FEASIBILITY STUDY

MEANING OF FEASIBILITY STUDY

 The feasibility study means to determine if a

business opportunity is possible , practical & viable.
A feasibility study enables a realistic view at both
the positive & negative aspects of opportunity.
Feasibility studies are useful when starting a new
business or identifying a new opportunity for existing
business.
PREPARATION OF FEASIBILITY
REPORT
 The feasibility study process involves making
a rational decision with a preparation of
feasible report. It guides the enterpreneur in
actually starting up & running the business
venture. It can help in proper utilization of
resources.
STEPS INVOLVED IN PREPARATION OF
FEASIBILITY REPORT

 Selection of factory location .

 Demand analysis of product.
 Market potential measurement.
 Capital saving and project 5 costing.
 Working capital requirements.
 Profit & tax planning.
 Economic, technical, financial, & managerial
feasibility of project.
SELECTION OF FACTORY
LOCATION
DEMAND ANALYSIS OF
PRODUCT
 The success of any project depends on the demand
for the output produced by it. Catering an unfulfilled
need should the ultimate objective of commercial
projects, if they should succeed. Identifying the need
, or the potential demand for the product is the main
issue involved. The market and demand analysis
involves:
 Identification of target market
 Designing the market strategy.
 Estimating the quantity of demand.
MARKET POTENTIAL
MEASUREMENT
 Market potential measurement involves:
 Market Research
 Segmentation
 Market Positioning
 Developing the marketing mix
 stategies.
 Strategies for distribution intensity.
 Budgeting the marketing strategies.
Capital Saving Decisions
National Saving
The sum of private saving and government saving.
Private Saving is the sum of household saving and
business saving.
Business saving is net profits retained in the
business, i.e. not distributed to owners.
Household saving is disposable income minus
consumption expenditure. As measured, it
ignores ‘capital gains’ of households.
Capital Saving Decisions

Some factors affecting household saving are:

 The real interest rate
 Disposable income
 Purchasing power of net assets [i.e. real wealth]
 Expected future income
WORKING CAPITAL
REQUIREMENT
 Working capital is the excess of current
assets over current liabilities. It is employed
for financing the current operation of the
business. It is required to meet day-to-day
transaction of the business. Working capital
estimation is difficult b’coz there is always an
element of uncertainity in all types of the
business.
PROFIT & TAX PLANNING