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Feasibility Analysis

•Feasibility analysis is the process of determining if a business idea is viable. •It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing. • 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.

. it should be confident that the product or service is what its prospective customers want.Feasibility Analysis • It follows the opportunity recognition stage and comes before the development of a business plan. • Is an assessment of the overall appeal of the product or service being proposed. •The idea is that before a prospective firm rushes a product or service into development.

Concept testing ii. The two components of a product/service feasibility analysis are: i.Feasibility Analysis . Usability testing .

Concept Testing A concept test entails showing a representation of the product or service to prospective users to gauge customer interest. . A concept statement is a one page description of a business that is distributed by a startup entrepreneur to people who are asked to provide feedback on the potential of the business idea. desirability. and purchase intent.

To evaluate the underlying premises of a product or service that an entrepreneur thinks is compelling. To help develop an idea 3. To estimate the potential market share the product or service might command .Concept Testing • There are three primary purposes for a concept test:…………………. 2. 1.

) A description of the product or service being offered. d. e. b.) Information about the founder or founders of the firm.Product/Service Feasibility Concept testing a.) The benefits of the product or service. c.) The intended target market.) A description of how the product will be positioned relative to similar ones in the market.) A description of how the product or service will be sold and distributed. f. .

. ‘Usability testing’ Is the method by which users of a product are asked to perform certain tasks in order to measure the product’s ease‐of‐use and the user’s perception of the experience.Usability Testing A concept test is usually followed by the development of a prototype or model of the product or service.

. While it is tempting to rush a new product or service to market. depending on the circumstances involved. conducting a usability test is a good investment of an entrepreneur’s or firm’s resources.Product/Service Feasibility Usability tests are sometimes called user tests. c. or field trials. beta tests.

Usability Testing . which is usually still in a rough or tentative mode. • Virtual Prototype: a virtual prototype is a computer‐generated 3D image of an idea.Prototype Product/Service Feasibility • Conducting a usability test typically requires the development of a prototype. . • A prototype is the first physical depiction of a new product. It displays an invention as a 3D model that can be viewed from all sides and rotated 360 degrees.

(2) Are important to the customer. operating margins (5) Are not crowded . the most attractive industries are characterized as the following: (1) Are large and growing. rather than low. (4) Have high. (3) Are fairly young rather than older and more mature.Industry/Market Feasibility Feasibility Analysis In general.

a new venture will want to know more about the industry it plans to enter.Industry/Market Feasibility In addition to evaluating an industry’s growth potential. This can be accomplished through both primary and secondary research .

Financial Analysis  A financial plan assesses the financial implication of various strategies proposed in other sections to quantify the flow of cash & profit vis-à-vis investment required.  All other aspects get converted into financial projections in terms of both funding requirements and income generating capacity of the venture to generate adequate return on investments. .

Plan  A business plan should be able to convert various numbers into the financial plans & funding needs of the venture for one’s firm.  Key purpose of writing a business plan is for investors to raise funds therefore they should estimate the fund requirements of the venture and the possible sources from where funds can be raised. .Business .

retained earnings ploughed back into the venture. equity contribution from other owners.short terms as well as long terms of loan. subsidy & grants received and different types of loans -------.  Thus the 3 broad categories of funding could be -------------- DEBT  EQUITY  GRANTS & SUBSIDIES .Sources of Funding  The broad sources of funding could be promoter’s equity.

even point  .Cash flows of the project  . While conducting a financial appraisal certain aspects has to be looked into like: .Investment worthiness judged in terms of various criteria of merit  .Means of financing  .Projected financial position .Projected profitability  .Investment outlay and cost of project  .Financial 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 expectations of those who provide the capital.Break.

lettuce and other ingredients for their burgers. they developed sustainable sources of supply of potatoes. quantification and evaluation of project inputs. When Macdonald entered India. machinery and materials. You have to ensure that the right kind and quality of inputs would be available at the right time and cost throughout the life of the project. that is. throughputs and outputs. in many cases you have to cultivate your supply sources.TECHNICAL ANALYSIS •The issues involved in the assessment of technical analysis of the proposed project may be classified into those pertaining to inputs. • You have to enter into long-term contracts with the potential suppliers. • . • • Input Analysis: Input analysis is mainly concerned with the identification. The activities involved in developing and retaining supply sources are referred to as supply chain management.

etc. height. what would be the sequence. weight. the inputs received would undergo a process of transformation in several stages of manufacture.colour.TECHNICAL ANALYSIS • Throughput Analysis: It refers to the production/operations that you would perform on the inputs to add value. Where to locate the facility. breadth. as well as standards to be complied with such as BIS. . chemical material properties. length. functional features. what would be the layout. and ISO etc. ISI. what would be the quality control measures. Usually. •Output Analysis: this involves product specification in terms of physical features. are the issues that you would learn in greater details in subsequent lessons.

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