Product/Project Identification & Types of Ownership

1. 1
Product/Project Identification
&
Types of Ownership

2. Product/Project
Identification
2

3. Product
Q. What is a Product?
A. A product is anything offered to a market for
attention, acquisition, use or consumption. A
product can satisfy a customer’s want or need and
it may be an object, a service, a place, a firm or
even an idea
3

4. Product
Examples of a product
Garments
Image makeover
A promotional plan
A trend forecast
A personal trainer
A fashion show production
4

5. Product
TANGIBLE vs. INTANGIBLE
5

6. Product
FASHION vs. STAPLE (BASICs)
6

7. Product
HIGH-END vs. LOW-END
7

8. GENERAL vs. LIMITED line
Chunnilal
Megamart
Tantra T-shirt
Product
8

9. Customer Brand
Specific Price
Frequency of
Purchase
Shopping Trip
Distance and
Time
Customer
Service
Convenience less low most short minimal
Shopping
Specialty more high least long maximum
9

10. Dissecting the Product
The three levels of products are:
Core
Formal
Augmented
10

11. Dissecting the Product
Formal Product:
brand name, styling
Core product :
the handbag
Augmented product :
brand image, celebrity
endorsement, national
advertisement, guaranteed
satisfaction, heritage
COACH HANDBAG
11

12. The Product Lifecycle
introduction
growth
maturity
decline
obsolescence
12

13. Practical application of PLC
Enter the market with an innovative product
Once the product sales pick up in the market,
increase production
During the maturity stage, competition is high,
margins are less, sales start stagnating –
concentrate on productivity, give more services
As the product starts declining, halt the
production, liquidate the existing stock, reinvent
13

14. Environmental analysis
identify relevant trends and changes on local/
national/international level
1. Economy – GNP, unemployment, disposable
income, etc.
2. Culture – shifts in attitudes, changing values
14

15. 3. Technology
gauge the potential technological developments
(resources employed by major firms)
make careful short-term marketing decisions
BUT …….. be prepared with PLAN B
Environmental analysis
15

16. 4. Legal concerns
Be prepared for any future legislation that may
affect the marketing mix.
E.g. deregulation of prices, restriction on
advertising, safety regulations
Environmental analysis
16

17. After environmental analysis we focus on specific
industry trends
1. Industry demand
Demand data  often available from published
sources
Market is growing OR declining, no. of new
competitors, changes in consumer need/preference
M.R.  gauge demand for Entrepreneur’s product
Industry Analysis
17

18. 2. Competition
Who are the competitors?
Normally…..large corporations – biggest threat
What are their strengths & weaknesses?
Competitors can be identified from experience,
trade journal articles, advertisements, websites,
yellow pages
Industry Analysis
18

19. Finally, focus on specific market, say Patna
Q1. Who is the customer?
Q2. What is the business environment like in specific
markets/areas?
Industry Analysis
19

20. 1. What are the major economic, technological,
legal & political trends at a national & I’nal level?
2. What are total industry sales over the past 5
years?
3. What is the anticipated growth in this industry?
4. How many new firms have entered this industry
in the past 3 years?
Environmental & Industry Analysis – Q’s
20

21. 5. What new products have been recently
introduced in this industry?
6. Who are the nearest competitors?
7. How will your business operation be better than
theirs?
8. Are the sales of each of your major competitors
growing, declining, or steady?
Environmental & Industry Analysis – Q’s
21

22. 9. What are the strengths and weaknesses of
each of your competitors?
10.What trends are occurring in your specific
market area?
11.What is the profile of your customers?
12.How does your customer profile differ from that
of your competitor?
Environmental & Industry Analysis – Q’s
22

23. 23
How is fashion business
different from other
businesses?

24. Components of
Small Business
24

25.  Organizational component
 Technical component
 Financial component
 Marketing component
 Managerial component
 Risk & fluctuations component
Components of small biz.
25

26. During start-up, small business must have a
strong organizational component
Which set up would be most suitable i.e.
proprietorship, partnership, joint stock company?
The answer would depend upon the
entrepreneur, his needs, level of confidence,
manpower strength, own strength & weaknesses,
etc.
Organisational Component
26

27. The technique of production/business is
important while setting/starting up a new business
technical factor can be optimised through
diversion of labour and integration of processes.
Technical Component
27

28. Finance has a direct bearing on the size of the
business
Finance is required at the initial stage, to run the
business, during expansion process.
Finance = fixed capital + working capital (Fixed
capital for acquisition of fixed assets; working
capital  for day to day working of the business)
Financial Component
28

29. The extent of market influences the scale of
production/business
Marketing component = 4P
Marketing Component
29

30. Includes the human resource/personal
component
Much depends on the organizing/managing
capability of the entrepreneur
Managerial Component
30

31. Frequent changes in demand must be kept in
mind while starting any business
Fluctuations : long period/short period
Biz. s.b. able to withstand fluctuating demand
M.O.Q. s.b. set accordingly
Risk & Fluctuating Component
31

32. Type of ownership
32

33. Type of ownership
1. Sole proprietorship
2. Partnership
3. Joint stock company
33

34. 1. Sole proprietorship
Simplest, oldest
Single ownership
One man control
No separate legal entity
Undivided risk
34

35. 1. Sole proprietorship
1. Ease of formation
2. Direct motivation
3. Independent control
4. Quick decision
5. Business secrecy
6. Personal touch
7. Freedom from govt.
control
8. Flexibility of operations
9. Social utility
MERITS
35

36. 1. Sole proprietorship
1. Limited funds
2. Lack of specialisation
3. Unlimited liability
4. Uncertain life
5. Limited scope for expansion
DEMERITS
36

37. 1. Sole proprietorship
1. When small amount of capital is required, e.g.
Sweet shops, bakery, newsstand, etc.
2. Where quick decisions are very important e.g.
property dealers, share brokers, etc.
3. Where limited risk is involved e.g. automobile
repair shop, confectionary, etc.
4. Where personal attention is required, e.g.
beauty salon, tailoring shops, lawyers, etc.
SUITABILITY
37

38. 1. Sole proprietorship
5. Where demand is local, seasonal or temporary,
e.g. retail trade, laundry, fruit sellers, etc.
6. Where fashion changes quickly, e.g. artistic
furniture, etc.
7. Where operation is simple and does not
require skilled management
SUITABILITY
Most popular form of org. in India
38

39. 2. Partnership
“The relation between persons who have
agreed to share the profits of a business
carried on by all or anyone of them
acting for all”
Sec-4, Partnership Act, 1932
39

40. 2. Partnership
1. Two or more persons – maximum 10 in banking
business and 20 in non-banking business
2. Agreement – written or oral
3. Lawful business
4. Sharing of profits
5. Mutual agency among partners
Characteristics
40

41. 2. Partnership
6. No separate legal entity of the firm
7. Unlimited liability
8. Restriction on transfer of interest
9. Utmost good faith
Characteristics
41

42. 2. Partnership
 Must be signed by all partners and s.b. properly
stamped
 Can be altered with mutual consent of all
partners
Partnership deed – written agreement among partners
42

43. 2. Partnership
1. Firm has to be registered with Registrar of
Firms appointed by govt.
2. Registration is not compulsory
3. Unregistered firm suffers from certain
disabilities
Registration of the firm
43

44. 2. Partnership
1. Can’t file suit to enforce its claims against 3rd
party for more than Rs.100!
2. Can’t sue any partner
3. A partner can’t file a suit against the firm for
enforcing his rights
4. Partners can’t enforce their claims against each
other
Disabilities of non-Registered firms
44

45. 1. Ease of formation
2. Larger financial resources
3. Specialisation and balanced approach
4. Flexibility of operation
5. Protection of minority interest
6. Personal incentive and supervision
7. Capacity for survival
MERITS
2. Partnership
45

46. 8. Better human and public relations
9. Business secrecy
MERITS
2. Partnership
Partnerships are apt for medium sized biz. that
require limited capital, pooling of skills and
judgment and moderate risk,
e.g. SSI, wholesale and retail trade, transport
agencies, real estate brokers, CA firms,
doctor’s clinics, law firms, etc. 46

47. 1. Unlimited liability
2. Limited resources (in case huge investments
are required)
3. Risk of implied agency
4. Lack of harmony
5. Lack of continuity
6. Non-transferability of interest
7. Public distrust – lack of publicity
DEMERITS
2. Partnership
47

48. 3. Joint Stock Company
With the growing needs of modern business,
collection of vast financial and managerial
resources became necessary
Proprietorship and partnership forms of
ownership failed to meet these needs due to their
limitations, e.g. unlimited liability, lack of
continuity and limited resources
48

49. 3. Joint Stock Company
It enables collection of vast financial
and managerial resources with
provision for limited liability and
continuity of operations
49

50. 3. Joint Stock Company
‘It is an
incorporated and voluntary association of
individuals with a distinctive name,
perpetual succession,
limited liability and
common seal, and
usually having a joint capital divided into
transferable shares of a fixed value’
50

51. 3. Joint Stock Company
1. Separate legal entity
a. It has an existence entirely distinct from and
independent of its members
b. It can own property and enter into contract
in its own name
c. It can sue and can be sued in its own name
Salient features
51

52. 3. Joint Stock Company
1. Separate legal entity
d. There can be contracts and suits between a
company and its members!
e. Assets and liabilities of the company are not the
assets and liabilities of the members & vice
versa
f. No member can directly claim any ownership
right in the assets of the company
Salient features
52

53. 3. Joint Stock Company
2. Artificial legal person
a. It is created by law and exists only in
contemplation of law
b. Intangible, invisible…..having no body and soul
c. It has rights and obligations in terms of law
Salient features
53

54. 3. Joint Stock Company
3. Perpetual succession
a. Continuous existence, unaffected by death,
insolvency, lunacy, etc.
b. It exists as long as it is not wound up (legally)
4. Limited liability
Salient features
54

55. 3. Joint Stock Company
5. Common seal
 Law provides for the use of common seal as a
substitute for its signature
 Common seal + signature of 2 directors is legally
binding on the company
Salient features
55

56. 3. Joint Stock Company
6. Transferability of shares
 Members are free to transfer their shares to
anyone without the consent of other members
Salient features
56

57. 3. Joint Stock Company
7. Separation of ownership and management
 Large no. of members
 Participation in day-to-day management is not
possible
 Directors are elected
 *Representative control is an important feature
of a company
Salient features
57

58. 3. Joint Stock Company
8. Incorporated association of persons
 A company is an incorporated or registered
association of persons
 One person can’t constitute a company under
the law
o Public company – minimum 7 persons
o Private company – minimum 2 persons
Salient features
58

59. Private Company
a. Restricts the right of its members to transfer the
shares
b. Maximum members = 50, excluding those
members who are or were employees of the
firm
c. Can’t invite public to subscribe in shares or
debentures of the company
Salient features
59

60. Public Company
a. No restriction on transfer of its shares
b. No maximum limit on no. of members,
minimum – 7
c. Can invite public for subscription to its shares
and debentures
Salient features
60

61. 3. Joint Stock Company
1. Limited liability
2. Large financial resources small
denominations, transferability
3. Continuity  firms require long periods of time
to mature/develop
4. Transferability of shares – liquidity
Merits
61

62. 3. Joint Stock Company
5. Professional management  large financial
resources, can afford expert professionals
6. Scope for growth & expansion  economies of
scale
7. Public confidence  transparent, regulated by
Govt. under Companies Act, AGM, annual
reports, audit by independent companies
Merits
62

63. 3. Joint Stock Company
8. Diffused risk  risk spread over large no. of
members
9. Social benefits  helps mobilise savings of the
community, Facilitates growth of financial
institutions, Employment generator, Revenues
to govt. through taxes
Merits
63

64. 3. Joint Stock Company
1. Difficulty of formation
2. Excessive govt. control
3. Lack of motivation & personal touch
4. Oligarchic management
5. Delay in decisions
6. Conflicts of interest
Demerits
64

65. 3. Joint Stock Company
7. Frauds in promotion & management
8. Lack of secrecy
9. Social evils
Demerits
65

66. 66
What is the scope of
fashion business in
India?