Module 3: Scanning the Environment

Business can only be sustainable in the long run if it works in harmony with the social and natural
environment. How much does your business depend on the environment? Does it rely on the
weather, soil or other natural resources? Does it need any specific type of labor from the local
community? Does it need the local community to support it? What should you do to make sure
that your business nurtures the natural environment and helps the local community? Will your
business nurture the natural environment or will it have a detrimental impact? How would you
minimize or reverse any negative effect that your business might have?

A few different approaches to generating business ideas.

1. Learn from successful business owners
2. Draw From Experience- self / Other’s
You can also visit community groups, colleges, etc. for a greater understanding of the market.
Here are some examples of comments that would help with your search for a business idea:
 “I cannot find a lunch box that keeps the food warm.”
 “The choice of cooking pots in the shops is very limited.”
 “There is no reliable way of sending gift packages to my friends and relatives living in the
villages.”
 “There is not enough entertainment in this town and the weekends are so boring.”
 “I really need to buy some marketing textbooks, but there are no good bookstores in this
town.”
 “There is so much garbage on the streets. Somebody should do something about it.”
3. Survey Your Local Business Area
4. Scanning Your Environment
 Natural resources,
 Characteristics and skills of people in the local community,
 Import substitution,
 Waste products,
 Publications,
 Trade fairs and exhibitions

3.1 Opportunity Recognition: Identifying the business opportunity:

Opportunity Defined – An opportunity is a favorable set of circumstances that creates the need
for a new product, service, or business idea.
– Most entrepreneurial firms are started in one of two ways: Some firms are internally stimulated.
An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a
business. Other firms are externally stimulated. An entrepreneur recognizes a problem or an
opportunity gap and creates a business to fill it.

Opportunity is more than an IDEA- as it has Four essentials

Attractive, Timely, Durable and Anchored (in a product/ service/ business that creates/add value)
The term “window of opportunity” is a metaphor describing the time period in which a firm can
realistically enter a new market. Once the market for a new product is established, its window of
opportunity opens, and new entrants flow in. At some point, the market matures, and the window
of opportunity (for new entrants) closes.
3 Ways to identify an Opportunity-Observing Trends, Solving a problem and Findings gaps in
the Market

Opportunity Recognition Process

OUTCOME-A business concept (Plan) is a concise description of an opportunity that contains
four essential elements:
1. The customer definition
2. The value proposition and compelling story
3. The product/service
4. The distribution channel
FOLLOWED BY- Preparing the Feasibility Analysis / Quick Test
- Is there a customer and a market of sufficient size to make the concept viable?
- Do the capital requirements to start, based on estimates of sales and expenses, make sense?
- Can an appropriate start-up or founding team be assembled to effectively execute the concept?
ACTIVITY- BUSINESS MODEL CANVAS- visual tools/ template for developing new
business models used to design, describe, challenge, invent and pivot the business model.
SWOT and PESTEL analysis

The primary goal of SWOT analysis is to increase awareness of the factors that go into making a
business decision or establishing a business strategy. To do this, SWOT analyzes the internal and
external environment and the factors that can impact the viability of a decision.
Albert Humphrey tested the approach in the 1960s and 1970s at the Stanford Research Institute.
SWOT analysis was originally developed for business and based on data from Fortune 500
companies. It has been adopted by organizations of all types as a brainstorming aid to making
business decisions. Can identify a market niche in which a business has a competitive advantage.
It can also help individuals plot a career path that maximizes their strengths and alert them to
threats that could thwart success. a SWOT analysis examines four elements:

1. Internal attributes and resources that support a successful outcome, such as a diverse
product line, loyal customers or strong customer service.
2. Internal factors and resources that make success more difficult to attain, such as a weak
brand, excessive debt or inadequate staffing or training.
3. External factors that the organization can capitalize on or take advantage of, such as
favorable export tariffs, tax incentives or new enabling technologies.
4. External factors that could jeopardize the entity's success, such as increasing competition,
weakening demand or an uncertain supply chain.
Organizations or individuals using this analysis can see competitive advantages, positive
prospects as well as existing and potential problems. With that information, they can develop
business plans or personal or organizational goals to capitalize on positives and address
deficiencies. Once SWOT factors are identified, decision-makers can assess if an initiative,
project or product is worth pursuing and what is needed to make it successful. As such, the
analysis aims to help an organization match its resources to the competitive environment.

A SWOT analysis can be used to assess and consider a range of goals and action plans, such as:

 the creation and development of business products or services;

 making hiring, promotion or other human resources decisions;
 evaluating and improving customer service opportunities and performance;
 setting business strategies to improve competitiveness or improve business performance;
 making investments in technologies, geographical locations or markets.
Similar is PESTEL analysis-
Political factors are those driven by government actions and policies. They include, but are not
limited to, considerations like: Corporate taxation, Other fiscal policy initiatives, Free trade
disputes, Antitrust and other anti-competition issues.
Economic factors relate to the broader economy and tend to be expressly financial in nature.
They include: Interest rates, Employment rates, Inflation, Exchange rates
Social factors tend to be more difficult to quantify than economic ones. They refer to shifts or
evolutions in the ways that stakeholders approach life and leisure, which in turn can impact
commercial activity: Demographic considerations, Lifestyle trends, Consumer beliefs, Attitudes
around working conditions.
Technology is changing rapidly: Automation, How research and development (R&D) may
impact both costs and competitive advantage, Technology infrastructure(like 5G, IoT, etc.),Cyber
security.
Physical environment can present material risks and opportunities: Carbon footprint, Climate
change impacts, including physical and transition risks, Increased incidences of extreme weather
events, Stewardship of natural resources (like fresh water).
Legal factors are those that emerge from changes to the regulatory environment, which may
affect the broader economy, certain industries, or even individual businesses within a specific
sector: Industry regulation, Licenses and permits required to operate, Employment and consumer
protection laws, Protection of IP (intellectual property).
3.2 Fundamentals of feasibility plan
A feasibility analysis is designed to assess whether entrepreneurial endeavor is, in fact, feasible or
possible. By evaluating the management team, assessing the market for the business/product
concept, estimating financial viability, and identifying potential pitfalls, one can make an
informed choice about the achievability of the entrepreneurial endeavor. A feasibility analysis is
largely numbers driven and can be far more in depth than a business plan. It ultimately tests the
viability of an idea, a project, or a new business. A feasibility study may become the basis for the
business plan, which outlines the action steps necessary to take a proposal from ideation to
realization. A feasibility study allows a business to address where and how it will operate, its
competition, possible hurdles, and the funding needed to begin. The business plan then provides a
framework that sets out a map for following through and executing on the entrepreneurial vision.
Feasibility studies also can provide a company's management with crucial information that
could prevent the company from entering blindly into risky businesses. Business feasibility
study is used to support the decision-making process of the business based on the cost-benefit
analysis of the business or the project viability.
The goals of feasibility studies are as follows:
To understand thoroughly all aspects of a project, concept, or plan.
To become aware of any potential problems that could occur while implementing the
project.
To determine, after considering all significant factors, the project is worth
undertaking.

Organizational feasibility aims to assess the prowess of management and sufficiency of

resources to bring a product or idea to market. The company should evaluate the ability of its
management team on areas of interest and execution. Typical measures of management
prowess include assessing the founders’ passion for the business idea along with industry
expertise, educational background, and professional experience. Founders should be honest in
their self-assessment of ranking these areas.
Resource sufficiency pertains to nonfinancial resources that the venture will need to move
forward successfully and aims to assess whether an entrepreneur has a sufficient amount of such
resources. The organization should critically rank its abilities in six to twelve types of such
critical nonfinancial resources, such as availability of office space, quality of the labor pool,
possibility of obtaining intellectual property protections (if applicable), willingness of high-
quality employees to join the company, and likelihood of forming favorable strategic
partnerships. If the analysis reveals that critical resources are lacking, the venture may not be
possible as currently planned.
Applying Feasibility Outcomes
After conducting a feasibility analysis, you must determine whether to proceed with the venture.
One technique that is commonly used in project management is known as a go-or-no-go decision.
This tool allows a team to decide if criteria have been met to move forward on a project. Criteria
on which to base a decision are established and tracked over time. You can develop criteria for
each section of the feasibility analysis to determine whether to proceed and evaluate those criteria
as either “go” or “no go,” using that assessment to make a final determination of the overall
concept feasibility. Determine whether you are comfortable proceeding with the present
management team, whether you can “go” forward with existing nonfinancial resources, whether
the projected financial outlook is worth proceeding, and make a determination on the market and
industry. If satisfied that enough “go” criteria are met, you would likely then proceed to
developing your strategy in the form of a business plan.

3.3 Idea selection

Five elements of the filter can be:
1.Desirability- The idea must have appeal for the customers as they are going to use the
product/solution.
2.Feasibility- Idea should be within co. circle of capability. This will ensure that the speed of
development would be fast.
3.Potential- This is for the benefit of the masses - market. Idea shouldn’t solve the problem that
are not worrying people at large. The solution for very localized and pocket problems can come
from any startup but big organizations should focus on solving bigger problems.
4.Clarity- This is for the people who would be the part of the project. If clarity is not there people
will not understand vision of the product/solution.
5.Viability- This is for the investors by large. The viable idea will be sold at the right price
creating value for the investors.

Preliminary Screening,
Idea screening is the process to spot good ideas and eliminate poor one. To screen the business
idea generated, three approaches are discussed as follow:
1) Macro screening: is aimed screening down ideas to 10. And the common criteria are:
Are my own competencies sufficient?
Can I finance it to a large extent with my own equity?
Will people buy my product/service (i.e. is it needed and can people afford it)?
2) Micro Screening: is aimed screening down ideas into 3. The common criteria used for
screening are:
Solvent demand
Availability of raw materials
Availability of personal skills
Availability of financial resources
3) Scoring the Suitability of Business Idea: This approach is most appropriate when deciding
on starting a business. When there are more than one possible business ideas and one
needs to decide which one to follow, we use score business ideas (e.g., BI1, BI2, BI3) by
assigning a rating from 1 to 3 for each question, with 3 being the strongest. After we
score the ideas we sum the total and select the idea with the highest score.
S. No Questions BI1 BI2 BI3
1. Are you familiar with the operations of this type of business?
2. Does the business meet your investment goals?
3. Does the business meet your income goals?
4. Does the business generate sufficient profits?
 5. Do you feel comfortable with the business?
6. Does your family feel comfortable with the business?
7. Does the business satisfy your sense of status?
8. Is the business compatible with your people skills?
9. Is there good growth projected for the overall industry of the business?
10. Is the risk factor acceptable?
11. Does the business require long hours?
12. Is the business location-sensitive?
13. Does the business fit your personal goals and objectives?
14. Does this business fit your professional skills?
Totals

Idea and its importance

See Module 2
Pre-feasibility analysis-
A prefeasibility study is rough screening aiming at identifying the most promising idea(s) and
discard the unattractive options. This reduces the number of options that are chosen to proceed
with a more detailed feasibility study and eventually with business development, ultimately
saving time and money.
SOCIAL ENTERPRISE The first step of the pre-feasibility assessment is to clearly define both
the social and financial objectives for your social enterprise. Once you have done so, you can
begin assessing a variety of business ideas on whether they will help you meet those goals,
identifying weaknesses and red flags and eliminating bad business ideas. The overall aim of this
assessment is to quickly “get to no” on bad business ideas before you begin a more in-depth
feasibility assessment, saving you a lot of time and effort in the business planning process.
Stages of Project Feasibility Analysis-

1: Conduct preliminary analysis

2: Outlining the project scope and conducting current analysis
3: Comparing your proposal with existing products/services
4: Examining the market conditions
5: Understanding the financial costs
6: Reviewing and analyzing data
7: Make "Go/No Go" Decision
Technical Feasibility refers to ability of the process to take advantage of the current state of
technology in pursuing further improvements. The technical capabilities of the personnel as well
as the capability of the available technology in relation to the requirements of the proposed idea
should be considered and the extent of compatibility should be studied. It also incudes the
evaluation of the hardware, software and other technical requirements of the proposed product.
For projects concerning manufacturing activities, technical analysis is a must. It lays out details
on how
will a good or service be delivered, which includes transportation, business location, technology
needed, materials and labour. Technical analysis can be done by answering to the following
questions:
Is the technology proposed to be used the latest technology?
What is the likelihood of the proposed technology becoming obsolete in the near future?
Is the technology proposed to be used a process technology?
Is the technology proposed to be used available indigenously?
In case of imported technology, is the technology freely available?
Is the technology proposed to be used cost effective in the long run?
Is the technology proposed to be used capable of producing goods and services according to the
requirements and satisfaction of the customers?
Is there any ongoing or additional research and development needs?
Once you have explored the answer of these questions, you need to do technical appraisal. Only
after getting positive response from technical analysis you should move further.

Technical Appraisal includes-

1. Scale of Operations: This section needs description of the scale of operations and the
estimated growth in the future.
2. Raw materials: It gives a complete detail about the selection of raw materials to be
used, name and address of the suppliers, terms of contract, cost and quality of raw
materials to be used. It includes information such as whether volume discounts will be
available as your business grows or if you plan to manufacture your parts at some
point of time. It also needs to mention if its available locally or needs to be imported.
If it needs to be imported then the import duty and other agreements should be
discussed. The durability of materials from which the product is made is also required
to be considered. The detailed analysis of raw materials as an input of production
must be carried out considering availability, cost and quality.
3. Location of the Project: Location of the business affects the success of the business
and thus it becomes important to select the location for the business carefully. The
important factors which determine the selection of project location are following:
-Availability of land (proper acreage and reasonable costs).
-The impact of the project on the environment and the approval of the concerned
institutions for license.
-The costs of transporting inputs and outputs to the project location (i.e., the distance
from the markets).
- Availability of various services related to the project such as availability of
extension services or veterinary or water or electricity or good roads etc.
4. Technical Know How: It involves selection of the experts and the professionals for
their expertise in required technical know-how to be used in the business. It also
needs analysis of reasonable utility and the accepted rate of obsolescence of
technology.
5. Calculating Labour Requirements: In this section, a list of the number and types of
employees needed to run the business is prepared which may be employed in the
future as your business grows. One may break labour into categories if necessary:
Senior Level Management, Office and Clerical Support, Production or Distribution
Staff, Professional Staff (i.e., lawyers, accountants, engineers, marketing), Fulfilment
(i.e., mail room, shipping department)
6. Possibility of Collaborative Agreements: If the organization plans to collaborate in
future or as start-up then it should be analysed in this section. Collaboration may
facilitate the managerial, financial and technological availability to the organisation.
7. Plant Layout: A plant layout study is an engineering study used to analyse different
physical configurations for a manufacturing plant. Plant layout is the most effective
physical arrangement, either existing or in plans of industrial facilities. These may be
arrangement of machines, processing equipment and service departments to achieve
greatest coordination and efficiency of 4 M's (Men, Materials, Machines and
 Methods) in a plant. The adequate layout may help in smooth operations of
manufacturing.
8. Project Scheduling and Implementation: It should describe the project implementation
schedule. The schedule is an important time management document that defines and
schedules the major phases of project work being carried out to fulfil the desired
project objectives and achieve the expected outcomes. The well documented
scheduling may facilitate smooth process of production.
9. Product Design: The product design refers to functional design of the product and the
attractiveness in appearance. It involves flexibility, permitting ready modification of
the external features of the product to meet demands or technological and competitive
changes. It should have descriptions of how will users use and buy the product. It also
needs description of how the product can be expanded and modified in future.
The results of these investigations provide a basis for deciding whether a new venture is
feasible from technical point of view or not.
MARKET FEASIBILITY ANALYSIS
This is one of the most important sections of the feasibility study as it examines the marketability
of the product or services and convinces investors that there is a potential market for the product
or services. If a significant market for the product or services cannot be established, then there is
no project. Market Feasibility is all about how will the real-world market be reacting towards a
particular development. It is concerned with gaining the in-depth knowledge and doing a deep
analysis of market and knowing how is the target market going to respond towards particular
project/product.
It includes a description of the industry, current market analysis, competition, anticipated future
market potential, potential sources of revenue and sales projection. Three major areas include-
Various sources for knowing market data of customer demand patterns, seasonal variation in
demand, government policies affecting demand, range of prices of substitute goods,
complementary goods and the prices of competitor’s goods, customer spending and purchasing
power, major competitors and their competitive strength.
A market analysis enables you to define competitors and quantify target customers and/or users
in the market within your chosen industry by analyzing the overall interest in the product or
service within the industry by its target market. Define a market in terms of size, structure,
growth prospects, trends, and sales potential. This information allows to better position your
company in competing for market share. Define your target market, which leads to a total
available market (TAM), that is, the number of potential users within your business’s sphere of
influence. This market can be segmented by geography, customer attributes, or product-oriented
segments. From the TAM, you can further distil the portion of that target market that will be
attracted to your business. This market segment is known as a serviceable available market
(SAM).
Projecting market share can be a subjective estimate, based not only on an analysis of the market
but also on pricing, promotional, and distribution strategies. As is the case for revenue, you will
have several different forecasts and tools available. Other items you may include in a market
analysis are a complete competitive review, historical market performance, changes to supply and
demand, and projected growth in demand over time.
Steps in Market Feasibility Analysis
1. Industry Analysis- size of the industry and market share expected, growth rate
expected and the outlook. It should also reflect the trends of demand and supply
factors and a brief description about the forces that drive the market-innovation,
regulations etc.
2. Demand of the product: It involves investigating and forecasting the demand of the
product in advance by using methods like expert’s opinion, customer’s survey, sales
forecasts, trend analysis, Delphi method, jury of expert method, etc. the forecasting of
demand will facilitate in ascertaining the current and future demand patterns, seasonal
variations in demand, purchasing power of the target market, government policies
affecting demand. It also should provide description of what level of actual product
demand can be ascertained correctly. Some of the demand forecasting techniques are
as follows:
Jury of Expert Method: The researcher identifies the experts on the commodity whose
demand forecast is being attempted. He/She further probes with them on the likely
demand for the product in the forecast period. This method consists of securing views
of the salesmen and/ or sales management personnel. There may be many variations.
 The entrepreneur has to ascertain precise demand condition with the help of the
expert.
Delphi method: The Delphi method is a facilitated process of gaining consensus
within a group of anonymous participants. The facilitator sends a forecast
questionnaire to each member of the Delphi group. Anonymity is critical in this
method to prevent a few
group members from dominating the decision. When the questionnaire is returned, the
responses are statistically summarized and then sent back out to the group. Under
Delphi method opinions are collected from experts and efforts are made to match
them.
Market Experiments: Market experiments (actual or simulated) are performed to
generate demand forecasts. A potential problem with survey method is that survey
responses may not translate into actual consumer behaviour. Consumers do not
necessarily do what they say that they are going to do. This weakness can partially be
overcome by use of market experiments designed to generate data prior to the full-
scale introduction of a product or implementation of a policy.
Trend Analysis: Under this method, the demand is forecasted by analysing past
records of sales data of the target customers. In this method, a large amount of reliable
data is required for forecasting demand. In addition, this method assumes that the
factors, such as sales and demand, responsible for past trends would remain the same
in future.
Survey Method: Survey method is one of the most common and direct methods of
forecasting demand in the short term. This method encompasses the future purchase
plans of consumers and their intentions. In this method, an organization conducts
surveys with consumers to determine the demand for their existing products and
services and anticipate the future demand accordingly.
3. Potential markets: Potential market is the part of the total population that has shown
some level of interest in buying a particular product or service. This section aims at
identifying the market potential and who will buy the product. The entrepreneur
makes a detailed analysis of market and the products and determines the potential
market accordingly.
4. Customer Segmentation and Targeting: A target market is the specific group of
people you want to reach with your marketing strategy. They are the people who are
most likely to buy your products or services, and they are united by some common
characteristics, like demographics and behaviours. Knowledge of the target market
provides a basis for determining the appropriate marketing action strategy that will
effectively meet its needs. The defined target market will usually represent one or
more segments of the entire market. The entrepreneur should also distinguish between
end users of the products and its customers. Market segmentation means dividing the
whole population into small homogenous group on the basis of demographics factors
such as age, income, occupation, gender, etc. The geographical factors; psychographic
factors and relevant behavioural factors such as frequency of purchases, reasons for
buying the product are considered. Considering these factors the entrepreneur
responds more effectively to the needs of more homogeneous consumers. It is
essential to identify the target market segment in order to judge the feasibility of the
product in the market.
5. Marketing strategies: The marketing mix is a crucial tool to help understand what
the product or service can offer and how to plan for a successful product offering. It
means formulating various strategies with regard to marketing mix of the firm i.e.,
 formulating strategies concerning the 4 Ps- product mix, price mix, promotion mix
and place mix.
6. Cost, Pricing Methods and Profitability: It involves ascertaining various costs
involved in marketing of the product and the method which will be used to calculate
and fix the price of the product. Price is the revenue generated by the firm, therefore
the entrepreneur must analyse the cost price and profitability to obtain the expected
amount of profit.
7. Competitors Analysis: Competitor analysis refers to an assessment of the strengths
and weaknesses of current and potential competitors relative to those of your own
product or service. A competitive analysis is a critical part of market feasibility
analysis. It should describe both the direct and indirect competition. It should also
identify the key competitors of the business and their market share, their strategies,
strengths and weaknesses. It should give details about how their product can be
differentiated by that of competitors and is their product able to meet the unmet needs
of the customers in unique way. The entrepreneur should also aim to determine the
possible reactions of the competitors on their product launch and the estimation of the
time required by the competitors to imitate your product/ service. Entrepreneur should
also describe strategies to respond to these reactions.
It is needless to mention here that market feasibility analysis gives green signal to go
further. If market analysis says that the project is not viable the project is to be dropped
then and there.
FINANCIAL ANALYSIS is the process of evaluating businesses, projects, budgets, and
other finance-related transactions to determine their performance and suitability.
Typically, financial analysis is used to analyse whether an entity is stable, solvent, liquid,
or profitable enough to warrant a monetary investment. The primary purpose of doing a
financial analysis of a project is to evaluate the project's profitability or cost-effectiveness
relative to some alternative project or investment. Frequently, the results of the financial
analysis are
used to compare alternative projects to select which ones should be implemented.
A financial analysis seeks to project revenue and expenses (forecasts come later in the full
business plan); project a financial narrative; and estimate project costs, valuations, and
cash flow projection:
A twelve-month profit and loss projection
A three- or four-year profit-and-loss projection
A cash-flow projection
A projected balance sheet
A breakeven calculation
The financial analysis should estimate the sales or revenue that are expected by the
business to generate. A number of different formulas and methods are available for
calculating sales estimates. Industry or association data can be used to estimate the sales
of the potential new business. Similar businesses in similar locations can be gauged to
predict how new business might perform compared with similar performances by
competitors. One commonly used equation for a sales model multiplies the number of
target customers by the average revenue per customer to establish a sales projection:
T×A=S[Target Customers/Users×AverageRevenue per Customer=Sales Projection]
Another critical part of planning for new business owners is to understand the breakeven
point, which is the level of operations that results in exactly enough revenue to cover
costs. It yields neither a profit nor a loss. To calculate the breakeven point, the two types
of costs: fixed and variable. Fixed costs are expenses that do not vary based on the
amount of sales. Rent is one example, but most of a business’s other costs operate in this
 manner as well. While some costs vary from month to month, costs are described as
variable only if they will increase if the company sells even one more item. Costs such as
insurance, wages, and office supplies are typically considered fixed costs. Variable costs
fluctuate with the level of sales revenue and include items such as raw materials,
purchases to be sold, and direct labor. Breakeven point—the sales level at which business
has neither a profit nor a loss. Projections should be more than just numbers: include an
explanation of the underlying assumptions used to estimate the venture’s income and
expenses.
Projected cash flow outlines preliminary expenses, operating expenses, and reserves—in
essence, how much you need before starting your company. You want to determine when
you expect to receive cash and when you must write a check for expenses. Your cash
flow is designed to show if your working capital is adequate. A balance sheet shows
assets and liabilities, necessary for reporting and financial management. When liabilities
are subtracted from assets, the remainder is owners’ equity.
Financial analysis will include analysis of data with regard to:
1. Capital requirements: It refers to the fixed capital requirement of the project and its
time frame during which the capital will be required. Various components of capital
cost of a project/business are: Land and building, Plant and machinery, Electricals,
Transportation, Knowledge and Consultancy fees, Miscellaneous assets, Preliminary
expenses, Margin money for working capital.
2. Sources of Capital: There are various sources with which capital can be generated
which are as follows: Ordinary shares, Preference shares having pre-determined rate
of dividend, Debentures, Bonds, Term loans, Deferred credits, Capital investment
subsidy, Lease financing, Public deposits etc. Before selecting any of these options,
the entrepreneur has to carefully analyse the costs of raising capital from these
sources.
3. Working capital: Working capital is the difference between a co’s company’s current
assets (cash, account receivable and inventories of raw material etc) and its current
liabilities, such as account payable. Is shows firm’s liquidity position. Co. make
analysis of working capital requirements at various stage of the project as well as day-
to-day expenses. Longer the time taken to convert raw materials into sales realisation,
higher shall be required working capital.
4. Financial history, if any
5. Potential sources of funds like lending institutions.
6. Required borrowing capital
7. Repayment conditions
8. Fixed and variable costs
9. Projected profitability and ROI
10. Financial Analysis such as: Profit and Loss analysis, Cash-flow analysis, Break-even
analysis, Balance Sheet, Ratio Analysis
ENVIRONMENTAL ANALYSIS AND REGULATIONS
The external environment consists of a general environment and an operating environment.
The general environment consists of the economic, political, cultural, technological, natural,
demographic and international environments in which a company operates. The operating
environment consists of a company's suppliers, customers, market intermediaries who link
the company to its customers, competitors and the public. Both the general and operating
environments provide business opportunities, harbour uncertainties and generate risks to
which a business must adapt. The environmental analysis refers to conditions and factors
external to the company which are outside of the company’s control, that might affect its
sales, market, costs, and so forth. These are often grouped into kinds of factors, such as the
common PESTLE, which stands for political, economic, social, technological and legal
factors that might affect the company. It can be analysed by SWOT analysis. It aims at
highlighting non-economic factors that may affect the performance of the firm.