Technical Analysis

TECHNICAL
Along with market and demand analysis you

try to find out answer to following questions
ANALYSIS  What manufacturing process or technology?
 What raw materials or inputs?
 What will be the product mix?
 Capacity, location and layout of plant?
 What are environmental issues?
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 What are Governmental policy for particular
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technology?
 What are the alternatives?

Choice of Manufacturing Appropriateness of

Process or Technology Technology

This issue arises due to many reasons like
An appropriate technology will be able to
 Different manufacturing processes for a product.
 Capacity Planned
answer following questions – Whether the –
 Inputs to be used  Technology utilizes local raw material?
 Investment to be made  Technology utilizes local man power?
 Cost of production by use of particular
technology/process  Goods and services produced cater to the
 Technology used by other units basic needs?
 Product mixed planned
 Technology protects ecological balance?
 Recent developments, appropriateness of
technology  Technology is harmonious with social and
 Ease of absorption cultural conditions?
 Availability of skilled manpower.

1
Technical Arrangements

If the technology to be used is patented by
someone else than technical arrangement have to
be made.

All aspects related to technical arrangements must
be carefully considered and taken care off like
 Period of collaboration
 Support
 New developments
 Price
 Exclusivity in use, etc.
Inputs and Utilities

There is a strong relationship between inputs and
utilities with plant location, technology, equipments
and capacity.

Issues related to inputs and utilities are
 Raw materials to be used and its availability
 Availability of industrial material and components
 Availability of auxiliary materials and factory
supplies
 Requirement and availability of utilities like power,
water, steam, fuel etc.

Product Mix Plant Capacity

While planning the plant capacity and
Decision about plant capacity is based on
technology one has to keep in mind the following:
product mix to be offered.  Technological requirement
 Like size, shape and variation in finished  Input constraints

products.  Investment cost

 Different combination of raw materials to be  Production cost

used to get varying quality (product mix) of  Market conditions

finished product.  Resources of the firm
 Governmental policy
 Availability of resources etc.

2
Plant Location and Layout Other Aspects

Plant location depends upon
Civil structure
 Proximity to raw material and markets

Machines and equipments
 Availability of infrastructure
 Labor situation
Environmental aspects
 Governmental policy
Project implementation schedule etc.
 Other factors like climate, etc.

Plant layout depends upon
 To a large extent on the technology adopted and
capacity planned
 Flow of material
 Safety of labor/man power
 Output of the firm

Alternatives

Main reasons for evaluating alternatives are
 Nature of project – possibility of integration
 Production process
 Product quality
 Scale of operations and time phasing
 Location