Unit III

Idea Generation and Feasibility Analysis

Idea Generation in Entrepreneurship

Entrepreneurship is being able to create and run a business. In entrepreneurship, idea

generation is one of the main factors that lead to its success. The idea thought of here should be
able to solve a problem.

And along with being unique, the idea should also be easy to execute. For example, let’s
suppose you feel a lot of people have a problem understanding legal jargon and legal
proceedings.

So, in this case, your entrepreneurial idea could be setting up a platform that caters to all
the legal needs of people and helps them understand it easily.

Idea Generation in Product Development

Idea generation is the first step for any product development. This requires you to look
for feasible product options that can be executed. It is a very important step for organizations to
solve their problems.

It requires you to do market research and SWOT analysis. You should aim to come up
with an idea that is unique from your competitors and can be used profitably.

For example, self-sanitizing door handles can be a product that you look at. It is unique
and would be in high demand because of the current shift towards a healthy lifestyle.

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Idea Generation Process

The process may be different for different organizations and different people. But there
are three main steps in the process. It starts with the identification of the question or the problem
we need to solve.

After which we need to come up with ideas and probable solutions. Finally, in the third
stage, we select the most suitable idea and execute it. For example, let’s suppose you are opening
up a restaurant.

So firstly, you need to identify what question you need to answer. Let’s assume you want
to decide upon a name for the restaurant. Now you will use different techniques (brainstorming,
mind mapping, etc) to come up with ideas for names.

In the last step, you will choose the most appropriate name from the different names you came
up with within the second step.

Idea Generation Techniques

Mind Mapping

It is a technique of presenting information. Here we show the links between the different
elements or the pieces of information. The links or connection is usually shown with the
help of lines and arrows. It’s a visual way of presenting the information.

For example, let’s suppose you want a name for your new application. You will start by
writing the main topic in the center of a paper, which here is the name for your new
application.

From the center point, you will have arrows pointing out. These arrows will point to the
main things to be kept in mind while thinking of a name like guidelines, visualization,
productivity, etc.

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 Now from every key aspect, there will be more arrows pointing out. These arrows will
describe the key aspect in detail. Like ‘guidelines’ will talk about the name being able to
express what the application does, following the naming scheme, etc.

Reverse Thinking

As is very clear from the name itself this technique asks us to think oppositely. Instead of
working on the problem in front of us, we work on the exact opposite of it.

For example, let us assume you want to know ‘how to increase your followers on social
media platforms. According to this technique, you will instead think of ‘how will I not
increase my followers on social media platform’.

To this question, you will get answers like, by not posting regularly, or posting low-
quality content, etc. Now you just have to reverse your answers.

So, to increase followers on a social media platform you should post high-quality content
regularly. This idea generation technique works on the concept that it’s easier to come up
with negative suggestions.

Brainstorming

This technique is quantitative meaning that you come up with a large number of ideas.
Here a group comes up with a different probable solution to the problem.

For example, if you along with some of your colleagues are trying to come up with a
tagline for your product. And each one of you gives your ideas, then that is called
brainstorming.

SCAMPER

The word SCAMPER is an acronym.

S -Substitute

C – Combine

A – Adapt

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 M – Modify

P – Put to another use

E – Eliminate

R – Reverse

Bob Eberle developed this technique. Each part of the acronym helps us think and ask
questions, which results in generating ideas.

For example, if you are a clothes manufacturing company you can think of ‘substitute’
your current material with a sustainable, eco-friendly option. You could also ‘put it to
other uses’ by recycling the waste material.

Synectic

George M. Prince and Willian J. J. Gordon developed this technique. In this technique,
we take apart a thing and then put it back together. This helps us get a better
understanding of how things work.

Role-Playing

In this technique, the participants take up roles to play. These roles are different from the
ones they usually play. It adds an element of fun and helps get innovative ideas.

For example, you could take up the roles of customers and discuss your expectations and
what you want from products. This could lead you to stumble upon some good ideas.

Storyboarding

This technique refers to the process of making storyboards to generate ideas. Storyboards
use pictures, illustrations, and other information to better present the ideas.

For example, suppose you are working on an idea for an advertisement. You can portray
the different scenes in the form of a storyboard. This helps you in better visualization and
you can make changes accordingly.

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Brainwriting

In this technique, a group of people writes their ideas on a piece of paper. After the
designated time for writing is over the paper is given to a different person.

Now this person reads the ideas on the paper they got and adds their ideas on the paper.
This continues until everyone has put their ideas on all the papers. And following this,
there is a discussion on each idea.

Business Opportunity

Business opportunity is a favorable situation for doing business. It is important for an

entrepreneur to recognize and exploit those opportunities. There are various approaches to
identify right business opportunities, some of them are as follows:

How to select the right opportunity?

• Identify your business and personal goal

• Research your favorite industry

• Identify promising industry segment

• Identify problem areas and brainstorm solutions

• Compare possible solutions with your objectives and opportunities in the market place

• Focus on the most promising opportunities

Example: - Udemy online learning platform for students and working professionals. Gagam
Biyani started reading blogs like tech crunch and got sucked into the startup culture.

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Opportunity identification/recognition process:

1. Preparation: Preparation is the first stage where entrepreneurs brings past experiences to
the opportunity recognition process. As per literature 50 to 90 percent of start-up ideas
emerge from a person’s previous work experience.
2. Incubation: At this various idea might emerge. In this process an entrepreneur is
contemplating an idea or a problem. Entrepreneurs consider various options and possibilities
through unconventional style. They rely on their intuition for finding ways to the solutions.
3. Insight: Insight refers to the “eureka” moment. At this point the answer or the solution
strikes suddenly or spontaneously. The problem is solved at this stage or the idea becomes
available. In this process three different types of insights may occur:

i. Experience of spontaneous identification of business opportunity. Prior research

suggests that entrepreneurs often have the experience of being immediately confident that
an idea will work.

ii. An occasion when a person gets the idea to solve the problem.

iii. A moment when an idea becomes available to you via your social network.
Entrepreneurs with a wider network of social contacts will identify more ideas and
recognize more opportunities than entrepreneurs with fewer contacts (Singh, 1998).

4. Evaluation: In this process feasibility analysis is conducted to evaluate the viability of the
idea. Insights are assessed for the viability of the concept.
5. Elaboration: Assuming that a business idea is viable, entrepreneur start working on detailing
of those ideas. They can begin business planning and venture creation process. Various plans
and programs can be decided to execute the business idea.

Market Entry Strategies

Market entry strategies are methods companies use to plan, distribute and deliver goods
to international markets. The cost and level of a company's control over distribution can vary
depending on the strategy it chooses. Companies usually choose a strategy based on the type of

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product they sell, the value of the product and whether shipping it requires special handling
procedures. Companies may also consider their current competition and consumer needs.

To select an effective strategy, companies align their budgets with their product
considerations, which often improves their chances of increasing revenue. The three primary
factors that affect a company's choice of international market entry strategy are:

Marketing: Companies consider which countries contain their target market and how they
would market their product to this segment.

Sourcing: Companies choose whether to produce the products, buy them or work with a
manufacturer overseas.

Control: Companies decide whether to enter the market independently or partner with other
businesses when presenting their products to international markets.

Market Entry Strategies for Internal Market

1. Exporting

Exporting involves marketing the products you produce in the countries in which you
intend to sell them. Some companies use direct exporting, in which they sell the product they
manufacture in international markets without third-party involvement. Companies that sell
luxury products or have sold their goods in global markets in the past often choose this method.

Alternatively, a company may export indirectly by using the services of agents, such as
international distributors. Businesses often choose indirect exporting if they're just beginning to
distribute internationally. While companies pay agents for their services, indirect exporting often
results in a return on investment (ROI) because the agents know what it takes to succeed in the
markets in which they work.

2. Piggybacking

If your company has contacts who work for organizations that currently sell products
overseas, you may want to consider piggybacking. This market entry strategy involves asking
other businesses whether you can add your product to their overseas inventory. If your company

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and an international company agree to this arrangement, both parties share the profit for each
sale. Your company can also manage the risk of selling overseas by allowing its partner to
handle international marketing while your company focuses on domestic retail.

3. Countertrade

Countertrade is a common form of indirect international marketing. Countertrading

functions as a barter system in which companies trade each other's goods instead of offering their
products for purchase. While legal, the system does not have specific legal regulations like other
forms of market entry do. This means companies may solve problems like ensuring other
companies understand the value of their products and attempting to acquire goods at a similar
level of quality. Countertrading is a cost-effective choice for many businesses because the
practice may exempt them from import quotas.

4. Licensing

Licensing occurs when one company transfers the right to use or sell a product to another
company. A company may choose this method if it has a product that's in demand and the
company to which it plans to license the product has a large market. For example, a movie
production company may sell a school supply company the right to use images of movie
characters on backpacks, lunchboxes and notebooks.

5. Joint ventures

Some companies attempt to minimize the risk of entering an international market by

creating joint ventures with other companies that plan to sell in the global marketplace. Since
joint ventures often function like large, independent companies rather than a combination of two
smaller companies, they have the potential to earn more revenue than individual companies. This
market entry strategy carries the risk of an imbalance in company involvement, but both parties
can work together to establish fair processes and help prevent this issue.

6. Company ownership

If your company plans to sell a product internationally without managing the shipment
and distribution of the goods you produce, you might consider purchasing an existing company

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in the country in which you want to do business. Owning a company established in your
international market gives your organization credibility as a local business, which can help boost
sales. Company ownership costs more than most market entry strategies, but it has the potential
to lead to a high ROI.

7. Franchising

A franchise is a chain retail company in which an individual or group buyer pays for the
right to manage company branches on the company's behalf. Franchises occur most commonly in
North America, but they exist globally and offer businesses the opportunity to expand overseas.
Franchising typically requires strong brand recognition, as consumers in your target market
should know what you offer and have a desire to purchase it. For well-known brands, franchising
offers companies a way to earn a profit while taking an indirect management approach.

8. Outsourcing

Outsourcing involves hiring another company to manage certain aspects of business

operations for your company. As a market entry strategy, it refers to making an agreement with
another company to handle international product sales on your company's behalf. Companies that
choose to outsource may relinquish a certain amount of control over the sale of their products,
but they may justify this risk with the revenue they save on employment costs.

9. Greenfield investments

Greenfield investments are complex market entry strategies that some companies choose
to use. These investments involve buying the land and resources to build a facility internationally
and hiring a staff to run it. Greenfield investments may subject a company to high risks and
significant costs, but they can also help companies comply with government regulations in a new
market. These investments typically benefit large, established organizations as opposed to new
enterprises.

10. Turnkey projects

Turnkey projects apply specifically to companies that plan, develop and construct new
buildings for their clients. The term "turnkey" refers to the idea that the client can simply turn a

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key in a lock and enter a fully operational facility. You might consider this market entry strategy
if your clients comprise foreign government agencies. International financial agencies usually
manage arrangements between companies and their overseas clients to ensure the companies
provide high-quality service and the client pays the full amount due.

Innovation

Business ventures have some common factors amongst themselves. But they need to have
some unique selling proposition (USP) to survive. It is for arming the business with a USP that
the organizations need to innovate. Innovation helps a business house to survive when the winds
of change hit the market, in fact innovation fuels in the winds of change. Innovation is not just
creation of new ideas/ thoughts but it is also about translating them into products/ services.
Hence Innovation can be defined as the successful exploitation of new ideas – incorporating new
technology, design & best practice is the key business process that enables the businesses to
compete effectively.

Innovation is something more than idea generation it is because idea has little
significance till it is converted into some useful product/ services. Innovation is the process of
conceptualizing an idea and then transforming that idea into a product/ service. Usually
innovations are being made with a desire to overcome a need or a problem. Innovation can be at
the spark of light and can also take generation of experimentations. Innovation usually make the
life more comfortable for a common man – but back operation in transforming ideas into
products/ services at times even take lifetime of many. The characteristics of Innovations are

1. Innovations are the harbingers of change

2. Innovations can take place at the spark of light or can take generation of experiments

3. Innovations can be both revolutionary as well as extension to the existing products/ services.

4. Innovations provide a USP to a business.

5. Innovations are action oriented i.e. active and searching new ideas.

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6. Innovations help in making the product, service or process simple and understandable.

7. Innovations help in making the product, service or process customer based.

8. Innovation is all about trying, testing and revising.

Thus innovation refers to a process of creation/ value addition of a product/ service/ process that
can solve an existing problems or tap an opportunities.

Creativity

“Being different for the sake of being different may attract attention but that is not
sufficient value. True creativity must deliver real value.” Edward de Bono

Creativity can be defined the process of developing an original product, service or idea
that makes a socially recognized contribution. Moreover novel combination of old ideas can also
be considered as creativity. Hence Creativity is the ability to bring some thing new into existence
from either an exiting or new idea. A creative person conceives an idea, which is new. It is
immaterial whether he takes any action. Hence the emphasis is on the ability and not the activity
of bringing anything new. Entrepreneurs need new ideas for setting up / running new business
ventures. An entrepreneur who is creative and brings her / his ideas into reality turns out to be
successful in business. Creativity has also become important in the present highly competitive
market where the business needs to differentiate itself from others to survive.

The next question that comes to mind is – Are creative persons born or made? Some of
the psychologists were of the view creativity as a function of the brain’s right hemisphere and
creative persons are born and not made. But various scientific researches have proven that
human brain can be conditioned under stimulating environment to become creative. It is for these
reasons that organizations & consultancies organize training sessions on creativity.

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Sources of Innovative & Creative Ideas

The Various Sources of idea generation are:

• Present & potential Consumers

• Exisiting Companies
• Raw material Providers
• Distributors & Retailers
• Research & Development
• Existing Employees

There is a great misunderstanding of considering innovation/ creativity as synonymous to

invention. But this is not true; innovation is in fact utilization of the inventions that lead to
increase in the overall growth & profitability of the organization.

Meaning & Concept of Feasibility Analysis

A feasibility study aims to objectively and rationally uncover the strengths and
weaknesses of an existing business or proposed venture, opportunities and threats present in the
environment, the resources required to carry through, and ultimately the prospects for success. In
its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.
A well-designed feasibility study should provide a historical background of the business
or project, a description of the product or service, accounting statements, details of the operations
and management, marketing research and policies, financial data, legal requirements and tax
obligations. Generally, feasibility studies precede technical development and project
implementation.
A feasibility study evaluates the project’s potential for success; therefore, perceived
objectivity is an important factor in the credibility of the study for potential investors and lending
institutions. It must, therefore, be conducted with an objective, unbiased approach to provide
information upon which decisions can be based.

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Investment proposals, involving huge capital outlay are invariably irreversible. Therefore, before
starting a project/proposal, it is necessary and imperative to find out whether the same is feasible
or not.

Objectives of Feasibility Analysis:

Businesses undertake feasibility studies to determine if a proposed strategic action is
operationally viable and will produce the desired results. The studies enable company leaders to
understand both positive and negative impacts before making a change.

The main objectives of carrying out a feasibility analysis are:

(i) To determine the outcome of the proposed action.
(ii) To ascertain whether it will work as anticipated and generate the projected revenue or
anticipated cost savings.
(iii) To identify the customers in the current and potential market
(iv) To learn more about customers’ current and future needs,
(v) To gauge interest of the customer in the product or service that is being offered.
(vi) To determine whether the primary customers will need the new product or service and how
much they can and will pay.
(vii) To determine if the product will be satisfactory.
(viii) To ascertain company’s strengths, weaknesses and position in the marketplace
(ix) To determine the financial benefits of the action vs. its costs.
(x) To gauge the competitor’s strengths and weakness and take corrective actions while carrying
out the feasibility analysis.

Advantages of Feasibility Analysis:

Effective feasibility studies can do more than just help executives choose which projects
to green light. Managers involved in a feasibility study can actually use much of the same data to
shape the project planning process.
Four main advantages to feasibility studies can generate crucial insight for approved
projects:

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(i) Helps in Understanding Demand:
Feasibility studies always analyze whether a real demand exists for a product or a service. This
holds true for internal projects as well as for potential consumer offerings. This way, project
managers can avoid spending resources on features or projects with low impact and low demand
among end users.
(ii) Helps in Assessing Resources:
Another of the advantages of feasibility studies is the opportunity to catalogue the current
resources available for a project and to estimate the need for additional resources. Feasibility
studies that recommend against projects often cite a lack of human resources or financial capital.
(iii) Helps in Ascertaining Marketing Feasibility:
Even for products and services with measurable demand, companies must examine their ability
to spread the word about a new offering. During the evaluation process, project managers learn
whether the market is already over saturated with stronger competitors. Company leaders can
also discover any potential legal roadblocks involving trademarks, patents, or other intellectual
property rights.
(iv) Helps in Marking a Timeline:
One of the biggest advantages of a feasibility study is the validation of a prospective timeline.
When moving into a formal project planning phase, a project manager can use data generated by
the study to help set milestones and deadlines. A quality feasibility study examines the timetable
suggested by project sponsors for potential delays or breakdowns.

Types of Feasibility

Financial Feasibility:
In order to ascertain financial viability, financial projections are made and on the basis of such
projections which need to be objective and realistic, the followings broad parameters are
evaluated for determining the feasibility of the project-
a. Return on Investment
b. Payback period of the outlay
c. Internal rate of return
d. Profitability index.

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In case of a new project, financial viability can be judged on the following parameters:
a. Total estimated cost of the project
b. Financing of the project in terms of its capital structure, debt to equity ratio and
promoter’s share of total cost
c. Existing investment by the promoter in any other business
d. Projected cash flow and profitability
The financial viability of a project should provide the following information:
a. Full details of the assets to be financed and how liquid those assets are
b. Rate of conversion to cash-liquidity
c. Project’s funding potential and repayment terms
d. Sensitivity in the repayments capability to the following factors
e. Mild slowing of sales
f. Acute reduction/slowing of sales
g. Small increase in cost
h. Large increase in cost

Technical Feasibility:
This assessment is based on an outline design of system requirements, to determine
whether the company has the technical expertise to handle completion of the project. When
writing a feasibility report, the following should be taken to consideration.
The technical feasibility assessment is focused on gaining an understanding of the present
technical resources of the organization and their applicability to the expected needs of the
proposed system. It is an evaluation of the hardware and software and how it meets the need of
the proposed system.
An in depth and critical study of following parameters is done:
a. Plant location
b. Layout
c. Plant & machinery and equipment
d. Manufacturing process
e. Infrastructure

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f. Technology
g. Efficient waste disposal.

Economic Feasibility:
The purpose of an economic feasibility study (EFS) is to demonstrate the net benefit of a
proposed project for accepting or disbursing electronic funds/benefits, taking into consideration
the benefits and costs to the agency, other state agencies, and the general public as a whole.
In sync with the phrase “Parity between haves and have not’s”, a social cost-benefit analysis
(SCBA) of the project should be carried out. This ensures that the organization is contributing to
the GDP of the economy and is also discharging its social obligations, by providing employment
opportunities and bringing in improvement in quality of life.
The purpose of business in a capitalist society is to turn a profit, or to earn positive
income. While some ideas seem excellent when they are first presented, they are not always
economically feasible. That is, that they are not always profitable or even possible within a
company’s budget. Since companies often determine their budget’s several months in advance, it
is necessary to know how much of the budget needs to be set aside for future projects.
Economic feasibility helps companies determine what that amount is before a project is
ultimately approved. This allows companies to carefully manage their money to insure the most
profitable projects are undertaken. Economic feasibility also helps companies determine whether
or not revisions to a project that at first seems unfeasible will make it feasible.

Social Feasibility:
Social feasibility is a detailed study on how one interacts with others within a system or
an organization. Social impact analysis is an exercise aimed at identifying and analyzing such
impacts in order to understand the scale and reach of the project’s social impacts.
At a minimum, all projects demand a review of project data at the Appraisal Phase, so as
to identify if material social impacts exist. Social impact analysis greatly reduces the overall
risks of the project, as it helps to reduce resistance, strengthens general support, and allows for a
more comprehensive understanding of the costs and benefits of the project.
However, social impact analysis can be expensive and time consuming, so the full
analysis process cannot be justified for all projects. At a minimum, all projects demand a review

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of project data at the Appraisal Phase, so as to identify if material social impacts exist. If they do,
a full social impact analysis should be conducted.

Legal Feasibility:
It should first be determined whether the proposed project conflicts with legal
requirements, and if the proposed venture is acceptable in accordance to the laws of the land. The
project team has to make a thorough analysis of the legal issues surrounding the project, across
several dimensions.
A detailed legal due diligence should be done to ensure that all foreseeable legal
requirements, which have not or will not be dealt with, in other appraisal exercises, are met for
the development of the project.
The main objectives of the legal feasibility analysis are as follows:
a. To ensure that the project is legally doable;
b. To facilitate risk management, indicating the risks and obstacles that need to be addressed
within the technical analyses, the financial model and/or the Value for Money analysis; and
c. To avoid, to the extent possible, major problems in the project’s development and
implementation, specifying the requirements that need to be considered at subsequent stages of
the PPP process, [public private partnership]

Market and Marketing Feasibility

Market feasibility studies involve testing geographic locations for a real estate
development project, and usually involve parcels of real estate land. Developers often conduct
market studies to determine the best location within a jurisdiction, and to test alternative land
uses for given parcels. Jurisdictions often require developers to complete feasibility studies
before they will approve a permit application for retail, commercial, industrial, manufacturing,
housing, office or mixed-use project. Market Feasibility takes into account the importance of the
business in the selected area.

Market feasibility must not be mixed up with economic feasibility. The potential
influence of market demand, competitive activities, and available market share should be

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considered in the market feasibility analysis. During the start-up, ramp-up, and commercial start-
up phases of the project, possible competitive activities (local, regional, national and
international) should be analyzed for early contingency funding and impacts on the operating
costs.

• Market feasibility is a crucial component of the feasibility study.

• This section contains all of the information on the particular industry.

• Important information such as the industry’s size, retail value, and trends are gathered.

• The specific market is also examined, as is the future market potential.

• A comprehensive evaluation is required to ensure the success of the firm.

• The competitive landscape has also been prepared.

• As a consequence, the company selects the best strategy for positioning itself regarding
the competitors.

• The product/service description is also defined.

All variations are reviewed and studied so that the most lucrative one may be implemented. A
profile of possible clients is created, and the market size in terms of potential purchasers is
estimated.

Previous data can be used to approximate sales projections. Different target audience locations
are examined, and the best audience and site are selected.

Managerial Feasibility Study

Managerial feasibility is ascertained by certain key elements like employee

involvement, demonstrated management availability & capability, and commitment. The
managerial and organizational structure of the project is addressed by this feasibility which
ensures that the proponent’s structure mentioned in the submittal is feasible to the kind of
operation undertaken.

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Political Feasibility Study

The directions for the proposed project are mostly dictated by political considerations.
This is certainly correct for large projects with potential visibility that may have important
political implications and government inputs. For example, regardless of the merit of the project,
the political necessity may be a source of assistance for a project.

On the other hand, because of political factors, value-able projects may face
uncontrollable opposition. An evaluation of the objectives of the project with the current
objectives of the political system is required in the political feasibility analysis.

Environmental Feasibility:
The environmental feasibility study considers both human and environmental health
factors. The ES is a comparative process that looks at all potential solutions, and then evaluates
them against specific criteria to ultimately find the best choice. It is a fact that external
environment exerts considerable influence on the organizations. In fact the climatic conditions in
a particular area/region have a significant impact on the existence of an enterprise. Therefore, it
is necessary to ascertain the environment viability as well.

The parameters considered are:

a. Overall protection of public and environmental health
b. Effective reduction of hazardous waste toxicity, mobility and volume.
c. Long-term and short-term effectiveness of environmental policies of the company
d. Potential consequences of the remedial measures taken for protecting environment

Operational Feasibility:
Operational feasibility is the measure of how well a proposed system solves the
problems, and takes advantage of the opportunities identified during scope definition and how it
satisfies the requirements identified in the requirements analysis phase of system development.

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 The operational feasibility assessment focuses on the degree to which the proposed
development projects fits in with the existing business environment and objectives with regard to
development schedule, delivery date, corporate culture and existing business processes.
To ensure success, desired operational outcomes must be imparted during design and
development. These include such design-dependent parameters as reliability, maintainability,
supportability, usability, producibility, disposability, sustainability, affordability and others.
These parameters are required to be considered at the early stages of design if desired operational
behaviours are to be realised.

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