ENTREPRENEURSHIP
UNIT - 4
Source of Business Ideas and test of feasibility
VERY SHORT QUESTION ANSWER
1 MARK
1.Define Business Ideas?
Ans: A business idea is a concept that can be used for financial gain that is usually centered on a product or service that can be offered for money. An idea is the base of the pyramid when it comes to the business as a whole.
2. Define Innovation?
Ans. Innovation is creating new ideas, new product development through research and development, or improving existing services. 3. Define profitability?
Ans: Profitability is a business's ability to generate earning compared to its costs over a certain period of time
4. What is a Feasibility Study?
Ans: A feasibility study is an analysis that takes all of a project's relevant factors into account including economic, technical, legal, and scheduling considerations to ascertain the likelihood of completing the project successfully.
5. What is a Business Plan?
Ans: A business plan is a written document that describes in detail how a business-usually a new one is going to achieve its goals. A business plan lays out a written plan from a marketing, financial and operational viewpoint.
6. Give one importance of Business plan.
Ans: 1. To help you with critical decisions: While business plans have many purposes, the primary importance of a business plan is that they help business owners make better decisions.
7. What is a Project Proposal?
Ans: The Project Proposal is the initial document used to define an internal or external project. The proposal includes sections such as title, start and end dates, objectives and goals, requirements, and a descriptor of the proposed solution.
8. What is an Investment?
Ans: An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
9. Define product?
Ans. A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form.
10. What is Finance?
Ans: Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
2 MARKS
SHORT QUESTION ANSWER
1.Give two advantages of Business Ideas?
Ans: i. Has technological leadership. It can also lead to cost advantages and econo-mies of scale. ii. Can obtain and secure scarce resources before crowding.
2.Give two disadvantages of Business Ideas?
Ans: (i) Investments in resolving problems, others can benefit from learning's.
(ii) Inertia makes it difficult to abandon the strategy that is no longer effective.
3.Give two sources of Business Ideas?
Ans: 1. Interests and hobbies: A hobby is an activity that you enjoy doing during your leisure-time and is one of the primary sources of business ideas. In fact, most people have founded great successful businesses while pursuing their interests or hobbies. For instance, if you enjoy traveling, playing with computers, music, sports, performing or cooking, you can seamlessly develop it into a business. You can join the tourism, entertainment or hospitality industry by venturing deeper into your favorite activity.
2. Customer surveys The starting point of any new business should be the clients because their needs and wants justify the service or product that you can offer to them. The wants and needs of the customers are, therefore, the sources of business ideas generation and you can ascertain them by carrying out a thorough survey. You can conduct such a survey, whether formally or informally, through questionnaires, interviews or observation as you list the sources of business ideas that work best for you.
4.Why is business plan important?
Ans: A well-written business plan is an important tool because it gives entrepreneurs the ability to lay out their goals and track their progress as their business begins to grow. Formulating a business plan should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business in on the right path and worth putting money into.Business plans typically include detailed information that can help improve the business's chances of success, like a market analysis, competitive analysis, customer segmentation, marketing, logistics and operations plans, cash flow projection and an overall path to long-term growth.
5. What is Business Design?
Ans: Business designers take juicy, creative, human-centered innovation and make it succeed out there in the real world. We [IDEO] use strategy, analysis, and financial modeling as generative design tools, and help organizations turn their biggest, wildest ideas into businesses with long-term viability.
6. What does a Business Designer do?
Ans: 1. understanding the business and the competition.
2. providing industry perspectives
3. designing experiments for prototyping
4. measuring the results of those experiments.
7. Who offers Business Design services to their clients?
Ans: Many companies offer Business Design-type services to their clients, but here is a selection of some interesting companies in this space
1. IDEO 2. Fjord (owned by Accenture) 3.EY-Seren (owned byEY)
8. How to become a Business Designer?
Ans: A lot of job ads state that MBAs are a "huge plus", but in reality, it seems to me that they are pretty much a pre-requisite. In some ways, this makes sense, as a holistic view of a business is crucial to designing a good one! However, it does exclude the autodidacts among us.Entrepreneurship experience is highly valued, as entrepreneurs have lived and breathed the design, prototype, and test cycle.
9. Give the types of Business design.
Ans:- 1. Business design 2. Enterprise design.3. Execution design.4. Products design
10.Define Location?
Ans: Location is especially important for businesses in the retail and hospitality trades because they rely a great deal on visibility and exposure to their target markets. But location is also important for service and manufacturing ventures, which have such costs as advertising, promotion, and distribution that are a direct result of where they're located.
11. Define Layout?
Ans: Master plan or blueprint of a printed or published work (such as an advertisement, book, magazine, newspaper, or website) that lays out the arrangement of its different graphic elements (such as body copy, colors, headlines, illustrations, scale). It establishes the overall appearance, relative importance, and relationships between the graphic elements to achieve a smooth flow of information (message) and eye movement for maximum effectiveness or impact. Often alternative layouts (called roughs) are prepared to explore different arrangements before the final layout is made for printing or production.
12. What is Layout Planning?
Ans: Layout planning is deciding on the best physical arrangement of all resources that consume space within a facility. These resources might include a desk, a work center, a cabinet, a person, an entire office, or even a department. Decisions about the arrangement of resources in a business are not made only when a new facility is being designed; they are made any time there is a change in the arrangement of resources, such as a new worker being added, a machine being moved, or a change in procedure being implemented. Also, layout planning is performed any time there is an expansion in the facility or a space reduction.
13. Give two Advantages of process layouts ?
Ans: 1. Flexibility: The firm has the ability to handle a variety of processing requirements.
2. Cost: Sometimes, the general-purpose equipment utilized may be less costly to purchase and less costly and easier to maintain than specialized equipment.
14. Give two Disadvantages of process layouts?
Ans: 1. Utilization. Equipment utilization rates in process layout are frequently very low, because machine usage is dependent upon a variety of output requirements.
15. Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means higher per-unit costs. More specialized attention is necessary for both products and customers. Setups are more frequent, hence higher setup costs. Material handling is slower and more inefficient. The span of supervision is small due to job complexities (routing, setups, etc.), so supervisory costs are higher. Additionally, in this type of layout accounting, inventory control, and purchasing usually are highly involved.
15. What is Combination layout?
Ans: Many situations call for a mixture of the three main layout types. These mixtures are commonly called combination or hybrid layouts. For example, one firm may utilize a process layout for the majority of its process along with an assembly in one area. Alternatively, a firm may utilize a fixed-position layout for the assembly of its final product, but use assembly lines to produce the components and subassemblies that make up the final product (e.g., aircraft).
16. What os Cellular layout?
Ans: Cellular manufacturing is a type of layout where machines are grouped according to the process requirements for a set of similar items (part families) that require similar processing. Read more:
https://www.referenceforbusiness.com/management/Int Loc Layout.html#ixzz6VUGurF9U
These groups are called cells. Therefore, a cellular layout is an equipment layout configured to support cellular manufacturing.
17. Define project Report?
Ans: 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.
Project Report is a written document relating to any investment. It contains data on the basis of which the project has been appraised and found feasible. It consists of information on economic, technical, financial, managerial and production aspects. It enables the entrepreneur to know the inputs and helps him to obtain loans from banks or financial Institutions.
18.Define Marketing Plan?
Ans: The project report must clearly state the total expected demand for the product. It must state the price at which the product can be sold in the market. It must also mention the strategies to be employed to capture the market. If any, after sale service is provided that must also be stated in the project. It must describe the mode of distribution of the product from the production unit to the market.
19. Define Capital Structure and operating cost?
Ans: The project report must describe the total capital requirements of the project. It must state the source of finance, it must also indicate the extent of owners funds and borrowed funds. Working capital requirements must be stated and the source of supply should also be indicated in the project. Estimate of total project cost, must be broken down into land, construction of buildings and civil works, plant and machinery, miscellaneous fixed assets, preliminary and preoperative expenses and working capital.
Proposed financial structure of venture must indicate the expected sources and terms of equity and debt financing. This section must also spell out the operating cost.
20. Define Financial Aspects?
Ans: In order to judge the profitability of the business a projected profit and loss account and balance sheet must be presented in the project report. It must show the estimated sales revenue, cost of production, gross profit and net profit likely to be earned by the proposed unit. In addition to the above, a projected balance sheet, cash flow statement and funds flow statement must be prepared every year and at least for a period of 3 to 5 years.
The income statement and cash flow projections should include a three-year summary, detail by month for the first year, and detail by quarter for the second and third years. Break even point and rate of return on investment must be stated in the project report. The accounting system and the inventory control system will be used is generally addressed in this section of the project report. The project report must state whether the business is financially and economically viable.
21. Define Project Implementation?
Ans: Every proposed business unit must draw a time table for the project. It must indicate the time within the activities involved in establishing the enterprise can be completed. Implementation schemes show the timetable envisaged for project preparation and completion.
22.Give two Characteristics of Project Report?
Ans: 1.This is the Abstract and mirror of various information and analyses regarding the project to be started. 2. For this report, various aspects of the projects are tested with the help of the experts, as the element of risk happens to be quite high in big projects.
23. What Is an Investment?
Ans: An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.
24. Define Speculation?
Ans: Speculation is a separate activity from making an investment. Investing involves the purchase of assets with the intent of holding them for the long term, while speculation involves attempting to capitalize on market inefficiencies for short-term profit. Ownership is generally not a goal of speculators, while investors often look to build the number of assets in their portfolios over time.
LONG QUESTION ANSWER
5 MARKS
1. Explain five Important Sources for Getting Business Ideas?
Ans: 1. Past Work Experience: If you have been working somewhere for the past few years, you have obviously been doing something right to still be on the payroll. During this time, you have gained experience in your field and been professionally exposed to various other fields. You have developed contacts both within your company and also elsewhere in the industry. You have picked up skills and may also have received training in a specialized subject.
2. Hobbies and Interests: I envy professional athletes because they make a living out of what they love doing. John McEnroe made millions playing tennis and many more millions commentating on it and most of us have to pay to play tennis. Life can be very unfair.Taking a good look at what you enjoy doing during your leisure time is a good way to look for business ideas. Hobbies are a means to avoid boredom and dissatisfaction at work. Explore both formal hobbies such as stamp collection, badminton, and classical music and also informal leisure activities such as walking, yoga, and cooking.
3. Strengths and Abilities: Be sure to allow your business to exploit your strengths and abilities and to steer clear of your weaknesses. List your strengths and weaknesses. Ask your friends and relatives to help you with the list. Look at what you enjoy and what you are good at, and try combining them in the business you are going to start. If you love painting but are not good at it, do not become a painter but if you have great communication skill, you can think about starting a business sellingworks of new artists to hotels and offices.
4. Friends and Family: Consulting friends and family members can be a great idea to look for ideas. Those close to you might have also thought of starting a business. You can take advantage of their work experience and interests to generate ideas and they would also be useful in the analysis of these ideas.
An interesting way to know their thoughts is get them together in a focus group. A focus group is a group of people sitting together to discuss a specific topic. You can invite some other people with domain knowledge to join you in this. For example, if you want to discuss business opportunities in the automobile sector, invite someone you know who works for Maruti.
5. Distribution Channels: The retailers and the distributors are the people closest to the consumer. No one knows more than them, what the consumer wants and what is he/she getting right now. Most distributors deal with a wide variety of products so their experience may be across industries.
They will be able to tell you which products are doing well in the market and what are the various problems in various industries. The retailer will be in a position to give you a first-hand report on consumer behaviour. Often distribution channel members can have suggestions for completely new products.
2. Explain five step feasibility test for your new business idea?
Ans: 1. Create a strong unique brand: Your business needs to stand out and a strong brand is integral to this. As part of this you'll need to check your business name doesn't conflict with that of another business.
3. Have a business plan: A business plan helps you put organise your ideas, clarify goals and ensure you have all of your bases covered. It will also improve your chances of success. Your plan should be an evolving document that grows with your business.
3. Know your unique selling points and capitalise on them: USPS are things that differentiate your business from its competitors, such as an exclusive product or exceptional service. These USPS provide a solid foundation for your business, giving you a competitive advantage that can be promoted in your marketing and potentially justifying larger profit margins.
4. Budget for ongoing costs: As a business owner, it's important you have an intimate understanding of the figures. When creating a budget, explore different options for fixed and variable costs and ask other experienced owners for advice. Putting together a detailed, accurate cost budget takes time and money but is hugely valuable.
5. Measure, don't assume, demand: You'll need to find out which segments of the market respond respond most positively to what you're selling. Research their purchasing habits and understand why your offering appeals to them more than others. Once you know this you can target these types of customers.
3. Explain the Contents of Business Plan?
Ans: Having gone through the significance of business plan, it is now clear that there is no substitute for a well-prepared business plan or project report and also there are no shortcuts to preparing it. The more concrete and complete the business plan, the more likely it is to earn the respect of outsiders and their support in making and running an enterprise. Therefore, the business plan needs to be prepared with great care and consideration.A good project report or business plan should contain the following contents.
1. General Information: Information on product profile and product details.
2. Promoter: His/her name, educational qualification, work experience, project related experience.
3. Location: Exact location of the project, lease or freehold, locational advantages.
4. Land and Building: Land area, construction area, type of construction, cost of construction, detailed plan and estimate along with plant layout.
5. Plant and Machinery: Details of machinery required, capacity, suppliers, cost, various alternatives available, cost of miscellaneous assets.
6. Production Process: Description of production process, process chart, technical knowhow, technology alternatives available, production programme.
4.Explain the Significance of Business Plan?
Ans: Arguments are made for and against writing a business plan.. The argument advanced against writing business plan is that it involves costs especially when some outside consultant or accountant or lawyer is hired to write the business plan. One of the reasons for not writing business plan is the fear of prematurely closing off the new venture. The major argument made in favour of writing business plan is reducing anxieties and tensions in running business enterprise. Writing business plan is especially useful for the entrepreneurs who require financial help from the outside sources like banks and financial institutions. The reason is that the outside sources advance funds to entrepreneurs based on the soundness of their enterprises as reflected in business plans. In nutshell, writing a business plan is not without its costs and sacrifices, nonetheless the benefits of it outweigh its costs. An objective without a is just a dream. Until committed to papers intentions are seeds without soil, sails without winds or mere wishes which do not lead to execution and without execution there is no payoff. The preparation of a business plan or project report is of great significance for an entrepreneur. The business plan serves the two essential functions: First and most important the business plan is like a road map. It describes the direction the enterprise is going in, what its goals are, where it wants to be, and how it is going to get there. It also enables an entrepreneur to know that he is proceeding in the right direction. Some hold the view that without well spelled out goals and operational methods/tactics, most businesses flounder on the rocks of hard times.
5. What is a Proposal? Explain the Characteristics of Proposals?
Ans: A proposal is a written document to persuade the reader for a suggested plan of action. For example, a proposal may aim to attain a grant from the government to carry out a survey on communication practices on organizations. Characteristics of Proposals
1. Proposals are persuasive documents as these try to convince the reader of the suitability of a particular course of action.
2. Proposals are generally written for an external audience though in some cases they may be made for internal purposes, by one department for another or from an individual to the management.
3. These may be solicited or unsolicited.
4. They vary in length from a couple of pages to several pages.
5. Proposals may be made by individuals or organizations for both individuals and organizations.
6.Explain five Content of Proposal?
Ans: The following are the topics under which information may be provided while writing a proposal. Depending on the complexity and the length of the proposal, these eight topics can be combined or further subdivided to suit the needs.
(i) Objective statement: The opening statement should present the purpose/objective of the proposal, that is, what the presenter is proposing to do. It should be linked to the need of the receiver to gain acceptability. The problem/objective should be stated clearly. In the case of solicited proposals, it is important to link the objective statement with the topic for which proposals are invited. In the case of unsolicited proposals, the objective should be of interest to the organization where the proposal is being submitted and it should also catch the reader's attention. This can be effectively done by summarizing the benefits of the proposal.
(ii) Background: Provide the reader with background information of the problem. This helps the reader to better understand the problem and see it in the right perspective. For example, a proposal of a research organization to a company for carrying out a survey on consumer behavior may be backed by information related to declining sales due to changing consumer needs.
(iii) Need: Need for what is being proposed is an offshoot of the background information. Based on the background information, the need is established so that the reader is clearly able to understand its advantages.
(iv) Procedure/Discussion of the plan: This is where you provide the details regarding how you will go about achieving the objectives listed out earlier. Give a step-by-step description of your plan of action, proposed schedule of the activities and an estimated budget. This is the heart of the proposal and needs to be written carefully, concisely and logically.
(v) Qualifications: Give the qualifications and experience of the persons who would be involved in the proposed project. This is given with a view to providing evidence of their ability to handle the project. Details of previous experiences of the organization/individuals in handling similar projects, the availability of facilities, equipment, expertise, and so on, provide credibility to the proposal.
7. Explain the Guidelines for Writing a Proposal?
Ans: Scot Ober has compiled some of the points to be kept in mind while writing a proposal. These are as follows
1. Give ample, credible evidence for all statements.
2. Do not exaggerate.
3. Provide examples, expert testimony and specific facts and figures to support your statements. 4. Use simple, straightforward and direct language preferring simple sentences and active voice.
5. Stress reader benefits. Remember that you are asking for something, usually a commitment of money; let the reader know what he or she will get in return.
8. Explain the Key reasons to have well-defined business processes?
Ans: 1. Identify what tasks are important to your larger business goals
2. Improve efficiency
3. Streamline communication between people/functions/ departments
4. Set approvals to ensure accountability and an optimum use of
resources
5. Prevent chaos from creeping into your day-to-day operations
6. Standardize a set of procedures to complete tasks that really matter to your business
9. Explain the seven steps of the business process lifecycle?
Ans: The seven steps of the business process lifecycle
Step 1: Define your goals
What is the purpose of the process? Why was it created? How will you know if it is successful?
Step 2: Plan and map your process
What are the strategies needed to achieve the goals? This is the broad roadmap for the process.
Step 3: Set actions and assign stakeholdersIdentify the individual tasks your teams and machines need to do in order to execute the plan.
Step 4: Test the process Run the process on a small scale to see how it performs. Observe any gaps and make adjustments.
Step 5: Implement the process Start running the process in a live environment, Properly communicate and train all stakeholders.
Step 6: Monitor the results Review the process and analyze its patterns. Document the process history. Step
7: RepeatIf the process is able to achieve the goals set for it, replicate it for future processes.
10. What are the essential attributes of an ideal business process?
Ans: There are 4 essential attributes that constitute an ideal business process
1. Finite : A good business process has a well-defined starting point and ending point. It also has a finite number of steps.
2. Repeatable: A good business process can be run an indefinite number of times.
3. Creates value: It ultimately aims at translating creation of value into executable tasks and does not have any step in the process just for the sake of it. In other words, if any step in the process isn'tadding value, it should not exist.
4. Flexibility : It has an in-built nature to be flexible to change and is not rigid. When there is any scope for improvement that is identified, the process allows that change to be absorbed within itself without operationally affecting its stakeholders as much.
11. Explain the Benefits of using business process software?
Ans: 1. Reduction of risks: BPM software helps prevent and fix errors and bottlenecks thereby minimizing risks.
2. Elimination of redundancies: Monitoring processes allows for identification and elimination of duplicated tasks. Implementing BPM software also enhances resource allocation to ensure human effort is invested only in relevant tasks.
3. Minimized costs: Improved visibility into processes helps zero in on wasteful expenditure. This way costs are kept to a minimum and savings are boosted.
4. Improved collaboration : Transparency fostered by BPM software boosts collaboration between internal teams as well as external vendors and buyers. Everyone is aware of responsibilities as well as timelines and bottlenecks.
5. Agility: Optimized processes enable greater agility in organizational operations. Minimized errors, bottlenecks, and duplication facilitate quicker turnaround times.
6. Improved productivity: When processes are shipshape, approvals are faster and information retrieval is easier. Tasks are routed sequentially without human intervention. These benefits significantly boost productivity of teams.
7. Higher efficiency: Comprehensive dashboards in BPM software
provide bird's-eye view of process performance. It helps managers ensure
that turnaround times are short and accuracy levels are high.
12. Explain the Characteristics of Project Report?
Ans: 1. This is the Abstract and mirror of various information and analyses regarding the project to be started.
2. For this report, various aspects of the projects are tested with the help of the experts, as the element of risk happens to be quite high in big projects.
3. The economic viability of the proposed project is correctly evaluated through potentiality reports.
4. This is a written document of various activities of the projectand its feasibility.
5. The project report is suggestive, because it gives clear suggestions for the selection of the project, by incorporating all essential facts of feasibility reports prepared by the experts.
6. It is prepared after collecting complete information.
7. This is the basis of calculation of profits because it includes the possible quantum production in the coming years and expenses to be incurred on the operation of the industry.
13. Explain the Need and Objectives of the Project Report?
Ans: 1. Selection of Best Investment Proposal : Project formulation is an important decision from the view of the investment proposal. Hence, the project report is required to take the decision regarding the best investment and also to know, which investment is not good.As a result, the expected profits may be gained.
2. Registration and Approval of Project: The need forpreparation of the project report is also to facilitate easy registration and approval of the project. For that, the project reports are essentially required to be sent to the Directorate of industries, other government departments, and the district industries center.
3. Financial Assistance: The enterprise gets financial assistance based on its project report. For availing financial assistance, the project report is required to be sent to various specific Financial Institutions, banks and investment corporations. Otherwise, they will neither be able to study the profitability and feasibility of the investment proposal, nor they will get satisfied with it.
Hence, the preparation of the project report is necessary to satisfy them for getting financial assistance.
4.Solving of Various Doubts and Inquests: We know that the project report is a brief description, account, and mirror of the project to be started. It presents solutions to various doubts and inquests relating to the project.
5. Appropriate Basis: The project report is an appropriate basis for getting infrastructure facilities, incentives, and concessions in various taxes from Government and other Institutions.
6.Testing of Business Profitability and Soundness: The objective of the preparation of the project report is also to test the business profitability and soundness of the project. The comparative review of estimated costs and possible income is possible by the project report.
7. Different Privileges/Exemptions: Preparation of project report is necessary also, because:Permanent and Temporary registration at District Industries Centre is possible, only on submitting copies of the project report with the registration form.Allotment of developed land and sheds also requires project report. The raw material may be procured from industrial Corporations.
14. Explain the three dimentions of Product?
Ans: There are three dimensions, as stated below
1. Managerial Dimension : According to management, a product is viewed as the total product. It includes all those tangible and non tangible aspects that management wants to offer. Managerial dimension of product covers mainly core products, product-related features, and product-related services.
2. Consumer Dimension : To consumers, a product is a bundle of expectations. They view product as a source of expectations or satisfaction. Thus, for consumer, total benefits received from product are important. This view is very important for a marketer.
3. Social Dimension : Society considers the product as a source of long-term welfare of people. Society expects high standard of living. safety, protection of environment, and peace in society.
15. Explain the Characteristics of Product?
Ans: 1. Product is one of the elements of marketing mix or programme.
2. Different people perceive it differently. Management, society,and consumers have different expectations.
3. Product includes both good and service.
4. Marketer can actualize its goals by producing, selling, improving, and modifying the product.
5. Product is a base for entire marketing programme.
6. In marketing terminology, product means a complete product that can be sold to consumers. That means branding, labeling, colour, services, etc., constitute the product.
7. Product includes total offers, including main qualities, features, and services.
16. Explain the types of Product?
Ans: 1. Consumer Products: Consumer products are those items which are used by ultimate consumers or households and they can be used without further commercial and engineering processes. Consumer products can be divided into four types as under:
i. Convenient Products: Such products improve or enhance users' convenience. They are used in a day-to-day life. They are frequently required and can be easily purchased. For example, soaps, biscuits, toothpaste, razors and shaving creams, newspapers, etc. They are purchased spontaneously, without much consideration, from nearby shops or retail malls.
ii. Shopping Products: These products require special time and shopping efforts. They are purchased purposefully from special shops or markets. Quality, price, brand, fashion, style, getup, colour, etc., are important criteria to be considered. They are to be chosen among various alternatives or varieties. Gold and jewelleries, footwear, clothes, and other durables (including refrigerator, television, wrist washes, etc.).
iii. Durable Products: Durable products can last for a longer period and can be repeatedly used by one or more persons. Television, computer, refrigerator, fans, electric irons, vehicles, etc., are examples of durable products. Brand, company image, price, qualities (including safety, ease, economy, convenience, durability, etc.), features (including size, colour, shape, weight, etc.), and after-sales services (including free installation, home delivery, repairing, guarantee and warrantee, etc.) are important aspects the customers consider while buying these products.
iv. Non-durable Products: As against durable products, the non durable products have short life. They must be consumed within short time after they are manufactured. Fruits, vegetables, flowers, cheese, milk, and other provisions are non-durable in nature. They are used for once. They are also known as consumables. Mostly, many of them are non-branded. They are frequently purchased products and can be easily bought from nearby outlets. Freshness, packing, purity, and price are important criteria to purchase these products.
v. Services Services are different than tangible objects. Intangibility, variability, inseparability, perishability, etc., are main features of services. Services make our life safe and comfortable. Trust, reliability, costs, regularity, and timing are important issues.
2. Industrial Products: Industrial products are used as the inputs by manufacturing firms for further processes on the products, or manufacturing other products. Some products are both industrial as well as consumer products. Machinery, components, certain chemicals, supplies and services, etc., are some industrial products. Industrial products include
1. Machines and components
2. Raw-materials and supplies
3. Services and consultancies
4. Electricity and Fuels, etc.
VERY LONG QUESTION ANSWER
10 MARKS
1. Define Business Ideas? Explain the sources of Business Ideas?
Ans: A business idea is a concept that can be used for financial gain that is usually centered on a product or service that can be offered for money. An idea is the base of the pyramid when it comes to the business as a whole.
For businesses, this could mean: creating new ideas, new product development through research and development, or improving existing services. Innovation can be the central focus of a business and this can help them to grow and become a market leader if they execute their ideas properly. Businesses that are focused on innovation are usually more efficient, cost-effective, and productive. Successful innovation should be built into the business strategy, where you can create a culture of innovation and drive forward creative problem-solving.
The entrepreneurs throughout the world use the following sources to tap to identify good ideas
1. Customers: Prospective customers know best what they want and the habits/tastes which are going to be popular shortly. New product or service ideas may come from customers' reactions to the present product and the expected product idea. Contacts with prospective consumers can also reveal the features that should be built into a product or service. The attention to the customers can take the form of informally monitoring potential ideas and needs or formally arranging surveys among prospective customers. Care needs to be taken to ensure that the idea or need represents a large enough market to support a new venture.
2. Existing organization: Competing products and services of existing organization and evaluation thereof is a successful source of new ideas. Frequently, this analysis uncovers ways to improve on these offerings, resulting in a new product that has more market appeal. The analysis of profitability and break-even level of various industries or organizations indicate promising investment opportunities which are profitable and relatively risk-free. An examination of the capacity utilization of various industries provides information about the potential for further investment.
3. Distribution channels: Member of the distribution channels: middlemen, transient customer preference and possible expectations which may be a good business idea. Not only do channel members frequently have suggestions for completely new products; they can also help in marketing the entrepreneur's newly developed products.
4. Government: The government can be a source of new product ideas in many ways. First, the files of the Patent Office contain numerous new product possibilities. They can suggest other more marketable new product ideas. Secondly, new product ideas can come in response to government regulations, industrial policy, investment guidelines, annual plan, Five year plan, etc.
Thirdly, several government agencies nowadays assist entrepreneurs in discovering evaluating business ideas.
5. Financial institutions and Development Agencies: These organizations also provide ready projects and offer suggestions to potential entrepreneurs which help identify promising projects.Community Development Financial Institutions Fund, Small Business Administration, Office of Advocacy, United States Chamber of Commerce, Economic Development Administration, Small Business and Entrepreneurship Council, House Committee on Small Business and many others bodies in the USA are working to improve entrepreneurship and small businesses.
6. Research and Development: The entrepreneur's own "research and development" is the largest source of new ideas. It may be a more formal endeavor connected with one's current employment or an informal laboratory in the private premise.
Formal institutional, research and development are often better equipped, enabling the entrepreneur to conceptualize and develop successful new product ideas. But many amazing product ideas have come from informal research endeavors at the private level.
7. Trade Shows, Fairs aid Exhibitions: These sources display new products and innovations in processes and services. An innovative entrepreneur can get product ideas from here which they can adapt or modify and produce with indigenous materials and technology.
8. Focus Groups: Focus groups are good sources of product ideas. A moderator leads a group of people through an open, in-depth discussion rather than simply asking questions to solicit participant response; for a new product area, the moderator focuses the discussion of the group is either a directive or a nondirective manner. The group of 8 to 14 participants is stimulated by comments from other group members in creaturely conceptualizing and developing a new product idea to fulfill market needs. This is an excellent method for initially screening ideas and concepts too.
9. Brainstorming: The brainstorming method for generating new product ideas is based on the fact that people can be stimulated to greater creativity by meeting with others and participating in organized group experiences.
This method would be effective if the effort focuses on a specificproduct or market area. The following four rules should be followed
when using this method.
• No criticism is allowed by anyone in the group - no negative comments.
• Freewheeling is encouraged the wilder the idea the better
• Quantity of ideas is desired- the greater the number of ideas, the greater the likelihood of useful ideas emerging.
• Combinations and improvements of ideas are encouraged ideas of others can be used to produce still another new idea.
10. Collective Notebook Method: In the collective notebook method, a small notebook that easily it's in a pocket, containing a statement of the problem, blank pages, and any pertinent background data, is distributed.Participants consider the problem and its possible solutions, recording ideas at least once but preferably three times a day. At the end of the month, a list of the best ideas is developed, along with any suggestions.
11. Heuristics Method: Heuristics relies on the entrepreneur's ability to discover through a progression of thoughts, insights, and learning. The technique is probably used more than imagined because entrepreneurs frequently must settle for an estimated outcome of a decision rather than a certainty.One specific heuristic approach is called the heuristic ideation technique (HTT).The technique involves locating all relevant concerts - that could be associated with a given product area and generating a set of all possible combinations of ideas.Value analysis Method: The value analysis technique develops methods for maximizing value to the entrepreneur and the new venture.It is a method for developing a new idea by evaluating the worth of aspects of ideas.
12. Checklist Method: A new idea is developed through a lot of The entrepreneur can use the list of questions or statements to guide related issues or suggestions.the direction of developing entirely new ideas or concentrating on specific "idea" areas. The checklist may take any form and be of any length.
13. Synectics Method: Synectic is a creative process that forced individuals to solve problems through one of four analogy mechanisms: 'personal, direct, symbolic, and fantasy. A group works through a two step process.
The first step is to make the strange familiar. Thus involves, through generalizations or models, consciously reversing the order of things and putting the problem into a readily acceptable or familiar perspective, thereby eliminating the strangeness. Once the strangeness is eliminated, participants engage in the second step, making the familiar strange through personal, direct, or. symbolic analogy, which ideally results in a unique solution being developed.
14. Dream Approach: The big dream approach to coming up with a new idea requires that the entrepreneur dreams about the problem and, its solution- thinking big.
Every possibility should be recorded and investigated without regard to all the negatives involved or the resources required. In other words, ideas should be conceptualized without any constraints until an idea is developed into a workable form.
15. Market Gap Analysis: Market gap analysis is a powerful method used to uncover areas in the market in which the needs and wants far exceed the supply.This method has a hopper or gathering effect of converting everyday information into bunches of lucrative product and service gaps that few have thought of before.
2. Explain the importance of a Feasibility Study to an Entrepreneur? Explain its Types?
Ans: The feasibility study acts as an investigative tool to assess the potential, viability or practicability of a new business. Some important characteristics of Feasibility study
1. It is an excellent instrument for the prediction of the likelihood of success or failure of a new business venture.
2. It may also be adopted in the case of incorporation of new products or ideas into the business mix.
3. A feasibility study includes all the actions that are needed to be taken to determine whether a business idea is likely to succeed.
4. It is a stepwise process that helps weigh the pros and cons of each step prior to getting into the actual process.
5. It provides results for key decisions that may be, moving forward with the idea, refining it or leaving it altogether.
Types of Feasibility Study
1. Financial Feasibility: The financial attractiveness of a particular business idea is established through a feasibility study. The conduct of any activity is not possible without monetary resources. This includes the estimation of all the costs that will play a vital part from the inception of the project to the operational costs during the later stages of its lifecycle. One of the most important costs is the startup capital. The study involves the determination of the funds required to start a business. Once these are deduced, the potential sources of generating this capital are also listed. Another important figure is the return on investment (ROI). The degree to which an activity yields financial gains is developed. The potential cash flows of the future are calculated. It also brings fourth the payback period, which puts forward the amount of time the investment takes to break-even. All these figures are, thus, summarized into a singular document.
2. Economic Feasibility: The economic benefits to be reaped by the business are ascertained by a feasibility study. It helps provide the degree to which the economic advantages of the idea are greater than the economic costs. An accurate analysis of the comparison of the all the costs to be incurred and the benefits to be received is conducted. This not only determines the viability of the project, but also directs the business towards saving itself from an inadequate allocation of resources. The credibility of the idea is assessed, and the management achieves a distinct breakdown of all the various costs it will have to incur from the initiation to the execution of the entire project. These costs, when weighed against the benefits that may be generated, result into the overall economic feasibility of the project.
3. Market and Marketing Feasibility: An essential part of the feasibility study is the market feasibility. All the details of the respective industry are presented in this section. Important details including the size, retail value and trends of the industry are gathered. The particular market is also analyzed along with the future market potential. A detailed evaluation is required to ensure the success of the business. The competitive landscape is also prepared. The firm, thus, adopts the most appropriate strategy of positioning itself relative to the competition.
4. Technical feasibility: Another essential is the support system required for smooth operations of the business. Variations in options related to logistics may be discovered. It helps one come across the availability of resources in terms of the required labor, material and relevant technologies. The potential of the technical resources available to the firm is estimated. An assessment of the skills of the technical team is conducted. Any shortcomings and the ways of meeting them are looked into. It also involves the evaluation of essential systems including hardware, software and technological requirements of the overall system.
5. Organizational and Operational Feasibility: The requirement of the human resource is also scrutinized. The skills required by the professionals and an estimation of the firm's capacity falls under this category. The required background of the professionals and any shortcoming being faced by the current human resource of the new business or project are analyzed. In case of absence of an effective team, hiring decisions may be made on the basis of the feasibility study. The entire legal and corporate organizational structure is planned accordingly. Similarly, this study also helps ensure that the firm has adequate resources for the running of smooth operations.
6. Legal Feasibility: Every country has its own respective legal implications. Any legal requirements that may hinder business activity need to be considered. This analysis explores all the legal factors that may conflict with the proposed business. All the relevant laws or protection acts are taken into account. An organization may save considerable time and effort by learning any type of locational constraints its business may face due to legal requirements.
7. Scheduling Feasibility: The different phases of the lifecycle of the business are planned and taken into account. The essential milestones and the entire schedule for their achievement is outlined. Based on the future projections, the different stages of business activity are estimated. All the essential activities and their respective times of fulfillment are enlisted.
3. Explain why we need a Business Plan?
Ans: 1. Set specific objectives for managers: Goodmanagement requires setting specific objectives and then tracking and following up. I'm surprised how many existing businesses manage without a plan. How do they establish what's supposed to happen? In truth, you're really just taking a short cut and planning in your head and good for you if you can do it--but as your business grows you want to organize and plan better, and communicate the priorities better. Be strategic. Develop a plan; don't just wing it.
2. Share your strategy, priorities and specific action points with your spouse, partner or significant other. :Your business life goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know?
3. Deal with displacement: Displacement is probably by far the most important practical business concept you've never heard of. It goes like this: "Whatever you do is something else you don't do." Displacement lives at the heart of all small-business strategy. At least most people have never heard of it.
4. Decide whether or not to rent new space: Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn't that be in your business plan?
5. Hire new people :This is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan. 6. Decide whether you need new assets, how many, and whether to buy or lease them: Use your business plan to help decide what's going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan?
7. Share and explain business objectives with your management team, employees and new hires: Make selected portions of your business plan part of your new employee training.
8. Develop new business alliances: Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.
9. Deal with professionals: Share selected highlights or your plans with your attorneys and accountants, and, if this is relevant to you, consultants.
10. Sell your business: Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it.
11. Valuation of the business for formal transactions related to divorce, inheritance, estate planning and tax issues : Valuation is the term for establishing how much your business is worth. Usually that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce.
12. Create a new business: Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen.
13. Seek investment for a business, whether it's a startup or not: Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.
14. Back up a business loan application: Like investors, lenders want to see the plan and will expect the plan to cover the main points.
4. Explain Business plan? Explain the advantages of Business plan?
Ans: A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term. Your business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask.
Advantages that a business plan will give your business.
1. Knowing Your Finances Finances are obviously a very important part to any business. By using financial projects in a business plan it will assist in deciding how much startup capital a new business will need. Not only will financial projections show how much startup capital a business will need but they will also show revenues, costs and profits. This is an advantage to startup businesses so they will not run out of money in the beginning stages of starting the business.
2. Make your marketing goals: Marketing is imperative to every business. A business plan can reveal the best marketing strategies that will generate the largest return on investment. Knowing the most useful marketing strategies for a business will allow that business to create a marketing advantage over its competitors.
3. Standing out From the Competition: The competitive analysis in a business plan will explain what a business and its direct/indirect competitors do differently and it will give them the opportunity to take advantage of those differences.
4. SWOT your business: The SWOT analysis will sort out the strengths, weaknesses, opportunities and threats of a startup business. This will put into perspective how strong or weak a business is, and ways it can fortify and grow. Knowing these few things about a business will layout the reasons that the business will succeed or fail
5. Knowing what is driving change in your industry: Industry growth patterns will show if an industry is expanding or declining, or the trends that the industry is experiencing. This information will help a business decide whether or not to change business structure if their industry is declining. For example if Blockbuster understood and responded to the industry trend of subscription movie rentals through the mail 3 years ago, they may not have gone bankrupt.
6. Know who will make the business work: This section of the business plan is imperative to find out what experience and qualities that a business team needs to be successful. It is important to know how many employees will be necessary to first start your business. This will also help realize the amount of money that will be allocated to employee salaries.
7. Understand the Challenges to Launch: The barriers to entry for a startup business may be significant, like needing various licenses or technological barriers that a business may have. By knowing these barriers and figuring how to overcome them, it will be easier to get your business started.
8. Price your products right: The pricing strategy will let you know how much money you need to charge for your product or service to break even and eventually create revenue. A pricing strategy is an important advantage to your startup business because it will help ensure that you are not over charging or undercharging customers. The correct price strategy will ensure that a business is not losing money or potential customers.
5. Explain the content of Business Plan?
Ans: A good project report or business plan should contain the following contents
1. General Information: Information on product product details.profile and
2. Promoter: His/her name, educational qualification, work experience, project related experience.
3. Location: Exact location of the project, lease or freehold,locational advantages.
4. Land and Building: Land area, construction area, type of construction, cost of construction, detailed plan and estimate along with plant layout.
5. Plant and Machinery: Details of machinery required, capacity,suppliers, cost, various alternatives available, cost of miscellaneous assets. 6. Production Process: Description of production process, process chart, technical knowhow, technology alternatives available, production programme.
7. Utilities: Water, power, steam, compressed air requirements, cost estimates, sources of utilities.
8. Transport and Communication: Mode, possibility of getting,
9. Raw Material: List of raw material required by quality and costs. quantity, sources of procurement, cost of raw material, tie-up arrangements, if any, for procurement of raw material, alternative raw material, if any.
10. Manpower: Manpower requirement by skilled and semi-skilled, sources of manpower supply, cost of procurement, requirement for training and its cost.
11. Products: Product mix, estimated sales, distribution channels, competitions and their capacities, product standard, input-output ratio, product substitute. 12. Market: End-users of product, distribution of market as local, national, international, trade practices, sales promotion devices, and proposed market research.
13. Requirement of Working Capital: Working capital required, sources of working capital need for collateral security, nature and extentof credit facilities offered and available.
14. Requirement of Funds: Break-up of project cost in terms of costs of land, building, machinery, miscellaneous assets, preliminary expenses, contingencies and margin money for working capital, arrangements for meeting the cost of setting up of the project.
15. Cost of Production and Profitability of first ten years.
16. Break-Even Analysis.
17. Schedule of Implementation.
6. Explain the Cons of a Business Plan?
Ans::A business plan takes time to create. Depending on the size of your business, it could be a time investment that takes away from your initial profits. Short-term losses might happen when you're working on a plan, but the goal is to great long-term gains. For businesses operating on a shoestring budget, one short-term loss may be enough to cause that business to shut their doors. Here are some of the other disadvantages that should be considered.
1. A business plan can turn out to be inaccurate: It is important to involve the "right" people in the business planning process. These are the people who are going to be influencing the long-term vision of your business. Many small business owners feel like they can avoid this negative by just creating the business plan on their own, but that requires expertise in multiple fields for it to be successful. A broad range of opinions and input is usually necessary for the best possible business plan because otherwise the blind spots of inaccuracy can lead to many unintended consequences.
2. Too much time can be spent on analysis: Maybe you've heard the expression "paralysis by analysis." It cute and catchy, but it also accurately describes the struggle that many have in the creation of a business plan. Focus on the essentials of your business and how it will grow. Sure-you'll need to buy toilet paper for the bathroom and you'll want a cleaning service twice per week, but is that more important than knowing how you can reach potential customers? Of course not.
3. There is often a lack of accountability: Because one person is generally responsible for the creation of a business plan, it is difficult to hold that person accountable to the process. The plans become their view of the company and the success they'd like to see. It also means the business plan gets created on their timetable instead of what is best for the business and since there isn't anyone else involved, it can be difficult to hold their feet to the fire to get the job done.
4. A great business plan requires great implementation practices: Many businesses create a plan that just sits somewhere on a shelf or on a drive somewhere because it was made for one specific purpose: funding. When a solid business plan has assigned specific responsibilities to specific job positions and creates the foundation for information gathering and metric creation, it should become an integral part of the company. Unfortunately poor implementation has ruined many great business plans over the years.
5. It restricts the freedom you once had : Business plans dictate what you should do and how you should do it. A vibrant business sometimes needs its most creative people to have the freedom to develop innovative new ideas. Instead the average plan tends to create an environment where the executives of the company dictate the goals and the mission of everyone. The people who are on the front lines are often not given the chance to influence the implementation of the business plan, which ultimately puts a company at a disadvantage.
6. It creates an environment of false certainty : It is important to remember that a business plan is nothing more than a forecast based on plans and facts that are present today. We live in a changing world where nothing is 100% certain. If there is too much certainty in the business plan that has been created, then it can make a business be unable to adapt to the changes that the world is placing on Or worse - it can cause a business to miss an exciting new opportunity because they are so tunnel-visioned on what must be done to meet one specific goal.
7. There are no guarantees : Even with all of the best research, the best workers, and a comprehensive business plan all working on your behalf, failure is more likely to happen than success. In the next 5 years, 95 out of 100 companies that start-up today will be out of business and many of them will have created comprehensive business plans. The pros and cons of a business plan show that it may be an essential component of good business, but a comprehensive plan may not be necessary in all circumstances. The goal of a business plan should be clear: to analyze the present so a best guess at future results can be obtained. You're plotting out a journey for that company. If you can also plan for detours, then you'll be able to increase your chances to experience success.
7. Explain Business Process? Explain the Types of Business Plan? Explain the importance of Business Plan?
Ans. A business process is a series of interlinked steps which are assigned to every stakeholder for a specific work to deliver a product or service to the customer. Each stakeholder performs a specific task they are specialised in to achieve a concrete goal. These steps are often repeated many times by multiple users in a standardized and optimized way.
Types of Business Process
1. Primary Processes: These are the fundamental processes of a business through which a company delivers the end product to the customer. Every step involving in these processes works towards adding value to the final offering.
2. Support Processes: Support processes don't add value to the final product directly but they make an environment for primary processes to operate efficiently and effectively. These processes support the everyday operations of an organisation.
3. Management processes: Management processes govern operations, corporate governance and strategic management. These processes set goals and standards which lead to the efficient and effective working of primary and support processes. Besides planning, these processes also involve monitoring and control of other business processes. Management processes are used to manage a business through strategic planning, tactical and operational planning. Importance Of Business Process: Business processes have always played a vital role in the proper functioning of an organisation and in its structure.
A well planned and strategized business process will help a business in the following ways:
1. Reduced expenditure and risk: a business process reduce expenditure and risk by already laying out the most efficient ways of doing the jobs considering the potential future shortcomings.
2. Reduce human error: it reduces the human error by distributing tasks to people who are specialised in it.
3. Improving efficiency: it enhances the productivity of a essential component of good business, but a comprehensive plan may not be necessary in all circumstances. The goal of a business plan should be clear: to analyze the present so a best guess at future results can be obtained. You're plotting out a journey for that company. If you can also plan for detours, then you'll be able to increase your chances to experience success.
7. Explain Business Process? Explain the Types of Business Plan?Explain the importance of Business Plan?
Ans. A business process is a series of interlinked steps which are assigned to every stakeholder for a specific work to deliver a product or service to the customer. Each stakeholder performs a specific task they are specialised in to achieve a concrete goal. These steps are often repeated many times by multiple users in a standardized and optimized way.
Types of Business Process
1. Primary Processes: These are the fundamental processes of a business through which a company delivers the end product to the customer. Every step involving in these processes works towards adding value to the final offering.
2. Support Processes: Support processes don't add value to the final product directly but they make an environment for primary processes to operate efficiently and effectively. These processes support the everyday operations of an organisation.
3. Management processes: Management processes govern operations, corporate governance and strategic management. These processes set goals and standards which lead to the efficient and effective working of primary and support processes. Besides planning, these processes also involve monitoring and control of other business processes. Management processes are used to manage a business through strategic planning, tactical and operational planning.
4.Importance Of Business Process: Business processes have always played a vital role in the proper functioning of an organisation and in its A well planned and strategized business process will help a business in the following ways:
1. Reduced expenditure and risk: a business process reduce expenditure and risk by already laying out the most efficient ways of doing the jobs considering the potential future shortcomings.
2. Reduce human error: it reduces the human error by distributing tasks to people who are specialised in it.
3. Improving efficiency: it enhances the productivity of a department by mapping out moves and relevant steps which are best for the business.
4. More customer focused: a business process is a customer oriented move. It continuously updates the company about the customer wants and reviews about the product/service. 5. Bridging communication gaps: It bridges the communication gap between the company and its customers through reviews and market research.
6. Better time management: business process improves time efficiency by developing strategies and flowcharts to minimize the time taken to do certain activities.
7. Adaption of new technology: business process often keeps changing and improves over time. The company adopts new technologies to keep their feet on the ground by improving business process according to the latest technologies. Above benefits can only be achieved if all the principles and methods are mapped out in an optimised and standardized way. The company which failed to do so will face the following problems:
1. Failure to recognise any problem: a company which doesn't focus on its business processes will often fail to recognise the exact problem that prevented it to achieve the goals due to its inability to set standardised processes.
2. Low motivation in employees due to the absence of a competent business process, the employees of the company will get demotivated as they might get placed in the departments for which they do not hold enough knowledge.
3. Lack of change implementation : companies will often repeat the same errors over and over again as there will be no system to recognise the problem and to implement change in the process.
4. Time-consuming efforts without proper flowcharts and workflow, specific work will take more time to be done than normal.
5. Lower efficiency: if there is no proper business process a company cannot be productive and its efficiency will be lower than a company with a proper business process. A business process increases efficiency by laying out steps and possible ways to do a task.
6. High risk and increased expenditure : companies which do not have an adequate business process they often failed to see the future risks and they are also incompetent to find a cost-effective way to do a task.
8. Define Product? Discuss the characteristics of Product? Explain the types of Product?
Ans: Product is one of the important elements of marketing mix. A marketer can satisfy consumer needs and wants through product. A product consists of both good and service. Decisions on all other elements of marketing mix depend on product. For example, price is set for the product; promotional efforts are directed to sell the product; and distribution network is prepared for the product. Product is in the center of marketing programme. Therefore, product has a major role in determining overall success of marketing efforts.
A marketer tries to produce and sell such products that satisfy needs and wants of the target market. Other words used for product are good, commodity, service, article, or object. In marketing literature, product has comprehensive meaning.
Philip Kotler: "Product is anything that can be offered to someone to satisfy a need or a want."William Stanton: "Product is complex of tangible and intangible attributes, including packaging, colour, price, prestige, and services, that satisfy needs and wants of people."
Characteristics of Product Careful analysis of concept of product essentially reveals following features
1. Product is one of the elements of marketing mix or programme.
2. Different people perceive it differently. Management, society, and consumers have different expectations.
3. Product includes both good and service.
4. Marketer can actualize its goals by producing, selling, improving, and modifying the product.
5. Product is a base for entire marketing programme.
6. In marketing terminology, product means a complete product that can be sold to consumers. That means branding, labeling, colour, services, etc., constitute the product.
7. Product includes total offers, including main qualities, features, and services.
8. It includes tangible and non-tangible features or benefits.
9. It is a vehicle or medium to offer benefits and satisfaction to consumers. 10.Important lies in services rendered by the product, and not ownership of product. People buy services, and not the physical object.
Types of Product
A company sells different products (goods and services) to its target market They can be classified into two groups, such as
1. Consumer Product and 2. Industrial Products
1. Consumer Products: Consumer products are those items which are used by ultimate consumers or households and they can be used without further commercial and engineering processes. Consumer products can be divided into four types as under.
i. Convenient Products: Such products improve or enhance users' convenience. They are used in a day-to-day life. They are frequently required and can be easily purchased. For example, soaps, biscuits, toothpaste, razors and shaving creams, newspapers, etc. They are purchased spontaneously, without much consideration, from nearby shops or retail malls.
ii. Shopping Products :These products require special time and shopping efforts. They are purchased purposefully from special shops or markets. Quality, price, brand, fashion, style, getup, colour, etc., are important criteria to be considered. They are to be chosen among various alternatives or varieties. Gold and jewelleries, footwear, clothes, and other durables (including refrigerator, television, wrist washes, etc.).
iii. Durable Products: Durable products can last for a longer period and can be repeatedly used by one or more persons. Television, computer, refrigerator, fans, electric irons, vehicles, etc., are examples of durable products. Brand, company image, price, qualities (including safety, case, economy, convenience, durability, etc.), features (including size, colour, shape, weight, etc.), and after-sales services (including free installation, home delivery, repairing, guarantee and warrantee, etc.) are important aspects the customers consider while buying these products.
iv. Non-durable Products: As against durable products, the non durable products have short life. They must be consumed within short time after they are manufactured. Fruits, vegetables, flowers, cheese, milk, and other provisions are non-durable in nature. They are used for once. They are also known as consumables. Mostly, many of them are non-branded. They are frequently purchased products and can be easily bought from nearby outlets. Freshness, packing, purity, and price are important criteria to purchase these products.
v. Services Services are different than tangible objects.Intangibility, variability, inseparability, perishability, etc., are main features of services. Services make our life safe and comfortable. Trust, reliability, costs, regularity, and timing are important issues.
The police, the post office, the hospital, the banks and insurance companies, the cinema, the utility services by local body, the transportation facilities, and other helpers (like barber, cobbler, doctor, mechanic, etc.,) can be included in services. All marketing fundamental are equally applicable to services. Marketing of services' is the emerging facet of modern marketing.
2. Industrial Products: Industrial products are used as the inputs by manufacturing firms for further processes on the products, or manufacturing other products. Some products are both industrial as well as consumer products. Machinery, components, certain chemicals, supplies and services, etc., are some industrial products.
Again, strict classification in term of industrial consumer and consumer products is also not possible, For example, electricity, petroleum products, sugar, cloth, wheat, computer, vehicles, etc., are used by industry as the inputs while the same products are used by consumers for their daily use as well.
Some companies, for example, electricity, cements, petrol and coals, etc., sell their products to industrial units as well as to consumers. As against consumer products, the marketing of industrial products differs in many ways.Industrial products include
1. Machines and components
2. Raw-materials and supplies
3. Services and consultancies
4. Electricity and Fuels, etc.
9. Explain Major Types of Financial Institution?
Ans: 1. Central Banks: Central banks are the financial institutions responsible for the oversight and management of all other banks. In the United States, the central bank is the Federal Reserve Bank, which is responsible for conducting monetary policy and supervision and regulation of financial institutions.Individual consumers do not have direct contact with a central bank; instead, large financial institutions work directly with the Federal Reserve Bank to provide products and services to the general public.
2. Retail and Commercial Banks: Traditionally, retail banks offered products to individual consumers while commercial banks worked directly with businesses. Currently, the majority of large banks offer deposit accounts, lending and limited financial advice to both demographics. Products offered at retail and commercial banks include checking and savings accounts, certificates of deposit (CDs), personal and mortgage loans, credit cards, and business banking accounts,
3. Internet Banks: A newer entrant to the financial institution market are internet banks, which work similarly to retail banks. Internet banks offer the same products and services as conventional banks, but they do so through online platforms instead of brick and mortar locations.
4. Credit Unions: Credit unions serve a specific demographic per their field of membership, such as teachers or members of the military. While products offered resemble retail bank offerings, credit unions are owned by their members and operate for their benefit.
5. Savings and Loan Associations : Financial institutions that are mutually held and provide no more than 20% of total lending to businesses fall under the category of savings and loan associations. Individual consumers use savings and loan associations for deposit accounts, personal loans, and mortgage lending.
6. Investment Banks and Companies: Investment banks do not take deposits; instead, they help individuals, businesses and governments raise capital through the issuance of securities. Investment companies, more commonly known as mutual fund companies, pool funds from individual and institutional investors to provide them access to the broader securities market.
7. Brokerage Firms: Brokerage firms assist individuals and institutions in buying and selling securities among available investors. Customers of brokerage firms can place trades of stocks, bonds, mutual funds, exchange-traded funds (ETFs), and some alternative investments.
8. Insurance Companies: Financial institutions that help individuals transfer risk of loss are known as insurance companies. Individuals and businesses use insurance companies to protect against financial loss due to death, disability, accidents, property damage, and other misfortunes.
9. Mortgage Companies: Financial institutions that originate or fund mortgage loans are mortgage companies. While most mortgage companies serve the individual consumer market, some specialize in lending options for commercial real estate only.
-0000-