If youre looking for business ideas you can start with a minimal investment, these top 5 cool

businesses might interests you. These are not only easy to start but can also bring big profits on
your pocket.

Read more at BusinessDiary.com.ph: http://businessdiary.com.ph/1883/top-5-business-ideas-for-young-
entrepinoys/#ixzz352eRL2zO
1. Jewelry and Bead Accessories: If you have that creative skills in making fashionable cute
and sellable accessories, then starting a jewelry and bead accessories making business is a
good option for you. How much capital youll need: this depends on how many you want to
make. Capital can range from P1,500 and up. You will also need materials such as pliers,
long nose, beads/ stones, head pins, wires or nylon cord.

Read more at BusinessDiary.com.ph: http://businessdiary.com.ph/1883/top-5-business-ideas-for-
young-entrepinoys/#ixzz352di3X36
2. Food Baking Cupcakes: Filipinos are fond of eating and if you have the passion for cooking
and baking, then selling simple baked goodies to your classmates, neighborhoods, or to offices,
food shops and sari-sari stores is one way to start. How much capital youll need: P1,500 and up.
Youll need basically the baking pan, spatula, oven, flour, baking powder, sugar, butter etc..

Food Cart business - many Filipinos are very interested going into this business and most of
them, when they hear or see a food cart, what they have in mind is franchising. But come to
think of it, why will you franchise a food cart that is not well known or never heard of? Many
people have the wrong perception of food cart business so many food cart fabricators victimize
innocent people telling them to franchise their food cart for a very low price with no royalty fee
but their food cart are not popular or well known. So you will end up selling their product which
they have sold you at a higher price. You are literally selling their product, you are now their
salesman and not a business owner and you will have to pay their franchise fee. But on the
contrary, if you plan to have food cart business and cannot afford a well known brand with a
pricey franchise fee, you can set-up your own food cart and your own brand by contacting a food
cart fabricator. Just be careful not to contact those who sell franchised food carts, only those
fabricators who makes made-to-order food carts. Who knows, if ever your business became
popular someday, you will become a franchisor to many people who wants to franchise your
business.
http://www.filentrep.com/business-guide/20-small-business-ideas-philippines.htm

Starting a Beaded Jewelry Business
Can You Make Money from Beading?
Do you want to start a beaded jewelry business? This article was written in response to a
beader who had been getting discouraging advice about the possibilities of starting a
beaded jewelry business and selling her work.
You can make money doing this. Some people do.
Most do not, or just make a bit to defray the expense of their hobby.
One of the things that can put you in the group who do make money is to treat it as a
serious business, which you appear to be doing. They start out selling wherever and
however they can. They make mostly the stuff that is selling, while taking a chance once in
a while on some dreamy piece that pushes your skills.
Both of my siblings are full-time craft/art entrepreneurs. My brotheris easing himself out of
the artist-blacksmith business after making a living selling his work at wholesale and retail
shows for many years. He is now selling mostly his prints (etching, engravings, woodcuts)
at retail shows.My sister has made her living as a silversmith/jeweler for 30-plus years. You
can see their websites at by clicking on the links above.
Check Out What Others Are Doing
You may want to look at Crafts Report magazine to get some idea about what people are
doing to succeed at various crafts. My library stocks the magazine; yours may, too. If not,
consider subscribing. Consider joining the American Crafts Council. They put out a magazine
and organize a number of wholesale and retail crafts shows around the country.
Start going to every crafts fair near you just to check them out. Look at who the exhibitors
are, especially others in the beaded jewelry business. Is this really a juried crafts fair or
more like a flea market? What prices are they selling at? Do people seem to be buying? How
do they display their work? Who would you buy from?
In your own mind, compare the current state of your work to what you are seeing that looks
good at the art fairs. Are they any better at the technical side of things? They may not be.
You don't have to know how to do every single thing with beads in order to start selling
your work through your own beaded jewelry business. You just need the particular skills to
make the particular pieces you want to make.
Here's a Good Beaded Jewelry Business Success Story
Fire Mountain Gems has a large collection of articles on their website (look at the left
column, near the bottom, to find them). Many are about ways to sell your work. I was just
over at their site because I was looking for a piece that was in their catalog a few years ago.
I failed to find it, but here's the gist of it. . . .
Hard times for the family, the wife takes a couple of dollars out of the grocery money and
buys some seed beads and earring findings. She makes 50 pairs of earrings out of those
materials, takes them to a flea market and sells them all for $2 or $3 a pair. She buys some
other beads with the profit and makes a mess of bracelets (or were they necklaces). She
sells all of those at the flea market for $12 or such. She finds the skull from a steer and
beads around it. She sells it. She digs aroundfor other skulls, cleans them up, and beads
them. Big success.
Are You Ready to Decide?
If you are sufficiently determined, sufficiently bold to get out there and start your beaded
jewelry business, and your work doesn't suck (notice this is not an extremely high
standard!), then you can definitely make some money. How much depends on your
ingenuity and hard work.
http://www.seedbeadsmarts.com/beaded-jewelry-business.html
Free Bead Projects
The free bead projects here can be used alone or to use the skills you are developing in
the Bead University part of the website.
You may choose to select a project first, then go over
to the Bead University area to pick a particular skill to work on as you do the project. If you
want to take whatever you already know and leap into the beading projects, There are lots
of ideas here to help you do that. It can be really satisfying to go from a pile of beads to a
completed bead project. It's also fun to figure out what to do with some unfinished objects
(UFOs) you have lying around, or to figure out what you can make with the beads you
already have on hand.
So have a look at the projects here, and use the ideas in the ways that make your beading
fun!

Six Beaded Cabochon Brooches

Here are six variations on making beaded brooches by surrounding a central cabochon with
seed beads, crystals, or other beads. A few includes special embellishment and they are all
extremely sparkly, as befits the very sparkly central pieces in them. Instructions for
finishing the brooches is also included.

Bead Embroidered Metal Box

The metal box topped with bead embroidery is something I've been playing with lately. You
will find lots of variations on the bead embroidery part of the box over on the Bead
University part of the website, but here is a basic version with all the instructions for
finishing the box. These are a great answer to the question of what to make for the men in
your life!

Really Thrifty Bead Projects

Practical Uses for Beaded Samples not only gives you free instructions, but you can
probably make some of them with leftover swatches of beadwork, so you may not need to
buy anything to complete some of them. If you have a box or bag of Unfinished Objects or
little bits of beadwork from trying out a new stitch or a particular color combination, this
may help you clear out some of that beady clutter while you make something useful. Take a
look and see what ideas you get.
More Beading Projects
The Kids Beading Projects pages have 7 different projects easy enough for
kids and fast enough for adults who want a fun project that doesn't feel like a
major life commitment. You'll find a variety of bracelets and necklaces, as well as the little
seed bead Treasure Pin
http://www.pinoybisnes.com/money-making-business-ideas/bead-jewelry-making-small-business/
How to Start a Bead Jewelry Making Business

Read more: http://www.pinoybisnes.com/money-making-business-ideas/bead-jewelry-making-small-
business/#ixzz352hkYHiU
If you ever asked yourself couldnt I do that myself? while you looked through rows
of bead bracelets, necklaces or earrings at a trendy boutique, the answer is yes. Bead
jewelry making is a creative and entertaining hobby that not only will have you produce
unique, handmade items of jewelry, but will also be a great business and a source of gift
ideas for family and friends.
Have you noticed lately how popular beads are at the moment? Everywhere you look
there are shops and stalls selling beads with do it yourself kits. These beads are
beautiful and you can make all different kinds of jewelry like earrings, bracelets and
necklaces just to mention a few ideas. You can even make your very own unique
beaded handbag if you wish. These also have become very popular with the fashion
conscious.
Bead jewelry making is an activity that can be done by anyone, even if they havent been
particularly trained to do bead work. In other words, there is no level of skill forced upon
you in order to complete an incredible decorative necklace or pair of earrings made out
of beads. The number one advantage of creating your own jewelry or ornaments is the
fact that they can be 100% original.
There are different bead-making techniques, such as looping, stringing, brooch-making,
and knotting. For this project, the stringing technique will be used. It requires wire or
string to hold the beads together.
To Make Dangling Bead Earrings you will need:
* 20 cm gauge no. 5 cable wire
* 16 pcs spacers from O-ring chain
* 2 pcs bead stoppers
* 2 pcs fish hooks
* 4 pcs blue glass bead
* 4 pcs yellow citrine
* 4 pcs pearl stone
* 10 inches chains
* 8 pcs coral beads
* 8 pcs of Class A rainbow crystals
* 2 pcs teardrops or elongated bead
Spacers are any of the minute accessories used in-between beads to provide aesthetic
spaces between them. They come in different forms, with metallic and ring spacers as
the most common ones.
PROCEDURE:
Step 1. Using a pair of 2-in-1 pliers, cut two 10-cm length of gauge no. 5 cable wire. Set
aside one of the cut wires. With the other, create a loop and put the teardrop bead stone
in the middle of the loop. Always remember that in bead making, the most stunning
stone should always be placed in the middle of the loop.
After placing the teardrop bead stone in the center of the looped wire, insert spacers on
both sides of the teardrop bead stone. Insert yellow citrines and a spacer next to the
teardrop stone and spacers already in place.
Step 2. To create dangles for the earrings, cut two sets of 2 inch-long and 3 inch-long
chains. Set aside one set. Insert one end of a 2-inch chain onto one end of the looped
wire, then insert the other end of the chain to the other wire end. Add the blue glass
beads and another spacer to both sides of the beads, then string the 3 inch-long chain
like the first one.
Step 3. String in the pearl, two corals, a spacer, and two Class A rainbow crystals
onto both sides of the wire. Then, insert a teardrop bead or rainbow crystal onto
both sides.
Step 4. Insert both ends of the wire into the two openings of either the bead or the
crystal.
Step 5. Now, insert both ends of the cable wire into the stopper. Then insert right end of
the cable wire back to the stopper to create a small loop. Crimp the stopper using the
long-nose pliers. Make sure that the beads are tightly secured. Cut the excess cable
wire, then attach the hook to the looped wire.
Follow the same procedure to create the second earring that will complete a pair.
To Make bead necklace you will need:
* 2 inches chains
* 1 pc ruby stone
* 8 pcs spacers from O-ring chain
* 2 pcs rhinestone
* 2 pcs yellow citrine
* 12 pcs red coral beads
* 2 pcs metal spacers
* 2 pcs pearl stone
* 12 pcs Class A elongated rainbow crystals
* 12 pcs Class A round crystals
* 2 pcs metallic bead
* 4 pcs teardrop or elongated bead stone
* 3 pcs pre-made teardrop Class A stone
* 1 pair toggle locks
Step 1. Get a gauge no. 5 cable wire. Cut it to fit the size of your neck, but make sure to
add an inch to the total length. Put the ruby stone in the middle of the wire, then add the
O-ring spacers on both sides of the stone. Cut a 2-inch long chain and string to add
dangles to your necklace. Clinch three blue glass beads to the chain, forming an
inverted triangle.
Step 2. String the following in this order: rhinestones, metal spacers, yellow citrines, two
red coral beads, metallic bead, pearls stones, two O-ring spacers, and three red coral
beads. To fill the remaining wire, you may alternately add Class A elongated rainbow
crystals and Class A round crystals.
Step 3. Lock your necklace using the toggle locks. Make sure that the beads are locked
tightly. Cut the excess cable wire.
Style Tips for Bead Jewelry
1. When making bead accessories, it is important to always come up with sets
consisting of both earrings and necklace.
2. Make your bead jewelry as unique as possible.
3. Learn the art of combining complementary colors for your bead stones.
4. If you are targeting Class A and B customers, use more sophisticated stones.
5. For student customers, use neon-colored beads and plastic beads.
Marketing Bead Jewelry
1. Put up an online site to promote your finished product. Include pictures and the prices
of the items.
2. The give your jewelry strong customer appeal, you must know the latest trends in
fashion and personal accessories. This will give you a clear idea of the materials, tools,
and techniques for making the kinds of bead jewelry your prospective market needs.
3. Women from different market segments have different bead jewelry needs. Devise
different marketing strategies for them accordingly.


Read more: http://www.pinoybisnes.com/money-making-business-ideas/bead-jewelry-making-
small-business/#ixzz352huYZSP
http://thesecondprinciple.com/teaching-essentials/five-basic-types-questions/
Five Basic Types of Questions
What types of questions are you asking students?
Leslie Owen Wilson
The art of asking questions is an ancient part of good teaching and one of the basic skills all
teachers should be able to master. Socrates believed that knowledge and awareness were
an intrinsic part of each learner. Thus, in exercising the craft of good pedagogy a skilled
educator must reach into learners hidden levels of knowing and awareness in order to help
the them reach new levels of thinking through thoughtfully developed questions.
As you examine the categories below, reflect on your own educational experiences and see
if you can ascertain which types of questions were used most often by your different
teachers. Hone your questioning skills by practicing asking different types of questions, and
try to monitor your teaching so that you include varied levels of questioning skills.
Specifically in the area of Socratic questioning techniques, there are a number of sites on
the Web which might prove helpful, simply use Socratic questioning as a descriptor.
1. Factual - Soliciting reasonably simple, straight forward answers based on obvious facts
or awareness. These are usually at the lowest level of cognitive (thinking) or affective
(feeling) processes and answers are frequently either right or wrong.
Example: Name the Shakespeare play about the Prince of Denmark?
2. Convergent Answers to these types of questions are usually within a very finite range
of acceptable accuracy. These may be at several different levels of cognition
comprehension, application, analysis, or ones where the answerer makes inferences or
conjectures based on personal awareness, or on material read, presented or known. While
these types of questions are valuable in exercising mid-level cognitive thinking skills, it is
quite easy to expand students cognitive processes even higher by adding another layer to
these questions whereby teachers ask students to justify their answers in light of the
evidence offered or the inferences made.
Example: On reflecting over the entirety of the play Hamlet, what were the main reasons
why Ophelia went mad? (This is not specifically stated in one direct statement in the text of
Hamlet. Here the reader must make simple inferences as to why she committed suicide.)
3. Divergent These questions allow students to explore different avenues and create
many different variations and alternative answers or scenarios. Correctness may be based
on logical projections, may be contextual, or arrived at through basic knowledge, conjecture,
inference, projection, creation, intuition, or imagination. These types of questions often
require students to analyze, evaluate, or synthesize a knowledge base and then project or
predict different outcomes. Answering these types of questions may be aided by higher
levels of affective thinking as well such as valuing, organization, or characterization.
Responses to these types of questions generally fall into a wide array of acceptability. Often
correctness is determined subjectively based on the possibility or probability of the
proposed answer. The intent of these types of questions is to stimulate imaginative,
creative, or inventive thought, or investigate cause and effect relationships.
Example: In the love relationship of Hamlet and Ophelia, what might have happened to
their relationship and their lives if Hamlet had not been so obsessed with the revenge of his
fathers death?
4. Evaluative - These types of questions usually require sophisticated levels of cognitive
and/or emotional (affective) judgment. In attempting to answer these types of questions,
students may be combining multiple cognitive and/or affective processes or levels,
frequently in comparative frameworks. Often an answer is analyzed at multiple levels and
from different perspectives before the answerer arrives at newly synthesized information or
conclusions.
Examples:
a. Compare and contrast the death of Ophelia with that of Juliet?
b. What are the similarities and differences between Roman gladiatorial games and modern
football?
c. Why and how might the concept of Piagetian schema be related to the concepts
presented in Jungian personality theory, and why might this be important to consider in
teaching and learning?
5. Combinations These are questions that blend any combination of the above.
You can easily monitor what types of questions you are asking your students through
simple tallies and examining degrees of difficulty. Or, if your students are older, then ask
them to monitor the types of questions you ask, allowing them to identify the types. For
those of you who might be a bit more collaborative or adventurous in your teaching and
want to give students some ownership in their educational processes, challenge them to
create course related questions to ask one another. In my many years of teaching I was
always pleasantly surprised at what students came up with.
More details please see This Rough Magic Lindley, D. (1993) This rough magic. Westport,
CN. Bergin & Garvey.
__________________________
Lynn Erickson was a principal and has written a number of books on different educational
topics. In the one cited below she also tackles types of questions as a topic but she divides
them into factual, conceptual and provocative.
If you look at my discussion above based on Lindleys divisions, it should become apparent
that these are some of the same types of categories as Ericksons. Her factual are still the
ones that are easily answered with definitive, and comparatively simple answers. These are
the questions that you find on the show Jeopardy. Unfortunately they are also too common
in schools and on tests.
Her conceptual questions might be ones that are convergent, divergent, or evaluative in
construction ones that delve deeper and require more sophisticated levels of cognitive
processing and thinking.
Her provocative ones are ones that entice, and ones that cannot be answered easily. They
are questions that can be used to motivate and frame content or ones that could be
classified as essential questions. In the initial categorization above they would be either
complex divergent questions or more sophisticated combination questions like
divergent/evaluative ones.
Erickson, H. L. (2007) Concept-based curriculum and instruction for the thinking classroom.
Thousand Oaks, CA. Corwin Press.
____________________________________________
Leslies comments: Please remember that questions should be about exercising mental
agility and recall and getting students and children to think in new and complex ways.
Questions should not be just about getting that one correct answer. Parents too can also
encourage higher levels of thinking and feeling by using questions to connect with their
childrens lives and interests, and by rediscovering the lost arts of friendly discussion and
polite discourse. Sadly, partly due to our obsession with our phones and social media, we
are in danger of losing these abilities to interact person-to-person at meaningful intellectual
levels.
There is a fine edge between polite, lively discussions that get the mind thinking quickly and
heart pumping, when compared to out of control, hostile argumentation. Being able to
discern the difference is a valuable social skill.
Innate curiosity, asking questions throughout life, is a strong human trait. It is how we find
and solve problems. Encouraging children to think, to learn, to remember, to make
inferences and connections through questions is a very ancient form of education one that
needs to be perpetuated, understood, and practiced.
http://www.skillsyouneed.com/ips/question-types.html
Types of QuestionSee also: Questioning Skills.


Although there are numerous reasons for asking questions the information we receive back (the
answer) will depend very much on the type of question we ask.

Questions, in their simplest form, can either be open or closed - this page covers both types but also
details many other question types and when it may be appropriate to use them, in order to improve
understanding.

Closed Questions
Closed questions invite a short focused answer- answers to closed questions can often (but not
always) be either right or wrong. Closed questions are usually easy to answer - as the choice of
answer is limited - they can be effectively used early in conversations to encourage participation and
can be very useful in fact-finding scenarios such as research.

Closed questions are used to force a brief, often one-word answer.
Closed questions can simply require a Yes or No answer, for example: Do you smoke?, Did you
feed the cat?, Would you like a cup of tea?
Closed questions can require that a choice is made from a list of possible options, for example:
Would you like beef, chicken or the vegetarian option?, Did you travel by train or car today?
Closed questions can be asked to identify a certain piece of information, again with a limited set of
answers, for example: What is your name?, What time does the supermarket open?, Where did
you go to University?
Open Questions
By contrast, to closed questions, open questions allow for much longer responses and therefore
potentially more creativity and information. There are lots of different types of open question; some
are more closed than others!

Leading or Loaded Questions
A leading question, usually subtly, points the respondents answer in a certain direction.

Asking an employee, How are you getting on with the new finance system? This question prompts
the person to question how they are managing with a new system at work. In a very subtle way it
raises the prospect that maybe they are not finding the new system so good.

Tell me how youre getting on with the new finance system is a less leading question the question
does not require any judgement to be made and therefore does not imply that there may be
something wrong with the new system.

Children are particularly susceptible to leading questions and are more likely to take the lead for an
answer from an adult. Something simple like, Did you have a good day at school? points the child
towards thinking about good things that happened at school. By asking, How was school today?
you are not asking for any judgement about how good or bad the day has been and you are more
likely to get a more balanced, accurate answer. This can shape the rest of the conversation, the
next question may be, What did you do at school? - the answer to this may vary based on the first
question you asked good things or just things.

Recall and Process Questions
Questions can also be categorised by whether they are recall requiring something to be
remembered or recalled, or process requiring some deeper thought and/or analysis.

A simple recall question could be, What is your mothers maiden name?. This requires the
respondent to recall some information from memory, a fact. A school teacher may ask recall
questions of their pupils, What is the highest mountain? Process questions require more thought
and analysis and/or a sharing of opinion. Examples include, What skills can you bring to this
organisation that the other applicants cannot? or What are the advantages and disadvantages of
asking leading questions to children?



Rhetorical Questions
Rhetorical questions are often humorous and dont require an answer.

If you set out to fail and then succeed have you failed or succeeded? Rhetorical questions are
often used by speakers in presentations to get the audience to think rhetorical questions are, by
design, used to promote thought.

Politicians, lecturers, priests and others may use rhetorical questions when addressing large
audiences to help keep attention. Who would not hope to stay healthy into old age?, is not a
question that requires an answer, but our brains are programmed to think about it thus keeping us
more engaged with the speaker.

Funnelling
We can use clever questioning to essentially funnel the respondents answers that is ask a series
of questions that become more (or less) restrictive at each step, starting with open questions and
ending with closed questions or vice-versa.

For example:

"Tell me about your most recent holiday."
"What did you see while you were there?"
"Were there any good restaurants?"
"Did you try some local delicacies?"
"Did you try the Clam Chowder?"
The questions in this example become more restrictive, starting with open questions which allow for
very broad answers, at each step the questions become more focused and the answers become
more restrictive.

Funnelling can work the other way around, starting with closed questions and working up to more
open questions. For a counsellor or interrogator these funnelling techniques can be a very useful
tactic to find out the maximum amount of information, by beginning with open questions and then
working towards more closed questions. In contrast, when meeting somebody new it is common to
start by asking more closed questions and progressing to open questions as both parties relax. (See
our page: What is Counselling? for more on the role of the counsellor.)

Responses
As there are a myriad of questions and question types so there must also be a myriad of possible
responses. Theorists have tried to define the types of responses that people may have to questions,
the main and most important ones are:

A direct and honest response this is what the questioner would usually want to achieve from
asking their question.
A lie the respondent may lie in response to a question. The questioner may be able to pick up on
a lie based on plausibility of the answer but also on the non-verbal communication that was used
immediately before, during and after the answer is given.
Out of context The respondent may say something that is totally unconnected or irrelevant to the
question or attempt to change the topic. It may be appropriate to reword a question in these cases.
Partially Answering People can often be selective about which questions or parts of questions they
wish to answer.
Avoiding the answer Politicians are especially well known for this trait. When asked a difficult
question which probably has an answer that would be negative to the politician or their political
party, avoidance can be a useful tact. Answering a question with a question or trying to draw
attention to some positive aspect of the topic are methods of avoidance.
Stalling Although similar to avoiding answering a question, stalling can be used when more time is
needed to formulate an acceptable answer. One way to do this is to answer the question with
another question.
Distortion People can give distorted answers to questions based on their perceptions of social
norms, stereotypes and other forms of bias. Different from lying, respondents may not realise their
answers are influenced by bias or they exaggerate in some way to come across as more normal or
successful. People often exaggerate about their salaries.
Refusal The respondent may simply refuse to answer, either by remaining silent or by saying, I am
not answering.


Find more at: http://www.skillsyouneed.com/ips/question-types.html#ixzz352k1KB7G
http://www.socialresearchmethods.net/kb/questype.php
Types Of Questions
Survey questions can be divided into two broad
types: structured and unstructured. From an instrument design point
of view, the structured questions pose the greater difficulties
(see Decisions About the Response Format). From a content
perspective, it may actually be more difficult to write good unstructured
questions. Here, I'll discuss the variety of structured questions you can
consider for your survey (we'll discuss unstructured questioning more
under Interviews).
Dichotomous Questions
When a question has two possible responses, we consider
it dichotomous. Surveys often use dichotomous questions that ask for a
Yes/No, True/False or Agree/Disagree response. There are a variety of
ways to lay these questions out on a questionnaire:

Questions Based on Level Of Measurement
We can also classify questions in terms of their level of measurement.
For instance, we might measure occupation using a nominal question.
Here, the number next to each response has no meaning except as a
placeholder for that response. The choice of a "2" for a lawyer and a "1"
for a truck driver is arbitrary -- from the numbering system used we can't
infer that a lawyer is "twice" something that a truck driver is.

We might ask respondents to rank order their preferences for
presidential candidates using an ordinalquestion:

We want the respondent to put a 1, 2, 3 or 4 next to the candidate,
where 1 is the respondent's first choice. Note that this could get
confusing. We might want to state the prompt more explicitly so the
respondent knows we want a number from one to 4 (the respondent
might check their favorite candidate, or assign higher numbers to
candidates they prefer more instead of understanding that we want rank
ordering).
We can also construct survey questions that attempt to measure on
an interval level. One of the most common of these types is the
traditional 1-to-5 rating (or 1-to-7, or 1-to-9, etc.). This is sometimes
referred to as a Likert response scale (see Likert Scaling). Here, we
see how we might ask an opinion question on a 1-to-5 bipolar scale (it's
called bipolar because there is a neutral point and the two ends of the
scale are at opposite positions of the opinion):

Another interval question uses an approach called the semantic
differential. Here, an object is assessed by the respondent on a set of
bipolar adjective pairs (using 5-point rating scale):

Finally, we can also get at interval measures by using what is called
a cumulative or Guttman scale (seeGuttman Scaling). Here, the
respondent checks each item with which they agree. The items
themselves are constructed so that they are cumulative -- if you agree to
one, you probably agree to all of the ones above it in the list:

Filter or Contingency Questions
Sometimes you have to ask the respondent one question in order to
determine if they are qualified or experienced enough to answer a
subsequent one. This requires using a filter or contingency question.
For instance, you may want to ask one question if the respondent has
ever smoked marijuana and a different question if they have not. in this
case, you would have to construct a filter question to determine whether
they've ever smoked marijuana:

Filter questions can get very complex. Sometimes, you have to have
multiple filter questions in order to direct your respondents to the correct
subsequent questions. There are a few conventions you should keep in
mind when using filters:
try to avoid having more than three levels (two jumps) for any question
Too many jumps will confuse the respondent and may discourage them from continuing with the survey.
if only two levels, use graphic to jump (e.g., arrow and box)
The example above shows how you can make effective use of an arrow and box to help direct the respondent to the
correct subsequent question.
if possible, jump to a new page
If you can't fit the response to a filter on a single page, it's probably best to be able to say something like "If YES,
please turn to page 4" rather that "If YES, please go to Question 38" because the respondent will generally have an
easier time finding a page than a specific question.
http://survey.cvent.com/blog/cvent-survey-blog/guide-to-the-five-types-of-survey-questions
Guide to the Five Types of Survey Questions
by Cvent Survey Staff January 13, 2009
Did you know there are five main types of survey questions? Each type can be used to attain different
types of data, so make sure to be mindful about which type you choose. Here's a quick overview of the
five survey question types:
1. Open-ended question. This question type is used to gain more insight into how the respondent feels.
This type of question type requires a lot of attention when analyzing responses, so use it only when
having the response in the respondent's own words is important.

Open-ended question example:
Describe your relationship with your child.

2. Multiple choice question. This question type is often used to gather demographic information or to
find out about a range of issues. Multiple choice questions can require a single answer or offer multiple
answer selections.

Multiple choice question example:
What is your marital status? (Select one)
- Single
- Living with Partner
- Married
- Divorced
- Separated
- Widowed

3. Ordinal scale question. This question type asks respondents to rank a range of items or choose from
an ordered set.

Ordinal scale question example:
When considering a job offer, please rank the importance of the following (Please fill in your rank order
using numbers 1 through 5 with 1 being the most important):
- Positive working environment
- Salary
- Benefits
- Vacation time
- Challenging workload

4. Interval scale question. This is the most commonly used question type. On an interval scale, it is
important that the space between each option, whether it's a number range or a feeling range, are equal.
Many of you have probably seen scales asking about agreement strength, likelihood or satisfaction (i.e.
very unsatisfied, unsatisfied, neither satisfied nor unsatisfied, satisfied, very satisfied).

Interval question example:
After learning about product XYZ, how likely are you to consider purchasing it when next shopping for
laundry detergent?
Extremely unlikely 1 - 2 - 3 - 4 - 5 Extremely likely

5. Ratio scale question. This question type asks respondents to respond in a measurable way. You've
likely seen ratio scale questions about income, age or hours spent. Ratio scale questions have a true
zero, and often times will be presented in an ordinal way with ranges. However, these ranges can still be
treated as ratio responses for analysis.

Ratio scale question example:
How many hours a day do you spend on a computer?

Selecting the correct question type is an essential part of any survey design. Carefully consider the
question type(s) on your next survey in order to obtain significant data.
http://www.questionpro.com/a/showArticle.do?articleID=survey-questions
Survey Questions and Answer Types
Survey Questions and Answer Types
By: Kevin Battey
COO, QuestionPro
So you've decided that you need a better understanding of the characteristics of people who visit
your website, or of some other business-related question. Developing a focused and effective
questionnaire will help you to efficiently and accurately pinpoint the information that will help you
make more informed decisions.
Developing a questionnaire is as much an art as it is a science. And just as an artist has a variety of
different colors to choose from in the palette, you have a variety of different question formats with
which to question an accurate picture of your customers, clients and issues that are important to
them.
The Dichotomous Question
The dichotomous question is generally a "yes/no" question. An example of the dichotomous question
is:

Have you ever purchased a product or service from our website?
Yes
No
If you want information only about product users, you may want to ask this type of question to
"screen out" those who haven't purchased your products or services. Researchers use "screening"
questions to make sure that only those people they are interested in participate in the survey.
You may also want to use yes/no questions to separate people or branch into groups of those who
"have purchased" and those who "have not yet purchased" your products or services. Once
separated, different questions can be asked of each of these groups.
You may want to ask the "have purchased" group how satisfied they are with your products and
services, and you may want to ask the "have not purchased" group what the primary reasons are for
not purchasing. In essence, your questionnaire branches to become two different sets of questions.
The Multiple Choice Questions
The multiple-choice question consists of three or more exhaustive, mutually exclusive
categories. Multiple choice questions can ask for single or multiple answers. In the following
example, we could ask the respondent to select exactly one answer from the 7 possible, exactly 3 of
the 7, or as many as 3 of the 7 (1,2,or 3 answers can be selected).

Example: A multiple-choice question to find out how a person first heard about your website is:
How did you first hear about our web site?
Television
Radio
Newspaper
Magazine
Word-of-mouth
Internet
Other: Please Specify _______________
For this type of question it is important to consider including an "other" category because there may
be other avenues by which the person first heard about your site that you might have overlooked.
Rank Order Scaling
Rank order scaling questions allow a certain set of brands or products to be ranked based upon a
specific attribute or characteristic. Perhaps we know that Toyota, Honda, Mazda, and Ford are most
likely to be purchased. You may request that the options be ranked based upon a particular attribute.
Ties may or may not be allowed. If you allow ties, several options will have the same scores.

Example:

Based upon what you have seen, heard, and experienced, please rank the following brands
according to their reliability. Place a "1" next to the brand that is most reliable, a "2" next to the
brand that is next most reliable, and so on. Remember, no two cars can have the same ranking .

__ Honda
__ Toyota
__ Mazda
__ Ford
The Rating Scale
A rating scale question requires a person to rate a product or brand along a well-defined, evenly
spaced continuum. Rating scales are often used to measure the direction and intensity of attitudes.
The following is an example of a comparative rating scale question:
Which of the following categories best describes your last experience purchasing a product or
service on our website? Would you say that your experience was:
Very pleasant
Somewhat pleasant
Neither pleasant nor unpleasant
Somewhat unpleasant
Very unpleasant
The Semantic Differential Scale
The semantic differential scale asks a person to rate a product, brand, or company based upon a
seven-point rating scale that has two bi-polar adjectives at each end. The following is an example of
a semantic differential scale question.

Example:
Would you say our web site is:
(7) Very Attractive
(6)
(5)
(4)
(3)
(2)
(1) Very Unattractive
Notice that unlike the rating scale, the semantic differential scale does not have a neutral or middle
selection. A person must choose, to a certain extent, one or the other adjective.

The Stapel Scale
The staple scale asks a person to rate a brand, product, or service according to a certain
characteristic on a scale from +5 to -5, indicating how well the characteristic describes the product or
service. The following is an example of a staple scale question:
When thinking about Data Mining Technologies, Inc. (DMT), do you believe that the word
"innovative" aptly describes or poorly describes the company? On a scale of +5 to -5 with +5 being
"very good description of DMT" and -5 being "poor description of DMT," how do you rank DMT
according to the word "innovative"?
(+5) Describes very well
(+4)
(+3)
(+2)
(+1)
Innovative
(-1)
(-2)
(-3)
(-4)
(-5) Poorly Describes
The Constant Sum Question
A constant sum question permits collection of "ratio" data, meaning that the data is able to express
the relative value or importance of the options (option A is twice as important as option B).
Example:
The following question asks you to divide 100 points between a set of options to show the value
or importance you place on each option. Distribute the 100 points giving the more important reasons
a greater number of points. The computer will prompt you if your total does not equal exactly 100
points.

When thinking about the reasons you purchased our TargetFind data mining software, please rate
the following reasons according to their relative importance.
Seamless integration with other software __________
User friendliness of software __________
Ability to manipulate algorithms __________
Level of pre- and post-purchase service __________
Level of value for the price __________
Convenience of purchase/quick delivery __________
Total 100 points
This type of question is used when you are relatively sure of the reasons for purchase, or you want
input on a limited number of reasons you feel are important. Questions must sum to 100 points and
point totals are checked by javascript.
The Open-Ended Question
The open-ended question seeks to explore the qualitative, in-depth aspects of a particular topic or
issue. It gives a person the chance to respond in detail. Although open-ended questions are
important, they are time-consuming and should not be over-used. An example of an open-ended
question might be:

(If the respondent indicates they did not find what they were looking for...)
What products of services were you looking for that were not found on our website?

If you want to add an "Other" answer to a multiple choice question, you would use branching
instructions to come to an open ended question to find out What Other....
The Demographic Question
Demographic questions are an integral part of any questionnaire. They are used to identify
characteristics such as age, gender, income, race, geographic place of residence, number of
children, and so forth. For example demographic questions will help you to classify the difference
between product users and non-users. Perhaps most of your customers come from the Northeast,
are between the ages of 50 and 65, and have incomes between $50,000 and $75,000.
Demographic data helps you paint a more accurate picture of the group of persons you are trying to
understand. And by better understanding the type of people who use or are likely to use your
product, you can allocate promotional resources to reach these people, in a more cost effective
manner.

Psycho-graphic or life style questions are also included in the template files. These questions
provide an in-depth psychological profile and look at activities, interests and opinions of
respondents.
https://www.surveymonkey.com/mp/survey-question-types/
Survey Questions
Get It Right from the Start. Choose the Right Type of Survey
Questions.

When you're looking for insights, it's important you start off on the right foot. How you get information and the survey
question type you ask play a big role in creating a successful survey. Before you start creating survey questions, ask
yourself how you intend to use the answers from your survey. Knowing the goals of your survey and the information
you'd like to collect will guide which survey question type to choose.
Popular Survey Types
Below are some of the most commonly used survey question types and how they can be used to create a great
survey. To see what each type of survey question might look like, visit the sample survey questions page.
Multiple Choice Questions
This question type allows the survey taker to select one or more options from a list of answers that you define. You
should use multiple choice questions when you have a fixed number of options.
Rating Scales
With rating scale questions, the survey taker selects a single rating for your question along an equally spaced
continuum of possible choices. Customer satisfaction survey question often use a Likert scale to measure customer
opinion or attitudes.
Comment/Essay Box Question
Open-ended survey questions require respondents to type their answer into a comment box, and do not provide
specific pre-set answer options. Responses are then viewed individually or by sophisticated text analysis tools, such
as SurveyMonkey's Open Ended Question Analysis tool.
Demographic Questions
To gather information about a respondent's background or income level, for example, demographic survey questions
would serve you well.
Once you get the hang of it, you'll quickly know which survey question and answer type to use and why and the
technical names will no longer elude you. In the meantime, survey creation tools from SurveyMonkey can help you
choose the right survey questions.
Take the Guesswork Out of Survey Questions
Most of us are better at interpreting results than building the perfect survey. It's a good thing that creating a survey
with SurveyMonkey is fast and easy. Start by using one of our hundreds of free, professionally designed survey
templates built by expert survey methodologists. Or create a survey from scratch with the help of our expert-built tool,
Question Bank. Either way, you're sure to have a survey or questions our survey methodologists say will leave you
with unbiased results. Promise.
https://explorable.com/types-of-survey
Types of Survey
Home
Overview
Research
o Basics
o Methods
o Experiments
o Design
o Statistics
Foundations
Academic
Write Paper
For Kids
Your Code
Sarah Mae Sincero

There are various types of surveys you can choose from. Basically,
the types of surveys are broadly categorized into two: according to
instrumentation and according to the span of time involved. The
types of surveys according to instrumentation include the
questionnaire and the interview. On the other hand, the types of
surveys according to the span of time used to conduct the survey
are comprised of cross-sectional surveys and longitudinal surveys.
The Survey Guide
1Surveys and Questionnaires - Guide
2Introduction
2.1Research and Surveys
2.2Advantages and Disadvantages
2.3Survey Design
2.4Sampling
3Planning
3.1Defining Goals
4Questions and Answers
4.1Survey Layout
4.2Types of Questions
4.3Constructing Questions
4.4Response Formats
4.5Response Scales
5Types of Surveys
5.1Selecting Method
5.2Personal Interview
5.3Telephone
5.4Online Surveys
5.4.1Preparing Online Surveys
5.4.2Online Tools
5.5Focus Group
5.6Panel Study
6Conducting the Survey
6.1Pilot Survey
6.2Increasing Response Rates
7After the Study
7.1Analysis and Data
7.2Conclusion
7.3Presenting the Results
8Example - Questionnaire
9Checklist
Take this as a course
This article is a part of the course "The Survey Guide".
According to Instrumentation
In survey research, the instruments that are utilized can be either a questionnaire or
aninterview (either structured or unstructured).
1. Questionnaires
Typically, a questionnaire is a paper-and-pencil instrument that is administered to the respondents.
The usual questions found in questionnaires are closed-ended questions, which are followed by
response options. However, there are questionnaires that ask open-ended questions to explore the
answers of the respondents.
Questionnaires have been developed over the years. Today, questionnaires are utilized in
various survey methods, according to how they are given. These methods include the self-
administered, the group-administered, and the household drop-off. Among the three, the self-
administered survey method is often used by researchers nowadays. The self-administered
questionnaires are widely known as the mail survey method. However, since the response rates
related to mail surveys had gone low, questionnaires are now commonly administered online, as in
the form of web surveys.
Advantages: Ideal for asking closed-ended questions; effective for market or consumer
research
Disadvantages: Limit the researchers understanding of the respondents answers;
requires budget for reproduction of survey questionnaires
2. Interviews
Between the two broad types of surveys, interviews are more personal and probing. Questionnaires
do not provide the freedom to ask follow-up questions to explore the answers of the respondents,
but interviews do.
An interview includes two persons - the researcher as the interviewer, and therespondent as the
interviewee. There are several survey methods that utilize interviews. These are the personal or
face-to-face interview, the phone interview, and more recently, the online interview.
Advantages: Follow-up questions can be asked; provide better understanding of the
answers of the respondents
Disadvantages: Time-consuming; many target respondents have no public-listed phone
numbers or no telephones at all
According to the Span of Time Involved
The span of time needed to complete the survey brings us to the two different types of surveys:
cross-sectional and longitudinal.
1. Cross-Sectional Surveys
Collecting information from the respondents at a single period in time uses the cross-sectional type
of survey. Cross-sectional surveys usually utilize questionnaires to ask about a particular topic at
one point in time. For instance, a researcher conducted a cross-sectional survey asking teenagers
views on cigarette smoking as of May 2010. Sometimes, cross-sectional surveys are used to identify
the relationship between two variables, as in a comparative study. An example of this is
administering a cross-sectional survey about the relationship of peer pressure and cigarette smoking
among teenagers as of May 2010.
2. Longitudinal Surveys
When the researcher attempts to gather information over a period of time or from one point in time
up to another, he is doing a longitudinal survey. The aim of longitudinal surveys is to collect data and
examine the changes in the data gathered. Longitudinal surveys are used in cohort studies, panel
studies and trend studies.
http://examples.yourdictionary.com/examples/examples-of-open-ended-and-closed-ended-
questions.html
Examples of Open-Ended and Closed-Ended Questions

In a conversation, when completing a research survey, being interviewed for a job or working on a
homework assignment, you might find yourself presented with a series of closed-ended or open-
ended questions. Close-ended questions are those which can be answered by a simple "yes" or
"no," while open-ended questions are those which require more thought and more than a simple
one-word answer.




Close-Ended Questions
If you can answer a question with only a "yes" or "no" response, then you are answering a close-
ended type of question.

Examples of close-ended questions are:

Are you feeling better today?
May I use the bathroom?
Is the prime rib a special tonight?
Should I date him?
Will you please do me a favor?
Have you already completed your homework?
Is that your final answer?
Were you planning on becoming a fireman?
Should I call her and sort things out?
Is it wrong to want to live on my own at this age?
Shall we make dinner together tonight?
Could I possibly be a messier house guest?
Might I be of service to you ladies this evening?
Did that man walk by the house before?
Can I help you with that?
May I please have a bite of that pie?
Would you like to go to the movies tonight?
Is math your favorite subject?
Does four plus four equal eight?
Is that haunted house really scary?
Will you be going to Grandmother's house for Christmas?
Did Dad make the cake today?
Is there a Mass being held at noon?
Are you pregnant?
Are you happy?
Is he dead?
Close-ended questions should not always be thought of as simple questions that anyone can quickly
answer merely because they require a yes or no answer. Close-ended questions can also be very
complicated. For example, "Is 1 in binary equal to 1 in counting numbers?" is a close-ended question
that not everyone would be able to quickly answer.

Open-Ended Questions
Open-ended questions are ones that require more than one word answers. The answers could come
in the form of a list, a few sentences or something longer such as a speech, paragraph or essay.

Here are some examples of open-ended questions:

What were the most important wars fought in the history of the United States?
What are you planning to buy today at the supermarket?
How exactly did the fight between the two of you start?
What is your favorite memory from childhood?
How will you help the company if you are hired to work for us?
What do you plan to do immediately following graduation from college?
What types of decorations do you plan to have for your friend's birthday party?
What was your high school experience like?
How did you and your best friend meet?
What sites do you expect to see on your vacation?
How do you go about booking tickets for a flight?
What were the major effects of World War II for the United States?
How do you go about purchasing a home?
What is it like to live in the capital of Morocco?
What is the quickest way to get to the pet store in town?
Why is it that every time I talk with you, you seem irritated?
In what way do you feel I should present myself?
How do you manage to raise those children alone?
What is the matter with the people in that class?
Where are you going to find the time to write all those letters?
Why can't I come along with you?
What makes the leaves change color?
How exactly does one replace the screen to a cellular phone?
Although open-ended questions require lengthier responses than do close-ended questions, open-
ended questions are not always more complicated. For example, asking "What are you planning to
buy today at the supermarket?" may simply require the respondent to read off of a list.

When These Questions Are Used
Either type of question can be used in a wide variety of scenarios. However, if you're looking for a
guide to liken these types of questions to, you can think of close-ended questions as multiple choice
questions on a school exam and open-ended questions as short responses and essay questions on
an exam.

Open-ended Questions

Open-ended questions require a response with more depth and a lengthier response. Open-ended
questions are also helpful in finding out more about a person or a situation, whether it's during an
interview, at a party, or when getting to know a new friend.

Close-ended Questions

Close-ended questions can be answered in only one word or very short phrase. Close-ended
questions can also be used in the situations mentioned above, although they have the potential to
end the conversation.

Here are examples of close-ended questions in these types of situations:

Would you like vanilla ice cream?
Have you ever met Joe before?
Where did you go to college?
What is your best quality?
Are you happy?
Do you enjoy your car?
Does your brother have the same interests as you?
Do you have a pet?
Do you like animals?
When is your birthday?
Do you like rain?
Now, here's some examples of these close-ended questions turned into open-ended questions - to
keep the conversation going:

What is your favorite flavor of ice cream and why?
How did you meet Joe?
What do you feel was most beneficial about your college experience?
How can your top qualities help our company to thrive and grow?
What are some of the things that bring you the most joy?
Why did you decide to purchase a Volvo?
What interests do you and your brother share, and which interests do you not share?
Do you have a pet and what is your pet like?
Do you like animals and why?
When is your birthday and how do you like to celebrate?
Do you like rain and what do you usually do during rain storms?
From these examples, it is clear that close-ended questions are used to elicit a short, quick
response, while open-ended questions are gateways into conversations.
http://polaris.gseis.ucla.edu/jrichardson/dis220/openclosed.htm
Open versus Closed Ended Questions
In the Reference Environment
Prepared by Dr. John V. Richardson Jr.
UCLA Professor of Information Studies

My vision is that information studies graduate students will learn the best
practices related to interviewing techniques in the reference
environment. The goal of the reference interview is to understand the users
query. The two-fold objective is to get the inquirer to express their
information need or problem and to have a satisfied user at the end of the
transaction. Hence, the task at hand is to use the proper balance of open and
closed-ended questions and to use these questions in the right sequence.

1. Open-ended questions are those questions that will solicit additional information
from the inquirer. Sometimes called infinite response or unsaturated type
questions. By definition, they are broad and require more than one or two word
responses. Note that neutral questions are merely a subset of open questions,
according to Dervin and Dewdney.

Examples:
a. How may/can I help you?
b. Where have you looked already?
c. What aspect are you looking for?
d. What kind of information are you looking for?
e. What would you like to know about [topic]?
f. When you say [topic], what do you mean?
g. What do you mean by [topic]?
h. What further clues can you give me?
i. What examples can you give me?
j. What is it you want to know about?
k. How will you use this information?
l. How will this information help you?
m. What will it help you do?
n. Where did you read or hear about [topic]?
o. Tell me how this problem arose?
p. What happened that got you stopped?
q. What are you trying to understand?
r. Where else have you searched?

Pros: Open-ended questions develop trust, are perceived as less threatening, allow an
unrestrained or free response, and may be more useful with articulate users. Cons: Can be
time-consuming, may result in unnecessary information, and may require more effort on the
part of the user.

2. Closed ended questions are those questions, which can be answered finitely
by either yes or no. Also known as dichotomous or saturated type
questions. Closed-ended questions can include presuming, probing, or
leading questions. By definition, these questions are restrictive and can be
answered in a few words.

Examples:
a. Can I help you?
b. May I help you?
c. Can you give me more information?
d. Have you searched elsewhere?
e. Can you describe the kind of information you want?
f. Can you give me an example?
g. Could you be more specific?
h. Are you looking for [topic]?
i. Would you tell me more about [topic]?
j. Would you explain [topic]?
k. Is there something specific about [topic], you are looking for?
l. Do you have a citation?
m. Is there any other information that you need?
n. Is there any thing else that I can help you find?
o. Does that help you out or does this help or will this search help you?
p. Do you need more clarification?
q. Is that correct/right/ok?
r. How is this?
s. Shall we continue?
t. Any other/further questions?
u. Is that what you are looking for?
v. Does this answer your question?

Pros: Quick and require little time investment, just the answer. Cons: Incomplete responses,
requires more time with inarticulate users, can be leading and hence irritating or even
threatening to user, can result in misleading assumptions/conclusions about the users
information need; discourages disclosure.
Closed-ended question
From Wikipedia, the free encyclopedia

It has been suggested that this article be merged into Yesno question.
(Discuss) Proposed since December 2011.

This article needs additional citations for verification. Please help improve
this article by adding citations to reliable sources. Unsourced material may be
challenged and removed. (October 2008)
A closed-ended question is a question format that limits respondents with a list of answer choices
from which they must choose to answer the question.
[1]
Commonly these type of questions are in the
form of multiple choices, either with one answer or with check-all-that-apply, but also can be in scale
format, where respondent should decide to rate the situation in along the scale continuum, similar to
Likert questions.
Contents
1 Ordinal Scale questions
2 Other examples
3 See also
4 References
Ordinal Scale questions[edit]
Further information: Likert scale
Respondents are asked to decide where they fit along a scale continuum. These questions contain
an ordered set of answers. A common ordinal scale ask about levels of satisfaction.
[1]

Other examples[edit]
A closed-ended question contrasts with an open-ended question, which cannot be answered with a
simple "yes" or "no", or with a specific piece of information, and which gives the person answering
the question scope to give the information that seems to them to be appropriate. Open-ended
questions are sometimes phrased as a statement which requires a response.
Examples of open-ended questions:
Tell me about your relationship with your supervisor.
How do you see your future?
Tell me about the children in this photograph.
What is the purpose of government?
Why did you choose that answer?
At the same time, there are close-ended questions which are sometimes impossible to answer
correctly with a yes or no without confusion, for example: "Have you stopped taking heroin?" (if you
never took it), see "Loaded question".
What are the differences between closed-ended
questions and open-ended questions?
The main difference between a closed-ended question and an open-ended question is the type of response
that can be given. With a closed-ended question there are a limited number of choices to choose from when
answering, but with an open-ended question the respondent can answer in their own words allowing for a wide
variety of answers.
Another difference between a closed-ended question and an open-ended question is the difficulty level of
statistical analysis. The closed-ended question allows researchers to analyze the data at a much faster rate
than the open-ended question, because there is a limited number of responses. However, the open-ended
question allows for a variety of responses, so it takes a large amount of time to categorize all these responses
into workable data.
Example / Application
Example: Closed-ended: Multiple choice question: How many hours are there is a day?
A. 18
B. 20
C. 15
D. 24
Application: For this example of a multiple choice question, it is clear to see that there are a fixed number of
ways in which one can answer this question. The respondent can only answer by circling either A., B., C., or D.
Example: Open-ended question: Describe what you did to deal with harassment at school?
Application: This question allows the respondent to answer the question in their own words. One participant
may say that they went to the school counselor, while another participant may say that they did not report the
sexual harassment. As a result, the open-ended question would provide researchers with loads of information.
The information can also be converted later to quantitative data through content coding the entries. For
example, in the hypothetical study about dealing with harassment, the open-ended data could be coded for
type of response, severity of response, or emotional reaction. Each time the content coder converts the
qualitative data to numbers (quantitative data) which allows more precise comparison across participants.
References
http://fluidsurveys.com/university/comparing-closed-ended-and-open-ended-questions/
Comparing Closed-Ended and Open-
Ended Questions
Posted by Rick Penwarden August 7, 2013 Categories: How-To Article, Survey
Design,Research Design
A key part of creating excellent online surveys is in the proper uses of both open-ended
and closed-ended questions. First, we must look at the nature of both question types,
their strengths and weaknesses, and when they should be used. So lets jump right into
things!

Closed-Ended Questions
Closed-ended questions come in a multitude of forms, but are defined by their need to
have explicit options for a respondent to select from. There are a wide variety of closed-
ended question types for survey creators to choose from, including: Multiple choice,
semantic differential, drop down, check boxes, ranking, and many more. Each question
type does not allow the respondent to provide unique or unanticipated answers, but
rather, they have to choose from a list of pre-selected options. Its like being offered
spaghetti or hamburgers for dinner, instead of being asked What would you like for
dinner?.
How to Use Closed-Ended Questions
Questions that are closed-ended are conclusive in nature as they are designed to
create data that is easily quantifiable. The fact that questions of this type are easy to
code makes them particularly useful when trying to prove the statistical significance of a
surveys results. Furthermore, the information gained by closed-ended questions allows
researchers to categorize respondents into groups based on the options they have
selected.
Demographic studies can illustrate a good use for closed-ended questions. Imagine that
the manager of a designer clothing store believes that certain types of people are more
likely to visit their store and purchase their clothing than others. To decipher which
segment groups are most likely to be their customers, the manager could design a
survey for anyone who has been a visitor. This survey could include closed-ended
questions on gender, age, employment status, and any other demographic information
theyd like to know. Then, it would be followed by questions on how often they visit the
store and the amount of money they spend annually. Since all the questions are closed-
ended, the store manager could easily quantify the responses and determine the profile
of their typical customer. In this case, the manager may learn that her most frequent
customers are female students, aged 18-25. This knowledge would allow her to move
forward with an action plan on how to cater to this niche better or break into other target
demographics.
Weaknesses
The major drawback to closed-ended questions is that a researcher must already have
a clear understanding of the topic of his/her questions and how they tie into the overall
research problem before they are created. Without this, closed-ended questions will
lead to insufficient options for respondents to select from, questions that do not properly
reflect the researchs purpose, and limited or erroneous information.
For example, if I asked the question Do you get to work by driving, busing, or walking?
I would have accidently omitted carpooling, biking, cartwheeling or any other form of
transportation I am unaware of. Instead, it would have been better for me to ask the
open-ended question of How do you get to work? to learn all the different types of
answer before forcing the selection based on a list of several options.
Open-Ended Questions
Open-ended questions are exploratory in nature. As discussed with the How do you get
to work? question, it allows for the respondent to provide any answer they choose
without forcing them to select from concrete options.
How to Use Open-Ended Questions
Questions that are open-ended provide rich qualitative data. In essence, they provide
the researcher with an opportunity to gain insight on all the opinions on a topic they are
not familiar with. However, being qualitative in nature makes these types of questions
lack the statistical significance needed for conclusive research. Nevertheless, open-
ended questions are incredibly useful in several different ways:
1) Expert Interviews: Since questions that are open-ended ask for the critical thinking
and uncut opinion of the respondent, they are perfect for gaining information from
specialists in a field that the researcher is less qualified in. Example: If I wanted to learn
the history of Ancient China (something I know very little about), I could create my
survey for a selected group of historians whose focus is Ancient China. My survey
would then be filled with broad open-ended questions that are designed to receive large
amounts of content and provide the freedom for the expert to demonstrate their
knowledge.
2) Small Population Studies: Open-ended questions can be useful for surveys that are
targeting a small group of people because there is no need for complex statistical
analysis and the qualitative nature of the questions will give you more valuable input
from each respondent. The rule here is the group must be small enough for the
surveyor to be able to read each unique response and reflect on the information
provided. Example: A supervisor who is looking for performance feedback from his/her
team of six employees. The supervisor would benefit more from questions that allow the
respondents to freely answer rather than forcing them into closed-ended questions that
will limit their responses.
3) Preliminary Research: As stated in the closed-ended questions section, conclusive
research usually requires preliminary research to be conducted in order to design the
appropriate research objects, survey structure and questions. Open-ended questions
can reveal to the surveyor a variety of opinions and behaviours among the population
that they never realized. It is therefore, incredibly useful to use open-ended questions to
gain information for further quantitative research.
4) A Respondent Outlet: It is usually a good idea in any survey, no matter how large,
to leave an open-ended comments question at the end. This is especially in the case of
a survey asking closed-ended questions on attitudes, opinions, or behaviours. Forcing
respondents to answer closed-ended questions asks them to fit in your box of options
and can leave them with extra information or concerns that they want to share with you.
Providing respondents with the outlet of a comment box is showing them the respect
they deserve for taking the time to fill out your survey.
Weaknesses
There are a few drawbacks to open-ended questions as well. Though respondent
answers are almost always richer in quality, the amount of effort it takes to digest the
information provided can sometimes be overwhelming. That is why open-ended
questions work best in studies with smaller populations. Furthermore, if your survey
sample is a fraction of the population you are studying, you will be looking to find data
which can be inferred on the overall population as statistically significant. Unfortunately,
open-ended questions cannot be used in this manner, as each response should be
seen as a unique opinion.

http://thetrainingworld.com/faq/questclosed.htm
What's the difference between and closed ended question and an open
ended question and when do I use them?
A closed question, or closed ended question is one that can be properly and
sensibly answered with a straight yes or no response OR a specific short
factual answer. With closed questions, the idea is that there is one correct
answer.
An open ended question is one that cannot be answered with a simple yes or
no question, and often has no single right answer.
Some trainers and instructors view closed questions as "bad", and open
ended ones as good, but that is false. Each has its uses.
Closed questions, because they stimulate short yes/no answers are ideal for
creating a fast pace interaction between instructor and group members. Used
in a machine gun fashion they can increase group energy, and give a sense of
urgency to the process. However, they should not be used in this fashion for
too long since the power to energize is based on the questioning sequence
being unusual or novel to the group, and short lasting.
Clearly, closed questions are not ideal to stimulate in depth thinking, and
that's the major function of open-ended questions.
Open ended questions should be used to generate longer, non-superficial
discussions, promote critical thinking and otherwise create intellectual
involvement.
http://bigbooster.com/articles/motivation/1/96.html
OPEN-ENDED QUESTIONS
2. Open-Ended Questions. The second Reflective Listening skill is a little more complicated
than Prompting, and it focuses more precisely on missing information that the listener wants
to get. It's called Open-Ended Questioning.

The difference between Open-Ended and Close-Ended questions can be stated very simply:
the Open-Ended Question cannot be answered with a simple yes or no, and the Close-
Ended Question can. For anyone who is interested in eliciting as much information as
possible from a speaker, it's obvious which kind of question is going to be more effective: the
Open-Ended Question, like the Prompt, encourages the speaker to keep talking, and thus
reinforces and Involves him. The Close-Ended Question is designed to elicit only a specific
piece of information which may or may not be the information that you need.

Sometimes it doesn't even elicit that, because it's phrased in a purely rhetorical manner. The
rhetorical questionwhere you don't really want a responseis the worst type of Close-
Ended Question, and it's one that demotivating managers use all the time. You know the
kind of person I mean. The division sales manager who storms into a meeting of branch
managers and announces, "We're going to hit quota this month or all you guys will be getting
your resumes retyped. Any questions?" Rhetoric. Intimidation. And no Involvement.

I used to have constant run-ins with an NFL coach who used this Close-Ended tactic before
games. "I want you guys to enjoy yourselves out there," he'd say. "But I don't want any
mistakes. If you drop that damn ball one time, and if you don't beat these turkeys' asses, I'm
going to sack every last one of you. Do you understand that?" Sure, we understood it. And
we understood, too, that he wasn't interested in hearing a response. That's no way to get the
best from your people.

Open-Ended Questions never start in this limiting and intimidating way, but with those words
that newspaper people appropriately call "openers": who, what, when, where, why, and how.
"What are your questions about the new quota we're setting up here?" "When do you think
we should put this new DP program on line?" Close-Ended Questions imply that you'd better
not have any question. Open-Ended Questions imply that you do have questions and
concerns, that they are worth talking about, and that the questioner is sincerely interested in
finding out more about your confusion. Because the grammar of the question does not allow
a monosyllabic answer, you allow the Person to expand on his or her opinions, to express
difficulties and confusions, to provide information rather than a grunted yes or no.

A couple of examples, the first from a factory floor situation. Say you're confronted by a
"slow" worker who just doesn't seem to understand what he needs to be doing to make a
new machine operate properly. To get that person's Behavior to change, you could ask
either a Closed or an Open-Ended question. Here are the possible choices:

A. Do you understand what this machine does?
B. What's your understanding of this machine?

Notice that the A (Closed) version, aside from inviting even a totally ignorant machine
operator to say "Sure," also unnecessarily challenges the listener to "prove" his expertise by
giving himself an A+ rating on a device he may, or may not, understand. The B (Open)
version allows for more hesitancy and humility: it allows the operator who is not absolutely
certain of the workings of the machine to admit it, and ask for an explanation.

One caveat, though. Obviously, you could, if you were a particularly vindictive plant
manager, make the B version sound pretty nasty, and you could also, if you were particularly
attentive to people's reactions, make the A version sound like a real plea for information. To
go back to the point I made in the section about nonverbal cues: The appropriate use of
Reflective Listening requires an attention not only to grammar, but to nuance and "body
grammar" as well.

A second example, from a situation that might confront you as the manager of a
computerized marketing department. You've just signed a trial contract with a software
supplier that includes a given amount of on-site training for your people each month. You're
excited about the system, but your assistant marketing manager seems hesitant. You might
ask her:

A. Don't you think this software training is exactly what we've
needed?
B. What do your people think about the new software training?

In this example, the A (Closed) version of the question not only demands a one-word
response, it even specifies what that response should be. This is an example of what is often
called a "leading question" or a "pre-emptive query," because it preempts the listener's own
response by subtly, but very strongly, indicating the "right" answer. This kind of question is
the most extreme example of the limited Close-Ended question. It gets very close to being a
mere rhetorical question, where the questioner really doesn't want an answer at all, but only
silent approbation for his own already-formed opinions. In terms of conversational
effectiveness, it has the same negative effect as politically barbed "inquiries" that assume the
listener is in accord with the questioner: "You just can't trust the Russians, can you?" or
"Don't you hate the new budget?"

By contrast, version B (Open) of this question allows a variety of responses. It's a realistic
probe for information rather than a request for rubber-stamping. The political equivalents
might include "How do you feel about the new Russian presence in
Angola?" or "What's your opinion of the president's budget cuts?"

Some people, of course, are resistant to providing information, even about their own deep
concerns, and I don't deny that there are communicational risks involved in working with
Open-Ended Questions. The most obvious, and most prevalent, of these risks is that the
person you're asking for "clarification" will say-or indicate to you without actually saying it
that what you're asking is simply none of your business. That can close you off from him, and
make it extremely difficult for you to turn him on to whatever needs to get done.

When you run into this kind of problemand you willyou might want to resort to a pair of
Open-Ended Questions that we have often found to be useful in drawing out the more closed
individuals. If Jim is reluctant to tell you "how he feels" about a given issue, we suggest
asking him one positive, and one negative question.

The positive question: What do you like about this?
The negative question: What are your concerns about this?

These questions, of course, will not guarantee that Jim will suddenly be transformed into a
garrulous, enthusiastic fellow ready to talk with you for days. But they do tend to focus the
need here for more feedback and more Involvement. Usually this will turn Jim around. If it
doesn't, I suggest backing off and trying another Reflective Listening technique to get him
Involved. Let's face it. There are people who see direct, personal questions of any kind as a
threat, and there is no point in antagonizing those people just because the Open-Ended
Question in general is an effective listening technique.
http://www.wikihow.com/Ask-Open-Ended-Questions
How to Ask Open Ended Questions
Edited by Jonathan E., Sondra C, Krystle, Darth_Pipe and 28 others

Four Methods:Open-ended QuestionsClosed-ended QuestionAsk Follow-up QuestionsListen
Asking questions is a basic way to gather information. But like everything else, there's a skill to it.
Asking Open-ended questions is a friendly way to engage people in a conversation. Give it a try,
you'll be surprised at how effective open-ended questions can be.
Steps
An open-ended question is one that compels a person to volunteer more information. A closed-
ended question, on the other hand, is one that can be answered with a simple yes or no
response. Knowing the difference between the two will help you tremendously.

Method 1 of 4: Open-ended Questions
1Ask questions that encourage people to talk. Let's say you went to a party on Saturday night
but had to leave early. If you want to know what happened after you went home, these open-
ended questions might help:
"What happened after I left?"
"What happened with Jim and Susan?"
"How did everyone like the champagne?"
Method 2 of 4: Closed-ended Question
1Avoid asking questions that require one-word replies. Not only will closed-ended questions
bring a conversation to a screeching halt, they usually provide inadequate answers as well. Here
are some examples of closed-ended questions relevant to the situation described above:
"Did you speak to Bob?"
"Did Susan leave with Jim?"
"Did everyone finish all the champagne?"
Method 3 of 4: Ask Follow-up Questions
1. 1
Go narrow first then broad and open. If you're struggling to get the person to open up
with broad open-ended questions, try narrowing the questions first and then make them
broader after getting them into the conversation. Example of this would be when talking
to your kids. You might ask a question like, "What happened at school today?" "Nothing"
is the response. Follow-up with something like, "What writing assignments are you
working on?" More than likely, this spark a conversation.
1. 2
Follow-up with "Why?" or "How?" Another technique that can help you get specific
information and a lengthier answer is to ask a closed-ended question followed up with
"Why?" or "How?" For example, if I want to know whether I might find a class useful, I
can ask someone who took it. Me: "Did you like that Sociology class?" Him: "Nope." Me:
"Why not?" Him: "Oh, well, it was a lot of reading and theory without much practical
application, for one thing."
Method 4 of 4: Listen

Make sure to Listen. Asking the right questions is pointless if you don't listen. Sometimes we
are guilty of formulating the next question without paying attention to the answer to the first. You
miss great opportunities for follow-up questions if you do this. Make an effort to listen to the
answer you asked for.
http://www.businessdictionary.com/definition/open-ended-question.html
open ended question


Definition
Unstructured question in which (unlike in a multiple choice question)
possible answers are not suggested, and the respondent answers it in his or her
own words. Such questions usually begin with a how, what, when, where, and why
(such as "What factors you take into account when buying a vehicle?" or "In
your opinion, what is thereasonable price for this item?")
and provide qualitative instead of quantitative information. Open ended questions
are asked generally during exploratory research and where statistical validity is not a
prime objective. See also closed question.


Read more: http://www.businessdictionary.com/definition/open-ended-question.html#ixzz352vE0dKU
http://changingminds.org/techniques/questioning/open_closed_questions.htm
Open and Closed Questions

Techniques > Questioning > Open and Closed Questions
Closed questions | Open questions

These are two types of questions you can use that are very different in character and
usage.
Closed questions
Definition
There are two definitions that are used to describe closed questions. A common definition
is:
A closed question can be answered with either a single word or a short phrase.
Thus 'How old are you?' and 'Where do you live?' are closed questions. A more limiting
definition that is sometimes used is:
A closed question can be answered with either 'yes' or 'no'.
By this definition 'Are you happy?' and 'Is that a knife I see before me?' are closed
questions, whilst 'What time is it?' and 'How old are you?' are not. This causes a problem of
how to classify the short-answer non-yes-or-no questions, which do not fit well with the
definition for open questions. A way of handling this is to define 'yes-no' as a sub-class of
the short-answer closed question.
Using closed questions
Closed questions have the following characteristics:
They give you facts.
They are easy to answer.
They are quick to answer.
They keep control of the conversation with the questioner.
This makes closed questions useful in the following situations:

Usage Example
As opening questions in a conversation,
as it makes it easy for the other person
to answer, and doesn't force them to
reveal too much about themselves.
It's great weather, isn't it?
Where do you live?
What time is it?
For testing their understanding (asking
yes/no questions). This is also a great
way to break into a long ramble.
So, you want to move into our
apartment, with your own bedroom and
bathroom -- true?
For setting up a desired positive or
negative frame of mind in them (asking
successive questions with obvious
answers either yes or no ).
Are you happy with your current
supplier?
Do they give you all that you need?
Would you like to find a better supplier?
For achieving closure of a persuasion
(seeking yes to the big question).
If I can deliver this tomorrow, will you
sign for it now?

Note how you can turn any opinion into a closed question that forces a yes or no by
adding tag questions, such as "isn't it?", "don't you?" or "can't they?", to any statement.
The first word of a question sets up the dynamic of the closed question and signals the easy
answer ahead. Note how these are words like: do, would, are, will, if.
Open questions
Definition
An open question can be defined thus:
An open question is likely to receive a long answer.
Although any question can receive a long answer, open questions deliberately seek longer
answers, and are the opposite of closed questions.
Using open questions
Open questions have the following characteristics:
They ask the respondent to think and reflect.
They will give you opinions and feelings.
They hand control of the conversation to the respondent.
This makes open questions useful in the following situations:

Usage Example
As a follow-on from closed questions, to
develop a conversation and open up
someone who is rather quiet.
What did you do on you holidays?
How do you keep focused on your
work?
To find out more about a person, their
wants, needs, problems, and so on.
What's keeping you awake these days?
Why is that so important to you?
To get people to realize the extend of
their problems (to which, of course, you
have the solution).
I wonder what would happen if your
customers complained even more?
Rob Jones used to go out late. What
happened to him?
To get them to feel good about you by
asking after their health or otherwise
demonstrating human concern about
them.
How have you been after your
operation?
You're looking down. What's up?

Open questions begin with such as: what, why, how, describe.
Using open questions can be scary, as they seem to hand the baton of control over to the
other person. However, well-placed questions do leave you in control as you steer their
interest and engage them where you want them.
When opening conversations, a good balance is around three closed questions to one open
question. The closed questions start the conversation and summarize progress, whilst the
open question gets the other person thinking and continuing to give you useful information
about them.
A neat trick is to get them to ask you open questions. This then gives you the floor to talk
about what you want. The way to achieve this is to intrigue them with an incomplete story
or benefit.
open-ended
Use Open-ended in a sentence
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Check Translations, Spelling, Look Up Resources w Free App
open-ended
[oh-puh n-en-did] Show IPA
adjective
1.
not having fixed limits; unrestricted; broad: an open-ended discussion.
2.
allowing for future changes, revisions, or additions: open-ended agreements.
3.
having no fixed answer: an open-ended question.
Origin:
181525; open + end
1
+ -ed
3


Related forms
open-endedness, noun
Dictionary.com Unabridged
Based on the Random House Dictionary, Random House, Inc. 2014.
Cite This Source
|
Link To open-ended
Collins
World English Dictionary
open-ended

adj
1without definite limits, as of duration or amount: an open-ended contract
.
2
.
denoting a question, esp one on a questionnaire, that cannot be answered "yes", "
no", or "don't know"
http://www.utwente.nl/mb/en/education/Organization/Educational%20policy/Assessment/Job%20
aids/closed-ended_questions_2/
CLOSED-ENDED QUESTIONS
(By: Hilde ter Horst (Zozi) and Riet Martens)
There are various types of closed-ended questions, the most common types being multiple-choice
questions and true/false questions. Examples can be found in publications such as the CITO Manual.
We will now examine these in more detail:
Advantages of closed-ended questions
Disadvantages of closed-ended questions
Composing tests as a whole
Composing multiple-choice questions
Checking test questions
Scoring key and mandatory retention of written work
ADVANTAGES OF CLOSED-ENDED QUESTIONS
- marking takes very little time;
- assessment is objective: there are no differences between examiners, moreover a single examiner
will also assess all students in the same way;
- it does not matter whether students are good or bad at formulating their answers;
- a great range of knowledge can be assessed in a short period of time;
- they are conducive to retrospective statistical calculations (degree of difficulty, reliability).
DISADVANTAGES OF CLOSED-ENDED QUESTIONS
- not all objectives (or learning objectives) can be assessed by means of closed-ended questions;
- such questions make considerable demands of students reading skills (which can be a problem for
some students);
- the smaller the number of alternative answers, the greater the probability that students will guess the
correct answer;
- composing good questions is a difficult and time consuming task.
COMPOSING TESTS AS A WHOLE
A test is more than just a set of questions. The test as a whole must exhibit content validity. To this end, it
is vital that there is a balanced emphasis on the relevant learning objectives throughout the test. For
example, if obtaining an understanding of .... is an important objective, then a test consisting only of
questions that require knowledge recall would certainly not be appropriate.
The best way to derive a representative test is to create a specification matrix (also known as a test
blueprint). This is used to distribute the test questions across the main topics and across the requisite
level (knowledge, understanding, skills). This specification table serves both as a guideline and as
a source of inspiration when developing the questions.
There should be a sufficiently large number of questions and assignments to rule out lucky guesses
(reliability). As a guide, you can assume that a closed-ended test consisting of questions with a choice of
four possible answers must contain a minimum of forty questions (this allows an acceptable level of
reliability (> 0.80) to be achieved). If the questions used contain just three alternatives then at least sixty
questions are required, while a test using two-choice questions must contain at least eighty questions.
This is a general guideline; if a test relates to about 1500 pages of reading material then forty four-choice
questions will not usually be sufficient to give a good reflection of the total quantity of subject matter
involved. In practice, the number of questions involved is usually determined by the time available for the
test.
The larger the number of answers to each question, the smaller the chance of a lucky guess (and the
more accurate the impression of a students knowledge). However, it is not possible to think up an infinite
number of plausible alternative answers. Another disadvantage of a large number of alternatives is that
the reading time increases proportionally (which means that your test will contain fewer questions).
Multiple choice questions offering three alternative answers are recommended.
COMPOSING MULTIPLE-CHOICE QUESTIONS
When composing a multiple-choice question, it is best to use the following procedure:
1. First formulate the stem. The stem consists of a clear question or formulation of the problem, and
sets out the context of the question.
2. Next, formulate the scoring key. This indicates the correct answer in the list of options.
3. Finally, formulate the distractors. These are the incorrect answers in the list of options.
Consider the following aspects when formulating a question:
- Ideally, the stem should be formulated in positive terms, if not then highlight the NEGATIVE parts of
the question.
- Only formulate distractors that are sufficiently plausible to be selected by students who have not
mastered the subject matter.
- Use the same style throughout when formulating the answers in the list of options to ensure that their
phrasing does not give a clue to the correct answer.
- Ensure that the options do not overlap.
- Ensure that the distractors are not too different from one another.
Sample questions, together with examples of dos and donts, and of common mistakes are listed in
the CITO Manual(in Dutch).
CHECKING TEST QUESTIONS
However much care is devoted to their compilation, experience shows that there is often room for
improvement in the form and/or content of questions. If possible, ask a colleague to take the test that you
have prepared for your students. A lack of consensus about the correct option indicates that the question
needs to be discussed. To this end, you can use the checklist for compiling closed-ended questions.
If you have not been able to get a colleague to check the test, use this checklist yourself.
Advantages and Disadvantages of Open and Closed Questions:

Advantages of Closed Ended

it is easier and quicker for respondents to answer
the answers of different respondents are easier to compare
answers are easier to code and statistically analyse
the response choices can clarify question meaning for respondents
respondents are more likely to answer about sensitive topics
there are fewer irrelevant or confused answers to questions
less articulate or less literate respondents are not at a disadvantage
replication is easier
Disadvantages of Closed Ended

they can suggest ideas that the respondent would not otherwise have
respondents with no opinion or no knowledge can answer anyway
respondents can be frustrated because their desired answer is not a choice
it is confusing if many response choices are offered
misinterpretation of a question can go unnoticed
distinctions between respondent answers may be blurred
clerical mistakes or marking the wrong response is possible
they force respondents to give simplistic responses to complex issues
they force people to make choices they would not make in the real world
Advantages of Open

they permit an unlimited number of possible answers.
respondents can answer in detail and can qualify and clarify responses
unanticipated findings can be discovered
they permit adequate answers to complex issues
they permit creativity, self-expression, and richness of detail
they reveal a respondents logic, thinking process, and frame of reference
Disadvantages of Open

different respondents give different degrees of detail in answers
responses may be irrelevant or buried in useless detail
comparisons and statistical analysis become difficult
coding responses is difficult articulate and highly literate respondents have an advantage
questions may be too general for respondents who lose direction
a greater amount of respondent time, thought, and effort is necessary
respondents can be intimidated by questions
answers take up a lot of space in the questionare.
Advantages of Open-Ended Questions
Open-ended questions allow respondents to include more information, including feelings, attitudes
and understanding of the subject. This allows researchers to better access the respondents' true
feelings on an issue. .
Open-ended questions cut down on two types of response error; respondents are not likely to forget
the answers they have to choose from if they are given the chance to respond freely, and open-ended
questions simply do not allow respondents to disregard reading the questions and just "fill in" the
survey with all the same answers (such as filling in the "no" box on every question).
Because they allow for obtaining extra information from the respondent, such as demographic
information (current employment, age, gender, etc.), surveys that use open-ended questions can be
used more readily for secondary analysis by other researchers than can surveys that do not provide
contextual information about the survey population.

Disadvantages of Open-Ended Questions
If open-ended questions are analyzed quantitatively, the qualitative information is reduced to coding
and answers tend to lose some of their initial meaning.
Because open-ended questions allow respondents to use their own words, it is difficult to compare
the meanings of the responses.
The response rate is lower with surveys that use open-ended question than with those that use
closed-ended questions.


Advantages of Closed-Ended Questions
Closed-ended questions are more easily analyzed. Every answer can be given a number or value
so that a statistical interpretation can be assessed. Closed-ended questions are also better suited for
computer analysis.
Closed-ended questions can be more specific, thus more likely to communicate similar meanings.
In large-scale surveys, closed-ended questions take less time from the interviewer, the participant
and the researcher, and so is a less expensive survey method.

Diadvantages of Closed-Ended Questions
Closed-ended questions, because of the simplicity and limit of the answers, may not offer the
respondents choices that actually reflect their real feelings.
Closed-ended questions also do not allow the respondent to explain that they do not understand the
question or do not have an opinion on the issue.
Organization development
From Wikipedia, the free encyclopedia

This article is written like a personal reflection or opinion essay that states the
Wikipedia editor's particular feelings about a topic, rather than the opinions
of experts. Please help improve it by rewriting it in an encyclopedic style. (March
2012)
Organization development (OD) is a deliberately planned, organization-wide effort to increase an
organization's effectiveness and/or efficiency and/or to enable the organization to achieve its
strategic goals. OD theorists and practitioners define it in various ways. Its multiplicity of definition
reflects the complexity of the discipline and is responsible for its lack of understanding. For example,
Vasudevan has referred to OD being about promoting organizational readiness to meet
change,
[citation needed]
and it has been said that OD is a systemic learning and development strategy
intended to change the basics of beliefs, attitudes and relevance of values, and structure of the
current organization to better absorb disruptive technologies, shrinking or exploding market
opportunities and ensuing challenges and chaos. It is worth understanding what OD is not. It is not
training, personal development, team development or team building,human resource
development (HRD), learning and development (L&D) or a part of HR although it is often mistakenly
understood as some or all of these. OD interventions are about change so involve people - but OD
also develops processes, systems and structures. The primary purpose of OD is to develop the
organization, not to train or develop the staff.
Contents
[hide]
1 Overview
o 1.1 History
o 1.2 Core Values
1.2.1 Objective of OD
o 1.3 Change agent
o 1.4 Sponsoring organization
o 1.5 Applied behavioral science
o 1.6 Systems context
o 1.7 The holistic and futuristic view of organization
2 Improved organizational performance
o 2.1 Organizational self-renewal
3 Understanding organizations
o 3.1 Modern development
4 Action research
5 Important figures
6 OD interventions
7 See also
8 References
9 Further reading
10 External links
Overview[edit]
Organization development is an ongoing, systematic process of implementing effective
organizational change. OD is known as both a field of science focused on understanding and
managing organizational change and as a field of scientific study and inquiry. It is interdisciplinary in
nature and draws on sociology, psychology, particularly industrial and organizational psychology,
and theories of motivation, learning, and personality. Although behavioral science has provided the
basic foundation for the study and practice of OD, new and emerging fields of study have made their
presence felt. Experts in systems thinking and organizational learning, structure of intuition in
decision making, and coaching (to name a few) whose perspective is not steeped in just the
behavioral sciences, but a much more multi-disciplinary and inter-disciplinary approach, have
emerged as OD catalysts or tools.
Organization development is a growing field that is responsive to many new approaches.
History[edit]
Kurt Lewin (18981947) is widely recognized as the founding father of OD, although he died before
the concept became current in the mid-1950s.
[1]
From Lewin came the ideas of group
dynamics and action research which underpin the basic OD process as well as providing its
collaborative consultant/client ethos. Institutionally, Lewin founded the "Research Center for Group
Dynamics" (RCGD) at MIT, which moved to Michigan after his death. RCGD colleagues were among
those who founded the National Training Laboratories (NTL), from which the T-groups and group-
based OD emerged.
Kurt Lewin played a key role in the evolution of organization development as it is known today. As
early as World War II, Lewin experimented with a collaborative change process (involving himself as
consultant and a client group) based on a three-step process of planning, taking action, and
measuring results. This was the forerunner of action research, an important element of OD, which
will be discussed later. Lewin then participated in the beginnings of laboratory training, or T-groups,
and, after his death in 1947, his close associates helped to develop survey-research methods at
the University of Michigan. These procedures became important parts of OD as developments in this
field continued at the National Training Laboratories and in growing numbers of universities and
private consulting firms across the country. Two of the leading universities offering doctoral
level
[2]
degrees in OD are Benedictine University and the Fielding Graduate University.
Douglas McGregor and Richard Beckhard while "consulting together at General Mills in the 1950s,
the two coined the term organization development (OD) to describe an innovative bottoms-up
change effort that fit no traditional consulting categories" (Weisbord, 1987, p. 112).
[3]

The failure of off-site laboratory training to live up to its early promise was one of the important
forces stimulating the development of OD. Laboratory training is learning from a person's "here and
now" experience as a member of an ongoing training group. Such groups usually meet without a
specific agenda. Their purpose is for the members to learn about themselves from their spontaneous
"here and now" responses to an ambiguous hypothetical situation. Problems of leadership, structure,
status, communication, and self-serving behavior typically arise in such a group. The members have
an opportunity to learn something about themselves and to practice such skills as listening,
observing others, and functioning as effective group members.
[4]

As formerly practiced (and occasionally still practiced for special purposes), laboratory training was
conducted in "stranger groups," or groups composed of individuals from different organizations,
situations, and backgrounds. A major difficulty developed, however, in transferring knowledge
gained from these "stranger labs" to the actual situation "back home". This required a transfer
between two different cultures, the relatively safe and protected environment of the T-group (or
training group) and the give-and-take of the organizational environment with its traditional values.
This led the early pioneers in this type of learning to begin to apply it to "family groups" that is,
groups located within an organization. From this shift in the locale of the training site and the
realization that culture was an important factor in influencing group members (along with some other
developments in the behavioral sciences) emerged the concept of organization development.
[4]

Core Values[edit]
Underlying Organization Development are humanistic values. Margulies and Raia (1972) articulated
the humanistic values of OD as follows:
1. Providing opportunities for people to function as human beings rather than as resources in
the productive process.
2. Providing opportunities for each organization member, as well as for the organization itself,
to develop to their full potential.
3. Seeking to increase the effectiveness of the organization in terms of all of its goals.
4. Attempting to create an environment in which it is possible to find exciting and challenging
work.
5. Providing opportunities for people in organizations to influence the way in which they relate
to work, the organization, and the environment.
6. Treating each human being as a person with a complex set of needs, all of which are
important to their work and their life.
[5]

Differentiating OD from other change efforts such as- 1. Operation management 2. Training and
Development 3. Technological innovations....etc
Objective of OD[edit]
The objective of OD is:
1. To increase the level of inter-personal trust among employees.
2. To increase employees' level of satisfaction and commitment.
3. To confront problems instead of neglecting them.
4. To effectively manage conflict.
5. To increase cooperation and collaboration among the employees.
6. To increase the organization's problem solving.
7. To put in place processes that will help improve the ongoing operation of the organization on
a continuous basis.
As objectives of organizational development are framed keeping in view specific situations, they vary
from one situation to another. In other words, these programs are tailored to meet the requirements
of a particular situation. But broadly speaking, all organizational development programs try to
achieve the following objectives:
1. Making individuals in the organization aware of the vision of the organization. Organizational
development helps in making employees align with the vision of the organization.
2. Encouraging employees to solve problems instead of avoiding them.
3. Strengthening inter-personnel trust, cooperation, and communication for the successful
achievement of organizational goals.
4. Encouraging every individual to participate in the process of planning, thus making them feel
responsible for the implementation of the plan.
5. Creating a work atmosphere in which employees are encouraged to work and participate
enthusiastically.
6. Replacing formal lines of authority with personal knowledge and skill.
7. Creating an environment of trust so that employees willingly accept change.
According to organizational development thinking, organization development provides managers
with a vehicle for introducing change systematically by applying a broad selection of management
techniques. This, in turn, leads to greater personal, group, and organizational effectiveness.
Change agent[edit]
A change agent in the sense used here is not a technical expert skilled in such functional areas as
accounting, production, or finance. The change agent is a behavioral scientist who knows how to get
people in an organization involved in solving their own problems. A change agent's main strength is
a comprehensive knowledge of human behavior, supported by a number of intervention techniques
(to be discussed later). The change agent can be either external or internal to the organization. An
internal change agent is usually a staff person who has expertise in the behavioral sciences and in
the intervention technology of OD. Beckhard reports several cases in which line people have been
trained in OD and have returned to their organizations to engage in successful change
assignments.
[6]
In the natural evolution of change mechanisms in organizations, this would seem to
approach the ideal arrangement. Qualified change agents can be found on some university faculties,
or they may be private consultants associated with such organizations as the National Training
Laboratories Institute for Applied Behavioral Science (Washington, D.C.) University Associates (San
Diego, California), the Human Systems Intervention graduate program in the Department of Applied
Human Sciences (Concordia University, Montreal, Canada), Navitus (Pvt) Ltd (Pakistan), MaxFoster
Global and similar organizations.
The change agent may be a staff or line member of the organization who is schooled in OD theory
and technique. In such a case, the "contractual relationship" is an in-house agreement that should
probably be explicit with respect to all of the conditions involved except the fee.
Sponsoring organization[edit]
The initiative for OD programs often comes from an organization that has a problem or anticipates
facing a problem. This means that top management or someone authorized by topmanagement is
aware that a problem exists and has decided to seek help in solving it. There is a direct analogy here
to the practice of psychotherapy: The client or patient must actively seek help in finding a solution to
his problems. This indicates a willingness on the part of the client organization to accept help and
assures the organization that management is actively concerned.
[7]

Applied behavioral science[edit]
One of the outstanding characteristics of OD that distinguishes it from most other improvement
programs is that it is based on a "helping relationship." Some believe that the change agent is not a
physician to the organization's ills; that s/he does not examine the "patient," make a diagnosis, and
write a prescription. Nor does she try to teach organizational members a new inventory of knowledge
which they then transfer to the job situation. Using theory and methods drawn from such behavioral
sciences as industrial/organizational psychology, industrial sociology, communication, cultural
anthropology, administrative theory, organizational behavior, economics, and political science, the
change agent's main function is to help the organization define and solve its own problems. The
basic method used is known as action research. This approach, which is described in detail later,
consists of a preliminary diagnosis, collecting data, feedback of the data to the client, data
exploration by the client group, action planning based on the data, and taking action.
[8]

Systems context[edit]
The holistic and futuristic view of organization[edit]
OD deals with a total system the organization as a whole, including its relevant environment or
with a subsystem or systems departments or work groups in the context of the total system.
Parts of systems for example, individuals, cliques, structures, norms, values, and products are
not considered in isolation; the principle of interdependency that change in one part of a system
affects the other parts is fully recognized. Thus, OD interventions focus on the total culture and
cultural processes of organizations. The focus is also on groups, since the relevant behavior of
individuals in organizations and groups is generally a product of the influences of groups rather than
of personalities.
[7]

Improved organizational performance[edit]
The objective of OD is to improve the organization's capacity to handle its internal and external
functioning and relationships. This includes improved interpersonal and group processes, more
effective communication, enhanced ability to cope with organizational problems of all kinds. It also
involves more effective decision processes, more appropriate leadership styles, improved skill in
dealing with destructive conflict, as well as developing improved levels of trust and cooperation
among organizational members. These objectives stem from a value system based on an optimistic
view of the nature of man that man in a supportive environment is capable of achieving higher
levels of development and accomplishment. Essential to organization development and
effectiveness is the scientific method inquiry, a rigorous search for causes, experimental testing of
hypotheses, and review of results.
Self-managing work groups allows the members of a work team to manage, control, and monitor all
facets of their work, from recruiting, hiring, and new employees to deciding when to take rest breaks.
An early analysis of the first-self-managing work groups yielded the following behavioral
characteristics (Hackman, 1986):

Employees assume personal responsibility and accountability for outcomes of their work.
Employees monitor their own performance and seek feedback on how well they are
accomplishing their goals.
Employees manage their performance and take corrective action when necessary to improve
their and the performance of other group members.
Employees seek guidance, assistance, and resources from the organization when they do not
have what they need to do the job.
Employees help members of their work group and employees in other groups to improve job
performance and raise productivity for the organization as a whole.

Organizational self-renewal[edit]
The ultimate aim of OD practitioners is to "work themselves out of a job" by leaving the client
organization with a set of tools, behaviors, attitudes, and an action plan with which to monitor its own
state of health and to take corrective steps toward its own renewal and development. This is
consistent with the systems concept of feedback as a regulatory and corrective mechanism.
[7]

Understanding organizations[edit]
Weisbord presents a six-box model for understanding organization:
1. Purposes: The organization members are clear about the organization's mission and
purpose and goal agreements, whether people support the organization' purpose.
2. Structure: How is the organization's work divided up? The question is whether there is an
adequate fit between the purpose and the internal structure.
3. Relationship: Between individuals, between units or departments that perform different tasks,
and between the people and requirements of their jobs.
4. Rewards: The consultant should diagnose the similarities between what the organization
formally rewarded or punished members for.
5. Leadership: Is to watch for blips among the other boxes and maintain balance among them.
6. Helpful mechanism: Is a helpful organization that must attend to in order to survive which as
planning, control, budgeting, and other information systems that help organization member
accomplish.
[9]

Modern development[edit]
In recent years, serious questioning has emerged about the relevance of OD to managing change in
modern organizations. The need for "reinventing" the field has become a topic that even some of its
"founding fathers" are discussing critically.
[10]

With this call for reinvention and change, scholars have begun to examine organization development
from an emotion-based standpoint. For example, deKlerk (2007)
[11]
writes about how emotional
trauma can negatively affect performance. Due to downsizing, outsourcing, mergers, restructuring,
continual changes, invasions of privacy, harassment, and abuses of power, many employees
experience the emotions of aggression, anxiety, apprehension, cynicism, and fear, which can lead to
performance decreases. deKlerk (2007) suggests that in order to heal the trauma and increase
performance, O.D. practitioners must acknowledge the existence of the trauma, provide a safe place
for employees to discuss their feelings, symbolize the trauma and put it into perspective, and then
allow for and deal with the emotional responses. One method of achieving this is by having
employees draw pictures of what they feel about the situation, and then having them explain their
drawings with each other. Drawing pictures is beneficial because it allows employees to express
emotions they normally would not be able to put into words. Also, drawings often prompt active
participation in the activity, as everyone is required to draw a picture and then discuss its meaning.
The use of new technologies combined with globalization has also shifted the field of organization
development. Roland Sullivan (2005) defined Organization Development with participants at the 1st
Organization Development Conference for Asia in Dubai-2005 as "Organization Development is a
transformative leap to a desired vision where strategies and systems align, in the light of local
culture with an innovative and authentic leadership style using the support of high tech tools.
Action research[edit]
Wendell L French and Cecil Bell defined organization development (OD) at one point as
"organization improvement through action research".
[8]
If one idea can be said to summarize OD's
underlying philosophy, it would be action research as it was conceptualized by Kurt Lewin and later
elaborated and expanded on by other behavioral scientists. Concerned with social change and,
more particularly, with effective, permanent social change, Lewin believed that the motivation to
change was strongly related to action: If people are active in decisions affecting them, they are more
likely to adopt new ways. "Rational social management", he said, "proceeds in a spiral of steps, each
of which is composed of a circle of planning, action, and fact-finding about the result of action".
[12]



Figure 1: Systems Model of Action-Research Process
Lewin's description of the process of change involves three steps:
[12]

"Unfreezing": Faced with a dilemma or disconfirmation, the individual or group becomes aware of a
need to change.
"Changing": The situation is diagnosed and new models of behavior are explored and tested.
"Refreezing": Application of new behavior is evaluated, and if reinforced, adopted.
Figure 1 summarizes the steps and processes involved in planned change through action research.
Action research is depicted as a cyclical process of change. The cycle begins with a series of
planning actions initiated by the client and the change agent working together. The principal
elements of this stage include a preliminary diagnosis, data gathering, feedback of results, and joint
action planning. In the language of systems theory, this is the input phase, in which the client system
becomes aware of problems as yet unidentified, realizes it may need outside help to effect changes,
and shares with the consultant the process of problem diagnosis.
The second stage of action research is the action, or transformation, phase. This stage includes
actions relating to learning processes (perhaps in the form of role analysis) and to planning and
executing behavioral changes in the client organization. As shown in Figure 1, feedback at this stage
would move via Feedback Loop A and would have the effect of altering previous planning to bring
the learning activities of the client system into better alignment with change objectives. Included in
this stage is action-planning activity carried out jointly by the consultant and members of the client
system. Following the workshop or learning sessions, these action steps are carried out on the job
as part of the transformation stage.
[4]

The third stage of action research is the output, or results, phase. This stage includes actual
changes in behavior (if any) resulting from corrective action steps taken following the second stage.
Data are again gathered from the client system so that progress can be determined and necessary
adjustments in learning activities can be made. Minor adjustments of this nature can be made in
learning activities via Feedback Loop B (see Figure 1). Major adjustments and reevaluations would
return the OD project to the first, or planning, stage for basic changes in the program. The action-
research model shown in Figure 1 closely follows Lewin's repetitive cycle of planning, action, and
measuring results. It also illustrates other aspects of Lewin's general model of change. As indicated
in the diagram, the planning stage is a period of unfreezing, or problem awareness.
[12]
The action
stage is a period of changing, that is, trying out new forms of behavior in an effort to understand and
cope with the system's problems. (There is inevitable overlap between the stages, since the
boundaries are not clear-cut and cannot be in a continuous process). The results stage is a period of
refreezing, in which new behaviors are tried out on the job and, if successful and reinforcing,
become a part of the system's repertoire of problem-solving behavior.
Action research is problem centered, client centered, and action oriented. It involves the client
system in a diagnostic, active-learning, problem-finding, and problem-solving process. Data are not
simply returned in the form of a written report but instead are fed back in open joint sessions, and
the client and the change agent collaborate in identifying and ranking specific problems, in devising
methods for finding their real causes, and in developing plans for coping with them realistically and
practically. Scientific method in the form of data gathering, forming hypotheses, testing hypotheses,
and measuring results, although not pursued as rigorously as in the laboratory, is nevertheless an
integral part of the process. Action research also sets in motion a long-range, cyclical, self-correcting
mechanism for maintaining and enhancing the effectiveness of the client's system by leaving the
system with practical and useful tools for self-analysis and self-renewal.
[4]

Important figures[edit]
Chris Argyris
Richard Beckhard
Robert R. Blake
Louis L. Carter
David Cooperrider
W. Edwards Deming
Fred Emery
Charles Handy
Elliott Jaques
Kurt Lewin
Rensis Likert
Jane Mouton
Derek S. Pugh
William J. Rothwell
Edgar Schein
Donald Schon
Peter Senge
Herbert Shepard
Eric Trist
Margaret J. Wheatley
Pulin Garg
Ichak Adizes
Clayton Alderfer
Wilfred Bion
A. Kenneth Rice
OD interventions[edit]
"Interventions" are principal learning processes in the "action" stage (see Figure 1)
of organization development. Interventions are structured activities used individually or in
combination by the members of a client system to improve their social or task performance. They
may be introduced by a change agent as part of an improvement program, or they may be used by
the client following a program to check on the state of the organization's health, or to effect
necessary changes in its own behavior. "Structured activities" mean such diverse procedures as
experiential exercises, questionnaires, attitude surveys, interviews, relevant group discussions, and
even lunchtime meetings between the change agent and a member of the client organization. Every
action that influences an organization's improvement program in a change agent-client system
relationship can be said to be an intervention.
[13]

There are many possible intervention strategies from which to choose. Several assumptions about
the nature and functioning of organizations are made in the choice of a particular
strategy.Beckhard lists six such assumptions:
1. The basic building blocks of an organization are groups (teams). Therefore, the basic units of
change are groups, not individuals.
2. An always relevant change goal is the reduction of inappropriate competition between parts
of the organization and the development of a more collaborative condition.
3. Decision making in a healthy organization is located where the information sources are,
rather than in a particular role or level of hierarchy.
4. Organizations, subunits of organizations, and individuals continuously manage their affairs
against goals. Controls are interim measurements, not the basis of managerial strategy.
5. One goal of a healthy organization is to develop generally open communication, mutual trust,
and confidence between and across levels.
6. People support what they help create. People affected by a change must be allowed active
participation and a sense of ownership in the planning and conduct of the change.
[6]

Interventions range from those designed to improve the effectiveness of individuals through those
designed to deal with teams and groups, intergroup relations, and the total organization. There are
interventions that focus on task issues (what people do), and those that focus on process issues
(how people go about doing it). Finally, interventions may be roughly classified according to which
change mechanism they tend to emphasize: for example, feedback, awareness of changing cultural
norms, interaction and communication, conflict, and education through either new knowledge or skill
practice.
[14]

One of the most difficult tasks confronting the change agent is to help create in the client system a
safe climate for learning and change. In a favorable climate, human learning builds on itself and
continues indefinitely during man's lifetime. Out of new behavior, new dilemmas and problems
emerge as the spiral continues upward to new levels. In an unfavorable climate, in contrast, learning
is far less certain, and in an atmosphere of psychological threat, it often stops altogether. Unfreezing
old ways can be inhibited in organizations because the climate makes employees feel that it is
inappropriate to reveal true feelings, even though such revelations could be constructive. In an
inhibited atmosphere, therefore, necessary feedback is not available. Also, trying out new ways may
be viewed as risky because it violates established norms. Such an organization may also be
constrained because of the law of systems: If one part changes, other parts will become involved.
Hence, it is easier to maintain the status quo. Hierarchical authority, specialization, span of control,
and other characteristics of formal systems also discourage experimentation.
[13]

The change agent must address himself to all of these hazards and obstacles. Some of the things
which will help him are:
1. A real need in the client system to change
2. Genuine support from management
3. Setting a personal example: listening, supporting behavior
4. A sound background in the behavioral sciences
5. A working knowledge of systems theory
6. A belief in man as a rational, self-educating being fully capable of learning better ways to do
things.
[13]

A few examples of interventions include team building, coaching, Large Group Interventions,
mentoring, performance appraisal, downsizing, TQM, and leadership development.
What is Organization Development?
One classic definition of organization development comes from Richard Beckhards 1969 Organization
Development: Strategies and Models:
Organization Development is an effort (1) planned, (2) organization-wide, and (3) managed from the top, to
(4) increase organization effectiveness and health through (5) planned interventions in the organizations
"processes, using behavioral-science knowledge.
Other definitions from leaders in Organization Development Network:
"OD is a field directed at interventions in the processes of human systems (formal and informal groups,
organizations, communities, and societies) in order to increase their effectiveness and health using a variety
of disciplines, principally applied behavioral sciences. OD requires practitioners to be conscious about the
values guiding their practice and focuses on achieving its results through people."
Arnold Minors, Arnold Minors & Associates, Toronto, Canada
"Organization Development is a body of knowledge and practice that enhances organizational performance
and individual development, by increasing alignment among the various systems within the overall system.
OD interventions are inclusive methodologies and approaches to strategic planning, organization design,
leadership development, change management, performance management, coaching, diversity, team
building, and work/life balance."
Matt Minahan, MM & Associates, Silver Spring, Maryland
Organizational Development Theory
Organizational Development (OD) is a field of research, theory, and practice dedicated to expanding the
knowledge and effectiveness of people to accomplish more successful organizational change and
performance.
OD is a process of continuous diagnosis, action planning, implementation and evaluation, with the goal of
transferring knowledge and skills to organizations to improve their capacity for solving problems and
managing future change.


History and Application of Organizational Development Theory
OD emerged out of human relations studies from the 1930s where psychologists realized that
organizational structures and processes influence worker behavior and motivation.
Lewin's work in the 1940s and 1950s also helped show that feedback was a valuable tool in addressing
social processes.
More recently, work on OD has expanded to focus on aligning organizations with their rapidly changing
and complex environments through organizational learning, knowledge management and transformation
of organizational norms and values.


Key Concepts of Organizational Development Theory
Organizational Climate
Defined as the mood or unique "personality" of an organization.
Attitudes and beliefs about organizational practices create organizational climate and influence
members' collective behavior.
Climate features and characteristics may be associated with employee satisfaction, stress,
service quality and outcomes and successful implementation of new programs. Climate features
and characteristics include:
o Leadership, openness of communication, participative management, role clarity, and
conflict resolution, leader support and leader control.


Organizational Culture
Deeply seated norms, values and behaviors that members share.
The five basic elements of culture in organizations include:
1. Assumptions
2. Values
3. Behavioral norms
4. Behavioral patterns
5. Artifacts
The subjective features (assumptions, values and norms) reflect members' unconscious thoughts and
interpretations of their organizations.
The subjective features shape the behaviors and artifacts take on within organizations


Organizational Strategies
A common OD approach used to help organizations negotiate change, i.e. action research, consists of
four steps.
1. Diagnosis
Helps organization identify problems that may interfere with its effectiveness and assess
the underlying causes
Usually done by OD enlisting the help of an outside specialist to help identify problems by
examining its mission, goals, policies, structures and technologies; climate and culture;
environmental factors; desired outcomes and readiness to take action.
Usually done through key informant interviews or formal surveys of all members.
2. Action planning
Strategic interventions for addressing diagnosed problems are developed.
The organization is engaged in an action planning process to assess the feasibility of
implementing different change strategies that lead to action.
3. Intervention
Change steps are specified and sequenced, progress monitored, and stakeholder
commitment is cultivated.
4. Evaluation
Assess the planned change efforts by tracking the organization's progress in
implementing the change and by documenting its impact on the organization.
5. Organisation Development is a growing field of Human Resource Management. It has its
foundations in a number of behavioural and social sciences. OD practitioners are
unashamedly humanistic in their approach to change management and
delivering sustainable organisational performance.
6. Organisation Development (OD) is both the field of applied behavioural science focused
on understanding and managing organisational change to increase an organisations
effectiveness and viability and a field of scientific study and enquiry
7. Francis et al 2012
8.
9. Very often organisations invest heavily in transformational change programmes
or organisational development interventions that fail to deliver performance in a
sustainable way. Organisation Development believes that every part of an organisation is
integral to a system that relies on and impacts other elements of the internal and
external environment in which the organisation operates.
10. OD helps organizations deliver sustainable performance improvement through people.
Those who practice OD usually have a strong humanistic and democratic approach to
organizational change. People and collaboration are key features of any OD intervention.
11. To deliver a sustainable environment for performance there are a number of
organisational development and design elements that may be relevant to delivering the
performance outcomes required. The OD practitioner will get involved in any number of
intervention including; organization diagnostic, evaluation, strategic thinking, culture
change, change management, coaching, mentoring, leadership development, team
building, organizational design, evaluation, performance management, talent
management, HR processes, learning and development, sales effectiveness, and
customer services as part of a holistic OD intervention.
12. Whether you are practitioner, a student or just curious, the purpose of
organisationdevelopment.org is to provide the ultimate practitioners guide and
the essentials for all things OD and HR.
13. - See more at: http://organisationdevelopment.org/#sthash.nQc8quOF.dpuf - See more
at: http://organisationdevelopment.org/#sthash.nQc8quOF.dpuf
Theory and practice of planned, systematic change in the attitudes, beliefs, and values of the employees through
creation and reinforcement of long-term training programs. OD is action oriented. It starts with a careful organization-
wide analysis of the current situation and of the future requirements, and employs techniques of behavioral
sciences such as behavior modeling, sensitivity training, and transactional analysis. Itsobjective is to enable
the organization in adopting-better to the fast-changing external environment of new markets, regulations,
and technologies.

Read more: http://www.businessdictionary.com/definition/organizational-development-OD.html#ixzz353DmOCrV
What is Organization Development?
"Organizational cultures are created by leaders, and one of the most decisive functions
of leadership may well be the creation, the management, and - if and when that may
become necessary - the destruction of culture."
- Edgar Schein [Former MIT Professor& Recent MBODLG Speaker]
Organization development (OD) is a professional discipline with focus on improving and
enhancing capabilities within organizations to meet strategic and tactical goals. That
focus is directed at the performance of people: individuals, groups and teams distinct
from capital or other assets at the disposal of the organization.
As such OD professionals pay particular attention to motivation, behavior, group
dynamics, skills and values development and
performance measurement.
Some people think this focus is "soft". Historically, there may be some truth to this
assessment, but as the discipline of OD emerges and matures, attention is increasingly
paid to measurement to determine value and effectiveness.
Not dissimilar to the evaluation of an income statement or balance sheet, such
measurement is increasingly essential for organizations to evaluate their most valuable
and cost-rich asset: their employees.

There are countless methods, tools, frameworks and practices to draw from and apply
to the successful use of organization development to meet organizational goals.
Whether it is Industrial Psychology, Social Psychology, Sociology, Anthropology, Law,
Adult Learning Theory, Behavior and Development Theory, ROI analysis, process
analysis, or the synthesis of two or more of these disciplines, the application of Action-
Learning is a cornerstone of the successful se of Organization Development.
It is Action-Learning that makes OD interesting, challenging, fruitful and fulfilling, not
only for individuals, but for groups, teams and organizations.


What do OD practitioners do?
If you want people to do a good job, give them a good job to do.
This famous quote by Frederick Herzberg, from his motivational theory studies, is a
great place to start. Why do people matter? Engaged or not, people are the critical
component for organizations to achieve.
OD practitioners help organizations run better by addressing the needs of their most
precious asset: human capital.
OD practitioners bring behavioral science into the boardroom, the conference room and
the cubicle. We address issues of motivation, acknowledgement, appreciation, return
on involvement and talent management.
The goal is to engage employees and develop their talents, while positively impacting
essential business processes and the bottom line.
MassBayODLG plays a role in the development of OD practitioners throughout
Massachusetts, New England, nationally, and globally. We look to provide a forum to
discuss OD issues and challenges, new thought leadership, and trends in the field and
help our membership to stay well-informed and well-connected within the industry.
Operations management
Operations management is an area of management concerned with overseeing, designing, and
controlling the process of production and redesigning business operations in the production
of goods or services. It involves the responsibility of ensuring that business operations are efficient in
terms of using as few resources as needed, and effective in terms of meeting customer
requirements. It is concerned with managing the process that converts inputs (in the forms of raw
materials, labor, and energy) into outputs (in the form of goods and/or services). The relationship of
operations management to senior management in commercial contexts can be compared to the
relationship of line officers to highest-level senior officers in military science. The highest-level
officers shape the strategy and revise it over time, while the line officers make tactical decisions in
support of carrying out the strategy. In business as in military affairs, the boundaries between levels
are not always distinct; tactical information dynamically informs strategy, and individual people often
move between roles over time.


Ford Motor car assembly line: the classical example of a manufacturing production system.


Cinema queue. Operations Management studies both manufacturing and services.
According to the United States Department of Education, operations management is the field
concerned with managing and directing the physical and/or technical functions of
a firm or organization, particularly those relating to development, production, and manufacturing.
Operations management programs typically include instruction in principles of general
management, manufacturing and production systems, factory management,
equipmentmaintenance management, production control, industrial labor relations and skilled trades
supervision, strategic manufacturing policy, systems analysis, productivity analysis and cost control,
and materials planning.
[1][2]
Management, including operations management, is like engineering in
that it blends art with applied science. People skills, creativity, rational analysis, and knowledge
of technology are all required for success.
Contents
[hide]
1 History
o 1.1 Industrial Revolution
o 1.2 Operations management
2 Topics
o 2.1 Production systems
o 2.2 Metrics: efficiency and effectiveness
o 2.3 Configuration and management
o 2.4 Modeling
o 2.5 Safety, Risk and Maintenance
3 Organizations
4 Journals
5 See also
6 References
7 Further reading
History[edit]
The history of production and operation systems began around 5000 B.C. when Sumerian priests
developed the ancient system of recording inventories, loans, taxes, and business transactions. The
next major historical application of operation systems occurred in 4000 B.C. It was during this time
that the Egyptians started using planning, organization, and control in large projects such as the
construction of the pyramids. By 1100 B.C., labor was being specialized in China; by about 350 B.C.,
an archaic assembly line was formed in Greece.
In the Middle Ages, kings and queens ruled over large areas of land. Loyal noblemen maintained
large sections of the monarchs territory. This hierarchical organization in which people were divided
into classes based on social position and wealth became known as the feudal system. In the feudal
systems, servants produced for themselves and people of higher classes by using the rulers land
and resources. The Renaissance brought about specialization in labor within the European system.
This system had some of the first significant contributions that led to the industrial revolution. The
industrial revolution occurred as the result of two conceptual phenomena: interchangeability of parts
and division of labor. Division of labor was developed several centuries before interchangeability of
parts. It was in the late eighteenth century when Eli Whitney popularized the concept of
interchangeability of parts when he manufactured 10,000 muskets. Up to this point in history of
manufacturing, each product (e.g. each gun) was considered a special order, meaning that parts of a
given gun were fitted only for that particular gun and could not be used in other guns.
Interchangeability of parts allowed the mass production of parts independent of the final products in
which they will be used. This changed the factory layout from a job shop to a flow shop, which
resulted in a substantial increase in the product quality and the speed of production.
In 1883, Frederick W. Taylor introduced the stopwatch method for accurately measuring the time to
perform each single task of a complicated job. He developed the scientific study of productivity and
identifying how to coordinate different tasks to eliminate wasting of time and increase the quality of
work. The next generation of scientific study occurred with the development of work
sampling and predetermined motion time systems (PMTS). Work sampling is used to measure the
random variable associated with the time of each task. PMTS allows the use of standard
predetermined tables of the smallest body movements (e.g. turning the left wrist by 90), and
integrating them to predict the time needed to perform a simple task. PMTS has gained substantial
importance due to the fact that it can predict work measurements without actually observing the
actual work. The foundation of PMTS was laid out by the research and development of Frank
B. and Lillian M. Gilbreth around 1912. The Gilbreths took advantage of taking motion pictures at
known time intervals while operators were performing the given task.
At the beginning of the twentieth century, American Industry invented the revolutionary idea of an
assembly synchronized system. Henry Ford developed the first auto assembly system where a car
chassis was moved through the assembly line while workers added components to it until the car
was completed. During World War II, the growth of complex systems led to the development of
efficient manufacturing methods and the use of advanced mathematical and statistical tools. This
was supported by the development of academic programs in industrial and systems engineering
disciplines, as well as fields of operations research and management science (as multi-disciplinary
fields of problem solving). While systems engineering concentrated on the broad characteristics of
the relationships between inputs and outputs of generic systems, operations researchers
concentrated on solving specific and focused problems. The synergy ofoperations research and
systems engineering allowed for the realization of solving large scale and complex problems in the
modern era. Recently, the development of faster and smaller computers, intelligent systems, and
the World Wide Web (WWW) has substantially changed the nature of operations, manufacturing,
production, and service systems. Based upon this evolutionary history of production, operations, and
manufacturing systems, it is clear that each era built upon the ideas of its predecessors. According
to Malakooti (2013)
[3]
the history and future of production and operation systems can be divided into
five phases as following.
1. Empiricism (learning from experience)
2. Analysis (scientific management)
3. Synthesis (development of mathematical problem solving tools)
4. Isolated Systems with Single Objective (use of Integrated and Intelligent Systems, and
WWW)
5. Integrated Complex Systems with Multiple Objectives (development of ecologically sound
systems, environmentally sustainable systems, considering individual preferences)
Some of these historical aspects are examined in more detail bellow.
Industrial Revolution[edit]


Marshall's flax mill in Holbeck. The textile industry is the prototypical example of the English industrial revolution.
See also: Industrial Revolution and Productivity improving technologies (historical)
Before the First industrial revolution work was mainly done through two systems: domestic
system and craft guilds. In the domestic system merchantstook materials to homes where artisans
performed the necessary work, craft guilds on the other hand were associations of artisans which
passed work from one shop to another, for example: leather was tanned by a tanner, passed
to curriers, and finally arrived at shoemakers and saddlers.
The beginning of the industrial revolution is usually associated with 18th century English textile
industry, with the invention of flying shuttle by John Kayin 1733, the spinning jenny by James
Hargreaves in 1765, the water frame by Richard Arkwright in 1769 and the steam engine by James
Watt in 1765. In 1851 at the Crystal Palace Exhibition the term American system of
manufacturing was used to describe the new approach that was evolving in theUnited States of
America which was based on two central features: interchangeable parts and extensive use
of mechanization to produce them.
In 1913 Henry Ford first used the concept of the assembly line in Highland Park, he characterized it
as follows:
"The thing is to keep everything in motion and take the work to the man and not the man to the work.
That is the real principle of our production, and conveyors are only one of many means to an end"
[4]

This became one the central ideas that led to mass production, one of the main elements of
the Second Industrial Revolution, along with emergence of the electrical industry and petroleum
industry.
Operations management[edit]
In 1911 Frederick Taylor published his "The Principles of Scientific Management",
[5]
in which he
characterized scientific management as:
1. The development of a true science;
2. The scientific selection of the worker;
3. The scientific education and development of the worker;
4. Intimate friendly cooperation between the management and the workers.
Taylor is also credited for developing stopwatch time study, this combined
with Frank and Lillian Gilbreth motion study gave way to time and motion study which is centered on
the concepts of standard method and standard time. Other contemporaries of Taylor worth
remembering are Morris Cooke (rural electrification in 1920s and implementer of Taylor's principles
of scientific management in the Philadelphia's Department of Public Works), Carl Barth (speed-and-
feed-calculating slide rules ) and Henry Gantt (Gantt chart). Also in 1910 Hugo Diemer published the
first industrial engineering book: Factory Organization and Administration.
In 1913 Ford W. Harris published his "How Many parts to make at once" in which he presented the
idea of the economic order quantity model. He described the problem as follows:
"Interest on capital tied up in wages, material and overhead sets a maximum limit to the quantity of
parts which can be profitably manufactured at one time; "set-up" costs on the job fix the minimum.
Experience has shown one manager a way to determine the economical size of lots"
[6]

In 1931 Walter Shewhart published his Economic Control of Quality of Manufactured Product, the
first systematic treatment
[7]
of the subject of Statistical Process Control.
In the 1940s methods-time measurement (MTM) was developed by H.B. Maynard, JL Schwab and
GJ Stegemerten. MTM was the first of a series of predetermined motion time systems,
predetermined in the sense that estimates of time are not determined in loco but are derived from an
industry standard. This was explained by its originators in a book they published in 1948 called
"Method-Time Measurement".
[8]

In 1943, in Japan, Taiichi Ohno arrived at Toyota Motor company. Toyota evolved a unique
manufacturing system centered on two complementary notions: just in time (produce only what is
needed) and autonomation (automation with a human touch). Regarding JIT, Ohno was inspired by
American supermarkets: workstations functioned like a supermarket shelf where the customer can
get products they need, at the time they need and in the amount needed, the workstation (shelf) is
then restocked. Autonomation was developed by Toyoda Sakichi in Toyoda Spinning and Weaving:
an automatically activated loom that was also foolproof, that is automatically detected problems. In
1983 J.N Edwards published his "MRP and Kanban-American style" in which he described JIT goals
in terms of seven zeros:
[9]
zero defects, zero (excess) lot size, zero setups, zero breakdowns, zero
handling, zero lead time and zero surging. This period also marks the spread of Total Quality
Management in Japan, ideas initially developed by American authors such
as Deming, Juran and Armand V. Feigenbaum. Schnonberger
[10]
identified seven fundamentals
principles essential to the Japanese approach:
1. Process control: SPC and worker responsibility over quality
2. Easy able -to-see quality: boards, gauges, meters, etc. and poka-yoke
3. Insistence on compliance: "quality first"
4. Line stop: stop the line to correct quality problems
5. Correcting one's own errors: worker fixed a defective part if he produced it
6. The 100% check: automated inspection techniques and foolproof machines
7. Continual improvement: ideally zero defects
In 1987 the International Organization for Standardization (ISO), recognizing the growing importance
of quality, issued the ISO 9000, a family of standards related to quality management systems. There
has been some controversy thought regarding the proper procedures to follow and the amount of
paperwork involved.
Meanwhile in 1964, a different approach was developed by Joseph Orlicky as a response to the
TOYOTA Manufacturing Program: Material Requirements Planning (MRP) at IBM, latter gaining
momentum in 1972 when the American Production and Inventory Control Society launched the
"MRP Crusade". One of the key insights of this management system was the distinction
between dependent demand and independent demand. Independent demand is demand which
originates outside of the production system, therefore not directly controllable, and dependent
demand is demand for components of final products, therefore subject to being directly controllable
by management through the bill of materials, via product design.
Recent trends in the field revolve around concepts such as Business Process Re-
engineering (launched by Michael Hammer in 1993
[11]
), Lean Manufacturing, Six Sigma (an
approach to quality developed at Motorola between 1985-1987) and Reconfigurable Manufacturing
Systems.
The term lean manufacturing was coined in the book The Machine that Changed the World.
[12]
Six
Sigma refers to control limits placed at six (6) standard deviations from the mean of anormal
distribution, this became very famous after Jack Welch of General Electric launched a company-
wide initiative in 1995 to adopt this set of methods. More recently, Six Sigma has
included DMAIC (for improving processes) and DFSS (for designing new products and new
processes)
Topics[edit]
Production systems[edit]


In a job shop machines are grouped by technological similarities regarding transformation processes, therefore a
single shop can work very different products (in this picture four colors). Also notice that in this drawing each shop
contains a single machine.


Flexible Manufacturing System: in the middle there are two rails for the shuttle to move pallets between machining
centers (there are also FMS which useAGVs), in front of each machining center there is a buffer and in left we have a
shelf for storing pallets. Usually in the back there is a similar system for managing the set of tools required for
differentmachining operations.
A production system comprises both the technological elements (machines and tools) and
organizational behavior (division of labor and information flow). An individual production system is
usually analyzed in the literature referring to a single business, therefore it's usually improper to
include in a given production system the operations necessary to process goods that are obtained
by purchasing or the operations carried by the customer on the sold products, the reason being
simply that since businesses need to design their own production systems this then becomes the
focus of analysis, modeling and decision making (also called "configuring" a production system) .
A first possible distinction in production systems (technological classification) is between continuous
process production and discrete part production (manufacturing).
Process production means that the product undergoes physical -chemical transformations and
lacks assembly operations, therefore the original raw materials cant easily be obtained from the
final product, examples include: paper, cement and nylon.
Part production (ex:cars and ovens) comprises both fabrication systems and assembly systems.
In the first category we find job shops,manufacturing cells, flexible manufacturing
systems and transfer lines, in the assembly category we have fixed position systems,assembly
lines and assembly shops (both manual and/or automated operations).
[13]



Delivery lead time is the blue bar, manufacturing time is the whole bar, the green bar is the difference between the
two.
Another possible classification
[14]
is one based on Lead Time (manufacturing lead time vs delivery
lead time): Engineer to Order (ETO,Purchase to Order (PTO), Make to Order (MTO), Assemble to
Order (ATO) and Make to Stock (MTS). According to this classification different kinds of systems will
have different customer order decoupling points (CODP), meaning that Work in Progress (WIP)
cycle stock levels are practically nonexistent regarding operations located after the CODP (except
for WIP due to queues). (See Order fulfillment)
The concept of production systems can be expanded to the service sector world keeping in mind
that services have some fundamental differences in respect to material goods: intangibility, client
always present during transformation processes, no stocks for "finished goods". Services can be
classified according to a service process matrix:
[15]
degree of labor intensity (volume) vs degree of
customization (variety). With a high degree of labor intensity there are Mass Services
(e.g., commercial banking bill payments and state schools) and Professional Services (e.g.,
personal physicians and lawyers), while with a low degree of labor intensity there are Service
Factories (e.g.,airlines and hotels) and Service Shops (e.g., hospitals and auto mechanics).
The systems described above are ideal types: real systems may present themselves as hybrids of
those categories. Consider, for example, that the production of jeans involves
initially carding, spinning, dyeing and weaving, then cutting the fabric in different shapes and
assembling the parts in pants or jackets by combining the fabric with thread, zippers and buttons,
finally finishing and distressing the pants/jackets before being shipped to stores.
[16]
The beginning
can be seen as process production, the middle as part production and the end again as process
production: it's unlikely that a single company will keep all the stages of production under a single
roof, therefore the problem of vertical integration and outsourcing arises. Most products require, from
a supply chain perspective, both process production and part production.
Metrics: efficiency and effectiveness[edit]
Operations strategy concerns policies and plans of use of the firm productive resources with the aim
of supporting long term competitive strategy. Metrics in operations management can be broadly
classified into efficiency metrics and effectiveness metrics. Effectiveness metrics involve:
1. Price (actually fixed by marketing, but lower bounded by production cost): purchase price,
use costs, maintenance costs, upgrade costs, disposal costs
2. Quality: specification and compliance
3. Time: productive lead time, information lead time, punctuality
4. Flexibility: mix, volume, gamma
5. Stock availability
6. Ecological Soundness: biological and environmental impacts of the system under study.
[3]

A more recent approach, introduced by Terry Hill,
[17]
involves distinguishing competitive variables in
order winner and order qualifiers when defining operations strategy. Order winners are variables
which permit differentiating the company from competitors, while order qualifiers are prerequisites for
engaging in a transaction. This view can be seen as a unifying approach between operations
management and marketing (see segmentation and positioning).
Productivity is a standard efficiency metric for evaluation of production systems, broadly speaking a
ratio between outputs and inputs, and can assume many specific forms, for example: machine
productivity, workforce productivity, raw material productivity, warehouse productivity (=inventory
turnover). It is also useful to break up productivity in use U (productive percentage of total time) and
yield (ratio between produced volume and productive time) to better evaluate production systems
performances. Cycle times can be modeled through manufacturingengineering if the individual
operations are heavily automated, if the manual component is the prevalent one, methods used
include: time and motion study, predetermined motion time systems and work sampling.
ABC analysis is a method for analyzing inventory based on Pareto distribution, it posits that since
revenue from items on inventory will be power law distributed then it makes sense to manage items
differently based on their position on a revenue-inventory level matrix, 3 classes are constructed
(A,B and C) from cumulative item revenues, so in a matrix each item will have a letter (A,B or C)
assigned for revenue and inventory. This method posits that items away from the diagonal should be
managed differently: items in the upper part are subject to risk of obsolescence, items in the lower
part are subject to risk of stockout.
Throughput is a variable which quantifies the number of parts produced in the unit of time. Although
estimating throughput for a single process maybe fairly simple, doing so for an entire production
system involves an additional difficulty due to the presence of queues which can come from:
machine breakdowns, processing time variability, scraps, setups, maintenance time, lack of orders,
lack of materials, strikes, bad coordination between resources, mix variability, plus all these
inefficiencies tend to compound depending on the nature of the production system. One important
example of how system throughput is tied to system design are bottlenecks: in job shops bottlenecks
are typically dynamic and dependent on scheduling while on transfer lines it makes sense to speak
of "the bottleneck" since it can be univocally associated with a specific station on the line. This leads
to the problem of how to define capacity measures, that is an estimation of the maximum output of a
given production system, and capacity utilization.
Overall Equipment Effectiveness (OEE) is defined as the product between system availability, cycle
time efficiency and quality rate. OEE is typically used as key performance indicator (KPI) in
conjunction with the lean manufacturing approach.
Configuration and management[edit]


Classic EOQ model: trade-off between ordering cost (blue) and holding cost (red). Total cost (green) admits aglobal
optimum.


A typical MRPII construct: general planning (top) concerned with forecasts, capacity planning and inventory levels,
programming (middle) concerned with calculation of workloads, rough-cut capacity planning, MPS, capacity
requirements planning, traditional MRP planning, control (bottom) concerned with scheduling.


When introducing kanbans in real production systems attaining unitary lot from the start maybe unfeasible, therefore
the kanban will represent a given lot size defined by management


Value Stream Mapping, a representation of materials and information flows inside a company, mainly used in the lean
manufacturing approach. The calculation of the time-line (bottom) usually involves using Little's Law to derive lead
time from stock levels and cycle times
Designing the configuration of production systems involves
both technological and organizational variables. Choices in production technology involve:
dimensioning capacity, fractioning capacity, capacity location, outsourcing processes, process
technology,automation of operations, trade-off between volume and variety (see Hayes-Wheelwright
matrix). Choices in the organizational area involve: defining worker skills and responsibilities, team
coordination, worker incentives and information flow.
Regarding the planning of production there is a basic distinction between the push approach and
the pull approach, with the later including the singular approach of Just in Time. Pull means that the
production system authorizes production based on inventory level, push means that production
occurs based on demand (fore-casted or present, that is purchase orders). It should be noticed that
an individual production system can be both push and pull, for example activities before the CODP
may work under a pull system, while activities after the CODP may work under a push system.
Regarding the traditional pull approach a number of techniques have been developed based on the
work of Ford W. Harris
[6]
(1913) which came to be know as the Economic order quantity (EOQ),
which formed the basis of subsequent techniques as the Wagner-Within Procedure, the News
Vendor Model, Base Stock Model and the Fixed Time Period Model. These models usually involve
the calculation of cycle stocks and buffer stocks, the latter usually modeled as a function of demand
variability. The Economic Production Quantity
[18]
(EPQ) differs from the EOQ model only in that it
assumes a constant fill rate for the part being produced, instead of the instantaneous refilling of the
EOQ model.
Joseph Orlickly and others developed Material Requirement Planning (MRP) at IBM, essentially
a push approach to inventory control and production planning, which takes as input both the Master
Production Schedule (MPS) and the Bill of Materials (BOM) and gives as output a schedule for the
materials (components) needed in the production process. MRP therefore is a planning tool to
managepurchase orders and production orders (also called jobs).
The MPS can be seen as a kind of aggregate planning for production coming in two fundamentally
opposing varieties: plans which try to chase demand and level plans which try to keep uniform
capacity utilization. Many models have been proposed to solve MPS problems:
Analytical models (e.g. Magee Boodman model)
Exact optimization algorithmic models (e.g. LP and ILP)
Heuristic models (e.g. Aucamp model).
MRP can be briefly described as a 3s procedure: sum (different orders), split (in lots), shift (in time
according to item lead time). To avoid an "explosion" of data processing in MRP (number of BOMs
required in input) planning bills (such as family bills or super bills) can be useful since they allow a
rationalization of input data into common codes. MRP had some notorious problems such as
infinitecapacity and fixed lead times, which influenced successive modifications of the original
software architecture in the form of MRP II andERP.
In this context problems of scheduling (sequencing of production), loading (tools to use), part type
selection (parts to work on) and applications of operations research have a significant role to play.
Lean Manufacturing is an approach to production which arose in Toyota between the end of World
War II and the seventies. It comes mainly from the ideas of Taiichi Ohno and Toyoda Sakichi which
are centered on the complementary notions of Just in Time andAutonomation (jidoka), all aimed at
reducing waste (usually applied in PDCA style). Some additional elements are also
fundamental:
[19]
production smoothing (Heijunka), capacity buffers, setup reduction, cross-training
and plant layout.
Heijunka: production smoothing presupposes a level strategy for the MPS and a final assembly
schedule developed from the MPS by smoothing aggregate production requirements in smaller
time buckets and sequencing final assembly to achieve repetitive manufacturing. If these
conditions are met, expected throughput can be equaled to the inverse of takt time. Besides
volume, heijunka also means attaining mixed model production, which however may only be
feasible through set-up reduction. A standard tool for achieving this is the Heijunka box
Capacity buffers: ideally a JIT system would work with zero breakdowns, this however is very
hard to achieve in practice, nonetheless Toyota favors acquiring extra capacity over extra WIP
to deal with starvation.
Set-up reduction: typically necessary to achieve mixed model production, a key distinction can
be made between internal and external setup. Internal setups (ex:removing a die) refers to tasks
when the machine is not working, while external setups can be completed while the machine is
running (ex:transporting dies).
Cross training: important as an element of Autonomation, Toyota cross trained their employees
through rotation, this served as an element of production flexibility, holistic thinking and reducing
boredom.
Layout: U-shaped lines or cells are common in the lean approach since they allow for minimum
walking, greater worker efficiency and flexible capacity.
A series of tools have been developed mainly with the objective of replicating Toyota success: a very
common implementation involves small cards known as kanbans, these also come in some
varieties: reorder kanbans, alarm kanbans, triangle kanbans, etc. In the classic kanban procedure
with one card:
Parts are kept in containers with their respective kanbans
The downstream station moves the kanban to the upstream station and starts producing the part
at the downstream station
The upstream operator takes the most urgent kanban from his list (compare to queue
discipline from queue theory) and produces it and attach its respective kanban
The two-card kanban procedure differs a bit:
The downstream operator takes the production kanban from his list
If required parts are available he removes the move kanban and places them in another box,
otherwise he chooses another production card
He produces the part and attach its respective production kanban
Periodically a mover picks up the move kanbans in upstream stations and search for the
respective parts, when found he exchanges production kanbans for move kanbans and move
the parts to downstream stations
Since the number of kanbans in the production system is set by managers as a constant number,
the kanban procedure works as WIP controlling device, which for a given arrival rate, perLittle's Law,
works as lead time controlling device.
In Toyota the TPS represented more of a philosophy of production than a set of specific tools, the
latter would include: SMED, Value Stream Mapping, 5S, poka-yoke, elimination of time batching, lot-
size reduction, Rank Order Clustering, single point scheduling, multi-process handling and backflush
accounting.
Seen more broadly JIT can include methods such as: product standardization and modularity, group
technology, total productive maintenance, job enlargement, job enrichment, flat
organization and vendor rating (JIT production is very sensitive to replenishment conditions).
Modeling[edit]
There are also fields of mathematical theory which have found applications in the field of operations
management such as operations research, mainly mathematical optimization problems and queue
theory. Queue theory is employed in modeling queue and processing times in production systems
while mathematical optimization draws heavily from multivariate calculus andlinear algebra. Queue
theory is based on Markov chains and stochastic processes. It also worth noticing that computations
of safety stocks are usually based on modeling demand as anormal distribution.
When analytical models are not enough, managers may resort to using simulation. Simulation has
been traditionally done thought the Discrete event simulation paradigm, where the simulation model
possesses a state which can only change when a discrete event happens, which consists of a clock
and list of events. The more recent Transaction-level modeling paradigm consists of a set of
resources and a set of transactions: transactions move through a network of resources (nodes)
according to a code, called process.


Illustration of the Simplex method, a classical approach to solving LPoptimization problems and also integer
programming (ex:branch and cut). Mainly used in push approach
[20]
but also in production system
configuration.
[21]
The interior of the green polytope geometrically represents the feasible region, while the red line
indicates the sequence ofpivot operations required to reach theoptimal solution.


A control chart: process output variable is modeled by a probability density function and for each statisticof
the sample an upper control line and lower control line are fixed, when the statistic moves out of bounds, an alarm is
given and possible causes are investigated. In this drawing the statistic of choice is the mean and red points
represent alarm points.
Since real production processes are always affected by disturbances in both inputs and outputs,
many companies implement some form of Quality management or quality control. Quality control
tools include check sheets, pareto charts, Ishikawa diagrams, control charts, which are used in
approaches like Total quality management and Six Sigma. Keeping quality under control is relevant
to both increasing customer satisfaction and reducing processing waste.
Operations management textbooks usually cover demand forecasting, even though it is not strictly
speaking an operations problem, because demand is related to some production systems variables.
For example, a classic approach in dimensioning safety stocks requires calculatingstandard
deviation of forecast errors. Demand forecasting is also a critical part of push systems, since order
releases have to be planned ahead of actual clients orders. Also any serious discussion of capacity
planning involves adjusting company outputs with market demands.
Safety, Risk and Maintenance[edit]
Other important management problems involve maintenance policies (see also reliability
engineering and maintenance philosophy), safety management systems (see also safety
engineering and Risk management), facility management and supply chain integration.
Organizations[edit]
The following organizations support and promote operations management:
Association for Operations Management (APICS) which supports the Production and Inventory
Management Journal
European Operations Management Association (EurOMA) which supports the International
Journal of Operations & Production Management
Production and Operations Management Society (POMS) which supports the journal: Production
and Operations Management
Institute for Operations Research and the Management Sciences (INFORMS)
The Manufacturing and Service Operations Management Society (MSOM) which supports the
journal: Manufacturing & Service Operations Management
Institute of Operations Management (UK)
Association of Technology, Management, and Applied Engineering (ATMAE)
What is Operations Management?
Operations Management deals with the design and management of products, processes,
services and supply chains. It considers the acquisition, development, and utilization of
resources that firms need to deliver the goods and services their clients want.
The purvey of OM ranges from strategic to tactical and operational levels. Representative
strategic issues include determining the size and location of manufacturing plants, deciding
the structure of service or telecommunications networks, and designing technology supply
chains.
Tactical issues include plant layout and structure, project management methods, and
equipment selection and replacement. Operational issues include production scheduling and
control, inventory management, quality control and inspection, traffic and materials
handling, and equipment maintenance policies.
Introduction to Operations
Management


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Benefits of Operations Management
The Transformation Process
Operations management refers to the activities, decisions and responsibilities of managing the
resources which are dedicated to the production and delivery of products and services.
The part of an organisation that is responsible for this activity is called the operations function and
every organisation has one as delivery of a product and/or service is the reason for existence.
Operations managers are the people who are responsible for overseeing and managing the resources
that make up the operations function. The operations function is also responsible for fulfilling customer
requests through the production and delivery of products and services.
Depending on the type of industry or business, other titles can be used interchangeably, such as a
fleet manager' in a distribution company or a store manager' in retail businesses.
[1]

Although the operations function is central to any organisation, it is only one of the three main core
functions, the others being marketing and finance. The marketing function is responsible for
communicating the organisation's products and services to its markets and researching customer
wants and needs.
[2]
The finance function is responsible for providing information to assist in economic
decision making and the overall management of financial resources.
[3]

There are also other functions which are not core to an organisation; however, their
contribution is crucial to the smooth running of any organisation.
Commonly known as support functions, they include accounting, information systems, human
resources and engineering.
Often, there is no clear division between the various functions and one of the biggest difficulties faced
by management is the ability to work effectively with other parts of the organisation. It is critical to
the success of your business that functional boundaries do not interfere with efficient internal
processes.
Being a small business owner, you may feel as though operations management does not apply to your
business. However, this is far from the truth and in reality, the concepts and principles behind
operations management is applicable to all businesses. The only difference is that you may have to
take on several roles as many smaller organisations simply don't have the resources to dedicate
individuals to specialised roles.
Operations Management
Gain fundamental insights to world of Operations Management from award
winning Professor Gad Allon
A Faculty Project Course - Best Professors Teaching the World
This course provides a general introduction to operations management. This course
aims to (1) familiarize you with the major operational problems and issues that confront
managers, and (2) provide you with language, concepts, insights and tools to deal with
these issues in order to gain competitive advantage through operations.
This course should be of particular interest to people aspiring a career in designing and
managing business processes, either directly (V.P. of Ops, COO) or indirectly (e.g.
management consulting). The course should also be of interest to people who manage
interfaces between operations and other business functions such as finance, marketing,
managerial accounting and human resources. Finally, a working knowledge of
operations, which typically employs the greatest number of employees and requires the
largest investment in assets, is indispensable for general managers and entrepreneurs.
We will see how different business strategies require different business processes, and
vice versa, how different operational capabilities allow and support different strategies to
gain competitive advantage. A process view of operations will be used to analyze
different key operational dimensions such as capacity management, flow time
management, supply chain management, and quality management. We will also
discuss developments such as lean operations, just-in-time operations, and time-based
competition.
Feasibility study
From Wikipedia, the free encyclopedia
For other uses, see Feasibility study (disambiguation).
The feasibility study is an evaluation and analysis of the potential of a proposed project which is
based on extensive investigation and research to support the process of decision making.
Contents
[hide]
1 Overview
2 Feasibility study topics echo
o 2.1 Common factors
o 2.2 Other feasibility factors
o 2.3 Market research study and analysis
3 See also
4 References
5 Further reading
6 External links
Overview[edit]
Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an
existing business or proposed venture, opportunities and threats present in the environment,
the resources required to carry through, and ultimately the prospects for success.
[1][2]
In its simplest
terms, the two criteria to judge feasibility are cost required and value to be attained.
[3]

A well-designed feasibility study should provide a historical background of the business or project, a
description of the product or service, accounting statements, details of
the operations andmanagement, marketing research and policies, financial data, legal requirements
and tax obligations.
[1]
Generally, feasibility studies precede technical development
and projectimplementation.
A feasibility study evaluates the project's potential for success; therefore, perceived objectivity is an
important factor in the credibility of the study for potential investors and lending institutions.
[citation
needed]
It must therefore be conducted with an objective, unbiased approach to provide information
upon which decisions can be based.
[citation needed]

Feasibility study topics echo[edit]
Common factors[edit]
The acronym TELOS refers to the five areas of feasibility - Technical, Economic, Legal, Operational,
and Scheduling.
Technology and system feasibility
The assessment is based on an outline design of system requirements, to determine whether the
company has the technical expertise to handle completion of the project. When writing a feasibility
report, the following should be taken to consideration:
A brief description of the business to assess more possible factors which could affect the study
The part of the business being examined
The human and economic factor
The possible solutions to the problem
At this level, the concern is whether the proposal is both technically and legally feasible (assuming
moderate cost).
Legal Feasibility
Determines whether the proposed system conflicts with legal requirements, e.g. a data processing
system must comply with the local Data Protection Acts.
Operational Feasibility
Operational feasibility is a measure of how well a proposed system solves the problems, and takes
advantage of the opportunities identified during scope definition and how it satisfies the requirements
identified in the requirements analysis phase of system development.
[4]

The operational feasibility assessment focuses on the degree to which the proposed development
projects fits in with the existing business environment and objectives with regard to development
schedule, delivery date, corporate culture, and existing business processes.
To ensure success, desired operational outcomes must be imparted during design and
development. These include such design-dependent parameters such as reliability, maintainability,
supportability, usability, producibility, disposability, sustainability, affordability and others. These
parameters are required to be considered at the early stages of design if desired operational
behaviors are to be realized. A system design and development requires appropriate and timely
application of engineering and management efforts to meet the previously mentioned parameters. A
system may serve its intended purpose most effectively when its technical and operating
characteristics are engineered into the design. Therefore operational feasibility is a critical aspect of
systems engineering that needs to be an integral part of the early design phases.
[5]

Economic Feasibility
The purpose of the economic feasibility assessment is to determine the positive economic benefits
to the organization that the proposed system will provide. It includes quantification and identification
of all the benefits expected. This assessment typically involves a cost/ benefits analysis.
Technical Feasibility
The technical feasibility assessment is focused on gaining an understanding of the present technical
resources of the organization and their applicability to the expected needs of the proposed system. It
is an evaluation of the hardware and software and how it meets the need of the proposed system
[6]

Schedule Feasibility
A project will fail if it takes too long to be completed before it is useful. Typically this means
estimating how long the system will take to develop, and if it can be completed in a given time period
using some methods like payback period. Schedule feasibility is a measure of how reasonable the
project timetable is. Given our technical expertise, are the project deadlines reasonable? Some
projects are initiated with specific deadlines. It is necessary to determine whether the deadlines are
mandatory or desirable.
Other feasibility factors[edit]
Market and real estate feasibility
Market feasibility studies typically involve testing geographic locations for a real estate development
project, and usually involve parcels of real estate land. Developers often conduct market studies to
determine the best location within a jurisdiction, and to test alternative land uses for given parcels.
Jurisdictions often require developers to complete feasibility studies before they will approve a
permit application for retail, commercial, industrial, manufacturing, housing, office or mixed-use
project. Market Feasibility takes into account the importance of the business in the selected area.
Resource feasibility
This involves questions such as how much time is available to build the new system, when it can be
built, whether it interferes with normal business operations, type and amount of resources required,
dependencies, and developmental procedures with company revenue prospectus.
Cultural feasibility
In this stage, the project's alternatives are evaluated for their impact on the local and general culture.
For example, environmental factors need to be considered and these factors are to be well known.
Further an enterprise's own culture can clash with the results of the project.
Financial feasibility
In case of a new project, financial viability can be judged on the following parameters:
Total estimated cost of the project
Financing of the project in terms of its capital structure, debt equity ratio and promoter's share of
total cost
Existing investment by the promoter in any other business
Projected cash flow and profitability
The financial viability of a project should provide the following information:
[citation needed]

Full details of the assets to be financed and how liquid those assets are.
Rate of conversion to cash-liquidity (i.e. how easily can the various assets be converted to
cash?).
Project's funding potential and repayment terms.
Sensitivity in the repayments capability to the following factors:
Time delays.
Mild slowing of sales.
Acute reduction/slowing of sales.
Small increase in cost.
Large increase in cost.
Adverse economic conditions.
Market research study and analysis[edit]
This is one of the most important sections of the feasibility study as it examines the marketability of
the product or services and convinces readers that there is a potential market for the product or
services.
[citation needed]
If a significant market for the product or services cannot be established, then
there is no project.
Typically, market studies will assess the potential sales of the product, absorption and market
capture rates and the project's timing.
[citation needed]

The feasibility study outputs the feasibility study report, a report detailing the evaluation criteria, the
study findings, and the recommendations.
[7]

What is a Feasibility Study?
File C5-65
Updated October, 2009
pdf format
As the name implies, a feasibility study is an analysis of the viability of an idea. The feasibility study focuses on
helping answer the essential question of should we proceed with the proposed project idea? All activities of the
study are directed toward helping answer this question.
Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Farmers and others
with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with
the development of a business. Determining early that a business idea will not work saves time, money and
heartache later.
A feasible business venture is one where the business will generate adequate cash-flow and profits, withstand the
risks it will encounter, remain viable in the long-term and meet the goals of the founders. The venture can be either a
start-up business, the purchase of an existing business, an expansion of current business operations or a new
enterprise for an existing business. Information File C5-66, Feasibility Study Outline is provided to give you guidance
on how to proceed with the study and what to include. Also, Information File C5-64, How to Use and When to Do a
Feasibility Study will help you through the process and help you get the most out of your study.
A feasibility study is only one step in the business idea assessment and business development process (Information
File C5-02). Reviewing this process and reading the information below will help put the role of the feasibility study in
perspective.
Evaluate Alternatives
A feasibility study is usually conducted after producers have discussed a series of business ideas or scenarios. The
feasibility study helps to frame and flesh-out specific business scenarios so they can be studied in-depth. During
this process the number of business alternatives under consideration is usually quickly reduced.
During the feasibility process you may investigate a variety of ways of organizing the business and positioning your
product in the marketplace. It is like an exploratory journey and you may take several paths before you reach your
destination. Just because the initial analysis is negative does not mean that the proposal does not have
merit. Sometimes limitations or flaws in the proposal can be corrected.
Pre-Feasibility Study
A pre-feasibility study may be conducted first to help sort out relevant scenarios. Before proceeding with a full-blown
feasibility study, you may want to do some pre-feasibility analysis of your own. If you find out early-on that the
proposed business idea is not feasible, it will save you time and money. If the findings lead you to proceed with the
feasibility study, your work may have resolved some basic issues. A consultant may help you with the pre-feasibility
study, but you should be involved. This is an opportunity for you to understand the issues of business development.
Market Assessment
Also, a market assessment (Information File C5-30) may be conducted that will help determine the viability of a
proposed product in the marketplace. The market assessment will help to identify opportunities in a market or market
segment. If no opportunities are found, there may be no reason to proceed with a feasibility study. If opportunities are
found, the market assessment can give focus and direction to the construction of business scenarios to investigate in
the feasibility study. A market assessment will provide much of the information for the marketing feasibility section of
the feasibility study.
Results and Conclusions
The conclusions of the feasibility study should outline in depth the various scenarios examined and the implications,
strengths and weaknesses of each. The project leaders need to study the feasibility study and challenge its
underlying assumptions. This is the time to be skeptical.
Dont expect one alternative to jump off the page as being the best scenario. Feasibility studies do not suddenly
become positive or negative. As you accumulate information and investigate alternatives, neither a positive nor
negative outcome may emerge. The decision of whether to proceed is often not clear cut. Major stumbling blocks
may emerge that negate the project. Sometimes these weaknesses can be overcome. Rarely does the analysis come
out overwhelmingly positive. The study will help you assess the tradeoff between the risks and rewards of moving
forward with the business project.
Remember, it is not the purpose of the feasibility study or the role of the consultant to decide whether or not to
proceed with a business idea. It is the role of the project leaders to make this decision, using information from the
feasibility study and input from consultants.
Go/No-Go Decision
The go/no-go decision is one of the most critical in business development. It is the point of no return. Once you have
definitely decided to pursue a business scenario, there is usually no turning back. The feasibility study will be a major
information source in making this decision. This indicates the importance of a properly developed feasibility study.
Feasibility Study vs. Business Plan
A feasibility study is not a business plan. The separate roles of the feasibility study and the business plan are
frequently misunderstood. The feasibility study provides an investigating function. It addresses the question of Is this
a viable business venture? The business plan provides a planning function. The business plan outlines the actions
needed to take the proposal from idea to reality.
The feasibility study outlines and analyzes several alternatives or methods of achieving business success. The
feasibility study helps to narrow the scope of the project to identify the best business scenario(s). The business plan
deals with only one alternative or scenario. The feasibility study helps to narrow the scope of the project to identify
and define two or three scenarios or alternatives. The person or business conducting the feasibility study may work
with the group to identify the best alternative for their situation. This becomes the basis for the business plan.
The feasibility study is conducted before the business plan. A business plan is prepared only after the business
venture has been deemed to be feasible. If a proposed business venture is considered to be feasible, a business plan
is usually constructed next that provides a roadmap of how the business will be created and developed. The
business plan provides the blueprint for project implementation. If the venture is deemed not to be feasible, efforts
may be made to correct its deficiencies, other alternatives may be explored, or the idea is dropped.
Reasons Given Not to Do a Feasibility Study
Project leaders may find themselves under pressure to skip the feasibility analysis step and go directly to building a
business. Individuals from within and outside of the project may push to skip this step. Reasons given for not doing a
feasibility analysis include:
We know its feasible. An existing business is already doing it.
Why do another feasibility study when one was done just a few years ago?
Feasibility studies are just a way for consultants to make money.
The market analysis has already been done by the business that is going to sell us the equipment.
Why not just hire a general manager who can do the study?
Feasibility studies are a waste of time. We need to buy the building, tie up the site and bid on the equipment.
The reasons given above should not dissuade you from conducting a meaningful and accurate feasibility study. Once
decisions have been made about proceeding with a proposed business, they are often very difficult to change. You
may need to live with these decisions for a long time.
Reasons to Do a Feasibility Study
Conducting a feasibility study is a good business practice. If you examine successful businesses, you will find that
they did not go into a new business venture without first thoroughly examining all of the issues and assessing the
probability of business success.
Below are other reasons to conduct a feasibility study.
Gives focus to the project and outline alternatives.
Narrows business alternatives
Identifies new opportunities through the investigative process.
Identifies reasons not to proceed.
Enhances the probability of success by addressing and mitigating factors early on that could affect the project.
Provides quality information for decision making.
Provides documentation that the business venture was thoroughly investigated.
Helps in securing funding from lending institutions and other monetary sources.
Helps to attract equity investment.
The feasibility study is a critical step in the business assessment process. If properly conducted, it may be the best
investment you ever made.
An analysis and evaluation of a proposed project to determine if it (1) is technically feasible, (2) is feasible within
the estimated cost, and (3) will be profitable. Feasibility studies are almost always conducted where large sums are at
stake. Also called feasibility analysis. See also cost benefit analysis.

Read more: http://www.businessdictionary.com/definition/feasibility-study.html#ixzz353TyPklD
http://www.togetherworks.org.uk/index.php?q=node/61
How to Write a Feasibility Study
Why do I need a feasibility study?

A feasibility study is a formalised, written approach to evaluating your idea and can help you identify:
if your idea is viable or not
useful facts and figures to aid decision-making
alternative approaches and solutions to putting your idea into practice
There are many reasons why new community ventures fail, but lack of planning and research is the main one. As you
plan, your knowledge of your market, customers and the environment in which you will work will grow. You'll also find
out obstacles to your idea as well as solutions to deal with them! This process considers all areas of your idea and
ensures you have something concrete on paper.
What does a feasibility study involve?
It can involve some or all of the following:
An assessment of the current market
An assessment of your potential position in the market
An evaluation of the possible options for entry into the market
A short list of the possible options
The development of a financial model to size the market and estimate the potential income and expenditure for
each of the short listed options
An assessment of the impact of each main option on your group's structure and products

Who undertakes such studies?
Commissioning a feasibility study may seem pointless if you are confident that your idea is a sound one, but a
decision made without thorough research can be costly. A feasibility study reduces the risk of making poor decisions
and increases your success. It gives you an objective and independent view of your idea potential and enables you to
make informed decisions about how it could be launched.

How do I format and write my Feasibility Plan?
This can be broken down into several sections:
a) Executive Summary - the main purpose is to gain the reader's attention. Give a brief and clear overview of the key
points of each section of your plan. While it is the first section, it is the last to be written. Two pages is more than
enough!
b) Product/Service - describe the benefits of your product or service from the customer's point of view. What is your
product or service? How is it different from what's already available? If a product, will you manufacture it and how?
Who are your suppliers? What are your distribution channels? Describe patents, trade secrets, or other information.
You must determine if the concept is a working and tested product or service.
c) The Market - is there a market for your idea? Can this be proven? Describe the size of your market (both in terms
of customers and finances). This requires research and is perhaps the most difficult section, but also most important.
What is your target market? What is your estimated market share percentage? Describe seasonal fluctuations, the
potential annual growth of the total market for your product or service, and factors affecting that growth.
d) Price and Profitability - how will you price your product or service; at a discount, at a premium or somewhere in
between? The gross margin must be high enough to at least cover your expenses. Community businesses do make
profit, but its what they do with the surplus that differentiates them.
e) Plan for Further Action - the future! Does the feasibility plan show that the idea is worthwhile? If so then it is time to
proceed to the business plan What can help me get started? Try thinking about the following and make some
notes
THE IDEA
How would you describe your idea? What is it? Will it work? How is it different from existing "businesses"? Who will
buy from you? Can you put your idea on paper? It is not enough simply to say "a service for the community" or "a
caf for young people". Paint a picture of your idea in words so that anyone reading this description knows exactly
what you are talking about. To start your Feasibility Study - start with your "business idea" on paper. Discuss it with
others and adjust it as you obtain more information and ideas.
PROFILES - KEY PEOPLE
It is not enough to have a good idea - you need people who can implement it.
Who are they? That is,
What are your/their skills and strengths? Does their background help or hinder the proposed venture?
Create a one page resume of each key person. This is not merely a job history, but a picture of each key person,
showing pertinent strengths, skills, experience, training and qualifications. It will reveal to you and any potential
lender, supplier, partners or agent, the operational/management strengths (and weaknesses) of you and your team. It
will also show you the need to acquire any missing skills you can identify.
PERSONAL OBJECTIVES
Why do you want to go into this venture? How will it effect your personal life? Consider Short Term - say up to one
year; Medium Term - one to three years; Long term - greater than three years. You need to sort out personal desires
first to avoid potential conflict in private and "working life".
THE MARKET
Customers: You cannot sell to everyone. So, who are your potential customers? Make a List. Why will they buy from
you? Identify your Market Segments or groups: What knowledge do you have of your market segments or groups?
How many are there? What will they buy? How often will they buy? What will be their average purchase?
Products & Services: Create a list showing the products / services you will be offering to each segment. Also look at
how long it will take you to produce or procure them. Determine how much it will cost to buy or produce them and
how much you can sell them for.
Suppliers: Identify preferred and alternative suppliers on a list and show products /services / prices on this list. Collect
catalogues and brochures to assist this study.
Competition: List your competitors and show their perceived strengths and weaknesses. For each main competitor,
list two good points and two bad points. You need to understand why they are competition to your proposed
business.
Ask the Question: How can you attract their customers from them? Price is not the only answer.
Map: Obtain a map and on it define your market boundaries, your location, your competitors, your suppliers, and any
demographic information on your market.
YOUR BUSINESS OVERVIEW
Location: identify your site, is it rented, owned, or at home? Why locate there? What are the advantages and
disadvantages?
Site Plan: draw up the site plan. Sketch the floor plan, identify assets and if necessary, use several alternative floor
plans.
Floor Plan: work through your plan, placing a value on each item.
Identify those you already have and those to be purchased or leased.
This will allow you to:

Identify the assets and equipment you will require
Place a value on each item
dentify resources you will be injecting into the business
Identify funding needs to be addressed.
STAFFING
What staff will you need, and why? If none, who will back you up, do the banking, allow you to take holidays? If you
need staff:
1. Who will they be?
2. What will be the cost?
3. What are their duties?
4. What training will be required?
5. What alternatives are there?
WORKING CAPITAL
When calculating how much working capital you need it may be necessary to allow for up to six months funds. This
may be due to no sales or low sales, having to extend credit, buying too much or overheads being higher than
expected.
After working through these details, the next step is to make a recommendation - either to begin or not to begin a
business.
Recommendation: recommendations from the Study regarding the viability of putting the business idea into practice
should be honest, short and direct. These recommendations are not usually a straight "yes" or "no", but rather "Yes, if
. . . ." Or "No, unless . . . ." You use the feasibility study to help make your decision: "Will this idea work for me or
not?"
SOURCES OF HELP
To write your Feasibility Study, you need to go to others for help and information. Don't try to do it all yourself when
there are so many sources of assistance available.
Small Business Advisory Centres information, business counselling, training workshops, research facilities, back up
and support facilities, networking, and publications.
Accountant: advise on all financial issues, assist in feasibility study, legal structure suggestions, assist in funding
estimates, sourcing and applications, check books if buying an existing business.
Solicitor: Contracts, leases, legal representation.
Bank: finance, information and support, leasing, advice on contracts, specialist services.
Business Advisers/Consultants: Someone to talk to, specialist advice, (especially if you are setting up as a co-
operative: Lancashire CDA, Co-operative and Mutual Solutions, ICOM), mentoring, negotiations, training, back-up.
Trade Associations: membership and support, group deals, training, advice, research, industrial relations expertise,
and networking. Potential Suppliers: information, back-up, promotional support, training, etc.
SOURCES OF INFORMATION
Own Research: Small Business Advisory Centres, librarian, libraries, publications, directories, Chambers of
Commerce, other business people.
Competitors : Check out your competition, their location, layout, advertising and service. This can be a great source
for ideas - what are they doing right or wrong?
Government Departments: Information and publications available from many Departments
Local Council : Demographic reports, publications, studies, future plans for development.
Feasibility study
A feasibility studys main goal is to assess the economic viability of the
proposed business. The feasibility study needs to answer the
question: Does the idea make economic sense? The study should
provide a thorough analysis of the business opportunity, including a look at all
the possible roadblocks that may stand in the way of the cooperatives
success. The outcome of the feasibility study will indicate whether or not to
proceed with the proposed venture. If the results of the feasibility study are
positive, then the cooperative can proceed to develop a business plan.
If the results show that the project is not a sound business idea, then the
project should not be pursued. Although it is difficult to accept a feasibility
study that shows these results, it is much better to find this out sooner rather
than later, when more time and money would have been invested and lost.
It is tempting to overlook the need for a feasibility study. Often, the steering
committee may face resistance from potential members on the need to do a
feasibility study. Many people will feel that they know the proposed venture is
a good idea, so why carry out a costly study just to prove what they already
know? The feasibility study is important because it forces the NGC to put
its ideas on paper and to assess whether or not those ideas are
realistic. It also forces the NGC to begin formally evaluating which steps to
take next.
The NGCs organizers will typically hire a consultant to conduct the feasibility
study. Because the consultant is independent of the cooperative, he or she is
in a better position to provide an objective analysis of the proposed
venture. The consultant should have a good understanding of the industry as
well as the new generation cooperative model of business. He or she should
have previous experience in directly related work. To get an estimate of the
costs of a feasibility study, prepare a rough outline of the work needed to be
done. Contact several consultants and provide them with a copy of this rough
draft to see what sort of estimates they give. When the time comes to hire a
consultant, prepare a formal request for proposals that outlines the
information that is needed and send this to several consultants.
It might be tempting to choose the lowest-cost consultant or a personal
acquaintance of one of the NGCs organizers, but always remember that
quality work is the most important factor when choosing a consultant. Make
sure that the consultant can provide an independent assessment of the
business opportunity. For instance, hiring an engineering firm or an
equipment manufacturer to conduct market analysis may lead to biased
results in favor of proceeding with the venture. Engineering firms and
equipment manufacturers may have an incentive to show positive results so
they can obtain contracts with the cooperative once it chooses to start up
operations. Engineering firms and equipment manufacturers are needed in
order to provide information about equipment requirements and costs, but an
independent consultant should conduct the overall feasibility study.
A feasibility study should examine three main areas:

market issues
technical and organizational requirements
financial overview

Market issues:
The primary area that the feasibility study needs to address is potential market
opportunities for the cooperative. If an adequate level of demand does not
exist for the product and the NGC does not know how to differentiate its
product so that it can compete with established industry players, then the
proposed venture should not be pursued.
Questions that need to be answered in this area of the feasibility study
include:

What type of industry is the NGC planning to enter? What are its
primary features?
What are the possible target markets for the NGCs product? What
demographic characteristics do they possess? How large are these
markets? Where are they located? Is the market expected to grow in
the future?
Will the NGC be competing in a mature industry or a growth industry?
Who are the NGCs competitors in this market? How large are these
competitors? How established are they? How do they price their
goods? How will these competitors react to the entrance of the NGC?
How will the NGC differentiate its product from those of its competitors?
What are the competitors strengths and weaknesses, and how would
the NGC compare against them? How does the NGC plan on gaining
market share?
What is the projected market share for the NGC?

Data that can help to answer these questions may be found in already-
published information or through primary research activities such as market
surveys conducted on behalf of the NGC. Relevant information may be found
through various sources such as government statistical publications, trade
journals, industry reports, or companies such as Dun & Bradstreet. The
Internet has also opened up new routes to obtaining information.
The answers to market-related questions should help the NGC develop
realistic estimates of the projected demand for the NGCs product for the first
several years of operation. Based on this projected demand, the NGC can
determine its anticipated level of business volume, which is needed in order to
design the processing facilities. If the projected business volume is not large
enough to justify a processing facility, then the project is not feasible.
Technological and organizational requirements:
This area concerns the internal set-up of the cooperative. Questions to be
answered in this area include:

Plant and equipment issues:
What type of equipment and technology will the business need to
produce its product? What are the costs involved? This includes both
the initial purchase and installation costs of the equipment as well as the
operational costs of running the equipment.
Who are the potential suppliers of this equipment? Where are they
located? What sort of service and warranties do they provide? How
long will it take to acquire the equipment and begin operations?
Based on its projected business volume, how much raw product will be
required by the NGC? What are the quality specifications? Will the
NGC have a sufficient membership base that can provide the raw
materials?
What are the possible locations for the NGCs facility? What size of
facility is needed? What are the costs of the building? Does the
proposed location have adequate access to infrastructures and services
such as major highways, railways, and utilities? Will the NGC build its
own facility, or purchase an existing location?
Where will the facility be located relative to the NGCs customers? Who
will be responsible for the transportation of goods between the facility
and the market? What are the transportation costs involved?
Managerial and organizational issues:
Is the NGC organizational structure the right one for this
business? How important are delivery contracts and a fixed source of
supply to the success of the business?
What qualifications are needed to manage these operations? What are
the key staff positions that need to be filled?
What type of experience should management have? Are there potential
candidates available to fill such positions? What will be the cost factor
involved in finding and retaining acceptable candidates?

Financial overview:
Based on the estimates that have been gathered from the preceding sections
of the study, the NGC needs to determine its overall financial
situation. Sources and uses of financing should be listed. Questions such as
the following need to be considered:

What are the total start-up costs required in order to begin
operations? For instance, what are the capital costs of the land, plant
and equipment, and other start-up costs such as legal and accounting
costs?
What are the operating costs involved? These include the daily costs
involved in running the business, such as wages, rent, utilities, and
interest payments on outstanding debt. These will determine the cash
flow requirements of the NGC.
Based on the estimated demand, what are the NGCs revenue
projections? How will the NGC determine its pricing arrangements?
What are the possible sources of financing for the NGC? Who are
potential lenders? What will be their required terms and limitations of
borrowing?
Based on the estimated revenues and costs, what is the projected
profit(loss) of the NGC? What is the break-even point?

If the results of the feasibility study indicate that the proposed venture is
economically viable, then the NGC can begin to develop a business plan.
2.3. Conducting a feasibility study

2.3.1. Introduction
2.3.2. Market analysis
2.3.3. Technical feasibility
2.3.4. Financial feasibility

2.3.1. Introduction
Aspiring entrepreneurs may have an idea about the type of fruit or vegetable product that
they would like to make. This can come from seeing others successfully producing a food
and wanting to copy them or from talking to friends and family members about products that
they think they could make. However, an idea for a business is not a sufficient reason to
begin production straight away, without having thought clearly about the different aspects
involved in actually running the business. Too often, people invest money in a business only
to find out later that there is insufficient demand for the product or that it is not the type that
customers want to buy. To reduce this risk of failure and losing money, potential producers
should go through the different aspects of running their business in discussions with friends
and advisers before they commit funds or try to obtain a loan. This process is known as
doing a feasibility study and when the results are written down, the document is known as
a business plan.
Conducting a feasibility study need not be difficult or expensive, but the most important
aspects should all be taken into account to ensure that potential problems are addressed.
These are summarised in the Feasibility Study Checklist in Appendix III and are described
in more detail in other Sections of this book. In this Section, the following questions that can
be answered by a feasibility study are addressed:
is there a demand for the
produce?
(Find out the characteristics required of the product and the size and value of
the market)
who else is producing
similar products?
(Determine the number and type of competitors)
what is needed to make
the product?
(Find the availability and cost of staff, equipment, services, raw materials,
ingredients and packaging)
what is the cost of
producing a product?
(Calculate the capital costs of getting started and the operating costs of
production)
what is the likely profit? (Calculate the difference between the expected income from sales to an
estimated share of the market and the costs of production)
Each of these aspects should be looked at in turn. When all the information has been
gathered and analysed, it should be possible to make a decision on whether the proposed
investment in the business is worthwhile or whether the producer's money could be better
spent doing something else. The same considerations should be taken into account when
an existing entrepreneur wishes to diversify production or make a new product.
It is also important to remember that the business plan is a working document that should
be used as a framework to guide the development of a business. To do this it should be
regularly updated. However, it often happens that an entrepreneur pays an adviser or
consultant to prepare a business plan but then does not understand the contents, or having
read it once, puts it away on a shelf never to be seen again. In the following parts of this
Section, the above aspects are described in a systematic way, as should be done in a
feasibility study, starting with 'The Market'.
2.3.2. Market analysis

Product quality survey
Survey of market size and value
Market share and competition

Once a potential producer decides that he wishes to start a business, the first thing to do is
to find out what is the likely demand for the fruit or vegetable product that he or she wishes
to make, by conducting a short market survey. Although there are market research
agencies that are able to do this type of work in many developing countries, it is better for
producers to do it themselves (if necessary with assistance from partners or advisers)
because they will then properly understand their customers' needs and how their business
should operate. If an idea is found to be feasible, this knowledge will in turn give them the
confidence to go ahead when problems are encountered, knowing that their product is in
demand.
Although telephone or posted questionnaires are possible, in most developing countries it is
better to conduct a market survey by going out into areas where the producer expects to
find consumers and asking people for their views. There are two types of information that
are needed:
1) information about the product and its quality and
2) information about how much people will buy, how often and for what price.
It is important to think in advance about the type of information that is needed and to ask
people the same questions each time, so that their answers can be compared and
summarised. This should be a short exercise to keep the costs low and in-depth market
research is not necessary for most products. A convenient way of doing this is to prepare
simple questionnaires such as those shown below, which can be used by entrepreneurs to
remind themselves of which questions to ask.
Product quality survey
Consumers are familiar with the types of fruit or vegetable products that are already on sale
and surveys on these products are therefore easier than those for a completely new food.
Questions can focus on what are the things that consumers like or dislike about existing
competitors' products. For example in Figure 29 the questionnaire is used to ask questions
about the qualities of chilli sauce.
However, if producers wish to make products that are new to an area, they need to have
samples for potential consumers to taste and give their opinion on whether they like the
product and would be willing to buy it. (When asking people to taste a product, a supply of
spoons should be taken so that each person interviewed uses a clean one). Samples can
usually be made at home using domestic equipment so that an investment in production
facilities is not needed at the this stage. An example of a questionnaire for a new product is
shown in Figure 30.
Although initially, new products have the advantage that there will be no competitors, the
process of assessing demand takes longer and costs more than for products that are
already known. In addition, as up to 80% of new products fail, the risks are higher and it
may be more difficult to get a loan for this type of work.
Figure 29. - Example of a survey questionnaire on the quality of competitors' chilli
sauce
Questions
1 2 3 4 5
Very
good
Good Average Bad Very
bad
1. Which make(s) of sauce do you by most often? Write names of sauce(s)
1. What do you think about the colour of the sauce you buy?
Tick in the appropriate place
2. What do you think about the seeds being present in the sauce?
3. Do you like the thickness of the sauce?
4. What do you think about the flavour of the sauce?
5. Do you like the bottle?
6. What do you think about the label?
7. What do you think about the price of the sauce?
8. Is there anything else that you think is good about the sauce
that you buy at present?
Write answers
9. Is there anything else about the sauce that you buy that you
would like to see improved?
Write answers
Remember that the customer (the person who buys the food) is not always the same
person as the consumer (the one who eats the food). This is particularly important when
getting information about the quality of foods that are mostly eaten by children, as their
preferences for colour or sweetness may be different to those of their parents (see also
Section 2.8.1). For food producers, customers can also be retailers or other sellers in
addition to institutions, other food processors and members of the public.
The results of such surveys can be analysed by adding together the numbers of people that
gave answers such as 'very good', 'poor' etc. In the example below, the answers to
questions about chilli sauce (Table 12) show that among other information, 88% of people
found the colour of the sauce to be better than average, 78% did not like having seeds in
the sauce and 60% found the flavour to be good or very good.
Other information that can be gained by analysing the data includes:
1. a large majority of consumers liked having sauce in a bottle and that they were happy
with existing labels. This information helps to show a new producer what type of packaging
must be used if he/she is to compete effectively with existing manufacturers or imported
foods.
2. A majority of consumers (52%) were unhappy with the price of the sauce and this
indicates that a potential market share exists, if a new product having a similar quality can
be sold more cheaply.
Figure 30. - Sample questionnaire for a new product (tomato jam)
Explain to each person you interview that you wish to start a new business making tomato
jam and that you have prepared some samples for people to try. Ask them if they would like
to taste the sample and give you their opinion on what it is like.
Question Answers
1. Do you eat other types of Jam? Yes/No...................... Circule answer
2. Which types of jam do you like best? List the types
3. Do you think you would like tomato jam? Yes/No/Not sure...... Circule answer


1 2 3 4 5
Very good Good Average Bad Very bad
4. What do you think about the colour of this tomato jam?
Tick in the appropriate place
5. Do you like having the seeds in the jam?
6. What do you think about the flavour of this jam?
7. Do you like the texture of the jam?
8 What do you think about the jar?
9. What do you think about the label?
10. What else do you like about this jam? Write answers
11. Is there anything that I can do to improve this jam? Write answers
Survey of market size and value
A different set of questions are needed when assessing the size of the market for a
particular type of food (the total weight of product that is bought per month or per year) and
the value of the market (the amount of money spent on that product each month or year). At
the same time it is possible to gather information about the types of people who buy a
particular food and where they buy it. A sample questionnaire is shown in Figure 31.
The information gathered from potential consumers, using questionnaires like the ones in
Figures 29 to 31, can be analysed by the entrepreneur to get a good idea of the quality
characteristics of the product that consumers prefer, the total demand for the product and
the total value of the market. However, this involves making a number of assumptions and it
is important to consider the following:
1) are the people interviewed really representative of all potential consumers?
2) were enough people interviewed?
3) were people giving accurate information?
Table 12. - Data collected about consumers' opinions of the quality of a product
Question
Summary of 50 replies
1 2 3 4 5 Total
Very
good
Good Average Bad Very
bad

1. What do you think about the colour of the sauce you
buy?
12 32 5 1 0 50
2. What do you think about the seeds being present in the
sauce?
5 6 16 14 9 50
3. Do you like the thickness of the sauce? 10 20 12 7 1 50
4. What do you think about the flavour of the sauce? 42 8 0 0 0 50
5. Do you like the bottle? 40 10 0 0 0 50
6. What do you think about the label? 10 11 20 9 0 50
7. What do you think about the price of the sauce? 5 7 12 25 1 50
If a producer is unsure about the quality of information that has been given, he or she
should ask more people the same questions to check the answers obtained. Clearly, the
more people that are interviewed, the more accurately does the information reflect the real
situation. However, a balance has to be drawn between the time and cost of interviewing
large numbers of people and the accuracy of the data that is obtained. As a guide, 50-75
interviews should result in a good idea about the market for a product in a particular area.
When analysing data collected about market size and value, it is often helpful to find official
statistics about the people who are expected to be the customers for a new product. For
example in Table 13, information was collected using a market survey of chutney
consumption in a small Asian town and analysed together with data from the Census Office
and a previous socio-economic survey about the size and wealth of the town's population.
Similar information is sometimes available from Local Government offices, tax authorities
and Chambers of Commerce, although it may not always be up to date.
Figure 31.- Sample questionnaire about market size and value
Questions Answers
About the market size:
1. How often do you buy this product? Daily/weekly/monthly
2. Do you buy different amounts at different times of the year? (Circle answer)
Yes/No (Circle answer)
3. When are the times that you buy the most? Write answer
4. How much do you buy each time? Write amount in kg or No.
Packs
5. When are the times you buy the least? Write answer
6. How much do you buy each time? Write amount in kg or No.
Packs
7. What is the amount of food in the pack? Write amount in kg
About the market value:
8. How much do you pay for a pack of the food? Write the amount in currency
9. What is the price difference for larger or smaller packs? Write differences
10. Does the price change at different times of the year? Yes/No (Circle answer)
11. When is the price highest? Write answer
12. When is the price lowest? Write answer
About the customer:
13. Would you say that you have a low, medium or high income in your
household?
Low/medium/high (Circle
answer)
14. In which age group do you belong? Tick answer
1-20
21-40
41-60
Male/Female M/F (Circle answer)
About sales outlets:
15. Where do you usually buy this food: Tick answer
Market stall
Local shop
Kiosk
Supermarket
Street hawker
Directly from producer
Other Write answer
Table 13. - Potential market for chutney in a small Asian town
Type of
customer
Number in each
category*
Amount of chutney bought per
month (kg**)
Amount of chutney bought
each time (kg**)
Low income 18,430 0.4 0.1
Medium
income
5,485 1.2 0.15
High income 192 2.25 0.45
* from official census statistics for the town
** average of information given by 70 customers interviewed
The cost of chutney in the market was $3.9 per kg when sold in 100g amounts from a bulk
container into customers' own pots (bought by the majority of those who said they were in
low income families), $4.1 per kg when sold in 150g plastic bags (bought mostly by medium
income families) and $4.8 per kg when sold in 450g glass jars (bought mostly by high
income families). This data can be analysed, as shown in Tables 14 (a) and (b), to calculate
the total size and value of the chutney market in this town.
The size and value of the market, calculated in Table 14, indicate that low income and
medium income families form the largest part of the chutney market in this town. These
people were found to buy the product either from bulk containers into their own pots, or pre-
packed in plastic bags. The demand for jars of chutney was limited to high income groups
which formed only 3% of the market size and 3.8% of its value. A new business would
therefore be likely to focus on low and medium income families as its potential consumers.
This has implications for not only the type of packaging that is used but also the types of
advertising, methods of promotion and agreements with retailers that should be considered.
These aspects are described in more detail in Section 2.8.
Table 14 (a). - Calculation of the size of the market for chutney
Type of
customer
Number in each
category
Amount of chutney bought per
month (kg)
Total demand (kg per
month)
Low income 18,430 0.4 7,372
Medium income 5,485 1.2 6,582
High income 192 2.25 432
TOTAL 14,386 kg
Table 14 (b). - Calculation of the value of the chutney market
Type of
customer
Amount of chutney bought
each time (kg)
Cost per kg of
chutney ($)
Number of
kg
Value of market ($
per month)
Low income 0.1 3.9 7,372 28,751
Medium
income
0.15 4.1 6,582 26,986
High income 0.45 4.8 432 7,882
TOTAL $63,619
Market share and competition
Market surveys and the calculation of market size and value are important to find out
whether the demand for a product really exists, but these figures should not be assumed to
represent the scale of production that could be expected. Even if no-one else is currently
making a product locally, it is likely that once a new business starts production and is seen
by others to be successful, they too will start up in competition. It is therefore important from
the outset, to estimate what is the proportion of the total market that a new business could
reasonably expect to have. This is known as the market share. It is often difficult to estimate
a realistic market share and the figure depends on a large number of variables, but Table
15 can be used as an initial guide. In many cases, new entrepreneurs over-estimate the
share that they could expect, with the result that production operates at only a small
proportion of the planned capacity. The lower percentages in Table 15 should therefore be
used initially. Section 2.3.4 describes some of the negative effects on finances of operating
a business below planned capacity.
In the example described in Tables 13 and 14 concerning the market for chutney, there
were a large number of small producers all making similar products. The estimated share of
the market for a new producer can therefore be calculated as follows:
Total size of the market = 14,386 kg per month
Estimated share = 5-10%, with 5% selected.
This represents sales of 719 kg of chutney per month with a potential value of $3,181 per month.
When converted to daily production rates, assuming 20 working days per month, the maximum
production is therefore 36 kg per day
This figure for daily production rate is very important. It is central to all subsequent
calculations of production capacity and investment requirements (below) and every care
should be taken to ensure that this information is as accurate as possible.
It should be noted that in the calculations below, the scale of production is based on an
anticipated share of the total market. In other situations, a more detailed analysis of market
segments could be made (Section 2.8.1) and the planned market share could be based on
one of those segments (e.g. low income groups in Tables 13 and 14).
Competitors are very important to the success or failure of a new business and the
entrepreneur should recognise that there are different types of competitor. Using the
example of someone wishing to make fruit juices, it is helpful to think how the consumers
might view the available products: for example when they are thirsty, they have a choice of
hot drinks (tea, coffee etc.), cold soft drinks, such as milk, juices, squashes or finally
alcoholic drinks. These are all general competitors, who are able to satisfy the consumers'
thirst. Supposing the consumers choose cold soft drinks that can be drunk straight from the
bottle, they then have a choice between carbonated (fizzy) soft drinks, and juices. These
are known as type competitors or different kinds of soft drink. Finally, on choosing juices,
there are different juices and different brands of the same type of juice, which are brand
competitors.
Although the appearance and quality of foods are important, competitors do not just
compete with their products. They also compete with the profit margin and level of service
that they offer to retailers and with special offers or incentives to customers. New
entrepreneurs must therefore assess each of these factors when deciding what the
competition is and how to deal with it. This is conveniently done using a SWOT analysis,
where SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
The technique involves looking at each aspect of the new business and comparing it to
other producers, particularly type and brand competitors.
Many new entrepreneurs do not appreciate the importance of finding information about
competitors and even if they do, they may not know where to find it. In addition to the direct
questions to consumers in market surveys described above, entrepreneurs can get
information about competitors from the following sources:
1. discuss with retailers the amount of sales of different brands and any seasonality in
demand. What are the trends in consumers' buying, what is getting popular and what is
going down? What types of consumers buy particular products and how often? Does the
retailer put on any special displays for some suppliers? What do they think about the idea
for a new product and do they think they will sell a lot of it? What are their plans for the
future?
2. look at competitors' advertising and retail displays, get a copy of their price lists.
3. ask the local Employer's Federation or Chamber of Commerce for any information
they have on the market for similar products.
4. visit trade fairs and talk to other producers and their customers.
5. look in trade journals, manufacturers' association magazines and newspapers for
information about the market and the activities of competitors.
Table 15. - Estimates of market share for a new food business with different levels of
competition
No. of other producers Many Few One None


Size of competitors Large Small Large Small Large Small
Product range S D S D S D S D S D S D
Market share (%) 0-2.5 0-5 5-10 10-15 0-2.5 5-10 10-15 20-30 0-5 10-15 30-50 40-80 100
S = similar products, D = dissimilar products
(From Do Your Own Scheme, Anon)
After finding as much information as possible, the entrepreneur can then start to compare
the new business with those of competitors using the SWOT analysis. An example of how it
might appear is shown in Table 16.
When it is completed, the entrepreneur should be able to answer the following questions:
who is producing similar products?
where are the competitors located?
what is the quality and price of their products?
what can I do to make a new product that is better than those of competitors?
why would customers or consumers want to change to a new product?
what offers or incentives do competitors give to retailers?
what are competitors likely to do if a new product is introduced?
The answers to these questions are then used to formulate a marketing strategy, details of
which are described in Section 2.8.2.
The analysis in Table 16 indicates that one competitor (A) has a range of good quality
products that are packaged and promoted well, but they are more expensive and do not
meet changing consumer requirements. The other competitor has a cheap product that is
not well packaged and not promoted. However, it sells well because the low price attracts
low income consumers and retailers promote it because of the higher margins offered by
the company. They appear to be expanding to new areas. However, retailers are annoyed
when Competitor B fails to deliver on time or in the correct amount and they may have over-
stretched their distribution capacity. The analysis points the way to producing a product
without additives and to providing a good service and equivalent margins for retailers. It also
highlights lack of information about process inputs (e.g. packaging) and production costs.
These are discussed in the Sections below.
2.3.3. Technical feasibility

Production planning
Weights of raw materials and ingredients
Equipment required
Packaging
Staffing levels

Once an entrepreneur has found information about potential consumers, their requirements
and the likely share of the market that could be obtained for a new product, it is then
necessary to assess whether production at this scale is technically feasible. The series of
questions below is helpful in deciding the technical requirements of the business:
are enough raw materials available of the correct quality when needed for year-round
production?
is the cost of the raw materials satisfactory?
is the correct size and type of equipment available for the expected production level and
at a reasonable cost?
can it be made by local workshops and are maintenance and repair costs affordable?
is sufficient information and expertise available to ensure that the food is consistently
made at the required quality?
are suitable packaging materials available and affordable?
are distribution procedures to retailers or other sellers established?
is a suitable building available and what modifications are needed?
are services (fuel, water, electricity etc.) available and affordable?
are trained workers available and are their salaries affordable?
Table 16. - Example of a SWOT analysis of a new business in relation to competitors
My proposed business Competitor A Competitor B
Strengths Production likely to be sited
close to retailers can deliver at
short notice.
Good brand image and
range of products.
Product is cheaper than A and
sells well They offer good
margin to retailers.
Weaknesses Difficult to find good packaging. Products more
expensive than B. Uses
synthetic colours and
preservatives.
Poor quality product, poor label
design. I'm told by retailers that
supplies are irregular and not
always the amount ordered.
Opportunities Retailers say demand for
products without additives is
increasing. I can produce
without added colours.
Appears to be expanding
deliveries to new areas
according to newspaper
reports.
Threats Strong promotion by A. There
are few wealthy consumers and
price is most important factor. I
am not yet sure of production
costs.
Cheaper products than
B.
May have over-expanded
distribution network and failing
to make deliveries.
(Adapted from: Starting a Small Food Processing Enterprise, by Fellows, Franco and Rios)
Production planning
The answers to these questions can be found by first setting down a plan of the production
process in a similar way to the process charts described in Section 2.2. This plan should
indicate how the different stages in a process are linked together, identify any 'bottle-necks'
in the process, the equipment that is required for each stage and where quality assurance
procedures should be used. The data that has been found from market surveys is added to
the process chart to indicate the scale of production that is required (e.g. Figure 32, which
uses chutney as an example).
The chart is also used for planning a number of different aspects of the production process,
including:
1) the weights of raw materials and ingredients that should be scheduled each day,
2) the number of workers and their different jobs,
3) the size of equipment required to achieve the planned throughput of product
4) the number of packages that are required each day.
In the example, the market information for chutney sales indicated that a minimum
production rate of 36 kg per day would be needed to meet the anticipated initial market
share. Assuming that production takes place for 8 hours each day for 20 days per month,
the average throughput would be 4.5 kg per hour (36/8 kg). This throughput figure is
critically important in all subsequent planning and every effort should be made to ensure
that it is as accurate as possible by checking all assumptions carefully. In particular, the
number of assumed working days may fall below twenty if there are regular power failures
or if production planning (Section 2.7.1) is inadequate. The different stages of production
planning are described below.
Figure 32. - Modified process chart showing scale of operation and daily
requirements for mango chutney production
Processing
stage
%
losses
Weight of
mangoes
(kg)
Batch size
(kg)
Processing time
(minutes) from
Figure 33.
No. of
workers
Minimum equipment
size (kg/hr)
Mangoes 0 60
Wash 14 60
Sort 45 51.6 90 2 Table for 2 workers
Peel/destone 0 28.4
Cut 28.4 120 3 Table for 3 workers, 3
knives
Mix 0 27 27 kg sugar +
13.51 vinegar
for batch of
60.7 kg.

Boil 34* 40 180 1 Boiling pan for 10 kg
batches. Two filters
and heat sealers. Table
for 2 people
Fill/seal 10 36 180 2
Cool/label 0 36 120 1
Store 0 36
Weight of
product
36
* evaporation losses during boiling. Note: recipe described in Figure 13.
Notes on calculations:
Boiling results in weight losses of 34% as water is evaporated and the solids content
increases to 70% (see calculation below). If each batch takes 20 minutes to boil, there are 2
batches per hour and in 3 hours there are 6 batches of 10 kg each to meet production target
of 60 kg of raw materials, yielding 36 kg of product per day. Therefore the boiling pan
should have 10 kg working capacity (that is a 12-15 litre pan).
Each worker fills and seals 40 bags per hour = 120 bags per day x 2 workers = 240 bags of
150g net weight = 36 kg per day
Calculation of boiling losses:
The solids content in the mix of ingredients before boiling is found as follows:
Ingredient Weight (kg) Solids content (%) Weight of solids (kg)
Mangoes 27 15 4.05
Sugar 27 100 27
Vinegar 13.5 0 0
Total 67.5 31.05
Total weight after 10% losses 60.7 kg 28
% solids in batch before boiling = (28/60.7) x 100 = 46%
So 28 kg equals 46% of the batch before boiling. After boiling there is no loss of solids (only
water is removed) but the solids content has been increased to 70%.
Therefore 70% still equals 28 kg.
Therefore the total weight of the batch after boiling = (100/70) x 28 = 40 kg
Weights of raw materials and ingredients
There are two stages involved in planning the amounts of materials that are needed to
produce the required weight of product: first, it is necessary to calculate the amount of each
ingredient that will be needed to formulate a batch of product and secondly, it is necessary
to calculate the amount of losses that can be expected during preparation of fruits and
vegetables.
The processor should experiment with different mixes of ingredients (the 'formulation' or
'recipe') to produce a product that has the colour, flavour, appearance etc. that consumers
say they prefer from market research. Skill and flair are needed to achieve this, using the
combination of ingredients that has the lowest cost. It is important to weigh each ingredient
carefully and make sure that all weights are recorded for each formulation that is tried.
Otherwise, the inevitable result is a successful trial product, but no information is recorded
to enable it to be repeated. Once a formulation has been successfully developed, great care
is needed to ensure that it is made in exactly the same way on every occasion. This
requires staff training, especially for those staff involved in batch preparation, the
implementation of quality assurance procedures and careful production control. These
aspects are discussed in more detail in Sections 2.7.1 and 2.7.2.
Nearly all fruit or vegetable processing results in losses of material. These may arise from
peeling or de-stoning, from unsatisfactory fruits and vegetables that are thrown away during
sorting, from spillage during filling into packs or from food that sticks to equipment and is
lost during washing. Different types of fruit and vegetables have been found in practice to
have different levels of wastage and examples of some of these are given in Table 17.
Typical losses from other sources in a well-managed production process are shown in
Table 18. However, it is necessary for an entrepreneur to do trials to calculate the actual
amount of wastage experienced with the particular varieties of fruit or vegetable and with
the particular process that are being used.
Clearly, it is in the interests of the processor to reduce losses as much as possible.
Contracts with reliable suppliers (Section 2.6.1) help to ensure lower levels of poor quality
raw materials and therefore reduce losses. Additionally, a well-managed processing
operation, having good quality assurance procedures (Section 2.7.2), also reduces
wastage, especially during later stages of a process when the product has a higher added
value.
Using the data from experimental production trials, or less desirably estimates based on
data in Tables 17 and 18, it is necessary to calculate the amount of raw materials and
ingredients that are needed to produce the required weight of product each day. This will
also enable the true cost of raw materials to be calculated for use in financial planning
(Section 2.3.4)
Using mango chutney as an example. Figure 32 shows losses during each stage of the
process. The amount of mangoes that need to be bought to produce the required weight for
each day's production can then be calculated. The result indicates that only 45% of
incoming raw materials were actually used in the product (27 kg of the 60 kg bought). If
mangoes were bought for $0.2 per kg in season, the true cost of the fruit is calculated as
$0.44 using the following formula:

Other ingredient costs are estimated as follows: sugar $0.6/kg, vinegar $1.25 per litre and
total spice costs of $1.3 per day. This data is used to calculate operating costs in Section
2.3.4.
Table 17. - Typical losses during the preparation of selected fruits and vegetables
Fruit or vegetable Typical losses during preparation (%) Notes
Apples 23 peeled & cored
Apricot halves 12 destoned
Bananas 41 peeled
Cabbages 30
Carrots 4 (bought without leaves)
Cauliflowers 38
Currants 3 seeds & skins removed
Figs 2
Grapes 19 skins & pips removed
Guava 22
Lemons 40 peel & seeds removed
Mangoes 45 peeled & destoned
Melons 42 peel & seeds removed
Okra 12
Onions 3
Oranges 25 peel & seeds removed
Passion fruits 58 peel & seeds removed
Pawpaws 38 peel & seeds removed
Peas 50 bought in pods
Peppers - chilli 15 seeds & stalk removed
Peppers - green 14 seeds & stalk removed
Pineapples 48 peeled & cored
Plantains 39 peeled
Tomatoes 4 seeds & skin removed
(Adapted from data in The Composition of Foods by Paul and Southgate, and from field
data collected by the author)
Equipment required
Using the process chart (Figure 32), the weight of food that should be processed at each
stage is then calculated in kg per hour. This information then allows the processor to decide
what equipment is required and the size (or 'scale' or 'throughput') that is needed. In doing
this, decisions need to be taken on the relative benefits of employing a larger number of
workers or buying machinery to do a particular job. In some enterprise development
programmes, there may be wider social objectives of employment creation which may
influence such decisions.
The decisions on equipment requirements are also influenced by:
the cost and availability of machinery
the availability of people who are skilled in
maintenance and repair
the availability and cost of spare parts and
the possibilities of local equipment fabrication.
Information on the types and suppliers of equipment is often difficult to obtain, but
catalogues and sometimes databases of equipment manufacturers and importers may be
available at offices of national and international development agencies, Chambers of
Commerce, university departments, food research institutes, embassies of other countries
and trade or manufacturing associations.
Table 18. - Typical Losses During Processing of Fruits and Vegetables.
Stages in a Process Typical losses
Washing fruits/vegetables 0-10
Sorting 5-50*
Peeling 5-60
Slicing/dicing 5-10
Batch preparation/weighing 2-5
Boiling** 5-10
Drying** 10-20
Packaging 5-10
Machine washing 5-20
Accidental spillage 5-10
Rejected packs 2-5
* Unsatisfactory raw materials depend on source and agreements with suppliers
** does not include evaporation losses
It is preferable wherever possible, to buy equipment from local suppliers and fabricators
because servicing and obtaining spare parts should be faster and easier. However, if
equipment has to be imported, the following points should be considered: when ordering
equipment, it is important to specify exactly what is required, as many manufacturers have a
range of similar products. As a minimum, it is necessary to state the throughput required in
kg per hour and the type of food to be processed. Where possible other information such as
the model number of a machine, whether single or three-phase power is available and the
number and types of spares required, should also be given. Assistance from a food
technologist working in a local university or food research institute may be required to
research and order equipment. The quotations received from equipment suppliers can then
be used when calculating financial viability (below).
Packaging
Similar considerations apply when ordering packaging materials as there is a very wide
range available and there are a number of considerations that should be taken into account
by the producer. These include the technical requirements of the product for protection
against light, crushing, air, moisture etc. (described in Section 2.5.5. and for individual
products in Section 2.2), the promotional and marketing requirements (Section 2.8.3) and
the relative cost and availability of different types of packaging. Selection of packaging
materials frequently causes the largest problems for small producers and is often the main
cause of delay in getting a business established. Professional advice should be sought from
a food technologist or in some countries, packaging specialists or agents of packaging
manufacturers.
Staffing levels
Decisions on the numbers and types of workers that are required to operate the proposed
business are taken in conjunction with decisions on equipment procurement. Using the
process chart, it is possible to break down the production into different stages and then
decide the number of people who will be needed for each stage of the process. It is
important also to include work such as store management, quality assurance and book-
keeping when planning employment levels.
In fruit and vegetable processing, each day's work will initially involve preparation of the raw
materials and then move through processing to packaging. It is possible to have all workers
doing the same type of activity throughout the day, but it is often more efficient to allocate
different jobs to each worker as the day progresses. A convenient way of planning this is to
draw an Activity Chart. This shows the type of work that is to be done each hour during the
day, the number of people involved with each activity and the sequence of work that
individuals will do during the day.
In the example of chutney processing, the total number of workers is estimated from the
process requirements shown on the process chart (Figure 32). It is estimated that two
workers will be able to wash and sort 40 kg mangoes within ninety minutes. Similarly, it will
require three workers to peel and slice this amount of fruit within two hours (Figure 33).
Once sliced fruit becomes available (by around 9.30 am), one of the three workers (X) can
begin preparing the batches of ingredients and boiling the chutney. By 11.00 am, fruit
preparation has finished and while one worker (Y) washes down the preparation area, the
third (Z) labels the previous day's production and packs them into boxes ready for
distribution.
In this plan, all workers have a lunch break at the same time, but in other types of process it
may be more convenient or efficient to stagger each person's break at different times. As
the first batch of product cools sufficiently, work can begin after lunch on filling and sealing it
into 150g plastic bags. This is a time-consuming stage as manual filling and sealing have
been selected. Additionally, packages require check-weighing to ensure that they contain
the correct weight of product (Sections 2.4.2 and 2.7.2). It is calculated that three hours will
be needed for two people to fill and seal 240 bags (36 kg). This time could be reduced if a
mechanical filler/sealer was bought, particularly at a later time when the business
expanded. In the example, the owner/manager (M) is involved with staff supervision, record
keeping, finance management and product distribution/sales. In other plans, these jobs
could be done by trained staff.
Figure 33. - Activity chart used to plan job allocations for staff to produce mango
chutney
This type of chart is useful for assessing the time required to complete each stage of the
process and for thinking through the problems that are likely to occur. When production
begins, it can be used as a basis for training in each job and it should be constantly
reviewed to optimise production efficiency.
In summary, the technical part of a feasibility study involves taking information about the
expected demand from the market survey and calculating the process throughput required
to meet that demand. This can then be used to decide on the type of equipment, the level of
staffing and the amounts of raw materials, ingredients and packaging that will be required.
These are summarised, using the example of chutney production, in Table 19.
Table 19. - Summary of technical feasibility calculations for mango chutney
production
Information required Data obtained
Estimated market size (kg/month) 14,386
Estimated share of market 5
Production required per month to meet market share (kg) 719
Production required per day @ 20 days' work per month (kg) 36
Minimum Process throughput @ 8 hours per day (kg/hr) 4.5
Weight of mangoes required per day (kg) 60
Losses on arrival due to sorting (%) 14
Amount of losses in the process (%)
- wastage/spillage 10
- peeling losses 45
- mixing losses 15
- packing losses 10
- evaporation losses during boiling (%) 34
Minimum size of equipment required (kg/hr) for
washing/sorting 60
peeling/slicing 40
boiling (2 batches of 10 kg per hour) 10
packing (bags per person per hour) 40
Number of people required to operate the process 3 plus owner/manager
2.3.4. Financial feasibility

Start-up costs
Operating costs
Income and profit
Financial planning
Preparing a business plan

Having completed the study of technical feasibility, the entrepreneur should then have
sufficient information to determine the costs that are likely to be involved in production.
Additionally, the market survey will have supplied information about the sale price that could
be achieved for the new product. The entrepreneur is therefore in a position to calculate the
expected income and expenditure and hence the gross profit that can be achieved.
Start-up costs
When a new fruit and vegetable processing business is started, it is likely that money will be
required to buy or convert a building and buy equipment to start production. Details of
suitable buildings are given in Section 2.5.3. Additionally, it is necessary to buy a stock of
packaging materials and the initial raw materials and ingredients. The start-up capitalis the
amount of money that is needed to buy the facilities and equipment, to register and licence
the business and get the necessary hygiene certificates.
Working Capital includes the costs of raw materials, packaging, staff training, product
promotion etc. that have to be made before the business begins to generate income from
sales of the product. The requirement for working capital also continues as the business
develops and is discussed further under 'Cashflow' below. As described in Section 2.7.1,
fruit and vegetable processing has relatively high requirements for working capital
compared to other types of food processing. This is because of the seasonal nature of crop
production and the need to buy several month's supply of crops during the season and part
process them so that production can continue for a larger part of the year.
The start-up capital and initial working capital are calculated to determine whether the
entrepreneur's savings (known as the owner's equity) will be sufficient to start the business
without a loan. Using the example of chutney production, the start-up costs are estimated in
Table 20, using representative data from the country concerned.
Table 20. - Start-up costs for chutney production
Start-up cast $
Conversion of building (Section 2.5.3) 800
Equipment (from Figure 32) 350
Registration of business 50
Business Licence 25
Hygiene inspection and certificate 50
Raw materials & ingredients for 4 weeks' production (from Figure 32)* 927.5
Packaging (minimum order) 200
Staff training (equivalent to income from 2 weeks' production value)** 1476
Initial production promotion 250
Staff salaries for 6 weeks 360
TOTAL 4488.5
* 60 kg mangoes/day @ $0.2/kg = $240/month,
27 kg sugar/day @ $0.6/kg = $324/month,
13.5 litres vinegar/day @ $2.25/litre = $337.5/month,
Spices cost $1.3/day = $26/month
** Sales @ $4.1/kg (Table 14) x 36 kg/day = $1476 for 2 weeks.
The owner's equity is $2,500 and a loan of $1,989 is taken to meet the total start-up costs.
(A further option of a second partner's equity of $2,000 is agreed at the same time to take
account of a negative cashflow during the first year of operation (see Table 22)).
Operating costs
There are two types of operating (or production) costs: those expenses that have to be paid
even if no production takes place and those that depend on the amount of food that is
produced. The first type are known as fixed costs and the second type are variable costs.
Examples of each are shown in Table 21 again using chutney production as an example.
Table 21. - Summary of fixed and variable operating costs for mango chutney
Type of Production Costs Actual costs for Chutney Production per
Year ($)
FIXED COSTS
Rent 1200
Labour* 2880
Loan repayment** 19898
Interest charges** 796
Professional fees (e.g. accountant's fees) 120
Maintenance of equipment (10% of value) 35
Depreciation of equipment (over 3 years) 117
Business registration fees, hygiene certificates and other
licences
125
Total fixed costs 7262
VARIABLE COSTS
Raw materials (Table 20) 2880
Other ingredients 8250
Fuel 800
Power 250
Packaging materials 1800
Transport/distribution 450
Labour* -
Advertising and promotion 1150
Total variable costs 15,580
Total operating costs per Year 22,842
* Labour is a fix cost if workers are permanently employed as full-time staff, but it is
described as a variable cost if people are only employed when production takes place. In
this example, permanent labourers are paid $80/month.
** In this example, the loan of $1989 is repaid within the first year with a fixed interest rate of
40% per month.
Income and profit
From the market survey, the estimated market size and share enables the expected sales
to be calculated. The gross profit (or gross loss) is the difference between the expected
income and the total operating costs over the first year, including any loan repayments.
Income is therefore calculated as follows:
Income = Selling price per unit x number of units sold
The income clearly depends on both the price of a product and the amount that is sold.
When selecting a price for a product, two approaches can be taken: first the price can be
based on production costs and it is set to ensure that income exceeds the total costs. This
however, does not take account of competitors' prices and to be successful, the new
product should be priced at or below the price of other similar products.
The second approach is therefore to set the price to compare favourably with existing
products and calculate the likely profit at the planned scale of production.
Unless the new product is to be sold directly from the production unit or through a sales
outlet owned by the producer, it is also important to remember the profit that will be
expected by retailers. In many countries this profit is normally 10-25% of the value of each
pack. In addition, there are distribution costs and perhaps special promotion costs that
should also be included. The price that is charged for the product should therefore allow the
producer, the distributors and the retailers to make an adequate profit. In the example using
mango chutney, the income to the producer is the sale price less 10% for retailer's profits
($4.1 - 10% = $3.7/kg).
When the production costs and income are compared using the second approach, the
operation of the business should be above the breakeven Point. Above this point is the
minimum level of production that can enable the enterprise to make a profit (Figure 34).
Figure 34. - Breakeven Point

Breakeven point can be calculated as follows:
calculate the contribution for variable costs per pack
subtract the value obtained from the sale price to obtain the 'unit contribution'
calculate the total fixed costs per year
divide the fixed costs by the unit contribution to obtain the annual production rate that will
allow the business to break even
In the example of chutney production, the contribution for variable costs per pack (Table 21)
= $ 15,380/57,600 bags per year = $ 0.270
The sale price per pack = $ 3.7/kg/6.61 packs per kg = $ 0.555 per pack
Unit contribution = sale price - (variable + labour contributions) = 0.555-0.270 = 0.285
Total fixed costs per year = $ 7262
Breakeven = fixed costs/unit contribution = 7262/0.285 = 25,481 packs per year
When expressed as a % of total production capacity (57,600 bags per year), the breakeven
point = (25,48157,600) x 100 = 44.2%
In other words, the processor must operate at above 44% of the available capacity in order
to make a profit. Clearly the higher the figure for the break-even point, the more difficult it is
for a process to be profitable.
The annual production costs are calculated in Table 21 as $22,842. If all products are sold,
the annual income is calculated to be $31,968 (36 kg per day @ $3.7/kg x 240 days per
year). This leaves a gross profit of $9,126 per year, which after taxes, is available to pay the
owner a salary and for re-investment and expansion of the business.
If the feasibility study shows that the scale of production required to meet the expected
market share is below the break-even point, the entrepreneur should carefully examine the
data to see if production costs can be reduced. If not, there is a question over the wisdom of
proceeding further with the proposed business.
It should be noted that entrepreneurs should not automatically consider the gross profit as
their own income. The money belongs to the business and they should take a fixed wage,
which is recorded as another business expense. A common source of business failure
happens when an owner removes cash to pay for a funeral or other family occasions and
disrupts the cashflow of the business to a point that it cannot continue trading.
Financial planning
If the gross profit indicates that the proposed fruit and vegetable processing business is
likely to be successful, it is then necessary to repeat the calculation of monthly gross profit
for one to three years. This will then show whether there is sufficient cash available to
operate the business without the need for further loans. This is known as a cashflow
forecast and an example, calculated for one year only for chutney manufacture, is given in
Table 22.
Table 22. - Example of cashflow forecast for chutney manufacture
Month J F M A M J J A S O N D Total
Income ($'000) 0.4 0.6 1.0 1.2 1.2 + 2.0 1.9 2.1 2.2 2.5 2.7 2.7 2.7 22.2
Expenses ($'000) 1.0 1.2 1.4 1.5 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 19.4
Cumulative Profit/loss ($'000) (0.6) (1.2) (1.6) (1.9) (0.4) (0.3) 0 0.4 1.1 2.0 2.9 3.9 2.8
Figures in ( ) indicate a negative cashflow. The second partner's equity of $2000 was taken
in May.
From the data in Table 22 it can be seen that during the initial start-up period during
January and February, production routines were becoming established and as a result,
sales were low. The expenditure on supplies of packaging materials and fruit during this
time leads to an accumulated negative cashflow of $1,900 by April. This illustrates one of
the benefits of conducting a feasibility study: the losses made over the first few months are
planned and can be addressed by taking out a loan or using the owner's equity. This gives
both the owner and any lenders the confidence to know that the business is under control
and that the negative cashflow will cease, in this case after seven months. Lenders are
more willing to provide a loan if they are confident that the finances of the business are
planned and managed. This should not be done just at the start of a business but also later
on, if sales are expected to fall for a while or if raw material costs rise temporarily (e.g. when
the harvest season finishes). A particular problem for all small businesses is the need to
order packaging materials in bulk because of minimum order sizes. This expenditure and
the need to tie up cash in stored packaging can be very damaging to a business cashflow.
The entrepreneur should assess the alternatives of paying a higher unit price for small
amounts of packaging or suffering a negative cashflow.
A similar forecast is made to show the expected development of the business over three
years (not forgetting to take account of the expected actions of competitors). Finally, in
assessing financial feasibility, the data is presented as a Profit and Loss Statement, to
calculate the net monthly profit before tax over the first three years. An example of a
monthly profit and loss account is shown in Figure 54.
Preparing a business plan
The advantages of writing down the results of the feasibility study are as follows:
the findings can be set out in a clear and logical way, so that potential lenders can
understand the business and its likely risks/advantages
the document helps the entrepreneur to clarify and focus his/her ideas
it is reference material that can be used to plan long term development of the business
the plan can be regularly consulted and updated as a guide to the business development
mistakes can be made on paper rather than in the operation of the business
when the plan shows that a successful business is possible, it makes the entrepreneur
feel more confident about success
it helps the entrepreneur to decide how much money is needed and if properly prepared, it
gives the loan agency confidence that their money will be repaid.
Most lenders have little understanding of fruit and vegetable processing and the
entrepreneur should therefore write the business plan in a simple way, avoiding jargon and
technical language as much as possible. If lenders can understand what is involved in the
business, they are more likely to approve a loan.
It is important to include as much detail as possible and if necessary do thorough research
first. It is also important to look outwards from the business to judge what competitors will
do and how the business will develop to become sustainable.
Although there is no fixed way of writing a plan, the sections that could be included are
summarised as follows and in Appendix III:
Introduction: to summarise what the product is, who is expected to buy it, why the business
is a good idea,
Basic information: the name and address of the owners, their qualifications and experience,
The product: details of the raw materials, the production process, quality assurance,
packaging etc. What is special about the product compared to those of competitors,
The market: the potential customers, where they are located, the size and value of the
market, expected market share, likely expansion (or contraction) of the market, the number
and types of competitors, their strengths and weaknesses and their expected reactions to a
new product,
Selling plan: distribution and sales methods, planned promotion, product cost,
Premises/equipment: where the business will be located, building to be used and services
that are needed, steps taken to meet health and hygiene laws, equipment and its cost,
Finance: amount required for start-up and initial operation, including profit and loss
statement and cashflow forecast for three years, owner's resources that will be used, size of
loan required and what it is for, security on the loan,
Business registration: steps that have been taken or are planned to register the business
with tax authorities, local government and Department of Health (or equivalent) for hygiene
inspection and certification,
Future plans: objectives of the business and expectations for the next 3-5 years.
http://www.fao.org/docrep/w6864e/w6864e09.htm
Cooperatives: A Tool for Community Economic
Development


CHAPTER 5
Conducting a Feasibility Study

This chapter provides a step-by-step overview of how to conduct a feasibility
study and market research, including:
the difference between a feasibility study and a business plan;
major components of a feasibility study;
key market analysis, organizational, financial questions in your
feasibility study;
techniques for conducting market research; and
where to obtain information you need to conduct market research.


Although [an unsuccessful feasibility study] may appear to be a failure, its
not. The real failure would have been if you had invested your own and others
money and then lost it due to barriers you failed to research in advance.
David E. Gumpert
How to Really Create a Successful Business Plan

Feasibility studies and business plans are identified in Chapter 4 as key
steps to starting a cooperative. This section explains two vital issues: how to
conduct a feasibility study and how to do market research. First, some
definitions.

What is a Feasibility Study?
A feasibility study is designed to provide an overview of the primary issues
related to a business idea. The purpose is to identify any make or break
issues that would prevent your business from being successful in the
marketplace. In other words, a feasibility study determines whether the
business idea makes sense.
A thorough feasibility analysis provides a lot of information necessary for the
business plan. For example, a good market analysis is necessary in order to
determine the projects feasibility. This information provides the basis for the
market section of the business plan.
Because putting together a business plan is a significant investment of time
and money, you want to make sure that there are no major roadblocks facing
your business idea before you make that investment. Identifying such
roadblocks is the purpose of a feasibility study.
A feasibility study looks at three major areas:
a. Market issues
b.Organizational/technical issues
c. Financial issues
Again, this is meant to be a first cut look at these issues. For example, a
feasibility study should not do in-depth long-term financial projections, but it
should do a basic break-even analysis to see how much revenue would be
necessary to meet your operating expenses.


The purpose of the business plan is to minimize the risk associated with a new
business and maximize the chances of success through research and
maximize the chances fo success through research and planning.
University of California
Center for Cooperatives

What is a Business Plan?
If the feasibility study indicates that your business idea is sound, the next step
is a business plan. The business plan continues the analysis at a deeper and
more complex level, building on the foundation created by the feasibility
study. For example, the financial section of the plan would include pro forma
(estimated) financial statements and 2-3 years of financial projections.
A business plan gives you an opportunity to find any weaknesses and reveal
any hidden problems ahead of time. It serves two purposes: first, it is an
analysis of how well the business will work; and second, it is a written
document necessary to obtain a loan.
Although business plans are often submitted to a bank as part of a loan
request, thats not the most important thing about them. The really important
thing about this process is that it forces you to think.
A business plan is sometimes described as a document of your thought
processes as you analyze your competition, the market, your operating
expenses, management and staffing needs, manufacturing process, etc. It
forces you to clarify your goals and objectives. Therefore, the feasibility study
and business plan are more important for the companys owners than for
anyone else, including loan officers.
Planning, however, wont guarantee success in business. The plan must be
realistic and based on valid assumptions. Most people have to work at
retaining their objectivity if they are doing the feasibility study and/or business
plan themselves. After all, if you are closely involved in organizing this
business, you probably have some emotional investment in it. It is easy for
people in this position to overlook or minimize potential problems or
hazards. Remember that planning, no matter how good it is, will never make
a bad business idea feasible.

Conducting a Feasibility Study
As noted above, the feasibility study is organized into three major sections
(market analysis, organizational/technical analysis, and financial
analysis). Each section below discusses the key questions which must be
addressed in the plan.


Market analysis begins by asking:
What, precisely is the market?

The more specific you can be, the better.
Is the market growing, shrinking, or staying the same?
Is it worth your while? Is the market youve identified big enough to
make it worth the time?
Eric S. Siegel
The Ernst & Young Business Plan Guide

Information generated in one part of the plan will reveal the need for more
information on another part of the plan or answer questions that may have
been left open in another section.
William R. Osgood
Basics of Successful Business Planning

The purpose of market analysis is to thoroughly acquaint yourself with all
aspects of your market so that you can formulate a plan to capture a share of
it.
Harold J. McLaughlin
Building Your Business Plan

1. Market Analysis Research
The key questions that should be answered in the Market Analysis section of
the feasibility study are presented below. In nearly all cases, research is
required in order to obtain enough information to answer the questions. See
p. 7 of this chapter for techniques for conducting market research. If these
questions cannot be answered adequately, the project is not feasible.
a. What is the current or projected demand for your proposed products or
services? In other words, how many units can you reasonably expect to sell
each month?
b. What are the target markets for this product or service? What demographic
characteristics do these potential customers have in common? How many of
them are there?
c. What is the projected supply in your area of the products or services
needed for your project?
d. What competition exists in this market? Can you establish a market niche
which will enable you to compete effectively with others providing this product
or service?
e. Is the location of your proposed business or project likely to affect its
success? If so, is the identified site the most appropriate one available?
The market analysis should be conducted first because it is critical to the
success of the business. If you cannot substantiate through research that
adequate demand for your product or service exists, or if you cannot obtain
sufficient quantity to meet expected demand, then your project is not
feasible. You should not continue to the next step in the feasibility study.


One...major reason for business failure is incompatibility of goals among
owners. This often leads to a breakdown of communication and conflict about
use of resources.
Harold MC Laughlin
Building Your Business Plan

2. Key Organizational and Technological Issues
Once market issues have been addressed, it is time to take a look at key
organizational and technology issues that are relevant to your project.
Organizational Issues
Key questions to answer include:
a. What organizational structure is the right one for your project?
Remember that cooperatives are not the best form of legal business structure
for every project. Review Chapter 3 of this Manual to help you evaluate this.
b. Who will serve on the board of directors? What are their qualifications?
c. What qualifications are needed to manage this business?
d. Who will manage the business (if possible)?
e. What other staffing needs does the co-op have? How do you expect
staffing needs to change over the next 2-3 years?
Because all subsequent decisions depend on the organizations legal
business structure, the first question is critical and should be answered before
you continue with the feasibility analysis. It is an important question and may
take some research. Dont hesitate to call on a qualified attorney or other
advisor if necessary.
While you need not know the answers to all the other questions in order for
the business to be feasible, they must all be satisfactorily answered before
you begin operations. This is a good time to begin the process of identifying
appropriate individuals for the board, management and other staff positions,
and to think carefully about what qualifications are necessary to manage this
business.


Be specific, and detailed, yet concise as possible. Dont think bulk is a
substitute for vigorous research and thinking.
Harold MC Laughlin
Building Your Business Plan

Technological Issues
The cost and availability of technology may be of critical importance to the
feasibility of a project, or it may not be an issue at all.
For example, a service organization, such as a child care center, will have a
few equipment and other technology- related issues to address. A
manufacturing enterprise, on the other hand, may have a number of complex
technology questions to analyze in order to determine whether or not the
business is feasible.
Key questions to answer include:
a. What are the technology needs for the proposed business?
b. What other equipment does your proposed business need?
c. Where will you obtain this technology and equipment?
d. When can you get the necessary equipment?
How does your ability to obtain this technology and equipment affect your
start-up timeline?
e. How much will the equipment and technology cost?
Keep in mind that technology doesnt necessarily mean complex machinery; if
your business simply needs a personal computer, printer, and fax machine,
those are your technological needs.
However, making wise decisions on even simple purchases such as office
machines may require some research. Obviously there are numerous types
of personal computers on the market. You many want to check Consumer
Reports for their recommendations, do some comparative shopping, and ask
acquaintances about their experiences with different companies. Your cost
estimates (question #e) will get plugged into your financial projections.
Naturally, the more complex the technology you need, the more research that
will be required to make good decisions about it. Dont skimp on this foot
work; you may regret it.

3. Financial Issues
Once your analyses of marketing, organizational and technology issues have
been completed, the third and final step of a feasibility analysis is to take a
look at key financial issues. Answer the following questions as well as you
can at this point and identify key issues that will require additional research.
Note that some of the questions below -- specifically revenue projections --
are directly based on your market analysis (the first step in the feasibility
study), in which you estimated the number of units of product or service you
could sell. If you didnt do that part of the feasibility study thoroughly, you
wont be able to do the financial analysis adequately.
a. Start-Up Costs: These are the costs incurred in starting up a new business,
including capital goods such as land, buildings, equipment, etc. The
business may have to borrow money from a lending institution to cover these
costs.
b. Operating Costs: These are the ongoing costs, such as rent, utilities, and
wages that are incurred in the everyday operation of a business. The total
should include interest and principle payments on any debt for start-up costs.
c. Revenue Projections: How will you price your goods or services? Assess
what the estimated monthly revenue will be.
d. Sources of Financing: If your proposed business will need to borrow
money from a bank or other lending institution, you may need to research
potential lending sources.
e. Profitability Analysis: This is the bottom line for the proposed
business. Given the costs and revenue analyses above, will your business
bring in enough revenue to cover operating expenses? Will it break even,
lose money or make a profit? Is there anything you can do to improve the
bottom line?

Conclusion
Your feasibility study should give you a clear idea whether the proposed co-
op is a sound business idea. Some techniques for conducting the Market
Analysis part of the feasibility study are presented on the following pages.


FEASIBILITY STUDY
Table of Contents
The following is a Table of Contents for an actual feasibility study conducted by the
authors. It is presented here as an example of a study that generally follows the
guidelines presented in this chapter. Please see Appendix F for excerpts from
additional feasibility studies.
I. Introduction and Scope of Study
II. Market Analysis
A. Domestic Market Profile
B. Overseas Market Potential
C. Target Market
D. Overall Market Feasibility
III. Producer Survey and Supply Analysis
A. Review & Analysis of Survey Results
B. Supply Outlook
IV. Organization & Technology Analysis
A. Organizational Capacity Analysis
B. Technology & Equipment Needs
C. Operational Scenarios
V. Transportation and Processing Analysis
A. Map of Producer Locations
B. Supply Outlook
VI. Financial Analysis
A. Financial Summary and Feasibility
B. Assumptions
VII. Overall Feasibility Evaluation
A. Summary and Conclusions
B. Recommendations

Conducting Market Research
Now that you know what questions to ask, exactly how do you go about
answering them? This section will explain some of the techniques used to
conduct the market analysis research recommended as the first step in a
feasibility study. This section reviews the key questions from Step 1 of the
feasibility study instructions (p. 4 of this chapter), providing guidelines on how
to answer each.
Dont think of market research as highly sophisticated, expensive and
complicated. It can be very much a do-it yourself thing.
Market analysis results in information about the market potential, which
provide the basis for accurate sales forecasts and your marketing strategy. Its
basic components include:
an estimate of the size of the market for the product/service;
projected market share;
information about your target market; and
analysis of the competition.
Market research involves activities designed to obtain data about the market,
and falls into two main categories:
primary research is that which collects new data through market surveys
and other field research -- specific studies that are conducted on behalf
of your company; and
secondary research includes gathering pre-existing information from
published sources.
In addition to conducting research, it is valid to rely somewhat on your own
opinions and observations, especially if they have to do with your local
community. No one knows a community like the people whove spent their
lives there. However, it is important to back up your opinions with data and
research. Dont rely solely on your gut feelings; theyre probably not enough
to go to the bank with. Resist the temptation to only look for data that confirms
your opinions!
All this information goes into estimating the sales your company will achieve
during its first few years of operation. The rest of the feasibility study and
business plan is built upon these estimates. Because it is one of the principal
tools for determining whether the business will work, it is worth making an
investment in market research. The quality of information in the market
analysis is dependent on the amount of energy that went into obtaining it!
You need to be as specific as possible about the dimensions (size, trends) of
the opportunity your business faces. Since a new business doesnt have a
track record, your research must be thorough to enable you to make realistic
sales estimates.


MARKET RESEARCH
Have a need and a market been clearly identified?
Has a clear, persuasive case been made as to how sales will be
generated?
Does this section serve as a sound basis for the implementation of a
marketing strategy?
Eric S. Siegel, et. al.
The Ernst & Young Business Plan Guide


It is beyond the scope of this Manual to cover the entire subject of market
research. A good book on this subject is Practical Marketing
Research by Jeffrey L. Pope, published by the American Management
Association.


Cooperatives only work when they are market-driven... [You must] ensure that
accurate market projections precede other development steps.
Madison Principles

Existing Demand Adequate?
In the Market Analysis section of the feasibility study, we suggested that you
determine whether adequate demand exists for your proposed co-ops
products/services. How do you figure this out?
Much of this information can be obtained through secondary research. A lot
of the information you need is available to the public, from government
statistics, computerized data bases, and the Yellow Pages. And of course the
Internet is a potential source of information. Many public libraries now have
access to the Internet, if you dont. A lot of information exists out there; the
best place to start is your local library. Talk to the research librarian!
Remember that the government collects a lot of information about you and
others. Use your imagination to find the information you need. The U.S.
Industry Outlook, for example, provides an economic and market overview of
hundreds of industries. Other sources for industry information are in the
sidebar below.

Obtain Industry information from:
Dun & Bradstreet: 800-552-3867
Moodys Manual of Investments
Standard & Poor's 800-437-3528
Value Line 800-654-0508
Figures can be obtained for average sales in many industries (except for
entirely new products). Robert Morris & Associates publishes an annual
survey of major industries, organized by Standard Industry Classification (SIC)
number. Using this book, you can look up the average sales of companies in
each SIC category.
For example, if you plan to open a convenience store, you can find the annual
sales, net margin, and lots of other financial information about retail
convenience stores. These can be a very useful starting place for your sales
estimates. Use them with some caution, however, as your sales will probably
fall below those of more established businesses.
There is a national or regional association for almost every industry under the
sun. Your public library may have a Directory of Associations in which you
can look up the appropriate industry group. These groups are often a wealth
of information, some of it free. Call them and explain you are considering
going into this field, and ask for any information they may have available. If
possible, get their membership list. The members of the association are doing
exactly what you want to do, and many of them will be glad to talk to you (with
the exception of the ones who will be your local direct competitors). If the
association requires that you join in order to get their information, do so. It
could be the best money you ever spent.


HELP WITH MARKET RESEARCH
Note that a local business school or small business development center can
help guide you in conducting your own market research. College students may
be a good source of labor for conducting telephone or other type of interviews.


Target Markets
What are the target markets for this product or service?
What demographic characteristics do these potential customers have in
common?
How many customers are there in your target market?
How many units of your product or services is each customer likely to
buy monthly?

Target Markets
Identifying a target market allows you to focus your efforts on marketing to a
distinct class of customers. This is also called market segmentation. It is the
act of dividing a large potential market into smaller groups, which are more
easily approached.
One of the advantages you gain from targeting a particular niche is the ability
to respond quickly when customer tastes and needs change. In order to
serve your customers, you have to know who they are, where they live, what
their behavioral characteristics are.
Describe your target market in terms of:
Geographic Characteristics. Do your customers live primarily in a
certain area or region?
Demographic Characteristics. (Age, sex, family status, education,
income, class, occupation, education; and, if relevant, religion and
race.)
Psychographic Characteristics. (Life style, personality types; attitudes;
interests, and buying motives.)
For example, a manufacturer of educational computer games might identify its
target market as primarily at-home users, with a secondary market segment of
schools. Then the manufacturer would describe each target market in terms
of its typical demographics (household income, education, family status, and
using habits). Their description might read something like this: The typical
buyer in our target market is married, living in a two-income household with an
average of two children, has a college education, is employed as a
professional, and has at least one personal computer at home. They buy our
computer games to provide educational, yet fun experiences for their children.
If you find that you have more than one target market, you should discuss the
relative importance of these target market segments. Do the in-home users
generate a higher margin than the small businesses? Is the market among
small businesses growing faster than that of home users? Will this relative
importance change over the next few years?



Customers are natural allies, worthy of products that are safe, wholesome and
priced fairly.
Bill Patrie
North Dakota Assn. of
Rural Electric Co-ops

Projected Supply
What is the projected supply in your area of the products or services needed
for your proposed business?
This question should be a little easier to answer than the demand
questions. Your projected supply is the amount you can obtain of the goods
or the amount of the service(s) you can provide, within a given time
period. Limitations on this will include your manufacturing capacity, suppliers
ability to provide raw materials to you, and your personnel (how many
services can your staff realistically provide in one month?).
Many cooperatives obtain supply information directly from the co-ops
potential membership through a survey (surveys are also useful for collecting
information about the co-ops potential customers). Please see Appendix E for
information about how to conduct a survey.


What About the Competition
What competition exists in this market?
Can you establish a market niche which will enable you to compete
effectively with others providing this product or service?
How much is your competition charging for similar product?

Competition Analysis
Identify your 3-4 leading competitors and specifically explain why your
company will be able to compete effectively with them. Be as realistic and as
specific as possible; stay away from generalizations about your
competition. Try to find out what market share each one has of the
market. Also write up an assessment of their strengths and weaknesses; and
how your product or service stacks up against each.
How crowded is the market? If your market is already crowded with
competitors, what market share would be available to a new company? If the
overall market is growing, then you may be able to capture part of the new
market.


Competitors are not enemies, they do not need to be defeated. Alliances are
possible with competitors.
Bill Patrie
North Dakota Assn. of
Rural Electric Co-ops

Conclusion
Feasibility studies require a lot of hard work, and the market analysis research
is the most difficult part of the process. We hope the questions weve
identified above and the guidelines for answering them are helpful.
Excerpts from actual feasibility studies are provided in Appendix F.
If the study indicates that your business idea is feasible, the next step is a
business plan. The business plan continues the analysis youve begun at a
deeper and more complex level, building on the foundation created by the
feasibility study.
The following chapter provides an outline of a complete business plan.


REFERENCES
Gumpert, David E. How to Really Create a Successful Business
Plan. Boston: Inc. Magazine Publishing, 1994.

McLaughlin, Harold J., Building Your Business Plan. New York: John Wiley
& Sons, 1985.
Osgood, William R. Basics of Successful Business Planning. American
Management Association, 1980.
Pope, Jeffrey L. Practical Marketing Research. American Management
Association. 1993.
Siegel, Eric S., et al., The Ernst & Young Business Plan Guide." New York:
John Wiley & Sons, 1987.
http://www.uwcc.wisc.edu/manual/chap_5.html