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MBA Program
Faculty of Business Studies
University of Dhaka
Group Details
Name of Members ID No.
Promit Debnath 18103
Bikash Chandra Paul 18115
Md. Kaikobad Hossain 18120
Anjan Kumar...
Project Cycle
Pre-investment Phase
Investment Phase
Operation Phase
Pre-investment Phase
Opportunity Study
Pre-feasibility Study
Feasibility Study
Appraisal Report
Pre-investment Phase
Opportunity Study
Pre-feasibility Study
Feasibility Study
Appraisal Report
• Screening innovative ide...
Pre-investment Phase
Opportunity Study
Pre-feasibility Study
Feasibility Study
Appraisal Report
• Describing the product o...
Feasibility Study
A feasibility study is defined as an evaluation or
analysis of the potential impact of a proposed projec...
Feasibility Study (Cont.)
Feasibility
Study
Based on
extensive
research
Contain
wide-ranging
of data
Should have
clear
sup...
Feasibility Study V/S Business Plan
An investigating function
Outlines and analyzes several
alternatives
Conducted before ...
Excuses for NOT Doing Feasibility Study
• We know it’s feasible. An existing business is
already doing it.
• Feasibility s...
Reasons to Do Feasibility Study
• Gives focus to the project and outline alternatives.
• Narrows business alternatives
• I...
Dimensions of Business Viability
Market Viability
Technical Viability
Business Model Viability
Management Model Viability
...
Market Viability
Opportunity
Target
Customer
Competitors
Market
Environment
Similar
Product
Pricing Distribution
Technical Viability
Capacity Resources
Manufacturing
Process
Business Model Viability
Uniqueness of
Model
Competitor’s
Ability to
Duplicate
Ability to
Create Value
Ability to
Create W...
Management Model Viability
Application of
knowledge &
skills
Training
Employee
management &
recruitment
Management of
inte...
Economic & Financial Viability
Startup cost Working capital Operating cost
Raw material
cost
Overall return on
investment
...
Exit Strategy Viability
Create wealth
from exit
strategy
Ability to
define exit
strategy
Identify
potential buyer
or strat...
Issues to be Considered
Market
Feasibility
Technical
Feasibility
Resource
Feasibility
Cultural
Feasibility
Operational
fea...
Market Feasibility
• Industry description.
• Industry competitiveness.
• Market potential
• Access to market outlets.
• Sa...
Technical Feasibility
• Determine facility needs.
• Suitability of production
technology.
• Availability & suitable of sit...
Resource Feasibility
• Required time for
completion
• Effect on normal
business operation
• Amount of resources
The time r...
Cultural Feasibility
• Impact on the local &
general culture
• Environmental factors
need to be considered
• Impact of ent...
Operational Feasibility
• Compatibility of current work
practices & procedures with new
system required by the project.
• ...
Legal Feasibility
• Legal Implication
• Ethical Issues
• Authorization
• Political Issues
• Environmental Issues
Whether t...
Schedule Feasibility
• Project timetable
• Project deadline
A project will fail if
it takes too long to
be completed befor...
Economic Feasibility
• Availability of required
resources
• Determine the benefits
& savings
• Compare the benefits
with c...
Parts of Feasibility Report
 Cover Sheet
 Executive Summery
 Table of Content
1. Introduction
2. Product or Service
3. ...
Parts of Feasibility Report
 Financial Projections
1. Balance Sheet Projections
2. Income Statement Projections
3. Cash F...
Executive Summery
Executive summery is the summarized outcome of the
feasibility report. It is a separate and standalone
d...
1. Introduction
Introduction includes the basic concept of the study. It
also includes the background of the study as well...
2. Product or Service
This section of the feasibility report describes the
entire product(s) or service(s) details of the ...
3. Technology
Technical knowledge of the feasibility study includes
several issues such as:
It provides details informati...
4. Market Environment
• Details about target market
• Emphasis on costumers’ benefit
Target
Market
• Target industry, key ...
5. Competition
Market competition is a vital issue of starting new
business if the competitors exist. Few things to
rememb...
6. Industry
A feasibility study should clearly define and describe
the industry in which the enterprise operates. It also
...
7. Business Model
Proposed enterprise’s business model is presented in
this part which includes:
How the business will ge...
8. Marketing & Sales Strategy
Basic marketing and sales strategy should be
presented in here. It may describe any strategi...
9. Production Requirement
This section describes the various issues regarding the
production of product or service. It may...
9. Production Requirement (Cont.)
In some cases, the enterprise may outsource the
production or other materials. Few thing...
10. Management & Personnel
To run the enterprise, it must need a management and
some personnel to control the management i...
11. Intellectual Property
Patent
Copyright
Trademark
11. Intellectual Property (Cont.)
In case of licensing agreement, enterprise should
disclose the name of the licensor, ke...
12. Regulations Issues
In this part, enterprise should outline the non-economic
forces that might affect the prospect of t...
13. Critical Risk Factors
In this part, enterprise has to identify the critical risk
factors of the business by:
SWOT Ana...
Financial Projections
Balance Sheet Projections
Income Statement Projections
Cash Flow Projections
Break-Even Projections
...
Capital Requirement & Strategy
In this step, enterprise has to answer several questions
such as:
How much funding (equity...
Findings & Recommendations
Findings and recommendations part of the feasibility
study should be honest, short and direct. ...
Conclusion
The conclusion of the report should highlight the
contribution of the business to the larger society. Such
issu...
Helping Hands
You cannot prepare a perfect feasibility report without the
help of other parties. Those helping hands inclu...
Monitoring the Study
Hiring a consultant does not negate the responsibility for
insuring that the feasibility study is con...
How to Accept or Reject the Study?
At the end of the study, the authorized party will submit the draft
or final report. It...
References
• Thomson, Alan (2005), Business Feasibility Study Outline,
Appendix 1, PP: 185-198
• Wikipedia, (2016), Feasib...
Suggested Questions!
1. Why Feasibility Study is important before starting
new business?
2. How to do the Feasibility Stud...
Suggested Questions! (Cont.)
7. Differentiate between Patent, Copyright and
Trademark. Explain with examples.
8. Is it nec...
Business Feasibility Study
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Business Feasibility Study

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Business Feasibility Study

  1. 1. MBA Program Faculty of Business Studies University of Dhaka
  2. 2. Group Details Name of Members ID No. Promit Debnath 18103 Bikash Chandra Paul 18115 Md. Kaikobad Hossain 18120 Anjan Kumar Das 18124 Pobittro Saha 18133
  3. 3. Project Cycle Pre-investment Phase Investment Phase Operation Phase
  4. 4. Pre-investment Phase Opportunity Study Pre-feasibility Study Feasibility Study Appraisal Report
  5. 5. Pre-investment Phase Opportunity Study Pre-feasibility Study Feasibility Study Appraisal Report • Screening innovative ideas • Reviewing country importing items • Assessing local community needs • Projecting future demand on certain product or service • Examining current diversified industrial trends • Reviewing available skill & workforce • Expert research
  6. 6. Pre-investment Phase Opportunity Study Pre-feasibility Study Feasibility Study Appraisal Report • Describing the product or service • Describing the market supply & demand • Describing production methodology • Describing initial inputs and infrastructure supporting services • Location • Estimate capital & operating cost • Estimate revenue
  7. 7. Feasibility Study A feasibility study is defined as an evaluation or analysis of the potential impact of a proposed project or program. It is conducted to assist decision makers in determining whether or not to implement a particular project or program.
  8. 8. Feasibility Study (Cont.) Feasibility Study Based on extensive research Contain wide-ranging of data Should have clear supporting evidence
  9. 9. Feasibility Study V/S Business Plan An investigating function Outlines and analyzes several alternatives Conducted before business plan
  10. 10. Excuses for NOT Doing Feasibility Study • We know it’s feasible. An existing business is already doing it. • Feasibility studies are just a way for consultants to make money • The market analysis has already been done by other same business • Feasibility studies are a waste of time. We need to buy the building, tie up the site and start the business.
  11. 11. Reasons to Do Feasibility Study • Gives focus to the project and outline alternatives. • Narrows business alternatives • Identifies new opportunities through the investigative process. • Identifies reasons not to proceed. • Enhances the probability of success by addressing and mitigating factors early on that could affect the project. • Provides quality information for decision making. • Provides documentation that the business venture was thoroughly investigated. • Helps in securing funding from lending institutions and other monetary sources. • Helps to attract equity investment.
  12. 12. Dimensions of Business Viability Market Viability Technical Viability Business Model Viability Management Model Viability Economic & Financial Model Viability Exit Strategy Viability
  13. 13. Market Viability Opportunity Target Customer Competitors Market Environment Similar Product Pricing Distribution
  14. 14. Technical Viability Capacity Resources Manufacturing Process
  15. 15. Business Model Viability Uniqueness of Model Competitor’s Ability to Duplicate Ability to Create Value Ability to Create Wealth
  16. 16. Management Model Viability Application of knowledge & skills Training Employee management & recruitment Management of intellectual property Management of risk Ability to delegate to the staff Suitable organizational structure Ability to measure business process
  17. 17. Economic & Financial Viability Startup cost Working capital Operating cost Raw material cost Overall return on investment Overall profitability Break Even Point Sustainability of market versus projected revenue Ability to generate economic value
  18. 18. Exit Strategy Viability Create wealth from exit strategy Ability to define exit strategy Identify potential buyer or strategies Schedule exit strategy
  19. 19. Issues to be Considered Market Feasibility Technical Feasibility Resource Feasibility Cultural Feasibility Operational feasibility' Legal Feasibility Schedule Feasibility Economic Feasibility
  20. 20. Market Feasibility • Industry description. • Industry competitiveness. • Market potential • Access to market outlets. • Sales projection Market assessment is needed to identify the opportunities in the market. If no opportunities exist, there may be no reason to proceed further.
  21. 21. Technical Feasibility • Determine facility needs. • Suitability of production technology. • Availability & suitable of site. • Raw materials. • Other inputs. Product methodology need to be determined. It involves which technology will be needed for production, how it will be operated and the experience of the firm in using the technology.
  22. 22. Resource Feasibility • Required time for completion • Effect on normal business operation • Amount of resources The time required for the project and resources needed to be determined here. Contingency & mitigation plans should also be stated here so that if the project does over run the company is ready for this eventuality.
  23. 23. Cultural Feasibility • Impact on the local & general culture • Environmental factors need to be considered • Impact of enterprise's own culture Culture has great effect on business. So local culture as well as corporate culture need to be taken into consideration here.
  24. 24. Operational Feasibility • Compatibility of current work practices & procedures with new system required by the project. • Effect of social factors such as how the organizational changes will affect the working lives of those affected by the new system 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 & existing business process
  25. 25. Legal Feasibility • Legal Implication • Ethical Issues • Authorization • Political Issues • Environmental Issues Whether the project conflicts with legal requirement is need to be checked.
  26. 26. Schedule Feasibility • Project timetable • Project deadline A project will fail if it takes too long to be completed before it is useful. Typically this means estimating how long the system will take to develop, & if it can be completed in a given time period using some methods like payback period.
  27. 27. Economic Feasibility • Availability of required resources • Determine the benefits & savings • Compare the benefits with cost The purpose of the economic feasibility assessment is to determine the positive economic benefits to the organization that the proposed system will provide. It includes quantification and identification of all the benefits expected. This assessment typically involves a cost/ benefits analysis.
  28. 28. Parts of Feasibility Report  Cover Sheet  Executive Summery  Table of Content 1. Introduction 2. Product or Service 3. Technology 4. Market Environment 5. Competition 6. Industry 7. Business Model 8. Marketing & Sales Strategy 9. Production Requirement 10. Management & Personnel Requirement 11. Intellectual Property 12. Regulations Issues 13. Critical Risk Factors
  29. 29. Parts of Feasibility Report  Financial Projections 1. Balance Sheet Projections 2. Income Statement Projections 3. Cash Flow Projections 4. Break-Even Projections 5. Capital Requirement & Strategy  Findings & Recommendations  Conclusion
  30. 30. Executive Summery Executive summery is the summarized outcome of the feasibility report. It is a separate and standalone document. It helps the interested parties to understand the entire report and decision making. Few things to remember: It should be presented immediately after the content section. It should not exceed more than one page.
  31. 31. 1. Introduction Introduction includes the basic concept of the study. It also includes the background of the study as well. Few things to remember: Introduction should be brief and clear. Introduction should reflect the insight reasons of the study.
  32. 32. 2. Product or Service This section of the feasibility report describes the entire product(s) or service(s) details of the company. It also gives a brief idea about: Product mix (if any) Usefulness of product or service Key components or raw materials and its availability Implementation plan Upgrade or expand the product line
  33. 33. 3. Technology Technical knowledge of the feasibility study includes several issues such as: It provides details information about the product or service. Describe additional or ongoing research or development needs.
  34. 34. 4. Market Environment • Details about target market • Emphasis on costumers’ benefit Target Market • Target industry, key players • Market size, targeted market share B2B Market • Demographic factors • Psychological and behavioral factors B2C Market
  35. 35. 5. Competition Market competition is a vital issue of starting new business if the competitors exist. Few things to remember: Details about competitors List of barriers to entry Describe uniqueness of product(s) Copyright issues Competitors reactions
  36. 36. 6. Industry A feasibility study should clearly define and describe the industry in which the enterprise operates. It also includes the following issues: Industry size Industry growth rate Industry segment Industry supply and demand Industry forces that drives the market
  37. 37. 7. Business Model Proposed enterprise’s business model is presented in this part which includes: How the business will generate revenue. Will there be recurring revenue? Describe the model fully so that it will support the financial projection.
  38. 38. 8. Marketing & Sales Strategy Basic marketing and sales strategy should be presented in here. It may describe any strategic partnership the enterprise has or is planning to form. This section also includes: Distribution strategy Projected profit margin or markup Pricing strategy and justification Payment terms for customers Other issues (e.g. warranties, marketing budget)
  39. 39. 9. Production Requirement This section describes the various issues regarding the production of product or service. It may include: How and where the company will manufacture and at what cost? What physical premises are required? Will space be owned or leased? At what cost? How complex the manufacturing process is? Describe equipment needed and cost.
  40. 40. 9. Production Requirement (Cont.) In some cases, the enterprise may outsource the production or other materials. Few things to remember: Describe supply sources and availability Outline the relevant contract terms Details about quality control
  41. 41. 10. Management & Personnel To run the enterprise, it must need a management and some personnel to control the management issues. This section also includes: Managers’ names, tittles, responsibilities, background, experiences, skills, cost etc. Sketch personnel requirement
  42. 42. 11. Intellectual Property Patent Copyright Trademark
  43. 43. 11. Intellectual Property (Cont.) In case of licensing agreement, enterprise should disclose the name of the licensor, key terms and give termination or renewal date. If the concept of the business is scientific, intellectual property extremely important. Sometimes business planning associated with intellectual property must occur prior to a business concept being developed and validated.
  44. 44. 12. Regulations Issues In this part, enterprise should outline the non-economic forces that might affect the prospect of the enterprise. It includes several issues such as: Key government regulations Environmental problems and associated cost (if any) Political stability (if any)
  45. 45. 13. Critical Risk Factors In this part, enterprise has to identify the critical risk factors of the business by: SWOT Analysis Porters Five Forces PEST Analysis N.B: Make sure how the enterprise will mitigate those associated risks!
  46. 46. Financial Projections Balance Sheet Projections Income Statement Projections Cash Flow Projections Break-Even Projections Capital Requirement & Strategy
  47. 47. Capital Requirement & Strategy In this step, enterprise has to answer several questions such as: How much funding (equity) will the firm need & when? What projected revenue or assets does the proposed business have to secure the financing? What sources will provide the funding, i.e. investors, lending institutions etc.? What ratio of debt to equity financing will occur? When will investors begin to see a return? What is the expected return on investment (ROI)?
  48. 48. Findings & Recommendations Findings and recommendations part of the feasibility study should be honest, short and direct. It is important to note that final recommendations should be based on the dimensions of the feasibility study separately. Few things are important in here such as: Likelihood of success Projected return of investment How the risk will be mitigated Argument based on strong evidence for justification
  49. 49. Conclusion The conclusion of the report should highlight the contribution of the business to the larger society. Such issues as employment opportunities, provision of inputs for industrial development, export potentials, and revenue to be generated will be addressed by this aspect.
  50. 50. Helping Hands You cannot prepare a perfect feasibility report without the help of other parties. Those helping hands includes: • Business Enterprise Center • Accountant • Solicitor • Banks • Business advisers or consultants • Trade associations • Potential suppliers • Competitors • Libraries and Online entrepreneurship recourses
  51. 51. Monitoring the Study Hiring a consultant does not negate the responsibility for insuring that the feasibility study is conducted properly. You need to be engaged in the project and the evaluation process, understand the issues involved, question the basic assumptions used in the study and challenge the conclusions of the study. Few things to remember: Represent the project committee’s needs and interests to the consultant Review and clarify what is needed from the consultant Monitor the work of the consultant Provide periodic reports to the project committee
  52. 52. How to Accept or Reject the Study? At the end of the study, the authorized party will submit the draft or final report. It is not uncommon for the project committee to reject the draft of the report and ask for further clarification and analysis. So, it is important to determine if it is accurate, relevant and complete. Few things are important to consider such as: Understandable and easy to read Addresses all of the relevant issues and questions Lists and discusses all of the underlying assumptions of the project analysis logically consistent within sections and among sections Thoroughly researched using good research techniques Contains all of the relevant information
  53. 53. References • Thomson, Alan (2005), Business Feasibility Study Outline, Appendix 1, PP: 185-198 • Wikipedia, (2016), Feasibility study, [online] Available at: https://en.wikipedia.org/wiki/Feasibility_study [Accessed 18 Apr, 2016] • Hofstrand, Don & Holz-Clause, Mary (November, 2009), When to Do and How to Use a Feasibility Study • Hofstrand, Don & & Holz-Clause, Mary (October, 2009), What is a Feasibility Study? • Matson, James (October 2000), Cooperative Feasibility Study Guide, United States Department of Agriculture, RBS Service Report 58 • W. Behrens, P. M. Hawranek (1995), Manual for the Preparation of Industrial Feasibility Study, United Nations Industrial Development Organization
  54. 54. Suggested Questions! 1. Why Feasibility Study is important before starting new business? 2. How to do the Feasibility Study? 3. Describe the dimensions of Feasibility Study? 4. Is there any differences between Business Plan and Feasibility Study? Explain. 5. What are the factors that influences the exit strategy viability? 6. Explain B2B and B2C market with real market examples.
  55. 55. Suggested Questions! (Cont.) 7. Differentiate between Patent, Copyright and Trademark. Explain with examples. 8. Is it necessary to monitor the Feasibility Study? Give your arguments. 9. “Feasibility Study is a waste of time & money. It’s not necessary to do it. Let’s start the business first and see what will happen!”- Do you agree or not? Explain your arguments. 10. How the risks related to the project will be determined and reported on Feasibility Study?

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