It is neither feasible nor advisable to drive eight hundred kilometre in eight hours.Is it really feasible to go for a Himalayan expedition in winter?
The term ‘Feasible’ is commonly used in many circumstances and very often without a proper understanding of the depth it carries. The synonyms of Feasibility are – Viability, Possibility, Probability, Likelihood, Practicability etc. But for all the reasons of making a palatable language experience, these words cannot be utilised as blind replacement of the word ‘Feasibility’.
Merriam Webstar dictionary explains ‘Feasibility’ as ‘capable of being done or carried out’. The underlying meaning of this word suggests the likelihood of something being done. It is widely used in business environment. In my previous article titled ‘Feasible, Viable and Sustainable’ I had covered some aspects of the term Feasibility’.
In business the term ‘Feasibility’ is used in multiple occasions and often replaced by the word ‘Viability’, though there is a fine difference between the actual meaning of these two words. You may read my earlier post ‘Feasible, Viable and Sustainable’, to know the content therein.
In this article, I would try to explain the reason why a Feasibility Study is important for every business and to explain my position, I would take a proxy case to build up my story.
Plastic Recycling a Case Study
An entrepreneur is aware that there is good potential in the sustainability business model. He knows some of his class mates entered into the E-waste recycling business and as far his knowledge goes, they are doing well. But his intuition tells him that though E-waste recycling has a good business prospect, the collection mechanism could be critical. Also, the outputs after the process are many, which makes the end product selling more critical. He feels that setting up a PET bottle recycling facility would be less risky as there is enormous availability of waste PET bottles, the end products are flake and granules and current regulatory guidelines recommend 30% use of recycled material with virgin products.
He plans to set up the facility in Tamil Nadu, where he feels the competition to be low. He has some contacts in the buyer community, and believes that he will be able to sell his produce easily. He plans to go for investment from a private equity investor.
Exploring the Benefits of Carrying out Feasibility in the above case
Taking the above case, let us try to understand the negative impacts of not carrying out a feasibility study.
1. Supply Side: The entrepreneur is aware that there is no shortage in the availability of waste PET material for recycling. But he is not certain of the number of other players operating in the same zone, their capacities, the type of supply bottlenecks faced by these players, the purchase mechanism, possibility for long-term supply agreements etc. Such information, if not available, would pose a major challenge in planning his plant capacity, strategizing procurement process and assessing operating cost structure. 2. Market Understanding & Competitive Advantage: As an entrepreneur, you may be to some extent know the buyers. But you may not be knowing some of the critical aspects like, what is the quantum of demand, buying cycle, specification / quality requirement, price movement, number of other manufacturers and their share in the total market, whether there are inward movement from other states etc. Without such information, your market understanding will be opaque.The scope of a feasibility study will include market analysis, which provides insights into customer needs, preferences, and behaviour. Understanding the market dynamics helps in refining the product or service offering to better meet customer demands. Feasibility studies enable you to identify competitors, their strengths, weaknesses, and market positioning. This knowledge can be leveraged to develop a competitive advantage and unique selling propositions. 3. Technology Selection: Without an objective assessment of the available technologies in the market for the specific manufacturing process, their adoption and success rates globally and within the country of operation, after sales support, acquisitor of technology could be futile. A feasibility study may bring out such aspects that are broadly unknown and help in the selection process. 4. Cost Optimisation: In actual project environment, you may find mutually exclusive opinions on cost appears from different angles.All these points are not standalone decisions on cost, rather they are strongly embedded in some or the other technical decision- making process.
By carrying out a feasibility of a project, you can identify potential cost overruns or budget constraints. Adjustments can be made to the project plan to ensure that resources are
5. Regulatory Compliance: Feasibility studies assess the legal and regulatory requirements applicable to the project, ensuring that it complies with relevant laws, regulations, and industry standards.
6. Investor Confidence: For projects seeking external funding, conducting a feasibility study enhances investor confidence by demonstrating that the project has been thoroughly evaluated and has a high likelihood of success.
Further, by undertaking a detailed feasibility study, you should be able to, optimise your resource utilisation, planning project schedule properly and take information/ data drive decisions, which may help long term sustenance of your project.