Please enable JavaScript.
Coggle requires JavaScript to display documents.
Topic 4 : Conducting a Feasibility Analysis and Designing a Business Model…
Topic 4 : Conducting a Feasibility Analysis and Designing a Business Model
Feasibility Analysis
Its role to serve as a filter, screening out ideas that lack the potential for building a successful business, before an entrepreneur commits the necessary resources to build the business plan
Business plan on other hand is planning tool for transforming an idea into reality
Feasibility study addresses the question : "Should we proceed with this business idea?"
Primarily an investigative tools
Is a particular idea a viable foundation for creating a successful business?
Elements of a Feasibility Analysis
Product or Service Feasibility : Determines the degree to which a product or service idea appeals to potential customers and identifies the resources necessary to produce it.
Secondary Research
Primary Research
Focus Groups
Protoytpes
Customer surveys and questionnaires
In-home trials
Trade associations and business directories
"Windshield" research
Financial Feasibility : an estimate of how much start-up capital is required to launch the business
Industry and Market Feasibility
Entrepreneur/Team Feasibility : Is this idea right for me?
Assess entrepreneurial readiness: knowledge, experience, and skills necessary for entrepreneurs to be successful.
Assess whether the business will be able to generate enough profit to support everyone’s income needs.
6 Macro forces for Industry & Market Feasibility Analysis
Demographic
Economic
Technological
Political and legal
Sociocultural
Global
Porter's Five Forces Model
Buyers : Bargaining power of buyers
Buyers' influence is high when number of customers is small and cost of switching to a competitor's product is low
Industry more attractive when
:Customers’ switching costs are high
:Number of buyers is large
:Customers want differentiated products
Potential entrants : Threat of new entrants
The larger the pool of potential new entrants, the less attractive an industry is.
Industry is more attractive to new entrants when
:Capital requirements to enter are low
:Buyers are not loyal to existing brands
:Government does not restrict the entrance of new companies
Suppliers : Bargaining power of suppliers
The greater the leverage of suppliers, the less attractive the industry
Industry more attractive when
:many suppliers sell a commodity product
:substitutes are available
:switching costs are low
:Items account for a small portion of the cost of finished products
Substitutes: Threat of substitute products or services
Substitute products or services can turn an industry on its head.
Industry is more attractive to new entrants when
:Quality substitutes are not readily available
:Prices of substitute products are not significantly lower than those of the industry’s products
:Buyers’ switching costs are high
Industry competitors : Rivalry among companies in the industry
Strongest of the five forces
Industry will be more attractive when
:the number of competitors is large ; or is small
:competitors are not similar in size or capacity
:industry is growing fast
:opportunity to sell differentiated product/service exists
The Business Modeling Process
Test the product with prototype or minimal viable product
Pivot Business Model until Ready to Expand
Test the Value Proposition with Customers
Develop the Business Model Canvas
Developing and Testing a Business Model
Who is my target market?
What do they expect of me as my customers?
What value does the business offer customers?
How do I get information to them, and how do they want to get the product?
What are the key activities to make all this come together, and what will they cost?
What resources do I need to make this happen, including money?
Who are the key partners I will need to attract to be successful?