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Chapter 2

The document outlines the importance of feasibility studies in project planning, emphasizing their role in assessing technical, financial, and marketing aspects before proceeding with a project. It details the project cycle phases, the distinction between feasibility studies and business plans, and the components of a feasibility study, including market, financial, organizational, and technical analyses. Additionally, it highlights the significance of gathering information to mitigate risks and support decision-making for potential investments.

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Dianne April Comia
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2 views

Chapter 2

The document outlines the importance of feasibility studies in project planning, emphasizing their role in assessing technical, financial, and marketing aspects before proceeding with a project. It details the project cycle phases, the distinction between feasibility studies and business plans, and the components of a feasibility study, including market, financial, organizational, and technical analyses. Additionally, it highlights the significance of gathering information to mitigate risks and support decision-making for potential investments.

Uploaded by

Dianne April Comia
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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Feasibility study

Success

Any successful project, company, factory,


individual based on three main factors
Technicality ( the main factor, the knowhow,
talent)
Finance
Marketing
What is project cycle

 The planning process of developing a new product, idea or


service has been described in many ways. Here we look at
the project cycle through these five phases:
Identification: Preliminary idea creation,
, pre-feasibility studies, ( identify the phenomena ).
 Deliberation: conducting feasibility studies, decision to
proceed with the project.
 Implementation: business plan. Securing capital,
construction, obtaining permits, hiring management.
 Operation: Mobilization of manpower, equipment and
materials to carry out the plan.
 Evaluation: Determining what worked and did not work
(in preparation to plan again).
Feasibility study overview

FEASIBILITY STUDIES
A feasibility study is the process that every
person or company should do before starting
any project. A well prepared and researched
study could save hundreds of thousands of
dollars further down the road.
A successful feasibility study may be
accepted or rejected.
Feasibility study overview

It helps avoid risk and answers questions,


like:
Will it work ?
How will it work ?
What is needed ?
When is the best time ?
How much investment is needed ?
What will the return be ?
Definition of Feasibility Studies

 A feasibility study is a study looks at the


viability of an idea with an emphasis on
identifying potential problems and attempts
to answer one main question: Will the idea
work and should you proceed with it?
Before you begin writing your business plan
you need to identify how, where, and to whom
you intend to sell a service or product. You
also need to assess your competition and
figure out how much money you need to start
your business and keep it running until it is
established
Feasibility Study vs. Business
Plan

A feasibility study is not a business plan. The


separate roles of the feasibility study and the
business plan are frequently misunderstood.
The feasibility study provides an investigating
function. It addresses the question of “Is this
a viable business venture?”
The business plan provides a planning
function. The business plan outlines the
actions needed to take the proposal from
“idea” to “reality.”
Executive summary

Is a term used in business for a short


document that summarizes a longer report,
proposal or group of related reports in such a
way that readers can rapidly become
acquainted with a large body of material
without having to read it all. It will usually
contain a brief statement of the problem or
proposal covered in the major document(s),
background information, concise analysis and
main conclusions. It is intended as an aid to
decision making by business managers.
Difference between Executive summary and
Abstract

An executive summary differs from an


abstract in that an abstract will usually be
shorter and is intended to provide a neutral
overview or orientation rather than being a
condensed version of the full document.
Abstracts are extensively used in academic
research where the concept of the executive
summary would be meaningless.
Why is feasibility study so important?

The information you gather and present in your feasibility


study will help you:
List in detail all the things you need to make the
business work.
Identify business-related problems and solutions.
Develop marketing strategies to convince a bank or
investor that your business is worth considering as an
investment.
Serve as a solid foundation for developing your business
plan.
Even if you have a great business idea you still have to
find a cost-effective way to market and sell your products
and services.
The Components of a Feasibility Study

Market Feasibility: Includes a description of


the industry, current market, anticipated
future market potential, competition, sales
projections, potential buyers, etc.
Financial Feasibility: Projects how much
start-up capital is needed, sources of capital,
returns on investment, etc.
The Components of a Feasibility Study

Organizational Feasibility: Defines the


legal and corporate structure of the business
(may also include professional background
information about the founders and what
skills they can contribute to the business).
Technical Feasibility: Details how you will
deliver a product or service (i.e., materials,
labor, transportation, where your business
will be located, technology needed, etc.).
Production process includes input, processing
and output.
Technical study includes

1-Technology and operational


This involves questions such as whether the
technology needed for the system exists, how
difficult it will be to build, and whether the firm
has enough experience using that technology. The
assessment is based on an outline design of
system requirements in terms of Input, Processes,
Output, Fields, Programs, and Procedures. This
can be quantified in terms of volumes of data,
trends, frequency of updating, etc in order to
estimate if the new system will perform
adequately or not.
Technical study

2- location analysis.
Location analysis typically involves testing
geographic locations for a real estate
development project, and usually involves
real estate land. Market Feasibility take into
account the importance of the business in the
selected area.
Technical study includes

3-Resource availability
This involves questions such as how much time
is available to build the new system, when it can
be built, whether it interferes with normal
business operations, type and amount of
resources required, dependencies, etc.
4-Culture
In this stage, the project's alternatives are
evaluated for their impact on the local and
general. an enterprise's own culture can clash
with the results of the project.
Financial study includes

1-Financial statements includes balance


sheet, income statement and cash flow
statement.
2-Financial ratios. Includes liquidity,
profitability, efficiency and capitalization
ratios
3-Source of finance ( loans or equity )
4-Appraisal methods. ( Pay back period, IRR,
NPV)
Marketing study includes

1. What is marketing study?


2. What is marketing Mix?
3. What is market structure?
4. What is SWOT analysis?
5. What is competitive profile?
6. What is market segmentation?
7. What is customer analysis?
Organizational study includes

1-Describe basic organizational design and


organization chart
2-Describe the human resources availability,
recruitment and training needs, and the reasons
for the
employment of foreign experts, to the extent
required for the project
3-Indicate key persons (skills required) and total
employment
(numbers and costs)
4-include professional background information about
the founders and what skills they can contribute to
the business
5-manning table
Introduction of the project includes

Title/ name of the project


Vision and mission statement
Project objectives
Estimated budget
Country review
Project background/ industry outlook
Source of information
 Table of references

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