Feasibility study
Feasibility study is
one of the significant business and management tools that will study the idea
of a business in an integrated way, before proceeding with the implementation stage,
thus maintaining the various sources of production - raw materials, labor, and
machinery. Therefore, the feasibility study is important as it is the key sign
to move forward with the implementation phase of the project and to continue it
or not, it is thus considered the limit to continue the implementation of the
project before it is actually launched.
Components
The feasibility study
consists of key sectors, namely the study of the idea of the project, market
analysis, administrative aspect, operational aspect, competitive analysis,
marketing analysis, in addition to the financial aspect of the project.
Project idea
Successful projects
are based on meeting the customer needs in the target market. Since it is known
that customers are looking for competitive prices, high product quality, more
options, high speed, etc., the idea of the project must be studied and
production lines developed towards meeting those desires. Studying this aspect
of the project is also important, as it bets on customers buying the new
product, which requires more time to solve such problems.
Market analysis
The market analysis
aspect of the feasibility study is based on measuring the number of customers
who have shown willingness to buy the new product, which contributes to
calculating the market size. The larger the market, the more it will contribute
to its entry and competition. The rapid growth of the target market would also
give real strength to actual investment with such promising projects. The
market analysis aspect also helps entrepreneurs and business owners to choose a
specific segment of the total market, this is towards meeting their common
needs on an ongoing basis. This aspect also makes the financial value that
customers will pay for the acquisition of the new product, thereby calculating
operational capacity, and measuring the total expected sales volume. This part
of the feasibility study selects the product pricing strategy by choosing the
size of the value added, the increase in the value of total costs, or the
prices of competitors in the market. This aspect can also include the times
when customers order the product, who is primarily responsible for making the
purchase decision, the mechanism of developing production lines, reassure and
development, etc.
Administrative aspect
This part of the study
charts the general strategies of the company, from strategic and annual
objectives, towards achieving the mission for which the company was founded.
This section also examines the types of commercial and legal licenses necessary
to operate the project before state institutions and other official entities.
This part of the study also deals with the size of the employment to be
employed, the necessary skills required, organizational structure, roles and tasks,
the recruitment mechanism, as well as development and training.
Competitive analysis
This aspect is based
on increased expected sales and continued competition in the markets towards
staying there for longer. The study is based on an analysis of the competitive
advantage of the new company in managing its business, as well as SWOT analysis
of Strengths/Weaknesses, future Opportunities and anticipated attacks- Threats
on the project. The competitive analysis aspect also includes the study of
competitors in terms of their advantages and weaknesses, as well as their
market share. This aspect of the feasibility study is the basis for
understanding the next aspect - the operational aspect.
Operational aspect
The operational part
of the study is based on employing and managing all types of different
production sources towards creating a product that will meet the requirements
of customers in the target market. This aspect will therefore include
identifying the materials and tools to be used in operational processes, labor,
location, and the capacity of the production process. This aspect of the
economic seriousness study also searches for suppliers who will be relied upon
to import materials important to the project.
Marketing analysis
It is one of the aspects
that distinguishes companies from others in competition and staying in the
market for longer. The importance of this aspect lies in maintaining the
expenses invested to take out the commercial product to customers, and to
maintain the market value of the company. This aspect includes the selection of
the best strategies for promotional operations such as advertising, product
aggregation strategy, customer value-added, and others. Marketing analysis also
examines the best ways to communicate with customers such as direct selling,
retail, or wholesale. This aspect is concerned with identifying the mechanism
for dealing with customers and after-sales service, which will keep this
business under construction.
Financial analysis
The last section in
the feasibility study is dealing with the figure and data in details. Therefore,
after complete all previous sections in the feasibility study, then it is
necessary to convert those results and aggregated data into financial
indicators that are easy to understand and deal with, in addition to the
calculating fixed and variable costs. The importance of this aspect of the
study is that it includes the capital of the project required, and the
mechanism of disbursement of those financial resources, which financial institutions
and banks in particular are looking for. The presence of more financial
indicators in this aspect, such as zero checks to cover break-even point
expenses, capital recovery period, and others, will achieve a thorough
understanding of the success of this business process among different
stakeholders.
You may communicate
with us via the following channels to implement your valuable idea into a real
action plan.
EXCPR™ for Consultancy & Business Management
P.O.
BOX 21407 – Safat 13075 Kuwait
Tel.
+965 600-39277
Fax.
+965 224-78734
