Feasibility Analysis Lecture 3

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29 Questions

What is the main objective of conducting a feasibility analysis?

To screen the idea from different aspects

What type of research is used in a feasibility analysis?

Both primary and secondary research

When is the proper time to conduct a feasibility analysis?

Early in the process before spending resources

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

Competitor Analysis

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

To study industry trends and forecasts

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

To collect new data by the person conducting the analysis

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

(Current Value – Initial Value) x 100 / Initial Value

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

Management Skills

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

Rate of Return

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

By assessing the projected rate of return

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

Organizational Feasibility

Which book reference is NOT mentioned in the text?

The Lean Start-Up by Reis, E.

What is the primary purpose of a financial feasibility analysis?

To determine if a business idea is financially viable

What is the primary purpose of a concept statement?

To solicit feedback from industry experts and potential customers

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

Projected revenue

What is the purpose of calculating the breakeven point?

To identify the point where total cost equals total revenue

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

Detailed financial projections for the venture

How can a business estimate its financial performance?

By studying industry trend analysis and reports on similar businesses

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

To gain insights on how to strengthen or adjust the idea

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

It is a symbolic milestone to determine the cash needed to start operations

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

Relying solely on secondary research from industry reports

What does the industry/target market feasibility analysis assess?

The overall appeal of the industry and target market for the product or service

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

Detailed market analysis of potential customers

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

A detailed marketing plan for the product or service

What is the main purpose of a feasibility analysis?

To test a specific idea and allow for revisions based on feedback

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

Competitive Advantage Analysis

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

To develop a preliminary description of the product or service

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

Is the product or service profitable?

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

Product/Service Demand

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.

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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