Conducting a Feasibility Analysis and Designing a Business Model

Assignment 5:  Chapter 4 Questions

Respond to the following Questions.  Students should complete this assignment after reading and reviewing the material for each chapter, attending class and taking lecture notes.  This assignment is designed to help students review material and prepare for exams.  Save a copy of your chapter questions for your review sheet to study for exams.  Students are expected to provide at least one paragraph (3-5 sentences) for each question.  Each question assignment submission is worth 20 points. 

1.        Describe the components of a feasibility analysis.

Feasibility analysis divided into four components. There are product or service feasibility, industry and market feasibility, financial feasibility and entrepreneur or team feasibility. Product or service feasibility is to measure whether our idea meets our client need. This process supposed us to do research about market desirability and market demand toward our product or service. Financial feasibility is to identify how much money that we need to start up the business. Industry and market feasibility is to measure a target market from product or service that we proposed in advance. Entrepreneur or team feasibility is to identify whether this idea has good management to run it. Good management considering the team and resource availability. These components focus to determine how attractive an industry is overall as a “home” for a new business and to evaluate possible niches a small business can occupy profitably.

2.        List the six foundational forces that shape the macro environment of a business venture.  Describe the six forces.

·         Sociocultural. This change can lead to dramatic changes that can create whole new industries and fundamentally transform existing industries. Influence created whether in wide or narrow scale. This environment based on behavior, point of view and tradition on certain group.

·         Technological. Technological breakthroughs lead to the development of new products and entirely new industries. Manager should be able to see technology’s development and its impact on business.

·         Economic. The business always meets the cost. The cost can be change rapidly. This change cause by inflation and deflation also monetary and physical policy. Manager should be able to estimate economy factors to anticipate the price change.

·         Demographic. Changing demographics create opportunities for entrepreneur. Demographic development can create opportunities or threats. Demographic relates with number of demand.

·         Global. Global trends create opportunities for even the smallest companies. It opens market into wider scope.

·         Political and legal. Market decision influenced by politic and legal in that country. These organization decide entrepreneur’s step on his business because their rules give impact to certain product.

3.        List and describe the various methods used to conduct marketing research.  

There are two methods that used to conduct marketing research. The primary research involves collecting data firsthand and analyzing it. The primary research tools include customer surveys, focus group, building prototypes, conducting in-home trials and “windshield” research (driving around and observing the competition). Secondary research involves gathering data that has already been compiled and is available, often at a reasonable cost or sometimes even free. Secondary research gathers existing data from trade associations and business directories, industry databases, demographic data, census data, forecast compiled by government agencies, market research reports, article in magazines and journal, local data and Internet. These both type of researches, gathering quantitative and qualitative information is important to drawing accurate conclusion about product’s or service’s market potential.

4.        Why is it essential to develop a sound business model before writing a business plan?

Develop business model helps entrepreneur better understand all that will be required to launch and build the business. The entrepreneur will test the concept and use what he or she learned from real customer to refine the business model before committing resources to grow the business to its full potential.

5.        Describe the nine elements of a business model.

·         Customer segments. To identify a segment of customers who are willing to spend real money to buy its products or services

·         Value proposition. It is the collection of products or services the business will offer to meet the needs of the customers. It is focus on one or two benefits that will make the new business stand out to customers and motivate them to purchase from the business.

·         Customer relationship. To identify how do customers interact with the business so it is effective and appropriate for its particular target market.

·         Channels. To define the most effective way to get products to the customers for this type of business. It refers to both communication channels and distribution channels.

·         Key activities. To build a basic checklist of what needs to be done to open the business and what activities are necessary to ensure its long-term success.

·          Key resources. To identify all key resources necessary to support a successful launch and to sustain the business as it grows.

·         Key partners. To build a network of relationship with key suppliers, key outsourcing partners, investor, industry partners and all other external business or entities that are critical to make the business work when launching and growing their business.

·         Revenue streams. It serves as the framework for the more detailed revenue forecasts developed for the business plan.

·         Cost structure. It becomes the framework for developing more detailed costs that the entrepreneur will incorporate into the financial plan in more detail.