UNIT II

FINANCING AND MANAGING THE

NEW VENTURES
 Contents
• Sources of Capital
• Venture Capital
• Record Keeping
• Setting up a Basic Recordkeeping system
• Recruitment
• Motivating and Leading Teams
• Financial Controls
• Marketing & Sales Controls
• E- Commerce & Entrepreneurship
• Internet Advertising
• New Venture Expansion and Strategies and Issues
• Finance is one of the important prerequisite to start an enterprise or capital is
work as lubricant in a production process.
• The success of new venture is very much depend on availability of finance or
capital.
• This taken by the entrepreneur well in advance Regarding the future financial
aspects of his/her enterprise is called financial planning or it deals with following
questions like Amount of money needed, Sources of money, Time when money
required.
• SOURCES OF FINANCE:
• Finance/capital can be arranged from two major Sources:
• Internal Source: Refer to the owner’s own money known as equity. This amount
fulfill very limited requirement of enterprise or it is very thin.
• External source : Arranged from financial Complete requirement of enterprise
and generally taken for long period.
CLASSIFICATION OF FINANCIAL NEEDS

• ON THE BASIS OF EXTENT OF PERFORMANCE

• Fixed Capital: The money invested in current assets like raw
material, finished goods, machinery, equipment, furniture etc.
• Working Capital: Money required for day to day operations of
business/enterprise.
• ON THE BASIS OF PERIOD OF USE:
• Long Term Capital: Money whose repayment is arranged for more
than five years in future.
• Short Term Capital: Borrowed capital/money that is to be repaid
within one year.
INTERNAL SOURCE
• Retained Profit:
• Profit earned by entrepreneur may be used to finance the future needs of
firm.
• Reducing Working Capital:
• By judging the exact requirement, part of working capital may be used For
financing the enterprise.
• Sale of Assets:
• By selling fixed assets which are of little use, fund may obtained.
• Personal Savings of the Owner:
• Like PF, insurance policy, investment, building may be used for fund.
• Deferred Credit:
• Goods, Machine, plant may be\ taken on credit basis for a particular time
period by giving bank security to supplier.
 EXTERNAL SOURCE:
• Deposits or borrowings from Friend/Relatives
• Credit facilities from commercial banks
• Terms loans from financial institutions.
• Mortgage loans against fixed assets
• By issuing Shares or Debentures
• Public Deposits (Govt. Bonds etc.)
• Venture Capital
 CAPITAL SOURCES FOR YOUR BUSINESS
• Not having enough capital is the cause of many small business failures.
• Adequate capital is needed to start up the business, operate through hard times,
and provide a good chance to become a profitable enterprise.
• Your success in raising funds for a new business depends on good planning, real
• To raise capital for your new business, you should be able to answer four
questions.

1. How much capital will I need?

2. How much of my own capital can I put in the business?
3. How much capital can I get from someone else?
4. How can I convince someone to provide me with capital?
 Planning your financial needs
• Your ability to plan the financial needs of your new venture will play a big part in how much capital you will be
able to raise. Prepare a loan package that includes your business plans, market analysis, projected balance
sheet, profit and loss projections, and cash flow projections. Lenders prefer these financial projections monthly
for at least one year, and then annually for three years.
• The amount of detail and research needed in the financial projections is directly related to the amount of
outside capital you hope to secure. In addition, a loan package must include the amount of the loan, how the
loan money will be used, when the money will be needed, when the loan will be repaid, the source of
repayment funds, and the amount of collateral you have to secure the loan. You should also include the amount
of equity capital you are personally investing in the business venture.
• Another part of the loan package should be personal information about you and anyone else involved directly
or indirectly in the new business. Don’t assume the potential lender knows this information. Even if you have
known each other for years, the lender may not have an accurate picture of your personal history and current
financial situation.
• The personal information included in the loan package should include education, work history and business
experience of everyone involved in the new business. You should also include credit references, personal
income tax statements for three years and updated financial statements. Information about the nature of the
loan and personal histories of those involved may be a major factor in getting the loan.
• If you seek professional help with the financial projections and loan package, it is vital that you be totally
familiar with the financial information. Your knowledge and understanding of the loan package will be
important when the lender evaluates it.
The five Cs of credit
• A traditional, time-tested checklist is the five Cs of credit: character,
capacity, collateral, conditions and capital.
 Equity versus debt capital
• If you do not have enough personal capital, you can sell equity or you can incur
debt.
• If shares of equity are sold in a partnership or corporation, the capital is not
repaid, but the investor takes an ownership interest in the business and receives
a portion of the business’ profits.
• Even though equity capital does not burden a new business with loan
repayments and interest charges, it reduces the primary owner’s share of the
profits.
• Debt must be repaid with interest, but normally the lender has no ownership
control. Borrowing money at the very start of a new business will drain off
income to make the debt payments.
Commercial loans
• There are three types of commercial loans that are usually defined in terms of
the length of time the loan is made.
• Short-term commercial loans (30 to 90 days) are the most common loans made
to a small business. They usually cover business operation expenses such as rent,
insurance, advertising, inventory or salaries. Short-term loans are often
unsecured and repayment is usually a lump sum, including interest when the
loan matures.
• Intermediate-term loans are for one to five years to purchase business
equipment, buy fixed assets or provide working capital. Intermediate-term loans
are usually secured by the new equipment or business assets. They sometimes
have low monthly payments, with a large balloon payment at the end of the
term.
• A long-term commercial loan is for five years or more to purchase an existing
business, buy real estate, or construct or improve a building or facility. The long-
term loan is always secured by the assets for which the loan was made, usually
requires constant monthly payments and often has a variable interest rate.
Ten sources of capital
1. Trade or supplier credit
2. Life insurance policies
3. Friends and relatives
4. Customers
5. Leasing companies
6. Commercial finance companies
7. Commercial banks
8. Small Business Administration
9. Small Business Investment Companies
10. Rural Economic and Community Development Agency
VENTURE CAPITAL
• Meaning:
“ Venture Capital is defined as providing seed, start-up and first stage finance to
companies and also funding expansion of companies that have demonstrated
business potential but do not have access to public securities market or other
credit oriented funding institutions.”
• Venture Capital is generally provided to firms with the following characteristics:
• Newly floated companies that do not have access to sources such as equity capital and/or
other related instruments.
• Firms, manufacturing products or services that have vast growth potential.
• Firms with above average profitability.
• Novel products that are in the early stages of their life cycle.
• Projects involving above-average risk.
• Turnaround of companies
VENTURE CAPITAL
• Venture Capital derives its value from the brand equity, professional image,
constructive criticism, domain knowledge, industry contacts; they bring to table
at a significantly lower management agency cost.
• A Venture Capital Fund (VCF) strives to provide entrepreneurs with the support
they need to create up-scalable business with sustainable growth, while
providing their contributors with outstanding returns on investment, for the
higher risks they assume.
• The three primary characteristics of venture capital funds which make them
eminently suitable as a source of risk finance are:
• That it is equity or quasi equity investment
• It is long term investment and
• It is an active form of investment.
VENTURE CAPITALISTS

“ A venture capitalist is
somebody who invests
in a new business
venture.”
They provide capital
either for expansion or
a startup business.
Venture Capitalist Vs Bankers/Money Managers
• Banker is a manager of other people’s money while the venture capitalist is
basically an investor.
• Venture capitalist generally invests in new ventures started by technocrats who
generally are in need of entrepreneurial aid and funds.
• Venture capitalists generally invest in companies that are not listed on any stock
exchanges. They make profits only after the company obtains listing.
• The most important difference between a venture capitalist and conventional
investors and mutual funds is that he is a specialist and lends management
support and also
• Financial and strategic planning
• Recruitment of key personnel
• Obtain bank and debt financing
• Access to international markets and technology
• Introduction to strategic partners and acquisition targets in the region
• Regional expansion of manufacturing and marketing operations
• Obtain a public listing
Factor to be considered by venture capitalist in selection of
investment proposal
1. Management: The strength, expertise & unity of the key people on the board bring
significant credibility to the company. The members are to be mature, experienced
possessing working knowledge of business and capable of taking potentially high
risks.
2. Potential for Capital Gain: An above average rate of return of about 30 - 40% is
required by venture capitalists. The rate of return also depends upon the stage of the
business cycle where funds are being deployed. Earlier the stage, higher is the risk
and hence the return.
3. Realistic Financial Requirement and Projections: The venture capitalist requires a
realistic view about the present health of the organization as well as future
projections regarding scope, nature and performance of the company in terms of
scale of operations, operating profit and further costs related to product
development through Research & Development.
4. Owner's Financial Stake: The financial resources owned & committed by the
entrepreneur/ owner in the business including the funds invested by family, friends
and relatives play a very important role in increasing the viability of the business. It is
an important avenue where the venture capitalist keeps an open eye.
STAGES OF FINANCING BY VENTURE CAPITALIST
• Venture capital can be provided to companies at different stages. These include:
• I. Early- stage Financing
• Seed Financing: Seed financing is provided for product development & research and to
build a management team that primarily develops the business plan.
• Startup Financing: After initial product development and research is through, startup
financing is provided to companies to organize their business, before the commercial
launch of their products.
• First Stage Financing: Is provided to those companies that have exhausted their initial
capital and require funds to commence large-scale manufacturing and sales.
• II. Expansion Financing
• Second Stage Financing: This type of financing is available to provide working capital for
initial expansion of companies, that are experiencing growth in accounts receivable and
inventories, and is on the path of profitability.
• Bridge Financing: Bridge financing is provided to companies that plan to go public within
six to twelve months. Bridge financing is repaid from underwriting proceeds
STAGES OF FINANCING BY VENTURE CAPITALIST
• III. Acquisition Financing :

• As the term denotes, this type of funding is provided to companies to acquire another
company. This type of financing is also known as buyout financing.
• It is normally advisable to approach more than one venture capital firm simultaneously for
funding, as there is a possibility of delay due to the various queries put by the VC.
• If the application for funding were finally rejected then approaching another VC at that
point and going through the same process
CHARACTERISTICS OF VENTURE CAPITAL:
• Ideas and innovations, which have potential for high growth but has inherent
uncertainties, are Financed by Venture capitalists.
• Further, venture capitalists provide networking, management and marketing
support as well.
• Therefore, venture capital refers to risk finance as well as managerial support.
This blend of risk financing and handholding of entrepreneurs by venture
capitalists creates an environment particularly suitable for knowledge and
technology based enterprises.
• Start ups, where fund is needed most, are seldom funded by Venture capitalist.
• However, a rare combination of product opportunity, market opportunity, and
proven management may attract venture fund even in Start ups.
• (a) Expect a very high growth rate in the assisted enterprise,
• (b) bring management and business skills,
• (c) expect medium term gains (5-10 years),
• (d) do not insist for any collateral to cover the capital provided.
ADVANTAGES OF VENTURE CAPITAL
• Finance - The venture capitalist injects long-term equity finance, which provides a solid capital
base for future growth. The venture capitalist may also be capable of providing additional
rounds of funding should it be required to finance growth.
• Business Partner - The venture capitalist is a business partner, sharing the risks and rewards.
Venture capitalists are rewarded by business success and the capital gain.
• Mentoring - The venture capitalist is able to provide strategic, operational and financial advice
to the company based on past experience with other companies in similar situations.
• Alliances - The venture capitalist also has a network of contacts in many areas that can add
value to the company, such as in recruiting key personnel, providing contacts in international
markets, introductions to strategic partners and, if needed, co-investments with other venture
capital firms when additional rounds of financing are required.
• Facilitation of Exit - The venture capitalist is experienced in the process of preparing a company
for an initial public offering (IPO) and facilitating in trade sales. Venture capitalist combines risk
capital with entrepreneurial management and advance technology to create new products,
new companies and new wealth. Risk finance and venture capital environment can bring about
innovation, promote technology, and harness knowledge-based ventures. In this sense, venture
capital is different from other types of financing such as
• development finance,
• seed capital, (At times Venture Capitalist provide)
• term loan / conventional financing,
• passive equity investment support, and
• R&D funding sources.
RECORD KEEPING
• Introduction
• Keeping records is crucial for the successful management of a business. A comprehensive
recordkeeping system makes it possible for entrepreneurs to develop accurate and timely
financial reports that show the progress and current condition of the business. With the
financial report you can generate from a good recordkeeping system, you can compare
performance during one period of time (month, quarter or year) with another period,
calculate trends and plan for the business's future.
• For a business to be successful, its owner must possess a good blend of these skills: sales,
customer service, management and recordkeeping. The sole proprietor must assume all
the responsibility; but if the business has more than one owner or employee, it has the
advantage of bringing sales, customer service, management and detail-oriented persons
together to cover all aspects of the business.
RECORD KEEPING
• Purpose
• The purpose of a good recordkeeping system is to provide management information to use
in operating the business.
• Because cash flow and profitability are closely tied to financial analysis, it is vital that the
entrepreneur understand the external and internal financial factors that affect business.
• The recordkeeping system provides the foundations for monitoring and measuring the
progress of the business. It provides a blueprint for fiscal control by monitoring and
measuring sales, costs of goods sold, gross profits, expenses and taxes.
• The entrepreneur should be involved in setting up the recordkeeping system and the chart
of accounts, which includes elements that are critical in managing the day-to-day
operations of the specific business.
Setting up a basic recordkeeping system
• Many business finance professionals recommend that all entrepreneurs be knowledgeable about basic recordkeeping
practices.
• The entrepreneur who decides to purchase a manual or computerized recordkeeping system, or has a bookkeeper or
accountant, still needs to understand the basic premises.
• Journal: Journal is a book for recording business transactions in chronological order. A simple method of recordkeeping
is to use 13-column paper for journals. You derive the information for each journal entry from original source
documents, such as receipts for cash paid or received, checks written or received, cash register tapes, sales tickets, etc.
The information appearing on these documents must be analyzed to determine the specific accounts affected and the
dollar amounts, then the proper journal entry is recorded.
• Transaction: It is entered in a journal before it is entered in ledger accounts. Transactions are entered into the journals
by date, amount, description and account to which the transaction has been assigned. For example, when rent is paid,
the journal entry would be made in the cash disbursement journal under the accounts of cash and rent. A journal is also
called the book of original entry. Different journals are used for different source documents. Cash coming into the
business (cash sales, bank loans, interest income) is entered in chronological order in a cash receipts journal. Cash going
out of the business (expenses: rent, insurance, payroll, purchases,) is recorded in a cash disbursement journal. The
check book is the source for recording disbursements.
• Disbursements: It should be made by check from a business account that is separate from your personal bank account.
This provides an audit trail in case of an IRS audit. Sales and Purchases on credit are entered into a sales journal and
purchases journal, respectively. These journals are the original entry for the accounts receivable and accounts payable.
A payroll journal is used to show employee gross wages, taxes/other deductions withheld and net wages. It also shows
the employer's share of FICA, Medicare and unemployment taxes. A general journal is used for miscellaneous entries
and adjustments such as depreciation and inventory.
Setting up a basic recordkeeping system
• The accounting system is built around a list of account names called a chart of accounts and is organized under
the categories of assets, liabilities, owner's equity, revenue or income, cost of goods sold (for a business that sells
a product), operating expenses and other income/expenses. The accounts you keep are tailor made for your
particular business.
• Assets are things of value owned by a business including cash, receivables, investments, buildings, land,
equipment, vehicles, etc.
• Liabilities are those amounts the business owes the creditors. They include payables, notes, loans, mortgages, etc.
• Owner's equity or capital (sometimes called net worth) is the investments of the owners and the accumulation of
profit or losses for the business since it began. It is also the difference between Assets and Liabilities.
• Revenue or income is the money that came into the business from the sale of goods and services. Income is
measured for a period of time.
• Cost of goods sold is the cost of the product being sold by the business. A service type business will not have a
cost of goods sold.
• Operating expenses are the daily expenses in running a business. For example, rent, advertising, insurance, etc.
• Other income/expenses are not daily necessities or a required part of the business operation. However they are a
part of doing business such as interest income and expense.
• At the end of each month, all transactions are totaled and only the total of each account is posted to the general
ledger on three-column paper. The general ledger is a cumulative (year to date) book that contains the individual
accounts maintained by the business and shows the balances in each account.
Setting up a basic recordkeeping system
• Financial statements (Balance sheet and income statement) are prepared using
the account balances from the general ledger.
• The balance sheet is a financial report as of a specific date that lists the assets,
liabilities and owner's equity of a company. It is a "snapshot" of the business at a
point in time.
• The income statement or profit and loss statement (P&L) is the financial report
that shows if the business had a profit or loss. It is the Revenue minus the
Expenses
• Single vs. double entry recordkeeping :
• Now you have laid out the blueprint for your recordkeeping, monitoring and
measurement systems.
• There are some other considerations that will affect your recordkeeping
functions. One consideration is whether to use single entry or double entry
recordkeeping.
Setting up a basic recordkeeping system
• Single entry
• Single entry is a simple listing of cash receipts and checks paid out. It is not a debit/credit
system.
• It records monies received in a cash receipts journal (cash in) and monies paid out in the cash
disbursements journal (cash out).
• From these two listings, a simple profit and loss statement and cash flow statement can be
developed.
• The single entry can be kept manually on a notepad or journal with columns labelled with your
chart of account numbers.
• Double entry:
• Because the double entry system is more sophisticated, an understanding of bookkeeping
principles is needed to implement it.
• A small business with a limited number of transactions and employees can get by on a single
entry system, either manual or computerized.
• All businesses require accounts receivable controls, accounts payable controls and pricing
policies.
• For larger businesses with employees, with different departments or with inventory to manage,
it is wise to implement a double entry recordkeeping system because it affords checks and
balances.
RECRUITMENT
• The process of finding and hiring the best-qualified candidate (from within or
outside of an organization) for a job opening, in a timely and cost effective
manner.
• The recruitment process includes analyzing the requirements of a job, attracting
employees to that job, screening and selecting applicants, hiring, and integrating
the new employee to the organization.
• The recruitment and selection is the major function of the human resource
department and recruitment process is the first step towards creating the
competitive strength and the strategic advantage for the organizations.
Recruitment process involves a systematic procedure from sourcing the
candidates to arranging and conducting the interviews and requires many
resources and time.
 General recruitment
• Identifying the vacancy:
process is as follows:
• The recruitment process begins with the human resource department receiving requisitions for
recruitment from any department of the company.
• These contain: •Posts to be filled •Number of persons •Duties to be performed • Qualifications
required
• Preparing the job description and person specification.
• Locating and developing the sources of required number and type of employees (Advertising etc).
• Short-listing and identifying the prospective employee with required characteristics.
• Arranging the interviews with the selected candidates.
• Conducting the interview and decision making
• Identify vacancy
• Prepare job description and person specification
• Advertising the vacancy
• Managing the response
• Short-listing
• Arrange interviews
• Conducting interview and decision making
• The recruitment process is immediately followed by the selection process i.e. the final interviews and the
decision making, conveying the decision and the appointment formalities
General recruitment process is as follows:
• Step 1: Identify Vacancy and Evaluate Need
• Recruitments provide opportunities to departments such as aligning staff skill
sets to initiatives and goals and planning for departmental and individual
growth. Although there is work involved in the hiring process, proper
planning and evaluation of the need will lead to hiring the right person for the
role and team.
• Newly Created Position
• When it is determined a new position is needed, it is important to:
• Understand and take into consideration strategic goals for the University and/or
department. Are there any upcoming changes that may impact this role?
• Conduct a quick analysis of UCR Core Competencies. Are there any gaps? What
core skills are missing from the department? Evaluate the core skills required now
and those which may be needed in the future.
• Conduct a Job Analysis if this position will be new to your department. This will also
help to identify gaps.
General recruitment process is as follows:
• Step 1: Identify Vacancy and Evaluate Need
• Replacement
• When attrition occurs, replacing the role is typically the logical step to take. Before
obtaining approval to advertise the position, consider the following:
• As with a newly created position, it may be helpful to conduct a Job Analysis in order to tailor the
position to what is currently required and to ensure proper classification. Your HR Classification Analyst
can assist in reviewing and completing.
• Review the role and decide if there are any changes required as certain tasks and responsibilities
performed by the previous person may not or should not be performed by the new person.
• Carefully evaluate any changes needed for the following:
• Level required performing these tasks; considering the appropriate classification level. Be aware that
changes in the classification of positions from represented to no represented will require union notice
and agreement .
• Tasks carried out by the previous employee
• Tasks to be removed or added if any of the work will be transferred within department
• Supervisory or lead responsibility
• Budget responsibility (if any)
• Work hours
General recruitment process is as follows:
• Step 2: Develop Position Description
• A position description also referred to as a job description is the core of a
successful recruitment process. From the job description, interview questions,
interview evaluations and reference checks questions are developed.
• A well-written job description:
• Provides a first and sometimes, lasting impression of the campus to the
candidate
• Clearly articulates responsibilities and qualifications to attract the best suited
candidates
• Improves retention as turnover is highest with newly hired employees.
Employees tend to be dissatisfied when they are performing duties they were
not originally hired to perform.
• Provides an opportunity to clearly articulate the value proposition for the role
and the department and helps attract candidates to apply
General recruitment process is as follows:
Identify Duties and Responsibilities
• Prior to developing the job description the hiring manager should identify the
following:
• General Information
• Position Purpose
• Essential Functions
• Minimum Requirements
• Preferred Qualifications
General recruitment process is as follows:
Identify Duties and Responsibilities
General recruitment process is as follows:
Step 3: Develop Recruitment Plan
• Each position requires a documented Recruitment Plan which is approved by the
organizational unit. A carefully structured recruitment plan maps out the strategy
for attracting and hiring the best qualified candidate and helps to ensure an
applicant pool which includes women and underrepresented groups including
veterans and individuals with disabilities.
• In addition to the position’s placement goals the plan contains advertising channels
to be used to achieve those goals. The recruitment plan is typically developed by
the hiring manager in conjunction with the Departmental HR Coordinator.
Placement goals identified are entered into the position requisition in the ATS.
• To ensure the most current placement goals are identified for the department and
unit, you may contact the office of Faculty and Staff Affirmative Action.
• Recruitment Plan Elements:
• A. Posting Period
• B. Placement Goals
• C. Additional Advertising Resources
• D. Diversity Agencies
• E. Resume Banks
General recruitment process is as follows:
Step 4: Select Search Committee
• To ensure applicants selected for interview and final consideration are evaluated by
more than one individual to minimize the potential for personal bias, a selection
committee is formed.
• The hiring manager will identify members who will have direct and indirect
interaction with the applicant in the course of their job.
• Each hiring manager should make an effort to appoint a search committee that
represents a diverse cross section of the staff.
• A member of the committee will be appointed as the Affirmative Action and
Compliance Liaison who will monitor the affirmative action aspects of the search
committee.
• The Hiring Manager will determine the size (no more than 6) and composition of
the committee based on the nature of the position.
• It is highly recommended the committee members include:
• At least one individual who has a strong understanding of the role and its contribution to the department
• A job specialist (technical or functional)
• Staff representative if position has supervisory responsibilities
• An individual who will interact closely with the position and/or serves as a main customer
General recruitment process is as follows:
Step 5: Post Position and Implement Recruitment Plan
• Once the position description has been completed, the position can then be
posted to the UCR career site via the ATS.
• Every effort should be made to ensure the accuracy of the job description and
posting text.
• It is not advisable and in some instances, not possible to change elements of
a posted position.
• The reason for this has to do with the impact a given change may have on the
applicant pool.
• To post the position:
• The requisition is then routed to the HR Recruitment Analyst who will post the position
• Applications can be reviewed once the minimum number of posting days has been
reached
General recruitment process is as follows:
Step 6: Review Applicants and Develop Short List
• Once the position has been posted, candidates will apply via UCR’s job board.
• Candidates will complete an electronic applicant for each position (resume
and cover letter are optional).
• Candidates will be considered “Applicants” or “Expressions of Interest”.
• All applicants must be reviewed and considered.
• Applicants are those who apply during the initial application period as
described in Step 5.
• Candidates who apply after the initial application period will be considered
“expressions of interest” and not viewable by the search committee.
General recruitment process is as follows:
Step 7: Conduct Interview

• The interview is the single most important step in the selection process.
• It is the opportunity for the employer and prospective employee to learn
more about each other and validate information provided by both.
• By following these interviewing guidelines, you will ensure you have
conducted a thorough interview process and have all necessary data to
properly evaluate skills and abilities.
General recruitment process is as follows:
Step 7: Conduct Interview

• Preparing for the Interview

• Once the short list (typically 3-5 identified for interview) is approved by the Office of
Faculty and Staff Affirmative Action, the interview process can begin.
• It is important to properly prepare for the interview as this is the opportunity to
evaluate the skills and competencies and validate the information the applicant has
provided in their application and resume.
• Choose one or two questions from each competency and minimally required skills
to develop your interview questions. Review the applicant's application or resume
and make note of any issues that you need to follow-up on.
• Phone Interviews
• Panel Interviews
• Virtual Interviews
• Interview Questions
General recruitment process is as follows:
Step 8: Select Hire Final Applicant
• Once the interviews have been completed, the committee will meet to
discuss the interviewees. Committee members will need to assess the extent
to which each one met their selection criteria.
• The search committee rating sheet will be helpful in justifying decisions and
making them as objective as possible.
• The most important thing to remember is that you will need to be able to
justify your decision. Documentation is key and required to be in compliance
with OFCCP requirements. As one of the most critical steps in the process, it is
important to keep the following in mind:
• The best candidate for the position was chosen based on qualifications
• The candidate will help to carry out the University and Department’s
missions
General recruitment process is as follows:
Step 9: Finalize Recruitment
• Upon completion of the recruitment process the offer to the selected finalist
is made. The salary to be offered is to be equitable and lead to the retention
and motivation of employees.
• Prior to initiating the offer, it is recommended that one more check of the
selection process be completed as follows:
• Review the duties and responsibilities of the position and ensure they
were accurately described and reflected in the job description and
interview process
• Review selection criteria used to ensure they were based on the
qualifications listed for the position
• Confirm interview questions clearly matched the selection criteria
• Confirm all applicants were treated uniformly in the recruitment,
screening, interviewing and final selection process
General recruitment process is as follows:
Step 9: Finalize Recruitment
• Initiating the Offer
• Once a final check of the selection process and the final applicant has been
determined, the Committee Chair or designee will notify the Departmental
HR Coordinator with the finalist’s name, salary and start date enter the
selection information into the ATS
• The Departmental HR Coordinator reviews the requisition in the ATS and
ensures all applicants on the requisition have been assigned a decision code
• The Departmental HR Coordinator forwards this information to the
Organizational HR Coordinator for review and approval
• Once approved, the Departmental HR Coordinator notifies the Committee
Chair or designee of offer approval
• The Committee Chair or designee makes the offer to the finalist
Motivation
Definition

• Motivation is the processes that accounts for an individual’s intensity,

direction, and persistence of efforts towards attaining a goal.”

• Nature of Motivation

• Unending Process
• Psychological Concept
• The whole individual is motivated
• Goals are Motivators
• Frustrated man cannot motivated.
Motivation
Process of motivation
1. Unsatisfied needs and motives:
• It is the first process of
motivation. This stage involves
unsatisfied needs and motives.
Such unsatisfied needs can be
activated by internal stimulus
such as hunger and thirst. They
can also be activated by
external stimulus such as
advertisement and window
display
Motivation
Process of motivation
2. Tension:

• Unsatisfied needs create tension

in the individual. Such tension
can be physical, psychological,
and sociological. In this situation,
people try to develop objects
that will satisfy their needs.
Motivation
Process of motivation
3. Action to satisfy needs and
motives:
• This stage involves action of
people to satisfy needs and
motives. Such tension creates
strong internal stimulus that calls
for action. Individual engages in
action to satisfy needs and
motives for tension reduction.
For this purpose, alternatives are
searches and choice is made, the
action can be hard work for
earning more money
Motivation
Process of motivation
4. Goal accomplishment:
• This stage involves goal
accomplishment. Action to satisfy
needs and motives accomplishes
goals. It can be achieves through
reward and punishment. When
actions are carried out as per the
tensions, then people are
rewarded others are punished.
Ultimately goals are
accomplished.
Motivation
Process of motivation
5. Feedback:
• This is the last stage for
motivation. Feedback provides
information for revision or
improvement or modification of
needs as needed. Depending on
how well the goal is
accomplished their needs and
motives are modified. Drastic
changes in environment
necessitate the revision and
modification of needs
Motivation
Leading Teams

1.Provide purpose.
2. Build a star team, not a team of stars.
3. Establish shared ownership for the results.
4. Develop team members to fullest potential.
5. Make the work interesting and engaging.
6. Develop a self-managing team.
7. Motivate and inspire team members.
8. Lead and facilitate constructive communication.
9. Monitor, but don't micromanage.
Financial Control Methods:
Marketing & Sales Control Methods:
• To know whether our marketing and sales strategies are effective and are generating
positive results are not.
• New venture must establish some measurements that focus on key controllable
variables that affect marketing and sales efforts.
• Marketing controls are the set of practices and procedures employed by firms to
monitor and regulate their marketing activities in achieving their marketing objectives
or goal or it controls proposed marketing plan against predefined goals.
• MARKET SHARE ANALYSIS: We can find out market share by taking the venture’s sales as a
percentage of total industry sales or our venture’s sales how much percentage contribute in a
total sale.
• SALES ANALYSIS: We can analyze/monitor sales information for a particular time period like no. of
sales enquires made in a week, no. of customer attended in a month, no. of meetings with
potential customers and how many new customers are created in a particular time.
• DISTRIBUTION: To supply exact quantity of products or quantity as needed by retailers or
Distributor entrepreneur must monitor increase or decrease distribution channel. Unavailability of
stock at right time, in right quantity creates opportunities for competitor to create new Customers
CUSTOMER SATISFACTION: With the help of marketing research, an entrepreneur can find out
satisfaction level of customers towards products or services offered by them. It help to create new
customer and retain existing customers.
E-COMMERCE:
• Electronic Commerce is an emerging concept that describes buying and selling of
products, services and information with the help of Internet via computer
networks.
• E-commerce is not limited to buying and selling products online but along with
transaction it also deal With its customer, suppliers, accountants, payment
services, government agencies and competitors Online Along with online selling,
EC will lead to significant changes in customize distribution and exchanged,
Search and bargain for product and services.
• E-commerce involves digitally enabled (Online) commercial transactions (Buying and
selling) Between and among organizations and individuals
• Digitally enabled transactions include all transactions (Online Order, Billing, Payment
Delivery etc.) mediated by digital technology
• Commercial transactions involve the exchange of value across organizational or individual
boundaries in return for products or services
Advantages & Disadvantages of E-COMMERCE:
• Advantages:

• A business can reduce the costs of handling sales inquiries, providing price quotes, and
determining product availability by using electronic commerce in its sales support and
order taking processes.
• Electronic commerce provides buyers with a wider range of choices than traditional
commerce.
• Electronic commerce provides buyers with an easy way to customize the level of detail in
the information they obtain about a prospective purchase.
• Electronic payments of tax refunds, public retirement, and welfare support cost less to
issue and arrive securely and quickly when transmitted over the internet.
• Electronic payments can be easier to audit and monitor than payments made by cheque,
providing protection against fraud and theft losses.
• Electronic commerce can also make products and services available in remote areas.
Advantages & Disadvantages of E-COMMERCE:
• Disadvantages:
• Some businesses are less suitable for electronic commerce. Such businesses may
be involved in the selling of items which are perishable or high-cost, or which
require inspection before purchasing. Return-on-investment is difficult to
calculate.
• Many firms have had trouble recruiting and retaining employees with the
technological, design, and business process skills needed to create an
effective electronic commerce presence.
• Difficulty of integrating existing databases and transaction-processing
software designed for traditional commerce into the software that enables
electronic commerce.
• Many businesses face cultural and legal obstacles to conducting electronic
commerce.
INTERNET ADVERTISING:
• Internet advertising has proven to be a targeted approach to reaching your
customer base, and is easily the most cost effective and measurable method of
obtaining new customers.
• It's an ideal way to reach potential customers with a solution that's cost effective,
offers precise targeting and easy to understand tracking tools.
• Online search advertising reaches over 94.5% of Australian internet users who
use search engines to find products or services online.
• Each one of these users is interested in the search keywords they have entered,
which makes the web such an effective way to connect with prospects interested
in your business.
INTERNET ADVERTISING:
• Responsive Audiences
• More and more Australians are using search engines like Google every day.
• Over 10.7 million Australians are online at least monthly and many of them are looking
to buy products or services while you read this.
• This is great news for small business owners who can use advertising platforms like
Google Ad Words to reach this captive audience
• Benefits for your Business
• Being found first in search results
• Gaining an advantage over your competitors
• Attaining the highest rate of traffic to your website
• Taking your position as your industry's leader
• Attracting more quality sales leads
• Increasing business revenue
• Improving business sustainability
 INTERNET ADVERTISING:
• Types of Advertising :
• 1) Sponsorships
• 2) Banner Run
• 3) Affiliate
• 4) Pay per Click
• BANNER ADS (DOUBLECLICK)
• Standardized ad shapes with images
• Normally not related to content
• CONTEXT LINKED ADS (GOOGLE ADSENSE)
• Related to content on page
• SEARCH LINKED ADS (GOOGLE ADWORDS)
• Related to search terms
• ADVERTISING (BANNER, POP-UPS WINDOW)
• Sponsorships link
• Online demo version
• E-MAIL MARKETING
• Spam mail, Hypertext
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• JOINT VENTURES:
• With the increase in business risks, hyper-competition, and failures, joint ventures have
increased.
• A joint venture is a separate entity involving two or more participants as partners.
• They involve a wide range of partners, including universities, businesses, and the public
sector
• Historical Perspective:
• Joint ventures are not new. In the U.S. joint ventures were first used for large-scale
projects in mining and railroads in the 1800s.
• The largest joint venture in the 1900s was the formation of ARAMCO by four oil companies
to develop crude oil reserves in the Middle East.
• Domestic joint ventures are often vertical arrangements made between competitors
allowing economies of scale.
• The increase in the number of joint ventures has been significantly throughout the 1990s.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Types of Joint Ventures :

• The most common type is that between two or more private-sector

companies. Some joint ventures are formed to do cooperative research.
• Another type of joint research for research development is the not-for-
profit research organization. Industry-university agreements for the
purpose of doing research are also increasing.
• Two problems have kept this type venture from increasing even faster.
• A profit corporation wants to obtain tangible results-such as a patent-
from its research investment, and universities want to share in the
returns.
• The corporation usually wants to retain all proprietary data while
university researchers want to make the knowledge available.
• Joint ventures between universities and corporations take many forms,
depending on the parties involved and the subject of the research.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Types of Joint Ventures :

• International joint ventures are increasing rapidly due to their

relative advantages. Both companies can share in the earnings and
growth.
• The joint venture can have a low cash requirement. Also, the joint
venture provides ready access to new international markets. Such a
venture causes less drain on a company's managerial and financial
resources than wholly owned subsidiary.
• There are drawbacks in establishing international joint ventures.
• The business objectives of the partners can be quite different.
• Cultural differences can create managerial difficulties.
• Government policies sometimes can have a negative impact on the
venture. The benefits usually outweigh the drawbacks.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Factors in Joint Venture Success
• One critical factor for success is the accurate assessment of the parties involved
and how best to manage the new entity.
• A second factor involves the symmetry between the partners.
• Another factor is that the expectations about the results of the joint venture
must be reasonable.
• The final factor is the timing. A joint venture should be considered as one of
many options for supplementing the resources of the firm.
• Features and Evaluation of Joint Venture
• When two or more persons join together to carry out a specific business venture
and share the profits on an agreed basis it is called a 'joint venture'.
• Each one of them who join as a party to the joint venture is called 'Co-Venturer'.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
Features Of Joint Ventures
1. Joint venture is a special partnership without a firm name.
2. Joint venture does not follow the accounting concept 'going concern'.
3. The members of joint venture are known as co-ventures.
4. Joint venture is a temporary business activity.
5. In joint venture, profits and losses are shared in agreed proportion. If there is no
agreement Regarding the distribution of profit, they will share profit equally.
6. Joint venture is an agreement for polling of capital and business abilities to be
employed in some Profitable venture.
7.At the end of venture, all the assets are liquidated and liabilities are paid off: if
necessary the assets And liabilities could be shared by co-ventures.
8. Joint venture always follows cash basis of account
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• ACQUISITIONS
• An acquisition is the purchase of a
company or a part of it in such a
way that the acquired company is
Completely absorbed and no
longer exists.
• Acquisitions can provide an
excellent way to grow a business
And enter new markets.
• A key issue is agreeing on a price.
Often the structure of the deal can
be more Important to the parties
than the actual price.
• A prime concern is to ensure that
the acquisition fits into the overall
direction of the strategic plan.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Advantages
• Established business.
• The acquired firm has an established image and track record.
• The entrepreneur would only need to continue the existing strategy to be
successful.
• Location is already established.
• Established marketing structure.
• The employees of an existing business can be important assets.
• They know the business and can help the business continue.
• Employees already have established relationships with customers, suppliers, and
channel members.
 NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Dis advantages
• Culture Clashes
• Even a company has a personality, a culture that permeates the entire organization. If you acquire a
company that has a way of doing things that conflict with yours, the employees of the acquired
company may bristle at your management style. Conversely, your employees may not accept managers
and supervisors from the acquired company.
• Redundancy
• When you acquire a company, you may have employees who duplicate each other's functions.
This can cause excessive payroll expenditures where you pay for two employees to do the
work of one.
• Increased Debt
• If you borrow money to acquire a company, that debt goes on the books of the original
company. In order to service that debt, you need revenues from the acquired company. Since
many companies become the target of acquisitions because they are struggling financially, you
may find that the financial problems of the acquired company prevent you from generating
the income you need to pay the new debt.
• Market Saturation
• If you acquire a company that is in the same line of business as your original company, your
hopes for market expansion may hit a barrier: the two companies together already dominate
the market. You may find it difficult to grow sales after the acquisition because not enough
new customers exist outside of the customer base you and the acquired company have
established.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• MERGER
• The combining of two or more
companies, generally by
offering the stockholders of
one company securities in the
acquiring company in
exchange for the surrender of
their stock.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Benefits of Mergers:
• 1. Economies of scale. This occurs when a larger firm with increased output can
reduce average costs. Different economies of scale include:
• i) technical economies if the firm has significant fixed costs then the new larger firm
would have lower average costs
• ii) bulk buying – discount for buying large quantities of raw materials
• iii) financial – better rate of interest for large company
• iv) Organizational – one head office rather than two is more efficient
• 2. International Competition. Mergers can help firms deal with the threat of
multinationals and compete on an international scale
• 3. Mergers may allow greater investment in R&D This is because the new firm
will have more profit. This can lead to a better quality of goods for consumers
• 4. Greater Efficiency. Redundancies can be merited if they can be employed
more efficiently
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Franchising
• A continuing relationship in
which a franchisor provides a
licensed privilege to the
franchisee to do business and
offers assistance in organizing,
training, merchandising,
marketing and managing in
return for a monetary
consideration. Franchising is a
form of business by which the
owner (franchisor) of a
product, service or method
obtains distribution through
affiliated dealers (franchisees).
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
Franchising
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
Franchising
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• TYPES OF FRANCHISING
• Product or Trade Name Franchising
• The product and trade name franchising system has evolved from suppliers or
manufacturers creating sales contracts with dealers to buy or sell their products
or product lines.
• In this relationship the dealer (franchisee) requires the trade name, trademark,
and/or product from the supplier or manufacturer.
• The franchisee identifies with the supplier through the product line.
• This method of franchising consists primarily of distribution by a single supplier
of manufactured products to dealers who then in turn resell this to the end
consumer
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• TYPES OF FRANCHISING
• Conversion
• A new franchising technique allows independently operated businesses
to convert to the form of an existing franchise business system.
• The new franchisee is expected to make changes in the existing business
which would bring them into conformity with the common marketing
display and trade identity
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Public Issues
• Public Issue is a method to raise share capital by selling securities to the public at large.
• In Private Placement, a company sells securities directly to a few pre-decided numbers of
investors or institutions.
• Private Placement is generally used by small-scale companies to raise funds.
• Every Company needs funds for its business.
• Funds requirement can be for short term or for long term.
• To meet short term requirements, they may approach banks, lenders & may even accept fixed
deposits from public/shareholders.
• To meet its long term requirements, funds can be raised either through loans from lenders,
Banks, Institutions etc. (which carry financial burden) or through issue of capital.
• Capital can be raised through private placement of shares, public issue, right issue etc.
• Public issue means raising funds from public.
• Promoters of the Company may have plans for the Company, which may require infusion of
money.
• The main purpose of the public issue, amongst others, is to raise money through public and get
its shares listed at any of the recognized stock exchanges in India.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• ADVANTAGES OF PUBLIC ISSUE
• Money non-refundable except in the case of winding up or buy back of shares.

• No financial burden i.e. no fixed rate of interest payable. However, in order to

service the equity, dividend may be paid.
• Enhance shareholders’ value if the Company performs well.
• Greater Transferability.
• Trading & Listing of securities at stock exchanges.
• Better liquidity of securities.
• Helps building reputation of promoters, Company & its products/services,
provided the Company performs well
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• DIS-ADVANTAGES OF PUBLIC ISSUE
• Time consuming process.
• Expensive.
• Several legal formalities.
• Involvement of many intermediaries.
• Transparency requirements and public disclosure of information may lead to
lack of privacy.
• Continuous compliance of provisions of listing agreement and other legal
requirements.
• Constant scrutiny of performance by investors.
• May lead to takeover of the company
• Securities of the Company may be made subjective to speculative attacks.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Right Issue :
• New stock (share) issue offered to existing stockholders (shareholders) in proportion to
their current stock/shareholding, for a specified period and at a specified (usually
discounted) price. Its objective is to afford them the opportunity to maintain their
percentage of ownership of the firm. See also scrip issue. Also called rights offering
• How it works:
• A rights issue is directly offered to all shareholders of record or through broker dealers of
record and may be exercised in full or partially.
• Subscription rights may either be transferable, allowing the subscription-right shoulder to
sell them privately, on the open market or not at all.
• A rights issue to shareholders is generally made as a tax-free dividend on a ratio basis (e.g.
a dividend of one subscription right for one share of Common stock issued and
outstanding).
• Because the company receives shareholders' money in exchange for shares, a rights issue
is a source of capital in an organization.
 NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Considerations: Issue rights the financial manager has to consider:
• Engaging a Dealer-Manager or Broker Dealer to manage the Offering processes
• Selling Group and broker dealer participation
• Subscription price per new share
• Number of new shares to be sold
• The value of rights vs. trading price of the subscription rights
• The effect of rights on the value of the current share
• The effect of rights to shareholders of record and new shareholders and rights
holders
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Underwriting :
• Rights issues may be underwritten.
• The role of the underwriter is to guarantee that the funds sought by the company will be
raised.
• The agreement between the underwriter and the company is set out in a formal underwriting
agreement.
• Typical terms of an underwriting require the underwriter to subscribe for any shares offered
but not taken up by shareholders.
• The underwriting agreement will normally enable the underwriter to terminate its obligations
in defined circumstances.
• A subunderwriter in turn sub-underwrites some or all of the obligations of the main
underwriter; the underwriter passes its risk to the sub-underwriter by requiring the sub-
underwriter to subscribe for or purchase a portion of the shares for which the underwriter is
obliged to subscribe in the event of a shortfall.
• Underwriters and sub-underwriters may be financial institutions, stock-brokers, major
shareholders of the company or other related or unrelated parties.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Bonus issue :
• When a company management decides to issue bonus shares, it results in the increase of
the company's share capital.
• This increase in share capital is funded by the company's Reserves and Surplus (retained
earnings in the balance sheet).
• For example, suppose a company issued one lakh equity shares of face value of Rs 10, the
company's share capital is Rs 10 lakhs. Now, if the company wants to give a one-for-one
bonus (1:1) to its shareholders, it has to generate another one lakh shares and transfer Rs
10 lakhs from its reserves and surplus account to share capital account. Thus, the bonus is
like 100 percent dividends as far as the company's reserve and surplus is concerned.
• A bonus issue permanently increases the share capital of the company, and hence, implies
that the company has to service the enlarged equity capital in line with future market
expectations. Bonus is treated as a company reward to the existing equity investors of the
company.
• A bonus issue reflects the management's confidence in the future and gives a very strong
signal in the market.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Stock split :
• The concept of stock split came into the limelight a few years ago when electronic holdings of
stocks started in the demat format.
• Historically, the face value of shares used to be Rs 10 (usually) or Rs 100 (for some stocks).
• The prime reason was to maintain uniformity and avoid confusion and manual errors. With the
adoption of the demat system, it became much easier to have and trade shares with multiple face
value denominations.
• However, as per the regulations, the face value should be in multiples of Re 1.
• Usually, a company's management thinks of stock split when they want to increase the liquidity of
shares in the market.
• When the market price of shares goes up quite a bit, it is difficult for the investors to buy even
small quantity of shares in the market.
• The company may decide to split the share's face value to increase the liquidity of shares, and
hence a drop in price.
• When a share is split, say, from Rs 10 face value to Re 1 face value, there would be no impact on
the company's share capital. The company's share capital and reserves remain unchanged.
 NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Choosing Location and Layout:
• Much like choosing a form of ownership and selecting particular sources of
financing, the location decision has far-reaching and often long-lasting effects on
a small company's future.
• Entrepreneurs who choose their locations wisely-with their customers'
preferences and their companies' needs in mind-can establish an important
competitive edge over rivals who choose their locations haphazardly.
• Because the availability of qualified workers, tax rates, the quality of
infrastructure, traffic patterns, and many other factors vary from one site to
another, the location decision is an important one that can influence the growth
rate and the ultimate success of a company.
• Factors:
• Choosing the State
• Choosing the Region
 NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• PROXIMITY TO MARKETS :
• Locating close to markets they plan to serve is extremely critical to manufacturers,
especially when the cost of transporting finished goods is high relative to their value.
• Locating near customers is necessary to remain competitive. Service firms often find
that proximity to their clients is essential. If a business is involved in repairing
equipment used in a specific industry, it should be located where that industry is
concentrated.
• The more specialized a business, or the greater [he relative cost of transporting the
product to the customer, the more likely it is that proximity to the market will be of
critical importance in the location decision.
• For instance, with its location in the centre of (he country and its ready access to a
variety of transportation systems, St. Louis, Missouri, has become home to many
companies' distribution centres.
• Not only do businesses in St, Louis benefit from a well-educated workforce, they also
can ship to customers anywhere in the country quickly and efficiently.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• PROXIMITY" TO NEEDED RAW MATERIALS:
• If a business requires raw materials that are difficult or expensive to transport, it
may need a location near the source of those raw materials.
• For instance, one producer of kitty litter chose a location on a major vein of
kaolin, the highly absorbent clay from which kitty litter is made.
• Transporting the heavy low-value material over long distances would be
impractical--and unprofitable.
• In other situations in which bulk or weight is not a factor, locating in close
proximity to suppliers can facilitate quick deliveries and reduce holding costs for
inventories.
• The value of products and materials, their cost of transportation, and their
unique function all interact in determining how close a business needs to be to
its source of supplies.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• WAGE RATES :
• Existing wage rates will provide another measure for comparison among states.
Wages can sometimes vary significantly from one state or region to another,
significantly affecting a company's cost of doing business.
• Another factor influencing wage rates is the level of union activity in a state. How
much union organizing activity has the state seen within the past two years? Is it
increasing or decreasing? Which industries have unions targeted in the recent
past?
• LABOR SUPPLY NEEDS:
• For many businesses, especially "new economy" companies, one of the most
important characteristics of a potential location is the composition of the local
workforce.
• Entrepreneurs must consider two factors when analyzing the labour supply in a
potential location: the number of workers available in the area and their levels of
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• BUSINESS CLIMATE :
• What is the state’s overall attitude toward your kind of business? Has it passed laws that
impose restrictions on the way a company can operate? Does the slate impose a corporate
income tax? Is there an inventory tax? Are there "blue laws" that prohibit certain business
activity on Sundays? Does the state offer small business support programs or financial
assistance to entrepreneurs? These are just some of the issues an owner must compare on a
state-by-state basis to determine the most suitable location. Some slates are more "small
business friendly" than others. For instance, Entrepreneur magazine recently named Fort
Worth-Arlington, Texas, as one of the best areas for small businesses, citing a positive attitude
toward growing and developing small companies as a major asset. Many factors make Fort
Worth (once known as Cow town because of its stockyards) a desirable location, including its
diversified economic base, a strong core of more than two dozen Fortune 500 companies,
significant population of private investors anxious to invest in promising small companies, and
several state and local government support systems offering entrepreneurial assistance and
advice. The renaissance of the downtown business district is creating new opportunities for
small businesses, and both Dallas-Fort Worth International Airport and Alliance Airport (a
specialized commercial air facility) provide important pieces of business infrastructure.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• TAX RATES:
• Another important factor entrepreneur must consider when screening stales for
potential locations is the tax burden they impose on businesses and individuals.
Income taxes may be the most obvious tax.
• States impose on both business and individual residents, but entrepreneurs also
must evaluate the impact of payroll taxes, sales taxes, property taxes, and
specialized taxes on the cost of their operations.
• Currently, seven states impose no income tax on their residents, but state
governments always impose taxes of some sort on businesses and individuals.
• In some cases, states offer special tax rates or are willing to negotiate fees in lieu
of taxes for companies that will create jobs and stimulate the local economy.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• INTERNET ACCESS:
• Speedy and reliable Internet access is an increasingly important factor in the
location decision.
• Fast Internet access through cable, DSL, or Tl lines is essential for high-tech
companies and those engaging in e-commerce.
• Even those companies that may not do business over the Web currently are
finding the odds very high that they will use the Web as a business tool within
the near future.
• Companies that fall behind in high-tech communication will find themselves at a
severe competitive disadvantage.
NEW VENTURE EXPANSION STRATEGIES AND ISSUES
• Issues Related to Selection of Layout :
• Plant layout problem is an area of arranging facilities such as equipment,
department, section, etc., inside the plant or work place.
• It is one of the most critical strategic decisions. This is because : Plant layout is
generally a onetime activity as it is very difficult to frequently rearrange the
facilities.
• It requires a long term vision about factory so that minimal dislocations occur
when the factory expands or goes through minor changes in process, production
schedule or product mix
• Wrong arrangements of facilities lead to more travel time between processes.
This causes more through-put time, more work-in-process, more material
handling, et
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