Feasibility analysis

Feasibility is concerned with availability of resources and competencies to driver a strategic option.It determines an option's implement ability and workability in practice.It assesses the organization's capability to make the strategic option succeed.
The approaches available for feasibility analysis are:

1. Fund flow analysis :It assesses financial feasibility.It forecasts the funds required and the likely sources of those funds for a strategic option.The timing of new funding requirements are also identified.Fund flows are inflows and outflows of cash and cash equivalent.Operating activities are the principal cash inflow activities.Fixed assets,working are,tax and dividends are the principal cash outflow activities.
2. Break even analysis :It studies cost-volume profit relationship to assesses financial feasibility.This identifies break even point where revenue equals cost.Costs are classified into fixed and variable.Variable costs directly very with production levels.Fixed costs remain fixed.Profit is possible when sales exceed the break even point.Break even analysis helps to assess whether the strategic option is feasible in meaning profit target.It also provides as assessment of risk of strategic options having different cost structure.
3. Resources development analysis :It identifies needs for resources and competencies for a specifics strategic option.It is used to judge.

• Sufficiency of current resources and competencies to pursue a strategic option.This is necessary to stay in business.
• Need for unique resources and competencies to sustain strategic advantage.This is necessary to complete successfully.

4.Staying in business :The questions for analysis are :

• Do we lack any necessary resources.
• Are we performance below threshold on any activity.