Question

“Imagine” a solution for an existing problem. Write a project proposal or business model, i.e, Propose a major project that includes plans to solve an identified problem OR propose a Business Model for a new business. Write only one: either the proposal for a project or the business model. If you choose the Business Model option, keep in mind that you are proposing a business--not simply a product. Your business is an entity that offers goods or services, but you are not NOT pitching a product here. Here, you are creating and presenting a business to potential investors. Moreover, if you are thinking about designing an app, DON'T. This assignment is about creating a business.

Formal reports and proposals use third person.

Option 1: Project Proposal

The questions your project proposal should address are the following:
1. What precisely is the problem/idea/issue?
2. Why did the problem/issue occur? –OR—What’s the genesis of the idea?
4. What is the significance of the problem/issue/idea?
5. What risks/opportunities are in play?
6. What should be done [could have been done] to resolve the problem?
7. What are the consequences of following or not following the recommendations?
8. What is the specific action needed?
9. How much will the project cost?
10. What are the resources needed/available for successful implementation?

Option 2: Business Model Format/Questions

The body of the plan must not exceed 3 single-spaced pages (minimum 2 single-spaced pages). This does not include financials or other appendices. These must not be more than 2 additional pages. Include 6-8 references.

1. Business Overview

• Describe your idea and business model: Who does what with whom how; who pays for it?

• Financial value proposition: Why is this great idea from a monetary standpoint-for the people investing in the service or product; consumers?

• Value proposition: What is your niche? Who are you selling to and why are they buying your product of service?

• Vision: What is the ultimate objective of your plan?

II. The Market

• Customer Identification: who’s paying for goods or services; e.g. private consumer.

• Market size, analysis and forecast: What is the need?

• Industry analysis and forecast: Who else is delivering this service already? What is the outlook on this type of activity? SWOT analysis.

• Your competitive advantage: What makes your business the best qualified/positioned to deliver the good or service you are proposing?

III. Financial Analysis

• Funding sources: Where will the money actually come from for the activity? What funding already exists or is committed?

• Budget with detailed projections through Year 1.

• Discuss assumptions and capital requirements.

IV. Funding/next steps

• How much funding/time does your plan require to get off the ground?

Answer 1

Project Proposal

A project proposal is a document which contains information about an impending issue or a problem, the need to resolve the issue at the earliest and the extent of damage caused by the problem—both explicitly and implicitly (imputed costs). It involves both the firm and its stakeholders—consumers of the firm’s products, suppliers of raw materials , owners of factor inputs and the society at large.

Details of the organisation:

1.Name of the firm: ABC Chemicals Inc…

2. Proposal : Construction of water purification plant.

3. Summary: To build a water purification plant since the toxic effluents emitted by the firm’s factory which are being released into the river Z that flows beside the factory have been a threat to the environment in and around the factory, especially to the fishes and other water animals in the river Z, and more specifically to the fish farm located downstream which is facing the health hazard posed by the factory emissions. It is having a mass effect on those who are consuming the fish from the river.

4. Duration : 1-4 year period for construction —in the initial phase the immediate treatment plant will be constructed and later on the capacity of the plant and its productivity will be enhanced.

5. Prepared by : The Financial Department , ABC Chemicals Inc.., (inputs from the Rand D Department and the City Environmental Council, a government backed organization.

Project Summary (Problem to be addressed) : ABC Chemicals Inc.. has been producing chemicals which are used for agricultural purposes as pesticides and insecticides as also for chemicals for certain industries too. The untreated effluents are discharged into the river Z since the past decade .It has been observed that due to the growing demand for the firm’s products (chemicals) the firm has increased its production capacity over the past five years and hence the discharges levels have increased to a greater extent.

Need to resolve the problem: There bis an urgent need to resolve the problem since over the decade the issue has been aggravating the situation , with growing dissent about the operations of the ABC Chemicals Inc.. among the residents in the vicinity.

Risks of such discharge: The issue in question became a socially negative externality, (costs / benefits to the society as a result of a economic (money related) activities of an individual or a firm--if costs are more than benefits its called negative externality)  since due to the emissions into the river Z, the fish farm downstream has been adversely affected and the firm involved in the pisciculture (fish rearing for commercial purpose) activity has been facing high water treatment costs since it was using the water from river Z which was contaminated.

Apart from the costs of treating its water caused due to factors external to its activity, the fish farm has also recorded a low level in fish productivity.

The contamination has also lead to a discoloring of the river water and a powerful foul smell emanating from the river with its aesthetic purpose also getting defeated since the downstream area is a tourist and recreation spot for the residents in the locality. Swimming and other water games are the chief activities and it has been found that the residents are facing health issues like rashes, breathing problems as well as digestive problems from consuming the fish produced by the fish farm.

Opportunities: Due to the construction of the water purification plant by the ABC firm, the fish farm’s productivity is expected to increase .This will in turn also reduce costs for the fish farm in treating its water for fish rearing activities. The quality and productivity of the fish produced in the farm will increase and its direct benefit will be on the improved health and lower health bills for the immediate consumers of the fish. The other benefits include rise in water quality of the river Z, reduction in the foul smell and better aesthetic beauty.

Cost – Benefit Analysis: The cost of the plant , initially could be $100,000 and could rise further to $1 million since it is expected that as the emissions increase the capacity of the treatment plant and its speed should also be simultaneously increased. The construction of the plant could initially affect the supply of the firm’s output from economists point of view but as its productivity improves with higher levels of output , the treatment cost could become a small part of the total costs since being a fixed cost, the AFC or the average fixed cost could become only a smaller proportion of the total cost structure of the firm , more so as it expands its scale of production.

Benefits include the increase in its sales, increase in the output capacity as well as the good will that will be generated when it recognises its social obligation --- and build the plant keeping in mind the larger interests of the society.

The risk of not taking responsibility for its emissions and not addressing the issue could escalate into a social cause attracting the attention of the local authorities who may insist on the closure of the firm’s activities due to the damage caused by them to the stake holders at large.

Resources: The financial requirements of the water treatment plant have to be met by the firm by utilising its existing fund of ‘accumulated profits’, as well as a loan from the bank. The opportunity costs involved—rate of interest, time period required for repaying the loan have to accurately calculated and a suitable decision ne taken. The manpower and other resources required can be generated for the vicinity areas which are thickly populated and hence there could be a good supply of both skilled and unskilled labourers required for the construction of the plant.

The benefits of the project are obviously outweighing the costs, since the water treatment plant and the discharge of treated wastes into the river would be beneficial to the society and hence in the larger interests of the society the firm has to undertake the project. This could in effect lead to a situation where the marginal private costs are more than the marginal social costs, also the marginal social benefits are also greater .Hence keeping the 'concern for the environment', as its objective it is suggested that ABC Chemicals Inc.., undertake this project.