DEFINITION OF FEASIBILITY STUDY
A feasibility study • Is designed to provide an overview of the primary issues related to a business idea. • Is created in order to minimize risk and to ascertain the viability of a project. • Is an evaluation and analysis of the potential of the proposed project which is based on extensive investigation and research to support the process of decision making.
COMPONENTS OF FEASIBILITY STUDY ✓ Market/Marketing Study • Includes a description of the industry, current market, anticipated future market potential, competition, sales projections, potential buyers, etc. • During marketing study, the researcher must determine if there are sufficient demands for the product as well the competitive position of the firm in the industry.
✓ Technical Study • Details how you will deliver a product or service • The manufacturing process, plant size, production schedule, machinery, plant location and layout, structure, raw materials, utilities and waste disposal is taken into consideration when it comes to technical study.
✓ Management/ Organizational Study • Defines the legal and corporate structure of the business • Management study involves on how the project shall be managed such as the business organization including the organization chart and function of each unit management personnel, skills and numbers of labor required.
✓ Financial/Economic Study • Projects how much start-up capital is needed, sources of capital, returns on investment, etc. • In financial study, the researcher should include the assessment of total capital requirements, break-even outputs, sales and prices, amount of sales required to earn a certain amount of profit and the cash payback period.
✓ Conclusion/Recommendation • Discusses how the business can succeed. • Be honest in your assessment