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Feasibility Study Module 1

A feasibility study determines whether a business undertaking can be profitable. It identifies critical issues and reduces risks of failure. A study contains chapters on market, management, technical, and financial feasibility. It evaluates the potential benefits and profitability of new businesses, expansions, technology changes, and mergers. A study involves creating a questionnaire to gather necessary information from potential customers on their satisfaction, willingness to try the new business, current providers, and anticipated service needs. This helps determine if there is a market for the proposed business.

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35 views3 pages

Feasibility Study Module 1

A feasibility study determines whether a business undertaking can be profitable. It identifies critical issues and reduces risks of failure. A study contains chapters on market, management, technical, and financial feasibility. It evaluates the potential benefits and profitability of new businesses, expansions, technology changes, and mergers. A study involves creating a questionnaire to gather necessary information from potential customers on their satisfaction, willingness to try the new business, current providers, and anticipated service needs. This helps determine if there is a market for the proposed business.

Uploaded by

sirjagz0611
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Subject Code: Mgt 63

Course Description: Feasibility Study


Instructor: John Vincent S. Jagolino

CHAPTER 1: GENERAL ASPECTS/SUMMARY

What is a Feasibility Study?

A feasibility study, which is synonymous with “Project Study”, is a systematic inquiry to determine
whether a specific business undertaking could be implemented at a certain acceptable profit level. It is not
merely an investigation but at the same time a plan or a framework on how the operation of a business
project but shall be accomplished.

Advantages:

1. It offers a means of determining whether valuable resources maybe committed in an undertaking.


2. It reduces the potential risk of failure for a business undertaking.
3. It allows for an identification of critical issues and critical resources in an undertaking.

Disadvantages:

1. It requires technical knowledge.


2. It requires initial expenses.
3. It requires time and effort.

Uses/Purposes

1. To evaluate the profitability if a new business.


2. To evaluate the benefits to be gained in the expansion of a business.
3. To evaluate the financial impact for changes in business location.
4. To evaluate the benefits from new methods of production, technology or machinery.
5. To evaluate changes in an organization.
6. To evaluate benefits from business mergers or business acquisition.

Parts of a Feasibility Study

Chapter 1: Market Feasibility


 Results and interpretation of data gathered from the questionnaire/survey.
 Computation of potential market
 Computation of income/revenue forecast

Chapter II: Management Feasibility


 Organizational structure
 Employment
 Remuneration

Chapter III: Technical Feasibility


 Vicinity and Floor plan
 Equipment, Machineries & other assets

Chapter IV: Financial Feasibility


 Income Statement
 Balance Sheet
 Cash flow
 Others

Chapter V: Socio-economic Feasibility


 Contribution and benefits of the study
Making the Introduction

The introduction is placed before chapter 1. It consists of a minimum of 2 paragraphs. These


paragraphs contain different thoughts or information regarding the study. Here are the contents:

First paragraph
 The first paragraph contains facts which are related to the study.
 These facts should be supported by authors from books, magazines, etc. and should be cited after the
statement/s.
e.g. It is prepared not only for a new project but also for the existing ones. (Ditablan 2012)
 If the facts are gathered from the internet, then the complete URL should be stated.
e.g.
Water is one of the most important substances on earth. (www.health.gov.au/internet/publica
tions/publishing.nsf/Content/ohp-enhealth-manual-atsi-cnt-l~ohp-enhealth-manual-atsi-cnt-
l-ch6~ohp-enhealth-manual-atsi-cnt-l-ch6.1)

Second Paragraph
 Tell the story on how the group decided what kind business should be established. Why not the other
kinds of business?

The proponents can add some information as long as it is relevant to the study.

Formulating the Vision, Mission and Objectives

VMO should be placed after the introduction. A proponent cannot formulate the right VMO if he/she
does not know the meaning of each of the terms.

Vision
Vision should be the company’s dream. It should be stated in a general way.

Mission
Mission should be the general step on how to attain the company’s dream.

Objectives
Objectives are the specific steps of the mission statement. It should be at least three.

Creating a Questionnaire

It is not easy to create a survey questionnaire. There many things that we need to consider. The
proponents must make sure that they will get ALL necessary information that is why they must make sure
that the necessary questions are asked. Inadequate questionnaire may lead to failure of the study.

The first question must be—“Have you availed or are you currently availing services of __(kind of
business)__?”. Then there must be choices under the question.

Example:

1. Have you availed or are you currently availing services of a Laundry shop?
( ) Yes
( ) No (END)

The second question will be the customer’s satisfaction of their current service provider and their
willingness to try your proposed business. It goes like this:

2. Satisfaction and willingness.


[ ] I’m satisfied with my current/previous service provider and I’m willing to try your service.
(proceed to question #4)
[ ] I’m satisfied with my current/previous service provider but I’m not willing to try your service.
(proceed to question #3)
[ ] I’m not satisfied with my current/previous service provider but I’m willing to try your service.
(proceed to question #4)
[ ] I’m not satisfied with my current/previous service provider and I’m not willing to try your service.
(proceed to question #3)
The third question is just asking the business name of the current provider and its address. Example:

3. Current/previous provider’s information

Name of the business: ___________________________________________


Address of the business: _________________________________________ (END)

The remaining questions will now be up to the proponents because it will now depend on what
proposed business they will have. It is very important to ask “how often” will they avail the service and the
“specific volume” that they are willing to avail.

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