The feasibility of the project should also be checked at this stage. This is mainly based on financial capacity, but additional elements should also be taken into account, depending on the nature of the production of the new product and its impact on the entity's existing activities, for example, production and staff capacity.
Stage 3: Analysis of investment potential
The analysis of potential consists of an examination of the size of the economic zone in which the investment is planned, an assessment of the competition and the identification of barriers in the market.
Once the market and competition analysis has been carried out, the potential of a given industry to carry out production or sales activities in it can be preliminarily estimated.
Step 4: Return on investment analysis
The next stage is an analysis of the costs and revenues associated exclusively with the production, distribution or sale of the product selected at the beginning. This part, which is the financial analysis, also takes into account the changes in capital in the other activities resulting from the expansion or change of the product portfolio. It is important to identify all groups of costs and revenues. This is because it allows a reliable forecast of the financial result of the planned investment.
The fourth stage allows for a final assessment of the profitability of a given company. It also shows the distribution of profitability scores over successive years, allowing for the selection of the year in which a given type of company should be launched.