(1) A feasibility study explores the practicality of a business idea by examining internal resources and capabilities as well as external market factors that could support or hinder the idea. (2) Key elements of a feasibility study include an external environmental analysis of the market and target customers, and an internal analysis of a company's resources and finances. (3) Conducting a feasibility study offers benefits like helping to select the most viable business idea, providing data to inform decision making and marketing strategies, and creating a solid foundation for a business plan to attract investors.

1. The Importance of a Feasibility Study
Feasibility study is an analysis which is undertaken to test the practicality of an idea before it is
implemented. Feasibility studies can be used in all walks of life, but they are more widely
employed in the business world. The predominant focus of a feasibility study is to explore both
the external and the internal environments of a business to identify factors which could assist
or impede a business idea. An examination of most successful businesses will reveal that they
had undertaken a comprehensive Feasibility Study before embarking on their venture.
The Key Elements of a Feasibility Study
The main constituents of a Feasibility Study are External Environmental Analysis and Internal
Company Analysis.
External Environmental Analysis – This investigates the critical factors in a company’s
immediate environment such as the current size of the market, the significant market trends,
potential for future growth, the major players within the market, the level of competitive rivalry
and the target customer segments to name a few.
Internal Company Analysis – This examines the company to determine if it has the adequate
resources, capabilities and the finances to implement an idea. The first part of this analysis is
usually centered around determining if the company possesses the required human resources,
skills, technology and logistical network .etc. to put in operation the proposed idea. The second
part of the internal company analysis is focused on determining if the idea is financially viable
for the company to embark on. The key aspects usually taken into consideration during this
analysis are startup costs, operating costs, revenue projections, sources of financing and
profitability to name a few.
The importance of a Feasibility Study
A Feasibility study offers numerous benefits for budding as well existing businesses. Some of
the more significant benefits are as follows:-
 When there are several alternative ideas available for a company to pursue, a feasibility
study will help a company in narrowing down to the most practically implementable idea
 Helps businesses in ascertaining the most conducive factors which could make an idea
work, as well as in identifying factors which could adversely affect the idea at each stage of
implementation
 Provides comprehensive and quality data about both the internal and external
environments which will help the management in corporate decision making as well as in
framing marketing strategies
 Feasibility study is the first step in a business venture and it serves as a concrete foundation
for developing a Business Plan later on

2.  A diligently undertaken Feasibility Study will create a good first impression and is an
effective tool to attract and convince investors about the viability of a proposed business
idea.
Conclusion
Feasibility Study is the first and the most important step in a business assessment process. A
well rounded feasibility study will uncover the pros and cons in a proposed business idea and
will help the management in making sound strategic decisions. If undertaken effectively, a
feasibility study could be the most crucial investment made by a budding entrepreneur or a
fledgling business.