Unit 4

Starting a Business
• Business Opportunity
 business opportunities
• A business opportunity, in the simplest terms,
is a packaged business investment that allows
the buyer to begin a business.
• A business opportunity is a situation involved
with sale/lease/presence of any product,
service, equipment, space etc. that will enable
the purchaser-licensee or seller-purchaser to
begin a business.
• With most business opportunities, buyer would
simply buy a set of equipment or materials, and
then he can operate the business any way and
under any name he wants.
• The licenser-seller guarantees an income greater
than or equal to the price the licensee-buyer pays
for the product when it's resold and that there's a
market present for the product or service.
A business opportunity consists of four elements :
• A need
• The means to fulfill the need
• A method to apply the means to fulfill the need and;
• A method to benefit

A desirable characteristic is for the combination of elements to be

unique.
The more control an institution (or individual) has over the
elements, the better they are positioned to exploit the
opportunity and become a niche market leader.
 What is business environment?
A business for its sustenance……

• needs resources like finance (obtained from financial institutions)

• Needs to accept social norms(practiced in the society)
• Must undergo market conditions(decided by the market)
• Must sell products/services(depends on the customers)
• Needs  skills( availability depends on the labours)
• Should use natural resources & raw material(available in Nature)
• Satisfy the legal systems(implemented by the government)

All above factors are many different components of a single concept

called Business Environment.
These factors are very dynamic and ever-changing
• Also
– constantly changing customer needs
– new innovations in the market
are eternal parts of the business environment.
• The challenge for any business in this technological era is
not just to enter the market but to survive in the market. 
• To survive in the market means to adapt to the changes as a
fast as possible. 
• To adapt to the changes means to be aware of the business
environment.

Hence Business environment is so critical

Business environment……

…means the …..means the sum …is the aggregate of

total of all all conditions,
surroundings, individuals, events and
external objects, institutions and influences that
influences or other forces that surround and affect
circumstances impact the the business.”
under which operations of a
business exists. business enterprise
• … which are uncontrollable in nature and affect the
business decisions and performance of a firm.
The economic, social, political, technological and other forces
which operate outside a business enterprise are part of its
environment.
So also, the individual consumers or competing enterprises as
well as the governments, consumer groups, competitors,
courts, media and other institutions working outside an
enterprise constitute its environment.
The important point is that these individuals, institutions and
forces are likely to influence the performance of a business
enterprise although they happen to exist outside its
boundaries.
How businesses are affected by external forces…?
How businesses are affected by external forces…?
Increase in taxes by government can make things expensive to
buy.

Technological improvements may render existing products

obsolete.

Political uncertainty may create fear in the minds of investors.

Changes in fashions and tastes of consumers may shift
demand in the market from existing products to new ones.

Increased competition in the market may reduce profit

margins of firms.
• A change in environment presents opportunity
to some and threat to others.
Ex: Technological environmental change like
advancement in Telecommunication
• Sometimes, in the same industry, a relevant
change in environment can have a favorable
or the opposite impact on different players of
the same industry.
Ex. Changes in Transportation industry
• The relation between a business and its
environment is not only a one way affair, but
sometimes a two way affair….
…..the business also equally influences
the external environment and can bring about
changes in it. Powerful business lobbies for
instance, actively work towards changing
government policies.
• Study of environment is very important,
Because, the environmental factors
influence almost every aspect of business,
be it its nature, its location, the prices of
products, the distribution system, or the
personnel policies.
 The success of every business depends on adapting itself to the
environment within which it functions. For example,

-when there is a change in the government

polices, the business has to make the
necessary changes to adapt itself to the
new policies.
Ex: Bharath Stage IV
 The success of every business depends on adapting itself to the
environment within which it functions. For example,

-Similarly, a change in the technology may

render the existing products obsolete,

Ex: The introduction of computer has

replaced the typewriters; the colour
television has made the black and white
television out of fashion.
 The success of every business depends on adapting itself to the
environment within which it functions. For example,

-Again a change in the fashion or customers’

taste may shift the demand in the market
for a particular product.
Ex: The demand for jeans reduced the
sale of other traditional wear.
All these aspects are external factors that
are beyond the control of the business. So
the business units must have to adapt
themselves to these changes in order to
survive and succeed in business.
And an addition to that the businesses
must also keep an eye on emerging
technologies, which would affect them.
 Types of environment
• Internal environment
• External environment
 Internal environment
• Suppliers
• Buyers
• Substitute products
• Rival firms
• New entrants
External environment
 Technological environment
• It is through business that technology
reaches people.
• Technology changes so fast and to keep
pace with it, businessmen should be ever
alert to adopt changed technology in their
business.
 Economic environment
• Industrial production, agriculture, planning,
basic economic philosophy, infrastructure,
national income, per capita income,
money supply, price levels, population,
savings, trade cycles etc…,
 Political environment
• Political institutions

Legislature
(decides on a particular course of action)

Executive
(implements whatever decided by the parliament)

Judiciary
(functions as watchdog to ensure that both executive and legislature
function in public interest and within the boundaries of the constitution)
 Socio-cultural environment
• Includes factors such as people’s attitude,
to work and wealth, role of family,
marriage, religion and education, ethical
issues and social responsiveness of
business,
• The employees a firm gets and its
obligation to society depends on cultural
and social setup in which the firm
operates.
 Natural environment
• Man has no answer to all the natural
problems.
• Severe droughts and floods are
uncontrollable
• Cyclones, hurricanes, rains, heat, etc..,
are beyond man’s control..
• Mining, agriculture, transport and
communication business depend on
geographical factors.
 Global environment
• LPG has forced Indian companies to view
their business from a global perspective.
• Safe and protected markets are no more
existing as world has become a village.
• Companies are to work under different
customers from different countries.
• Products are accepted differently by
different customers.
Environmental Factors and their Features
Scanning the environment for opportunities
• Environmental scanning is
a review of external sources
to discover factors that
impact a business. ... One
popular method
of environmental scanning
is SWOT analysis. Each
letter stands for one area to
review: Strengths,
Weaknesses, Opportunities,
and Threats.
• Environmental scanning is
the process of gathering
information about events
and their relationships
within an organization's
internal and external
environments. The
basic purpose of environme
ntal scanning is to help
management determine the
future direction of the
organization.
• Environmental scanning is
necessary because there are
rapid changes taking place
in the environment that has
a great impact
on the working
of the business firm. Analysis
of
business environment helps
to identify strength
weakness, opportunities and
threats.
• Environmental analysis will help the firm to understand
what is happening both inside and outside the organization
and to increase the probability that the organisational
strategies developed will appropriately create value.
• Environmental scanning is necessary because there are
rapid changes taking place in the environment that has a
great impact on the working of the business firm. Analysis
of business environment helps to identify strength
weakness, opportunities and threats. SWOT analysis is
necessary for the survival and growth of every business
enterprise.
‘Scanning of environment’ is the first step in the sensing of entrepreneurial
opportunity. It is required to ensure that the identified entrepreneurial
opportunity is compatible with various environmental factors as described below.
Developmental and institutional factors: The encouragement and guidance of
various governmental and non-governmental institutions plays a vital role in the
setting up of an enterprise.
Economic Factors: The vital economic factors like demand and supply will determine
the size of the enterprise. The health of the economy will also determine the
various means of financing the business.
Financial Factors: The funds required for starting up an enterprise requires a close
examination of the available financial institutions and other sources of funding.
Social and cultural factors: Evaluating the social and cultural factors is essential
before implementing a business concept. This will ensure that the product or
service is compatible with the needs of the population living in a specific region.
Legal factors: Starting an enterprise involves fulfillment of various legal
requirements. Thus the environment has to closely scanned for legal factors.
Political Factors: Various governmental policies prevailing in the society will affect
the setting up of the enterprise. Thus a thorough scanning of the political factors
is required.
The need and importance of environmental
scanning
• 1. Identification of strength:
• Strength of the business firm means capacity of the
firm to gain advantage over its competitors. Analysis
of internal business environment helps to identify
strength of the firm. After identifying the strength,
the firm must try to consolidate or maximise its
strength by further improvement in its existing plans,
policies and resources.
The need and importance of environmental
scanning
• 2. Identification of weakness:
• Weakness of the firm means limitations of the firm.
Monitoring internal environment helps to identify
not only the strength but also the weakness of the
firm. A firm may be strong in certain areas but may
be weak in some other areas. For further growth and
expansion, the weakness should be identified so as
to correct them as soon as possible.
The need and importance of environmental
scanning
• 3. Identification of opportunities:
• Environmental analyses helps to identify the
opportunities in the market. The firm should make
every possible effort to grab the opportunities as and
when they come.
The need and importance of environmental
scanning
• 4. Identification of threat:
• Business is subject to threat from competitors and
various factors. Environmental analyses help them to
identify threat from the external environment. Early
identification of threat is always beneficial as it helps
to diffuse off some threat.
The need and importance of environmental
scanning
• 5. Optimum use of resources:
• Proper environmental assessment helps to make
optimum utilisation of scare human, natural and
capital resources. Systematic analyses of business
environment helps the firm to reduce wastage and
make optimum use of available resources, without
understanding the internal and external environment
resources cannot be used in an effective manner.
The need and importance of environmental
scanning
• 6. Survival and growth:
• Systematic analyses of business environment help
the firm to maximise their strength, minimise the
weakness, grab the opportunities and diffuse threats.
This enables the firm to survive and grow in the
competitive business world.
The need and importance of environmental
scanning
• 7. To plan long-term business strategy:
• A business organisation has short term and long-
term objectives. Proper analyses of environmental
factors help the business firm to frame plans and
policies that could help in easy accomplishment of
those organisational objectives. Without undertaking
environmental scanning, the firm cannot develop a
strategy for business success.
The need and importance of environmental
scanning
• 8. Environmental scanning aids decision-making:
• Decision-making is a process of selecting the best
alternative from among various available
alternatives. An environmental analysis is an
extremely important tool in understanding and
decision­making in all situation of the business.
Success of the firm depends upon the precise
decision making ability. Study of environmental
analyses enables the firm to select the best option
for the success and growth of the firm.
 Steps involved in starting a Business Venture

• Identification of business opportunity

• Generation of business idea
• Feasibility study
• Preparation of business plan
• Launching the enterprise
 Steps involved in starting a Business Venture

Step 1: Identification of Business Opportunity

• Business opportunity = idea which can be converted to a profitable
business. 
• All people cannot identify all business opportunities, but only
entrepreneurs can….and only those can be converted to profitable
business ventures.
• An entrepreneur decides the line of business (manufacturing, trading or
service) as any mistake made in taking such a decision may prove to be
very costly.
• And also ensures that
– there is an adequate market for the product or service
– that the rate of return on the investment is sufficient
 Steps involved in starting a Business Venture

Step 2: Generation of Business idea

• In this stage ideas are converted into a business idea based on
the following….
– The business idea should be able to yield a reasonable return on
investment i.e. it should be worthwhile for implementation.
– There must be sufficient demand for the proposed product or service.
– The idea should require such capital, technical know how, raw material
and other inputs which the entrepreneur can arrange for.

• A business idea may be discovered from the following sources.

Observing Markets: The entrepreneur should study the market to find out the demand and supply position for various
 

products. He should then estimate the future demand after taking into account the anticipated changes in income
levels, fashions etc... Market surveys can also reveal competition and price trends. From the data collected through
market surveys, the promoter should try to identify those products and industries where demand exists and supply
needs to be increased.

Prospective Consumers: Contacts with prospective consumers can give an idea of the features that should be built into
the product/service. It is also important to collect data on customer needs and preferences before choosing the
product to be manufactured. A market test of the prototype product can be conducted before launching the product
in the market.

Study of Project Profiles: Various publications of public and government agencies on various projects and industries is
an important source of business ideas. Such project profiles describe in detail the prevailing market situation and the
technical and financial requirements of different projects. A careful analysis of such details can bring out the most
promising projects which can then be taken up for further evaluation.

Developments in Other Nations: An entrepreneur can discover good business ideas by keeping good knowledge about
developments in advanced nations of the world. Underdeveloped and developing countries prove to be a good market
for those products which are the ‘in things’ in developed nations. An entrepreneur can also visit foreign markets to
explore the possibility of a foreign collaboration and to discover other types of business ideas

Trade Fairs and Exhibitions: A visit to national and international trade fairs and exhibitions can provide information
about various products. It is also a good place to explore possibilities of collaboration and dealership and gives a fair
idea of the existing competition in the market.
 Steps involved in starting a Business Venture

Step 3: Feasibility Study

• Feasibility study is a detailed study done by an
entrepreneur to ensure that the project is viable. The
feasibility study should contain an analysis of the
following.
• Feasibility is defined as the practical extent to which a
project can be performed successfully.
• To evaluate feasibility, a feasibility study is performed,
which determines whether the solution considered to
accomplish the requirements is practical and
workable.
 Objectives of feasibility study:
– To find out if an business project can be done:
• ...is it possible?
• ...is it justified?

– To provide management with enough information to know:

• Whether the project can be done
• Whether the final product will benefit its intended users
• What the alternatives are (so that a selection can be made in
subsequent phases)
• Whether there is a preferred alternative

After a feasibility study, management makes a “go/no-go” decision.

• Things to be studied in the feasibility study:
– The present organizational system
• Stakeholders, users, policies, functions, objectives,...
– Problems with the present system
• inconsistencies, inadequacies in functionality, performance,…
– Goals and other requirements for the new system
• Which problem(s) need to be solved?
• What would the stakeholders like to achieve?
– Constraints
• including nonfunctional requirements on the system (preliminary pass)
– Possible alternatives
• “Sticking with the current system” is always an alternative
• Different business processes for solving the problems
• Different levels/types of computerization for the solutions
– Advantages and disadvantages of the alternatives
 Types of feasibility
Technical
Technical feasibility
feasibility Schedule
Schedule feasibility
feasibility
 Is the
Is the project
project possible
possible with
with current
current Is itIspossible
 it possible to build
to build a solution
a solution inin
technology? time to be useful?
technology? time to be useful?
What technical risk is there? What are the consequences of delay?
Any constraints on the schedule?
Availability of the technology:
Can these constraints be met?
Is it available locally?
Can it be obtained?
Will it be compatible with other systems?
Operational
Operational feasibility
feasibility
Economic
Economic feasibility
feasibility If the
 the
If system
system is developed,
is developed, willwill it be
it be
 Is the
Is the project
project possible,
possible, given
given resource
resource used?
constraints? used?
constraints?
Human and social issues…
What are the benefits?
Potential labour objections?
Both tangible and intangible
Quantify them! Manager resistance?
What are the development and Organizational conflicts and policies?
Social acceptability?
operational costs?
legal aspects and government regulations?
Are the benefits worth the costs?
 Technical Feasibility
• Is the proposed technology or solution practical?
– Do we currently possess the necessary technology?
– Do we possess the necessary technical expertise
• …and is the schedule reasonable for this team?
– Is relevant technology mature enough to be easily applied to our problem?
• What kinds of technology will we need?
– Some organizations like to use state-of-the-art technology
• …but most prefer to use mature and proven technology.
– A mature technology has a larger customer base for obtaining advice concerning
problems and improvements.
• Is the required technology available “in house”?
– If the technology is available:
• …does it have the capacity to handle the solution?
– If the technology is not available:
• …can it be acquired?
 Economic Feasibility
• Can the bottom line be quantified yet?
– Very early in the project…
• a judgement of whether solving the problem is worthwhile.
– Once specific requirements and solutions have been identified…
• …the costs and benefits of each alternative can be calculated
• Cost-benefit analysis
– Purpose - answer questions such as:
• Is the project justified (I.e. will benefits outweigh costs)?
• What is the minimal cost to attain a certain system?
• How soon will the benefits accrue?
• Which alternative offers the best return on investment?
– Examples of things to consider:
• Hardware/software selection
• Selection among alternative financing arrangements (rent/lease/purchase)
– Difficulties
• benefits and costs can both be intangible, hidden and/or hard to estimate
• ranking multi-criteria alternatives
 Schedule Feasibility
• How long will it take to get the technical expertise?
– We may have the technology, but that doesn't mean we have the skills required to
properly apply that technology.
• May need to hire new people
• Or re-train existing systems staff
• Whether hiring or training, it will impact the schedule.
• Assess the schedule risk:
– Given our technical expertise, are the project deadlines reasonable?
– If there are specific deadlines, are they mandatory or desirable?
• If the deadlines are not mandatory, the analyst can propose several alternative schedules.
• What are the real constraints on project deadlines?
– If the project overruns, what are the consequences?
• Deliver a properly functioning information system two months late…
• …or deliver an error-prone, useless information system on time?
– Missed schedules are bad, but inadequate systems are worse!
 Operational Feasibility
• How do end-users and managers feel about…
– …the problem you identified?
– …the alternative solutions you are exploring?
• You must evaluate:
– Not just whether a system can work…
– … but also whether a system will work.
• Any solution might meet with resistance:
– Does management support the project?
– How do the end users feel about their role in the new system?
– Which users or managers may resist (or not use) the system?
• People tend to resist change.
• Can this problem be overcome? If so, how?
– How will the working environment of the end users change?
– Can or will end users and management adapt to the change?
Financial Feasibility: Projects how much start-up capital is needed,
sources of capital, returns on investment, etc.
Organizational Feasibility: Defines the legal and corporate structure of
the business (may also include professional background information
about the founders and what skills they can contribute to the
business).
Legal Feasibility: Determines whether the proposed system conflicts
with legal requirements, e.g. a data processing system must comply
with the local Data Protection Acts.
Cultural Feasibility: In this stage, the project's alternatives are
evaluated for their impact on the local and general culture. For
example, environmental factors need to be considered and these
factors are to be well known. Further an enterprise's own culture
can clash with the results of the project.
• Once the feasibility study is completed, an in-depth
analytical study of the project is made to decide
selection or rejection of the project. Once the project
is selected, the findings of the feasibility study are
presented in the form of a business plan 
• This business plan is needed to get sanction for the
project from the concerned authorities, including
financial institutions.
 Steps involved in starting a Business Venture

Step 4: Preparation of Business Plan

• ….that describes various elements involved in starting a new
enterprise. It is often an integration of functional plans such as
marketing, finance, production, personnel etc. Business plan serves
the following objectives:
a.       It indicates the actions to be taken to implement the project.
b.      It helps the entrepreneur in raising necessary funds.
c.       It helps in measuring the progress of the venture at successive
stages
d.      It informs investors, suppliers, creditors and other stakeholders
about the programme of the entrepreneur.
 Steps involved in starting a Business Venture

Step 5: Launching the Enterprise

• After preparing the business plan, the entrepreneur
assembles the necessary resources to launch the
enterprise. He collects the required funds and acquires
land and buildings, plant and machinery, furniture and
fixtures, raw materials, employees etc. Once this is
achieved, it is necessary to ensure that the project is
implemented properly and it has smooth and
uninterrupted operation.
 Identification of business
opportunities
• A good business opportunity is that which is a
techno-economically and commercially viable
and feasible and environmentally sustainable
proposition.
• Every entrepreneur needs to identify a sound
opportunity. To identify an opportunity, one
needs to:…….
• Collect basic information on local resource base, e.g.
agriculture, forest and mines
• Collect information on Opportunity Identification (OI) exercise
done earlier (if any), by DIC, banks, other financial institutions,
etc.
• Discuss the potential business opportunities with existing
entrepreneurs
• Discuss with customs and sales tax officials about the inflow of
goods
• Collect information on new major investment happening in the
field
• Collect (negative) list of banned items for financing
• List out poor performing industries
• Collect information on skill base—especially on handicrafts, etc.
• Collect information on availability of infrastructure like power,
• water and transport, etc.
 Characteristics of an “IDEAL”
Business opportunity.
• Requires no investment
• Has a recognized, measurable market
• A perceived need for the product or service
• A dependable supply source for the required inputs
• Requires no labour force
• Provides 100% gross margin
• Buyers purchase frequently
 Characteristics of an “IDEAL”
Business opportunity.
• Receives favourable tax treatment
• Has a receptive, established distribution system
• Has great publicity value
• Customers pay in advance
• No risk of product liability
• No technical obsolescence
• No physical perishability
• Impervious to weather conditions
• Possesses some proprietary rights
• An opportunity may be absolutely viable but
may not be feasible if it is mismatched. For
example, although setting up a large flourmill
may be a perfectly viable proposition, it may
not be feasible to set up one in Sunderbans
for an illiterate rural or tribal man.
• Therefore, one needs to consider the
following facts before deciding upon an
opportunity:
• One’s Education
• Experience
• Economic Background
• Investment Capacity
• Family Background
• Managerial Capabilities
• Market Competition with other Producers/Size of
Market
• Location of the Unit
• Availability of Technology and Process Know-how
• Availability of Raw Material
• Availability of Skilled Workforce
• Availability of Required Infrastructure
• Project Cost
• Export Potential
• Life-cycle of the Product and Future Growth of the
Product
• Shelf-life of the Product (highly perishable like milk
or long-term
• like capital goods or consumer durables, etc,)
• Profitability of the Product
• Degree of Risk/Gestation Period/Government Policy
• After ascertaining these factors, a SWOT
analysis of the entrepreneur vis-à-vis the
identified opportunity should be conducted. If
both match, one can proceed for a preliminary
feasibility study through market survey. It is
advisable to zero in two to three opportunities
to finalize one.
• A set of introspective questions while deciding
upon an opportunity:
• How comfortable are you with the technology? Will you be
able to handle it?
• What is the situation of competition? How will you
withstand the competition?
• Will you be able to muster enough resources (especially
finance)?
• Will you be able to manage investment from your own
resources?
• If not, how do you plan to get funds?
• How critical is the government support for your product?
• Is raw material easily available? If not, how will you manage
regular supply of raw material?
• Will you get adequate skilled manpower? If not, how will
you manage?
 Importance of financial, technical
and social feasibility of the project.
• Financial feasibility test provides a 360 degree analysis of
the business via formation of financial statements (Profit
and Loss, Balance Sheet and Cash Flow, etc..), considering
some key assumptions on products or services, conducting
ratio analysis and calculating the value of business applying
appropriate valuation method.
• It helps to assess whether business is worthwhile investing
or not.
• It helps entrepreneurs to get an idea about how much
money is required for handling a business project
successfully.
 Financial feasibility results in
getting the answers for….
• In how much time, is the business going to achieve break even ?
• What level of profitability, does the business going to achieve in next
3 years or 5 years?
• What level of current ratio would an entrepreneur be expecting at
any given point in time? Whether the current assets would be
sufficient enough to fund the current liability?
• What level of " Cash Flow", will the business generate?
• What ROI does the business will generate?
• What is the Net Present Value of the business if it is discounted for 5
years, at a relevant Industry expected rate of return ?
• What would be the eligibility level in case the entrepreneur opts for a
loan?
 Financial Feasibility
• A financial feasibility study….
- Projects how much start-up capital is needed, sources of
capital, expenses, revenues, returns on investment,
income disbursements and other financial considerations.
-Estimates how much cash is needed, where it will come
from, and how it will be spent.
-Generally focuses on one particular project or area, or on
a group of projects (such as advertising campaigns).

The scope of financial feasibility study depends on the type of project and whether it
is revenue producing (e.g. industry, agriculture) or not (e.g. roads, public
schools).

For a project to be financially feasible, there must be a clear evidence that the
 Financial feasibility study involves
1. Assessment of the “seed capital” needs of the business project
during the investigation process and start-up, and how these
needs will be met.

2. Estimation of capital requirements for facilities, equipment and

inventories.

3. Estimation of working capital needs.

4. Estimation of start-up capital needs until revenues are realized at

full capacity.

5. Estimation of contingency capital needs due to construction

delays, technology malfunction, market access delays, etc.

6. Estimation of other capital needs.

 Technical Feasibility
-focuses on the technical resources available to the
organization.
-helps organizations determine whether the technical
resources meet capacity and whether the technical
team is capable of converting the ideas into working
systems.
-involves evaluation of the hardware, software, and
other technology requirements of the proposed
system.
Every project must be technically feasible.
 Technical Feasibility……
• Computes Facility needs.
• Estimates the size and type of production facilities.
• Investigates the need for related buildings, equipment, machineries, accessories etc..,
• Investigates the Suitability of production technology
• Investigates and compares technology providers.
• Determines reliability and competitiveness of technology (proven or unproven, state-
of-the-art, etc.).
• Identifies limitations or constraints of the technology.
Also
• Estimates the amount of raw materials needed.
• Investigates the current and future availability and access to raw materials.
• Assesses the quality and cost of raw materials.
• Investigate the availability of labor including wage rates, skill level, etc.
• Assess the potential to access and attract qualified management personnel.

75
 Technical feasibility

• Technical feasibility is related to examining whether

the project under study is technically feasible to
setup and operate to produce service/product.
• For example, in agriculture project of Apple
farming, types of field, soil test, temperature
required in selected location, location selection,
plantation distance between plants, etc.., needs to
be analyzed.
  The purpose of the technical feasibility study is

 To ensure that the project is technically feasible, that

all inputs required for the project are available.
 To facilitate the most optimal formulation of the
project in terms of technology, size, location and so on

The cost and availability of technology may be of critical

importance to the feasibility of a project or it may not be an
issue at all.
Technical feasibility study would cover the
following aspects in detail:

1. Manufacturing Process / Technology

2. Technical arrangements
3. Material inputs and utilities
4. Plant capacity
5. Location and site
6. Machineries and equipment
7. Environmental aspects
8. Project charts and layouts
9. Schedule of project implementation
10.Work schedule
11.Need for considering alternatives
Market Feasibility
Market feasibility is a study that determines
-the depth and condition of a particular market
-its ability to support a particular product /service development
-whether a product or service can sustain in a specific market or not
-whether it is capable of generating financial surplus for the firm

The key concern of a market feasibility study is a project's ultimate marketability.

Market feasibility study includes:-

Description of the industry
Current Market Analysis
Competition or presence of competing products.
Anticipated future market potential.
Potential buyers and sources of revenues.
Sales projections.
Market feasibility tests can be carried out not only on products but on
ideas, campaigns, processes and entire businesses too.

A feasible product is the one which not only caters to the needs of
present prospective buyers but also maintains a stable demand in the
future.

A feasible product enhances the financial surplus of a firm.

 Market feasibility involves the study….

-That looks at the need of the project and helps estimate demand for
the product/service
-That estimates the pattern of unfulfilled demand
-That determines the scope of an investment, the possible production
programs, the technology required and often the choice of location.
-That helps identify Market price of product/service
-That makes an Analysis of competitors, their strength weakness
-That gives a clear picture of Distribution mechanism
 Questions answered in
Market Feasibility study
• What is the current condition of the market?
• Who are the buyers?
• What is the target demographic?
• Should there be a test run?
• Is there enough buzz that can be created for product?
• What is the total current demand?
• How is the demand distributed temporally and geographically?
• What is the break-up of demand for different sizes?
• What price will the customers be willing to pay?
• How will the market respond to the proposed project?
• How can potential customers be convinced about the superiority of the product?
• Will anyone want the product once its done?
• What are the prospects of immediate sales? The best tool to
• What price and warranty will ensure its acceptance? answer all these
• What channels of distribution are most suitable? questions is
• What trade margins will induce distributors to carry it? A MARKET SURVEY