Assignment Instructions
• Write the following slides in your own handwriting and submit a
scanned copy of it via goggle classroom by the deadline while
submit the hard copy of Assignment 1.C1, 1.C2 and 1.C3 (All bound
together in the sequence) to the instructor in the next class after
deadline.
• Electronic submissions only without the associated handwritten hard
copy shall not be marked.
• Late submissions of scanned Assignment to Google classroom are
accepted but shall be penalized by:
•
•
•
•
10% for late submission,
30% for submission more than 24 hours after deadline,
60% for submission 48 hours after deadline, and
80% for submission thereafter…
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
Feasibility Analysis
• What is feasibility analysis?
• It is the process of determining whether a business idea is
viable, i.e., worth pursuing
• When to conduct feasibility analysis?
• At the initial stage of the business, i.e.
 right after recognizing the business idea
 before writing a business plan
 before spending any resources on it
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Feasibility Analysis
Role of feasibility analysis in developing business ideas
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What are the Objectives Behind
Feasibility Analysis?
• Put an idea to test by:
 Talking to industry experts
 Surveying prospective customers
 Studying industry trends
 Thinking through financials
 Scrutinizing it in other ways
• Helps determine whether an idea is feasible
• Helps to shape and mold the idea based on feedback
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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What is the Purpose of Product/Service
Feasibility Analysis?
• It is an assessment of the overall appeal of the product
or service being proposed
• Before a firm rushes a new product or service into
development, it should be sure that the product or
service has what prospective customers want.
• Components of Product/Service Feasibility
• Product/Service desirability
• Product/Service demand
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Product/Service Desirability
1 of 2
• Ask the following questions to determine the basic appeal of
the product or service.
• Does it make sense?
• Is it reasonable?
• Is it something consumers will get excited about?
• Does it take advantage of an environmental trend, solve a
problem, or take advantage of a gap in the marketplace?
• Is this a good time to introduce the product or service to
market?
• Are there any fatal flaws in the product or service’s basic
design or concept?
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
Product/Service Desirability
2 of 2
• Administer a Concept Test
 A concept statement should be developed
a one page description of a business
distributed to people who are asked to provide feedback on
the potential of the business idea
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Product/Service Demand
• Buying Intentions Survey
 is an instrument used to estimate customer interest in a
product or service
 consists of a concept statement or a similar description of a
product or service with a short survey attached
 Internet sites make administering a buying intentions survey
easy and affordable
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Product/Service Demand
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Product/Service Demand
• Library, Internet, and Gumshoe Research
 Reference librarians can point towards resources to help
investigate a business idea, such as industry-specific trade
journal and industry reports
 Internet searches can yield important information about
the potential viability of a product or service idea
 Be a gumshoe (detective or an investigator)
 Ask people what they think about your product or service
idea
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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What is the Purpose of Industry/Target
Market Feasibility Analysis?
• It is an assessment of the overall appeal of the
industry and the target market for the proposed
business.
• An industry is a group of firms producing a similar
product or service.
• A firm’s target market is the limited portion of the
industry it plans to go after.
• Components of Industry/Target Market Feasibility
• Industry attractiveness
• Target market attractiveness
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Industry Attractiveness
1 of 2
Most attractive industries have the characteristics depicted
below:
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Industry Attractiveness
2 of 2
• Other important factors
• the degree to which environmental, economic, societal
and business trends are moving in favor rather than
against the industry
 Profit margins increasing or falling
 Innovation accelerating or waning
 Input costs going up or down
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Target Market Attractiveness
• Target Market
 Place within a larger market segment that represents a narrower
group of customers with similar needs
• Successful start-ups introduce either
 A new product into an existing market OR
 A new market to an existing product
• Challenge is in identifying an attractive target market
 find a market that’s large enough for the proposed business but
is yet small enough to avoid attracting larger competitors
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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What is the Purpose of Organizational
Feasibility Analysis?
• Conducted to determine whether a proposed
business has sufficient management expertise and
resources to successfully launch a business.
• Focuses on non-financial resources
• Components of Organizational Feasibility
• Management prowess
• Resource sufficiency
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Management Prowess
1 of 2
• A firm should honestly evaluate the ability of its
management team
 satisfy itself that management has the requisite passion
and expertise to launch the venture
• Managers with extensive professional and social
networks have an advantage
• New venture should be able to identify several
capable individuals they believe will join the firm
after it is launched
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Management Prowess
2 of 2
• Find an appropriate business partner, to help launch
the business
• Know the skills and experiences you need
• Make sure your personalities and work habits are
compatible
• Make sure you and your partner have common goals
• Look in the right places
• Hire a lawyer
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Resource Sufficiency
1 of 2
• An assessment of whether an entrepreneur has sufficient
resources to launch the proposed venture
• A firm should list the most critical nonfinancial
resources needed to move the business idea forward
successfully
• Obtain intellectual property protection on key aspects of
the business
• Critical to companies that have invented a new product/
introduced a new service
• Check online for filed patents
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Resource Sufficiency
2 of 2
• Examples of nonfinancial resources that may be critical to the
successful launch of a new business
• Affordable office space, manufacturing space, or space to launch a
service business
• Key management employees
• Key support personnel
• Key equipment needed to operate the business (computers, machinery,
delivery vehicles)
• Ability to obtain intellectual property protection on key aspects of the
business
• Support of local governments and provincial government if applicable
for business launch
• Ability to form favorable business partnerships
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Financial Feasibility Analysis
• Final component of a comprehensive feasibility
analysis
• A preliminary financial assessment is sufficient
• Components of financial feasibility analysis
• Total Start-Up Cash
• Financial Performance of Similar Businesses Needed
• Overall Financial Attractiveness of the Proposed Venture
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Total Start-Up Cash Needed
• Refers to the total cash needed to prepare the business
to make its first sale
• Prepare an actual budget
 list all the anticipated capital purchases and operating
expenses needed to get the business up and running
 provide an explanation of where the money will come
from
• Determine if the proposed venture is realistic given
the total start-up cash needed
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Financial Performance of Similar
Businesses
• Estimate a proposed start-up’s financial performance by
comparing it to similar, already established businesses
• Several ways to doing this, all of which involve a little
ethical detective work
 Online reports offer detailed industry trend analysis and
financial reports on thousands of individual firms
 simple observational research – visit point of sale of similar
businesses
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Overall Financial Attractiveness of the
Proposed Venture
• To assess whether the new venture is financially
feasible, a start-up’s profitability should be weighed
against following factors:
 Amount of capital invested
 Risks assumed in launching the business
 Existing alternatives for money being invested
 Existing alternatives for entrepreneur’s time and efforts
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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Overall Financial Attractiveness of the
Proposed Venture
• Factors used to weight the overall financial
attractiveness of the financial feasibility of the business
idea:
• Steady and rapid growth in sales during the first 5 to 7 years
in a clearly defined market niche
• High percentage of recurring revenue—meaning that once a
firm wins a client, the client will provide recurring sources of
revenue
• Ability to forecast income and expenses with a reasonable
degree of certainty
• Internally generated funds to finance and sustain growth
• Availability of an exit opportunity for investors to convert
equity to cash
NATIONAL UNIVERISTY OF COMPUTER & EMERGING SCIENCES, LAHORE – EE DEPARTMENT
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