The document discusses the concept of feasibility analysis, which determines the viability of a business idea. A feasibility analysis consists of three parts: an industry and market analysis using Porter's Five Forces model to assess attractiveness; a product analysis using primary and secondary research; and a financial analysis of capital needs, earnings potential, and return on investment. It focuses on how industry and market analysis identifies industry attractiveness and potential market niches for a small business.

1. CHAPTER 4 DISCUSSION QUESTIONS
1) What is a feasibility analysis?
2) What is an industry & market feasibility analysis?
3) Explain the 5 forces model.
4) What is a product or service feasibility analysis?
5) What is the difference between primary & secondary
research?
6) What is a financial feasibility analysis?

2. FEASIBILITY ANALYSIS
”THE PROCESS OF DETERMINING WHETHER AN ENTREPRENEUR’S IDEA IS A
VIABLE FOUNDATION FOR CREATING A SUCCESSFUL BUSINESS.”
-ANSWERS THE QUESTION: “SHOULD WE PROCEED WITH THIS BUSINESS
IDEA?”
-THE EASY PART OF LAUNCING A BUSINESS IS COMING UP WITH AN IDEA FOR
A NEW BUSINESS CONCEPT OR APPROACH.
-THE HARD PART OF LAUNCHING A BUSINESS IS TRANSFORMING THE IDEA
INTO A VIABLE BUSINESS.
-A FEASABILITY ANALYSIS IS CONDUCTED PRIOR TO COMMITTING THE
NECESSARY RESOURCES REQUIRED TO BUILDING A BUSINESS PLAN.

3. FEASIBILITY ANALYSIS
-CONSISTS OF 3 INTERRELATED COMPONENTS:
1) INDUSTRY & MARKET FEASIBILITY ANALYSIS
STEP 1: ASSESSING INDUSTRY ATTRACTIVENESS (5
FORCES MODEL)
STEP 2: IDENTIFYING POTENTIAL NICHES
2) PRODUCT OR SERVICE FEASIBILITY ANALYSIS
GATHERING PRIMARY & SECONDARY RESEARCH
3) FINANCIAL FEASIBILITY ANALYSIS
A)CAPITAL REQUIREMENTS
B)ESTIMATED EARNINGS
C)RETURN ON INVESTMENT

4. I. INDUSTRY & MARKET FEASIBILITY ANALYSIS
-TWO MAIN PURPOSES:
1) ASSESSING INDUSTRY ATTRACTIVENESS
-TO DETERMINE HOW ATTRACTIVE AN INDUSTRY IS
OVERALL AS A “HOME” FOR A NEW BUSINESS.
2) IDENTIFYING POTENTIAL NICHES
-TO IDENTIFY POSSIBLE NICHES A SMALL BUSINESS CAN
OCCUPY PROFITABLY.
NICHE:
-A DISTINCT SEGMENT OF A MARKET.

5. INDUSTRY & MARKET FEASIBILITY ANALYSIS
STEP 1: ASSESSING INDUSTRY ATTRACTIVENESS

6. FIVE FORCES MODEL
”A MODEL THAT RECOGNIZES THE POWER OF 5 FORCES ON AN
INDUSTRY.”
-A USEFUL TOOL FOR ANALYZING AN INDUSTRY’S
ATTRACTIVENESS.

8. 1) RIVALRY AMONG COMPANIES COMPETING IN THE INDUSTRY
-THE STRONGEST OF THE 5 FORCES.
-LIKE HORSES RUNNING IN A RACE, BUSINESSES IN AN
INDUSTRY ARE JOCKEYING FOR POSITION IN AN ATTEMPT TO
GAIN A COMPETITIVE ADVANTAGE.
-FACTORS THAT MAKE AN INDUSTRY MORE ATTRACTIVE:

9. 1) NUMBER OF COMPETITORS IS LARGE OR SMALL.

10. 2) COMPETITORS ARE NOT SIMILAR IN SIZE OR CAPABILITY.

11. 3) THE INDUSTRY IS GROWING AT A FAST PACE.

12. 4) THE OPPORTUNITY TO SELL A DIFFERENTIATED
PRODUCT/SERVICE IS PRESENT.