environmental Barriers →

(a) Raw Material – Non-availability of raw materials required for production during peak seasons.  It leads to increase in price of raw materials due to competition.

(b) Labour –

• Lack of skilled labour
• Lack of committed and loyal employee
• Quality and Quantity of labour

(c) Machinery – Machines are necessary but they are also costly and due to rapid change in technology they become obsolete and require replacement which requires cash in hand.  It becomes very difficult for small business organization to keep updating its production process.

(d) Land and Building – Acquisition of land and construction of building at a prime location require heavy expenditure.  If the land is taken on rent, it becomes a fixed cost and a constant concern for the entrepreneur.

(e) Infrastructure support – Adequacy of power, proper roads, water and drainage facilities etc. There is less support from development authorities due to red-tapism and corruption.

(ii) Financial barrier → Availability of funds is a major concern. A delay in source of finance results in delay of starting or running business.

(iii) Personal Barrier → They are caused by emotional blocks of an individual.  They cause a mental obstruction. They are :-

(a) Lack of confidence – They think they will never find a successful business idea and would be unable to attract necessary resources. Therefore, they dismiss the thought of being self-employed.

(b) Lack of Dependability on others – They aim to gain their additional expertise through trail and error and experience, rather than seeking further development or personal assistance from others.

(c) Lack of Motivation – Lose interest and motivation when ideas don’t work.

(d) Lack of Patience – When desire to achieve success in first attempt or to become rich instantly are confronted with business challenges/problems they lose interest. They give up at during initial losses.

(e) Inability to Dream – Sometimes they are short of vision or satisfied with what they have achieved and lose interest in further expansion of business.

(f) Sense of Pride/Embarrassment – they are too proud or too embarrassed to take help.

(iv) Societal Barrier →

• Socio-cultural norms and values
• Degree of approval or disapproval of entrepreneurial behaviour
• Financial stability and family background
• Caste and religious affiliation

(v) Political Barrier →

• Government incentives and concessions
• Facilitating socio-economic setting
• interest in economic development of society

Scope of Entrepreneurship in India →

Individuals are opting for entrepreneurship as a career due to reasons such as –

• Desire of control over one’s future
• More profits
• Lack of employment opportunity
• Government measures to promote entrepreneurship

Entrepreneurship provides employment and source of earning to people. It helps in reducing the monopoly of rich businessman and achieving a balanced regional development and growth in economy. Government of India is conducting development programmes to identify entrepreneurial potential and assistance from financial and non-financial institutions are being provided to entrepreneur. Entrepreneurship training institutes have been established and financial and operational support is being provided to young entrepreneurs in India.

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Boston consultancy group growth share Matrix commonly known as BCG Matrix is a famous portfolio analysis technique developed by Boston consultancy group in the 1970`s. It was developed for managing portfolio of different business units. The BCG Matrix  shows a relationship between products that are generating cash and products that are eating cash.

Large companies who want to be organized in Single Business Units(SBU) face a challenge of allocation resources among these units . The BCG Matrix shows various business units on a graph of market growth v/s market share relative to competitors. Resources are allocated to business units according to where they are situated on the graph.

Four Cells of a BCG Matrix

(A) Cash cows – It is a business unit with large market share in a mature and slow growing industry. Cash cow require little investment and generate cash that can be used to invest in other business units. These a generally large and mature business units reaping the benefits of experience and customer loyalty.

(B) Star – It is a business unit that has a large market share in a fast growing industry. It may generate cash but due to rapid growing market it requires investment to maintain its needs. It is a high growth – high market share business unit. These business units are generally in the growth stage of its product life cycle and not self sufficient in terms of its financial needs.

(C) Question mark? – It is also called the problem child. It is a business unit which has a small market share in a high growth market. Such a business unit requires huge investment to grow market share but whether it will be a star or not is unknown.

(D) Dogs – These are business units with a small market share in a mature industry .A dog may not require substantial cash but it ties up capital that could be invested elsewhere. Such a business unit must be liquidated unless it has some special strategic purpose or prospects to gain market share in the future. 

The BCG matrix provides a framework for allocating resources among different business units and allow one to compare many business units at a glance.

Criticism of the BCG Matirx

It is criticised that it does not reflect the true nature of the business. The BCG Matrix considers only two dimensions High and Low for measurement and while a business may enjoy a high, medium or low market share/growth rate.

It assumes that high market share always leads to high profits which is not be true. High Costs are involved in business units with large market share which may lead to normal profits.

There are many parameters to measure profitability other than growth rate and market share. The BCG Matrix ignores all other indicators of profitability. 

The model does not clearly define the markets.

Long term profitability of a business depends upon a variety of factors which may not be related to market share or growth. A business with low market share can also earn high profits without needing large amount of investment.  

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According to National Commission on agriculture “Agricultural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all aspects of market structure of system both functional and institutional, based on technical and economic considerations and include pre-harvest and post-harvest operations, assembling, grading, storage, transportation and distribution”

Agricultural Marketing can simply be defined as buying and selling of agricultural produce. It includes the following activities :

Assembling

Grading

Storage

Transportation

Distribution

Earlier the farmers in India practiced agriculture on a subsistence basis and marketing of agricultural produce was limited to direct cash sales and barter transactions. But, now farmers in India are growing more of cash crops and not only traditional food grains. Agricultural marketing in modern days involve three important functions of Assembling (concentration), Processing (preparation for consumption) and Distribution.

Agricultural activities include – Horticulture, Sericulture, Dairy Products, Livestock, Fishing, Hunting, Pisciculture, Rearing of Pigs etc.

Objectives of Agriculture Marketing

→ Rotation of economic resources – Agricultural Marketing generates 52 % of employment in India.

→ Development of backward areas

→ Increase in productivity of economy

→ Help farmers sell their produce at a favourable time, place and price

→ To widen the product range.

→ To help in planning for successful operations leading to better quality of produce and customer Satisfaction.

→ To bring in good marketing practices which helps to cope up with environmental changes.

Scope for improvement

Agricultural marketing aims to provide best advantages and facilities to farmers. Farmers in India have also realized the importance of  adopting new production and marketing techniques. Bust still there is a scope for improvement and it is necessary to focus on the following –

1. Giving more importance to corporate institutions.
2. Coordinating with procurement agencies.
3. Including Market Studies and market intelligence.
4. Improvement in storing and grading of products.
5. Focus on improvement of prices.
6. Providing training and education to farmers.

Current Changes in Agricultural Marketing

• Due to green revolution farmers are focusing more on non-food crops.
• Improvement in infrastructural facilities by the Government.
• There is a high increase in income and expectations of farmers.
• Farmers are adopting new techniques for more returns and higher standards of living.

Problems in Agricultural Marketing

→ Heavy village sales and consumption of agricultural produce due to the following reasons –

• Most farmers are indebted to landlords
• Farmers dislike city markets.
• Existence of many middle men.

→ Lack of reliable and up to date market information.

→ Absence of proper standardization and grading.

→ Inadequate transport and communication facilities.

→ Inadequate storage facilities.

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