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FEASIBILITYFEASIBILITY STUDYSTUDY

WhatWhat isis aa FeasibilityFeasibility Study?Study? n n A feasibility study is a study, which is

WhatWhat isis aa FeasibilityFeasibility Study?Study?

n n

A feasibility study is a study, which is

A feasibility study is a study, which is

performed by an organization in

performed by an organization in

order to evaluate whether a specific

order to evaluate whether a specific

action makes sense from an

action makes sense from an

economic or operational standpoint.

economic or operational standpoint.

n n

The objective of the study is to test

The objective of the study is to test

the feasibility of a specific action

the feasibility of a specific action

and to determine and define any

and to determine and define any

issues that would argue against this

issues that would argue against this

action.

action.

WhatWhat isis aa feasibilityfeasibility study?study? n n A feasibility study is the analysis of a

WhatWhat isis aa feasibilityfeasibility study?study?

n n

A feasibility study is the analysis of a

A feasibility study is the analysis of a

problem to determine if it can be solved

problem to determine if it can be solved

effectively. It takes into account:

effectively. It takes into account:

n n

n n

n n

operational (will it work?),

operational (will it work?),

economical (costs and benefits)

economical (costs and benefits)

technical (can it be built?)

technical (can it be built?)

aspects are part of the study. Results of the

aspects are part of the study. Results of the

study determine whether the solution should be

study determine whether the solution should be

implemented.

implemented.

n n The question of a feasibility The question of a feasibility study essentially tries

n n

The question of a feasibility

The question of a feasibility

study essentially tries to answer

study essentially tries to answer

is: “Should we proceed with the

is: “Should we proceed with the

specific action plan?” On top of

specific action plan?” On top of

determining whether the plan is

determining whether the plan is

viable, organizations can use a

viable, organizations can use a

feasibility study for

feasibility study for

understanding the risks better

understanding the risks better

and preparing for them.

and preparing for them.

WhenWhen shouldshould aa FSFS bebe used?used? n n The study is typically used in The

WhenWhen shouldshould aa FSFS bebe used?used?

n n

The study is typically used in

The study is typically used in

situations where an important

situations where an important

strategic decision needs to be

strategic decision needs to be

taken.

taken.

Why do entrepreneurs need a Why do entrepreneurs need a feasibility study? feasibility study? n

Why do entrepreneurs need a

Why do entrepreneurs need a

feasibility study?

feasibility study?

n n

Once you have developed a business

Once you have developed a business

concept the next step is to determine

concept the next step is to determine

the feasibility of that idea.

the feasibility of that idea.

n n

By developing a set of questions to

By developing a set of questions to

ask yourself and others, you can

ask yourself and others, you can

determine if the product or service

determine if the product or service

will appeal to set demographics

will appeal to set demographics

(target audience).

(target audience).

CoreCore ElementsElements ofof FSFS n n n n n n n n n n Market

CoreCore ElementsElements ofof FSFS

n n

n n

n n

n n

n n

Market Study

Market Study

Technical Study

Technical Study

Management Study

Management Study

Financial Study

Financial Study

Socio-Economic Study

Socio-Economic Study

MarketMarket StudyStudy n n focuses on testing the market for the focuses on testing the

MarketMarket StudyStudy

n n

focuses on testing the market for the

focuses on testing the market for the

proposed action or idea. It examines

proposed action or idea. It examines

issues like whether the product or

issues like whether the product or

service can be sold at reasonable

service can be sold at reasonable

prices or if there’s a marketplace for

prices or if there’s a marketplace for

it.

it.

n n n n n n n n n n n n n n Market

n n

n n

n n

n n

n n

n n

n n

Market feasibility should answer the following

Market feasibility should answer the following

questions:

questions:

What market segments are you targeting?

What market segments are you targeting?

Why would people buy the product or service?

Why would people buy the product or service?

Who are the potential customers and how many

Who are the potential customers and how many

of them are there?

of them are there?

What are the buying patterns of these potential

What are the buying patterns of these potential

customers?

customers?

How will you sell the product or service? Where?

How will you sell the product or service? Where?

Who are your competitors? Including past,

Who are your competitors? Including past,

current and future competitors.

current and future competitors.

n n

What are the strengths and weaknesses of your

What are the strengths and weaknesses of your

competitors?What is your product or service’s

competitors?What is your product or service’s

competitive edge?

competitive edge?

TechnicalTechnical StudyStudy n n this aspect identifies whether the this aspect identifies whether the product

TechnicalTechnical StudyStudy

n n

this aspect identifies whether the

this aspect identifies whether the

product could be produced at the

product could be produced at the

highest possible quality level with

highest possible quality level with

minimum cost.

minimum cost.

n n n n n n n n n n n n n n n

n n

n n

n n

n n

n n

n n

n n

n n

n n

n n

This part of the feasibility study should answer the

This part of the feasibility study should answer the

following questions:

following questions:

What is the proposed product or service?

What is the proposed product or service?

Is the product or service already on sale?

Is the product or service already on sale?

If not, how far is it from an existing marketplace and

If not, how far is it from an existing marketplace and

what will the introduction cost?

what will the introduction cost?

How can you protect the product or service from the

How can you protect the product or service from the

competition?

competition?

What are the strengths of the product or service?

What are the strengths of the product or service?

What are the main benefits to customers or users?

What are the main benefits to customers or users?

What resources are required for producing or providing

What resources are required for producing or providing

it?

it?

How capable is the organization to acquire these

How capable is the organization to acquire these

resources?

resources?

What are the regulatory standards surrounding the

What are the regulatory standards surrounding the

product or service and its use?

product or service and its use?

ManagementManagement StudyStudy n n it determines the appropriate it determines the appropriate business organization, the

ManagementManagement StudyStudy

n n

it determines the appropriate

it determines the appropriate

business organization, the people out

business organization, the people out

the firms or persons involved or to be

the firms or persons involved or to be

involved both before and during the

involved both before and during the

operating periods of the enterprise,

operating periods of the enterprise,

and then functions.

and then functions.

FinancialFinancial StudyStudy n n it determines the profitability level of the project which it determines

FinancialFinancial StudyStudy

n n

it determines the profitability level of the project which

it determines the profitability level of the project which

is generally defined as the relationship of the net

is generally defined as the relationship of the net

income after taxes to the total investment.

income after taxes to the total investment.

n n

n n

involves a thorough coverage of all the monetary

involves a thorough coverage of all the monetary

information of the enterprise.

information of the enterprise.

covers detailed information on the total project cost,

covers detailed information on the total project cost,

initial capital requirements, sources of financing,

initial capital requirements, sources of financing,

financial statements and the financial analysis.

financial statements and the financial analysis.

Socio-EconomicSocio-Economic StudyStudy n n it determines the contribution of the proposed it determines the contribution

Socio-EconomicSocio-Economic StudyStudy

n n

it determines the contribution of the proposed

it determines the contribution of the proposed

business to the government, community, society, and

business to the government, community, society, and

etc.

etc.