Barringer e4 Ppt 03GE

5/18/2018 Barringer e4 Ppt 03GE

1/38Copyright 2012 Pearson Education

Chapter 3

Feasibility Analysis

Bruce R. Barringer

R. Duane Ireland

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Chapter Objectives1 of 3

1. Explain hat a feasibilit! anal!sis is and h! it"si#portant.

$. Discuss the proper ti#e to co#plete a feasibilit!

anal!sis hen developing an entrepreneurial venture.

3. Describe the purpose of a product%service feasibilit!

anal!sis and the to pri#ar! issues that a proposed

business should consider in this area.

&. Explain a concept state#ent and its co#ponents.'. Describe the purpose of a bu!ing intentions surve! and

ho it"s ad#inistered.

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Chapter Objectives$ of 3

(. Explain the i#portance of librar!) Internet) and

gu#shoe research.

*. Describe the purpose of industr!%#ar+et feasibilit!

anal!sis and the to pri#ar! issues to consider inthis area.

,. Discuss the characteristics of an attractive industr!.

-. Describe the purpose of organiational feasibilit!anal!sis and list the to pri#ar! issues to consider

in this area.

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Chapter Objectives3 of 3

1/. Explain the i#portance of financial feasibilit!

anal!sis and list the #ost critical issues to consider

in this area.

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0hat Is easibilit! 2nal!sis

easibilit! 2nal!sis

easibilit! anal!sis is the

process of deter#ining hether

a business idea is viable.

It is the preli#inar! evaluation of a business idea) conducted

for the purpose of deter#ining

hether the idea is orth

pursuing.

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0hen 4o Conduct a easibilit! 2nal!sis

5 4i#ing of easibilit! 2nal!sis

6 4he proper ti#e to conduct a feasibilit! anal!sis is earl! in

thin+ing through the prospects for a ne business.

6 4he thought is to screen ideas before a lot of resources arespent on the#.

5 Co#ponents of a 7roperl! Conducted easibilit!

2nal!sis

6 2 properl! conducted feasibilit! anal!sis includes fourseparate co#ponents) as discussed in the folloing slides.

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easibilit! 2nal!sis

Role of feasibilit! anal!sis in developing business ideas.

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or#s of easibilit! 2nal!sis

7roduct%8ervice easibilit!

Organiational easibilit!

Industr!%4arget 9ar+et

easibilit!

inancial easibilit!

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Outline for a Co#prehensive easibilit!

2nal!sis

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7roduct%8ervice easibilit! 2nal!sis1 of $

7roduct%8ervice

easibilit! 2nal!sis

7urpose

Is an assess#ent of the overall

appeal of the product or service

being proposed.Before a prospective fir# rushes

a ne product or service into

develop#ent) it should be sure

that the product or service is hat

prospective custo#ers ant.

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7roduct%8ervice easibilit! 2nal!sis$ of $

Co#ponents of product%servicefeasibilit! anal!sis

7roduct%8erviceDesirabilit!

7roduct%8erviceDe#and

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7roduct%8ervice Desirabilit!1 of 3

Does it #a+e sense Is it reasonable Is it so#ething consu#ers

ill get excited aboutDoes it ta+e advantage of an environ#ental trend) solve a

proble#) or ta+e advantage of a gap in the #ar+etplace

Is this a good ti#e to introduce the product or service to the

#ar+et2re there an! fatal flas in the product or service"s basic design

or concept

irst) as+ the folloing :uestions to deter#ine the basicappeal of the product or service.

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7roduct%8ervice Desirabilit!$ of 3

5 8econd) 2d#inister a Concept 4est6 2 concept state#ent should be developed.

6 2 concept state#ent is a one;page description of a business

that is distributed to people ho are as+ed to provide

feedbac+ on the potential of the business idea.

6 4he feedbac+ ill hopefull! provide the entrepreneur

before proceeding further.

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Copyright 2012 Pearson Education

7roduct%8ervice Desirabilit!3 of 3

?e @enture

itness Drin+"s

Concept 8tate#ent

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7roduct%8ervice De#and1 of (

5 7roduct%8ervice De#and6 4here are to steps to assessing product%service de#and.

6 8tep 1< 2d#inister a Bu!ing Intentions 8urve!

6 8tep $< Conduct Aibrar!) Internet) and u#shoe research

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5 Bu!ing Intentions 8urve!6 Is an instru#ent that is used to gauge custo#er interest in a

product or service.

6 It consists of a concept state#ent or a si#ilar description of

a product or surve! ith a short surve! attached to gauge

custo#er interest.

6 Internet sites li+e 8urve!9on+e! #a+e ad#inistering a

bu!ing intentions surve! eas! and affordable.

7roduct%8ervice De#and$ of (

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7roduct%8ervice De#and3 of (

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7roduct%8ervice De#and& of (

5 Aibrar!) Internet) and u#shoe Research

6 4he second a! to assess the de#and for a product or

service is b! conducting librar!) Internet) and gu#shoe

research.6 Reference librarians can often point !ou toard resources

to help !ou investigate a business idea) such as industr!;

specific trade journals and industr! reports.

6 Internet searches can often !ield i#portant infor#ationabout the potential viabilit! of a product or service idea.

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7roduct%8ervice De#and' of (

u#shoe Research

Explanation

2 gu#shoe is a detective or an

investigator that scrounges around

for infor#ation or clues herever the! can be found.Be a gu#shoe. 2s+ people

hat the! thin+ about !our product

or service idea. If !our idea is to

sell educational to!s) spend a ee+ volunteering at a da! care center

and atch ho children interact

ith to!s.

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7roduct%8ervice De#and( of (

One of the #ost effective

things an entrepreneur

can do to conduct a thorough product%service

feasibilit! anal!sis is to

hit the streets and tal+ to

potential custo#ers.

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Industr!%4arget 9ar+et easibilit! 2nal!sis1 of $

Industr!%4arget 9ar+et

easibilit! 2nal!sis

7urpose

Is an assess#ent of the overall

appeal of the industr! and the

target #ar+et for the proposed business.2n industr! is a group of fir#s

producing a si#ilar product or

service.

2 fir#"s target #ar+et is theli#ited portion of the industr! it

plans to go after.

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Industr!%4arget 9ar+et easibilit! 2nal!sis$ of $

Co#ponents of industr!%target #ar+etfeasibilit! anal!sis

Industr! 2ttractiveness 4arget 9ar+et2ttractiveness

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Industr! 2ttractiveness1 of $

5 Industr! 2ttractiveness

6 Industries var! in ter#s of their overall attractiveness.

6 In general) the #ost attractive industries have the

characteristics depicted on the next slide.6 7articularl! i#portantthe degree to hich environ#ental

and business trends are #oving in favor rather than against

the industr!.

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Industr! 2ttractiveness$ of $

52re !oung rather than old

52re earl! rather than late in their life c!cle

52re frag#ented rather than concentrated

52re groing rather than shrin+ing

52re selling products and services that custo#ers =#ust have> rather than

=ant to have>

52re not croded

5ave high rather than lo operating #argins

52re not highl! dependent on the historicall! lo price of +e! ra #aterials

Characteristics of 2ttractive Industries

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4arget 9ar+et 2ttractiveness

5 4arget 9ar+et 2ttractiveness

6 4he challenge in identif!ing an attractive target #ar+et is

to find a #ar+et that"s large enough for the proposed

business but is !et s#all enough to avoid attracting largerco#petitors.

6 2ssessing the attractiveness of a target #ar+et is tougher

than an entire industr!.

6Often) considerable ingenuit! #ust be e#plo!ed to findinfor#ation to assess the attractiveness of a specific target

#ar+et.

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Organiational easibilit! 2nal!sis1 of $

Organiational easibilit!

2nal!sis

7urpose

Is conducted to deter#ine

hether a proposed business has

sufficient #anage#ent expertise) organiational co#petence) and

resources to successfull! launch

a business.ocuses on non;financial resources.

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Organiational easibilit! 2nal!sis$ of $

Co#ponents of organiationalfeasibilit! anal!sis

9anage#ent 7roess Resource 8ufficienc!

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9anage#ent 7roess

5 9anage#ent 7roess6 2 proposed business should candidl! evaluate the proess)

or abilit!) of its #anage#ent tea# to satisf! itself that#anage#ent has the re:uisite passion and expertise to

launch the venture.6 4o of the #ost i#portant factors in this area are because it"s a tool that can be usedin the initial pass at deter#ining the feasibilit! of a

business idea.

6 If a business idea cuts #uster at this stage) the next step is

to co#plete a business plan.

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