The document discusses the key components of a feasibility study for developing a business plan. It explains that a feasibility study analyzes the viability of a proposed project and involves analyzing several areas including market demand, technical requirements, management needs, financials, economic and environmental impacts. The feasibility study process includes generating project ideas, conducting initial screening, and then analyzing key areas such as market demand, technology, finances, economics and environment impacts. The overall goal is to determine if the project is worthwhile and should proceed to implementation.

1. ENTREPRENEURSHIP DEVELOPMENT – KMB 402
Topic: Developing a Business Plan
(Part 4 of 4)
ACHLA TYAGI,
Assistant Professor
Department of Business Administration
ABES EC (032), Ghaziabad
AKTU, LUCKNOW
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

2. Feasibility Study
- Feasibility study is related to analyse the
viability of the identified project to support
decision making of investment.
- As its name implies, it is a study to decide
whether the identified project is attractive
enough to go for implementation
- The study needs inputs from many
professional disciplines for various areas of
the study
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

3. Feasibility Analysis: A Schematic Diagram
(P Chandra (2003) Projects: Planning………, Tata McGraw –Hill, New Delhi. page 13).
. Generation of ideas
Initial Screening
Is the Idea Prima Facie Promising?
Yes No
Plan Feasibility Analysis
Terminate
Conduct
Market Analysis
Conduct
Technical Analysis
Conduct Financial
Analysis
Conduct Economic and Ecological analysis
Is the project Worthwhile? No
TerminatePrepare Funding Proposal
Yes
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LUCKNOW

4. Why Feasibility Study?
 To find if there is adequate demand for the
project’s output.
 To find if there is availability of suitable technology
and inputs.
 To find the best options.
 To answer if the project meets the environmental
regulations and priority of the nations.
 To examine the project’s financial and economic
viability.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

5. Areas of Analysis in Feasibility Study
• Demand/ Need and Market Analysis
• Technical Analysis
• Management Analysis
• Financial Analysis
• Economic Analysis
• Environmental Analysis
• Social Analysis
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

6. Market and Demand Analysis
• Market and demand analysis look at the need
of the project and help to estimate demand.
• It is the key activity for determining the scope
of an investment, the possible production
programs, the technology required and often
the choice of location.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

7. Market and Demand Analysis
The analysis cover mainly:
a. Aggregate demand for the product/service
b. The share of unfulfilled demand
c. Demand forecasting
d. Market price of product/service
e. Analysis of competitors, their strength &
weakness
f. Distribution mechanism
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

8. Technical Analysis
• Every project must be technically feasible.
• Technical analysis is related to examine
whether the project under study is technically
feasible to setup and operate to produce
service/product.
• For example, in agriculture project of Apple
farming, types of field, soil test, temperature
required in selected location, location
selection, plantation distance of between
plants, variety etc needs to be analyzed.ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

9. Technical Aspects to be Considered
Technology:
• Choice of technological process and/ or appropriate
technology,
• Is the technology proven or tested?
• Does the technology/ process/ equipment technically fit
with the facility’s existing technology/process/
equipment & machinery?
• Equipment capacity & whether it is as per requirement
• List of recommended equipment suppliers.
• Reputation of the suppliers and performance guarantees
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

10. Technical Aspects to be considered
Cont.
• Investment cost and operational cost of different
technology/process
• Environmental aspects of different technology
Location aspects of the project and availability of
infrastructural facilities with probable alternative
locations
Inputs: Availability of electricity, water, fuel, raw
materials
Size and scale of operations: based on the demand,
capital requirement, and technology, inputs available
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

11. Management Analysis
If the management is incompetent, even a good
project may fail. So it looks at:
a. Types of organisation
b. Academic qualification, and experience of key
persons
c. Availability of personnel required for project
execution.
d. Assessment of other specific skills required for the
project
e. User’s role in case of development projects etc.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

12. Financial Analysis
The scope of financial appraisal varies considerably with the
nature of project and whether it is revenue producing (e.g.
industry, agriculture) or not (e.g. roads, public schools).
Financial analysis covers:
- Investment Cost Estimation
- Operating Cost Estimation
- Benefits Estimation
- Cost Benefits Comparison
- Project Selection Decision
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

13. Economic Analysis
• Economic analysis estimate and analyze the
project’s net contribution to the whole
economy of the region or country.
• It helps determine whether the project
increases the net wealth of a region or
country as a whole or not.
• Estimation of Economic Costs of Projects
• Estimation of Economic Benefits of Projects
• Comparing Costs and Benefits
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

14. Economic Analysis
• Calculation of Economic Net Present Value (ENPV),
Economic Internal Rate of Return (EIRR) and
Economic Benefit Cost Ratio (EB/C Ratio)
• Decisions:
- If ENPV > 0, accept, if ENPV < 0, reject
- If EIRR > discount rate (cost of capital), accept
project
- If EB/C ratio > 1 accept, < 1 reject project
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

15. Environmental Analysis
A project may causes environmental impacts in
many ways. Some of the important parameters
considered under Environmental Analysis:
• Identification and analysis of adverse effects on
the environment
• Identification of positive impacts
• Required Mitigation measures
• Designing environmental management plan
• Provision of fund for environment management
plan
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

16. Environmental Analysis
Some of the important legislations for
environment protection are as follows:
• The National Green Tribunal Act, 2010
• The Air (Prevention and Control of Pollution) Act,
1981
• The Water (Prevention and Control of Pollution)
Act, 1974
• The Environment Protection Act, 1986
• The Hazardous Waste Management Regulations,
etc.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

17. Social Analysis
A project may causes social impacts in many
ways as:
• Will the project have any adverse effects on
the society?
• What are positive and negative impacts
• Viable measures to address negative impacts
• Estimating cost for addressing social impacts
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

18. Initiating the Feasibility Study
• Appointment of an experienced manager and
selection of study team members
• Scope of the study
• External Advisers to support study team
• Plan and schedule the study
• Starting study as per plan and schedule
• Controlling study to complete as per plan and
schedule.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

19. Completing the Feasibility study
The feasibility study should act as a
springboard for the next phase in the project
life cycle. – design and appraisal –ensuring
that it is able to commence in a focused way.
The end product of Feasibility Study should
therefore comprise a clear, concise report,
called Feasibility Study Report
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW