MODULE 6

THE FEASIBILITY STUDY

The fast-paced nature of today’s corporate environment has raised the risks and
uncertainties that companies must contend with. Furthermore, as more firms try to suit the
desires of these customers, the rise in customer awareness has led in a huge increase in
competition. As a result, it has become increasingly important for businesses to differentiate
themselves from the competitors. As a result, competing in the marketplace has become difficult.
On the other hand, getting into it is an entirely different story. Entrant’s failure is due to lack of
proper strategy and thought. As a result, prior to entering the market, completing some research
is vital to assuring profitability. A good example of this type of investigation is a feasibility
study.
Entrepreneurs face various challenges while beginning a new business. While not as
well-known as the business strategy, the feasibility study may be just as important. Before a
business owner may ask for funding, he or she must demonstrate that the idea is viable.
Entrepreneurs must establish characteristics of business viability, such as market
viability, technological viability, business model viability, management model viability,
economic and financial model viability, and exit strategy viability, in order to develop a
feasibility study. This session will provide you an outline of what a feasibility study is and what
it does.

At the end of this chapter, the student will be able to:

 Define the concept of feasibility study;
 Identify the purpose of a feasibility study;
 Enumerate the parts of a feasibility study;
 Assess how to apply feasibility study outcomes to a new venture; and
 Create feasibility study based on the trends in the hospitality and tourism industry
is created
LESSON 1- THE FEASIBILITY STUDY

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
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studies to discern the pros and cons of undertaking a project before investing a lot of time and
money onto it.
The feasibility study is a research instrument used to evaluate the potential, viability, and
practically of a new firm. The following are some of the most important characteristics of a
feasibility study:
1. It is a fantastic tool for predicting the possibility of a new business venture’s
success or failure.
2. It can also be used to include new items or concepts into the company’s mix of
offerings.
3. A feasibility study entails all the steps necessary to determine whether a business
idea has a good chance of succeeding.
4. It is a step-by-step procedure that allows you to consider the benefits and
drawbacks of each phase before beginning the actual performance.
5. It gives information for making key decisions such as continuing forward with the
idea, refining it, or abandoning it entirely.
The feasibility study helps determine whether an idea or business is a viable option. The
business plan is developed after the business opportunity is created.
StrategicBusinessTeam.com explained, “A feasibility study is carried out to find out the
workability and profitability of a business venture. Before anything is invested in a new
business venture, a feasibility study is carried out to know if the business venture is worth
the time, effort, and resources. A feasibility study is filled with calculations, analysis and
estimated projections while a business plan is made up of mostly tactics and strategies to
be implemented in other to grow the business.”
The business plan’s cornerstone is the feasibility study. A feasibility study also
uncovers alternatives and solutions that might otherwise be overlooked. As a result,
performing this research before to a business idea that may not work out as planned is
critical, as this will only result in further investment to correct previous errors. The
gathering of these data aids in making informed decisions about the most profitable
approach. This document investigates all of the various facets of the company’s
formation and implementation.
HOW A FEASIBILITY STUDY CAN HELP YOU KEEP YOUR BUSINESS ON
TRACK
A well-executed feasibility study aids the company in gaining a wide view and a detailed
analysis of its potential business viability.
It can learn more about a project before committing money, time, or other resources to it.
The project’s scope may be substantially altered at times.
The feasibility study ensures that all decisions are taken before entering the firm and
discovering the flaws afterwards. Various business conduct choices are developed, and
the most optimal one is chosen.

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 This research gives essential information and a thorough examination of the complete
business picture.
It improves the success rate by evaluating a variety of factors.
It’s also a great way to provide information to the company’s future investors. They will
be able to get a thorough picture of the venture’s many aspects.
Feasibility studies are used in a variety of businesses, including the hotel, hospitality,
restaurant, real estate, medical, office, and industrial sectors. To ensure that the business
gets off to a good start, detailed instructions are supplied.
This research aids in the smooth operation of the company and prepares the way for
efficient operations.
It allows the company to concentrate on both short and long-term objectives. The
importance of this document cannot be overstated, since it determines whether the
company succeed or fails.
STANDARD FORMAT OF FEAASIBILITY STUDY
CHAPTER 1. EXECUTIVE SUMMARY
Name of the Firm
Location of the Firm
Brief Description of the Project
Major Assumptions

CHAPTER 2. MANAGEMENT ASPECT

Management of the Project
Vision
Mission
Objective
Name of the Project
Name of the Business
Logo of the Business
Business Organization
Type of Organization
Description of the Members
Organizational Chart
Personnel Plan
Duties and Responsibilities
Company Policies and Procedures
Health and Safety Protocols
Compensation Plan
Recruitment Program
Recruitment Process
Job Qualification
Job Requirement

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 Training Program
Benefits
Facilities
Status of Timetable
Legal Aspects
Articles of Partnership/Incorpotation

CHAPTER 3. MARKETING ASPECT

Market Study
Target Market
Market Demographics and Survey
SWOT Analysis
Competitors’ Profile and Analysis
Competitive Strategy
Marketing Strategy
Product Strategy
Pricing Strategy
Distribution Strategy
Promotional Mix Strategy
-Sales Promotion
-Personal selling
-Advertisement
-Public Relation
Digital Marketing Strategy
Contribution to the Philippine Economy

CHAPTER 4. TECHNICAL ASPECT

Products and Services
“New Normal” Procedure
Business Schedule
Shop Location
Shop size
Shop Floor Layout
Supplies, Equipment, Furniture, and Fixture details
Supplier of Raw Materials, Supplies, Equipment, Furniture and Fixture
Uniform (must adopt the New Normal for Employee)
Utilities
Waste Disposal

CHAPTER 5. FINANCIAL ASPECTS

Sources of Financing
Total Project Cost
Profit and Lost Statement
Cash Flow Statement
Balance Sheet
Statement of Partners Equity

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DESCRIPTION PER CHAPTER

I. Chapter 1 – Executive Summary

1. Name of the Firm – This section will present your FIRM / COMPANY name
and not the business’s name. It should be unique and business-minded.
2. Location of the Firm – This section will present the location of the firm.
Location is one of the essential factors in the success of the business. It should be
strategic and aligned with your business concept and goals. You need to present
the picture of the location, its exact size, how much is rental, or with a title. You
have to present the accessibility of the transportation and, importantly, seek
APPROVAL from the landlord or owner of the lot or space of your business. You
need to have proof about this.
3. Brief Description of the Project – This section will describe the concept of the
business, your core product, and services, what you promise to your consumer,
and what your business will provide to them. This should catch the attention of
your investors.
4. Major Assumptions – a consideration that you assume will happen in the future
for your business, or these are the factors that are your baseline for some part of
your papers. For example, revenue will increase for how many percentages, the
COGS will increase for how many percentages, soon services or products to offer,
expansion details, etc.
II. Chapter II – Management Aspect - implies a clear and precise identification of duties
and responsibilities, flow of authority, and human resource level requirement. It must be
set up for optimum effectiveness. To achieve these, management must plan all activities
for the company to become a productive and competitive industry through human
resources, financial capability, and new technologies. This aspect should also apply the
new standard practices in the workplace and for the employee due to the pandemic that
significantly impact the business.
1. Management of the Project details the project’s direction in terms of
vision, mission, and objective. In your feasibility study, you will develop
your Vision, Mission, and Objectives aligned to your BUSINESS
CONCEPT and DIRECTION.
a. Vision is a future-oriented declaration of the organization’s
purpose and aspirations. In many ways, you can say that the
mission statement lays out the organization’s “purpose for being”,
and vision statement then says, “Based on that purpose, this is
what we want to become:.” Thus, it answers the question “What
We want to Become.”
b. Mission communicates the organization’s reason for being and
how it aims to serve its key stakeholders. It answers the question of
“Who we are and what we value.”
c. Objectives are specific actions and timelines for achieving the
goal.
2. Name of the Project -shows the physical quality of your business.
a. Name of the business – One of the successes of a feasibility study
is according to the business’s name. It should be unique, catchy,

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 and business-minded. It should create attention, excitement, and
curiosity for the consumer.
b. Logo of the business – It shows the brand image of your business.
The logo should be creative, unique and create awareness and trial
to the customer. The logo should eb aligned with the concept of the
business.
3. Business Organization – It details the flow of management of your
designed business in terms of authority and level or reporting.
a. Type of Organization – This will discuss the type of management
organization if you are a sole proprietor, partnership, or
corporation. Most of the time, partnership is the proposed
business organization, and you need to specify if you are a limited
or general partnership.
b. Description of the Members – It discusses the list of members of
the organization of the business. In addition, it will show the
profile and credentials related to the business you propose to
establish to show credibility and professionalism to the investors.
c. Organizational Chart – This will show the chart of the
management authority from top management down to rank-and-
file employees. You role and level of reporting. Please take note
that it should be Manager to Supervisor to Rank and File employee
ideal for small businesses.

5. Personnel Plan - This shows the details about the role of your personnel and the
rules and regulations of the organization.
a. Duties and Responsibilities - Duties imply the obligation and
moral commitment which an individual is expected to perform.
Responsibility refers to the liability that a person assumes or accepts as
part of his job role. It should be specific, precise, and related to the
business and position. Generic responsibility is not allowed here. Come up
with the duties and responsibilities of all the positions you have in your
organizational chart.
b. Company Policy and Procedure - this section shows the policy
of the company to its employee. This section will discuss the Do's and
Don'ts in the workplace, offenses, sanctions, and other company-related
policies. It also discusses the procedure to undergo by the employee once
it commits an offense.
C . Health and Safety Protocols - This is a new section in this
portion in c. which you will discuss the health and safety practices and
procedures you will give to your employee as part of the new normal since
we are involved in the distribution of food and services. In building a
business, this is very important to draft this section to comply with DOLE
and other government agencies.
6. Compensation Plan - This section will discuss the compensation package 6 . you
will provide to your employee. It should show that the basic salary aligns with the
country's minimum wage, government deductions, 13-month computation, and

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 other basic package included in a basic salary. Please review the latest minimum
wage and government deduction of SSS, PhilHealth, Pag-Ibig, and BIR (12%
tax). It would help if you come up with the compensation package for all I
employees in the organizational chart.
7. Recruitment Program - refers to your company program in hiring an employee.
a. Recruitment Process - finding and attracting potential resources for
filling up the vacant position in an organization. You will come up with
your process of pooling your talents.
b. Job Qualification - refers to the education, work experience, and skills
you need for a specific position in your company. You have to be specific
and not general since there is a different requirement per position in an
organization. You have to create job qualifications per position you have
in your organizational chart.
c. Job Requirement - These are the specific forms that an employee must
submit to process the application. Examples are SSS Form, TIN ID, NBI
clearance, etc.
8. Training Program - It is an area that will be designed for a specific training of
the staff. You have to be intended to develop the skills and competencies very
specific with the training and cost-effective. Training should be more on leaders
or managers since they are more on developing their employees.
9. Benefits - This section shows the benefits that an employee can receive in your
business or organization. This is divided into Mandatory and Company Package
Benefits. Mandatory Benefits are those under the government which is mandated
to be given to employees. Company Package is those initiated and under the
company's discretion, such as 14th month, incentive trip, rewards, insurances, etc.
Please refer to DOLE's latest memorandum.
10. Status and Timetable of the Project - This is simply the GANTT Chart; this will
show the summary of all the actions and tasks you need to accomplish in putting
up the business. This starts from brainstorming or developing a feasibility study
down to the opening of the business. This will also show the specific month and
year that you are going to accomplish the specific task.
11. Legal Aspects - This shows all legal documents that your business needs to
secure to operate legally. This will show the mayor's permit, barangays permit,
DTI permit, sanitary permit, and any other necessary permits to start your
business in the chosen location.
12. Articles of Partnership/Inc -This is a legal agreement wherein you can
understand the grounds in putting up partnership business. It is downloadable on
the internet.
III. Chapter III - Marketing Aspect - enables you to define competitors and quantify target
customers and users in the market within your chosen industry by analyzing the overall interest
in the product or service within the industry by its target market. You can define a market in size,
structure, growth prospects, trends, and sales potential. This information allows you to better
position your company in competing for market share.
1. Market Study - This section is essential since it will overview the market you enter in
the business. This section will provide brief details about the demand of the industry or business

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concept you chose. It should be convincing and factual data to represent the rise of the concept of
business you chose.
2. Target Market - This section will provide you target market or the focus market. It is
vital in business and an entrepreneur to identify your target market or the rifle approach analysis.
80% of the business will be coming from the target market, so it is important to select it
carefully. It is part of the market survey questionnaire after you gather the data.
3. Market Demographics and Survey Result and Interpretation - This portion will
discuss the result of the demographic profile of your respondent in the survey. This is important
when you are doing market segmentation since your sees your customer's profile and background
to have a perfect target market. This section will also present your survey results, present via
table analysis, and interpret the result.
4. SWOT Analysis - This is one of the essential portions of the marketing aspect, the
SWOT analysis. This summarizes all the internal and external factors that will benefit and affect
your business. This SWOT analysis will be helpful also in determining the right strategy you
need to implement in your business. You can come up with some factors in SWOT based on the
survey result.
5. Competitors Profile and Analysis - This section will discuss the profile of your
competitors for you to be able to analyze your competitive advantage. You need to select at least
three of your main competitors. Please review the types of competitors.
6. Marketing Strategy - The most critical section in which an entrepreneur, these are the
marketing effort that you will implement to achieve your business's market share and objectives.
It is divided into five distinct areas:
a. Product Strategy - This section will present the strategy you will do in all your
products and services. What is the emphasis that you will do specifically to your core
product?
b. Pricing Strategy - This will cover the pricing strategy that you will apply to
your products and services. Please refer to the tourism marketing lesson about the
different pricing approaches and pricing strategies.
c. Distribution Strategy - This portion will cover the distribution channel you
will use to deliver the products and services. Please refer to the Tourism Marketing
lesson about the different procedures.
d. Promotional Strategy - This is divided into four areas such as Sales
Promotion, Personal Selling, Advertisement, and Public Relations.
 Sales Promotion-Please detail here the sales promotion strategies
you will implement. Please refer to the lesson about the different
sales promotion strategies.
 Personal Selling - Please show here the spiel, SLOGAN, and any
other personal selling conversation you implement. Please refer to
the lesson for the personal selling strategy.
 Advertisement - Please show here the commercial that you made
and any other advertisement medium you made, such as
Poster/Brochure/Social Media/Website or any other types of
Advertisement. Please refer to the lesson for the types.

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  Digital Marketing Strategy - This is a new approach in feasibility
given the high rise of online and digital media approaches to
promote the business.
7. Contribution to the Philippine Economy - This section will discuss the
contribution of your proposed business in terms of economic, employment, social, and
cultural approaches.

IV. Chapter IV - Technical Aspect - is one of the essentials of this study because this factor
responds to the technicalities and basic structure of the proposed study. It assesses the details of
how you intend to deliver a product or service to customers.
1. Products and Services - This section will present all the products and services you
will offer to your customers. It should show the product's name, the picture, the product
description, and the price. If you have delivery options in your business and other services
involved in the business, you will present them in this portion.
2. "New Normal Procedure" - This is a new section in which you need to present the
new standard approaches you will implement in your business, such as the observation of social
distancing, the proposed idea of the division of dine-in area, kitchen and cashiering processes,
etc.
3. Business Schedule - This presents the table of all the schedules of your business and
your employee's schedule from Time into Time out. It would help if you considered balancing
time, break time, turnover, day off, and any other interval within the organization.
4. Shop Location - Present your shop's location- the competitors within, the accessibility
to get there, transportation available, parking availability, etc.
5. Shop Size - Present here the size of your shopper division or area. Remember that
space is essential, especially the dine-in area where sales generate.
6. Shop Floor Layout - This portion will present the layout of the shop, top view and per
area view. It should be well represented with sketches or 3D designs.
7. Supplies, Equipment, Furniture, and Fixture details - List down all the materials
you need for your business: interiors, exteriors, and the raw materials.
8. Suppliers of Supplies, Equipment, Furniture, and Fixture - List down all your
suppliers of these materials. Please do not forget that suppliers are fact and existing in the market
with their updated price of the items.
9. Uniforms - Present all the proposed uniforms of your business from manager to rank
and file employee.
10. Utilities - List down all the utilities you needed in order to operate the business.
Forecast here your monthly consumption since it will be part of the financials.
11. Waste Disposal Management - Discuss the waste management process of your
business, eco-friendly practices in both indoor and outdoor areas.

V. Chapter Financial Aspect - It is an area in the feasibility study that projects how much start-
up capital is needed, sources of capital, returns of investment, and other financial considerations.
It looks it will come from, and how it will be spent. at how much cash is needed, where
1. Sources of Financing-present the sources of fund and how much per each member.

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 2. Total Project Cost-present ALL the costs involved in the business in order for you to
easily trace the exact amount of number to put in the financial statements.
3. Profit and Loss Statement - present the income statement that will show the
company's expenses and revenue over the period. This is important so you would able to present
the revenue if you hit or miss the target per year.
4. Cash Flow Statement- summarizes the amount of cash and cash equivalents entering
and leaving a company. The cash flow statement measures how well your company will manage
its cash position, meaning how well the company will generate cash to pay its debt obligations
and fund its operating expenses.
5. Statement of Partner's Equity-shows how the net worth/value (or equity) of business
change for the period. This statement includes net income (or net loss), which was brought
forward from the income statement. The ending balance is carried forward to the balance sheet.
6. Balance Sheet - will report your company's assets, liabilities, and shareholders' equity
at a specific point in time and provides a basis for computing rates of return and evaluating its
capital structure.

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