Chapter 3: Feasibility Analysis Flashcards
CH03 What are three ultilized method for doing determine Product/Service Demand?
- Talking Face-to-Face with Potential Customers
- Utilizing Online Tools, such as GOOGLE ADWORDS and LANDING PAGES, to assess demand
A LANDING PAGE is a single Web page that typically provides direct sales copy, like “click here to buy a Hawaiian vacation.” - Library, Internet, and GUMSHOE RESEARCH
A gumshoe is a detective or an investigator that scrounges around for information or clues wherever they can be found.
If your idea is to sell educational toys, spend a week volunteering at a day care center and watch how children interact with toys. Take the owner of a toy store to lunch and discuss your ideas. Spend some time browsing through toy stores and observe the types of toys that get the most attention.
CH03 What are the attributes/characteristics of an attractive industry for a new venture?
The TOP THREE factors are particularly important
■ Are young rather than old
■ Are early rather than late in their life cycle
■ Are fragmented rather than concentrated
■ Are growing rather than shrinking
■ Are selling products or services that customers “must have” rather than “want to have”
■ Are not crowded
■ Have high rather than low operating margins
■ Are not highly dependent on the historically low price of a key raw material, like gasoline
orflour, to remain profitable
CH03 Describe the purpose of feasibility analysis.
When should a feasibility analysis be conducted relative to opportunity recognition and the development of a business plan?
- Feasibility analysis is the process of determining if a business idea is viable. As a preliminary evaluation of a business idea, a feasibility analysis is completed to determine if an idea is worth pursuing and to screen ideas before spending resources on them
- Feasibility analysis follows the opportunity recognition stage but comes BEFORE the development of a business plan.
CH03 What is “feasibility analysis”?
- The process of determining if a business idea is viable before spending resources on it.
- 4 keys areas: product/service feasibility, industry/target market feasibility, organizational feasibility, and financial feasibility.
- It requires both “primary research” and “secondary research” to complete feasibility analysis
CH03 What is “primary research”?
- It is one kind of reasearch needed for completing feasibility analysis
- Research that is collected by the person/persons completing the analysis
- It includes TALKING TO CUSTOMERS, GETTING FEEDBACKS FROM EXPERTS, CONDUCTING FOCUS GROUPS, ADMINISTERING SURVEYS
CH03 What is “secondary research”?
- It is one kind of reasearch needed for completing feasibility analysis
- It examine data that is already collected
- The data includes: industry studies, analyst forecasts, other information from library or Internet
CH03 What is “Product/Service Feasibility”?
- One of the key areas of feasibility analysis
- It is an assessment of the overall appeal of the product/service being proposed.
- to discover whether customers WANT the product or service you’re offering
- It has two components: product/service desirability and product/service demand
CH03 What is “Product/Service Desirability”?
- It is one of the components of Product/Service Feasibility Analysis
- It use to to affirm that the proposed product/service is desirable and serves a need in the marketplace.
- The best way to realize the feasibility of a product/dervice is to get out and talk to potential users
CH03 What is “concept test”?
- A tool to ask for feedback and advice from potential customers to determine product/service desirability
- It involves showing a PRELIMINARY DESCRIPTION (CONCEPT STATEMENT) of a product/service idea to industry experts and potential customers for feedback
- “Concept statement” is a one-page document including: a description of the product/service, target market, benefit of product/service, description of the special features of product/service relative to competitors, and management team.
- It should be shown to at least 20 people who are familiar with the industry
CH03 What is “Product/Service Demand”?
- It is one of the components of Product/Service Feasibility Analysis
- It is used to determine if there is demand for the product or service
- It has 3 methods: talking face to face to potential customers, using online tools (AdWords, landing pages), and library, Internet and gumshoe research
CH03 What is “landing page”?
- A tool using to determine product/service demand
- It is a single web page that provide direct sales copy appearing when customers click on a link through AdWord
CH03 What is “gumshoe research”?
- A tool using to determine product/service demand
- It is a detective or an investigator that scrounges around for information or clues wherever they can be found.
- It is important and should not be stopped even after the firms have lauched their product.
CH03 What is “industry/target market Feasibility”?
- One of the key areas of feasibility analysis
- It is an assessment of the OVERALL APPEAL of the industry and the target market for proposed product/service.
- It has two components: Industry attractiveness and target market attractiveness.
- It is a limited group of individuals or businesses with similar interests that a firm tries to appeal
- It should be large enough to earn profit, but small enough to avoid larger competitors.
- It is important to determine target market because most start-ups dont have enough resources to serve the broad market.
CH03 What is “Organizational Feasibility”?
- One of the key areas of feasibility analysis
- It is used to determine whether the proposed business has sufficient management expertise, organizational competence, and resources to successfully launch.
- It consists of 2 primary issues: management prowess and resource suffieciency
