Feasibility Analysis Lecture 3
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Questions and Answers

What is the main objective of conducting a feasibility analysis?

  • To spend resources on the business idea
  • To adjust the financials of the business
  • To screen the idea from different aspects (correct)
  • To collect primary and secondary research

    • What type of research is used in a feasibility analysis?

  • Only primary research
  • No research is needed for a feasibility analysis
  • Both primary and secondary research (correct)
  • Only secondary research

    • When is the proper time to conduct a feasibility analysis?

  • There is no proper time to conduct a feasibility analysis
  • Early in the process before spending resources (correct)
  • During the implementation of the business idea
  • After spending resources on the business idea

    • Which of the following is NOT a key component of a feasibility analysis?

    <p>Competitor Analysis</p> Signup and view all the answers

    What is the main purpose of secondary research in a feasibility analysis?

    <p>To study industry trends and forecasts</p> Signup and view all the answers

    Which of the following best describes the role of primary research in a feasibility analysis?

    <p>To collect new data by the person conducting the analysis</p> Signup and view all the answers

    What is the formula for calculating the Annual Rate of Return?

    <p>(Current Value – Initial Value) x 100 / Initial Value</p> Signup and view all the answers

    Which area is NOT part of the four key areas of feasibility analysis mentioned in the text?

    <p>Management Skills</p> Signup and view all the answers

    What does RoR stand for in the financial feasibility analysis context?

    <p>Rate of Return</p> Signup and view all the answers

    How is the Financial Attractiveness of a proposed venture assessed according to the text?

    <p>By assessing the projected rate of return</p> Signup and view all the answers

    What is the Total Start-Up Cash Needed part of in the feasibility analysis as per the text?

    <p>Organizational Feasibility</p> Signup and view all the answers

    Which book reference is NOT mentioned in the text?

    <p>The Lean Start-Up by Reis, E.</p> Signup and view all the answers

    What is the primary purpose of a financial feasibility analysis?

    <p>To determine if a business idea is financially viable</p> Signup and view all the answers

    What is the primary purpose of a concept statement?

    <p>To solicit feedback from industry experts and potential customers</p> Signup and view all the answers

    Which of the following is NOT a component of the total start-up cash needed calculation?

    <p>Projected revenue</p> Signup and view all the answers

    What is the purpose of calculating the breakeven point?

    <p>To identify the point where total cost equals total revenue</p> Signup and view all the answers

    Which of the following is NOT typically included in a concept statement?

    <p>Detailed financial projections for the venture</p> Signup and view all the answers

    How can a business estimate its financial performance?

    <p>By studying industry trend analysis and reports on similar businesses</p> Signup and view all the answers

    What is the primary goal of gathering feedback on a concept statement?

    <p>To gain insights on how to strengthen or adjust the idea</p> Signup and view all the answers

    What is the significance of the 'first $1 profit' in the context of the total start-up cash needed calculation?

    <p>It is a symbolic milestone to determine the cash needed to start operations</p> Signup and view all the answers

    Which of the following is NOT a recommended method for assessing product or service demand?

    <p>Relying solely on secondary research from industry reports</p> Signup and view all the answers

    What does the industry/target market feasibility analysis assess?

    <p>The overall appeal of the industry and target market for the product or service</p> Signup and view all the answers

    Which of the following is NOT a factor considered in a financial feasibility analysis?

    <p>Detailed market analysis of potential customers</p> Signup and view all the answers

    Which of the following is NOT a typical component of a concept statement?

    <p>A detailed marketing plan for the product or service</p> Signup and view all the answers

    What is the main purpose of a feasibility analysis?

    <p>To test a specific idea and allow for revisions based on feedback</p> Signup and view all the answers

    Which of the following is NOT a key area of feasibility analysis?

    <p>Competitive Advantage Analysis</p> Signup and view all the answers

    What is the purpose of conducting a concept test in a Product/Service Feasibility Analysis?

    <p>To develop a preliminary description of the product or service</p> Signup and view all the answers

    Which of the following is NOT a key question to ask when assessing the desirability of a product or service?

    <p>Is the product or service profitable?</p> Signup and view all the answers

    Which of the following is a key component of Product/Service Feasibility Analysis?

    <p>Product/Service Demand</p> Signup and view all the answers

    Study Notes

    Feasibility Analysis

    • Feasibility analysis is the process of determining if a business idea is viable.
    • It involves both primary (collected by the person completing the analysis) and secondary (already collected for another purpose) research.

    Four Key Areas of Feasibility Analysis

      1. Product/Service Feasibility Analysis: Assessing the overall appeal of the product or service.
      1. Industry/Target Market Feasibility Analysis: Evaluating the appeal of the industry and target market.
      1. Organizational Feasibility: Assessing the organization's ability to execute the business idea.
      1. Financial Feasibility Analysis: Evaluating the financial viability of the business idea.

    Product/Service Feasibility Analysis

    • Product/Service Desirability: Assessing the appeal of the product or service idea.
      • Involves developing a concept statement to solicit feedback from industry experts and potential customers.
      • Feedback provides insights into the viability of the idea and suggestions for improvement.
    • Product/Service Demand: Assessing the demand for the product or service.
      • Involves talking to potential customers, utilizing online tools, and conducting primary and secondary research.

    Financial Feasibility Analysis

    • Total Start-Up Cash Needed: Determining the total cash required to prepare the business for its first sale.
      • Involves preparing a budget that lists all anticipated capital purchases and operating expenses.
    • Financial Performance of Similar Business: Estimating financial performance by studying similar, already established businesses.
    • Overall Financial Attractiveness of the Proposed Venture: Evaluating the projected rate of return on investment.
      • Calculated using the annual rate of return formula: (Current Value – Initial Value) x 100 / Initial Value.

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    Description

    Learn about Product/Service Feasibility Analysis, Industry/Target Market Feasibility Analysis, Organizational Feasibility, and Financial Feasibility Analysis in this lecture. Understand how to conduct these analyses and determine the viability of a business idea.

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