Page 100 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 7: Building the Business Plan

4. From where can the raw material be obtained? Notes
5. What would be the equipment and technology?
Technical/Operational Analysis collects data on the following parameters:
1. Material Availability: It is imperative to assess the availability of the raw material required
for production of goods/services. The feasibility study of material should make an account
of following variables:

(a) The availability of quality and quantity of raw material
(b) The factors on which the availability of raw material is dependent
(c) Price sensitivity (elasticity) of raw material
(d) Perishable time of raw material

2. Material Requirement Planning: It is undertaken to analyze the quantity of material that
would be required to let the production run smoothly; it would be dependent on material
availability variable mentioned above.
3. Analysis of Choice of Technology: It is done to identify whether the product developed at
the idea generation stage is technologically feasible or not i.e. it answers questions like:

(a) Whether a technology for the product exists or not?
(b) If technology exists in more than one form, which technology would be more
profitable to the company?

(c) The choice of the technology would be affected by:
(i) Capacity of the plant
(ii) Amount of investment
(iii) Availability of technology

(iv) Production cost
(v) Latest developments
(vi) Quantity of planned production
(vii) Impact of environment.

4. Plant Location: Plant location refers to a fairly broad area where the enterprise is to be
established, like city, industrial zone or costal area. Plant location is the physical layout of
the business and is affected by process of production, safety of personnel, minimum
production cost, scope of expansion, proper space utilization etc.
The choice of the location is influenced by the following factors:

(a) Proximity to raw material and market
(b) Availability of infrastructure like power, transportation, water, means of
communication

(c) Favorable government policies
(d) Other factors like climatic conditions, availability of manpower etc. can affect the
decision of plant location.

5. Machinery and Equipment: Machinery and equipment is dependent on production
technology, plant capacity, investment cost of buying, maintenance and running cost.

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