YARDSTICK INTERNATIONAL COLLEGE

MASTERS OF BUSINESS ADMINISTRATION:

ONLINE PROGRAM

PROJECT ANALYSIS AND MANAGEMENT ASSIGNMENT 01

ASSESS THE STRENGTH AND WEAKNESS OF THE

INVESTMENT PROJECT PROPOSAL:

PREPARED BY: DEGIFE DESHA

ID: MBAO/6012/14A

SUBMITTED TO: ZEGEYE HABTEMARIAM (Ph.D.)

JANUARY, 2023
ADDIS ABABA, ETHIOPIA

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 TABLE OF CONTENTS

Contents Page
TABLE OF CONTENTS ....................................................................................... i
EXECUTIVE SUMMARY .................................................................................ii
1. INTRODUCTION ............................................................................................ 1
1.1 Background Of The Proposed Project ...................................................... 1
2. Market Feasibility Analysis .............................................................................. 1
3. Technical Feasibility Analysis .......................................................................... 2
3.1 Input Analysis .............................................................................................. 2
3.2 Utilities:........................................................................................................ 2
3.3 Business Implementation Schedule ............................................................. 3
4. Organizational and Managerial analysis ........................................................... 3
4.1 Manpower Requirement: ............................................................................. 3
4.2 Organization structure of the Project ........................................................... 3
5. Financial Feasibility Analysis ........................................................................... 3
5.1 Net present value ......................................................................................... 4
5.2 Benefit Cost Ratio ........................................................................................ 5
5.3 Internal Rate of Return ................................................................................ 5
5.4 Payback Period ............................................................................................ 5
6. Socio Economic Benefit ................................................................................... 5
7. The Project Proposal Objective (SMART) ....................................................... 6
8. Conclutions And Recommendations ................................................................ 6
8.1 Conclutions .................................................................................................. 6
8.2 Recommendations ........................................................................................ 7

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EXECUTIVE SUMMARY
The aim of this paper is to assess and identify the Strength and Weakness of the proposed
proposal feasibility study methods, more precisely to suggest the possible use of the
reflection method in the process of feasibility. The main goal of the feasibility study is to find
out if the project is possible. Reflection is a general tool to perform a quantitative and
qualitative assessment and evaluation of any processes. In this paper I want to demonstrate
the use of this particular method within the project life cycle. The system related to process of
the project feasibility evaluation can be defined in broader terms as entire environment
consisting of market feasibility, technical feasibility, financial feasibility, and organizational
feasibility, economic and social elements having an impact on the project success and at the
last of the document I have conclusion and recommendations. All these elements can be
measured and justified by implementing reflection.

Key Words: Feasibility, Assess, Reflection.

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1. INTRODUCTION

1.1 Background Of The Proposed Project

According to the feasibility study any project papers should briefly conduct the background of the
feasibility like:
 Economic back ground and potential of the country in relation to investment:
economic growth rate per annum in recent years, with regard to the agriculture/ livestock
investment potential of the country.
 Location: Any project should be implemented on certified land of hectares so, for finished
leather project wereda, kebele, or area not been located by km, minimum and maximum
elevation.
 Human population and density: The current population of the wereda also not conducted
in the project regarding to share culture, technology and religion.
 Livestock population: The livestock population of the country, the livestock population at
wereda level should be sourced from animal production office regarding to sheep, goat and
cattle…etc.
 Infrastructure: The project area is the direct beneficiary of some infrastructure like road
and some distance from other like electric power, telephone, and health center with some
distance were not identified in the feasibility study.
 Natural Resources: Like climate, topography, water resource, temperature, rainfall, and
Land use/ land cover were not briefly investigated in feasibility study are the weaknesses
side.
 Socio-economic Situation, Suitability Assessment, SWOT Analysis also were not
explained.

2. Market Feasibility Analysis

A primarily concerned with the aggregate demand of the proposed product/ service in future
and the market share expected to be captured. Success of the proposed project clearly
hinges on continuing support of customers. It is a study of knowing who all comprise your
customers. For this you require information on:
 Consumption trends , past and present supply position, production possibilities and
constraints
 Imports and exports , computation, cost structure, elasticity of demand
 Consumer behavior, intentions, motivations, attitudes, preferences and requirements

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  Distribution channels and market policies in use
 Administrative, technical and legal constraints impinging on the marketing of the
product.
According to this proposed project most of the above listed were not included in the
feasibility study, but past supply and present demand regarding to the market study were
adequately explained by showing figuratively in table form processed domestic production
as well as export of hides and skins from the year 2007 up to 2013 Ec. The sources also
cited.
Projected demand: were briefly investigated for finished leather in pieces and year, hides
and goat.
Pricing and distribution: In the side of pricing the prices of processed animal skin and hid
depend on the availability and value of raw materials. In this profile the study did not
determined the recent price by assuming price will be rise considering inflation rate.
Market Location: For final products and raw materials market location should be
investigated, but in this study selling processes of the skin and hid product should be
facilitated from where to where surroundings market by the project sales on carrying by
what and what did not detailed.

3. Technical Feasibility Analysis

The issues involved in the assessment of technical analysis of the proposed project may be
classified in to those pertaining to input, throughputs and outputs.
3.1 Input Analysis: Input analysis mainly concerned with the identification, quantification and
evaluation of project inputs, that is machinery and materials. You have to ensure that the right kind
and quality of inputs would be available at the right time.
Raw material required for the production of finished leather were included Crust leather (crust
hides, crust goats skin, crust sheep’s skin), Resins and binders, Pigment paste, Lacquer emulsions
and Formaldehyde with units of measure and quantity.
3.2 Utilities: The utilities required by the finished leather manufacturing plant are fuel oil, water
and electricity. All of that total cost of utilities is estimated annual utilities requirement and Cost
details of which are shown in Table 6.
Production Process, Source of Technology, machinery & equipment with the detailed contact
information. So the technical analysis of this project feasibility was adequately conducted.

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3.3 Business Implementation Schedule
Generally, it takes about how many months’ period for obtaining loan, finalizing the suppliers and
construction of various civil structures and installation of plant and machinery. Purchase of
vehicles, utilities and office furniture and equipment’s goes simultaneously while other investment
activities including construction, machinery procurement & installation, etc. should be carried out.
Educated and skilled manpower will be recruited before machinery installation and commissioning
to provide first hand training to newly employed workers by the engineers installing the
machineries and make trial production together. Proper planning needs to be done so as to take up
various activities without any break.
The activity wise schedule of implementation is not to be given in the proposed project. So that the
detail planned schedule of the project should be included.

4. Organizational and Managerial analysis

4.1 Manpower Requirement:
The total manpower required is 57 persons. Details of manpower and annual estimated labor cost
including the fringe benefits are given in Table 13. The total annual man power cost is estimated at
Birr 654,000. But the background information of manpower like education level and experience
was not known, so the manpower requirement is not feasible.

4.2 Organization structure of the Project

There is finance and administration manager next to the general manager (the owner) who is
responsible to lead all the financial transaction and human resource of the farm. The promotion and
sales of products will be facilitated by the marketing unit should not adequately structured in the
proposed project. The production unit should lead the regular operation. By diagrammatical for any
project the organizational structure should be structured by a sequence of each position.

5. Financial Feasibility Analysis

The objective of financial analysis is to ascertain whether the proposed project will be financially
viable in the sense of being able to meet the burden of servicing debt and whether the proposed
project will satisfy the return expect actions of those who provide the capital. While conducting a
financial appraisal certain aspects has to be looked in to like:

 Investment outlay and cost of project , means of financing

 Projected prodigality, cash flow of the project,
 Investment worthiness judged in terms of various criteria of merit.

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  Project financial position : 1. Net Present Value---------------NPV
2. Benefit Cost Ratio --------------BCR
3. Payback Period -------------------PB
4. Internal Rate of Return ----------IRR

Project Life: According to the implementation plan of the project, the implementation period
allocated for the entire project from the start to the final commissioning is one year. With regard to
operational life of the project Years is not considered in the financial analysis.

Repair and Maintenance Cost: The annual repair and maintenance cost of the plant is not
estimated based on the rates of the total cost or Book value by each specific cost, but by general 5%
of machinery cost.
Working Capital: The working capital requirement of the project during operation is calculated on
the basis of the minimum days of coverage needed for the different elements of the working capital.
But in this proposed project the many items of initial working capital amount were included in the
investment cost like: Raw Material Consumption, Utilities, Wage and Salary, Repair &
Maintenance should be included in the working capital, for the reason of this the total capital cost
was only birr 1,137.20 in page number 21,table 10.
Risk analysis: In order to minimize future loses of the business the following various risks associated
with the project should be identified as well as mitigation mechanisms clearly suggested. Increase in
Operating Cost by 10% the project NPV will be positive/negative and acceptable or not with less risk
was not analysed , when Increase in Investment Cost by 10 Million the project NPV will be negative or
not and high risky business and when Decrease in Price by 10% the project NPV will be negative and
high risky business.
Contingency plan: Based on the risk analysis result finished leather business should care the
management attention about price (using occasional and holiday market such like New year,
Christmas, epiphany, Easter etc, those periods driving the demand and price), investment cost
(avoid delay on construction phase) and operating cost (Using cost efficiency techniques),
respectively.

5.1 Net present value

In the proposed project of finished leather the net present value formula and the calculations
was not clearly defined like this:

NPV = present value of all cash inflows – present Value of all cash out flows

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 NPV is an indicator of how much value an investment or project adds to the capital invested. In
principle a project is accepted if the NPV is non-negative. Accordingly, the net present value of the
project at what discount rate is found to be unknown in this proposed project.

5.2 Benefit Cost Ratio

The BCR is defined as the ratio of the sum of the project’s discounted benefits to the sum of
its discounted investment and operating costs.
When BCR > 1, accept the project
When BCR < 1, reject the project
When BCR = 1, be indifferent
But in this proposed project the projectors was not checked the feasibility by using BCR.

5.3 Internal Rate of Return

Accordingly, the IRR of this project is computed to be 17.28 % indicating the vaiability of the
project. But the calculated value formula with the specific figures should not clearly identify in
the project.

5.4 Payback Period

The payback period, also called pay–off period is defined as the period required recovering the
original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 5years in this proposed project recovering the original investment
outlay period was very long-term. So that the projector’s should be checked again.

6. Socio Economic Benefit

The economic impact of the project can be viewed in a number of ways. It can be viewed through
its specific impact such as employment generation and increasing government revenue. But the
proposed project analyzed only some of benefits.

Also Social and Institutional analysis, Environmental analysis, etc project feasibility analysis
aspects are not adequately addressed in the proposal.

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7. The Project Proposal Objective (SMART)
 Specific - The Projectors are sets their objective to develop finished leather
proposal feasibility with a project feasibility guidelines, which is specific.
 Measurable- Progress of the feasibility of finished leather proposal measured by
elements of feasibility analysis covered in each component, which is measurable.
 Attainable - The finished leather project can be achievable by 2 years, but the
implementation plan of each progress is not known.
 Relevant - The feasibility studded by the projector’s helps in continuous
improvement of the mission, and over the period it also helps the concerned
enterprise or business in reaching the purpose.
 Time-bound - Finishing the finished leather project is time-related and the
objective was set with a deadline after 12 years.
So, the project proposal objective is not hundred percent complete SMART.

8. Conclutions And Recommendations

8.1 Conclutions
The objective of this proposed feasibility study is primarily to facilitate the entrepreneur with the
investment information and provide an overview about project. The proposed feasibility may
form the basis of an important investment decision and in order to serve this objective, the
document covers various aspects of Concept Development, Start-up, Production, Marketing,
Finance and Business Management.

The feasibility is based on the information obtained from various agricultural sources as well as
discussions with businessmen. For financial model, since the forecast/projections relate to the
future periods, actual results are likely to differ because of the events and circumstances that
don’t occur frequently as expected. Them are in difficulty of fund, that means the subsidy
they get from donors and the existed sources of capital are not sufficient.

The project is accessible and has the necessary infrastructure such as road, telephone,
water and electric power. The proposed project clearly identifies all the necessary
equipment, inputs, management of the company and the required man power.
The proposed project were not possesses wide range of economic and social benefits such
as increasing the level of investment, tax revenue and employment creation for both
women and youths. Generally, the project is technically feasible, financially and
commercially viable but not analyzed socially and economically feasibility or acceptable.

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Hence the projectors’ before implementing this project he/she should check the feasibility
analysis components like socially and economically feasibility, budget plan, work plan, the
procedures, sequences of topics, clarity, simplicity, flow, availability of required contents,
etc.

8.2 Recommendations
Financial sensitivity analysis shows that the project is highly sensitive to decrease in sales
revenue but relatively less sensitive to increase in raw material and investment costs.
Therefore, it is recommended that the company should give a great attention for the
possible reasons for sales reduction. In this case, different mechanisms should be selected
and implemented to increase sales. In addition to this, the company should decrease its
cost that lowers profitability. The project must utilize modern promotional styles to
capture the planned market share. To do so, it has to design effective strategy to achieve
this plan.

Although, due care and diligence has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the actual
results may differ substantially from the presented information. In this case, any delaying
to implement the project creates some problem on its profitability as there is always
change like change in price of services and goods, cost of raw materials, customers
preference and purchasing power etc.….So, it is recommended that investors should
implement the project as soon as possible before any change occurred.