Question 2: Feasibility Analysis

You are planning to launch an office cleaning service company in Munich. Critically discuss the four forms of feasibility analysis.

Explain each form and give a brief example of your planned office cleaning service for each form of feasibility analysis (how would you apply the feasibility analysis to your business idea?).

Answer:

The four forms are

1. Product/service feasibility analysis:
   • Describes how appealing the product is and whether potential customers need it.
   • Example: Do companies in Munich need office cleaning services? Would it be appealing for them to have an external company provide this service for them? Do market research, speak to potential customers, i.e. companies in Munich with offices.
2. Industry/target market feasibility analysis:
   • Describes what the industry structure is. Are there a few big players or are there many small companies? In which stage of the industry life cycle is this specific industry? Is the market growing, stagnant or shrinking?
   • Example: Analyze the industry and the market for office cleaning services. Do market research to find out more about the industry and the market.
3. Organizational feasibility analysis:
   • Describes whether you have competent, motivated management (or an entrepreneur) and the necessary resources.
   • Example: Do you or your manager have the knowhow and the non-financial resources for offering cleaning services in Munich? Do you know how to market and sell cleaning services?
4. Financial feasibility analysis:
   • Describes / analyzes how much start-up cash is needed to start the business and how attractive the proposed venture is financially.
   • Example: Try to find out the financial attractiveness (profit margin) of similar businesses and prepare a rough business plan of your proposed cleaning service.