UNIT -2
ANUPAM KRISHNA BE, MBA PGDM PhD. (MNIT)
ANUPAM KRISHNA
ANUPAM KRISHNA
Why do a Feasibility Study? Provide a thorough examination of all issues and assessment of
probability of business success Give focus to the project and outline alternatives Narrow business alternatives Surface new opportunities through the investigative process Identify reasons NOT to proceed Enhance the probability of success by addressing and mitigating factors early on that could affect the project Provide quality information for decision making Help to increase investment in the company Provide documentation that the business venture was thoroughly investigated Help in securing funding from lending institutions and other monetary sources
Project formulation
Technical dimension Economical dimension Financial dimension Social dimension Marketing dimension
ANUPAM KRISHNA
ANUPAM KRISHNA
ANUPAM KRISHNA
Market analysis
Pattern of consumption growth Supply position Composition of the market Nature of competition in the market Income and price elasticity of demand Consumer behavior Availability of substitutes Distribution channel Marketing policies
Reports from ministry Techno economic surveys Stock exchange directories RBI bulletin Publication from ads agencies
ANUPAM KRISHNA
Market survey
Total market demand and rate of growth Demand in different segments Income and price elasticity Motives of purchase Satisfaction level and existing products Distribution practices Socio- economic nature
ANUPAM KRISHNA
ANUPAM KRISHNA
Technical analysis
Plant capacity Production technology Machinery and equipment Plant location and sites Material inputs and utilities Product mix Plant structure and civil works Project charts
ANUPAM KRISHNA
Project charts
Functional layout Material flow Production line Transport Utility consumption Communication Organizational layouts Plant layout
ANUPAM KRISHNA
Financial analysis
Profitability measurement A Estimates of sales and production B Estimates of production costs C Estimates of operational results Financial analysis Projected balance sheets
ANUPAM KRISHNA
Projected fund flow statement Projected cash flow statement Financial appraisal Economic analysis
Existence of growing market with demand and supply gap Stability Back up and reliable support Overall appraisal of competitors
ANUPAM KRISHNA
Comparing similar projects Incentives offered by govt. Sales tax. Octroi, entry tax Land offered Subsidy on power Financial assistance term loan, underwriting, working capital Water rates Housing scheme Supply of raw material Labour development
ANUPAM KRISHNA
ANUPAM KRISHNA
Economic
Identify the benefits and the costs associated with the development of the plan
ANUPAM KRISHNA
ANUPAM KRISHNA
Tangible/Intangible
Tangible benefits or costs are ones that can be measured in dollars Intangible benefits or costs are those that cannot be directly measured in dollars
ANUPAM KRISHNA
Operational Feasibilty
The process of examining the likelihood that the project will achieve its desired goals.
ANUPAM KRISHNA
Technical Feasibility
Examines the companys abiltiy to construct the proposed system Includes assessment of potential hardware and software needs
ANUPAM KRISHNA
Schedule Feasibility
Examines whether a given project can be done in a time frame that meets the needs of the organization
ANUPAM KRISHNA
Labor relations and regulations Safety regulation Copyright or patent laws Antitrust laws
ANUPAM KRISHNA
Political Feasibility
The attitudes and position of stakeholders regarding the project.
ANUPAM KRISHNA
Project sensitivity
Sensitivity analysis is an approach which focuses on how the results of a decision change if the original estimates or the underlying assumptions change.
ANUPAM KRISHNA
Estimated variables
Life of project Investment Cost of capital Sales volume Selling price
ANUPAM KRISHNA
decisions
Under certainty Under uncertainty Under conflict Under risk
ANUPAM KRISHNA
ANUPAM KRISHNA
ANUPAM KRISHNA
Social costs
Goods and material acquired Labour and services used Fixed assets purchased Environmental damage Depletion of animal resources Depletion of energy resources Soil erosion and deforestation Disruption of family life Reduction in life expectancy Wastage of natural resources Economic disparity Urbanisation
ANUPAM KRISHNA
Social benefits
Products and service provided Provides employment Upliftment of weaker sections Better social life Earning foreign exchange Rise in living standards Equality Decrease in poverty End of class system Community/ social welfare
ANUPAM KRISHNA