Definition of Managerial Feasibility Studies: Managerial Feasibility studies is the objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats which are presented by the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained. Managerial feasibility study is an analysis of the viability of an idea.
The Managerial 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. Objectives of Managerial Feasibility Studies: Managerial Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats as presented by the environment, the resources required to carry through, and ultimately the prospects for success.
Managerial Feasibility is the study of whether or not a project is worth doing. However the Objectives of Managerial Feasibility Studies are as follows: 1. Gives focus to the project and outline alternatives. 2. Narrows business alternatives 3. Identifies new opportunities through the investigative process. 4. Identifies reasons not to proceed. 5. Enhances the probability of success by addressing and mitigating factors early on that could affect the project. 6. Provides quality information for decision making. 7.
Provides documentation that the business venture was thoroughly investigated. 8. Helps in securing funding from lending institutions and other monetary sources. 9. Helps to attract equity investment. 10. The feasibility study is a critical step in the business assessment process. If properly conducted, it may be the best investment you ever made. Functions of Managerial Feasibility Studies: As such, a well-designed Managerial feasibility study should provide a historical background of the business or project, description of the product or service, accounting tatements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations, feasibility studies precede technical development and project implementation. The main functions of the Managerial feasibility study is to prepare- 1) Project Specification: The project specification has all the information about the project which is more like a guideline for the project. It gives a great insight to the management about the kind of investment involved for undertaking a project along with the manpower, hardware, software and other factors. ) Cost Benefit Analysis: Cost Benefit analysis is a method to identify the gross benefit involved in the development and implementation of a new system. Basically, it tells the organization whether they are economically prepared for the project. 3) Prepare Feasibility Report: Managerial Feasibility Report contains various feasibility studies like:- Technical Feasibility, Economic Feasibility ,Operational Feasibility, Social Feasibility ,Time Feasibility ,Management Feasibility And Legal Feasibility.
Methods of Managerial Feasibility Studies: Managerial Feasibility studies can take on different forms, depending on their contexts. In large enterprises, schools, and government agencies, a Managerial feasibility study could take months or even years of work in conjunction with outside consultants. On the other hand, a small business with the right connections and resources can perform an ad hoc feasibility study over the course of a few days. Regardless of the timeframe involved, the project manager in charge of the Managerial feasibility study must remain impartial as he or she handles four critical tasks:
Whether a Managerial feasibility study lasts for six months or six days, it should follow a four step method outlined by experienced project management professionals. Four-Step Managerial Feasibility Study Method: 1. Examine the Market: The first step to an effective feasibility study method involves a critical analysis of the competitive landscape for a product or service. Many first-time entrepreneurs make the mistake of assuming that their product has no competition. In reality, any other way in which a customer allocates money, time, or attention can be viewed as competition.
The feasibility study should paint a realistic picture of the likelihood that enough customers will be satisfied to result in a sustainable offering. 2. Review Technical Requirements: Understanding the needs of the marketplace does not always guarantee the ability to meet customers’ expectations. Including this analysis in the feasibility study method puts the overall requirements for a successful project into the proper context. In many cases, a study can help determine whether the project sponsor will require more resources internally or whether an outside vendor or partnership can handle the tasks more effectively. . Explore the Business Model: Having assessed the current market need and a team’s ability to execute, a feasibility study can look at the long term viability of the overall business model. This feasibility study method relies heavily on tools like scenario planning to ensure long term success. Project managers can discover whether the business model actually offers enough profit potential to make the initiative worthwhile. Likewise, study administrators can examine whether the new product or service under consideration requires such a significant change as to make it untenable within a business. . Look for an Escape Route: “Forever” is a dirty word among many venture capital firms. Investors like to know that they’ll make a profit, and they want to have a strong idea about when they can cash the check. Common feasibility study methods include an analysis of potential exit strategies, especially for investors and other stakeholders that may want to move on. Study leaders can investigate how a project will evolve over multiple iterations, and whether it relies too heavily on key personnel. Application of Managerial Feasibility Studies:
Problems of managerial feasibility studies: Problems overcoming the managerial feasibility studies: Six Steps are there to solve the problems which may come in Making Managerial feasibility study. They are discussed below Step 1: Understand the problem In most cases, the business driver is a problem or opportunity in the organization. Managers need to have a clear understanding of what this is (otherwise you can solve the wrong problem). This is not just a technical question, time, cost, quality, service and reputational issues can be involved. Step 2: Identify Alternative Solutions
Based on a clear understanding of the business problem, Managers need to determine the alternative solutions. A range of solutions will assist in optimizing the outcome from the Feasibility Study. Step 3: Determine the Feasibility of each option To identify the feasibility of each solution assessments need to be made for a range of factors: • Time (likely time and potential range of outcomes) • Cost (likely cost and potential range of outcomes) • The risk profile of the solution (opportunities and threats) • Quality, reliability and performance issues Other factors relevant to the solution. Step 4: Choose a Preferred Solution The next step is to select a preferred solution. Each parameter should have an acceptable range defined and a weighting allocated to allow effective comparison. Options that fall outside of an acceptable range are discarded. The rest are weighted and the optimum solution(s) identified. The selected option is generally the solution that you have the highest confidence of delivering but cost and/or time considerations may force a higher risk option. Step 5: Obtain Buy In
The preferred solution needs to be agreed by all of the key stakeholders. Once agreed the business case can be firmed up, a Sponsor appointed and the project nominated for formal initiation Step 6: Submit the proposal to the organizations Portfolio Management decision making Once the Managerial feasibility of a concept is established, the proposal is assessed by the portfolio management team against all of the other potential and existing opportunities available to the organization and, where appropriate, the proposal is approved, resources and funding allocated and a project created.
Conclusion: The main function of a Managerial feasibility study is to examine an idea, product or service in the actual context that it will be used. It helps to identifies enabling and constraining forces. It considers resources required and compares them with resources available. A feasibility study will provide sufficient information to make an informed yes or no decision, based on facts instead of assumptions and emotional attachments to the idea under consideration.