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 justfeasible for that manner.
Knowing the feasibility and viability of a business venturewill help its
sustainability and the success of the projector business.
FEASIBILITY
“Feasibility” is a study that aims at uncovering the strength and weakness of an
existing business or a proposed business venture. Ittakes into consideration the
opportunities offered by the environment, its resources, and the subsequent
success of the venture.
Itshould include the description of the productor service, its historical
background, operationaldetails, 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 theproject
 Administrativefeasibility of the project
 The economic and financial viability of the projectproposal
 Other important policies and cross cutting issue

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PROJECT
FEASIBILITY
MARKETING FEASIBILITY
Demandpatternforthe productand
marketshare of proposedproduct
TECHNICAL FEASIBILITY
Productiontechnologyprocess
selection
Capacityof plant,locationlayout
selectionof plantandmachinery
FINANCIAL FEASIBILITY
Cost of projectand meansof finance
Profitability cashflowsandrickanalysis
ECONOMICAL FEASIBILITY
Cost benefitratio
Social cost benefitsanalysis

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MARKETING FEASIBILITY
Marketing appraisalis 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
 Pastand 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
 Governmentpolicy and restriction
 Supplementary and complementary goods
The information required for demand marketanalysis is partly through market
survey and partly from secondary sources.
TECHNICAL FEASIBILITY
Technical analysis of projectis done continually when the projectis formulated.
Technical appraisalseeks to determine whether the pre- requisite for the
successfulcommissioning of projecthavebeen considered and reasonably good
choice have been made with respectto location, size and process etc.
Italso helps to locate sourceof supplier of raw material and fixing up the final
cost of project.

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The major aspect of technical appraisalshould include
a) Choice of technology which is influenced by various factors such as- plant
capacity, principle inputs productmix, ease of absorption.
b) Means of acquiring technology – this is the option available are-this the
option available are-technology licensing, purchaseof technology, joint
venture or collaboration arrangement.
c) Productmix design
d) Plant capacity decision the factors like demand, technological
requirements, inputs constraints, governmentpolicy and resources of firm
e) Decision regarding structureand civil works.
Considerations of alternatives – the technical analysis area pre- requisite
establishing feasibility
FINANCIAL FEASIBILITY
Financial appraisalanalyses whether proposed projectwill be financially viable in
the sensethat is able to meet the burden of servicing the debts and whether the
projectwill satisfy the return expectation of those who have invested capital.
The various aspects of financial appraisalare:-
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 costbenefits analysis.
Itis the mostfrequently used method for evaluating the effectiveness of a new
system.
In economic analysis the procedureto determine the benefits and savings that
are expected froma candidate systemand compare them with cost.
An entrepreneur must accurately weigh the costverses benefits beforetaking an
action.
Possiblequestion raised in economical feasibility analysis are:-
A. Is the systemcosteffective?
B. Do benefits outweigh costs?
C. Estimated cost of hardware
D. Estimated cost of software/hardwaredevelopment
E. Cost of employee time for study
F. Selection among alternatives financing
arrangements(rent/lease/purchase)
The concerned business mustbe able to see the value of investment it is
pondering before committing to an entire a systemstudy.
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 surviveand
grow in the marketplace.
“Viability” is the study or an investigation of existing business or proposed
venture’s sustainability. Itdetermines whether the proposalshould 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 profitmeans a better chance at success for the business.
Viability into futureis 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, butto choosethe
one that best fits with the business venturegoals 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, inclusiveof raw material, labored
professionalexpertise.
 Supply chain implication
 Manufacturing process
 Ability to apply input.