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Feasibility Study

The document outlines a feasibility study for a project, detailing its purpose, components, and importance for various stakeholders including project proponents, creditors, management, and the general public. It emphasizes the need for market analysis, technical analysis, and financial analysis to evaluate the viability of a business idea before significant resources are invested. Key aspects include assessing demand, competition, operational requirements, start-up and operating costs, and potential revenue and profitability.

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Eula Mae Lomugdang
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16 views6 pages

Feasibility Study

The document outlines a feasibility study for a project, detailing its purpose, components, and importance for various stakeholders including project proponents, creditors, management, and the general public. It emphasizes the need for market analysis, technical analysis, and financial analysis to evaluate the viability of a business idea before significant resources are invested. Key aspects include assessing demand, competition, operational requirements, start-up and operating costs, and potential revenue and profitability.

Uploaded by

Eula Mae Lomugdang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PROJECT

FEASIBILITY
STUDY
Feasibility Analysis. It is a detailed business case for the project. It highlights the
benefits, costs, and risks that are associated with the project. It can be divided in three
key components (economic/marketing, technical, and financial. It is the preliminary
evaluation of a business idea, conducted for the purpose of determining whether the
idea is worth pursuing.

Timing. The proper time to conduct a feasibility study analysis is in the early stage, ie in
thinking through the prospects for a new business. The thought is to screen ideas before
a lot of resources are spent on them.
USERS
Project Proponents. The study would serve as a basis for selecting good ventures, for
implementing activities and formulating long-range plans.
Creditors and Investors. The study will serve as a basis in deciding whether to grant
financing and for determining the amount and terms thereof. For example, a bank would
require a feasibility study of a start-up business(due to the lack of financial statements)
to determine whether it should approve the loan applied for by the latter.

Management. The study would help in ascertaining the feasibility of expansion


programs, in deciding on the possibility of taking over existing business, as well as the
extent of the capital outlay required.
Government Instrumentalities. The study would help to ensure that the project meets
necessary legal requirements and would help determine the extent of government incentives that
may be granted.
General Public. The study would aid in minimizing the risk of business failures, reducing waste
of valuable resources, and thereby accelerating economic growth.
Nature, Purpose and Components
Market Analysis
Demand. Determine whether, not only when demand exist, but also the level of demand , i.e,
how much of the product does the customer likely to purchase along with how often.
Target market or customer. Successful marketing depends on accurate targeting of the
customers that may want to purchase from you. Where do these individuals live? What is their
income? What is their family status? How do they think about issues such as small businesses or
local products?
Competition. It is also important to research your potential competition. How many competitors
are there? Information to focus on includes trying to understand what they do well, what
weaknesses may exist and how your business and product would differ from theirs.
Market channel and outlets. Assess the potential market outlets for your product and the
corresponding channels for getting your product to those outlets. For instance, do you envision
having a retail location on your firm or at your place of business? Or do you wish to sell your
products at other stores? Your decision on market outlets could depend on requirements an outlet
may have regarding how they receive products, i.e., the distribution channels they utilize. Do they
accept deliveries direct from you or do they require the use of a specific distributor?
Government Instrumentalities. The study would help to ensure that the project meets
necessary legal requirements and would help determine the extent of government incentives that
may be granted.
General Public. The study would aid in minimizing the risk of business failures, reducing waste
of valuable resources, and thereby accelerating economic growth.
Nature, Purpose and Components
Market Analysis
Demand. Determine whether, not only when demand exist, but also the level of demand , i.e,
how much of the product does the customer likely to purchase along with how often.
Target market or customer. Successful marketing depends on accurate targeting of the
customers that may want to purchase from you. Where do these individuals live? What is their
income? What is their family status? How do they think about issues such as small businesses or
local products?
Competition. It is also important to research your potential competition. How many competitors
are there? Information to focus on includes trying to understand what they do well, what
weaknesses may exist and how your business and product would differ from theirs.
Market channel and outlets. Assess the potential market outlets for your product and the
corresponding channels for getting your product to those outlets. For instance, do you envision
having a retail location on your firm or at your place of business? Or do you wish to sell your
products at other stores? Your decision on market outlets could depend on requirements an outlet
may have regarding how they receive products, i.e., the distribution channels they utilize. Do they
accept deliveries direct from you or do they require the use of a specific distributor?
TECHNICAL ANALYSIS

Facilities and Equipment.What facilities and equipment are required for


the production and processing of products? Where can you obtain these? Will
you be able to service or repair the equipment and if not, how close is a
reliable technician? f your proposed business venture does well, can you
handie an expansion, or will that require drastic remodeling or new
construction?
Labor and Management. Reliable and quality labor and management are
critical to every business. Estimate the number of employees you may need,
not only that, what knowledge and skill will they need to possess? Will you
be willing to train people? Do you possess the knowledge and skills to
manage this new venture? How can you handle any weaknesses that exist?
Inputs. You want to make sure that you have a complete grasp of all the
items needed to produce, process, market and sell your product or service.
From where will you source your inputs, and will you be able to obtain them
on the schedule you need them for? Are inputs of the quality or have the
characteristics that you require?
FINANCIAL ANALYSIS
Start-up costs. Costs required to acquire any needed land, build facilities, purchase
machinery and equipment, obtain licenses, certifications or any other requirements for
starting the venture. Not only do you need to know how much start-up costs would be
but also how they will be financed. Do you have the cash available or will you be
financing thru loans or investors?

Operating costs. On-going costs both fixed and variable associated with running the
business and producing the product. Fixed costs are expenses that don't change based
on the amount that you produce. E.g., rent and insurance. Variable costs are those
expenses that do change or vary with your level of production. E.g., raw materials and
packaging materials. You have to understand how operating costs change over time. For
instance, are there months when production increases thereby increasing variable costs.
Financing. How will you finance your potential business venture? Take out a loan from a
bank? Do you know some potential investors?. Research and understand the
requirements and implications that come with all sources of funding.
Revenue and Profitability. Look at the potential revenue that would be generated by
the business. This will be determined by how you price your products and the quantity
that you sell. Finally, estimate the profit that results.

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