Feasibility assessment
Name
Institution
Feasibility Assessment
Feasibility analysis refers to the process of evaluating a business idea to determine if it is viable. The process ensures all projects are carefully understood before spending resources on them. It also calls for extensive research before any decisions are made. Decisions made in this case really heavily on strengths and weaknesses of proposed ventures or existing business, attention is also drawn towards opportunities and threats brought about by environment, resources required and other prospects for achievements. In other words, feasibility study provides a comparison of cost required to execute a project and value attained after it has been completed. A properly executed feasibility analysis explores four main areas; product/service feasibility, industry/target market feasibility, organization feasibility and financial feasibility. However, all these areas are structured towards achieving a common objective; evaluating a project’s credibility or potential for success.
Product or service feasibility analysis focuses on the overall appeal of the product or service that is under review or development. The analysis can be divided in two main areas namely desirability and demand to ensure it focuses on all essential aspects. Before a prospective firm introduces a new product or improve the existing products, it should be sure that is what the customers want. To establish product/service desirability the organization should prepare a concept test of about a page and distribute it to different people to fill. This move will provide feedback on the prospective product thus assisting the organization to improve the development strategy even further before proceeding. In product /service demand, the prospective firm should carrying out two main steps in assessment; provide a buying intention survey and then conduct a secondary research using the internet, library and gumshoe. Buying intention survey comprises of statements about the product and assists to evaluate customer interest on the same.
Coca cola Company is one of the companies that have strongly embraced product feasibility assessment. The company ensured that proper brand desirability and product demand are well analyzed before launching the company’s new product cocacola-zero a sugarless brand of the company’s popular beverage; coke soda. Coke Cola Company management possessed questions like Is the product reasonable?, Will it assist in filling the marketplace gap? Is it a good time to introduce the product?. Answering these questions meant that the company analyses the product before launching it to the target market.
Industry/ target market feasibility analysis focuses on the industry and target market of the prospective firm. An industry refers to a group of organizations producing related products and services. Target market on the other hand, is the limited section of the industry that the prospective firm intends to focus on. Feasibility analysis in these two areas revolves around two wide components; industry attractiveness and target market attractiveness. Industry attractiveness analysis will involve comparing the industry characteristics to those of the firm. This means that the firm will require monitoring environmental and business trends are improving and not declining in comparison to those of the industry. Target market analysis will assist the firm to find a market that is large enough for the desired product or service but at the same time attracting few competitors from the same industry. It is difficult to establish the attractiveness of a target market than that of the industry; therefore the firm should employ detailed research and ingenuity to attain accurate results about a specific target market.
Organizational feasibility analysis establishes efficiency of the prospective firm in areas relating to management, organizational competence and besides availability of resources. Organizational feasibility pays close attention to the non-financial resources of a firm thus establishing ability to introduce new products or improve existing systems. The components of organizational feasibility analysis are management prowess and resource sufficiency. Management prowess will establish the firm’s management team on it passion and expertise on the business idea. This important analysis will determine the passion the financing team has on the business idea. It will also establish the market understanding of the funding team or the entrepreneur before the firm participates in any venture. Resource sufficiency on the other hand, assesses whether the firm has sufficient resources to launch the business idea. In carrying out this assessment the firm should make a list of all non-financial resources required for the venture and evaluate it. At this level, if it is found that some critical resources are not attainable the project should be discontinued.
Financial feasibility analysis provides the final analysis of an elaborate feasibility analysis. At this point the firm should pay attention to the financial resources required for the venture. The components of this analysis that are quite essential are funds required for the start up, financial performance of related firms and overall financial attractiveness of the project. Start-up funds refer to the total cash to be invested before the firm can make the first sale. At this stage the firm should prepare a budget comprising of capital purchases and operating expenses that will be required to generate initial revenue. This move will ensure the venture financial requirements are realistic and will not affect the firm previous performance. The second component of financial feasibility analysis which is financial performance of similar business involves comparing financial situations or related businesses. There are several ways in which the firm can undertake this process; analyzing financial records that may be available for other firms and also simple carrying out simple observation research on customer spending. Lastly, financial feasibility analysis requires monitoring overall financial attractiveness of the venture which requires the firm to make financial estimates on the venture that will yield positive results with existing factors.
Feasibility analysis achievements can best be explained using Coca cola company achievements, Milk Company Inc and Budweiser Black Company all of which concentrate heavily on advertising. For instance, during the Super bowl game on February 1st they took time to market their new products to their target markets. Coca cola advertised using security cameras, Milk Company gave samples the milk shake and Budweiser briefed the clients using the black crown celebration advertisement. All these companies strictly observed the four main areas of a feasibility assessment before introducing a product. They researched on their product, identified the target market, established organizational resources and established financial stain for the venture.
With that discussion, we can confidently establish that feasibility analysis evaluates and analysis the viability of a business venture. It is more effective if the four main areas are well explored which are; product feasibility, industry/target market feasibility, organizational feasibility and financial feasibility. When these four areas are correctly done a company’s prospects for a new business will be well timed and properly conducted thus assuring excellent returns.
References
Justis, R. T. & Kreigsmann, B. (1979). The feasibility study as a tool for venture analysis.Business Journal of Small Business Management
Young, G. I. M. (1970). Feasibility studies. Appraisal Journal
