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CHAPTER 4: FEASIBILITY STUDY AND TECHNOLOGY VENTURE BLUEPRINT, AINI SOFIA…
CHAPTER 4: FEASIBILITY STUDY AND TECHNOLOGY VENTURE BLUEPRINT
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Feasibility Study
The preliminary evaluation of a business idea or proposed project.
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Four Expected Outcomes of a Feasible or Viable Business Idea
:green_cross: It is profitable and can provide the entrepreneur with a financial return that covers the cost of implementing and running the business.
:green_cross: It can generate a positive cash flow that allows the entrepreneur to pay creditors and meet other financial obligations
:green_cross: It can sustain the period of pre-profit whereby the business incurs costs and expenses but it is not yet making any profit.
:green_cross: It meets the goals of the entrepreneurs who are the business founders or the team that eventually leads the business towards growth.
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Reason to conduct feasibility study
It provides the entrepreneur with an opportunity to focus on the proposed project.
Regardless of other commitments, the entrepreneur and his/her team understand that this is the first step towards developing a successful business and time and effort must be allocated for the feasibility study.
It provides for an assessment and a through examination on issues and matters that relate to the implementation of the project.
The investigative process will give the entrepreneur an in depth understanding of the overall needs in terms of resources and market in order to start the business.
It provides quality information for decision making.
Feasibility study is conducted to analyse whether the proposed business idea is viable for implementation.
Thus, it allows the entrepreneur to make better-informed business decisions that will increase the likelihood of the business success.
It helps entrepreneurs to outline and narrow down the business alternatives.
The investigate process of the feasibility study will help the entrepreneur reduce the number of options available.
This will help save the entrepreneur's time, money and other resources.
It opens up new opportunities as the entrepreneur goes through the investigate process of the feasibility study.
Whether the proposed business idea is a viable option or not, other attractive opportunities may surface from the analysis of the market and the needs or problems associated with it.
It analyses the probability of success of the proposed business. A successful business will give good return on investment to the entrepreneur and the investors.
Investors and banks will only invest in a business that has been thoroughly researched, will make profit, and can sustain over the years. The critical elements addressed in a feasibility study are important for funding purposes.
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Composition of a Feasibility Study
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Market Feasibility Study
An assessment of market opportunities and risks and the overall appeal of the market for the proposed venture.
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Product/Service
Anything that can be offered to the market for attention, acquisition, use or consumption that might satisfy a need or want.
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Customers
Determining the customers that the business wishes to serve or satisfy.
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Market Size
To the expected demand from the potential target market.
Factors that can be used such as population of the target market, market penetration in terms of sales coverage are, market growth rate, competitor's sales, sales method and estimation of purchase by target market
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Technical Feasibility Study
Concerned with determining whether the business has the necessary technology, equipment, materials, technical manpower and suitable location in order to produce the intended products/ services.
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Technology and equipment
To identify the type if technology to be used for the proposed business venture.
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Materials
Identify the types, quantity and quality of materials and the suppliers of the materials.
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Organizational Feasibility Study
Concerned with determining whether the business has the necessary and sufficient human resource to bring a particular product or service to the market successfully.
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Organizational Structure
Identifies each job position, its function and where it reports to within the organization.
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Management Team
A group of individuals responsible to manage the business and to propel the business to success.
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Financial Feasibility Study
An analysis of the financial aspects of the proposed business in order to determine whether the investment will be profitable and within a reasonable range of costs estimated.
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Start-up Capital
To determine the amount of start-up capital required by the entrepreneur to set up and run the business.
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Current Asset
To business assets which have a life span of less than a year.
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Working Capital
The money must be available to a business to manage its day-to-day operations and to met its short-term obligations.
AINI SOFIA BINTI MOHD ZOPRI (2017302875) EH2207C