OPERATIONS MANAGEMENT:Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want. The scope of OM ranges from strategic to tactical and operational levels.
Representative strategic issues include determining the size and location of manufacturing plants, deciding the structure of service or telecommunications networks, and designing technology supply chains.
Tactical issues include plant layout and structure, project management methods, and equipment selection and replacement. Operational issues include production scheduling and control, inventory management, quality control and inspection, traffic and materials handling, and equipment maintenance policies.
NATURE AND SCOPE OF OPERATIONS MANAGEMENT:The scope of production and operations management is indeed vast .Commencing with the selection of location production management covers such activities as acquisition of land, constructing building ,procuring and installing machinery ,purchasing and storing raw material and converting them into saleable products. Added to the above are other related topics such as quality management ,maintenance management ,production planning and control, methods improvement and work simplification and other related areas Operations management is understood as the process whereby resources or inputs are converted into more useful products .A second reading of the sentence reveals that, there is hardly any difference between the terms production management and operations management .But, there are a least two points of distinction between production management and operations management : First, the term production management is more used for a system where tangible goods are produced .Whereas ,operations management is more frequently used where various inputs are transformed into tangible services .Viewed from this perspective, operations management will cover such services organization as banks ,airlines ,utilities ,pollution control agencies super bazaars, educational institutions ,libraries ,consultancy firm and police departments, in addition ,of course ,to manufacturing enterprises. The second distinction relates to the evolution of the subject. Operation management is the term that is used now a days .Production management precedes operations management in the historical growth of the subject .
TYPES OF OPERATIONS:-
travel. If a company has an ability to manufacture tangible products. customer is present: examples are health care. etc . assembling). Construction. Inputs (raw materials. Mining.) and outputs (products) are tangible and visible objects. hair cut. Manufacturing operations deal with goods/tangible products.we call it service company. It also shares ideas across the company about
. etc. we call it a manufacturing company. Example industries: Agriculture.
OPERATIONS FUNCTION: The Operations function brings together raw materials with the production process to make products that customers need. forestry and fishing. In some others. etc.The other companies who are not manufacturers are referred to as service companies.Manufacturing transformation processes are some kind of chemical or physical processes (ex: welding.
Products must be distributed. Facilities must be maintained.how to improve processes or achieve cost savings. Operations function is much broader than activities occur in a factory. There are two types of decisions: Strategic decision Tactical/operational decision
. and so on.
Inputs Operations Function
Primary functions of operations management:The primary function of an operation management is to guide the system by decision making. Products must be developed. Materials must be purchased.
Acquisition of equipment.
Such decisions are specific and short-term in nature and are bound bystrategic decisions. Arrangement of Department: . These are typically pertaining to the system design. Such decisions typically pertain to the system operation.What exist and what is required to organization for their success. The Geographical Location of Facilities:-It means which is the infrastructure of the company.
Traits Of Good Operational Manager:-
. These are long term decisions. System design involves decisions that relate to: System Capacity: . Placement of Equipment within physical structure.To avoid movements of employees. Product and services planning. Strategic decision The decisions which sets the direction for the entire organization. The equipment should be placed in a way that the accidents are minimized.
Using a wide array of communication vehicles. including verbal. UNDERSTANDS CUSTOMER NEEDS A successful operations manager needs to have a deep acknowledgment of customer needs. By knowing what makes your customers happy. and analyze profit & loss statements and balance sheets. That requires an understanding of what is a true measure of satisfaction to a customer. The ability to get your message across to your staff. your customers is an essential skill that will be put to the test each day.1. UNDERSTANDS THE ORGANIZATION'S FINANCIAL PERFORMANCE Operations managers are directly responsible for contributing to their organizations' financial performance. 3. most importantly. A successful operations manager knows how to prepare sales projections and expense budgets. your superiors and. you will be able to connect with them and provide guidance to your subordinates on how to take care of customers' needs. 2. will allow you to establish a rapport with each audience. an efficient operations manager should utilize business
. COMMUNICATES EFFECTIVELY An effective operations manager knows how to communicate on many different levels with all types of people. written and body language techniques. To simplify the process of creating financial projections.
Operations management is important to an organization‘s managers for at least two reasons. which streamlines the process of setting performance goals. IMPORTANCE OF OPERATIONS MANAGEMENT:Operations management refers to the complex set of management activities involved in planning organizing leading. Second. reports and charts in less time. which allows one to build a comprehensive set of financial projections. operation. it can help organizations meet customers‘ competitive priorities. Operations management deals with the design. and improvement of thesystems that create and deliver a firm‘s primary
. An effective operations manager should look into utilizing human resource software. In addition. 4. evaluating employees and maintaining up-to-date training and certification information. it can improve productivity.planning software. As an operations manager. A successful operations manager knows the importance of building a strong team and developing positive relationships among team members.
Operations management is very important in business operations since it forms the heart of the organization by controlling the system of operation. you need to establish specific measurements that tell your staff how they are doing against the goal. First. This can be achieved by understanding and addressing the individual needs and concerns of your staff. which improves an organization‘s financial health. but also for staff development. and controlling an organization‘s operations. This will provide you with the clear base for employee recognition. TRACKS AND MEASURES STAFF PERFORMANCE It's essential to set work objectives for each of your team members and be able to measure their progress. MOTIVATES THE TEAM Organizations don't get much done unless their people are motivated. measuring and tracking individual personnel performance will provide feedback that helps focus on issues and success factors that will improve the overall organization's performance. 5.
all areas still need information and support from each other for the organization to operate effectively. without being told.products and services. However.
. or their staff. and a customer query can quickly be solved by asking everyone in the office for advice. which identiﬁes some of the key issues over which functional areas need to communicate. the manager knows which members of staff are keen and hardworking. operations management is a functional field of business with clear management responsibilities INTERACTION OF OPERATIONS WITH OTHER FUNCTIONAL AREAS:No functional area in a business organization can work in isolation. In a small ﬁrm. Some of the reasons why departmental links are essential are shown in the table below. to take account of everyone‘s needs.
The situation is different in a larger organization because people may work in separate areas or departments and rarely meet each other. Like marketing and finance. Sales people know which customers still owe money and must not be sold any more goods on credit until a bill has been paid. This often means that joint decisions have to be made between departmental managers. Constant communication and cooperation is essential for the business to achieve its aims and objectives. links and interactions between people responsible for different functions are usually informal and continuous.
Distribution and Finance:-
Finance must know when goods have been despatched so that invoices can be sent out. Finance and all other departments:-
Finance monitors departmental spending and the achievement of ﬁnancial targets. Functional area Links: Sales and Production:-
Sales must know production schedules and agree delivery dates of orders with Production so customers are not promised dates which cannot be met. Customer Service. Distribution and Sales:-
Sales must be able to inform customers when deliveries are due and be aware of any problems. Human Resources and Finance:-
Will liaise over salary increases and bonuses. Finance will be involved when discounts are agreed or when there are problems with customer payments. sales and marketing:-
Customer Service must pass on customer feedback that could affect future product developments or future sales. Sales and Finance:-
Finance must know about customer enquiries to check their credit rating before sales are made.
.Production must tell Sales about production problems which will affect customers. Sales and Marketing :-
Must liaise over sales promotions and adverts so that sales staff can expect/handle enquiries.
R & D and Production:-
Liaise over new product developments and methods of production. Human resources and other functional areas:-
HR handles job vacancies.
. training courses and CPD for all areas/staff.
TIME THEORY BY FREDERICK WINSLOW TAYLOR:-
. people began to recognise management as a separate field of study. The advent of the factory system during this period highlighted. This development brought along with it new questions and problems to which adequate solutions were required. appropriate management of all this became imperative. To find appropriate solutions to these problems. EVOLUTION OF SCIENTIFIC MANAGEMENT:-
Management has developed and grown in leaps and bounds from a nearly insignificant topic in the previous centuries. the importance of direction as a managerial function. Management has evolved into a powerful and innovative force on which our society depends for material support and national well-being. The period between 1700 and 1850 is highlighted by the industrial revolution and the writings of the classical economists. for the first time. to one of the integral ones of our age and economy. As factories and jobs increased and a distinctive work culture began to take shape.
he believed profits would rise to such an extent that labor have to fight over them. The scientific education and development of workers. then developed later into a more humane approach in dealing organizational productivity based on the Hawthorne experiment which followed the numerous theories‘ in the neo-classical approach. instead of relying on traditional work methods.by so doing . Intimate friendly cooperation between management and labor. The Scientific selection of workers so that the each workers would be given responsibility for the task for which he or she was best suited. In this way he established:-
. Taylor based his management system on production line time studies. The practice of human relations serves as the organizational motivator to provide the productivity of workers in conventional way to promote higher output in business and industry. Taylor contended that the success of these principles required‖a complete mental revolution‖ on the part of management and labor.The evolution of organization and management follows the conception of the classical school. In short Taylor believed that management and labor had common interest in increasing productivity. Rather than quarrel over profits both side should increase production . 3. 4. Using time study he broke each job down into its components anddesigned the quickest and best method of performing each components. However. 2. It is further intertwined by the systems approach of the modern school. he analyzed and timed steel workers movements on a series of jobs. Frederick w Taylor (1986-1915) rested his philosophy on four basic principles:1. The development of a true science of management so that the best method for performing each task could be determined. it seems that in contemporary time the scientific management theory of Frederick Taylor is still utilized as the by-product of management development.
using a ―scientifically correct ―rate that would benefit both the company and workers. The
. and motivated by.
MOTION STUDY BY FRAMK BUNKER GILBRETHS:In contrast to. LIMITATIONS OF TIME THEORY: Although Taylor's method led to dramatic increase in productivity and higher pay in number of instance. allowing for the analysis of the labor process in a scientific context. the Gilbreths proposed a technical language. Taylor‘s method became known as work study and it was embraced by several organizations. Taylor‘s time study methods.
How much workers to do with the equipment and materials in hand. he also encourage Employers to pay more productive workers higher rate than others. Workers and unions began to oppose his approach because they feared that working harder or faster would exhaust whatever work was available His critics objected to the speed up condition that placed undue pressure on employees to perform at faster and faster levels. It was eventually also applied to office and administrative jobs and it became a precursor to systems analysis. The emphasis on productivity and by extension profitability led some managers to exploit both the workers and customers. As a result more workers joined unions and thus reinforced a pattern of suspicious and mistrust that shaded labor relations for decades.
Thus Taylor‘s scientific method to establish work procedures resulted in reduced timeframes to perform jobs and introduced rules and procedures to industrial management.Taylor called his plane the differential rate system. Thus the workers were urged to surpass their previous performance standards to earn more pay .
participative management rhetoric and a variety of guerrilla thrusts under the battle cry of motivation theory. The Ford system. One was the visual record of how work had been done. In their conception motion and fatigue were intertwined every motion that was eliminated reduced fatigue. was too robust to yield to mere humanistic rhetoric. human relations theory. Lillian and Franck collaborated on fatigue and motion studies and focus on ways on promoting the individual workers welfare. the films also served the purpose of training workers about the best way to perform their work. The films served two main purposes. the sheer success of Ford's personal vision of scientific management raised Western productivity to unparallel heights and rendered America the "arsenal of democracy" in World War II. then in the guises of a quality of work life movement.This method allowed the Gilbreths to build on the best elements of these work flows and to create a standardized best practice. which campaigned first as the human relations movement.
IMPLIMENTATION OF SCIENTIFIC MANAGEMENT BY HENRY FORD : Henry Ford used scientific management as the foundation of his engineered.
. To them the ultimate aim of scientific management was to help workers reach their full potential as human beings. Indeed. and Lillian M.Gilbrethsmade use of scientific insights to develop a study method based upon the analysis of work motions.Gilbreth(1968-1924) and (1878-1972) made their contribution : To the scientific management movement as a husband and wife team. moving assembly line and created the next phase in performance management a phase that has dominated most of the twentieth century. science. consisting in part of filming the details of a worker‘s activities while recording the time Frank B. Secondly. emphasizing areas for improvement. though.
Without question. scientific management. But attempts to invent performance systems on humane foundations that outperform the earlier successes of scientific management have fared badly even as they gathered greater numbers of ideological adherents. It has gone nowhere. lacks much in human and humane values. It invites criticism. especially in the form of the moving assembly line. The great human relations movement that followed World War II has foundered in the swamps of its own rhetoric.
―Business means all those human activities organized and operated freely and regularly to provide the goods and services to society for the sake of profit.‖
Input is the starting point and output is the ending point of production process and input-output relationship is called as ―Production Function‖. "the music business" and compound forms such as Agribusiness. services or both to consumers. where most of them are privately owned and administered to earn profit to increase the wealth of their owners. doing commercially viable and profitable work.
In economics. which encompasses all activity by the community of suppliers of goods and services. and the broadest meaning. Input is the starting point of every production activity. Businesses are predominant in Capitalisteconomies . the exact definition of business. Businesses may also be not-for-profit or state-owned.capital and entrepreneur are required altogather at a time to produce a commodity. although that term also has a more precise meaning. A business owned by multiple individuals may be referred to as a company.
The "business" relates to the state of being busy either as an individual or society as a whole. labour. However. Factors of production refers to inputs required for conducting production. like much else in the philosophy of business. production means creation or an addition of utility.
4 Factors of Production:
Factors of production means inputs and finish goods means output. depending on the scope — the singular usage to mean a particular organization.
. The term "business" has at least three usages.e. the generalized usage to refer to a particular market sector.A Business (also known as enterprise or firm) is an organization engaged in trade of goods.Iinputs decides the quantity of output i. output depends upon inputs. All factors of production like land. is a matter of debate and complexity of meanings.
one that facilitates description and discussion. as well as the revenues it generates and the expenses it incurs. Following Geoffrey A. The challenge is that the concept of your business model must be simple. and talk about the same thing. delivers and captures value. their core values and brand promise. and their strategic goals.
Following Moore‘s theory. People need to start from the same point. Your organization needs a business model concept that everybody understands. The model includes the components and functions of the business. A business model describes the rationale of how your organization creates. relevant.Business Model:
The plan implemented by a company to generate revenue and make a profit from operations. we distinguish four different business models: Model 1: The ‗Disruptive Innovation‘ Business Model (―Red‖)
. Moore‘s theory of innovation vectors. and intuitively understandable. we believe that any enterprise needs to make fundamental decisions in the choice of the business model needed to support their key business purpose.
creating innovations. better performance. Model 2: The ‗Customer Intimacy‘ Business Model (―Yellow‖) The ‗customer intimacy‘ oriented strategy focuses on making flexible and differentiated value propositions by aligning them more precisely with target customers‘ needs and values. or faster time to market. The preferred organizational structure for the red strategy is a ‗skunk work‘ structure. The best culture for this business model is a ‗competence culture‘. It mainly creates a growth market position by using research and development to improve features. Philips. and characterized by team-level accountability to subjectively determined metrix Model 3: The ‗Product Leadership‘ Business Model (―Green‖) The ‗product leadership‘ oriented strategy focuses on differentiating market offerings by creating more desirable features. officially appointed project teams and departments work along objectively defined metrics. Apple. The best culture for this strategy is a ‗cultivation culture‘. Southwest Airlines. The best culture for this strategy is a culture of ‗collaboration‘. e. It requires down-in-the-trenches solidarity. performance. or market price in an established product category. Model 4: The ‗Operational Excellence‘ Business Model (―Blue‖) The ‗operational excellence‘ oriented strategy focuses on optimizing processes and systems to differentiate offerings by lower cost. forcing those who adopt it to displace their existing systems. individual accountability and empowerment are key contributors. e. The
. Customer intimacy does not necessarily call for increasing customer satisfaction. The preferred organizational structure for this business model is the hierarchical structure.and customer intelligence. This strategy requires close customer proximity. rooted in the need for affiliation. higher quality. The preferred organizational structure for this strategy is a ‗matrix structure‘. and relies heavily on accurate market.g. Southwest Airlines (with a touch of ―yellow‖ – see here). Hewlett Packard.g. Apple. Microsoft. and Syngenta. and a collaborative pursuit of results.A ‗disruptive innovation‘ oriented strategy initiates a growth market by creating a new category through one of two mechanisms: Discontinuous technology: creates new standards incompatible with currently prevailing standards. in which processes and systems are fixed in protocols. In this structure.. the following of which is mandatory. providing the best possible individually tailored customer offerings. It does not impose arm's length goodwill. where self-actualization. Examples of ―green‖ companies are Bayer. where different disciplines are closely collaborating in a matrix model. Examples of ―red‖ companies are Google (however slowly losing its color and turning ―green‖). The preferred organizational structure for this business model is a ‗project structure‘. the exchange of useful information. and Virgin. improvements and plans in spontaneous and often temporary entities with subjectively defined (or even undefined) metrics. Value-chain discontinuity: destabilizes the value chain in an existing market by challenging existing business models. It requires taking responsibility for customer results. or lower market price.
their organizational structure. General Electric. the business cannot have only one objective. Compaq (before the takeover by HP). employees. Profit is the main objective of business. combining a strategy of customer intimacy (yellow) with a project structure (green) and a control culture (blue) obviously is not a good idea.best culture for this business model is a ‗control culture‘.
. The control culture is rooted in the need for order and security and characterized by team-level accountability to objectively defined metrics. Below you see a diagram with some of the typical behaviors in the different business models:
In order to assure long-term success. creditors. and their organizational culture into one color. So. Examples of ―blue‖ companies are General Motors. TNT. Eastman Kodak. customers.
Objectives of Business:
Business objectives are the goals. The business tries to achieve these goals. organizations need to align their strategy. However. etc. This is because it has to satisfy different groups such as shareholders. aims or purpose of the business. it has to fix objectives for each group.
and 5. Social Objectives. 3.Types of Business Objectives
There are five types of business objectives..
. National Objectives These types of business objectives are depicted in the following picture. Human Objectives. 2. viz. 4. Economic Objectives. Organic Objectives. 1.
. It motivates the owners.
Definition of Objectives
According to Louis Allen." According to Dalton E. It helps in planning and decision-making. It is used to evaluate (measure) the performance of the employees. "Objectives are the goals. McFarland. managers and employees to work hard. aims or purposes that organisation wish to achieve over varying period of time. "Objectives are goals established to guide the efforts of the company and each of its components.Objective gives direction to the business.
and the least important objective is written last.Nature Characteristics of Business Objectives
The features or characteristics of business objectives are depicted below. i. That is. shareholders. Hierarchy of Objectives
Hierarchy means to write down the objectives according to their importance. The business has to fix different objectives for each group. This is because a business has to satisfy different groups.
1. The most important objective is written first. customers. etc. All objectives are important. a business does not have only one objective.
. employees. society.
2. It has many or multiple objectives. Multiplicity of Objectives
Business objectives are multiple in character. creditors.e. vendors.
1.e.g. the business objectives must also be flexible. For e. Quantitative objectives are visible. etc. i. The long-term objectives are made for a long-period.g. Flexibility of Objectives
The business is flexible. If the objectives are rigid. Quantitative objectives are easy to measure. Rupees.. i.e.
5. viz. The short-term objectives are made for a short-period. etc.
4. in Dollars.. Qualitative objectives are invisible. maximum one year. They are like a Master Plan. Therefore. 2. There are continuous changes in the technical. It is expressed in numbers. Quantitative and Qualitative objectives. It is not expressed in numbers. tangible and countable. Today modern methods are used to measure qualitative objectives. This is because the business environment keeps on changing. the business will not survive. A business must have both quantitative and qualitative objectives. social. Employee performance. employee satisfaction. Measurability of Objectives
. Percentage.However. Short-term objectives are more specific. viz. Qualitative objectives are not easy to measure. Long-term objectives. 1. some objectives are more important than others. and 2. For e.
6. business objectives can be classified into two types. These objectives cannot be measured. economic and political environment. Qualitative and Quantitative Objectives
There are two types of objectives. Some objectives need immediate action while others can be kept aside for some time. Periodicity of Objectives
Based on period. Long-term objectives are more general. Short-term objectives. The hierarchy of objectives must also be changed from time to time. for five years or more. intangible and uncountable.
3. The business has to change its objectives according to the changes in the business environment.
The objectives must be clear and specific. etc. if a salesman sells only 10 units of water purifier in a month then his performance is bad. It also has objectives for shareholders. the objectives of all the departments.
. They must move in the same direction. Each salesman must sell 100 units of water purifier per month.
7. sectional objectives and individual objectives. However. They must support each other. departmental objectives. He can be given bonus and promotion. They must not clash with each other. viz. Measurable objectives motivate the employees to work hard. the business will not survive. He needs more training. Network of Objectives
Network means an interconnection between different objectives.g.. This is because they know their target clearly. It is easy to measure the performance of the salesman. employees. A business has many different objectives. must support each other. All these objectives must be interconnected. This is a clear and specific objective. customers. It must be easy to measure. corporate objectives. If not. For e. Similarly. If a salesman sells 200 units of water purifier in a month then his performance is good. Their performance can also be measured easily. They must not clash or conflict will each other.
A feasibility study is performed by a company when they want to know whether a project is possible given certain circumstances.to find out whether a company has enough money for a project. to find out
. Feasibility studies are undertaken under many circumstances .
companies can save money and resources in the long run by avoiding projects that are not feasible.will anyone want the product once its done? What is the target demographic? Should there be a test run? Is there enough buzz that can be created for the product?
Real Estate Feasibility . is the project something that can be completed? The economic feasibility study is more commonly called the cost/benefit analysis.this measures how well your company will be able to solve problems and take advantage of opportunities that are presented during the course of the project
Marketing Feasibility .what are the legal implications of the project? What sort of ethical considerations are there? You need to make sure that any project undertaken will meet all legal and ethical requirements before the project is on the table. By doing the research beforehand.what will the impact on both local and general cultures be? What sort of environmental implications does the feasibility study have?
Legal/Ethical Feasibility .does the company currently have the time resources to undertake the project? Is the project completable in the available time?
Economic Feasibility .does the company have the technological resources to undertake the project? Are the processes and procedures conducive to project success?
Schedule Feasibility .
Operational Feasibility .
Types of feasibility studies:
There are many different types of feasibility studies. what facilities will be required for the project.
Resource Feasibility . etc.given the financial resources of the company.what kind of land or property will be required to undertake the project? What is the market like? What are the zoning laws? How will the business impact the area?
. or to see if there are enough human resources for the project.do you have enough resources. here is a list of some of the most common:
Technical Feasibility .whether the product being created will sell.
Cultural Feasibility . what resources will be required. A good feasibility study will show the strengths and deficits before the project is planned or budgeted for.
Identify logistical and other problems and solutions. 3. The consultant preparing it needs to have an expert understanding of what the funding requirements are. Three things are crucial when doing a feasibility study: 1.to ensure synergy between the feasibility report and the funding application forms. Develop marketing strategies to convince a donor. A lease may limit business hours/days. etc. bank or investor that your idea is worth considering as an investment. Our feasibility studies have brought in £37 million for our clients. This is especially important for store-front retail businesses where location could make or break your business. parking spaces. It must be fully comprehensive.this takes a look at the various aspects involved in the project marketing. The importance of one cannot be underestimated.
Importance of Business Feasibility Study:
Most organisations. restrict the product or service you can offer.leaving no stone unturned 2. real estate.
Comprehensive Feasibility . When undertaking a new business venture. cultural.you've wasted your money.we can produce the most effective one for your organisation's needs. The information you gather and present in your feasibility study will help you:
List in detail all the things you need to make the idea work. even limit the number of customers a business can receive each day. If he/she doesn't. most commercial space leases place restrictions on businesses that can have a dramatic impact on income. and in some cases. It must be complemented by a GOOD and THOROUGH business plan
. this is the most common type of feasibility study performed.
Even if you have a great idea you still have to find a cost-effective way to market and sell your products and services. and Serve as a solid foundation for developing your business plan. businesses. For example. developers and charities make the mistake of steam rolling into a project without a sound feasibility study. If you need a feasibility study. economic.
.an effective one that can deliver for your organisation. This is important to ensure success in funding bids and to ensure that your idea fits into the wider master plan for the area.then you need a feasibility study. As well as ensuring that your project meets the requirements of the Disability Discrimination Act the feasibility study must include the following key areas: Ensure that the objectives of the project match the economic development needs of the local area and are compatible with the wider county and regional economic development plans and strategies.So. If you are planning an important project or a capital development for your organisation. do you want to take your project to the next level? If the answer is yes.in fact most funders won't consider your project without one. you will need to have Feasibility Study and Business Plan to support your bids. This could damage your organisation's credibility. Your project's feasibility study and business plan both need to be effective and geared towards meeting the criteria of funding bodies. Did you know that applying for funding without a feasibility study for a project that is linked to a building can ruin your chances of success.
Outline of Business Feasibility Study:
Because putting together a business plan is a significant investment of time and money.the following repreasent s a structural outline of business feasibility study:
Cover Sheet Executive Summary Table of Contents
Introduction Product and services Technology Market environment Competition Industry Business model Market ing and sales strategy Production / Operating requirements Management and Personnel requirements Intellectual property Regulations/ Environmental Issues Critical Risk Factors
Balance Sheet Projections Income Statement Projections Cash Flow Projections Break-even Analysis Capital requirement & Strategy Recommendations & Findings Conclusion
. the entrepreneur should make sure that there are no major roadblock in their road of business success.
Describe how customers would use and buy the product & services. So beautifully? How big is the opportunity? What level of actual market demand can be measured verses projected?
For Business-To-Business Market include:
. When deciding whether or not they read the rest of the plan. stand-alone document interested parties will read this section first in conjunction with a grance at the financial section. How and why would they buy the product or services? What is the projected need your product or services fulfill. product or services in simple language. Give product mix if the enterprise will initially be focusing on more than one product.Executive Summary:
The executive summary is a summary of all the key sections of the business feasibilty study and should work as a separate. rugged secure etc Describe plans to upgrade product or expand product line
As necessary provide further technical information about product & services Describe additional or ongoing research and development needs Keep the description in lay terms and explain technical terms enough to be understood by business-savvy but not necessarily technology expert readers
Intended Market Environment:
Define and describe the target market distinguish between users and customers Be clear how end users and customers benefit. it is presented first The executive summary should be no more than one page long
Describe the enterprises. Key points to remember includes Write this document after the contant section of the business feasibility study is completed :although the executive summary is written last. Give enough detail to help the reader judge the effectiveness of your marketing and positioning plans Describe key components or raw materials that will be used in the product. how the enterprise will source these and how available they are Describe plans to test the product to ensure it works as planned and is sufficiently durable.
For Business-To-Consumer Market include:
Psychographic factors Relevant behavioural factors such as frequency of product purchase and shopping behavior
Describe direct and indirect competition pertains to the target markets only List all key barriers to entry State how difficult it will be for the competitor to copy the enterprise‘s product and service
Describe demand and supply factors and trends Describe or clesrly define the industry in which the enterprise operates include the size. who are the key players. How will the business generate revenue Describe the model enough detail to support financial projections presented later
Marketing & Sales Strategy:
Lay out the basic marketing and sales strategies Discuss any strategy partnership the enterprise has or is planning to form Describe the pricing strategy and justification include the expected gross profit margin Describe intended typical payment terms for customers Quantify the marketing budget for at least the first year
Production / Operating Requirements:
Describe enough of how and where the enterprise will manufacture sources or create and deliver the final product or service to estimate costs Will space be owned or leased? How complex is the manufacturing process? Describe equipment needed and costs
. replacement needs versus expansion. growth. frequency of product purchase.
What industry is the target market in. rate and outlook
Describe the proposed enterprise‘s business model.
Financial Projections :
Balance sheet projection. responsibility relevant background experience. waste disposal plans if needed Political stability.year 1( month or quarterly) year 2 and 3 annually Cash flow projection – year 1 (month or quarterly) year 2 and annually Break-even analysis. give name of license Describe key terms and give termination or renewal date
Regulations / Environmental Issues:
Outline non-economic forces that might affect the prospect of the firm: Key government regulations and the enterprise‘s plans for compliance Any environmental problems on property. titles.Management and Personnel:
List the proposed key managers. change in regulations and technical obsolescence etc. Example include internal characteristics.when will the firm begin to turn a profit Cost benefit analysis. Porters five forces and PEST analysis. economics forecasts. what people will be needed now in a year in the long term?
Intellectual Property :
Briefly discuss patents. if applicable
Critical Risk Factors:
Describe critical risk faced by the enterprise much of their components will arise from the SWOT. uniqueness investment. copy right and trade marks obtained and in process If enterprise is operating order a licensing agreement or patent assignment.will the business provide a vible return on investment for the owner or the investor
Capital Requirement & strategy:
How much funding will the firm need and when? What projected revenue or assets does the proposed business have to secure the financing
. skills and costs Sketch personnel requirements. plans to address the problems and their cost Environmental factors i.three years and highlights inflow of capital Income projection.
short and direct Market viability Technical viability Business model viability Management model viability Economic & financial model viability Exit strategy
What sources will provide the funding i. investors. lending institutions What radio of debt to equity financing will occur?
Final Findings & Recommendations:
Recommendations from the feasibility study regarding the viability of putting the business idea into practice should be honest.