Krishna Consultancy

Your Saarthi in the MahaVyojana

What To do? And How to do it?

1. Analyse each data point and figure out essential information hidden in them.
2. After analysing the data enter its financial impact in the excel sheet given to you.
3. Once you have done that explain your approach of arriving at that figure in the ppt.
4. You will be marked on the approximation of the financial figures given by you as well as your approach.

Let’s Understand with an Example!

So how do you solve a data point?

● Suppose you are given the labour cost-curve to determine the cost your start-up has to incur due to
wages of labour, on a monthly or yearly basis.
● Then, first, you would need to find the demand in the market (by analysing the market share data)
● And then, for meeting that demand you would need to calculate how much production is to be done.
● And after that, you’ll be required to calculate how many labourers are needed to be hired for meeting
that particular production goal.
● Hence, you arrive at the labour cost incurred by your start-up.
● After this, all you need to do is enter the figure in the P&L statement under the Cost of production and
explain your approach for calculating it in the PowerPoint template given to you.

(The graph is just for explanation purpose, kindly ignore it’s inaccuracy.)

Understanding the Business Model

• Business model
The term business model refers to a company's plan for making a profit. It identifies the products or services
the business plans to sell, its identified target market, and any anticipated expenses.

Business Model Canvas is a strategic management and lean start-up template for developing new or
documenting existing business models. It is a visual chart with elements describing a firm's or product's value
proposition, infrastructure, customers, and finances.

• Market Share
This refers to the portion of a market controlled by a particular company or product.

• Average Cost Curve

The average cost curve shows the per-unit cost of production.
Average Cost Curve: Costs of production of t-shirt and jeans as a function of total quantity produced.
The lowest point on the curve is the optimum level of production.

• Machine-Efficiency Table
Each machine incurs different costs for producing different quantities of merchandise, each machine requires
different capital investments and requires a different number of labourers (refer to labour-production curve)
for production.

Different Machines have different limits of working hours per day.

• Labour-production curve
This graph relates the number of laborers required with different levels of production for each machine.
After a certain point, when the machine reaches its highest production capacity and all the resources are
occupied, even if we increase the number of laborers, the production stays constant.

• Marketing-Efficiency Table
Marketing: A company uses marketing techniques to increase its market share.

This Marketing-Efficiency table shows the different means of marketing provided by different marketing
companies. Each marketing channel caters to different age groups, has different conversion rates, and has a
difference in the amount charged for using that channel.

You can choose different marketing channels from different companies, you are free to choose as many
channels as you want, based on your calculations.

Conversion Rate: the conversion rate is the percentage of people reached through the marketing channel
who become your customers.
[So, a 5% conversion rate would mean 5% of your start-up’s total reach will become your customers.]

• Online Infrastructure Cost Table

Due to marketing efforts, the company’s online reach increases, and 40% of the total reach visits the website,
which results in web traffic.
Due to increased web traffic, the company incurs various costs to maintain the online infrastructure.
 • Innovation-Adoption Curve
The technology adoption lifecycle is a sociological model that describes the adoption or acceptance of a new
product or innovation.

The model indicates that the first group of people to use a new product is called "innovators", followed by
"early adopters". Next, come the early majority and late majority, and the last group to eventually adopt the
product are called "Laggards" or "Phobics."

This curve shows the percentage of customers who have subscribed to the premium services offered by Vesh-
Clothing.

• Prospective Location Table

This table shows the various locations available to the company to establish its units, namely retail stores,
warehouses, and production plants.

Below is the financial statement of the Industry for your perusal.