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They should not be a theoretical exercise but should identify and define existing opportunities and conditions for success, providing complete information on markets, entrepreneurial input, location conditions, the business environment and other factors affecting projects implementation.

The studies should investigate the prevalence of conditions for success, provide cost rations and other project-related data, which can be used as input in any resulting feasibility studies accordingly, opportunity studies should be structure like studies, which are dealt with in part three of the Manual Provide essential information on the subsection as a whole and on factors influencing the performance of projects irrespective of whether the factors are internal or external to the subsection.

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Provide critical background information as well as specific data for each opportunity selected with emphasis on subsection- typical factor input and project-specific data that deviate significantly from subsection averages. Lower the cost of preparing feasibility studies as the information and data collected and analyzed at the subsection level could be shared by a number of prospective investor and a number of similar individual projects in other words, one subsection opportunity study would serve a number of feasibility studies.

The preparation of opportunity study ill the cost of specific feasibility study because much of data required for the design and appraisal of the latter would already have been collected and stored in appropriate data banks and could be made available to investors at little or no cost. This would be especially important in the case of feasibility studies for small industrial projects, where cost could discourage potential sponsor from sponsoring such studies. However institution providing advisory service might charge for the preparation of an individual feasibility study and the building up of data bank.

Specific investment proposal identified through opportunity studies could be included in national and regional development plan as well are in promotional material issued by public and private institution Figure II show the position of an opportunity study within the flow of project related data and the process of project preparation. Characteristic of the production process The opportunity study should briefly describe the production process typical for the subsection stressing those processes that have comparative advantage under condition prevailing in that socio-economic environment.

The ascription should cover the entire process including material input, material flows (raw material factory supplies) labor, input, quality control and critical emission (effluents noise. Etc) The efficiency of production may be expressed by coefficient such as specific material and energy consumption output per worker material costs per unit produced and specific investment costs in so far as possible to study should also examine the strength and weakness of alternative production programmer and process essential input of material and other factor should be listed.

Along with critical quality requirement and he degree to which input are promotional to inputs. Internal infrastructure and services Small industrial enterprises usually do not have the capacity to establish and maintain the same internal infrastructure service as larger enterprises (e. G. Maintenance and repair laboratory and quality control R and D) but have to rely on external service in developing country specialist and rarely available at short he much more important than in industrialized countries where such service are and service critical for the subsection and advise on how to overcome related problems (e. G. Y locating where external services are available by establishing in house workshop or by sharing services with partners).

Material Input and supplies Although material input are usually much the same within subsection their quality and origin may very considerably depending on the engineering design and the production technology applied For an assessment at the subsection level it is sufficient to describe quality and quantity requirement for the most appropriate technological alternatives and the availability of those input and factory supplies Special attention should be paid to critical inputs hat its, to inputs that are likely to affect the choice the location technology and scale of production for such critical alternatives procurement strategic should be identified If for example a subsection relied on a single supplier the purchase/ supplier relationship would need the quite different from that where a number of supplies were competing in the market. The risk and advantage of each purchasing strategy should be compared. To facilities the assessment of alternative at the subsection level inputs should be differentiated according to main categories, as described below, Row

Material Row Material requirement are directed by the type and quality and producer and also by the technological process to the applied although the latter may more often to true for large industrial enterprises in assessing the raw material it is important to examine, availability, cost and reliability. Suitability In the manufacture of glass for instance the silica sand must process a specific chemical and physical composition otherwise the find process will not be able to satisfy market requirement Similarly part and components Purchase from supplier must meet quality standard. Availability The raw material must be available whenever it is needed by the plant in the to minimize storage cost and avoid interrupting plant operations.

Cost The cost factor should not be underestimated Some times a domestic raw material cannot be used because it is too expensive compared to the market price of the final Product. Some raw material may be substituted for other e. G. Copper for aluminum alloy (Substitution of raw material may, however, change the appearance and use of the final product) Reliability The reliability of the source of supply and the risks of not obtaining the elites and quantities if there are to alternative supplier, sociopolitical factor are natural disasters could interrupt supplies and jeopardize production, it might, therefore, he wise to diversity the sources of supply.

Factory Us applier Factory supplies comprise auxiliary material such a chemical packaging material and lubricant and utilities such as cooling water electricity power and fuel as sources of supply should be assessed for the subsection in addition the cost of environmental protection measures should be determined in determining types production cost the main supplier should be identified minor cost may be an mated using appropriate ratios Types of production process For statistical purposes to allow small industrial enterprises to be compared within and between subsection it may be useful to distinguish between four types of production processes: The production and processing of raw material as for example, building materials. Substances changing transformation of raw material and components part as for example metal products.

The joining/ mixing and dissembling/selecting of components parts group of components raw and artificial material as, for example the assembly f car components of electric appliances When small industrial business are being described it is useful to differentiate product factor and process types production in order to mass production and princess mode (batch or continuous production) B- Production Programmer and capacity utilization The assessment of successful production programmer should allow the determination of successful product combination typical for a subsection such programmer and determined not only be marketing concept but also by the raw material and by the tech oenology applied by product are sometimes difficult and market unless key are processed further. Assessment of the capacity utilization typical for a subsection or for a region help to identify weakness that will put an enterprises at risk in the long run lower than planned output figures may be due to luck of entrepreneurial talents and skill non respective products (design quality life cycle changing consumers behavior etc. ) or a poor business environmental identification of the more common weakness will first of all allow determining which of them is/ are critical it will also be important for development planning by the regional and national institution. Technology availability, selection and acquisition

The purpose Of assessing the technologies that are typically applied in a subsection as well as of describing their requirement and the means of acquiring to particular having identified the advantages and disadvantages of various technologies and to suggest suitable processes. Particularly in developing countries the technologies generally applied subsection may not always satisfy the requirement of the market (Product design and quality) especially if there is competition with imported product or they may be inappropriate (efficiency of production of waste clean technology etc. The opportunity study should accesses such requirement together with the strength and weakness of the technologies in use and identify need for technology adaptation and development.

Developing countries often need to acquire foreign technologies and production know- how although this is more common for large scale industries imported technologies should be evaluated particularly with regard to their appropriateness to local condition the absorptive capacity of local enterprises and possible adaptation such an assessment can only be done by specialized institution or consultants cause small industrial enterprises usually lack the technologies applying the following criteria Technical and economic viability at low level of output Flexibility which mean the process can be used not only for a single specific product but can be adopted to other product as well, Relatively low capital intensity investment per employee In certain subsection e. G. Production for expert of car component relatively capital prices in such cases however it may be possible to adapt the capital intensive technologies for instance by increasing the labor components especially in countries with low killed labor sots but high capital cost. Ability to absorb technology i. E. Which skill and training are required training and the job, costs of training etc. Three point have to be kept in mind when assessing technologies.

Domestic demand As it seems unreasonable to start out by gearing production in penetrate the more difficult export markets, preferences should be given to domestic technologies, provided the products meet the quality requirement of the domestic market. Domestic economics resources. The dependence of certain technologies on foreign resources often constitutes a serious weakness particularly for developing countries. Hence technologies that use domestic raw material, energy sources etc, may be advantages and may be supported or enforced by public policies and regulation. The size of the domestic labor market and the qualification of the workers as well as training facilities at the workplace usually will influence the case with which technologies are absorbed and applied.

Socio economics condition many countries cannot afford to pay for an imported technology so enterprises may not have access to the most economics alternative, However even if foreign exchange and price are not constant, it may not be feasible to transfer technology because he technology may be difficult to absorb or adapt. Therefore it is important for the study to systemically asses the socio-economics conditions that prevail in a subsection and to identify and recommend only those technologies that are compatible with local socio-economic conditions. Technology is by no means the only factor determining optimal plant size Economic and financial consideration and equally important role. It is obvious that marketing task (expected sales) and the risk evaluation made by investor and potential financial will also have to be considered when the scope of a project and the reduction capacity to be installed are being determined.

The opportunity study should therefore identify and assess technological alternatives from the point of view of the success potential of each alternative, giving particular attention to the following: Commercial feasibility with regard the local demand local known how and skill and human and other resources. Financial Feasibility with regard to management skill marketing potential and personnel as well as purchasing and inventory management. These should be expressed in item of net cash flow granted by the enterprise. At the same time as the commercial and financial feasibility is being assessed strength and weakness opportunities and threat should also be analyzed SOOT. The opportunity study should indicate the source public domain patent right etc. F the technologies found appropriate for the various enterprises of a subsection and should state how and under what condition they may be obtained and at what cost. Example of contractual arrangement for technology acquisition and transfer should be given whenever appropriate. The international transfer of technology including the transfer between evolving countries is critical even more for small industrial enterprises than for large enterprises because small enterprises particularly in developing countries have to cope with a number of constraints. Very often the number of technological option for the development of a subsection is limited.

The technology market is dominated by large enterprises that have the financial and management capacities and often also dominate the market for raw material, prefabricated products and other mean of production. Formulation and assessment of marketing concepts The formulation Of marketing concept is determined by external and internal indention. External condition Internal Condition Society value system tradition Business philosophy objective, strategies, mean Market Business situation environment analysis (segment) strength position, film potential The marketing concept has a strategic and a operative dimension comprises marketing strategies as well as the mean for their implementation (Figures and X). The marketing strategies is determined by the strategic objective as reflected in the overall business conduct.

In small and medium sized enterprises unlike are large ones the business philosophy is dominated by he personal value and attitude of the enterprises. Marketing objectives Marketing objective a part of the hierarchically structured business principles and objectives of a firm which are dominated by the strategic oriented Basically two strategic orientation prevail which may be characterized as innovative and conservative innovative orientation aims at introducing new product development new market starting a new business require a good measure of innovative orientation Conservative orientation aims at increasing sales of products that have been on the market for some with little or no modification.

Growth oriented marketing objective may entail aggressive marketing with a pronounced tendency to enter new market or the diversification of production by adding new product sales may increase at the expenses of the computer or owing to an expanding market. If a small medium size firm takes up an investment project intending to penetrate a market with an already well known product it does not aim at market share but rather look at market attractiveness in term of profitability growth potential and competition. Sales target and related marketing costs dominate the marketing decision in such a case. An opportunity study the subsection level should identify and evaluate typically feasible marketing objectives.

It is not sufficient to State target for sales turnover profit in general terms, Rather the marketing objectives also need to concern themselves with product image, establishment of a brand name, training of a sales from and presence and visibility in the market. Marketing strategies Enterprises can purse different marketing strategies at the same but for different product and markets. The definition description and evaluation of market segment of the basis of marketing research should lead of the identification of alternative product strategies on based on these subsection information appropriate capacities of an enterprise particularly if it is small. The well known Info matrix (figure XSL) illustrator basic product/ marker strategies.

On the market side the degree of the diversification depend on the familiarity of potential customer with products or services if they are already available and establish in the market on the product side the degree of product diversification depend of the novelty of the product or services being marketed the greatest degree of diversification would be represented by the reduction and marketing of a new product not yet produced or offered in any markets. Specialization rather than diversification strategies are pursed if market condition offer chances for firms concentrating on particular strength while the much diversification can lead to Medicare performance and diminish the competitiveness of a firm specialization can lead in dependence on development highly specific customer group or small market segment.

Intensive research and development as well as innovative product policies will serve to protect against the negative effect of specialization small firm specially if they are in geographically digressed markets land to specialize in particular customer or product thereby exploiting market niches if another land they confine their economics activities to a small, local region they tend to directly. As innovation oriented enterprises is likely to follow marketing strategies different from those of a more conservatives enterprises the former tend to improve its market position by diversification the letter lend to achieve a competitive advantages through cost leadership.

Decision on price and communication strategies determine the competitive advantage through cost leadership Decision a price and communication strategies determine the competitive behavior aggressive behavior is usually reflected by the low price strategy and intensive promotion A strategy not typical for small and medium- sized enterprises is that “friendly” competition friendly competition concentrate their promotional activities on a description of the product and the firm and tend to avoid price competition and aggressive promotion such as cooperative advertising. Marketing strategies require that instruments should be combined with organizational measures. This combination is called he marketing mix. For optional result the selected instrument should be harmonize their application and design should be functionally and chronologically coordinated. The isolated application of marketing instruments as for instance the introduction of new distribution system without support Of an approximate product policy are promotional measures is unlikely to succeed. Worksheet V-4 should be used for describing marketing objectives and strategies.

Product Policy Product policy should be based on a given project idea and the related market Analysis At the subsection law however alternative product strategies deed to be assessed for the different market segment product policy also comprise permanent product development and research including the development of new product as may be required with a view on the life cycle of both product the more product development is necessary as in the cash of fashion goods. Product development include the systematic search for and testing of new product idea such testing should not be limited to technical exercise such as the production of proto types but must also assess market opportunities preferably is isolated market. Studies at the subsection may indicate the need to establish production development unit within enterprise for many small companies however this is bound to excess their financial capabilities.

They may therefore wish to undertake product development on a recurring rather then a permanent basis and too cooperation with other companies or research institution Alternatively product policy may entail searching for new product and acquiring production licenses for them. Price policy and conditions of payment Prince policy is an important marketing instrument. It consists of setting the price and determining terms of payment Prince are normally set within a anger founded by required cost coverage and the limit set by the market product pricing is closely related to the number of unit sold. The relationship between potential sales volume and price is expressed in term Of price electricity.

High price electricity means that consumers react strongly to price changes According to the Manual the preparation of industrial flexibility studies, whenever practicable marketing research at the subsection level should provide information not only on the possible effect of price electricity but also on the buying behavior of customers which a function of income bevel related at prices income electricity. Low the high price strategies may be applied generally or limited to specified period only (annual sales market introduction of products) If an enterprises operate in separate market it employ different pricing strategies Differentiation is pricing may also takes the form of discounts of large quantities or rebates for regular customer practiced in many market.

Pricing strategies also specify the term of payment such as payment advance deposit installment bill of exchange letter of credit supplier in effect discount and rebates as well as special currency arrangement in the case of export or import. Export for advance payment or cash on delivery the terms of payment involve interest and administrative costs, favorable terms of payment in effect constitute a discount but may be more desirable that straightforward price reduction because they allow for flexibility without affecting overall pricing policy. Communication and distribution strategies is many respect closely connected to main purpose of communication strategy is to assure organize and maintain the flow of information between an enterprises and its customer, sales agent and competition.

Since an enterprises also interacts with its social environment its communication are not just for business marketing purposes Distribution strategies are related to physical transport the design of sales rooms the organization of sales unit and the choice of distribution method direct sales through wholesalers and retailer. The organization of sealer and distribution as well as of personnel depend greatly on the type of product on service and characteristic of the market or target group offered sales personal need special technical knowledge for which they is most cases need to be trained alternatively personnel with technical known how may be taught sales skill the cost of such trained are to be accounted for as marketing cost and may be activated in the balance sheet and written off over a certain period.

It is particular strength of small and medium sized enterprises that the entrepreneur himself frequently it is also the most important salesman based on his central position personal competence and image as owner. In develop market it may be possible to use already existing outlet or channel distribution if there are no such outlet they have to be created and small firm deed and cooperate with other enterprises to increase point of sale retail shop sale office etc. Cooperation also needs to be established with firms providing installation and maintenance or transport and storage to faceplate timely delivery. Thus distribution strategies as assessed to be subsections level should address the following issue. A) Where will be product or service be offered (acquire/ ordered) (b) Will the product be offered at on place only (for instance and the location of the enterprises) or at different places? (c) Will it be necessary to have to sales deep rodent with traveling salesman? D) Will company salesman or independent agent tell sell the product and visit customer? (e) It is necessary to establish a network of branch office or can existing distribution channel be used? (f) Will the outside selling function be restricted to selected retailer or will wholesaler to used? (g) Will cooperation with independent intermediaries have a contractual basis (long term contract franchise system)? H) Will the product be marketed through intermediaries (exclusive, representative, specialized trader trading house) or directly to consumers? The choice of distribution channel cannot he easily reversed thou considerable cost and the possible loose of customer. Distribution channel have an impact on the image of a firm and contribute to its visibility in the market. Even without promotional measures a firm product may gain recognition if certain channel are used regularly because customer become attend to a product source and normally respond slowly to any changes. Once firm have succeed in building up a stock of custom they need to neglect communication and active selling.


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