Feasibility and viability

feasibility and viability

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COCHIN UNIVERSITY COLLEGE OF ENGINEERING
KUTTANAD




INDUSTRIAL MANAGEMENT

FEASIBILITY AND VIABILITY


SUBMITTED TO P A JOB




SUBMITTED BY
ANJAN KUMAR
ROLL NO. 60

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If you are starting a business, planning an investment on a project, it is necessary
that you determine it is viable or even just feasible for that manner.
Knowing the feasibility and viability of a business venture will help its
sustainability and the success of the project or business.
FEASIBILITY
“Feasibility” is a study that aims at uncovering the strength and weakness of an
existing business or a proposed business venture. It takes into consideration the
opportunities offered by the environment, its resources, and the subsequent
success of the venture.
It should include the description of the product or service, its historical
background, operational details, financial data and accounting statement, legal
and tax requirement and its policies on management and marketing research.
FEASIBILITY STUDY
Aim of a feasibility study
 Development objective
 Policy framework and detailed project objectives
 Technical soundness of the project
 Administrative feasibility of the project
 The economic and financial viability of the project proposal
 Other important policies and cross cutting issue

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PROJECT
FEASIBILITY
MARKETING FEASIBILITY

Demand pattern for the product and
market share of proposed product
TECHNICAL FEASIBILITY

Production technology process
selection
Capacity of plant, location layout
selection of plant and machinery
FINANCIAL FEASIBILITY

Cost of project and means of finance
Profitability cash flows and rick analysis
ECONOMICAL FEASIBILITY

Cost benefit ratio
Social cost benefits analysis

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MARKETING FEASIBILITY
Marketing appraisal is concerned with determination of the aggregate demand
for the proposed product/service.
To carry out the market appraisal, the analyst requires variety of information.
 Who is the customer for the product?
 Where he is located?
 How can I reach them?
 What is expected sale for next 5 or 10 years?
The information requirements are
 Past and present consumption and demand pattern and likely projected
trend
 Demand supply gap
 Production capacity and price structure
 Method of distribution
 Consumer behavior, motivations, tastes and preferences
 Competitors
 Government policy and restriction
 Supplementary and complementary goods
The information required for demand market analysis is partly through market
survey and partly from secondary sources.
TECHNICAL FEASIBILITY
Technical analysis of project is done continually when the project is formulated.
Technical appraisal seeks to determine whether the pre- requisite for the
successful commissioning of project have been considered and reasonably good
choice have been made with respect to location, size and process etc.
It also helps to locate source of supplier of raw material and fixing up the final
cost of project.

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The major aspect of technical appraisal should include
a) Choice of technology which is influenced by various factors such as- plant
capacity, principle inputs product mix, ease of absorption.
b) Means of acquiring technology – this is the option available are-this the
option available are-technology licensing, purchase of technology, joint
venture or collaboration arrangement.
c) Product mix design
d) Plant capacity decision the factors like demand, technological
requirements, inputs constraints, government policy and resources of firm
e) Decision regarding structure and civil works.
Considerations of alternatives – the technical analysis are a pre- requisite
establishing feasibility
FINANCIAL FEASIBILITY

Financial appraisal analyses whether proposed project will be financially viable in
the sense that is able to meet the burden of servicing the debts and whether the
project will satisfy the return expectation of those who have invested capital.
The various aspects of financial appraisal are:-
1. Cost of project
2. Means of finance
3. Profitability and break-even point
4. Financial statement
5. Criteria for evaluation of projects
6. Risk analysis

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ECONOMICAL FEASIBILITY
Economical feasibility is considered to be social cost benefits analysis.
It is the most frequently used method for evaluating the effectiveness of a new
system.
In economic analysis the procedure to determine the benefits and savings that
are expected from a candidate system and compare them with cost.
An entrepreneur must accurately weigh the cost verses benefits before taking an
action.
Possible question raised in economical feasibility analysis are:-
A. Is the system cost effective?
B. Do benefits outweigh costs?
C. Estimated cost of hardware
D. Estimated cost of software/hardware development
E. Cost of employee time for study
F. Selection among alternatives financing
arrangements(rent/lease/purchase)

The concerned business must be able to see the value of investment it is
pondering before committing to an entire a system study.
Economic analysis is used for evaluating the effectiveness of the proposed
system.
The economical feasibility will review the expected cost to see if they are in-line
with the projected budget or if the project has an acceptable return on
investment.

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VIABILITY
Viability means: - ability to survive
“Viability” is the practical potential of a start up business idea to survive and
grow in the marketplace.
“Viability” is the study or an investigation of existing business or proposed
venture’s sustainability. It determines whether the proposal should be approved
or not. It involves dealing with strategies on how to make the business grow and
last. Business growth is an aspect of viability. How long a business will last is a
determined by its viability, and it can be seen in the profits that the business has
made for a certain period.
Good profit means a better chance at success for the business.
Viability into future is known as “sustainability”.
Business viability decision making is the study of identifying and choosing
alternatives business models based on the values and preferences of the decision
maker. Making a business decision implies that there are alternatives commercial
factors to be identify as many of these alternatives as possible, but to choose the
one that best fits with the business venture goals and entrepreneurial objective.

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MARKET VIABILITY

 Market environment
Example- size, sustainability, potential marked, target market, potential
value.
 Competitors
 Similar products
 Pricing
 Packaging
 Distribution to market
 Promotion / advertising



TECHNICAL VIABILITY

 Capacity
 Availability and quality of resources, inclusive of raw material, labored
professional expertise.
 Supply chain implication
 Manufacturing process
 Ability to apply input.