UNIVERSITY OF SOUTHERN MINDANAO

Technopreneurship
ES 223
Module 3
 Module 3: Conducting a
Feasibility Analysis
and Designing a Business Model
• Idea Assessment
• Feasibility Analysis
• Porter’s Five Forces Model
• Product or Service Feasibility Analysis
• Financial Feasibility Analysis
• Developing and Testing a Business Model

The Foundations of Entrepreneurship 2

 Lecture 1: Idea Assessment

ILO 1: By the end of the learning experience,

students must be able to:

✓Describe the process of conducting

an idea assessment

Idea Assessment 3
 Introduction
Start-up And Growth Of An Entrepreneurial Venture

Creating a Launching a
Business Ideas
strategic plan business

Conducting an
Crafting a
idea
business plan
assessment

Conducting a
Developing a
feasibility
business model
analysis

Figure 1. New Business Planning Process

Insert Running Title 4

 Idea Assessment
• An idea assessment is the process of examining a
need in the market, developing a solution for that
need, and determining the entrepreneur’s ability
to successfully turn the idea into a business.
• An idea assessment helps the entrepreneur
efficiently evaluate the numerous ideas that come
out of the creative process before committing the
time and effort to craft a business plan, design a
business model, or even conduct a feasibility
analysis.

Idea Assessment 5
 Idea Assessment
• One effective tool used to help assess ideas is the
idea sketch pad
• The idea sketch pad helps an entrepreneur assess
ideas in a relatively short period of time.
• When using the sketch pad, the entrepreneur asks
a series of key questions addressing five key
parameters

Idea Assessment 6
The Really Big Idea Sketch
Pad

Source: Dr. Alex Bruton, The Innographer, Ltd., the innographer.com/toolkit/ idea-modeling.

Figure 2.Illustrate the Idea Sketch Pad

Idea Assessment 7
 Idea Assessment
1. Customers
- Start with a group of customers who have a
clear need that is not being addressed.
-This may be a need that no business is
currently addressing, or it may be a need that no
business is fully or adequately meeting for these
customers.

Idea Assessment 8
 Idea Assessment
1. Customers
- The entrepreneur assesses the customers by
answering basic questions about the potential users of
the product or service and the potential buyers if they
are different than the users.
e.g. For sugary cereals, children are the users and their
parents are the buyers.
Specifically who would be the users of the
offering or beneficiary?
How would they use the offering?
How many potential customers are there?
Who is the economic buyer or decision maker?

Idea Assessment 9
 Idea Assessment
2. Offering
- Describe your idea for a product or service to
offer the customers.
• Are you offering a product, a service, an
experience, or a combination of one or more of
these?
• What are its key features?
• Name and describe it in detail…
• Sketch it or otherwise help visualize help people
visualize it…

Idea Assessment 10
 Idea Assessment
3. Value proposition
- Explain why your product or service will be
important to the customers.
• Why would your offering be valuable to the user
and/or buyer?
• How does it address the need these customers
currently have that is not being met?

Idea Assessment 11
 Idea Assessment
4. Core competencies
- Does your offering include any technologies
or unique features that will help differentiate it from
competitors?
- Is it based on intellectual property that you
can protect?

Idea Assessment 12
 Idea Assessment
5. People
- Identify the key people on the team who will
launch this business.
• Who are the founding entrepreneurs of this
venture?
• Do they have the skills and knowledge needed to
successfully turn the idea into a start-up venture?
• Can they attract key team members who will fill in
any gaps in knowledge, skills, and experience?

Idea Assessment 13
 Lecture 2: Feasibility Analysis

ILO 2: By the end of the learning experience,

students must be able to:

✓Conduct feasibility analysis

Feasibility Analysis 14
 Feasibility Analysis
• A feasibility analysis is an analysis of the viability
of a business idea.

• An industry and market feasibility analysis is the

starting point for the remaining three components
of a feasibility analysis.
• A product or service analysis
• A financial feasibility analysis
• An entrepreneur analysis.

Feasibility Analysis 15
Feasibility Analysis
Industry and Market Feasibility

Product or
Service Feasibility

Entrepreneur/
Financial
Team
Feasibility
Feasibility

Figure 3. Elements of Feasibility Analysis

Feasibility Analysis 16
 Feasibility Analysis
• An industry and market feasibility analysis focused
into two-fold:
- 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

Feasibility Analysis 17
 Feasibility Analysis
• The first step in
assessing industry
attractiveness is to
paint a picture of
the industry in
broad strokes,
assessing it from a
“macro” level.

Figure 4. Environmental Forces and New Ventures

Feasibility Analysis 18
 Feasibility Analysis
• Six foundational macro forces create change in
industries and the markets they serve:
1. Sociocultural
- Social and cultural change can lead to dramatic
changes that can create whole new industries and
fundamentally transform existing industries.
e.g. In the 1970s and 1980s women began entering the
workforce at much higher rates that lead to cultural
change. This cultural change led to the birth of the
daycare industry and also women’s fashion industry for
women’s business attire. It led to rapid growth in the
restaurant industry as families began eating in
restaurants.

Feasibility Analysis 19
 Feasibility Analysis
2. Technological
- Technological breakthroughs lead to the
development of new products and entirely new
industries
- e.g. The Internet led to the creation of many new
businesses within the music industry, including
Pandora, Spotify, and Apple’s iTunes, which
changed how customers buy and listen to music
and how people consume information which
advertising revenues experienced steady growth.

Feasibility Analysis 20
 Feasibility Analysis
3. Demographic
- Changing demographics create opportunities for
entrepreneurs.

- e.g. Jason Greenspan of Silver Stars Fitness, targets a

different market than most fitness clubs but instead
specifically designed for the fitness needs of retired
baby boomers (born between 1946 and 1964) during
the middle of the day for convenience. As a result,
Greenspan plans to expand to more locations to keep
up with the growing population of retired baby
boomers.
Feasibility Analysis 21
 Feasibility Analysis
4. Economic
- Although many companies struggle during economic
downturns, some businesses are able to grow.

- e.g. Businesses in the e-learning industry thrived

during the Great Recession. Those who were
unemployed or afraid of becoming unemployed were
unwilling to pay the growing cost of tuition for
traditional educational programs, Companies that
provide high quality Web-based e-learning at a fraction
of the cost of traditional university-based education
filled this gap in the market.
Feasibility Analysis 22
 Feasibility Analysis
5. Political and Legal
- The enactment of new legislation creates opportunities for
entrepreneurs

- e.g. Affordable Health Care Act (also known as Obama

Care, 2010). Because of this legislation, payment for
healthcare is shifting from fee-for-service to a system
based on pay-for-performance. Savvy entrepreneurs are
creating new companies that help healthcare providers and
hospitals to track and report performance related metrics
based on the value of the healthcare they provide, measure
and improve quality of healthcare outcomes, and enhance
efficiency in their healthcare delivery systems.
Feasibility Analysis 23
 Feasibility Analysis
6. Global
- Global trends create opportunities for even the smallest of
companies.

- e.g. Ethan Siegel of Orb Audio manufactures high-end

speakers for home theater systems sells directly to the
customer through its Web site. When the dollar weakened
against other currencies in 2008, cofounder Ethan Siegel
noticed a sharp increase in orders from international
markets. Siegel started running Internet advertisements
aimed at consumers in the markets where most of the
increase in international sales were coming from including
Great Britain, Canada, Finland, and Australia. total revenue
continues to grow due to the expansion of international
sales for this small manufacturer.
Feasibility Analysis 24
 Feasibility Analysis
Entrepreneurs should answer the following
questions to help further evaluate the attractiveness
of that industry in light of the impact of the macro
forces for change:
• How large is the industry?
• How fast is it growing?
• Is the industry as a whole profitable?
• Is the industry characterized by high profit margins
or razor-thin margins?

Feasibility Analysis 25
 Feasibility Analysis
• How essential are its products or services to
customers
• What trends are shaping the industry’s future?
• What threats does the industry face?
• What opportunities does the industry face?
• How crowded is the industry?
• How intense is the level of competition in the
industry?
• Is the industry young, mature, or somewhere in
between?
Feasibility Analysis 26
 Feasibility Analysis
Example: “Self-driving Cars”
• Driverless cars have been the stuff of science
fiction for several decades. As a result of several
recent technological breakthroughs, a fully
functional driverless car may soon become
possible.
• The macro forces shaping the automobile industry
must come into alignment for the driverless car to
become a true market opportunity.

Feasibility Analysis 27
 Feasibility Analysis
1. Sociocultural environment
- Americans stayed loyal to their cars and the
freedom they offered to allow them to drive when,
where, and how they wanted to. However, research
from KPMG suggests that there may be a change in
consumer attitudes. A survey conducted by
CarInsurance.com found that 20 percent of drivers
would “hand over the keys tomorrow” if a safe,
driverless car were available for consumers to
purchase. Ninety percent of those surveyed would
consider a driverless car if it could bring down
insurance costs.
Feasibility Analysis 28
 Feasibility Analysis
2. Technological environment
- Traditional automobile companies, including
Nissan, General Motors, and Lexus, all have
driverless car technologies under development.
- Google is a leader in the development of
technology to enable driverless cars. Google has
logged hundreds of thousands of miles of testing
for its driverless technology with no reported
safety issues.
- Upstart electric car company Tesla developed an
autopilot system.
Feasibility Analysis 29
 Feasibility Analysis
3. Demographic environment
- As baby boomers age, driverless car technologies offer
this generation the promise of continued autonomy
even after they reach the age that is no longer safe for
them to drive.
4. Economic environment
- With continuing concerns about the cost and supply of
energy, driverless cars may offer significant fuel savings.
Computers in the driverless cars will be able to
determine the most direct route with least traffic
congestion and will drive at controlled speeds, all of
which will improve fuel consumption for every car on the
road.

Feasibility Analysis 30
 Feasibility Analysis
5. Political/legal environment
- Although the other macro forces all seem to favor the
emergence of a market for driverless cars, the political
and legal environment is not all favorable. Toyota has
been fighting multiple lawsuits for several years that
are tied to allegations that its cars are prone to
unintended acceleration.
- A main cause of the problems may be in the software
in the computers that control all modern automobiles.
- Some legal experts believe this seemingly impossible
standard leaves auto companies no choice but shelve
any products with software that directs the operation
of the vehicle.

Feasibility Analysis 31
 Niche Marketing
• The next step in assessing an industry is to identify
potentially attractive niches that exist in the industry
- The key question entrepreneurs address about a
possible niche market is
“Can we identify a niche that is large enough to
produce a profit, or can we position our company
uniquely in the market to differentiate it from the
competition in a meaningful way?”

Niche Marketing 32
 Niche Marketing
What Is Niche Marketing?
• Target marketing, focused marketing, concentrated
marketing and micromarketing are all used as
synonyms for niche marketing.
• Is considered to be a small market consisting of an
individual customer or a small group of customers with
similar characteristics or needs.
• Finding a market niche is the most common and a
relatively safe entry strategy for new entrepreneurial
businesses, it requires continued attention to
competitive forces in the market.
Niche Marketing 33
 Niche Marketing
Market Niches
- Questions entrepreneurs should address in this
portion of the feasibility analysis include:
• Which niche in the market will we occupy?
• How large is this market segment, and how fast is
it growing?
• What is the basis for differentiating our product or
service from competitors?
• Do we have a superior business model that will be
difficult for competitors to reproduce?

Niche Marketing 34
 Niche Marketing
Cautions With a Niche Strategy
1. Entering a niche requires adaptability in your
initial plan.
- While developing their business models,
entrepreneurs can misjudge what customers
actually need within a niche market. Unless they are
willing and able to adjust their business models.

Niche Marketing 35
 Niche Marketing
Cautions With A Niche Strategy
2. Niches change
- While developing their business models,
entrepreneurs can misjudge what customers
actually need within a niche market. Unless they
are willing and able to adjust their business
models.
- Too many entrepreneurs get stuck doing the same
thing or offering the same product while their
customers’ needs and wants evolve.
Niche Marketing 36
 Niche Marketing
Cautions With A Niche Strategy
3. Niches can go away
- Although many niches can last for years, no
market is forever.
- Adaptation can offer some hope, but if the decline
is too rapid, niche businesses can fail.

Niche Marketing 37
 Niche Marketing
Cautions With A Niche Strategy
4. Niches can grow
- If a niche market grows large enough, it can attract
some very large competitors.
- Adaptation can offer some hope, but if the decline
is too rapid, niche businesses can fail.
- Eventually, it may no longer be a true market
niche, which requires that the entrepreneur adapt
his or her business strategies to meet this more
competitive market.

Niche Marketing 38
 Lecture 3: Porter’s Five Forces
Model

ILO 3: By the end of the learning experience,

students must be able to:

✓Explain Porter’s Five Forces Model

Porter’s Five Forces Model 39

 Porter’s Five Forces Model
• After evaluating the broader macro environment,
the entrepreneur changes focus to the more
immediate competitive environment.

• A useful tool for analyzing a specific industry’s

attractiveness within the competitive environment
is the
Five Forces Model developed
by Michael Porter of the Harvard Business School

Porter’s Five Forces Model 40

Porter’s Five Forces Model

Source: Adapted from Michael E. Porter, “How Competitive

Forces Shape Strategy,” Harvard Business Review 57, no. 2
(MarchApril 1979): 137–145.

Figure 5. Five Forces Model of Competition

Porter’s Five Forces Model 41
 Porter’s Five Forces Model
1. Rivalry among companies competing in the industry
- When a company creates an innovation or develops a
unique strategy that transforms the market,
competing companies must adapt or run the risk of
being forced out of business.
- Generally, an industry is more attractive when:
a. The number of competitors is large or, at the other
extreme, quite small (fewer than five).
b. Competitors are not similar in size or capability.
c. The industry is growing at a fast pace.
d. The opportunity to sell a differentiated product or
service is present

Porter’s Five Forces Model 42

 Porter’s Five Forces Model
2. Bargaining power of suppliers to the industry
- The greater the leverage suppliers of key raw materials or
components have, the less attractive is the industry.
- Generally, an industry is more attractive when:
• Many suppliers sell a commodity product to the companies
in it.
• Companies in the industry find it easy to switch from one
supplier to another or to substitute products (i.e., “switching
costs” are low).
• The items suppliers provide the industry account for a
relatively small portion of the cost of the industry’s finished
products.

Porter’s Five Forces Model 43

 Porter’s Five Forces Model
3. Bargaining power of buyers
- Generally, an industry is more attractive when:
• Customers find it difficult to gather information on
suppliers’ costs, prices, and product features—
something that is becoming much easier for customers
in many industries to do by using the Internet.
• Customers demand products that are differentiated
rather than purchase commodity products they can
obtain from any supplier (and subsequently can pit one
company against another to drive down price).

Porter’s Five Forces Model 44

 Porter’s Five Forces Model
4. Threat of new entrants to the industry
- The larger the pool of potential new entrants to an
industry, the greater is the threat to existing
companies in it. This is particularly true in industries
where the barriers to entry, such as capital
requirements, specialized knowledge, access to
distribution channels, and others are low
- Generally, an industry is more attractive to new
entrants when:
• Capital requirements to enter the industry are low.

Porter’s Five Forces Model 45

 Porter’s Five Forces Model
4. Threat of new entrants to the industry
• Cost advantages are not related to company size.
• Buyers are not extremely brand-loyal, making it easier
for new entrants to the industry to draw customers
away from existing businesses.
• Governments, through their regulatory and
international trade policies, do not restrict new
companies from entering the industry.

Porter’s Five Forces Model 46

 Porter’s Five Forces Model
5. Threat of substitute products or services
- Many makers of glass bottles have closed their doors in
recent years as their customers—from soft drink bottlers to
ketchup makers—have switched to plastic containers,
which are lighter, less expensive to ship, and less subject to
breakage.
- Generally, an industry is more attractive when:
• Quality substitute products are not readily available.
• The prices of substitute products are not significantly lower
than those of the industry’s products.
• Buyers’ cost of switching to substitute products is high.
Porter’s Five Forces Model 47
 Summary
ILO 1: Describe the process of conducting an idea
assessment.
- An idea sketch pad is a tool that helps entrepreneurs
assess ideas.
- The idea sketch pad has five parameters:
• Customers. Start with a group of customers who
have a clear need that is not being addressed.
• Offering. Describe your idea for a product or service
to offer the customers.

Summary 48
 Summary
ILO 1: Describe the process of conducting an idea
assessment.
• Value proposition. Explain why your product or
service will be important to customers.
• Core competencies. Determine if your offering has
any technologies or unique features that will help
differentiate it from competitors?
• People. Identify the key people on the team who will
launch this business

Summary 49
 Summary
ILO 2: Conduct a feasibility analysis
- Determine how attractive an industry is overall as
a “home” for a new business.
- Evaluate possible niches a small business can
occupy profitably.

Summary 50
 Summary
ILO 3: Explain Porter’s Five Forces Model
• Entrepreneurs should assess five forces that shape
the competitive environment for every business:
- The rivalry among competing firms
- The bargaining power of suppliers
- The bargaining power of buyers
- The threat of new entrants
- The threat of substitute products or services

Summary 51
 References:
[1] Salkowitz R, (2010), Young World Rising How Youth,
Technology and Entrepreneurship are Changing the World
from the Bottom Up, Hoboken, New Jersey, John Wiley &
Sons, Inc
[2] Duening, T. N., Hisrich, R. D., Lechter, M. A. (2010),
Technology Entrepreneurship, Creating Capturing and
Protecting Value, 84 Theobald’s Road, London, Elsevier
Inc.
[3] Scarborough, N. M., Cornwall, J. R. (2016), Essentials of
Entrepreneurship and Small Business Management, Eight
Edition, Edinburgh Gate Harlow Essex England, Pearson
Education Limited
References 52
 References:
[4] Feldman, M. P., Link, A. N., Siegel, D. S., (2002), The
Economics of Science and Technology: An Overview of
Initiatives to foster Innovation, Entrepreneurship, And
Economic Growth, United States, Springer
Science+Business Media, LLC
[5] Ulijn, J., Drillon, D., Lasch, F., Elgar, E., (2007),
Entrepreneurship, Cooperation and the Firm,
Northampton Massachusetts, USA
[6] Barringer, B. R., Ireland, R. D., (2019),
Entrepreneurship, Successfully Launching New Ventures
Global Edition, 6th Edition, KAO Park Harlow, UK, Pearson
Education Limited
References 53
 References:
[7] Barringer, B. R., Global Edition,2nd Edition
(2015), Preparing Effective Business Plans, An
Entrepreneurial Approach, Edinburgh Gate Harlow
Essex England, Pearson Education Limited

[8] Pathak S., Xavier-Oliveira E., Laplume A. O.

(2013), Influence of intellectual property, foreign
investment, and technological adoption on
technology entrepreneurship, Michigan, USA,
Journal of Business Research, Elsevier
References 54
 References:
[9] Okorie N. NKwa D.Y, Olusunle S.O.O., Akinyanmi
A.O., Momoh I.M., (2014), Technopreneurship: An
urgent need in the material world for sustainability
in Nigeria, Akure, Nigeria,European Scientific
Journal, European Scientific Institute

[10] Fowosire, R. A, Idris, O.Y, Opoola Elijah, (2017),

Technopreneurship: A View of Technology,
Innovations and Entrepreneurship,USA, Global
Journals Inc

References 55
End of Topic

Thank you
Conducting a Feasibility Analysis and Designing a Business Model 56