Section 5.1 Feasibility Analysis: Testing an Opportunity

1. 5.1 • Discuss the importance of defining a prospective business by writing a clear and concise business concept. • Describe how a feasibility study can be used to test a concept in the marketplace. Section 5.1 Feasibility Analysis: Testing an Opportunity

2. Developing a Business Concept Once you have a idea for a new business, define it by writing a clear and concise business concept. business concepta clear and concise description of a business opportunity; it contains four elements: the product or service, the customer, the benefit, and the distribution Section 5.1 Feasibility Analysis: Testing an Opportunity

3. Developing a Business Concept In developing a business concept, consider the featuresand benefits your product or service offers. featuresdistinctive aspects, qualities, or characteristics of a product or service benefitsthings that promote or enhance the value of a product or a service to the customer Section 5.1 Feasibility Analysis: Testing an Opportunity

4. Developing a Business Concept When developing a business concept an entrepreneur must ask the following questions: • What is the product or service being offered • Who is the customer? • What is the benefit that is being provided? • How will the benefit be delivered to the customer? Section 5.1 Feasibility Analysis: Testing an Opportunity

5. Testing the Concept in the Market An entrepreneur can use a feasibilityanalysisin order to decide if there is enough demand for a product or service. feasibility analysisthe process that tests a business concept; it allows the entrepreneur to decide whether a new business concept has potential Should I proceed with this business? Section 5.1 Feasibility Analysis: Testing an Opportunity

6. Testing the Industry The broadest level of feasibility analysis looks at the industry in which the business will operate. industrya group of businesses with a common interest Section 5.1 Feasibility Analysis: Testing an Opportunity

7. Testing Product or Service Requirements To consider all the requirements of a product or service, you may opt to create a prototype. prototypea working model used by entrepreneurs to determine what it takes to develop their products or services Section 5.1 Feasibility Analysis: Testing an Opportunity

8. SWOT analysis An assessment of a company’s strengths and weaknesses and the opportunities and threats that surround it; SWOT: strengths, weaknesses, opportunities, threats. A business can analyze its:Strengths Weaknesses Opportunities Threatsin the marketplace using a process called a SWOT analysis. This procedure helps because it: prepares a company for competition or a changing marketplace. provides guidanceand direction for future business strategies.

9. Internal Strengths and Weaknesses Strengths and weaknesses are internal factors that affect a business operation. The analysis centers around three Cs: Company Customers Competition

10. Internal Strengths and Weaknesses • Company When evaluating itself, a company must analyze these areas: Company staff Financialsituation Production capabilities

11. Talking to Customers • Customers The most important part of the feasibility analysis is testing customers to measure interest and identify the target customers. Companies study customer buying patterns using surveys or conducting interviewswith people in their target markets. target customerspeople most likely to buy a business’s products and services Section 5.1 Feasibility Analysis: Testing an Opportunity

12. Studying the Competition • Competition A company may find that it has certain strengths and weaknesses when compared to its competitors. Questions that help a business to analyze its competitive position are: What market sharedoes the company have? What advantages does the company have over its competitors? What core competencies does the company possess?

13. Studying the Competition An easy way to evaluate the competition is to create a competitive grid. competitive grida tool for organizing important information about a business venture’s competition Competitor Customer Benefits Distribution Strengths Weakness Section 5.1 Feasibility Analysis: Testing an Opportunity

14. External Opportunities and Threats Businesses must always look for opportunities to create competitive advantage if they are to succeed in the marketplace. Marketing Essentials Chapter 2, Section 2.1

15. Competition Companies need to know what their competitors are doing at all times. Changes in other companies’ financial situations affect the marketplace, and conducting a SWOT analysis helps a business react and adjust to these shifts.

16. environmental scan An analysis of outside influences that may have an impact on an organization. Environmental Scan Often, a business will conduct an environmental scan to methodically examine four main areas of the marketplace. The acronym PEST refers to each of the four factors evaluated in the scan: Political Economic Socio-cultural Technological

17. Political Political issues center around government involvement in business operations, such as: Laws Regulations Global companies need to know the political structure and regulations of each foreign country in which they conduct business.

18. Economic Businesses are always interested in the economy because if it is healthy, people will be more likely to invest in products and markets. If the economy is in recession, companies need to be more cautious in their decisions. The economy is affected by factors such as: Unemployment rate Inflation Retail sales figures Productivity Consumer confidence

19. Socio-Cultural A socio-cultural analysis is based on customers and potential customers. It focuses on their: Attitudes Lifestyles Opinions And also considers: Age Income Occupation Education level Marital status

20. Technological Changing technology may be a threat for one industry, but an opportunity for others. Companies develop completely new products or capitalize on new developments by making products to support them.

21. Looking at Start-Up Resources A strong business model is important to investors. business modela description of how entrepreneurs plan to make money with their business concepts Section 5.1 Feasibility Analysis: Testing an Opportunity

22. Let’s Practice In your table groups, discuss what you have learned today. Together, write a compelling, clear & concise business concept statement for DECA Custom Designs. Be sure to refer back to your notes on questions to address. Here is a sample of one: “Eastside Sports offers sporting equipment and apparel to local teams and people who play sports. It provides the convenience of one-stop shopping at a retail outlet in the customer’s own neighborhood.”