Chapter 2

Preliminary Study
Preliminary Steps
A feasibility Study should cover the key operating
areas of a business which will impact on the project
under consideration, such as distribution, finance,
human resources, information systems, marketing,
production, purchasing ,research and development.
We have provided a wide range of checklists and
questionnaires which you may find useful in your
preliminary feasibility planning steps.
 Legal issues
Are there any legal requirements or issues we need to
look at or attend to? Do we need a special
shareholders agreement ?
What warranties will be required?
Can we afford to meet these warranty obligations?
Will we need to address any Trade Practices law
requirements? Are there any special insurance
requirements?
Are there any special licenses we need to look at or
obtain?
Do we require any special contracts or is there a need
to raise any contracts or contractual issues?
 Legal issues
Registration of intellectual property
- Do we have any patents ,copy rights, etc.?
- Do we have appropriate protection for our Intellectual property in place?

Corporate structure-current
- Is our current structure adequate and is it the correct structure for our
needs?

Corporate structure - future

- Will our current structure serve our future needs?

Financial liabilities etc

- What possible liabilities and claims are outstanding and may occur?
- What guarantees are outstanding?
- What burdens are there on the business?
Focus on your limited resources, which
could include:
 People
 Skills
 Money Facilities
 Information
 Technology can you utilize , demonstrate or supply technology that is
at the cutting edge for your industry?
 The unique technical skills of you and your staff Time
 Patents, Copy rights, Trade Marks, Intellectual Property
 Intellect-can your organization demonstrate superior intellect which
will assist in making the project feasible ?
 Intellectual property- what patents. copyrights, licenses , etc
 What do you own, which could assist with making the project feasible?
 External expertise – do you have external providers of unique services
who can be classed as a resource for your business?
 Your advertising agency, accountant, designer, consultant, media
contacts or formal and informal business networks?
The Environmental Climate- Analyzing the
environment
The business and marketing environment contains six
major factors which may have an effect on your
business or project ,both currently and in the future:
Demographics
Economic conditions
Competition
Social and cultural forces
Political and legal forces
Technology
 The environmental climate
It is not hard to identify current strategic planning
programs that have been highly disrupted by a
changing environmental climate.
In recent times the Corona crisis and the wars together
with pollution, safety and consumerism concerns, can
bring many such examples to mind. The point is that
the environment is changing and those organizations
which can adapt to change are the ones which enjoy
long-run successes.
 Analyzing the Business Environment
The business environment of any organization consists of
many forces close to it, which affect its ability to serve its
customers, such as other internal departments, channel
members, suppliers, competitors and publics.
It also includes broader demographic , economic,
political, legal, technological, environmental , social
and cultural forces. The organization needs to consider
all of these when developing its strategic plan.
 Analyzing the environment
Analysis areas and questions :
What are the relevant social, political, economic and
technological trends?
How do you evaluate these trends?
Do they represent opportunities or problems?


Do you understand?
Who your key customers are?
What their real requirements are?
What they use the product for?
Its key benefits?
Provide features your key customers consider important?
Are you aware of your competitors?
Mission statement
Strategies
Goals and objectives
Their current market position
Any plans they may have for expansion or changes in
operations
Operating capacity
Current compared to available capacity
Their width of product range
Their capabilities
Any possible changes?
 Analyzing the environment
 What are the main factors in the remote environment (Economic, Political,
Technological, Legal, Social/cultural, Demographic) which will affect the
industry?
 What will that effect be and when will it be felt?
 Is the industry profitable now?
 Is it likely to be profitable in the future?
 Which aspects of the industry have relative power or will develop power in the
future?
 What strategic groups exist in the industry?
 What are the critical success factors required to be in the industry?
 What are the critical success factors required to lead the industry?
 What is the level of turbulence within the industry?
 What factors will push the industry towards being an international or global
industry or prevent it from becoming international or global?
 Analysis should include the:
 Threat of new entrants
 The relative power of suppliers to the industry
 The relative power of buyers from the industry
 The existence of substitutes
SWOT Analysis: Strengths, Weaknesses,
Opportunities, and Threats

A SWOT analysis guides you to identify the positives

and negatives inside your organization (Strength &
Weakness) and outside of it, in the external
environment (Opportunity & Threat). Developing a
full awareness of your situation can help with both
strategic planning and decision -making.
When do you use SWOT?
You might use it to:
• Explore possibilities to problems.
• Make decisions for your responsibilities .
• Determine where change is possible.
• Adjust and refine plans .
Listing Your Internal Factors:
Strengths and Weaknesses (S, W)
For example :
General areas to consider
- Human resources - staff, volunteers, board members, target
population
- Physical resources - your location, building, equipment
- Financial - grants, funding agencies, other sources of income
- Activities and processes - programs you run, systems you employ
- Past experiences - building bases for learning and success, your
reputation in the community
Listing External Factors:
Opportunities and Threats (O, T)
For examples :
Forces and facts that can does not control include :
• Future trends in your field or the culture
• The economy - local, national, or international
• Funding sources - foundations, donors, legislatures
• Demographics - changes in the age, race, gender, culture of those you
serve or in your area
• The physical environment (Is your building in a growing part of
town? Is the bus company cutting routes?)
• Legislation (Do new federal requirements make your job harder...or
easier?)
• Local, national or international events
Preliminary Action Items
 Meet to discuss your competitors, their position, claims, etc., and what
questions you should ask them when you call.
 Contact them to obtain their literature and hear their sales pitch.
 Attract their sales people to find out everything about their perceived
features, benefits, advantages...and how they sell their product against
yours.
 Document, word-for-word, their entire sales pitch, including
everything they say about your business.
 Organise and analyse their literature.
 Search on-line databases for news clippings, articles, stories and other
relevant data.
 Contact your resellers and ask their opinions.
Preliminary Action Items
Develop a complete competitive matrix.
Meet with your sales and marketing people to brainstorm the
optimum responses to all of your competitors’ statements .
Develop a full script of bullet-proof responses for all of your
sales and marketing people to use.“I’m glad you asked that
question.........”
Organise and host a focus group of appropriate customers and
prospects to solicit customer input.
Compare your strengths and weaknesses, from an objective
perspective and according to your competitor’s emphasis on
your weaknesses.
Priorities action items for your engineering or other groups to
make product improvements.
 Positioning
Positioning is the art of defining how your product
/service should be perceived by your customers
relative to their perception of your competitors’
products.
How will a customer distinguish your product or service
from those of your competitors?
Positioning is extremely valuable especially when you
are not the market leader because you must establish
the benefits of going with your lower known product
or service.
Work sheet
This work sheet will allow you to identify the prime benefits of your
product/ service as well as who would benefit by using it.
Positioning activities
Determine product's position with respect to the following:
•Category
A.What is it?
B.What does it do?
•Class
A.High-end
B.Low-end
•Features and benefits
A.What's new, different, better, etc.?
B.Who will buy this product?
•Price
A.What's the right price for this product?
Positioning
 Customers will know they need my product/ service because:
 Briefly describe specific selling features of your product.
 They don’t know how to...............
 It costs too much to...............
 They waste too much time doing...............

 My product/ service meets the needs of:
 List the types of customers who could benefit from your product/service.
 Business owners, entrepreneurs, department managers
 Investors, bankers
 Lawyers ,CPAs, consultants, etc.
 These customers will benefit from my product/service because:
 List the key benefits of your product/service; be sure to list benefits and not just features.
 Business owners, entrepreneurs , department manager, because....
 Investors, bankers, because ...............
 Lawyers, CPAs, consultants, because...............
Positioning
Where would you position your organization and/or products?
Where would you like to be?
How do your customers perceive you?
HIGHPRICE

LOW HIGH
QUALITY QUALIT
Y

LOWPRICE