Feasibility Analysis Paper #3 Entrepreneurship & Innovation

Feasibility Operational Feasibility Technical Feasibility Schedule Feasibility Economic Feasibility the measure of how beneficial or practical it will be to develop a particular business.

Feasibility Analysis Objective: to discover and document opportunities and risks for a nascent enterprise. Rationale: An entrepreneur writes a formal feasibility plan to determine if his or her idea for a new product or service has the potential to become a successful venture.

Operational Feasibility the measure of how well the solution of problems will work in the organization or the marketplace. (Is the problem worth solving?)

Technical Feasibility a measure of the practicality of a specific technical solution and the availability of technical resources and expertise.

Schedule Feasibility a measure of the reasonableness and achievability of the projected timetable for development and implementation of the innovation.

Economic Feasibility a measure of the cost effectiveness of a project or solution. Takes into account costs and benefits - often called Cost- Benefit Analysis. Costs divided into development costs (one-time costs to set up a system) and operating costs (ongoing costs after system has been placed in operation). Operating costs are either fixed (same or nearly the same every month, quarter, year, etc.) and variable (vary in proportion to some usage factor - i.e. production costs, hourly workers wages, supplies, etc.). Benefits can be divided into tangible benefits (those that are easily quantified - change in savings for the firm after the system is implemented) and intangible benefits) (those which are almost impossible to quantify - customer goodwill, employee morale, better service, etc.).

Economic Factors Inflation Employment Disposable income Business cycles Energy availability and cost Others?

Step One: Which Industry The industry in which you’re interested. What experience and skill sets you have with this industry. Why you chose it – what excites you about it? How do different industry factors give rise to new business opportunities?

Henderson-Clark Model of Innovation

Types of Innovation Product Innovation – new products or improvements on products. The new Mini or the updated VX Beetle, new models of mobile phones and so on. Process Innovation – where some part of the process is improved to bring benefit. Just in Time is a good example. Positioning Innovation – Lucozade used to be a medicinal drink but the was repositioned as a sports Paradigm Innovation – where major shifts in thinking cause change. During the time of the expensive mainframe, Bill Gates and others aimed to provide a home computer for everyone.

Which Product ? Stoppers and corks for wine Flooring Buoys to float fishing nets

Example flexible material that automatically repairs damage and also pinpoints where it has been wounded

Step 2: Capture the Business Idea Different ways you can find business ideas Prior knowledge affects one’s individual ability to recognize & enhance your “prior knowledge” “Networking” in the entrepreneurial process?

Four Leaf Clover Model: The Business Idea OCCURENCES MISSING LINKS INNOVATIONS INCONGRUITIES Sudden Changes Latent Impractical Features

Step 3: Research the market and customers Methods Business as a Value Delivery System Product/service analysis Features and benefits Value proposition

Step 4: Gather Competitive Intelligence Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Current category rivalry Pressure from substitutes Category capacity

Describe the Competition Diet lemon limes Baseball cards Fruit flavored colas Coffee Diet Coke Diet Pepsi Diet-Rite cola Bottled water Lemon limes Regular colas Beers Juices Wine Fast food Tea Video rentals Ice cream Product form competition: Diet colas Product category competition: Soft drinks Generic competition: Beverages Budget competition: Food and entertainment

Step 5: Estimate Price & Profitability General estimates of revenue and costs. How will you price your product or service? What are your start-up costs? How much capital do you need to begin?

Step 6: Future Action Plan Define your personal role Will you go it alone or have a partner, form potential alliances or partnerships with other organizations or corporations Give a general estimate of needed start-up capital. Complete the plan with your thoughts about potential success.