Frequently Asked Questions for the Feasibility Plan

Part 2: Feasibility
Q: I have question about the raw materials under the technical feasibility section. I was wondering what you are looking for in terms of labor availablity in the foreign country becuase I have been doing research and have not been able to find whats available, all I find are the unemployement rates.

A: Unemployment is a good start but don’t worry if you can’t find exactly what you are looking for. You can make assumptions based on how big the labor force is in general and if the competitors have manufacturing plants already.  In the end, if you don’t have much confidence that you can find employees, that would be a reason to decide against manufacturing in country.

Q: How to figure this out: "how much capital is needed to start production, given your market potential?" i can tell it is basically asking how much initial investment on property, plant, and equipment there needs to be.  my question is how does my knowlege of market potential dictate this figure.

A: Yep, you need to forecast your first year sales. So make an estimate of how much share of the total you will get, based perhaps, on the share in the U.S. then cut it down because a first year introduction will have a hard time capturing over 5% of the market, especially with a mature juice market as you all have described.

When it comes to costs, again, estimates. We don’t have access to actual costs, so you can think about the price in U.S. and the retail markup and what proportion of that is marketing, and so forth, coming to a percent of the price that is production. Then to double check, you can get actual costs of ingredients – again, just price at the store if it is hard to get producer costs, and start estimating and see if the two come out close (starting with product and starting with costs (if that makes sense). You can also sometimes find research reporting on costs in an industry.

Of course all this depends on sales volume you expect because there are economies of scale.

So, just make a logical argument and don’t worry about accuracy. This is about knowing what to include and when you are actually doing it, you’d have real costs.

Another consideration, of course, is how you will produce it – here in US for export, or locally with a joint venture perhaps.

Finally, you might consider what Ian, our guest speaker, said about FOB multiples (e.g., retail price might be 4-8 times FOB cost).

Part 1: Market Analysis

Q. will we get penalized for going over the page limit?
A. YES. Up to one page over ok. Reference list or Appendices don’t count in 10 page limit. It is hard to make something shorter, especially when you’ve spent so long on research and writing. A trick – put anything you want in an appendix and put a few of the choice points in the text, referring to Appendix X for more (appendix has no page limit). When figuring out how to cut, foremost is “does this help us decide whether or not and how to market our product in this country?”

Q. Will we get penalized for going over 15 minutes in the presentation?
A. No, but it could affect your grade on it because you’ll have to stop at 15 minutes.

Q. I have culture and have been having a really difficult time condensing the information into under 3 pages

A. You could write 100 pages on culture, so the way to condense is to think about the product. Which things will affect its marketing? Some things are more important than others. Another trick is to make a table and put it in the appendix then refer to it in the paper, mentioning a few key points in the paper.

Q.I am struggling to complete the Business Target Market portion of the market analysis.

A. Have you tried primary research? You could call the office of the U.S. embassy to Angola: http://angola.usembassy.gov/. The staff there might have ideas for you. You can also try finding someone from Angola on Facebook or some other network and asking them for advice. Or try finding a pharmacy in Angola that you can call directly if you detect they can speak English. Skype is only 2 cents a minute for this kind of call. I also see on this site that there is a US-Angola Chamber of Commerce.

You might also look at the export.gov list of freight forwarders (http://www.export.gov/logistics/eg_main_018144.asp ). There are a couple in Reno and they might give you guidance.

It is possible that you can’t get any more data, but if you indicate the effort you made it will be fine (such as listing the attempts in an appendix so I can see it).

Q: What exactly is the character of the market?
A: This is a description of the market. You might define the market by, say ages, but then you should describe based on their behaviors, attitudes, values, where they work and live, anything you can find about this target group.

Q. Where to find penetration/adoption rates and absolute number/size of market?
It is not likely that you’ll find these numbers, so you’ll have to estimate based on reasonable logic and assumption. Market size – if you are using an age range you can find the number in that group in secondary research. If you are using behavior, such as number of people who have a healthy lifestyle it is much harder – even in this country, so this is why many companies use demographics at first. So one solution is to change the market descriptor to something you can find info on, because it is very important to know how many are in the target so you know if it is a profitable target.. Penetration: If you have the annual dollars spent on the product category, you can divide by the average price and an estimate of how many times a year someone would buy the product to come up with an idea of the number of people buying. That is likely to be fairly inaccurate, so you’d use other ways to validate, such as looking in the U.S at the penetration rates for this or a similar product. If you can’t find that, use the product category – outdoor /active clothing or juice drinks, for example, and then logically say that you assume the penetration to be the same for this product in that category. You can also call the company directly and ask the PR folks to give you a ballpark breakdown of their US market and what percent of X age group buys. They won’t give you anything too specific, but they are likely to respond to your guesses – “would you say that more or less than half of 18-24 year olds buy outdoor clothing…?"

Q. How to find market share and competitive information?
If you can't find this in secondary research, call Pat Ragains at the library to see if he has an idea. You can certainly find info on competitors in this country and then see which ones export to your country. Call the companies, look at annual reports, or you can talk to a retailer in the country. Call them using Skype and ask what products are on the shelf in this category and what is the big seller and which company makes it, etc.