THC 304

ENTREPRENEURSHIP
IN TOURISM AND
HOSPITALITY
Module 3: The Feasibility Study
(Phase 2)

Name of Student:
Course/Year/Section:
Instructor/Contact Number: Lucila B. Bacalla/09177064269

ABM 201 – BUSINESS FINANCE

College of Hospitality and Tourism

Course Overview

Course No. THC 304

Course Code
Descriptive Title Entrepreneurship in Hospitality and Toursim
Credit Units 3 units
School Year / Term Second Semester, AY 2020-2021
Mode of Delivery Modular Approach
Name of
Kristin O. Espita , Lucila B. Bacalla
Instructor/Professor
This course describes the skills, knowledge and performance
outcomes required to plan and develop a feasible Business Plan by
understanding the nature and scope of entrepreneurship, scanning
the market of potential entrepreneurial venture opportunities, and
identifying and evaluating the methods of venturing into business
including but not limited to starting one’s own business, buying
Course Description existing businesses and the process franchising. It also emphasizes
on assessing the possible characteristics and mindset of
entrepreneurs, analyzing typical entrepreneurial venture
challenges, errors and rewards, identifying effective strategic
management, developing product and service innovations and
introducing the concepts of environmentally sustainable practices,
social entrepreneurship and intellectual property management.

1. Develop knowledge in assessing the market viability of new

business ideas
Course Outcomes 2. Acquire entrepreneurial personality and characteristics
3. Facilitate conduct of projects/study effectively
4. Display persuasion skills in presenting ideas
A high-quality corporate University of Science, Technology and
SLSU Vision
Innovation
SLSU will:

a. develop Science, Technology and Innovation leaders and

professionals.
SLSU Mission b. produce high-impact technologies from research and
innovations;
c. contribute to sustainable development through responsive
community engagement programs;
d. generate revenues to be self-sufficient and financially viable.

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Module Guide
How to navigate this module

Entrepreneurship in Tourism and Hospitality (HPC 304) is one of most opportune topics
for students in hospitality and tourism programs. The study on entrepreneurship is
necessary as it helps in exploiting business potentials in the hospitality and tourism
industry.

The module is designed to equip students with the knowledge and skills necessary for
making an effective feasibility study especially in the aspect of opportunity recognition
and articulating plans and ideas as they embark to the real world after they graduate.

The module is furnished with pre-test and post-test, discussions, evaluation/assessment

tasks, and formative assessments to help you learn the nature and scope of
entrepreneurship and the crafting of feasibility study.

The modules made use of illustrative diagrams and tables for you to easily understand
the topics. The references used for this are the research output published on some
reputable research sites, published books and e-books, and learning materials related to
entrepreneurship and feasibility study.

This module covers the following lessons, namely: a) Organization and Strategy, b)
Schedule, c) Financial Projections, d) Findings and Recommendations.

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Lesson I. Organization and Strategy, Schedule, Financial Projections,

Findings and Recommendations

Intended learning outcome/s:

At the end of the lesson, you will be able to:

1. Create plans and projections for a project;
2. Make analysis based on created plans and projections;
3. Present business idea thru elevator pitching

Now get started

Introduction

The dynamic nature of today’s business environment has led to an increase in the
risks and uncertainties that are faced by organizations. The growth in the degree of
awareness of the customers has led to a dramatic increase in competition as more and
more companies are now trying to cater to the needs of these customers. It has become
crucial for businesses to outshine competition in terms of provision of value to its clients.
Survival in the marketplace has become difficult, however, entering it is an entire
different story. An absence of proper planning and forethought leads to the failure of
entrants. Thus, to ensure profitability, it becomes essential to conduct some sort of
analysis before plunging into the market. A proper example of this analysis is the
feasibility study.

Conducting a feasibility study is a good business practice. If you examine

successful businesses, you will find that they did not go into a new business venture
without first thoroughly examining all of the issues and assessing the probability of
business success.

Feasibility studies can be used in many ways but primarily focus on proposed
business ventures. Farmers and others with a business idea should conduct a feasibility
study to determine the viability of their idea before proceeding with the development of
a business. Determining early that a business idea will not work saves time, money and
heartache later.

The word “feasibility” means the degree or state of being easily, conveniently, or
reasonably done. If something is feasible, it means that we can do it, make it, or achieve
it. Feasibility analysis takes the guesswork (to a certain degree) out of a business launch,
and provides an entrepreneur with a more secure notion that a business idea is feasible
or viable.

Some leaders may find themselves under pressure to skip the "feasibility analysis"
step and go directly to building a business. Individuals from within and outside of the
project may push to skip this step. Reasons given for not doing a feasibility analysis
include:

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 We know it’s feasible. An existing business is already doing it.

 Why do another feasibility study when one was done just a few years ago?
 Feasibility studies are just a way for consultants to make money.
 The market analysis has already been done by the business that is going to sell us
the equipment.
 Why not just hire a general manager who can do the study?
 Feasibility studies are a waste of time. We need to buy the building, tie up the site
and bid on the equipment.

The reasons given above should not dissuade you from conducting a meaningful
and accurate feasibility study. Once decisions have been made about proceeding with a
proposed business, they are often very difficult to change. You may need to live with these
decisions for a long time.

Key to remember

Organization and Staffing

Schedule
Financial Projections
Findings and Recommendations

Let’s Learn

A feasibility study is an analysis that takes all of a project's relevant factors into
account—including economic, technical, legal, and scheduling considerations—to
ascertain the likelihood of completing the project successfully. Project managers use
feasibility studies to discern the pros and cons of undertaking a project before they invest
a lot of time and money into it.

Feasibility studies also can provide a company's management with crucial

information that could prevent the company from entering carelessly
into risky businesses.

How a Feasibility Study can ensure your business will be on track

 A thoroughly executed feasibility study helps the firm in attaining a broad picture
as well as a detailed analysis of the profitability of its future business.
 It can gain knowledge about the project before investing budget, time or other
resources into it. Sometimes, the scope of the project may be drastically changed.
 The feasibility study ensures that all determinations are made prior to jumping
into the business and learning about the shortcomings later. Various alternatives
of the conduct of business are generated and the most optimum one is adopted.

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 This study provides invaluable detail and a scrutinized analysis of the entire
business scenario.
 It enhances the success rate as numerous parameters are evaluated.
 It is also an excellent source of provision of information to the future investors of
the business. They can receive a complete snapshot of the various factors related
to the venture.
 Feasibility studies are prevalent in countless industries including, but not limited
to, the Hotel, Hospitality, Restaurant, Real Estate, Medical, Office, Industrial
industry. A thorough guidance is provided to ensure that the business starts off on
the right foot.
 This study helps ensure smooth running of the business and paves way for
effective operations.
 It enables the organization to focus on both short and long term goals. The
significance of this document can never be underestimated as the success or
failure of the business is dependent on it.

FEASIBILITY STUDY FORMAT

A Feasibility Study has the following components:

1. Executive Summary
2. Description of Products and Services
3. Technology Considerations
4. Product/Service Marketplace
5. Marketing Strategy
6. Organization and Staffing
7. Schedule
8. Financial Projections
9. Findings and Recommendations

In the previous Module, components 1 to 5 were discussed. As a continuation, we

will now deal with the remaining components 6 to 9.

6. Organization and Staffing

Organizational structure and staffing refers to a company, business or other

entity’s operations and management. Defining the organizational structure for a
business is a key aspect of small business planning, including staffing. Often based
upon estimates, considerations concerning staffing may include budgets, production
requirements and employee and management staff work experience. Using business
organizational structure, managers may determine required staffing, how to utilize
existing resources and when to add new staff to complete work.

With many new products or services there may be a need for additional staffing
or for an organization to restructure in order to accommodate the change. These are
important considerations as they may result in increased costs or require an
organization to change its practices and processes.

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7. Schedule

This section is intended to provide a high level framework for implementation of

the product or service being considered. This section is not intended to include a detailed
schedule as this would be developed during project planning should this initiative be
approved. This section may include some targeted milestones and timeframes for
completion as a guideline only.

The different phases of the lifecycle of the business are planned and taken into
account. The essential milestones and the entire schedule for their achievement is
outlined. Based on the future projections, the different stages of business activity are
estimated. All the essential activities and their respective times of fulfillment are enlisted.

8. Financial Projections

Financial feasibility focuses specifically on the financial aspects of the study.

It assesses the economic viability of a proposed venture by evaluating the startup
costs, operating expenses, cash flow and making a forecast of future performance.

The results from a financial feasibility study determine whether the proposed
project is financially possible and make a projection on the rate of return on invested
capital.

The preparation of a financial feasibility study has three parts:

 Determining the startup costs. The first step in the preparation of a financial
feasibility analysis is to identify the costs needed to start the project such as:
purchases for land and buildings, acquisition of equipment, licenses and permits,
and etc.
 Preparing a profit plan and making cash flow projections. The preparation of
projected sales, expenses and cash flow is next and is the analysis that determines
if the proposed venture will be financially viable. These projections include the
projected sales, costs of production or services and operating expenses separated
into fixed and variable categories.

The cash flow projections include the amount of funds needed for startup and
identifies where these monies will come from. The amount of equity capital is
determined along with the amount and source of all borrowed funds and leases.

 Assessing the return on invested capital. The projected profits will be used to
determine the financial feasibility of the project. This part of the financial study
assesses the attractiveness of the project to equity investors and the overall
financial return on the project.

9. Findings and Recommendations

The final section of feasibility and recommendation reports states the

recommendation. This section should summarize the findings of the feasibility study
and explain why this course of action is or is not recommended. This section may

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include a description of pros and cons for the initiative being considered. This section
should be brief since most of the detail is included elsewhere in the document.
Additionally, it should capture the likelihood of success for the business idea being
studied.

The recommendation section should echo the most important conclusions

leading to the recommendation and then state the recommendation emphatically.
Ordinarily, you may need to recommend several options based on different
possibilities.

The Executive Summary

An executive summary should be included at the beginning of the report. In 2-3

pages, the main points of the feasibility study are summarized for a quick review by the
readers. The executive summary provides the reader with an overview of the feasibility
study and will help them see the entire picture before they read the details. Some
decision-makers may only read the executive summary. Thus, the executive summary
should be concise and include the major findings of the study followed by a
recommendation.

Let’s sum up

 The increase in risks and uncertainties is brought about by the dynamic nature of
the business environment today. Survival in the market has become difficult, and
entering as new comer is another challenge. Thus, proper planning such as
feasibility study is essential to ensure profitability.
 Conducting a feasibility study is a good business practice. If you examine
successful businesses, you will find that they did not go into a new business
venture without first thoroughly examining all of the issues and assessing the
probability of business success.
 In this module, the following components of the feasibility study were discussed:
o Organization and Staffing
o Schedule
o Financial Projections
o Findings and Recommendations
o The Executive Summary

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Let’s assess what have you learned in this lesson

1. Each group will write the Feasibility Study (Phase 2), which is composed of the
following components:

a) Organization and Staffing

b) Schedule
c) Financial Projections
d) Findings and Recommendations

Critiquing of Feasibility Study (Phase 1) will be based on Rubric Assessment for

Output (Exemplary – 15; Strong – 12; Proficient – 9; Developing – 6; Emerging –
3)

FINAL OUTPUT

1. Business Pitching. Students will present their business idea to potential investors
to raise capital or customers to sell their product. Rubric in Rating Oral
Examination will be used with the following criteria: relevance, continuity of
thoughts, correct usage.

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Post-Test

Choose the best answer.

1. A clear and concise description of an opportunity

a. business model b. business concept

c. feasibility analysis d. business plan

2. A 30-second to 2-minute presentation that conveys in an engaging way what a

business is proposing and why the listener should be interested

a. marketing plan b. liability c. elevator pitch d. net worth

3. Free promotion

a. culture b. vision c. liability d. publicity

4. The process used to test a business concept

a. feasibility analysis b. focus group

c. consumer trend d. value chain

5. A document that thoroughly explains a business idea and how it will be carried out

a. business model c. mission c. marketing plan d. business plan

6. Paid promotion through media outlets

a. advertising b. asset c. publicity d. vision

7. A study to assist in making the go/no go decision based on a close examination of

product/service, market, industry, and financial data

a. environmental analysis b. industry analysis

c. competitive analysis d. feasibility analysis

8. A review that addresses the roles of the community, region, nation, or the rest of the
world, as they relate to a business

a. feasibility analysis b. environmental analysis

c. industry analysis d. competitive analysis

9. The difference between assets and liabilities

a. vision b. net worth c. liability d. publicity
10. A concise communication of strategy, including a business definition and
explanation of competitive advantage
a. liability b. asset c. mission d. vision

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11. A critical view of industry definition, industry size and growth (or decline), product
and industry life cycle, and any current or anticipated legal or regulatory concerns

a. feasibility analysis b. industry analysis

c. competitive analysis d. environment analysis

12. A company’s plan to generate revenue and make a profit from operations

a. mission b. net worth c. business model d. business plan

13. The combination of the four factors – products, price, place, and promotion – that
communicates a marketing vision

a. advertising b. marketing mix c. marketing plan d. target market

14. Includes telemarketing, direct mail, in-person selling, and other personalized
promotional efforts

a. direct marketing b. advertising c. net worth d. target market

15. The beliefs, values, and behavioral norms of an organization

a. vision b. publicity c. culture d. asset

16. A financial document that summarizes income and expense activity over a specified
period and shows net profit or loss

a. mission statement b. cash flow statement

c. balance sheet d. income statement

17. Groups defined by common factors such as demographics, psychographics, age, or

geography that are of primary interest to a business

a. marketing mix b. proof of market

c. direct marketing d. target market

18. A statement of the marketing goals and objectives for a business and the intended
strategies and tactics to attain them

a. breakeven point b. business plan c. marketing plan d. marketing mix

19. Community activities that are designed to enhance an organization’s image

a. public relation b. vision c. publicity d. culture

20. An investigation that provides evidence of a market opportunity

a. proof of market b. target market c. asset d. direct marketing

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21. Group of businesses with a common interest

a. association b. industry c. trade union d. manufacturer

22. Those most likely to buy a business’ products and services are

a. manufacturers b. other businesses

c. trade organizations d. target customers

23. To develop a new business, first you need to create a

a. plan b. account c. prototype d. layout

24. Means by which you deliver a product or service to the customer

a. direct channel b. distribution channel

c. delivery method d. layout

25. Looks at the people aspect of the business

a. growth plan b. contingency plan

c. organizational plan c. business plan

26. The financial plan presents _______ for the future of the business

a. forecasts b. trends c. finances d. studies

27. Describes how you intend to make money with your business concept

a. brainstorm b. business model c. trend d. prototype

28. The distribution channel through which your product or service flows from the
producer to the customer

a. highway system b. distribution channel

c. value chain d. direct channel

29. When you have a feasible business concept, the next step is to develop

a. business plan b. feasibility analysis b. financial analysis d. industry

30. The process of discovering new ways of combining resources

a. business b. entrepreneurship c. innovation d. planning

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References

Bhosale, P. (2015). Why you must have Feasibility Report before starting a business.
Retrieved from https://www.noomii.com/articles/5800-why-you-must-have-
feasibility-report-before-starting-a-
business#:~:text=Before%20starting%20a%20business%2C%20a,successful%
20launching%20of%20the%20business.&text=It%20will%20also%20help%20
you,flow%20projections%20of%20the%20business.

Masanja, N. (2020). Practical Guide to Feasibility Study. NMM Printers. Tanzania

Wolfe, L. (2019). How to Write a Professional Technical Feasibility Study. Retrieved

from https://www.thebalancecareers.com/writing-technical-feasibility-study-
3515778#:~:text=A%20technical%20feasibility%20study%20assesses,to%20b
ring%20all%20this%20together.

https://canvas.northwestern.edu/courses/21997/pages/feasibility-study-
template?module_item_id=227077

https://dubaibusinessadvisors.com/blog/business-management/feasibility-study-
importance-to-entrepreneur/

https://marketbusinessnews.com/financial-glossary/feasibility-study/

https://www.extension.iastate.edu/agdm/wholefarm/pdf/c5-65.pdf

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