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Formation of Joint Stock Company: Promotion and Promotes of a Company: Steps in Promoting
Steps Involved in Promotion of a Company
Discovery of a Business Idea
- Process of business promotion begins with conception of an idea of business opportunity.
- Idea may come from non-availability of any product to satisfy the existing need of people.
For example:
During early 1940՚s there was no “Walkman” .
- This idea gave birth to the new product “Walkman” .
Investigation and Verification
- Once the idea has been conceived, then investigation is made to establish the soundness of the proposition.
For example:
If technology is available but the cost involved in making a “Walkman” would be so high that no customer could be able to purchase it.
- Investigation on technical feasibility, commercial viability and profitability are presented in a report called “project report” or “feasibility report” .
- Report helps in procuring licenses and arrange the necessary finance from financial institutions and other investors
Assembling
- The next step is assembling or making arrangements for all the necessary requirements.
- It includes land, building, machinery, tools, capital, etc.
- Decision is also to be made regarding size, location and layout etc.
- Also make agreement with bankers to finance and take initial steps for the setting up of a Company.
Financing the Proposition
- Proportion of capital to be raised from owner՚s fund, that borrowing from banks and others.
- How and when to raise the share capital from the general public.
- Agreements are made with merchant bankers, underwriters and stockbrokers.
- These are to assist the capital issue and so on.