Project Identification - Project Management, Entrepreneurship & Small Businesses | Entrepreneurship & Small Businesses - B Com PDF Download

Project Identification

The second important step in project identification is choosing the right line of business. To ensure the success of business, the prospective entrepreneur has to spend considerable time and energy on choosing the right line of activities. While doing so he has to examine the business potential of his ideas. For that he has to

1. study the environment / marketability of the product/service.
2. nature, extent, trend of demand for the product or service proposed to be manufactured/rendered
3. composition and pattern of potential users of the product or service
4. extent and intensity of competition in proposed area of business
5. procurement and uninterrupted availability of required raw materials and human resource
6. access to and affordability of technical know-how
7. access to the market
8. future prospects for growth in demand
9. compliance of legal provisions relating to the manufacturing the product or rendering services. (some products or services are banned under law e.g. ‘hashish’ or ‘dance-bars’ etc.) At the same time the entrepreneur has to assess which legal liabilities would come to him in production and marketing a particular product or service. For example, if he wishes to be in pharmaceutical production, the legal liability regarding scheduled drugs, expiry dates etc. would inevitably come to him. If he undertakes the passenger travels (tours and travels business) the liability regarding safety of passengers would come to him.
10. whether proposed product belongs to license category or de-licensed category.
11. availability of government schemes, special incentives, concessions regarding proposed line of business
12. estimated size of market
13. distinguishable features of the product or service to be manufactured or rendered. In bath-soap market every soap is marketed on the basis of distinguishable feature e.g. Lux (beauty care) Liril (lime freshness), Hamam (herbal based) Santoor (sandal based) Lifebuoy (germ-kill) Medimix (ayurveda based) Breeze (rose-beauty) and so on and so forth. Likewise, a number Life Insurance schemes and Mutual Fund Schemes are marketed adding an unique distinguishable feature.

At this stage, the entrepreneur may consult the experts in various issues related to choosing the right line of business. On making an in-depth primary study, if the scheme looks attractive and the degree of calculated risk provides the entrepreneur with an adequate level of confidence, he may take next step to develop a detailed project report, obtaining technical know-how, raising funds etc.

Opportunity seeking

An entrepreneur is basically an opportunity seeker. A number business opportunities may be available, however, seeking the right business opportunity depends upon the entrepreneur’s capabilities, his strengths and weaknesses and also on his preferences. Identification of appropriate business opportunity requires specialized skills. Before coming to the final decision, he has to explore and analyze all possible opportunities. For seeking the best business opportunity, the following explorations may be useful.

1. Environment exploration -This means the study of different environmental factors. The study of demographic environment includes the in-depth study of growth rate of population, age-composition, sex-composition, occupational- pattern, and income-composition etc. Low infant mortality rate and high birth rate ensures the increasing demand for baby-soap, baby hair oil, gripe-water, toys and kids wear etc. Socio-economic conditions, culture, basic features of resources etc are also studied.
2. Present business exploration - This relates to the study of present pattern of business activities, the study of the consumption pattern, the study of emerging trends in the pattern of trading and consumption and the pattern of demand.
3. Technology exploration - It is the study of new business opportunities created by change in technology For example, in case of printing industry, traditional system of printing has gone and computer based multi-colour printing opportunities have emerged It is also concerned with anticipation of new business opportunities likely to emerge as a result of impact of technological advancement.
4. Idea exploration - Business ideas are related to different factors. The exploration of idea may relate to-----------

• Growth related ideas - e.g. change in age-composition of population and life­styles gives an impetus to fashion-industry, mobile and bike industry etc.
• Resource -related ideas - e. g. agro-based industry (i.e. pickle-making, ketch­up, sauce, jams, mineral based industry (i.e. water, pharma) marine-based industry (i.e. fishery) waste-based (i.e. low grade paper can be made by industry using cotton-waste, jute waste and wastage-paper etc.)
• Import-export related ideas - i.e. export of mushrooms, strawberries, jewellery in foreign markets.
• Service-sector related ideas -for example repairs, maintenance of cars and automobiles. Nowadays, housekeeping (i.e. cleaning the big premises) has been emerging as a multi-crore industry.

Decision-making process

This final step in project identification involves making important decisions regarding the project to be undertaken. While taking decisions, the prospective entrepreneur has to go through following steps.

1. Selection of broad industry group

First of all, the entrepreneur has to decide as to which industry he intends to enter in. i.e. textile industry, sugar industry, automobile industry, cement industry etc.

Then he has to decide upon which product is to be manufactured e.g. consumer goods or capital goods etc. He has to take into account the present industrial climate for the product to be chosen by doing SWOT analysis and also assess the possibilities for diversification in future.

2. Selection of specific project

 After having finalized the industry group, the entrepreneur has to decide the size of the project, its capital investment, availability of possible financial assistance etc. He has to check the government policies, rules and regulation to be complied with for obtaining necessary license. At this stage, the entrepreneur has to assess his own strengths and weaknesses. Then he has to compare the relative merits and demerits of the proposed project with special reference to market potentiality, return on investment and technology.

3. Final decision

The entrepreneur takes the final decision as regards project after testing its commercial viability. For gauging the commercial viability of the project, the entrepreneur has to test its market feasibility, technical feasibility, financial feasibility and economic feasibility.

Remember-----

• The proper identification and selection of a project ensures success of an enterprise. He may come across several investment opportunities.
• Project identification refers to the selection of the most feasible and promising project from among several investment opportunities. .
• Project Identification includes following steps - 

1. Conceiving project ideas from amongst various sources.
2. Choosing the right line of business
3. Opportunity seeking through exploration of environment, present business, technology and business idea exploration
4. Making decisions as regards selection of broad industry group and specific project etc.