This document discusses the process of generating and screening project ideas. It begins by outlining steps for generating ideas, including conducting SWOT analyses and fostering a conducive work environment. It then discusses monitoring the external environment, including economic, governmental, technological, social and competitive factors. Corporate appraisal and Porter's model for analyzing industry profit potential are also summarized. The document outlines sources for scouting new project ideas and provides a preliminary screening process. It introduces a project rating index methodology before concluding with qualities of successful entrepreneurs and lessons on leadership from Jack Welch.

1. Generation and Screening
of Project Ideas
DR M.SHAHZAD ANJUM
1

2. 2
Generation and Screening of
Project Ideas
1. Generation of Ideas
2. Monitoring the Environment
3. Corporate Appraisal
4. Profit potential of Industries: Porter’s Model
5. Scouting for project ideas
6. Preliminary screening
7. Project rating index
8. Sources of positive net present value
9. On being an entrepreneur

3. 3
1. Generation of Ideas
• Stimulating the flow of ideas
– SWOT analysis
– Clear articulation of objectives
• Cost reduction
• Productivity improvement
• Increase in capacity utilization
• Improve in contribution margin
• Expansion into promising fields
– Fostering a conducive work environment

4. 4
2. Monitoring the Environment
1. Economic Sector
2. Government Sector
3. Technological Sector
4. Socio-demographic Sector
5. Competition Sector
6. Supplier Sector

5. 5
2. Monitoring the Environment
1. Economic Sector
• State of the economy
• Overall rate of growth
• Growth rates of primary/secondary/tertiary
sectors
• Cyclical fluctuations
• Linkage with the world economy
• Trade surplus/deficits
• Balance of payment situation

6. 6
2. Monitoring the Environment
2. Government Sector
• Industrial policy
• Government programmes and policies
• Tax framework
• Subsidies, incentives and concessions
• Import and export policies
• Financing norms
• Lending conditions (FIs and CBs)

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2. Monitoring the Environment
3. Technological Sector
• Emergence of new technologies
• Access to technical know-how
• Receptiveness on the part of industry

8. 8
2. Monitoring the Environment
4. Socio-demographic Sector
• Population trends
• Age distribution and shifts
• Income distribution
• Educational profile
• Employment of women
• Attitudes towards consumption and investment

9. 9
2. Monitoring the Environment
5. Competition Sector
• Number of firms in the industry and their market
shares
• Degree of homogeneity and differentiation
among products
• Entry barriers
• Comparison with substitutes
• Marketing policies and practices

10. 10
2. Monitoring the Environment
6. Supplier Sector
• Availability and cost of raw materials and sub-
assemblies
• Availability and cost of energy
• Availability and cost of money/capital

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3. Corporate Appraisal
• Marketing and distribution
• Production and Operations
• Research and development
• Corporate resources and personnel
• Financing and accounting

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4. Profit potential of Industries:
Porter’s Model
• Five basic competitive forces
– Threat of new entrants
– Rivalry among existing firms
– Pressure from substitute products
– Bargaining power of buyers
– Bargaining power of sellers

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Forces Driving Industry
Competition
The Industry
Rivalry among
existing firms
Potential Entrants
Substitutes
Suppliers Buyers

14. 14
5. Scouting for project ideas
• Analyse the performance of existing industries
• Examine the inputs and outputs of various industries
• Review imports and exports
• Study plan outlays and government guidelines
• Look at suggestions of financial institutions and
development agencies
• Investigate local materials and resources
• Analyse economic and social trends

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5. Scouting for project ideas
cont’d
• Study new technological developments
• Draw clues from consumption/trends abroad
• Explore the possibility of reviving sick units
• Identify unfulfilled psychological needs
• Attend trade fairs
• Stimulate creativity for generating new product ideas
• Hope that the chance factor will favour you

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6. Preliminary screening
• Compatibility with the promoter
• Consistency with government priorities
• Availability of inputs
• Adequacy of market
• Reasonableness of cost
• Acceptability of risk level

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7. Project rating index
Construction of a Rating Index
• Identify factors relevant for project rating
• Assign weights to these factors
• Rate the project proposal on various factors (using a
rating scale)
• For each factor, multiply the factor rating with the
factor weight to get the factor score
• Add all the factor scores to get the overall project
rating index

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8. Sources of positive
net present value
• Economies of scale
• Product differentiation
• Cost advantage
• Marketing reach
• Technological Edge
• Government policy

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9. Being an Entrepreneur
Questions that every entrepreneur must answer
1. Are my goals well defined?
• Personal aspirations
• Business sustainability and size
• Tolerance for risk
1. Do I have the right strategy?
• Clear definition
• Profitability and potential for growth
• Durability
• Rate of growth
1. Can I execute the strategy?
• Resources
• Organizational infrastructure
• The founder’s role

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Qualities and Traits of a
Successful Entrepreneur
• Willingness to make sacrifices
• Leadership
• Decisiveness
• Confidence in the project
• Marketing orientation
• Strong ego

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How to be a Good Leader Jack
Welch
1. Leaders relentlessly upgrade their team,
using every encounter as an opportunity to
e valuate , co ach and build se lf-co nfide nce
2. Leaders make sure people not only see
the vision, they live and breathe it
3. Leaders get into everyone’s skin, exuding
positive energy and optimism
4. Leaders establish trust with candor,
transparency and credit

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How to be a Good Leader cont’d…
5. Leaders have the courage to make
unpopular decisions and gut calls
6. Leaders probe and push with a curiosity
that borders on skepticism, making sure
their questions are answered with action
7. Leaders inspire risk-taking and learning
by setting the example
8. Leaders celebrate
“Think o f yo urse lf as a g arde ne r, a wate ring can
in o ne hand and fe rtiliz e r in the o the r”, Jack
Welch