Chapter 06 Conducting A Feasibility Evaluation And Crafting A Winning Business Plan Research Newspaper

Chapter 6: Executing a Feasibility Analysis and Crafting complete Business Plan

Chapter 06

[***You must read the book for this chapter for further� details,  in addition to the following slides for quiz and exam� preparations***]

Conducting a Feasibility Analysis�

and Crafting a Winning�

Business Plan

Feasibility Analysis

• Entrepreneurs do not lack creative�

ideas,  but…

• Is a particular idea a viable�

Is a particular idea a viable

foundation for creating a successful�

business? �

• Feasibility study addresses the�

problem:  " Should we proceed with�

this business idea? ”

Feasibility Study

• Not the same as a business plan�

• Serves as a filter,  screening out ideas�

th t d k th

that lack the potential for building a�

capital t ti d f m ildi

successful business before an�

entrepreneur commits the necessary�

resources to building a business plan �

• An investigative tool

one particular

Chapter 6th: Conducting a Feasibility Examination and Making a Winning Strategy

Elements of a Feasibility Analysis

Industry and

Industry Feasibility

Services or products

Feasibility

Economic

Feasibility

Elements of a Feasibility Analysis

Industry and

Market Feasibility

Product or Service

Feasibility

Financial

Feasibility

Industry and Market Feasibility�

Analysis

Two areas of focus:

1 ) Determining how attractive an�

i actually d t i

industry is overall as a " home” for a�

lmost all

" h

”f

new business

2 . Identifying possible niches a small�

business can occupy profitably �

2

Chapter 6th: Conducting a Feasibility Evaluation and Creating a Winning Strategy

Porter's Five Forces

Version

• Five forces interact with one another to�

determine the setting in which companies�

compete and,  hence,  the attractiveness of�

the industry:

1 .

2 .

a few.

4.

a few.

Rivalry among companies in the industry

Bargaining power of suppliers

Bargaining power of buyers

Threat of new entrants

Threat of substitute products or services

Five Forces Model

Potential

Entrants

Threat of

New Entrants

Suppliers

Negotiating Power

of Suppliers

Industry

Competitors

Bargaining

g

g Power

of Buyers

Customers

Rivalry

among

existing companies

Threat of

Substitute

Goods or

Solutions

Substitutes

Five Forces Model

Potential

Traders

Threat of

New Entrants

Suppliers

Bargaining Power

of Suppliers

Industry

Competitors

Negotiating

g

g Power

of Buyers

Purchasers

Rivalry

among

existing organizations

Threat of

Substitute

Goods or

Solutions

Substitutes

several

Chapter 6: Conducting a Feasibility Analysis and Composing a Winning Business Plan

Rivalry Among Companies

• Strongest of the five forces

• Industry is more attractive when:

– Number of competitors is large,  or,  at the�

additional extreme quite small

other extreme,  quite small

– Competitors are not similar in size or capacity

– Industry is growing fast

– Opportunity to sell a differentiated product or�

service exists

Five Forces Model

Potential

Entrants

Menace of

New Entrants

Suppliers

Bargaining Electricity

of Suppliers

Industry

Competitors

Bargaining

g

g Power

of Potential buyers

Buyers

Competition

among

existing firms

Threat of

Replace

Products or perhaps

Services

Alternatives

6-11

Bargaining Power of Suppliers

• The greater the leverage of suppliers,  the�

less attractive the industry

• Industry is more attractive when:

Many suppliers sell a commodity product

Substitutes are available

Switching costs are low

Items account for a small portion of the�

cost of finished products

some

Chapter 6th: Conducting a Feasibility Research and Creating a Winning Strategy

Five Forces Model

Potential

Entrants

Danger of

Fresh Entrants

Suppliers

Bargaining Electrical power

of Suppliers

Industry

Competition

Bargaining

g

g Power

of Purchasers

Buyers

Rivalry

among

existing firms

Danger of

Substitute

Products or perhaps

Services

Substitutes

Bargaining Power of Buyers

•...



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