The first procedural decision involved in setting up of a new enterprise is to select the nature and type of business. The entrepreneur has to decide the type of business in terms of industrial, trading or service. Then he has to select the types of goods and service ha will produce or distribute. He has to consider several factors, e.g., nature and source of raw material, type of technology to be used, source of supply, distribute policy, etc. After deciding the nature of business activity, the promoter has to analyses and forecast the profitability of the proposed business on the basis of probable operating costs imply cost of procuring different inputs while sales revenue depends upon the size of the market, probable market share of the proposed undertaking, expected growth of total market, sales estimate these factor. Marketing research may be carried out to product analysis is made to determine the design, quality and style of the product to be manufactured. Decisions regarding product design, pricing policy, distribution channel and publicity should be made from the view point of propspective customers.
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