MS-04 question 5

Choose any organization of your choice and find out the investment appraisal methods that the organization follows. Write a detail note on your visit?
The organization, I am familiar with is a
-a large manufacturer/ marketer of safety products-the products are used as
[personal protection safety]
[ industrial safety]-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
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THE INVESTMENT APPROACH.
the investment appraisal method that the organization follows for the NEW PRODUCT INTRODUCTION is:
STEP 1
The appointment of the new product commitee, which includes
1.product manager/
2.marketing manager/
3.sales manager
4.CEO
5.finance manager
6.external consultant.
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STEP 2
DEVELOPMENT OF THE ''NPD'' PROJECT REPORTwhere ''NPD'' stands for new product development.
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STEP 3
SEARCHING FOR OPPORTUNITYInformation that can help to shape the development of the product plan.
INDUSTRY ANALYSIS
*SALES VOLUME AND TRENDS
By dollar volume and unit sales.
By specific product.
By geographic design.
By customer use pattern.
By manufacturer and marketer.
By buying power.
By distribution channel.
By price.
*BASIC TECHNOLOGY
By parts, raw materials, labor.
By process.
By patent barriers.
By purchasing.
*COMPETITION
By product specifications.
By product volumes.
By market share.
By end‑user.
By trade channel.
*CUSTOMER DEFINITION
By customer use.
By geographic characteristics.
By industry. By pricing effects.
By alternative and substitute products.
By seasonal purchase.
*OTHER FACTORS
Import regulations.
Government regulations.
Economic situations.
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STEP 4
OPPORTUNITY IDENTIFICATION
The process includes:
*Define targets.
*Forecast rough volume and share.
*Perform a risk ratio analysis.
*Conduct a preliminary feasibility study using secondary data and professional expert opinion ‑ no prototypes or no trial runs.
*Assess competitive reactions, exclusivity, regulations, protections and constraints.
*Look at exceptional technical hurdles.
*Consider legal and policy issues.
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STEP 5
CONCEPTION
This phase translates market facts into product concepts and customer positioning communication, prior to extensive research and development. The objective is to create and to refine a variety of appropriate product concepts in the form of customer communications, which may then be screened down to a workable number of the most appealing ones that may be carried forward into the prototype modelling phase.
1 . INPUT RESEARCH
This is a backgrounding step, often required where "hands‑on" experience, technical education, patent and literature review, as well as special consultant professionals, are needed for complete understanding of the opportunity area.
2. IDEATION
Ideation is the generation of large quantities of unconstrained possibilities, utilising a variety of stimulus techniques ‑brainstorming, group discussion, etc.
3. IDEA FORMS
This is the shaping of concepts into single‑minded, clear communications. The goal is a clear communication that neither goes beyond nor falls short of a real world summary statement of each concept.
4.PRE‑SCREENING CONCEPTS
Broad‑brush selection methods are applied to eliminate or improve concepts that are difficult to target.
5.SCREENING RESEARCHThis process rates many concepts rapidly ‑ individually and in relationship to each other.-----------------------------------------------------
STEP 6
PROTOTYPE MODELLING
At this phase, preliminary concepts have survived several selection steps. Now it is necessary to bring the narrowed number of proposed new products closer to reality in the form of prototype products and prototype communications. The target customer prospect should see the concept "in the round" as closely as is timely and economically feasible. Prototype modelling accomplishes the development of such stimulus materials.
1 . DESCRIPTORSThis step involves the product category and preliminary brand name development.
2. PROTOTYPES
This covers all aspects of the product and its communications. Included are:Product.Package. Brand name and description. Communications theme development. Prototype of communications. Prototype testing.
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STEP 7
DEVELOPMENT This phase of product development encompasses a number of different activities.
1 . VITRO TRIALSIn‑house double check of the prototype in the research and development.
2. PILOT PRODUCTIONThis involves a small‑scale replication of mass production. It helps to debug the system and devise productions controls, systems and equipment design. it is basic to determining on‑stream cost estimates.
3. SCALING UP (COMMERCIALISATI ON)Manufacturing resources. Marketing factors. Distribution. Service. Financial. Legal.
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STEP 8
The development of the feasibility report.-first appraisal of the project feasibility / viability.
TARGET
-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
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STEP 9
TEST MARKETING
Evaluation of:Awareness, attitude, usage. Distribution. Sales.
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STEP 10
TOTAL APPRAISAL FOR THE INVESTMENT.
and final authorization for the release.
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STEP 11
MARKETING PLANNING DEVELOPMENT
The marketing plan should include the following elements:Prototype introduction. Test simulation. Sales and distribution. Creative strategy. Media programme. Trade promotion. PR plans. Start‑up plan. Assessment plan. Expansion plan. Finance and production requirements.-------------------------------------------
STEP 12
MAJOR LAUNCH /INTRODUCTION OF THE PRODUCT
Finally comes the moment of truth ‑ the major introduction.Expanding the sales territory.Close monitoring of performance vs. plan.Evaluating opportunities.
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LAST STEP FINAL APPRAISAL OF THE INVESTMENT.AT THE END OF THE 12 MONTHS.
against the target set.-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
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