1. FEASIBILITY STUDY Aspects of Operating a Business

2. Types of Deals Contract Agreement Contracts include three parts:
Serious and definite offer
A consideration, something for which a person is bargaining.
A serious acceptance of the offer.
Agreement
A non-legally binding deal, often with few set details, and often is not considered official.

3. Legal feasibility
copyrights, anti-trust laws (systems that share data across organizations), financial reporting requirements, contractual obligations, software ownership, outsourcing arrangements, etc.

4. Business Permits and Licenses
Special permission from the government is needed for some businesses. Often, you need special training and have to take a test. See your lawyer to find out if you must:
Just register with the local or state government. “Hello…I’m in the home repair business.”
Gain a permit from the local government. “Hello, I’d like to go door-to-door, and need a permit.”
Prove you have special skills to get a license.

5. Market Feasibility Industry Description
Describe the size and scope of the market
Estimate the future direction of the market
Describe the nature of the market
Identify the life-cycle of the market

6. Market Feasibility “Industry” Competitiveness
Investigate industry concentration
Analyze major competitors
Explore barriers of entry into market
Determine concentration and competitiveness of input suppliers
Identify price competitiveness of service

7. Market potential
Identify the demand and usage trends of the market or market segment
Examine the potential for emerging market opportunities
Assess estimated market usage and potential share of the market

8. Market Feasibility Access to market outlets
Identify the potential “buyers” of the service and the associated marketing costs
Investigate the distribution system and the costs involved

9. Technical Feasibility
Determine facility needs
Estimate the size and type of production facilities
Investigate the need for related building and equipment
Investigate and compare technology providers
Identify limitations or constraints of technology

10. Technical Feasibility
Availability and suitability of site
Access to markets
Access to transportation
Access to a qualified labor pool
Access to production inputs
Explore economic development incentives
Explore community receptiveness to have service located there.

11. Technical risk larger projects are riskier
project team size, project duration, number of organizational units involved, programming effort
structured and easily obtainable requirements less risky
use of standard technology less risky than novel or non standard technology
development team familiarity with hardware, software development environment, OS; application area; systems of similar scope
less risk when user group is familiar with system development process and application area

12. Operational feasibility
likelihood of project attaining desired objectives
how new system will affect organizational structures and processes,
how it fits into current day-to-day operations
Organizational/political feasibility
how key stakeholders in organization view system
system can affect distribution of information, thus power

13. Schedule feasibility
likelihood that timeframes can be met and that this is adequate to meet organization’s needs
resource availability to enable schedule

14. Economic Feasibility: System Costs:
Development Costs
IS Personnel, consultants
hardware, software procurement
data conversion
documentation, user trg
Computer room, etc
Production Costs
operation and maintenance
manpower, software / hardware upgrading,supplies
System Benefits:
Tangible
reduced operating costs, transaction costs errors

15. Cost Benefit Analysis:
Increased transaction throughput
Intangible
improved customer relations
better decision making, etc
Cost Benefit Analysis:
Payback Point: Development Costs
(Years to payback) Benefits per year
Sensitivity Factors
Possible variation in cost/benefit estimates
1.1 Cost can be higher by 10%
Effect of Inflation

16. Time Value of Money Profitability Index
Present Value (PV) = amt * 1 / (1 +c) ^ n
n : # of periods in time
c : Cost of Money ( discount rate )
Profitability Index
Earnings per dollar invested
(Present value of total cash flow) (value of initial investment )
Yearly cash flow = (Projected Annual Benefits) (Projected Annual Production Cost)