This document outlines the key elements of conducting a feasibility study and crafting a business plan over weeks 6-7. It discusses determining the attractiveness of an industry through a five forces model analysis and identifying potential profitable niches. The feasibility study evaluates the financial, industry/market, and product/service viability. It also provides guidance on the essential components of an effective business plan, including the executive summary, company description, marketing strategy, management team, and financial projections.

1. WEEK 6-7
Conducting a Feasibility Study
and Crafting a Business Plan

2. Week 6: conducting a Feasinility Study and Crafting a Business Plan
Module Learning Outcomes:
By the end of this module, a student is able to:
1. Understand the elements of Feasibility Study
2. Determine how attractive an industry is overall as a home for a new
business.
3. Identify the possible niches a small business can occupy
profitability.

3. Topics Covered
• Definition of Feasibility Study
• Five Forces Model
• Financial Feasibility Study
• Business Plan
• Business and Marketing Strategy

4. The process of determining
whether an entrepreneur’s
idea is a viable foundation for
creating a successful business

5. Financial Feasibility
Industry and
Market Feasibility
Product or
Service Feasibility

6. .
Rivalry among
existing firms
Suppliers Buyers
Potential
Entrants
Substitutes
Threat of new entrants
Bargaining
Power of
suppliers
Bargaining
Power of
buyers

7. ❑ Number of competitors is large or few
(less than 5)
Competitors are not similar in size or
capability
The industry is growing at a fast pace
The opportunity to sell a differentiated
product or service is present

8. ❑ Many suppliers sell a
commodity product to the
companies in it
Substitute products are
available for the items suppliers
provide
Companies in the industry find
it eas to switch from one
supplier to another
The items suppliers provide
account for a relatively small
portion of the cost of finished

9. ❑ Switching costs to competitors is high
Number of buyers is large
Customers demand differentiated products
Customers find it difficult to gather
info on suppliers costs etc
The items account for a relatively small portion
of the customers’ finished products

10. ❑ Advantages of economic scale are not
present
Capital requirements to enter are low
Cost advantages are not related to
company size
Buyers are brand-loyal
Governments do not restrict entry

11. ❑ Quality substitute products are
not readily available
Prices of substitute products are not
lower
Buyers’ cost of switching to
substitute products is high

12. ❑ Are customers wiling to purchase our goods
and services?
Can we provide the product or service to our
customers at a profit?

13. i

14. ❑ Prototypes: an original, functional model of a
new product that entrepreneurs can put into
the hands of potential customers so they can
see it, test it and use it
In-home trials: a research technique that
involves sending researchers into customers’
homes to observe them as they use the
company’s product or service

15. ❑ Capital
Requirement
s
Estimated
Earnings
Returnon
Investment

16. A written summary of an entrepreneur’s
proposed business venture, its
operational and financial details, its
marketing opportunities and strategy,
and its managers’ skills and abilities

17. ❑ Guides an entrepreneur
Attracts lenders and investors Reality
Test
Competitive Test
Value Test
Represents/reflects its creator

18. ❑ Title Page and Contents
Executive Summary
Vision and Mission Statement
Company History
Business and Industry Profile
Business Strategy
Description of the Firm’s Product or Service
Marketing Strategy
Competitor Analysis
Description of Management Team
Plan of Operation
Pro Forma Financial Statements
The Loan or Investment Proposal

19. ❑ Capital
Capacity
Collateral
Character
Conditions

20. ❑ The company’s business
model and basis for
competitive edge
The company’s target markets and
the benefits its product or service
will provide
The qualification of the
founders and/or key
employees

21. ❑ Overview of industry or market
segment
Existing or anticipated profitability of the
industry
Company’s general business goals
Company’s immediate objectives

22. ❑ How to gain competitive edge
How to achieve the goals and
objectives
Methods to satisfy KSFs of the
industry

23. ❑ Overview of how customers will use it
Any patents, trademarks or copyright
Honest comparison with competition
Feature (descriptive fact about a product or
service) vs Benefit (what a customer gains from
the product or service)
Description of production process, strategic
raw materials, sources, costs.

24. ❑ Defining the target market
Who? Where? How many? Why?
Proving that a profitable market exists
Showing customer interest
Documenting market claims

25. ❑ Advertising
Market Size and trend
Location
Pricing
Distribution

27. ❑ Qualifications of those with
at least 20% ownership
Resumes
How to avoid primary reasons
for business failures

28. Statements
❑ Monthly for 3 years by quarter
3 sets: pessimistic, most likely,
optimistic
Statement of assumptions

29. ❑ Purpose of financing
Amount requested
Plans for repayment/exit strategy
Timetable for implementation
Evaluation of risks

30. :
Financial Feasibility
Industry and Market Feasibility
Product or Service Feasibility

31. END