FEASIBILITY STUDY

A feasibility study involves four phases:

• MARKET RESEARCH
• TECHNICAL ASPECTS
• ADMINISTRATIVE ASPECTS
• FINANCIAL ASPECTS

MARKET RESEARCH.

A market research study must produce a clear sales projection based on the definition of:

• pRoduct

• MARKET SEGMENT

• MAIN CUSTOMERS

• MAIN COMPETITORS

• Competitiveness in the market as compared to that of the competitors. Prices, delivery, quality, service, financing.

• Commercial strategy The applied methodologies are described in the above Market Research section.
  

TECHNICAL ASPECTS.

The technical aspects stage focuses on the definition of the main productive elements of the operation:

The main aspects to analyze depend on the kind of investment project. In the case of an industrial operation, the main elements are:

• Technical definition of the product
• Manufacturing process
• Listing of machinery and equipment
• Selection of technology
• PLANT LOCATION
• PRODUCTIVE LABOR FORCE
• Listing of goods and services

ADMINISTRATIVE ASPECTS.

This phase defines the project promoter and executor, his/her main characteristics, the schemed administrative structure, and the business skills required to carry out the project.

The main elements covered in this phase are:

• LEGAL STRUCTURE
• ASSocIATES TO THE COMPANY
• OrganiZATION CHART OF THE COMPANY
• BUSINESS SKILLS  (Curriculum)

FINANCIAL ASPECTS

This stage presents the financial description of the project and the answers to basic questions such as: How much is to be invested? How much is to be financed and in what conditions? What are the projected sales? What are the projected costs and expenses? What are the projected profits? What is the behavior of the company’s flow?

Major aspects covered in the financial phase:

• ListINGS OF GOODS AND SERVICES
• SALES PROYECTION
• costs AND EXPENSES PROJECTION
• CASH FLOW PROJECTION
• OrigIn AND APplicaTiOn OF RESOURCES
• PROYECTED FINANCIAL STATEMENTS
• InternaL RATE OF RETURN

The analysis and simultaneous presentation of all the elements in a Feasibility Study are essential for the assessment of the project’s viability and the determination of its risk levels regarding both the allocation of capital for investment and the allowance of credits to finance the project.

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