Chapter I

IDENTIFICATION AND EXPLORATION OF BUSINESS SCENARIOUS

Introduction

BUSINESS – any lawful economic activity concerned with the production and/or
distribution of goods and services for profit. Business refers to any activity undertaken
by man whereby he/she seeks to make money over and above his costs, and where
there is a risk of loss.

ENTREPRENEURSHIP – refers to the economic activity of a person who starts,

manages, and assumes the risk of a business enterprise.
- An activity that assures the viability and growth of the economy.
- The process of creating something new with value by devoting the
necessary time and effort, assuming the assuming the accompanying
financial, mental, and social risks, and receiving the resulting rewards of
monetary and personal satisfaction and independence.

The one who creates a new business in the face of risk and uncertainty for the
purpose of achieving profit and growth by identifying significant opportunities and
assembling the necessary resources to capitalize on them. Or the person who
undertakes entrepreneurial activities is called an entrepreneur.

A feasibility study—sometimes called a feasibility analysis or feasibility report—

is a way to evaluate whether or not a project plan could be successful . A feasibility
study evaluates the practicality of your project plan in order to judge whether or not
you're able to move forward with the project.
A feasibility study is designed to help decision makers determine whether or not
a proposed project or investment is likely to be successful. It identifies both the known
costs and the expected benefits. In business, “successful” means that the financial
return exceeds the cost.
A Feasibility Study is a DETAILED ANALYSIS that considers all the critical
aspects of a proposed project in order to determine the likelihood of it succeeding.
It is a crucial assessment that determines a project’s viability . Analyzing
technical , economic, legal, social and environmental factors that help decision makers
evaluate it the project is feasible and likely to succeed.
A well executed FEASIBILITY STUDY ensures realistic assessments, increases
project success chances, and enables effective decision making. It provides a solid
foundation for informed choices and guides organizations toward projects with the
highest likelihood of achieving desired outcomes.
A Feasibility Study evaluates the feasibility of an idea or project in economic,
technical, legal, social, and other aspects. Feasibility studies are usually conducted
before starting a project to ensure that it can be carried out efficiently and beneficially
for the business or organization.
A Feasibility Study is an evaluation and analysis of a project or system that
somebody has proposed. We also call it a Feasibility Analysis. The study tries to
determine whether the project is technically and financially feasible, i.e., is it technically
or financially viable? Financially feasible, in this context, means whether the project is
feasible within the estimated cost.

A feasibility study also determines whether a project makes good business

sense, i.e., will it be profitable?

Put simply; the study is an analysis of how easily or successfully we could

complete something. It also tries to determine how profitable or unprofitable it might be.

When large sums of money are at stake/invested/risk, companies and

organizations typically carry out feasibility studies.

Such studies are crucial in mitigating risks and ensuring that resources are
allocated to projects with the highest potential for success and sustainability.

Success in business may be defined primarily by return on investment, meaning

that the project will generate enough profit to justify the investment . However, many
other important factors may be identified on the plus or minus side, such as community
reaction and environmental impact.

Although feasibility studies can help project managers determine the risk and return
of pursuing a plan of action, several steps should be considered before moving forward.

 A company may conduct a feasibility study when it’s considering launching a

new business, adding a new product line , or acquiring a rival.
 A feasibility study assesses the potential for success of the proposed plan or
project by defining its expected costs and projected benefits in detail.
 It’s a good idea to have a contingency plan on hand in case the original project
is found to be infeasible.

A feasibility study is an assessment of the practicality of a proposed plan or

project. A feasibility study analyzes the viability of a project to determine whether the
project or venture is likely to succeed . The study is also designed to identify potential
issues and problems that could arise while pursuing the project.

As part of the feasibility study , project managers must determine whether they have
enough of the right people, financial resources, and technology . The study must also
determine the return on investment, whether this is measured as a financial gain or a
benefit to society, the latter in the case of a nonprofit project.
 The feasibility study might include a cash flow analysis, measuring the level of cash
generated from revenue vs. the project’s operating costs. A risk assessment must also
be completed to determine whether the return is enough to offset the risk of undergoing
the venture.

When doing a feasibility study, it’s always good to have a contingency plan
that is ready to test as a viable alternative if the first plan fails.

FEASIBILITY vs BUSINESS PLAN

The term is similar to a business plan, but the meaning is not the same. When
somebody has an initial business idea, the company carries out a feasibility study.

The study aims to show out the possibilities in that business idea.

The business plan, on the other hand, describes the company, its goals, strategies,
and financial projections (forecasts).

A feasibility analysis tells you whether something will work. A business plan tells you
how it will work.

The word ‘feasibility‘ means the degree or state of being easily, conveniently, or
reasonably done. If something is ‘feasible,’ it means that we can do it, make it, or
achieve it. In other words, it is ‘doable’ and also ‘viable.’

A viable business, for example, is one we expect will make a profit every year for a
long time.

“A feasibility study is an analysis of the viability of an idea.”

“The feasibility study focuses on helping answer the essential question of ‘should we
proceed with the proposed project idea?’ All activities of the study are directed toward
helping answer this question.”

A viability study is similar to a feasibility study. However, the viability study only looks
at how profitable or commercially successful an idea or project might be. It does not
determine whether something is doable.
Feasibility study – example
A hospital, for example, aiming to expand, i.e., add an extension to the building,
may perform a feasibility study. The study will determine whether the project should go
ahead.

The people carrying out the study will take into account labor and material costs.
They will also take into account how disruptive the project might be for staff and
patients.

The study may have to gauge public opinion regarding the new extension. In
other words, would the local community be in favor or against such a project?

It is important to determine how the stakeholders will respond. A stakeholder is a

person with an interest or concern in a project, business, or organization.

Hospital stakeholders are, for example, doctors, nurses, other hospital staff,
patients, hospital visitors, and the hospital’s owner. Members of the local community
may also be stakeholders.

Those conducting the study go through all the pros and cons of the project. They
then weigh them against each other. Finally, they determine whether it is a good idea to
go ahead.
Cost vs. value
In its simplest terms, the two main criteria to determine whether a project is feasible are:

 How much will it cost?

 What value will the project bring upon completion?

A good feasibility study

A good feasibility study should provide:

 A historical background of the project or business.

 Accounting statements.
 Details of all the operations and management.
 A detailed description of what it is.
 Financial data.
 Tax implications and obligations.
 Legal requirements.
 Marketing research data and policies.

It should assess the environmental impact and sustainability of the project, ensuring
it aligns with contemporary ecological and social responsibility standards. The study
should also consider potential technological advancements that could affect the
project’s feasibility and future profitability.

Benefits of a Feasibility Study

There are several benefits to feasibility studies:

1. Helping project managers discern the pros and cons of undertaking a project
before investing a significant amount of time and capital into it.
2. Feasibility studies can also provide a company’s management team with crucial
information that could prevent them from entering into a risky business venture.
3. Such studies help companies determine how they will grow. They will know
more about how they will operate, what the potential obstacles are, who the
competition is, and what the market is.
4. Feasibility studies also help convince investors and bankers that investing in a
particular project or business is a wise choice.
5. Risk reduction
6. Attracting Financial Report
7. Aiding in project planning and management
8. Saves from wasting your resources
9. Evaluates current and needed resources and technology
10. Helps to discover newer or better opportunities
11. Identifies valid reasons to advance or veta a project idea
 The feasibility problem is to find any feasible solutions for an optimization
problem without regard to the objective value. This problem can be considered as a
special case of an optimization problem where the objective value is the same for all the
feasible solutions.

Your top-most feasibility confirms that a site's viable based on your assumptions.
The Static feasibility gives you more data and paints a more accurate picture. However,
the cash flow feasibility gets into the nuts and bolts in terms of whether the project's
going to generate a profit.
Examples:

1. Feedback from colleagues and peers about research design.

2. Checking to see what is the best approach to the research.

3. Going to a potential site to see if the research is possible.

4. Sending your survey instrument to a few experts in the field for their
feedback as to whether or not the questions are appropriate for the topic
and/or cohort of the research.

5. Student researcher designs a questionnaire for their study’s target

population and asks someone from a different population to test the
questionnaire.

Types of Feasibility Study

TELOS is an acronym in Project Management (PM) used to define five areas of
feasibility that determine whether a project should run or not.
1. Technical (T) — Is the project technically possible?

2. Economic (E) — Can the project be afforded? Will it increase profit?

3. Legal (L) — Is the project legal?

4. Operational (O) — How will the current operations support the change?

5. Scheduling (S) — Can the project be done in time?

It can be easily derived from the type name which will be the details of each type. So
let's not go in-depth about it.
The findings of your project feasibility study are compiled in a feasibility
report that usually includes the following elements.
  Executive summary.

 Description of the Product/Service.

 Financial projections.

 Marketing strategy.

 Technology considerations.

 Product/Service marketplace.

 Organization/Staffing.

 Schedule.

How to Conduct a Feasibility Study

The exact format of a feasibility study will depend on the type of organization that
requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices
for conducting any feasibility study:

 Conduct a preliminary analysis, which involves getting feedback about the new
concept from the appropriate stakeholders.
 Analyze and ask questions about the data obtained in the early phase of the
study to make sure that it’s solid.
 Conduct a market survey or market research to identify the market demand and
opportunity for pursuing the project or business.
 Write an organizational, operational, or business plan, including identifying the
amount of labor needed, at what cost, and for how long.
 Prepare a projected income statement, which includes revenue, operating costs,
and profit.
  Prepare an opening day balance sheet.
 Identify obstacles and any potential vulnerabilities, as well as how to deal with
them.
 Make an initial “go” or “no-go” decision about moving ahead with the plan.

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components
that are typically found in a feasibility study include the following:

 Executive summary: Formulate a narrative describing details of the project,

product, service, plan, or business.
 Technological considerations: Ask what will it take. Do you have it? If not, can
you get it? What will it cost?
 Existing marketplace: Examine the local and broader markets for the product,
service, plan, or business.
 Marketing strategy: Describe it in detail.
 Required staffing: What are the human capital needs for this project? Draw up
an organizational chart.
 Schedule and timeline: Include significant interim markers for the project’s
completion date.
 Project financials
 Findings and recommendations: Break down into subsets of technology,
marketing, organization, and financials.

How to write a feasibility study

1. Describe the project.
2. Outline the potential solutions resulting from the project.
3. List the criteria for evaluating these solutions.
4. State which solution is most feasible for the project.
5. Make a conclusion statement.

Feasibility study examples include evaluating new business opportunities to see

how much return the business may generate. A feasibility study analyzes a proposed
project or idea to determine if it is viable, practical, and economically feasible.
A feasibility study is an assessment tool that helps determine if a proposed
product, service or business will be successful. The study considers many factors,
including technical, economic and legal, to evaluate the proposal.
Feasibility studies can identify the logistical, financial, and market challenges of a
proposed project by evaluating: What the estimate would be to fund the project. When
the potential business will offer a return on investment. The market for the proposed
product or service.
SEARCH FOR BUSINESS OPPORTUNITY, IDEATION, INNOVATION, AND
CREATIVITY

There are many business opportunities for an individual with a creative

mind. All business starts with an idea, and it is said that creativity, through
innovativeness and the capacity of bringing something new in the market, spells
the difference between a traditional businessman and an entrepreneur.

A smart entrepreneur may decide to have a small or large business, but it is

important to follow the process of identifying and evaluating the various options in
generating ideas that can be transformed into a profitable business endeavor.

The Search for Business Opportunity

In selecting a business, option should not be based on luck and immature
thinking, but on a thorough evaluation and systematic process. Start by
developing long and short lists of potential business opportunities. Likewise,
the resources, skills, and technology available in the community are to be evaluated
if these are not fully or efficiently utilized.

In discovering business opportunities, the following factors on resources have

to be evaluated:

1. Markets. This refers to the number of prospective buyers, competitors, the

price, and the quality of goods and services that have to be analyzed. Business
opportunities exist in areas where consumer satisfaction is weak or incomplete.

2. Individual Interests. Business interest of individuals should match business

opportunities. For example, if one is a good cook, he could venture in the food
businesses.

3. Capital. This serves as the fuel that keeps the business operating. The
availability of funds should fit the type of business to organize.

4. Skills. The entrepreneur should have the proper skills in the business he is
going to undertake.

5. Suppliers of Inputs. It is important that there are steady suppliers of raw

material and other inputs to the business.

6. Manpower. The success of any business also depends on the efficiency of its
employees.

7. Technology. Entrepreneurs should be aware of the presence of technology to

improve their products or services, or introduce new innovations in the market.

Among the productive resources, people are the most important because they
are the ones who organize and manage the other productive resources such as
money, materials, machine, and manpower.

Other opportunity-seeking processes that can guide a prospective

entrepreneur as to what kind of business to establish are as follows:

1. Look at other successful businesses/entrepreneurs. Looking up at other

entrepreneurs as a role model that could be an inspiration, by doing what they
have done or do it even better.

2. Respond to a problem area. The solution to a problem might be transformed

into a business venture.
 3. Home-Based Business Option. These must not be taken for granted, for there
are some big businesses that started as small business at home.

4. Linkage of Resources. The entrepreneur can produce his own input instead of
buying them.

The best way to evaluate business opportunity is through Market Research, which
is defined as the study of all problems in marketing a product.

The steps in Market Research are: 

Defining the problem
• Making a preliminary Investigation
• Planning the research
• Gathering the data
• Analyzing the data
• Reaching a conclusion
• Implementation and evaluating decision

Through Market Research, the entrepreneur can be guided in identifying

the profitable markets, saleable products, the strengths and weaknesses of
competitors, available resources, business risks, trends in consumer tastes
and preferences, better marketing strategies, proper business location, new
market opportunities, and realistic objectives.

Location of the business is a key factor in business success. In selecting

a location, the population, income, competitor, government policies, peace and
order, and others are being considered. This requires a market survey.

To be able to translate business opportunities into profits, the SWOT

(Strength, Weakness, Opportunity, and Threat) Analysis is applied. These are
tools for evaluating the strengths, weakness, opportunities, and threats
associated with a particular product or service. In knowing this, the
entrepreneur must be able to have an idea or a precautionary measure even
before the start of the business. Excellent knowledge about the life cycle of the
products provides the entrepreneur business opportunities to continuously start
in business. The following are the description of the various stages of a
product life cycle. According to Fajardo, products have their own life
cycle. It is composed of four stages: Introduction, Growth, Maturity, and
Decline.

In the selection process, one has to begin with choosing on a particular

business by category or sector:
1. The service-based business. Common examples of service-based
businesses are consultancy, barber shops, repair shops, beauty parlors, care
giving, rendering professional services, such as engineers, dentistry, medical
doctors, and others where there is no need to manufacture something.

2. Trading or product-based business. This is a buy and sell transaction that

can happen in your storehouse, showroom, or any other structureless
environment.

3. Manufacturing business. This is a manufacturing or production-based

business by creating a product.

4. Licensed business opportunities. If you find some difficulties in launching

a product or service, it is a good idea to look for licensed business
opportunities. Franchising is a business format somehow very similar to
licensed business operations.

5. Distributorship. This is where an independent entrepreneur, company, or

individual enters into an agreement or contract to offer, sell, or distribute a
particular product, but is not entitled to use the manufacturer’s trade name as
part of its own trade name. In our country, distributor represents foreign
companies who can sell products to dealers strategically located all over the
country.

6. Rack Jobber. This involves an agent or buyer entering an agreement with a

parent company to market its goods to various stores by means of
strategically located store racks.

7. Wholesalers. These sell the product of manufacturers or producers to

retailers and other distributors who have direct dealings with the end users or
customers.

8. Subcontracting. This is a familiar form of business format in the garments

sector, as well as the shoe industry. This involves signing up an arrangement
with a major producer to complete a set of product component on a preagreed
price.

9. Vending machine routes. These are placed in various places or locations.

The entrepreneur needs to have substantial capital outlay as he had to pay
for the vending machine, including the stocks to be vended.
Ideation

The beginning of a business endeavor is ideation. This should be the first

investment of anyone who seeks to be an entrepreneur; and to be called an
entrepreneurial business opportunity, such idea has to be new, or if not, should
be innovative. The best source of ideas are the consumers or the market in
general, since they are the ones who are in need for a certain product or service.
For a creative person, ideas are in him in his mind, but for those deprived with
creative thinking, they can get ideas through reading books and talking to
someone with creative thinking. There are some specific sources like trade
journals, trade associations, conventions, exhibits, trade shows and consumer
shows, country government affairs, and others.

Ideas that are worth a business should be the one that has a market now
and in the future. This could be a product, a service system, and the like, which
could fall in any of the following categories:

a. Need/want drives
b. Time-saving drives
c. Money savings
d. Unique or incorporating strong competitive advantages
e. Link to personal interest, preferably passion

The more idea a person produces, the more original and the better quality ideas
one will find among them. When you come across an idea, you should put it in
writing.

The most common way of developing ideas is as follows:

• Recognizing the need. Developing an idea or a product that can

satisfy a need, and respond to the need by establishing a business
concern.
• Improving an existing product. The result of consumer
dissatisfaction to the existing product could open the door to
introduce innovations or improvements.

• Recognize trends. Entrepreneurs should be able to recognize the

opportunity to develop a product and set trends that can make them
leading entrepreneurs.

• Be aware of everything. There is no other way to know about

what is happening around you, but to research and read.
 • Questions and assumptions. Anybody can question the
relevance or quality of any product or services, provided that there
is an effort to improve the product.

• Naming it first, then develop it. If you have the idea, study it and
develop it to something that is worth a business.

Earlier, it is said that ideation is the beginning of a business. A

wrong choice of idea could be the cause of business failure, so ideas need
to be evaluated if it can be profit potential. The following are some tips
in evaluating ideas;

a. Do not let your idea follow money, let money follow your ideas. If the
idea is clear and viable, there should be clear options for the business out of
the idea.

b. See yourself as a problem solver. Ideas should be a solution to an existing

problem of the consumer or the market in general.

c. Use research as a weapon against failure. This is an important fact in

decision-making process; most business failed because of lack of information.

d. Make sure your idea has longevity. An idea that is worth pursuing into a
business is one which has a long-term purpose and not only a fad.

e. Take a risk on your ideas. Venture into a business by using your own
ideas.

f. Test your idea against the past, present, and future. The market needs
and demands will not be far from what is happening in the past, so it is better
to get information about the past, present, and future.

g. Know the characteristics of your market. Know the needs of your market
and all the factors that affect the buying process. Your idea will depend on
this.

Once you generate an idea, it has to be protected because it can make

you a potential millionaire, like Bill Gates. There are many ways of protecting
our idea from being stolen or claimed by others, and losing the opportunity to
be known as the creator and the originator of the ideas. Aside from this, no
company will pay you a royalty if the idea presented is not legally protected.
The following are the ways of protecting your ideas:

a. Confidentiality Agreements. It specifically provides that a signer will

not share the idea to anyone. This is a typical agreement or contract
 where one should ask advise to a patents attorney or those with
experience and expertise in the intellectual property rights.

b. Patents. These gives the inventor exclusive legal rights to exclude

anyone else from manufacturing, selling, importing, or using an
invention during the life of the patent. The three general classifications
are: Design, Utility and Plants Patents.

c. Trademarks. This is a word, name, symbol, or device used by

manufacturers on merchants to identify their goods and distinguish
them from others sold in the market. This should be send in
conjunction with a business or a product, otherwise, this will not be
granted.

d. Copyrights. A copyright protects the creative works of composers,

authors/writers, artists, and others. This is the easiest form of
protection for Intellectual Property.

Entrepreneurial Creativity

Creativity, innovation, and entrepreneurs are inseparable. Creativity is an

essential part of innovativesness, the starting point of a process, which is skillfully
managed, and brings an idea into innovation. It is considered as a characteristic
that is innate or inherent to every individual, but the social environment can
influence both the level and frequency of creative behavior. It is particularly
important to understand the role the environment can play.

Environmental Stimulants (speeds) to Creativity

a. Freedom – a sense of control over one’s work ideas.

b. Good Project Management – a manager serves as a good role model
c. Sufficient Resources – access to necessary resources
d. Encouragement management enthusiasm for new ideas
e. Various Organizational Characteristics.
f. Recognition – a general sense that creative work will receive appropriate
feedback, recognition, and reward
g. Sufficient time – time to think creatively about problem
h. Challenge – a sense of challenge arising from intriguing nature of the problem
itself.
i. Pressure – a sense of urgency that is internally generated from competition as a
personal sense of challenge.
j. Outside Organization – from a general desire to accomplish something
important
 If there is an environment conducive to stimulating creativity, there are also
environmental obstacles to creativity. These are the various organizational
characteristics, which are an inappropriate reward system, the lack of freedom in
deciding what to do or how to accomplish the task, and the organizational disinterest
which result to lack of support, interest, or faith in project. It could also be the inability of
the manager to set clear direction and the reluctance of managers and co-workers to
change their way of doing things. Included also is the lack of appropriate facilities,
equipment, materials, and the time pressure to think creatively about the problem.

The Concept of Innovation

Innovation is doing something different. It could be introducing either something

new or different. Innovativeness is a characteristic of an individual, team, or
organization. This is also the capacity to create ideas and develop them to
usable products or services.

Impacts of Innovation

Efforts on innovation must have impacts – positive impacts. It must have a

positive implication that is supportive of organizational goals and objectives. The
innovative accomplishment exists if the following happens:

1. Effecting a new policy – creating change or orientation or direction

2. Finding new opportunities – developing an entirely new product or opening a new
market
3. Designing a new structure – changing the formal structure, reorganizing or
introducing a new structure
4. Devising a fresh method – introducing a new process, procedure, or technology
for continued use

Within the organization, the orientation toward innovation must come primarily
from the higher level of management. The elements of innovation orientation are as
follows:
a. Value placed on creativity and innovation in general;
b. An orientation towards risks;
c. A sense of pride in the organization and its members, and the enthusiasm
about what they are capable of doing; and
d. An offensive strategy of taking the lead towards the future.

The most critical aspect in making a decision to go into self-

employment and entrepreneurship is the context of ideation, innovation,
and creativity. The generation of idea and transforming it into a business
venture can make or break a potential entrepreneur. The success of the
business could lead to personal prosperity of the owners and help in the
economic condition of our country.
 Innovation is not only for a change, but also for the search in excellence, not
only in producing a product, but also in the form of innovative systems and
services. The innovativeness and the creativity of an individual could be the
greatest assets any business could have, so this should be developed and
properly take care of.

The prospective entrepreneur has a variety of option in deciding what

kind of business he is going to put up. He can go on marketing scanning
to see what is needed. He should not limit himself in going into
manufacturing of sari-sari store or market niche (place), but developing
similar product or service should be examined. Buying a franchise, being a
subcontractor, innovating an existing product, systems, or services, sponsoring a
start up business, or acquiring an on-going business concern are some of the
business ideas which are very promising and could succeed eventually.

QUIZ:

1. Explain Feasibility Study, its advantages and when do we need it?

2. Discuss the entrepreneurial activities in search of business
opportunities in relation to your future plan of business.
3. What is the best way to evaluate business opportunities?
4. Describe the concept of ideation, innovation, and creativity.
5. Discuss the factors to consider in evaluating the business potential of
an idea.
6. Describe the stimulants to creativity. How will you apply these
stimulants to your business?