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After choosing the form of the business organisation the next start up problem is the choice of the particular product or service to be manufactured by the firm. It is an important decision because rest of the challenges of setting up a business are based on the type of the product the firm wants to produce. This decision can be taken through a comparative analysis of the several products or services that the firm can provide. The analysis involves assessing the size and structure of the market for the products; determining the future demand pattern for each of them; comparing their competitive positions in the market; graphing the life cycle of each product; finding the shelf life of each product. The ease of availability of raw materials, technology for production as well as the manpower are other important determinants. Government policies and regulations can also help the entrepreneur in taking the decision. Central Government and the State Governments provide incentives for manufacture of certain products by small scale units.
The most important promotional measure is the reservation of several products for exclusive manufacture by small scale industries. Large/Medium units can, however, manufacture such reserved items provided they undertake to export 50% or more of their production. Also, there are some agencies and organisations which provide entrepreneurs with the necessary information required in making a product choice.
The Commissionerates or Directorates of industries of different states provide guidance to the entrepreneurs with respect to the particular State. An entrepreneur can also study the industry clusters of India to get an idea about the type of products best suited for production in particular areas.
Major Industry Clusters of India
Some states and districts are known for a specific group of industries based on the availability of the basic raw materials, etc. Examples of major industry clusters are:
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