SUBJECT:

TECHNOLOGICAL INNOVATION AND

MANAGEMENT ENTREPRENEURSHIP
Subject Code: BEC501
SEM.:V
MODULE – 5
Business model – Meaning, designing, analyzing and improvising; Business Plan
– Meaning, Scope and Need; Financial, Marketing, Human Resource and
Production/Service Plan; Business plan Formats; Project report preparation and
presentation; Why some Business Plan fails? (Selected topics from Chapter 8
(Page No 159-164, Text 2)

Financing and How to start a Business? Financial opportunity

identification; Banking sources; Nonbanking Institutions and Agencies; Venture
Capital – Meaning, and Role in Entrepreneurship; Government Schemes for funding
business; Pre launch, Launch and Post launch requirements; Procedure for getting
License and Registration; Challenges and Difficulties in Starting an Enterprise
(Selected topics from Chapter 7(Page No 147-149), Chapter 5 (Page No 93-99)
& Chapter 8(Page No. 166-172) Text 2)

Project Design and Network Analysis: Introduction, Importance of Network

Analysis, Origin of PERT and CPM, Network, Network Techniques, Need for
Network Techniques, Steps in PERT, CPM, Advantages, Limitations and
Differences. (Selected topics from Chapters 20, Text 3).
 Part - 1
Business model – Meaning

• The term Business model refers to a company's plan for making a profit. It identifies the
products or services, the business plans to sell, its identified target market, and any
anticipated expenses.
• Business models are important for both new and established businesses. They help new,
developing companies attract investment, recruit talent, and motivate management and staff.
Established businesses should regularly update their business plans or they will fail to
anticipate trends and challenges ahead.
• Business plans help investors evaluate companies that interest them. The important aspects
of business model are:
✓ A business model is a company's core strategy for profitably doing business.
✓ Models generally include information like products or services the business plans to sell,
target markets, and any anticipated expenses.
✓ The two levers of a business model are pricing and costs.
✓ When evaluating a business model as an investor, ask whether the idea makes sense and
whether the numbers add up.
Understanding Business Models:
• The business models can be broken into three parts:
1. Everything it takes to make something: design, raw materials, manufacturing, labor, and so
on.
2. Everything it takes to sell that thing: marketing, distribution, delivering a service, and
processing the sale.
3. How and what the customer pays: pricing strategy, payment methods, payment timing, and
so on.
• As business model is simply an exploration of what costs and expenses we have and how
much we can charge for our product or service. A successful business model just needs to
collect more money from customers than it costs to make the product. This is our profit—
simple as that.
• New business models can refine and improve any of these three components. Maybe we can
lower costs during design and manufacturing. Or, perhaps you can find more effective
methods of marketing and sales. Or, maybe we can figure out an innovative way for
customers to pay.
• We can take an existing business model and offer it to different customers. For example,
restaurants mostly operate on a standard business model but focus their strategy by targeting
different kinds of customers.

Business Model – Analyzing

• Analyzing your business model can help to determine whether a venture is, or will be, viable
and valuable.
• After completing a Business Model Canvas for a current or future business model, designers
often ask the following questions:
✓ Where are our revenues coming from?
✓ What value is delivered to which markets?
✓ What costs are involved in delivering that value?
✓ Are our perceived key activities and key resources as important for gaining revenue as they
are?
✓ If we change our model in a specific way, what are the effects?
• This requires insight into several elements of the business model, attributes of these elements
and the relations between different elements. Analyzing these elements will provide the
foundation for business model change and innovation in an organization.
• We can analyze a business model from several different perspectives.

Business Model – Designing

• There is a common business model used for defining a company’s business model, it is the
Alexander Osterwalder’s Business Model Canvas:
✓ Value Propositions: what you offer to a customer in a given segment, the customer needs you
satisfy.
✓ Channels: How you plan on reaching your various customer segments, and which group you
would like to target most.
✓ Customer Relationships: You need to plan on maintaining customer relations effectively.
✓ Revenue Streams: what are your customers paying for? How much? How would they prefer
to pay?
✓ Key Resources: what resources are essential to deliver your Value Propositions through the
Channels and maintain our Customer Relationships?
✓ Key Activities: what are the most important things you must do to make your business work?
✓ Key Partnerships: who are our Key Partners and why? What Key Resources do they provide
and what Key Activities do they carry out? What’s in it for them? What relationship should
we have?
✓ Cost Structure: what costs are implied by our Business Model? Which are largest? What is
fixed and
• All business model design projects are unique and present a challenge to the participants
because there is no one formula or prediction for how they will evolve. The process consists
of five phases: mobilize, understand, design, implement, and manage. This process provides a
framework which all businesses regardless of their industry or context can apply to themselves.

What is Business Plan?

• A business plan is a roadmap and blueprint of the project. A business plan is a written
document that describes in detail how a business is going to achieve its goals.
• It is a document that explains, a business opportunity, identifies the market to be served,
and provides details about how the entrepreneurial organization plans to pursue it.
• Ideally, the business plan describes the unique qualifications that the management team
brings to the effort, explains the resources required for success, and provides a forecast of
result, over a reasonable time horizon.
• A business plan is based on estimates and explains the importance and purpose of business,
provides the contents, and gives the process of preparing and presenting. It includes two
sample business plans to give a step-by-step procedure for starting a business enterprise.
Business Plan : Scope and Need:
• Scope:
• A business plan is the written representation of an entrepreneur's vision for his/her
business, a written document about 20 pages in length that describes where a business
is heading and how it hopes to achieve its goals and objectives.
• A workable business plan should determine the direction of the company; highlight
the challenges in the path of the business and formulate strategies and contingencies to
keep the business on track in order to reach predetermined goals and objectives.
• A business plan is required not only for a start-up company but also for those which
are growing.
• Need:
• To help make crucial start-up decisions, reassure investors, measure operational progress,
test planning and assumptions, adjust forecasts, set the standard for good operational
management.
• Get finance from banks/equity funding from angel investor/ venture capitalists.
• To attract business partners, key employees, make business alliances.
• Enables the board of directors, to make capital investment decisions.
• It provides a basis for measuring actual performance/expected results.
• The plan's financial projections can be used as a budget. Actual results that fall short of
planed results will prompt the entrepreneur to investigate and take corrective action.
• It acts as a vehicle for communicating to others what the business is trying to accomplish.
Financial Plan:
• The financial plan is a critical section of the business plan as it translates all the other parts
of the business into anticipated financial results.
• The financial plan section determines the viability and is a key component in determining
ability to attract any investment in our business idea.
• The financial plan section of the business plan consists of an analysis of Financial
statements such as
➢ The income statement,
➢ The cash flow projection,
 ➢ Projected balance sheet,
➢ Break-even charts,
➢ Cost of the project,
➢ Sources,
➢ Uses of funds.

• A financial plan is simply an overview of our current

business financials and projections for growth. It is a document that represent our current
monetary situation as a snapshot of the health of the business and the projections being the
future expectations.
• It helps us, as a business owner, set realistic expectations regarding the success of our
business.
• Components of a successful financial plan: All business plans, whether you’re just
starting a business or building an expansion plan for an existing business, should
include the following:
1) Profit and loss statement 2) Cash flow statement 3) Balance sheet 4) Sales forecast
5) Personnel plan 6) Business ratios and break-even analysis.

Marketing Plan:

• Characteristics of Marketing Plan:

 • The market is where the company's product or service will be sold. The marketing plan is
written after conducting a market analysis.
• This provides information on assessing the market’s size and growth, defining the target
market, and articulating the value proposition.
• The value proposition gives the unique set of benefits that the customers will get, if
they choose to purchase the company offerings over its competitor's offerings.
• Stakeholders know that marketing is the activity most associated with success or failure. A
company that is not able to connect with its customers will fail, even if it offers attractive
products or services. A sound and realistic marketing plan is the best guarantee that a solid
customer connection will be made.
• Characteristics of Marketing Plan:
• The marketing plan should be supported with a solid market intelligence report. The
plan should be clear about all aspects of marketing, including price, position, promotion,
place, and customer value proposition.
• The marketing plan should be a dynamic plan used to monitor the progress of the business.
It also contains detailed guidelines regarding how the product will perform in each life
cycle and the budget allocated for the same. And of course, it should be achievable and
must be able to respond positively to changing market conditions.
• 9 Key Elements for Entrepreneur to Create a Successful Business Marketing Plan (1-5):
1. Overall Summary of the Business Model : (a) Clarity with the core values and the
positioning in the market. (b) Explain how the brand will enter the local market followed
by the international market – if ultimate ambitions stretch that far.
2. A Strategy That Must Be Followed: Must be based on consumer needs.
3. Availability of Products and Services: Not just Designing good products and services to
customers is enough, but the aim must be making it available in a cost- effective manner.
4. Pricing Strategy: Price can be the maker or breaker of a product that produces revenue.
1. Awareness of the Product: Plan how we intend to make product or service known to
intended customer base.
• 9 Key Elements for Entrepreneur to Create a Successful Business Marketing Plan (6-9):
1. Who Will Benefit From our Offering? Segmentation, targeting and positioning are the
essences of Marketing. Target customer base will go some way to determining the price we
can ultimately charge. It will also determine how we can best communicate our offering to
them and where we will find them.
2. Short Term and Long Term Objectives: Entrepreneurs must have a clear vision of their
mission, marketing and financial objectives. They need to be specific about how their brand
will satisfy the target market. Planning must include short, medium and long-term goals.
3. SWOT Analysis: Before designing a complete project, a pilot project needs to be designed
and implemented. An entrepreneur should know everything – including any flaws that may
become apparent.
 4. PEST Analysis: SWOT Analysis will give the inner view of the business model. PEST
analysis is to know how our model will run in the changing Political, Economic, Social and
Technological Environment.
Human Resource Plan:
• Human resource planning (HRP) is the continuous process of systematic planning ahead to
achieve optimum use of most valuable asset—quality employees. Also referred to as
workforce planning.
• Human resources planning ensures the best fit between employees and jobs while avoiding
manpower shortages or surpluses. There are four key steps to the HRP process.
✓ Analyzing present labor supply
✓ Forecasting labor demand,
✓ Balancing projected labor demand with supply
✓ Supporting organizational goals.
• HRP allows companies to remain both productive and profitable. It needs to be flexible
enough to meet short-term staffing challenges while adapting to changing conditions in
the business environment over the longer term. HRP starts by assessing and auditing the
current capacity of human resources.
• The challenges to HRP include forces that are always changing, such as employees getting
sick, getting promoted or going on vacation.
• HR managers have to make plans to do the following:
• Find and attract skilled employees.
• Select, train, and reward the best candidates.
• Cope with absences and deal with conflicts.
• Promote employees or let some of them go.
Production Plan:
• Production plan serves as a guide for the company's production activities. It establishes and
sequences activities which must be carried out to achieve a production target, so that all staff
involved are aware of who needs to do what, when, where and how.
• Production Planning in 5 Steps: (1) Forecast Demand (2) Determine potential options for
Production (3) Choose the option that uses resources more effectively (4) Self assess the
performance (5) Adjust
• A production plan will help you meet product demand while minimizing production time and
cost by improving process flow, reducing the waiting time between operations, and optimizing
use of plant, equipment and inventory. In order to do this, we must align our production plan
to our business strategy and business plan.
Product / Service Plan:
• The products and services section of the business plan is more than just a list of what our
business is going to provide. If we intend to use our business plan to get funding or find
partners, our products and services section needs to showcase the quality, value, and
benefits our business offers.
• The product and services plan should include:
✓ A description of the products or services we are offering
✓ How our products and services will be priced
✓ A comparison of the products or services our competitors offer in relation to ours
✓ Sales literature including information about our marketing materials and the role our
website will play in our sales efforts.
✓ A paragraph or so on how orders from our customers will be processed or fulfilled
✓ Any needs we have to create or deliver our products, such as up-to-date computer equipment
✓ Any intellectual property, such as trademarks, or legal issues you need to address
✓ Future products or services you plan to offer
• Product planning serves as the basis for decision-making about price, distribution and
promotion. Product planning is the process of creating a product idea and following through
on it until the product is introduced to the market. A small company must have an exit strategy
for its product in case the product does not sell.

Business plan Format:

• In reality there is no standard format for the presentation of a good business plan. They vary
in content and size of the business concerned and on the emphasis that is placed on certain
critical areas as opposed to others.

• THE CONTENTS every business plan should address a number of fundamental issues without
which it would not be complete. These issues can be grouped under six major areas that are
the pillars of every business activity whether large or small. These are:
➢ Sales and Marketing
➢ Operations
➢ Human Resources
➢ Finance
➢ Information & Communication Technologies (ICT)
➢ Information Management Essential contents of a business plan in a simple format.

• The table below (next slide) lists the important elements of a sample business plan and offers
some simple points that need to be taken into consideration in regard to each section. The
format provides with a framework for presenting our thoughts, ideas and strategies in a logical,
consistent and coherent manner.
 Sl No CONTENT REMARK

1 Executive Summary A snapshot of the business

2 Company Description Describes what is planned to do

3 Market Ananlysis Research on Industry, market, competitors

4 Organisation and Management Business and Management structure

5 Service or Product Service or Product being offered

6 Marketing and Sales Marketing the business and the Sales strategy

7 Funding Request Money required for the next 3 to 5 years

8 Financial Projections Supply information like Balance sheets

9 Appendix An optional section that includes résumés and

permits.

Project Report Preparation and Presentation:

• A Project Report is a document which provides details on the overall picture of the proposed
business. The project report gives an account of the project proposal to ascertain the prospects
of the proposed plan/activity.
• It contains data on the basis of which the project has been appraised and found feasible. Banks
and other financial institutions decide whether a loan should be granted, and If granted, the
amount that should be sanctioned on the basis of this report. The project report is generally
prepared to cover the following broad segments:
1. General information: Name of the unit and address, Name of product/service, Constitution
of the unit, Name of the promoter, Educational qualification, Experience.
2. Details of the project: Product/service details, Details of machinery, Details of raw material,
Utility, Manpower requirement, SWOT (Strengths, Weaknesses, Opportunities, and
Threats) analysis.
3. Market survey: The market survey report should be enclosed.
4. Cost of project:
a) Fixed cost: Land/building, machinery, office equipment, miscellaneous items,
 b) Working capital: Stock in raw material, semi-finished goods, finished goods, bills
receivable, working expenses,
c) Total investment: Fixed capital, working capital, preliminary and preoperative expenses,
interest
d) during implementation, contingency,
e) Means of finance: Term loan, working capital loan, own investment (with incentives),
f) Profitability: Revenue, production cost, depreciation, administrative
expenses, interest, maintenance, sales and advertisement, profit, annual income before
tax, taxes, net profit.
5. Annexure: Promoter's bio-data, organizational chart, details of group units if any, statutory
sanctions/approvals, project feasibility study report, project schedule, arrangement of and
and building, statement of cost of plant, machinery and other equipment, details of orders
and enquiries, process chart, financials for project and its analysis, financials of the
company and its analysts, manpower planning, and financial statements.
Why some Business Plan fails?
• Like any other project, writing a business plan needs careful planning and systematic
execution. Some business plan fails because of the following reasons:
1) Failure to address the customer's problems and needs: The entrepreneur should
document customer pain point before preparing the plan. Customer needs can be
identified from direct experience, letters from customers, or from market research.
2) Unrealistic goals set by the promoters: The goals set by the entrepreneur should be
Specific,Measurable, Achievable, Realistic, and Time-bound (SMART).
1) Lack of commitment to the business by the promoters: The promoters must make
a total commitment to the business in order to be able to meet the demands of new venture.
Investors will not be interested in a venture that does not have committed promoters.
2) Lack of experience of the promoters: A lack of experience will result in failure
unless the entrepreneur can either attain the necessary knowledge or team up with others
who already have experience in this area.
3) Lack of professionalism: The business plan should be brief, clear, and nicely organized. It
should highlight those points that can attract investors. The assumptions made in preparing
the business plan should be realistic.
Part - 2
Financing and How to start a Business?

• Financial opportunity identification; Banking sources; Nonbanking Institutions and Agencies;

Venture Capital – Meaning, and Role in Entrepreneurship; Government Schemes for funding
business; Prelaunch, Launch and Post launch requirements; Procedure for getting License and
Registration; Challenges and Difficulties in Starting an Enterprise.

Financial opportunity identification:

• According to a recent study, over 94% of new businesses fail during first year of operation.
Lack of funding turns to be one of the common reasons.
• Money is the bloodline of any business. The long painstaking yet exciting journey from the
idea to revenue generating business needs a fuel named capital. That’s why, at almost every
stage of the business, entrepreneurs find themselves asking – How do I finance my startup?
• Business simply cannot function without money, and the money required to make a business
function is known as business funds. Throughout the life of business, money is required
continuously. Sources of funds are used in activities of the business. They are classified based
on time period, ownership and control, and their source of generation.
1. Based on Period – The period basis is further divided into three dub-division.
• Long Term Source of Finance – This long term fund is utilized for more than five years.
The fund is arranged through preference and equity shares and debentures etc. and is
accumulated from the capital market.
• Medium Term Source of Finance – These are short term funds that last more than one year
but less than five years. The source includes borrowings from a public deposit, commercial
banks, commercial paper, loans from a financial institute, and lease financing, etc.
• Short Term Source of Finance – These are funds just required for a year. Working Capital
Loans from Commercial bank and trade credit etc. are a few examples of these sources.
2. Based on Ownership – This sources of finance are divided into two categories.
• Owner’s Fund – This fund is financed by the company owners, also known as owner’s
capital. The capital is raised by issuing preference shares, retained earnings, equity shares,
etc. These are for long term capital funds which form a base for owners to obtain their right
to control the firm’s management and operations.
• Burrowed Funds – These are the funds accumulated with the help of borrowings or loans
for a particular period of time. This source of fund is the most common and popular amongst
the businesses. For example, loans from commercial banks and other financial institutions.
3. Based on Generation – This source of income is categorized into two divisions.
• Internal Sources – The owners generated the funds within the organization. The example
for this reference includes selling off assets and retained earnings, etc.
• External Source – The fund is arranged from outside the business. For instance, issuance of
equity shares to public, debentures, commercial banks loan, etc.
Banking Sources
• Borrowings from banks are an important source of finance to companies. Bank lending is still
mainly short term, although medium-term lending is quite common these days.
• Short term lending may be in the form of:
a) an overdraft, which a company should keep within a limit set by the bank. Interest is charged
(at a variable rate) on the amount by which the company is overdrawn from day to day;
b) a short-term loan, for up to 3 years.
• Medium-term loans are loans for a period of from 3 to 10 years. The rate of interest charged
on medium-term bank lending to large companies will be a set margin, with the size of the
margin depending on the credit standing and riskiness of the borrower.
• A loan may have a fixed rate of interest or a variable interest rate, so that the rate of interest
charged will be adjusted every 3, 6, 9 or 12 months in line with recent movements in the Base
Lending Rate.
Non-Banking Institutions and Agencies
• Funds can be raised from a variety of sources for financing a project. The two broad
sources of finance available are (1) Equity financing und (2) Debt financing.
• The key factors in determining the Debt- Equity ratio for a project are the cost, nature of assets,
business risk, norms of lenders, control considerations, and market conditions.
Equity Financing

• This is a shareholder's fund and it may be in the form of equity capital, preference, capital,
internal actual, venture capital, and angel investing. Equity financing means exchanging partial
ownership in a firm for funding.
• Equity shareholders enjoy the rewards as well as bear the risk of ownership. However, their
liability is limited to their capital contributions. The rights of equity share holders consist of
the right to residual income; the right to control; the pre-emptive right to purchase additional
equity shares issued by the firm; and the residual claim over assets in the event of liquidation.
• Equity Capital – Ownership capital as equity shareholders collectively own the firm. When the
company grows, it floats public shares too (IPO).
• Preference Capital - It has some characteristics of equity and some attributes of debentures. It
is a special class of a company's shares, on which dividends are paid before the dividends on
ordinary shares, and whose holders are repaid before others if the company goes bankrupt.
• Internal Accruals - Consist of depreciation charges and retained earnings.
• Venture Capitals – Described in next slide
• Angel Investing - Wealthy individuals who invest in entrepreneurial firms, usually during start-
up. They mentor the start-ups. Angels usually expect a lower return on investment than venture
capital firms. Angel network is a unique concept, which brings together highly
successful CEOs and entrepreneurs from India and around the world interested in investing in
start-ups and have a potential of creating high-growth companies.

Venture Capital – Meaning and Role in Entrepreneurship

• Venture capitalists are professionals who invest in startups with growth potential. Venture
capital injects equity finance with a solid capital base for future growth.
• Venture capital firms provide equity for business and expect 20 to 40 percent equity stake in a
company and high returns on their investments within three to five years.
• The Indian Venture Capital and Private Equity Association (IVCA) is the
national-level organization for venture capital firms in India.
• 5 Step process of Venture Capital Financing ([Link] & [Link] model): 1. Deal
organization. 2. Screening. 3. Evaluation or due diligence. 4. Deal structuring. 5. Post-
investment activity and exit.
• 6 Stages of Venture Capital Financing:
 1. The seed money stage (for proof of concept/development of the product).
2. Start-up, The funds are primarily meant for marketing and product development.
3. First-round financing: Additional money needed to begin sales and manufacturing
4. Second-round financing: Funds required for working capital for a firm that is selling its
product but still losing money.
5. Third-round financing: Financing of a firm that has broken even and is planning an
expansion. This is also called mezzanine financing.
6. Fourth-round financing: Financing of a firm that is expected to go public within six months.
This is also called bridge financing.
Debt Financing and other Miscellaneous Sources

• Debt financing is basically money that is borrowed to run the business. Debt financing refers
to borrowing money from a source outside the company under certain terms and conditions
relating to interest rates and the period of return of the principal amount.
• Most entrepreneurs prefer to start their Operation with money borrowed from banks and
financial institution when a firm raises money for working capital or capital
expenditures.
• In return for lending the money, the individuals or institutions become creditors and receive
a promise that the principal and interest on the debt will be repaid. Term loans and
Debentures are two important ways of raising long term debt.
• Term Loans: Term loans represent a source of debt finance, which is generally repayable in
less than ten years. Term loans represent secured borrowing. In order to protect their
interests, financial institutions impose restrictive covenants on the borrowers.
• Debentures: Debentures provide more flexibility than term loans as they offer greater choice
with respect to maturity, interest rate, security, repayment, and special features.
• Other Sources of Finance: These include Working Capital Advance, Deferred credit, Lease
finance, Hire purchase, Unsecured loans and deposits.
Government Schemes for funding business

• India has more than 40 million registered and unregistered MSMEs (Micro Small Medium
Enterprises) engaged in varied sectors including IT, manufacturing, packaging, and food
processing.
• This sector is one of the key growth drivers of the country, contributing about 40% to India’s
GDP and remains a critical source of employment for India’s growing population.
• Recognizing the importance of this sector, the government has started the ‘Make In India’
initiative to encourage more SMEs to become a part of India’s growth journey.
• India was recently termed as the only, truly emerging market in the world at the moment.
Recognizing the importance of SME growth in the post-demonetization era, the government
has started some new business loan schemes and boosted other existing ones.
• Here are the top business loan schemes from the government of India that you can avail for
small business finance: MSME Business Loans, MUDRA Loans, Credit Guarantee Trust
for Micro and Small Enterprises (CGTMSE), National Small Industries Corporation
Subsidy, Technology Upgradation Schemes, Marketing Assistance Scheme, Certification
Scheme, Credit Rating Scheme.

MSME Business Loans :

 •
The most talked about business loan scheme right now is the ‘MSME Business Loans in 59
Minutes’, a scheme first announced in September 2018. The loans under this scheme
are given for financial assistance and encouragement of MSME growth in the
country.
• Both new and existing business can utilize the scheme for a financial assistance up to ₹ 1
crore. The actual process takes 8-12 days to complete, while the approval or
disapproval is granted within the first 59 minutes of application.
• It is a refinancing scheme, wherein five authorized public sector banks will grant the funds.
The interest rate depends on the nature of your business and credit rating. No
information has been given on subsidizing the principal amount or interest funding.
MUDRA (Micro-units Development and Refinance Agency) Loans :

• The loans under the scheme are given on the pretext of ‘funding the unfunded’. Since small
companies and startups are often left to their own devices for financing their venture,
the government has created the concept of low-cost credit to such undertakings.
• MUDRA Loans are also a refinanced business loans, approved and disbursed through public
sector banks, private sector banks, co-operative societies, small banks, scheduled
commercial banks and rural banks that come under the scheme. The loans are generally
given to micro or small businesses operating in the manufacturing, trading and services
sector.
• The MUDRA Loans are structured as : • Sishu Loans up to Rs. 50,000/- • Kishor Loans up
to Rs. 5,00,000/-
• Tarun Loans up to Rs. 10,00,000/-
• Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE):
• This scheme provides collateral-free financing to the MSME sector for both existing and
new enterprises.
• The Ministry as well as the Small Industries Development Bank of India (SIDBI)
established the Credit Guarantee Trust scheme in 2000-200l for micro and small
enterprises. The coverage of the loan under CGTMSE shall ensure that the financial
institution gets the guaranteed amount without any time lag at a minimal cost.
• National Small Industries Corporation (NSIC) Subsidy:
• The NSIC subsidy for small businesses offers two kinds of
financial benefits–Raw Material Assistance and Marketing Assistance.
• The NSIC is mainly focused on funding small and medium enterprises who wish to improve
/ grow their manufacturing quality and quantity
• Technology Upgradation Schemes:
• This schemeallows small businesses to upgrade their process by financing
technological upgradation.
• SME need to gain competitive advantage in international markets by upgrading their
technology. The various schemes provided by the government for technology upgrading
are: • Credit Linked Capital Subsidy Scheme (CLCSS), • Technology Upgradation Fund
Scheme (TUFS).
• Marketing Assistance Scheme:
• MSME can get subsidies to organize and participate in domestic and foreign trade
exhibitions and also buyer-seller meets. This would help MSME to develop contacts
and venture into international markets.
• Certification Scheme:
• In order to enhance the competitive strength of MSME, to improve quality, environment,
and safety standards, certification is needed. To promote this, the government provides
incentives to MSME obtaining ISO 9001, ISO 14001,and Hazard Analysis and Critical
Control Point (HACCP) certification.
• Credit Rating Scheme:
• The credit rating scheme for this sector has been formulated in consultation with the Indian
Banks Association and rating agencies. Eligible enterprises get a subsidy of up to 75 per
cent for getting themselves rated by a credit rating agency under the Performance
and Credit Rating Scheme of NSIC.

Prelaunch, Launch and Post launch requirements:

• A product launch is when a company decides to launch a new product in the market. Product
launch can be of an existing product which is already in the market or it can be a completely
new innovative product which the company has made.
• Product launch involves various steps which involves understanding customer needs, product
design, testing of the product, marketing & advertising and ensuring that the product reaches
out to all its audience. A successful product launch provides a sales momentum for the
company.
• Importance of a Product/Market/Brand Launch: The market launch starts after the product or
the service has been launched and encompasses the marketing plan and its implementation to
ensure that the product reaches the target market. Brand launch is defined as the creation of a
new brand in the marketplace and positioning it where none other exists. A good product launch
helps in the following:
1. Create Awareness: Launching a product or brand through articles, events and promotional
events ensure that the campaign gets noticed and people become aware of the product or
brand. This, in turn, can increase the customer base and sales.
2. Planning and Staffing: The soft launch can give an idea of the strategies to be
implemented, resources and staffs requirement and the training and preparation needed to
take care once the product is released to the whole marketplace
3. Two approaches for Launch: 1. Soft Launch - Towards the release is limited to a small
set of the target audience or a limited demographics or geographic area and check if any
changes are required before launching the product to the whole market 2. Hard Launch -
When the product is released with full force marketing efforts from the very first day in
order to spread awareness and excitement to customers and persuade them.

• Elements for a Good Product Launch: a) Relating Product Capabilities to Market Needs b)
Having a clear positioning and messaging tagline c) Setting clear goals for launch d) Having
the power of leverage e) Having a proper time of launch
• Advantages of Launch:
1. Excitement and Attention: Once the product launch is communicated to the audience
through a press release, articles, social media, and events, people get aware of the launch
and it will create excitement in their minds.
2. Building Trust: If people are invited to try the products through free samples, it can build
trust and customers can overcome their skepticism and accept the product. This also allows
the promotion of a product through word-of-mouth, social media, and communities.
 3. Training and Preparation: A soft product launch gives time to train and prepare employees
to deal with the public appearance and customer queries once the product is launched to the
whole market.
4. Increased Revenue Streams: New products can pave the path to unexplored revenue
streams.
Moreover, a new product or brand launch captures the interest of different business which
allows expansion of the business and entering into new ventures.
• Disadvantages of Launch:
1. High Investment: Launching a new brand or product needs a lot of investment of time and
resources for training employees, press releases, promotional activities and events. There
is a risk of the product not getting successful and the launch getting failed.
2. Proper Approach to Launch: Different types of products need different approaches to
launch, whether soft launch or hard launch. If the requirement is towards quick and more
dramatic results, a hard product launch is preferred
• Nearly 75 percent of startups fail within the first three years. The classic saying “prior
planning prevents poor performance” applies directly to a startup. There needs to be
an established audience presence beforehand to achieve this.
• Here are 7 ways in which we can ensure a strong start for our business:
1. Explain how your product or service changes lives. Think on why we started a business.
2. Pinpoint interests of your target market.
3. Find the right influencers.
4. Create a webpage with a sign-up form.
5. Hold contests with giveaways.
6. Track and analyze everything.
7. Keep audience in suspense

Procedure for getting License and Registration:

• The registration of business is filed with their state. Some types of businesses have to
register with the federal government, but only if we operate businesses such as those
pertaining to firearms, tobacco and alcohol.
• Registering your business with state entities helps you to start and run your business
legally. The Small Business Administration (SBA) is a great resource that provides many
tools to help with registering our business.
• In order to set up an enterprise, the entrepreneur has to decide on the constitution of
the unit at the initial stages of the project as sole proprietorship, partnership, limited
company (private/public), cooperative, and franchising.
• The sole proprietor has no legal formalities. Usually MSME choose to register with the
District Industries Centre for obtaining various facilities and incentives. Partnership
firms are governed by the lndian Partnership Act, 1932. The terms and conditions of
partnership are contained in the partnership deed. Companies register with the
registrar of companies and cooperatives register with the Registrar of cooperatives.
• 7-Step Guide To Get Your Startup Registered Under Startup India Scheme:
• Step 1: Incoípoíate youí Business: Register your business first as a Private Limited
Company or Partnership Firm or a Limited Liability Partnership.
 • Step 2: Registeíing with Staítup India Scheme : Logging into the Startup India website
and fill up the registration form with details of the business along with uploading certain
relevant documents.
• Step 3: Documents to be uploaded
1) Letter of Recommendation (A recommendation regarding the innovative nature of your
business from an Incubator established in a post-graduate college in India, in a
format specified by the Department of Industrial Policy and Promotion (DIPP))
2) Incorporation/Registration Certificate,
3) Description of your business in brief
• Step 4: Ceítifying youíself
• Step 5: Immediately get íecognition numbeí
• Step G: ľax benefits
• Step 7: Patents, tíademaíks and/oí design íegistíation benefits.

Challenges and Difficulties in Starting an Enterprise:

• What are the biggest challenges entrepreneurs face when starting their own business? How
do successful entrepreneurs handle and solve problems in business? Must an entrepreneur
face these business challenges when starting a business?
1. Developing the Vision and Business Idea - The main business challenge is going to be our
ability to forge the opportunity into a business idea. An entrepreneur must always be ahead
of his time or else he will lose his relevance. It is the duty of an entrepreneur to bring into
the present what is yet to be.
2. Assembling a Business Team - The second business challenge one will face is
assembling the right business management team “strategic round table business team” that
will meet regularly to brainstorm on ways to grow your business. As an entrepreneur, we
are bound to have strengths and weaknesses. We need a business team to cover up
or compliment our weaknesses. A suitable team is a necessity for building a successful
business.
3. Raising Capital for the Business - Trying to convince investors about something that
doesn’t exist yet is definitely a challenge, especially in this time of economic recession.
Trying to make them understand that we are trustworthy and equal to the task is not child’s
play, especially when we are building our first business and have to prove the world that we
are up to it.
4. Finding the Right Business Location - To get a location that has a rapidly growing
population, good road network and other amenities at a good price? Not easy . Nowadays
many office buildings are empty due to the financial crisis, and rents are negotiable. Try to
find a location where there are more starting entrepreneurs to split costs and help each other
with infrastructure.
5. Finding Good Employees - Most employees want to work less and get paid more. Finding
a good employee who will be passionate about delivering his or her services is quite
difficult. You may have great employees but if they can’t act as a team, they are worthless
and will yield nothing but stagnation.
6. Finding Good Customers - Good customers are really hard to find. A good customer will
be loyal to our company and will be willing to forgive us, if we make a mistake and
apologize. He will try to do the right thing that will benefit both him/herself and your
 company mutually. Bad customers will try to exploit the company’s goodwill and look for
ways to rip off the company.
7. Dealing with Competition - Competition as a benchmark for creativity, the main engine
that stimulates innovation and production of quality products. Without competition, there
will be no innovation and without innovation, our business will become stagnant.
Competition keeps us on our toes and drives us to constantly improve.
8. Unforeseen Business Challenges and Expenses – A good entrepreneur must always be
prepared for whatever may occur. Unexpected challenges can come in the form of: • Not
being able to make payroll • Bad debts from customers • Loss of market share • Unpaid bills
and taxes • Inadequate stock or inventory • Unexpected resignation of staff from sensitive
positions • Dwindling working capital. These business challenges, if not handled properly,
can ruin our plan to build a successful business.
9. Keeping Up With Industrial Changes and Trends - A lot of profitable businesses have
been wiped out by slight industrial changes and trends. Dotcom trend of the mid- nineties,
where many established businesses were wiped out by emerging web based Dotcom
companies. The big task will be our ability to quickly use the trend to our advantage. We
can see the same thing happening in the retail business.
10. Exiting the Business - Before starting a business, it is advisable to plan an exit strategy.
Lack of an exit plan is the primary reason why most businesses crumble after the death of
the founder. Most smart entrepreneurs will use a certain benchmark as a target and once it
is reached, they exit the business.

Part - 3
Project Design and Network Analysis

Importance of Network Analysis:

• Project Design is the framework of a project formulated in detailed sequences and develops an
acceptable work Plan.
• The compilation of the sequential narration is known as Project Logic.
• When the Project Logic is presented in graphical pattern, it is known as Network

Project Logic
Sequential
Narration
 • Network Techniques are used by the Project managers to improve the ongoing project
estimates. Also when the project is not going as per the plan, this is used to make changes in
the plan as part of project control.
• The whole project is considered with reference to a sequence of activities and events.
• The events are thought of in different streams of operation and the inter-relationship needs to
be understood clearly.
• The whole project can be put on one large network while segments are put in different small
networks for more detailing.
• Time estimates are made through the network tools (like
MS Project) and cost estimates are done based on those.
• The physical Progress of the projects are monitored through the network. When the
management wants to make more economical, they can shorten through “crashing”.

Origin of PERT and CPM

(PERT – Program Evaluation Review Technique) (CPM Critical Path Method)

• Network is a logical extension of the old Grant Bar Chart. CPM & PERT were
developed in U.S independently in 1957 & 1958. CPM emphasizes mainly on activities
themselves while PERT on events.
• The differences between PERT and CPM dissolved while both underwent measures to attain
perfection through their application as tools.
• PERT was applied to help solve problems of producing the Polaris missile system to a very
tight schedule. The application of PERT has been used on probability estimates covering the
pessimistic-optimistic and normal.
• PERT and CPM emphasizes on “Beginning to End” principle.

Network Design
• Network comprises a set of exponents connected with each other in a sequential
relationship.
• Network Analysis is a system which plans by analyzing the project activities.
• Projects are broken down into simple activities, then arranged in logical sequence. It is also
decided which activities to be done simultaneously and which sequentially.
• A network Diagram constructed above presents the relationship between all the activities
involved. Time, costs and other resources are allocated to different activities.

Project Analysis Time, Costs

of project Scheduling Co-ordinating
Design worked out
Activities Project the activities
Activities
Network Techniques
• A Project has many activities, there are 2 categories – one which can be done
concurrently, another which can be done only after the previous one is done fully/partly.
• While analyzing why a delay occurred or how to make it faster, timing and sequencing the
activities are reviewed.
• For example, in a factory construction, there are many activities like availability of
construction materials, labor, procurement and delivery of machinery, erection &
commissioning, starting the trial runs, training the staff. In these, some have to follow the
sequence and some can be done in parallel.
• To analyze and bring out the intended result, techniques of project scheduling like Bar
Charts, PERT, CPM are used. CPM is the widely used one since it is very useful in basic
management functions of planning, scheduling and control.
• These techniques can be applied in diverse projects like construction of Building/highway,
launching of a new product, large maintenance projects, scheduling ship construction and
repair, end of month closing of accounts, large reasearch projects.

Need for Network Techniques:

• Earlier there were Milestone Charts and Bar charts as conventional planning methods. But
due to their inherent limitations, these could not be used for large and complex projects.
• Requirement of Techniques vary since they have to be adopted appropriately for each
individual firm and its own circumstances.
• PERT is one of the Project Management techniques more useful to managers. It is tested
tool of management in industrially developed countries. It works a method of minimizing
production delays, interruptions and conflicts of co-ordinating and synchronizing the
various parts of the overall job towards scheduling and budgeting resources. It is also a
communication facility to report developments and keep the managers posted.
• PERT is concerned with 2 concepts:
• Events – a specific accomplishment that occurs at a needed point of time, does not need
time/resources
• Activities – Works required to complete the specific event.
• In PERT, the activities require time, money and resources for the completion.

1 2

3 4 5

6 7 8
• Gantt milestone chart (developed by Gantt, shown above) depicts the work to be done with
the inter-relationships between all activities. The numbers represent activities, Rectangles
represent tasks (milestones) and 3 tasks together represent the project.

Steps in PERT:

• Following are the steps involved in PERT:

1. Development of Project Network
2. Time Estimation
3. Determination of Critical paths, Event Slacks, and Activity Floats
4. Development of Project Schedule
5. Calculations of variability and the probability of completion in a given time.
• In PERT, time is the basic measure. It is usually expressed in calendar weeks, the
project should be completed within a stipulated optimistic time.
• In order to arrive at most reliable estimate of time, 3 time estimates are employed :
➢ The optimistic time – shortest time possible, if everything goes well with no complications.
➢ The pessimistic time – Longest time conceivable, includes all unexpected delays
➢ The most likely time – the best estimate of what normally would occur
➢ The differences in these three estimates give a measure of relative uncertainty involved.

PERT – Advantages, Limitations:

• Advantages:
➢ It gives the management the ability to plan the best possible use of resources to achieve a
given goal within the overall time and cost limits.
➢ Itb helps management to handle the uncertainties involved in programmes
where no standard time data available.
➢ It presses for the right direction, at the right point and at the right time.
• Limitations:
➢ When the activities are of non-repetitive type, time estimate to complete is difficult
➢ It does not consider resources required at various stages of the project
➢ Use of this technique for active control of the project requires frequent updating and
revisiting the PERT calculations which is costly affair
CPM (Critical Path Method):

• Next to PERT, the CPM is widely used for planning and controlling projects which follow
the networking principles.
• CPM was developed in 1956 at the E.I Dupont Nemours @ Co, USA in connection with
the periodic overhauling and maintenance of a chemical plant. It resulted in reducing the
shut down period from 130 Hrs to 90 Hrs and saving hours and thus 1 million $.
• CPM has two time-cost estimates for each activity (one for normal situation and another
for the crash situation). It does not incorporate any statistical analysis in determining such
time estimates.
• CPM operates on the assumption that there is a precise known time that each activity in the
project will take.
CPM – Advantages, Limitations:
 • Advantages
➢ It helps in ascertaining the time schedule
➢ Control by the management, with this aid, is easy
➢ It makes better and detailed planning possible
➢ It provides a standard method for communicating project plans, schedules, time
and cost performance.
➢ It identifies the most critical elements and thus more attention can be paid to these
activities.
• Limitations
➢ It fails to incorporate statistical analysis in determining the time estimates.
➢ It operates on the assumption that there is a precise known time that each activity in the
project will take but this may not be true in actual life.
➢ It is difficult to use CPM as a controlling device for the simple reason that one must repeat
the entire evaluation of the project each time when changes are introduced into the network.
CPM was initially developed as a static planning model and not as a dynamic controlling
device.
Differences between PERT & CPM:
• If one job has to be completed before another can begin, the first one is described as
Immediate predecessor of the job following, the later one is called as immediate successor
of the former.

a (10 days) B (12 days)

1 2

a, 10

• There are two types of graphs are used in PERT/CPM:

• Activity on the Arrow (AoA), Activity on the Node (AoN)
• Activity – actual performance of the task and it consumes time and resources. Event start
or the end of the activity and does not consume time and resources.
• Example : Machine Installation is an Activity, Start of Installation and end of installation
are Events.

No. PERT CPM

1 The Origin is Military (Naval) The Origin is Industrial

2 It is an event oriented approach It is an activity oriented approach
3 There is allowance for uncertainty No such allowance
 4 It has 3 time estimates There is only one single estimate of time and the emphasis is on
cost.
5 It is a probability model with It is a deterministic model with well known activity (single) based
uncertainty in activity duration upon past experience

6 It does not demarcate the difference It marks critical activities

between critical and non-critical
activities
7 It is especially suitable when high It is suitable when reasonable precision is required e.g. civil
precision is required in time construction projects, industrial expansion schemes etc.
estimates e.g. defense projects
8 Time is averaged No averaging of time involved
9 The concept of crashing is not The concept of crashing is applied
applied
10 It lays emphasis on reduction of the It lays emphasis on the greatest reduction in completion time with
execution time of the project the least increase in project cost. It is cost based
without too much cost implications.
It is time based

An Example case of CPM:

Job Job Description Immediate Time required to

Identity Predecessor perform the job

a Preparation of Dealer Questionnaire 10 Days

b Preparation of Consumer Questionnaire 10 days

c Dealer Survey a 20 days

d Consumer Survey b 60 days

e Processing and Interpretation of dealer survey data c 10 days

f Processing and Interpretation of consumer survey data d 30 days

 • The Critical Path is the longest path in a project Work.
• A path is a set of nodes connected by arrows beginning at the initial node of the network
and ending at the terminal node.
• Let us a take a case of consumer survey for a product and apply CPM. Refer the table and
the diagram of the previous slide.
• There are two paths in this project 1-2-3-6, 1-4-5-6. The numbers refer to nodes. The time
of the total path is the sum of time taken for all the activities in that path.
• First path takes 40 days, 2nd path takes 100 days. The second path is the critical path. Each
activity is critical to the project end date and that is why it is called critical path.
• Since the Critical path is the longest, delay in any of the non-critical path will not affect the
project end date. The extent of the delay that can be caused to jobs on the non-critical path
without affecting the total duration is known as Slack (here it is 60 days).
• If we want to reduce the total project duration, the duration of any of the critical path has to
be reduced. Incase the consume survey is reduced from 60 days to 30 days, then the project
duration will be reduced to 70 days. But the number of people required will be doubled and
may be the cost too. This is called Crashing

A House Building Project Case Study:

A Typical House Building Project schedule is as below:
1. Excavation : 3 weeks,
2. Foundation : 6 weeks,
3. Settling period : 8 weeks,
4. Walls : 8 weeks,
5. Roofing : 2 weeks,
6. Top of Roofing + Tank + Drainage : 4 weeks,
7. Plumbing : 6 weeks,
8. Electrical work : 5 weeks,
9. Plastering : 8 weeks,
10. Painting : 6 weeks.
The owner wants the house to be completed in 10 months. Draw a Network Diagram.
A House Building Project Case Study

A software Development Project Case Study

A Typical Software Project schedule is as below:

1. Study of Requirements : 1 week,

2. Drafting Specifications : 2 weeks,
3. Architecture Document : 1 week,
4. Building & Training teams (3 features):
2 weeks for featute1, 1 week for feature2, 1 week for feature3
5. Design Documents : 2 weeks (for all 3 features)
6. Coding : 8 weeks for feature1, 7 weeks for feature2, 6 weeks for feature3.
7. White box (Code level) Testing : 3 weeks (for all 3 features)
8. Black Box Testing : 6 weeks,
9. Reporting results : 2 weeks,
10. Delivery of software : 1 week.
Question: The customer wants the software to be ready in 24 weeks.
1. Draw a Network Diagram and find the critical path.
2. Identify which activities to be crashed. 3. What is the slack in non-critical paths
**** END ****