An example of a feasibility study process is presented below. Although this example is for an assisted living facility, the process is similar for most projects. Since Strategic Performance Group LLC (SPG) has conducted hundreds of market feasibility studies we have developed a model and methodology that has been tried and proven. When reviewing the feasibility for an assisted living facility there are four components that are critical to the study.

1. Industry Overview
Factors that we look for within the industry overview include growth trends in the industry, the market size of the industry, an overview of long term care including the profile of a typical resident (age, gender, etc.) in an assisted living facility and their average length of stay. Other industry data may include average revenue generated, gross and net profit margins and operating ratios.

2. Demographics of the target market area.
The target market can be defined as a specific radius of the proposed facility. Depending on the market, that area can range from as little as 5 miles up to 30 miles or more. Demographics that are critical for analyzing the feasibility of an assisted living facility are the number of people in the target market that are over a certain age, e.g. 75, the mix of males vs. females, household income, one person households, etc. It is not only critical to acquire current year demographic statistics but also a 5 year projection so that future market potential is also taken into consideration.

3. Competitor overview
A competitor analysis is critical in ascertaining the current demand for assisted living facilities. Once all the assisted living facilities in the market area are identified then it is important to interview the management staff at each facility. The market survey includes information on each facility including age of facility, number of beds or units, type of units, i..e. 1 bedroom, 2 bedroom, studio, private, semi-private, etc., size of each unit in terms of square footage, monthly fee charged per unit, occupancy rates, waiting lists, initiation fees and specialized care such as Alzheimer’s and dementia.

Analysis and Recommendations
Once the industry overview, demographics identified and competitive analysis are completed, the next step is to analyze the information gained in the market place. The analysis will consider demand – current and potential, demographics, competition, etc. to determine whether an additional assisted living facility has sufficient demand to support it. As part of the analysis, revenue potential is projected based on number of units in the facility. Income is then projected based on number of units and expected fees per unit.

As a result of the feasibility study, a GO / NO GO recommendation is made by SPG based on a thorough review and analysis of the market. The client can then use the professionally prepared report to make a final decision or to meet with lenders, investors, etc. for financing, knowing that they have received an objective and independent assessment of the feasibility for developing the project.

Strengths are what your company is really good at. Some strengths can be viewed as core competencies. Strengths may include industry leadership, management capability, technological advantage, employee expertise, etc. Leveraging strengths can lead to sustainable strategic advantage. Weaknesses or limitations are areas where you might be vulnerable in the marketplace or to competition. Sometimes, weaknesses are the inverse of strengths, e.g. the technology that you are employing may be coming obsolete as competitors are investing in more state of the art technology.

Opportunities present themselves based on changes in the competitive environment, market place, changes in regulations, patents, etc. Likewise, threats may surface as a result of increased government regulation, a soft economy, new entrants in the marketplace with substitute products, etc.

Conducting a SWOT analysis on a periodic basis as part of your planning process will ensure that you are formulating strategies that will make you a long term player in the marketplace.

Typically, a business is comprised of both primary and secondary activities. Primary activities are those involved in the physical creation of the product or service, its marketing and delivery and after-sale support. Primary activities typically include.

• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• Service

Support activities provide the infrastructure or inputs that allow the primary activities to take place. Support activities typically include general administration, human resources management and research, technology and systems development.

For example, some of the factors for assessing sources of differentiation in a primary activity such as Marketing and Sales include…

1. Effectiveness of market research to identify customer segments and needs.
2. Innovation in sales promotion and advertising.
3. Evaluation of alternate distribution channels.
4. Motivation and competence of sales force.
5. Development of an image of quality and favorable reputation.
6. Extent of brand loyalty among customers.

The initial step in value chain analysis is to divide a company’s operations into specific activities or business processes. The next step is to attempt to attach costs to each discrete activity. Each activity in the value chain incurs costs and ties up time and assets. This will reveal either cost advantages or disadvantages.

Once the value chain has been documented, it becomes important to identify the activities that are critical to buyer satisfaction and market success. The activities that are examined are based upon the basic mission of the company e.g. superior service, low cost producer, quality, etc. The value chains and the relative importance of the activities will vary by industry. The relative importance of value activities also can vary by a company’s position in a broader value system. This broader value system can include the value chains of its upstream suppliers and downstream customers.

Value chain analysis is most effective when comparing the value chains of activities of key competitors. A meaningful comparison is critical when evaluating value activity so it can be determined if it is a strength or a weakness to the business.

Positioning by Attributes or benefits
The most frequently used positioning strategy tries to capitalize on a specific product attribute, benefit or feature. Economy, reliability or durability are attributes frequently used in this strategy. Products can be positioned in terms of a combination of attributes. However, using too many attributes in a positioning strategy may confuse consumers as to what the product stands for.

Positioning by Quality / Price
The best way of looking at this strategy is in terms of a continuum from high to low. In some cases, a strategy of high quality/ high price is pursued while other companies pursue a strategy of good value at a low price.

Positioning by Use
To stimulate consumption of products whose growth has slowed, companies attempt to develop new ways for consumers to use a product. An example is orange juice which used the following message to stimulate consumption. “It’s not just for breakfast anymore.”

Positioning by User
This strategy entails associating a product with a user or a class of users. For example, Harley Davidson broadened its image to reach a new class of motorcycle enthusiasts: aging baby boomer professionals.

Positioning by Product Category
With this strategy, one objective is to get consumers to associate a product with a product category about which they have a positive image. For example, Folgers instant coffee positioned itself as tasting like freshly brewed coffee.

Positioning by Competitors
Positioning relative to competitors can succeed when a competitor is well-known or has a well-established image. The most famous example of this strategy is the Avis car rental slogan, We’re number two, but we try harder.” A more recent example is Sun Country Airlines positioning itself against Northwest Airlines as the smaller, more affordable airline.

Regardless of which positioning strategy you use, it is a subjective evaluation of the product and must be used in terms of how consumers will see the product.

• Remote
• Industry
• Operating

The remote environment is one in which a company has little if any influence. It includes the economic, social, political, technological and ecological factors. For example, the social factors that affect a company include the values, beliefs, attitudes, opinions and lifestyles of those in the external environment. Translating social change into business strategies is not easy. However, gaining a better understanding of such things as changing work values, geographic shifts in populations, ethical standards, etc. can result in developing successful strategies.

Factors in the industry environment include how the industry is structured. For example, in the book, Competitive Advantage, Michael Porter discusses the five forces influencing competition within an industry. There are the threat of new entrants, the bargaining power of customers, the bargaining power of suppliers, the threat of substitute products or services, and the positioning among existing companies. Designing viable strategies requires a complete and thorough understanding of the five forces.

The operating environment consists of factors relating to the competitive situation that can directly influence a company’s ability to profitably market its products and services. This category can be separated into competitive position and customer profiles. When looking at competitive position, many factors are included such as breadth of product line, price competitiveness, relative market share, capacity and productivity, raw material costs, caliber of personnel, effectiveness of sales distribution, etc. When conducting a competitive analysis, this is generally the type of information that you are seeking about your competitors.

Customer profiles are essentially an understanding of a company’s customers. This includes a segmentation of customers along the lines of geographic, demographic, psychographic and behavioral. Profiling your current customer base identifies those characteristics that will be useful for identifying new customers with similar characteristics.

Although it can be time consuming, a thorough analysis of your environment can provide the basis for a well-thought-out strategy that will allow your company to anticipate future business conditions and result in improved performance and profitability.