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Chapter I BACKGROUND OF THE STUDY Introduction Filipinos nowadays are exposed on different kinds of foods without taking in consideration of the benefits they would get from it. Filipinos love to eat and always desires what will satisfy them. One of the food Filipinos love to eat is candies. Candies are rich confection made with sugar and often flavored or combined with fruits or nuts. There are many different kinds of candies already existing here in our country. One of those is candy bars. Candy bars are very common especially to children. It is a confection in bar form comprising some or all of the components like cocoa solids, cocoa butter, sugar and milk. It is a form of confectionery which is

commonly packed on a bar or log form and is often coated with chocolate and sized as a snack for one person. These types of candies are commonly eaten anytime of the day and in any occasions.

Since candy bars are often made out of fruits, the proponents manufactured a candy bar which is made of kamias. Kamias or Averrhoabilimbi is a fruit commonly seen here in the Philippines. This is usually planted in the backyards of many Filipino people. Kamias is a small tree, growing 5 to 12 meters high. Leaves are pinnate, 20 to 60 centimeters long, with hairy rachis and leaflets. Leaflets are opposite, 10 to 17 pairs, oblong, 5 to 10 centimeters in length. Panicles growing from the trunk and larger branches are hairy, 15 centimeters long or less. Flowers are about 1.5 centimeters long, and slightly

fragrant. Fruit is green and edible, about 4 centimeters long, subcylindric, or with 5 obscure, broad, rounded, longitudinal lobes. Kamias fruits are considered antibacterial, astringent, antiscorbutic, febrifuge, antidiabetic, stomachic,

refrigerant. This fruit is also considered astringent, refrigerant, and stomachic.As have been observed by the proponents, since Kamias fruits are everywhere, people cannot notice the other importance and uses of such fruit. This is the reason why the proponents came up with study.

Through this study, the proponents would like to introduce a candy bar made from kamias fruit. This offers several benefits. Every one hundred grams of the edible portion of the kamias fruit contains protein, calcium, phosphorus, iron, thiamine, riboflavin, carotene, ascorbic acid and niacin. Filipinos are known for valuing the health benefits that they could get from the food they are going to eat. They considered how Filipinos love to eat sweets regardless of their age. This gives the proponents the idea to introduce a candy bar with a new flavor in the market using the resources which are usually set aside by many, the kamias fruit which is known of being abundant in our country. This fruit contains small amount vitamins and minerals Brief Background of the study Consumers nowadays, are more conscious in terms of what are the content of the food they will eat. They are more attractive to those foods which are made from natural ingredients but in terms of sweets they sometimes ignore its contents provided it will give them satisfaction in terms of its taste.

In planning a business, the first thing to consider is the consumer. Consumers are said to be the life blood of a business. A business owner must identify first who their potential consumers are and determine first the needs and wants of their consumers. Nowadays, other than being health conscious, they are also looking more on the price of a certain product. That is why the

proponents find a main ingredient which is not only at a lower price but also considered by many as no other use as its usual consumption, and this is the kamias fruit. In the Philippines, this fruit is commonly found in backyard and are eaten either raw or dipped on rock salt. It can also make dried to preserved and used as a souring agent for a Filipino dish called Sinigang. This fruit can also preserved in sugar and is also used as alternative stain remover by most Filipino mothers. The proponents considered the feasibility of entering the candy food business, considering those candies that are being patronized by most Filipinos. Through this, the proponents came up with the idea of producing kamias candy bars made from raw kamias fruit at a price affordable to Filipino consumers. This product will give customers the satisfaction they want in terms of candies without sacrificing too much on the quality and benefits of the product and the assurance that they will enjoy its taste at a lower price.

Objectives of the Study The main objective of this study is to determine the viability of the proposed business and to determine if it will be feasible or not. It aims to achieve the following specific objectives: 1. To determine the market feasibility of the proposed study by identifying the target consumer and formulating appropriate strategies on how to introduce the product on the market. 2. To determine the technical soundness of the study. 3. To determine and analyze the organizational structure that will suit the overall operation of the proposed business. 4. To create a realistic financial projection to test the profitability of the study. 5. To determine the impact of the study on the economy of the proposed study. Definition of Terms The following are the terminologies needed for the better understanding of the study. The terms are listed below with their corresponding theoretical and conceptual definition. Candy. A solid confection of sugar and syrup with flavoring, fruit, nuts, etc. (Websters, 2002). In this study, it refers to the kind of products which the

proponents proposed.

Candy bars. It is confection in bar form comprised of some or all of the following components: cocoa, butter, sugar, and milk (Karmel, 2008). In this study, it refers to the kind of product proposed by the proponents. Kamias.A tropical fruit native to Malaysia and Indonesia and belongs to the family of Oxalidaceae (InfopideaTalk). In this study, it refers to the main ingredients used in making Kamias Candy Bars. Market. They are people with both desire and ability to buy a specific offering (Kerin, 2009). In this study, it refers to the potential customers on where the proposed product is for. Target market.These are specific group of potential customers toward which the organization directs its marketing program (Kerin, 2009).In this study, it refers to the specific group of market where the proposed products are to be produced. Marketing strategy.Means by which a marketing goal is to be achieved (Kerin, 2009). In this study, it refers to the program on how the proponents will introduce the proposed product in the market. Sinigang.It is Filipino soup or stew characterized by its sour and savory flavor most often associated with tamarind (wikipedia). In this study, it refers to a dish where the kamias fruit is added as a souring agent. Confectionery.It is the art of creating sugar-based dessert forms or subtleties, often with pastillage. In this study, it describes the taste proposed product.

Scope and Limitations The proposed business is named JID Manufacturing Enterprise, the manufacturer of Kamias Candy Bar. The product utilizes the use of excess

kamias in the households. The main focus of this study is the marketing aspect, technical aspect, management aspect, financial aspect and socio-economic aspect. In the marketing aspects, to determine the projected demand and supply of the product and its positioning and product features, the proponents conducted surveys through the use of questionnaires to come up for an output for the product of the study. The proponents used the descriptive method of research in taking the needed information relevant for the study. This covers marketing

strategies to effectively promote the product of the study, the Saimak ChocolateCoated Candy. Surveys and interview has to be done to assess the behavior and attitude of the consumer towards the product. Questionnaires will be

distributed to the respondents of ten (10) barangays in Rosario, Batangas. Data gathered will help in evaluating the consumers projected demand for the product. Questionnaires were given to the selected barangays of Rosario, Batangas. In the technical feasibility aspect, it deals with the manufacturing process, the time allotment, the production schedule, the capacity of machinery in production, the raw materials, and the supplies of equipment. Technical study also includes the location and layout and proper waste disposal. The purpose of this limitation is to maintain the right equipment to be used in makingSaimak Chocolate-Coated Candy. The idea of the manufacturing process is depicted in

the flow chart. The features of the proposed product are based on the result of the surveyconducted by the respondents. The proper usage of equipment is considered in order to avoid the defects on the products during the production. The management aspect discussed the form of business ownership and the organizational structure including the contribution of the partners. It also shows the specific identification of the flow of uncertainty, manpower requirement and their duties. The proposed business used the line organizational structure which is a simplest form of structure and directs straight line responsibility and which control is from the top to the middle management up to the lower management. The general manager as the overall supervisor in the organization must have the proper skills and knowledge in the business. In the financial study, the profitability of the business was discussed. It includes the cash inflow and the overall expenses of the production. The cost were properly calculated and stated to easily forecast its demand. This aspect focused on the capital to be used for the establishment of the business. The figures in the financial statement and financial analysis are based on the five (5) year projection. Most of the financial figures were based on the assumptions of the proportion. The socio-economic aspect deals with the economic responsibility of the business in the society. It determines how the proposed business may benefit not only the company but also the society, public and the government. It also discussed the large increase on job opportunities. It may be limited based on the skills and the capacity of the business and restricted by the type of business

strategies to be applied. This study can also help other raw materials in the environment. This study will be affected by certain changes in the near future. The efficiency and effectiveness of this study will depend on the actions that will come up with the circumstances that might occur.

Chapter II MARKET STUDY This chapter will discuss the different marketing strategies and techniques to be used to maintain and increase the number of respective buyers. This also focused on how to determine the supply and demand and other areas that will affect the market of the product to foreseen the profitability of the proposed business. This chapter includes the size and characteristic of the market, the demand for the product, the availability of supply and the competitive situation (Fajardo, 1985). A good marketing study of a business can create or attract more customers. It is a process wherein the business can create sound customer relationship and to identify the needs and wants of the potential group. This refers to the performance of the business that will help direct the proposed product from the manufacturer up to the target consumers and how those consumers are willing to purchase the product. It determines the perceived need for the product and the type of strategies needed to make the proposed product acceptable to the market and ho this product will meet the needs of the consumers. This chapter contains the information that will help ensure the

success of this market study. Objectives of the Study The objectives of this study are to determine the feasibility of the Saimak Chocolate-Coated Candy. The objectives of the study are the following: 1. To determine the target market of the proposed product. 2. To present the demand and supply projection of the market.

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3. To analyze and present the possible products SWOT analysis and other factors that will affect the market. 4. To identify the appropriate marketing strategy to create a competitive edge over its related product. Research Methodology Methodology isthe process used is how the research should be undertaken, the it

to collect information and data for

purpose

of making business decisions. It deals with the techniques used, data gathering instruments and procedures, subject of the study and statistical treatment of the data to acquired adequate information (Valdez, 2008). This part contains the research method used and the data gathering procedures and techniques together with the instruments applied for the development of the study. This were used to gather information needed for the accomplishment of the important components if the study. Specifically, this study contains research design, respondents of the study, data gathering instrument and procedures, statistical treatment and findings. Research Design Research design is the plan, structure, and strategy of investigation conceived so as to obtain answer to research questions and to control variance. It is also the specification of methods and procedure for acquiring the information needed. It is the operational pattern or framework of the project that stipulates what information is to be collected from which sources by the procedures.

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In order to determine the marketability, the proponents used the descriptive research method through survey in gathering the needed information. The objective of this method is to portray an accurate profile of person, event or situation (Robson, 2002). Survey studies are employed to measure the existing phenomenon without inquiring into why it exists. In such studies, one does not have to take into account the relationship between variables. The main intention is to use the data in problem solving rather than for the hypothesis testing. Descriptive method involves the collection in order to test the feasibility and to gather information concerning the production of the Saimak ChocolateCoated Candy. This includes the distribution of questionnaires to assess the individual consumption of the related products. This method is used as a

descriptive survey instrument to conduct measurements from the identified measurements (Sevilla, 2004). Respondents of the Study The proponents conducted their survey in Rosario, Batangas. The

respondents of this study came from those barangays with the most number of merchandise stores in Rosario. These barangays consist of Poblacion A, B, C, D, E, Alupay, BagongPook, Baybayin, Itlugan, Masaya, Namunga and San Roque. The proponents did not take into consideration the income of the target since the product will be offered at a reasonable price. Questionnaires are also distributed to (30) thirty retailers who are selling the related products to consider as respondents to gather information regarding the supply of the related products. The information gathered was used to

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determine the willingness of the target market to purchase and sell the proposed product. The proponents target market includes the target with the age of 5 years old and above since those ages has the capacity to give substantial information. Data Gathering Instrument In the process of gathering the necessary data, the proponents prepared (2) two sets of questionnaires to serve as a guide in obtaining relevant information for the proposed product.Questionnaires are the list of a research or survey questions asked to respondents, and designed to extract specific information. the purpose of the questionnaires are to collect the appropriate data, make a data comparable and amenable to analysis, to minimize bias in formulating and asking question, and to make questions engaging and varied. The first questionnaire was the consumer questionnaire which was distributed to the target consumers of the proposed product while the second questionnaire was given to the retailers who sells the related products. The questionnaire for consumer is consisted of the respondents profile, past usage, frequency of buying and willingness to buy and the price of the proposed product. The questionnaire for the retailers specifies the supply of candy bars for the past (5) five years to determine if these are still demandable. The

proponents used the questionnaires to introduce the proposed products to the target market and to identify the potential demand for the product. This is

necessary to find out the specifications that the consumers want for the product. Reading different feasibility studies and other related reading materials as well as

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consulting to the advisers served as an important guide in formulating the questions. The proponents used convenient sampling wherein the proponents considered every individual within the target barangays who are living near the retail outlets and those respondents who are usually buying in a retail store. Convenience sampling involves selecting haphazardly those cases that are easiest to obtain for your samples. The sample selection process is continued until the required sample size has been reached (Saunders, 2009). Data Gathering procedures The proponents did brainstorming and researches to formulate the questionnaire. Then, the questionnaires are checked and validated by the advisers, panelist, grammarian, statistician, and expert. To come up with the historical data, a significant number of questionnaires are distributed to the target market. The proponents collected the information regarding of the barangays with the most number of merchandise stores in Rosario, Batangas from the Municipal Planning and development office of Rosario to secure list of merchandise outlets and retail stores of the given municipality. (396) Three hundred ninety six

respondents have answered the questionnaires. The proponents come up with the number of respondents by using the Slovin formula using 5% margin of error to have an accurate result.

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The researchers explain further the proposed products to the respondents to guide the target to answer the questions regarding the product and the questionnaire itself to avoid mistakes and to come up with the desired result. The result of the survey were tallied and tabulated and were checked by the adviser. Data gathered from the survey were interpreted into meaningful information which will greatly contribute for the success of the study. Statistical Treatment of Data The proponents derived the samples from the 2012 number of individuals from the (12) twelve barangays in Rosario, Batangas. During the administering of the instruments, the proponents had a latter from their university which gives them the authorization to perform the research. In computing the sample size, Slovinsformula was chosen using 5% as the margin of error. The total number of individuals in the target barangays in Rosario, Batangas was 34,779.

Formula: n= n = sample size N =total number of individuals of the target barangay in Rosario, Batangas e = 5% margin of errors From the data gathered, the proponents derived the desired samples:

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n= n = 396 Demand Demand is defined as the total amount of certain goods that will be purchased at a given time for a given price. The market demand is a quantity of a commodity that buyers will purchase at a particular market price (Cuthbertson, 1985). Economists defined demand as the relationship between the quantities of a good or service consumers will purchase the price charged for that good. Demand represents the entire relationship between quantity desired of a good and all possible prices charged for that good. Several factors such as the

consumer tastes, price and availability of similar products, and consumer income will affect the demand (Kerin, 2009). It can be determined by various factors such as the market price, the price of substitute goods, and complementary goods. These are the wants for specific product that are backed by an ability and willingness to buy them. purchase power. Demand analysis is used to identify who wants to buy a given product, how much they are likely to pay for it, how many units they might purchase, and other factors that can be used to determine product design, selling cost, and advertising strategy for a product.In this study, the proponent conducted survey by distributing questionnaires to its target consumers to find out if the market has Those wants become demand when supported by

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the need for the product. It is important to have a demand analysis to determine the sustainability of the business, tocontribute for the businesss decision making. Table 2.1 Historical Demand Year 2007 2008 2009 2010 2011 Historical Demand 431,179 466,632 483,379 500,818 518,789

Table 2.1 shows the historical demand of the year 2007-2011. There is a direct relationship between the numbers of individuals and the historical demand because as the former increases the latter also increases. Major Consumers of the Product Consumers are individual who buys products or services for personal use and not for manufacture or resale. The consumers for this study are those who are willing to buy and have the capabilities to buy the proposed product. The proponents chose individuals with the age of (5) five years old and above as major consumers of the product.The success of business will depend on how those consumers will accept the firms product together with the other factors. Projected Demand The proponents used the historical demand as basis to determine the projected demand. Straight line method was used to analyze the marketability of the proposed product and to determine if the product could penetrate the market.

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Table 2.2 Projected Demand Year 2015 2016 2017 2018 2019 Projected Demand 575,344 594,381 613,418 632,455 651,492

Table 2.2 shows the projected demand of the related products for the year 2015-2019. It shows that every year of the operation, there is an increase of demand for the product. It is important for the business to determine number of products that the firm will produce for a period of time. Supply Supply is the amounts of some product producers are willing and able to sell at a given price all other factors being held constant. It is the amount of a product, goods or services, available for purchase at any specific price (Pagoso, 2005). Since, so far, there is no local supplier that introduces the same kind of product, the proponents come up with the SiamakChocolate-Coated Candy which means that the firm will be the sole supplier of Siamak Chocolate-Coated Candy. Historical Supply The total supply for the year 2007-2011, it is based on the survey conducted by the proponents to the retailers of the related products. The

historical demand is obtained by adding the supply for every retailer to its corresponding year. In order to determine the historical supply, the proponents

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gather information of the related products past supply through distribution of survey questionnaires to the retailers. Table 2.3 Historical Supply Historical Supply (pack) 13,212 29,580 48,564 71,788 98,070

Year 2008 2009 2010 2011 2012

Projected Supply Projected supply is estimation, based on historical data, of the future levels of production or distribution demand or other factors affecting profit margin and business activities. This information is used for maintaining appropriate This shows the

inventory levels and managing other supply chain process,.

market acceptability using the past supply pattern given by the data gathered through the survey questionnaires given to retailers. The proponents the straight line in computing the projected supply which was based on the data obtained from historical supply. This was used to determine the market gap in the year to come. Table 2.4 Projected Supply (Pack) Projected Supply 23,605 25,056 26,507 27,958 29,409

Year 2015 2016 2017 2018 2019

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Demand and Supply Analysis Supply and demand analysis was done to determine if an imbalance exist between the supply and demand for the proposed product. There are several factors that will affect the supply and demand; it includes the price of the firm or the competitors product, the number of population and income. It shows the amount of demand which is unsatisfied by their level of supply available. It is essential for the business to determine the supply and demand to contribute in the business decision making. Competition plays an important role in this analysis for it affects the supply and demand. It can influence the consumers buying behavior like the price

offered by the competitors.

Year 2015 2016 2017 2018 2019

Table 2.5 Market Gap Projected Projected supply Demand 575,344 23,605 594,381 25,056 613,418 26,507 632,455 27,958 651,492 29,409

Market Gap 503,750 521,336 538,922 556,508 574,094

Table 2.5 shows the market gap for the year 2015-2019. The market gap was computed through the deduction of market supply from projected demand. Market Share Market share is the portion of total sales of a product or type of product by a company. Increasing market share is one of the most important objectives

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of business. The higher the market share, the higher the return on investment. This is probably as a result of economies of scale(Riley, 2012). Table 2.6 Market Share Annual sales Projected Demand 26,928 575,344 32,313 584,381 34,663 613,418 36,558 632,455 38,385 651,492

Year 2015 2016 2017 2018 2019

Market Share 4.68% 5.53% 5.65% 5.78% 5.89%

Table 2.3 shows the market share for the year 2015-2019. This shows that there is an increase every year of operation. SWOT Analysis SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats that the proposed business face.To be able to translate business opportunities into profits, SWOT analysis is applied. It studies the financial

resources, physical facilities, management capabilities, the market, production process, information system, sources of supply and social environment (Fajardo). Strengths and weaknesses are considered to be internal factors over which you have some measure of control and opportunities and threats are considered to be external factors over which you have essentially no control.The SWOT analysis is a valuable step in your situational analysis. Assessing your firm s strengths, weaknesses, market opportunities, and threats through a SWOT analysis is a very simple process that can offer powerful insight into the potential and critical issues affecting a venture (Berry, 2013).

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It is important to determine they businesss SWOT analysis because it can help the firm to uncover opportunities that they are well placed to exploit. And by understanding the weaknesses of the business, they can manage and eliminate threats that would otherwise catch the firms unawares. The following SWOT analysis describes the key strength and weaknesses and represents the opportunities and threats by the JID Enterprise. Strengths Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within companys control and belong to the internal environment and are expected to effect the firms operations in a positive manner (Diola, 2009). Cheap and Abundant Raw Materials.The proponents chose kamias in making the product since there is an abundant source of this fruit in every household in rural areas. And in the Philippines, this fruit was commonly known as a souring agent or preserving by adding sugar. Reasonable Price.The proponents set an affordable price for the product since its main ingredient was kamias which is known to be cheap in the country. Good Quality Product.The consumers could guarantee the safety and quality of the Saimak Chocolate-Coated Candy for it is carefully processed and made. Availability of Technology.In preparing the products, the firm would only need that equipment commonly used at home.

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Plant Accessibility.The proponents chose a place wherein it offers accessibility. The proponents plan to establish their manufacturing enterprise at Barangay E, Rosario, Batangas near the Rosario public market since it is one of the centers of commerce in Rosario. Weaknesses Weaknesses capture the negative aspects internal to the business that detract from the value offer, or place at a competitive disadvantage. These are areas need to enhance in order to compete with best competitor. The more accurately weaknesses is identified, the more valuable the SWOT will be (Berry, 2013). New to market.Being new to market, Saimak Chocolate-Coated Candy would not easily introduce the product and penetrate the market because of the other existing related product. Limited Capitalization.In starting a business, capital is very important. It isfor its ability in producing the proposed product. Since the firm has limited capital, it means limited production and it cant afford to have technologies f or bigger production and for the improvement of the product. Opportunities Opportunities are presented by the environment within which our organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities.

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Possibility of good profits. The proponents believe that together with the hard work and perseverance of the team, the product can bring more revenue for the proposed business. Possibility of business expansion.After a long span of operation and good performance of the firm, there is an opportunity to expand the business in the other places by increasing the number of its distribution channel. Threats These are indications of an approaching or imminent menace. Negative event that can cause a risk to become a loss, expressed as an aggregate of risk, consequences of risk, and the likelihood of the occurrence of the event. A threat may be a natural phenomenon such as an earthquake, flood, storm, or a manmade incident such as fire, power failure, sabotage, etc. Stiff competition.There are several existing competitors of the proposed product which are already stable in the market and have established a good credibility specially those related products. Change in taste and preference of the consumer. Due to the flavors used and by other technologies applied by the other competitors, there is the possibility that consumer may shift to the other products. Nowadays, because of numbers of alternative products, consumer doesnt stick to a single brand or product for their convenience.

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Marketing strategies and programs Marketing Strategy is something that helps companies achieves Marketing objectives. Marketing objectives help achieve corporate objectives and corporate objectives aim to achieve a competitive advantage over rival organizations. The marketing strategies include attracting consumers through the quality, delicious taste and its reasonable price. A good marketing plan could really help the business to meet the demand and to introduce the product to the market. Product category /quality and style Product quality means that the product can reach and satisfy the needs of the consumers. The main ingredients of the proposed product came from the freshly harvested kamias. To ensure the quality and unique taste of the product. The product of the JID enterprise, Saimak Chocolate-Coated Candy is guaranteed to be acceptable and delicious not only by children but also the elders who love sweets other than that the product taste good, its appearance doesnt look far different from the other existing candy bars. Saimak Chocolate-Coated Candy belongs to the category as

confectionary; the product will be manufactured with a weight of 7grams per piece and 24 pieces per pack. The product will be offered to the costumer at acceptable price which can satisfy them. Every pack is guaranteed to be at its best quality by the trained and dedicated workers. Every piece does not only contain the good quality

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ingredients but also the hearts and visions of not only the head manager but also the dream of its workers. Brand Name Brand name is very important for the recognition of the product the more appealing is the name and the more it will be recognized. Thus, the product was named Saimak Chocolate-Coated Candy the name was derived from the inverted name of the main ingredients of the proposed product which is the kamias. In other countries Saimak commonly stands for different meanings, it is a Persian given name, and hence occurring mostly in the regions populated by the Iranian people. In the Persian language epic, the Shahnameh, Siamak is the beloved son of Keyumars, the first human. In other countries it means a black haired man, bringer of joy, and a great emperor. The name gives the customer the idea that the product is made from the kamias by not only relying on its appearance. The proponents consider this brand name to catch the attention of the customer because of the uniqueness of its name. Packaging Processes (such as cleaning, drying, and preserving) and materials (such as glass, metal, paper or paperboard, plastic) employed to contain, handle, protect, and/or transport an article. Role of packaging is broadening and may include functions such as to attract attention, assist in promotion, provide machine identification (barcodes, etc.), impart essential or additional information, and help in utilization. See also packing.

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The proponents chose the foil-pillow packs the package of the new product for the convenient and appearance of the design. The purpose of the packaging was first is the protection of the content of the product. It is used to prevent other materials to mix with the product. Packaging serves as a silent advertisement because the more it looks presentable and attractive, the more it can invite customers, this can help the proposed product be recognized from the others product one of the content of the package design was the logo to make the logo proposed product more prominent. Packaging has a big role in the marketing strategy of the new product to attract and to catch the attention of the buyers that is why it is important to analyze and be creative in choosing the appropriate packaging for the product. Pricing Price is the value that will purchase a finite quantity, weight, or other measure of a good or service. It serves as the consideration given in exchange for transfer of ownership, price forms the essential basis of commercial transactions. It may be fixed by a contract, left to be determined by an agreed upon formula at a future date, or discovered or negotiated during the course of dealings between the parties involved. In commerce, price is determined by what a buyer is willing to pay, a seller is willing to accept, and the competition is allowing to be charged. With product, promotion, and place of marketing mix, it is one of the business variables over which organizations can exercise some degree of control.

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The proponents have decide to used the penetration pricing, this was used as a strategy to acquire more customer and to position the product into the market as quickly as possible using this strategy, the business could easily recover the cost of the production at a short span of operation and to compete with competitive products. The business will going to set price above the total unit cost and making the product appealing to those no price- sensitive type of customer to easily adjust with the pricing mistakes.

Table 2.7 Selling Price of Saimak Chocolate-Coated Candy Manufacturing cost Pack Piece Direct Material Used/Unit 10.51 Labor Cost/Unit 3.27 Factory Overhead/unit 3.75 Total Cost/Unit 17.53 Mark-up (50%) 8.77 Selling Price -Retailers (VAT Exc) 26.30 Input VAT 12% 3.16 Selling Price Retailers 24.46 Mark-up (30%) 8.84 Selling Price to Consumers 33.30

0.44 0.14 0.16 0.73 0.37 1.10 0.13 1.02 0.37 1.39

The total manufacturing cost for the production of Saimak ChocolateCoated Candy amounted to Php26.30 per pack. The proponents decided to include 50% mark-up and 12% value-added tax which could cover all the expenses of the firm. The proponents also estimated that the retailers would sell the product at Php33.30.

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Distribution In managing its intermediaries, the business will decided to use the direct distribution channel in which the manufacturer will be the one to deliver the finished product to the retailer through a delivery vehicle. It is done to cut costs and to avoid middlemen markups on the product. The proposed product, Saimak Chocolate Coated Candy, will available in all the groceries merchandise stores, public market convenience and retail stores.
Manufacturer

Retailer

Consumer

Channel of distribution The manufacturer will be using the indirect channel of distribution through delivering the products to retailer and they are the one to sell the product to consumer the proponents have decided to provide an improvised delivery with in Rosario, Batangas the

tricycle to deliver the product to the retailer delivery will be done once a week. Promotion

Promotion is one of the major elements of the marketing mix of the business. Promotion is a form of persuasive communication, or getting others to do what you want them to do. Its function is that of informing consumers about a product or service and influencing them to buy that product or service. There are

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many different promotional tools that are used by businesses to enhance the image of the product, such as mailings, speeches, presentations, contests, packaging, films, catalogs, coupons, posters, and even endorsements by famous people. Promotion is an important part of a business's strategy in surviving today's competitive marketplace. Product free taste will be done to introduce the proposed product and to create customer relationship, builds trust and creates connections that ultimately lead to abundant, long-term relationships with the customers. Table 2. Promotional Mix When Where This will Public start on the market day when proposed product was introduced. This will be done for two days.

what Free Taste

Who Proponents

Internet marketing

proponents

Ten days before the operation.

Facebook and www.sulit .com

How Budget The 1500.00 proponents will produce sample products in smaller sizes for free taste and will roam around the Rosario public market. The 300.00 proponents will create an account of the manufacturing company which contains pictures and other information about the product.

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Generalization This chapter discussed the different marketing strategies and techniques used to maintain and increase the number of respective buyers and how to determine the supply and demand and other areas that will affect the market of the product to foreseen the profitability of the proposed business. It generates the strategy that creates techniques, business communication, and business development. In order to determine the market feasibility, the proponents required the number of individuals in the urban and rural barangays in Rosario, Batangas in the Municipal Planning and Development Office to obtain individual ability to purchase the product. The target market of the study is the individuals in those barangays with the most number of merchandise stores in Rosario. The proponents chose

individuals with age ranges from 5 (five) years old and above. The proponents conduct a survey to determine the historical demand and supply of the related products. The historical demand of the product is

10,585,807 pieces and the historical supply of the related products is 10,585,807. The proponents have also created some promotional strategies to attract more customers.

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Chapter III TECHNICAL STUDY The technical aspect is one of the essential of this study because it responds to the operation of the production. This includes the machineries, tools and equipment used in the proposed product. produced at a given time. This aspect also includes the minimization of labor cost and maximizing the output in the production process. The proponents also considered the It also includes the quantity

effective and efficient way of allocating resources that maximize the profit by producing the desired product quantity at the lowest possible cost. Objectives of the Study The objective of this study is to be able to know the technical feasibility of the proposed product, the Saimak Chocolate-Coated Candy. The proponents had set the following objectives: 1. To describe the uses of the proposed product that will meet the customers satisfaction. 2. To determine the steps of the proposed products manufacturing process. 3. To determine the proper plant location; and 4. To identify the manufacturing process used and all the necessary assets including the raw materials, tools, and equipment needed for production.

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Product Product refers to the tangible materials proposed by the firm. It is

anything that is of value to a consumer and can be offered through a voluntary marketing exchange (Hill, 2010). JID Manufacturing enterprise introduces the Saimak Chocolate-Coated Candy, a ready to eat food in the form of candy bar. Saimak Chocolate-Coated Candy weighs 7grams offered in a pillow pack. preservatives and harmful chemicals. Description of the Product Saimak Chocolate-Coated Candy, as the product of JID Manufacturing enterprice is made from kamias, which is commonly found in the backyard of every Filipino family and are commonly used as a souring agent. proponents aimed to introduce a kind of candy which is new to market. The product is made from the fresh kamias fruit, some research proved that it contains small amount of vitamins and minerals. The packaging of the product is a pillow pack containing 168g (7gx24pcs) each. Packaging was chosen according to what the consumers wishes to, to ensure that it will be presentable to them. This also contains information about the product like the brand name, product name, manufacturer, expiration date and other important data to inform the customers. Saimak Chocolate-Coated Candy is a candy made out of kamias, coated with chocolate. This possesses a sweet and a chewable taste which will be like by the consumers. The The product contains no

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Uses of the Product New trends of the product exist and every time, new ideas and technologies are applied to those products to go along with the flow of the competition. Saimak Chocolate-Coated Candy serves as a confectionery. The main ingredient of the product was kamias and based on many observations, big portion of it were left on the trees and just let it fall on the ground without being notice that even kamias have many uses. The proponents decided to innovate the product and use it as the main ingredient of the proposed product. Unlike the other confectioneries, the product contains real fruit pulp of kamias that is why it is more nutritious together with the fact that it contains vitamins and minerals. Description of the Process This describes the process, the workers who do those processes and the time it will take to finish the process. 1. Preparation of raw materials and measuring of ingredients. The workers should clean first the area before the operation. The ingredients should be measured accurately using the weighing scale and the measuring cups. The night before the operation, kamias that will be used in the production process was already soaked and boiled in sugar by the two workers. 2. Draining the kamias. The two workers would remove the soaked kamias in the water and let it drained for 5 minutes.

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3. Mixing and cooking of kamias. The two workers would place the kamias in two casserole with 1 sugar melted in 2 liters of water each. Boil until the kamias had completely absorbed in the solution. The process will take 20 minutes. 4. Cooking kamias with other ingredients. After the kamias has completely cooked, add the skimmed milk and mixed evenly. The process will take 50 minutes. 5. Measuring and molding of kamias candy Two workers will work on this process. It will take 30 minutes to finish this process. A wax paper is used and put on the tray before the mixture to prevent it from sticking on the tray when cooked. Make sure that every piece has enough distance with each other to ensure that it will not get stick with each other because it will surely expand when heated. 6. Transferring the sliced mixture on the oven. Let it cook for 8 minutes to achieve its chewy texture. This will take 1 hour. 7. Melting of chocolates. A casserole will be used to melt the chocolates in a low heat stove. This process will take 10 minutes. 8. Coating the candies with chocolate. Two workers will work on this process. After the mixtures have been cooked, it will be dipped on the melted chocolate. The candies will

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be then placed on another tray and let it cool for 10 minutes. This process will take 25 minutes. 9. Inspection. It is done to ensure the quality of the finished product. This process can take 20 minutes. 10. Packaging. The candies will be placed on its pillow plastic packaging which will take 2 hours. 11. Inspection. This process is made to check if there are defects on the finished products. This would take 30 minutes. 12. Storing and inventory. It is necessary for the finished products to have its storage room. Manual counting of the finished products is necessary on this process. This would take up to 40 minutes. 13. Cleaning. After the whole process of the production of the product, maintaining the cleanliness of the working area as well as the materials is greatly needed since the workers are also focusing on the health benefits that their product contains. This would take 30 minutes. Manufacturing Process The proponents decided to manufacture the products by using the assembling process. In this process, each step and procedures are being

36

performed by two workers. The proponents were able to determine that the process will be done six (6) days a week from 8:00 in the morning until 5:00 in the afternoon. Sunday will be the rest day because this is the time allotted by God for himself to rest after he has made everything on earth. Manufacturing process Process of Production 1. Preparation of raw materials and measuring of ingredients. (W1 and W2) 2. Draining the kamias.(W1 and W2) 3. Mixing and cooking of kamias.(W1 and W2) 4. Cooking kamias with other ingredients.(W1 and W2) 5. Measuring and molding of kamias candy. (W1 and W2) 6. Cooking of kamias candy in oven 7. Lunch break 8. Melting of chocolates. (W1 and W2) 9. Coating of chocolate. (W1 and W2) 10. Cooling of kamias candy. 11. Inspection. (W2) 12. Packaging. (W1 and W2) 13. Inspection. (W1) 14. Storing and inventory. (W1 and W2) 15. Cleaning. (W1 and W2)

Beginning Time 08:00am

End time 08:15am

08:15am 08:20am 08:40am 09:30am 11:00am 12:00pm 01:00pm 01:20pm 02:30pm 03:00pm 03:20pm 03:50pm 04:10pm 04:40pm

08:20am 08:40am 09:30am 11:00am 12:00pm 01:00pm 01:20pm 02:30pm 03:00pm 03:20pm 03:50pm 04:10pm 04:40pm 05:00pm

Production Schedule There will be two workers and one manager to be employed in this business for the entire operation. Just like as the typical business firms, JID Manufacturing Enterprise will also be having eight (8) working hours per day, having six (6) days a week, four (4) weeks a month, and twelve (12) months a

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year. There will be a total of two hundred eighty eight (288) working days in a year. The two workers are expected to produce 180 packs a day, 1,080 packs per week, 4,320 per month and will be producing 51, 840 packs of Saimak Chocolate-Coated Candy annually. Adjustments would be made annually due to the different factors. Production Schedule (24pieces/ pack) Daily Weekly Monthly Annually 110 440 1760 21120 116 462 1848 22176 121 485 1940 23285 127 509 2038 24449 134 535 2139 25671

Year 2015 2016 2017 2018 2019

Tools and Equipment The following are the list of machineries, equipment, tools, supplies and other fixtures that will be used in the manufacturing and production of the Kamias Chocolate-Coated Candy. All of this equipment will be purchased locally and will be delivered and stalled free of charge by the suppliers. Factory equipment It is very essential and necessary for a manufacturing business to have tools and equipment in the business operation to have faster and easier production of the products. These tools and equipment must be in good condition to produce quality products demanded by the consumers and for the business to operate efficiently and effectively.

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Factory equipment Sealer Double burner Gas stove Total

(Source: JAK C Marketing)

Table 3.1 Factory equipment Unit Unit cost Total cost 1 Php30,000.00 Php30,000.00 1 Php900.00 Php900.00 Php30,900.00

Factory furniture For the business to have a nice working area, factory furniture are obviously needed. The table below shows the list of furniture to be used on the whole operation and production. Table 3.2 Factory Furniture and Fixtures Unit Unit cost Total cost 1 Php2000.00 Php2000.00 2 Php320.00 Php640.00 1 Php1,100.00 Php1,100.00 Php3,740.00

Factory furniture office table Mono block chairs Office chair Total

(Source: JAK C Marketing and Manny and Odeth furniture)

Factory tools and supplies These are being used in the manufacturing process of the product. It needs to be properly maintained for its continuous used and also, it should always be sanitized to maintain its cleanliness in order to produce quality products. Table 3.3 Factory tools and supplies

Factory tools Weighing scale Measuring cups Basin (big) Casserole

Unit 2 6 3 5

Unit cost Total cost Php680.00 Php1360.00 200.00 1200.00 145.00 435.00 350.00 1750.00

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Large pan Large spatula Knife Large drainer Gloves Apron Mask Hairnet Total

2 4 2 2 8 4 4 4

1,100.00 120.00 40.00 100.00 15.00 60.00 10.00 15.00

2200.00 480.00 80.00 200.00 120.00 240.00 200.00 145.00 Php8140.00

(Source: Edra and Rodellen General Merchadise)

Maintenance Supplies Maintenance is the act of maintaining something or the state of being maintained (Websters, 2010). This is greatly needed to ensure the cleanliness of the working area and most importantly, the cleanliness of the facilities and the product being manufactured. Table 3.4 Maintenance supplies Quantity Unit cost 10 Php5.00 3 10.00 3 50.00 6 100.00 15 17.00 10 80.00 3 45.00 3 10.00 3 125.00 1 2,500.00

Description

Rags Broom Dustpan Trash can Scothbrite (small) Dishwashing liquid Pail Dipper Mop Fire extinguisher Total (Source: Pural and Edras General Merchandise) Office Furniture and Fixtures

Total cost Php50.00 30.00 150.00 600.00 255.00 800.00 135.00 30.00 375.00 2500.00 Php4925.00

A typical office environment can be often described as a harsh one. To avoid this, office furniture and fixtures are being used to give more comfort and

40

ease not only to the manager but also to the workers. Table below shows the things needed inside the office environment. Table 3.5 Office Furniture and Fixture Quantity Unit cost Total cost 1 Php1900.00 Php1900.00 1 950.00 950.00 2 1150.00 2300.00 1 4500.00 4500.00 Php9650.00

Particular office table office chair ceiling fan filing cabinet Total
(Source: JAK C Marketing)

Office Tools and Supplies These things are greatly needed for the daily transactions of the business. The table shows the list of the tools and equipment used in the operation of the business. Table 3.6 Office Tools and Supplies Quantity Unit cost 4 Php50.00 2 25.00 2 5.00 2 4.00 2 25.00 2 2.00 2 60.00 5 5.00 1 5.00 1 250.00 3 38.00 1 99.00 4 45.00 2 175.00 1 55.00 2 50.00 1 15.00

Particular record book Journal folder (long) folder (short) brown envelop (long) brown envelop (short) file organizer Ballpen Apencil Stapler staple wire wall clock Scissor Calculator white board white board marker white board eraser Total

Total cost Php200.00 50.00 10.00 8.00 50.00 4.00 120.00 25.00 5.00 250.00 114.00 99.00 180.00 350.00 55.00 100.00 15.00 1619.00

(Source: Formosa and Edras General Merchandise)

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Direct materials The direct materials needed in the production of Kamias ChocolateCoated Candy can be found and purchased in the local market. The primary ingredient which is Kalamias will be coming from the Municipality of Rosario. The main supplier which will come from Tanauan, Batangas agrees to provide weekly delivery of kalamias fruit to maintain the freshness of the raw materials. Table 3.7 Direct Materials Quantity Unit Cost 10,368 kilograms Php15.00 2,592 kilograms 60.00 1,296 kilograms 36.00 4 bottles 60.00

Particular Kamias skimmed milk Sugar Glucose Total

Total cost Php155,520.00 155,520.00 46,656.00 240.00 Php357,396.00

(Source: Rodellen and EPC Commercial)

Kamias- is one of the main ingredients in making the proposed product. Skimmed milk- is a cream from which the cream has been removed. Sugar- is sweet crystalline or powdered substance, white when pure, consisting of sucrose obtained mainly from sugar cane and sugar beets and used in many foods, drinks, and medicines to improve their taste. Glucose- is a colorless to yellowish syrupy mixture of dextrose, maltose, and dextrin containing about 20 percent water, used in confectionery, alcoholic fermentation, tanning, and treating tobacco Indirect Materials These are materials which are not directly associated with the goods but are used in production.

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Particular label foil Corrugated box Total (Source: Tanauan Packaging Center)

Indirect Materials Quantity Unit Cost 3.00 0.915 4.00

Total cost

Utilities JID Manufacturing Enterprise will be using utilities such as electricity, water supply, and communication services. The electric consumption will be supplied by Batangas Electric Cooperative II. For better Business Transactions, the communication Service will be provided by Smart telecommunications. Rosario Water District will be the one to supply the water needed by the business in its operation. Utilities Expense Monthly Consumption 1200 1200 350 500

Description Electricity LPG Water telephone total

Annual Consumption 14,400 14,400 4,200 6,000 39,000

Plant Location

Plant size and Layout Waste Disposal Generalizations

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ESTABLISHMENT OF JID MANUFACTURING ENTERPRISE: MANUFACTURER OF SAIMAK CHOCOLATE-COATED CANDY IN ROSARIO, BATANGAS

A Feasibility Study Presented to the Faculty of College of Accountancy, Business, Economics and International Hospitality Management Jose B. Zuo Campus Batangas State University Rosario, Batangas

In Partial Fulfillment Of the Requirements for the Degree Bachelor of Science in Business Administration Major in Marketing Management

By:

De Torres, Desiree A. Galac, Irene H. Latade, Jomer A.

July 2013

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Chapter IV MANAGEMENT STUDY Management is the attainment of goals of the organization through the cooperative efforts of its members (Fajardo, 2010). Through this definition, management is then the acquisition of all materials, machine, equipment, and men through the cooperation at its fullest to achieve a desirable result. It is also the organization and coordination of the activities of a business in order to achieve defined objectives. Management is often included as a factor of production along with machines, materials, and money. According to Peter

Drucker, the basic task of management includes both marketing and innovation. Management will be discussing the form of business ownership, the capitalization and the organizational structure, manpower requirements as well as job specification, the organizational policies and lastly the legal requirements needed in establishing the business. Objectives of the Study This study was conducted to determine the importance of management study and to obtain the following objectives: 1. To know the suited organizational and management structures for the establishment of the JID Manufacturing. 2. To set qualifications and requirements for the employees and personnel for the achievement of the companys goal and objective. 3. To put rules and regulations as well as the policies for the company and its employees.

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4. To determine and comply with the legal requirements needed in establishing the company. Form of Business Ownership Business ownership includes sole proprietorship, partnership and corporation. The proponents agreed to choose partnerships as the form of business ownership where the managerial skills and capital resources as well as experiences of the partners are formed to combine for an effective implementation and operation of the proposed business. Partnership is where two (2) or more people jointly own the business (Carysforth and Neild, 2000). It is a relationship and an organization in its own right with separate legal personality and does not confer any limited liability on partners. Capitalization Capitalization, in accounting is where the costs acquire an asset are included in the price of the asset. It is also known as invested capital and is said to be the sum of the corporations stock, long-term debt and retained earnings. Each partner will contribute an amount of Php80, 000.00 as an equal share to raise a total of Php240, 000.00 as the initial capital of the business. Table 4.1 Partners Capital Contribution Partners De Torres, Desiree A. Galac, Irene H. Latade, Jomer A. TOTAL Amount Php80,000.00 Php80,000.00 Php80,000.00 Php240,000.00

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Organizational Structure An organizational structure is considered as the viewing glass or perspective through which individuals see their organization and its environment. It consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of the organizational aims. Figure 4.1 presents the guide for the smooth course of command and authority which could help in achieving the companys goal and objective. Figure 4.1 Organizational Structure General Manager - - - - - - - - - - - - - - - - - - - Book keeper

Worker 1 Man Power Requirements

Worker 2

Man power is very important in the production of the business through the efficiency of the people. Without manpower, success to business is impossible. As stated in Macmillan Dictionary, manpower consists of all the people- workers or employees who are available to do a particular job or to work in a particular place. Workers or employees are given particular training needed to be more knowledgeable with their work. They are expected to their job more effectively for the success of the firm. The general manager has the responsibility to treat his workers fairly, and have good human relations and communications, as well as

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the capability to do his job as the manager of the firm and identify and evaluate the problems of the enterprise. JID Manufacturing Enterprise will be employing two (2) competent workers having sufficient skills, knowledge and interests to produce the demand for Saimak Chocolate-Coated Candy. Trainings and orientation will be conducted before the start of the firms production for the worke rs to be informed with shall be done and to have sufficient knowledge about their job. Patience and hard work is needed. Job Description Job description is a written document that describes the relationships and requirements that characterized each position. This includes the knowledge, skills and variety of behavioral characteristics being considered which are necessary to perform the job successfully. Listed below are the qualifications needed for each of the positions. General Manager Participate in corporate strategic planning and implement strategic goals and objectives Implement programs that include marketing, sales, purchasing,

distribution, accounting/finance, safety, education and employee services Prepare budget and sales forecasts Manage the day-to-day activities of the facility, overseeing that work is accomplished by the managers and supervisors, and that it is consistent with corporate policies and objectives

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Review financial and operating reports Manage all departments on daily basis Promote equal opportunity and affirmative action employment practices

Bookkeeper Ensure that all commissions are paid in a timely manner Maintain records of property owner disbursement Answer telephones, direct calls and take messages. Keep records of materials filed or removed, using logbooks or computers. Prepares reports and submit it to accountant.

Worker Prepares the raw materials and tools for production Manufactures the product Maintains the cleanliness in working area Follows all company rules and policies Work as part of the team Have objectives rather than money

Job Specifications Job specification is also a part of the job analysis information where the knowledge, skills and abilities that are required to perform a job are defined. The following data are the job specifications which will serve as the qualifications of JID Manufacturing Enterprise in hiring their employees. General Manager Graduate of any business related course

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Computer literate Has the ability to manage a team With good moral character Must be able to communicate with a wide range of people effectively at all levels.

Must be able to demonstrate a clear understanding and knowledge in all aspects

Bookkeeper Male/ Female, at least 20 years old above Has work experience in bookkeeping Graduate of accounting or any related course Knowledge of computer-based accounting systems Has good communication skills

Workers Male/ Female Graduate of at least secondary level Physically and mentally fit Works as part of a team With good moral character

Compensation Compensation means providing the employees with monetary value in equivalent for their service rendered. It is a way of motivating employees for them to strive harder and can help boost their morale. The firm will provide

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right and reasonable amount of compensation to every employees.

The

employees will receive their salaries on a semi-monthly basis which is every 15th and 30th day of the month. The table 4.2 will represent the employees compensation in a monthly and annual basis. Table 4.2 Compensation Schedule Monthly Annually Php7,000.00 Php84,000.00 4,320.00 51,000.00 4,320.00 51,000.00 Php15,640.00 Php187,680.00

Position Manager Worker 1 Worker 2 Total

The table 4.2 shows the salary of the employees. Salary will be given on a semi- monthly basis. Organizational policies

Organizational policies are methods of action selected, usually by an organization from among alternatives to guide and determine present and future decisions and positions on public matters. implemented by the whole organization. In order to have more systematic operation, JID Manufacturing Enterprise should set and imposed certain rules and policies to meet the companys goals and objectives. These serves as strategic link to the companys vision and its These are sets of guidelines

day-to-day operation and it allows employees to understand their roles and responsibilities within predefined limits. These basically allow the management to guide to guide operations within constant management intervention.

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Policies toward Employees Each employeeis required to work on time from 8:00-12:00 in the morning and1:-5:00 in the afternoon. Salaries of the employees will be given every 15 th and 30th day of the month. 13th month pay shall be given to all employees and is equivalent to their one month salary. Absences should not be tolerated without any valid reason. Any misconduct is subjected to disciplinary action. Vices including smoking and drinking are strictly prohibited. Cleanliness and orderliness should be maintained. There must have an inventory in every production.

Policies toward Retailers Retailers will be entertained at the waiting area. Defective products will be allowed to returned and replaced within 3 days. Only returns with official receipts are allowed. Comments and suggestions regarding the product will be accepted.

Policies toward Suppliers Material will be delivered on time and in good condition. On the first year of the operation, purchases will be in cash. On the

second year, 70 % of the total; purchase will be paid in cash and the remaining account will depend on both parties agreement.

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Legal Requirements In starting a business, it is not only how a company will earn profit, it is also important that they can comply with the legal requirements needed in establishing a business. In order for a business to operate legally, it must

conform to the requirements imposed by the law. The following are the requirements necessary for compliance: 1. Barangay clearance from barangay where the business is located. 2. Register the business to the Security and Exchange Commission. 3. Application to the Local Government Unit which include the following requirements: a. Location sketch b. Sworn statement of the capital investment by the owner. c. Certificate of Testing d. Zoning certification e. Tax Clearance 4. Social Security System application. 5. BIR Registration 6. BFAD Requirements a. Standard Petition Form, duly notarized; b. 1x1 picture of applicant (owner, general manager); c. For Corporation/Partnership, photocopy of registration with SEC and Article of Incorporation;

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d. Mayors Permit reflecting plant asset; e. Demised fixed asset and operating capital, duly notarized; f. Floor plan of working area with complete dimension in meters; g. Location or plant site; h. Notarized contact of lease of Building and Warehouse; i. j. List of product to be manufactured; List of technical and non-technical personnel and scholastic attainment; and k. If licensed, submit a duly notarized license agreement. Table 4.3 Fees and Licenses Particulars BIR Registration SEC Registration BMBE Registration Occupational Tax Mayors Permit Sanitary Permit Business Tax Fire Inspection Permit Garbage Fee Zoning Fee Sanitary Inspection Fee Micro biological Test Certificate Fee (ENRO) Inspection and Monetary Fee Medical fee Environmental protection fee Total Amount Php500.00 1,000.00 1,000.00 400.00 385.00 100.00 544.00 50.00 120.00 210.00 100.00 560.00 150.00 150.00 200.00 2,000.00 Php7,469.00

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Generalization JID Manufacturing Enterprise will start with the initial capital of Php240,000.00 from the equal contribution of the partners. The proponents will form a general partnership in which partners are accountable to the extent of their properties and share the profit that may be earned by the business. The

manager is the overall assign in the entire management of the business and responsible for all the documents needed by the firm and the 2 workers are entitled in the production process of making the product. The manager will be compensated with Php7,000.00 and each workers will receive Php4,320.00 every month. All the employees should comply with job description and

specification set by the firm. Partnership is adapted by the proponents as the form of business ownership wherein capital, resources, skills and experiences were used to manage and operate the proposed business. The firm will employ 2 productive and competent workers to produce the Saimak Chocolate-Coated Candy. The company set several rules and policies to maintain the orderliness in the organization. These should be implemented and followed for the

improvement and for the sake of the entire business. The company must also conform to the legal requirements needed to properly establish the business.

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Chapter V FINANCIAL STUDY Financial study is needed for the assessment of the effectiveness with which funds are employed in the firm, to ensure the efficiency and profitability of the operation of the firm together with the value and safety of the debtors claim against the firms assets. It gives information regarding the abilities of the organization to utilize all its available resources to gain profit. It is composed of the schedule on the profit to be realized and the preparation of the financial statement as well as the projection covering the five (5) years of the business operation. Objectives of the Study This study attempts to meet the following objectives 1. To determine the total projected cost for the proposed business: 2. To state the financial assumptions used in preparing the projected financial statement: 3. To present the financial condition and performance of the business through the set of project financial statement: 4. To evaluate the viability of the business using ratios, breakeven point and payback period. Total Project Cost According to Notre Dame Office of Research, total project costs are allowable direct and indirect costs incurred by the institution to carry out an approved project or activity. In this study, it includes the planned fixed asset

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acquisitions and the current asset levels based on the materials, supplies, and equipment which is designed for continues used rather than being converted into cash. Project cost will be used by the partners as their initial capital contribution in the firm. The total project cost for its first two (2) months is ______ and cash contingencies of ____ with a total of project requirement of _____ which will be the contribution of the partners. The amount will be used for all the necessary materials needed for the proposed business and for the necessary expenses for the future operation of the firm. The proponents will consider all the necessary materials and items for the business to come up with the initial capital requirement which will be used for the business operation for two (2) months. Initial Capital Requirement The partners will have the initial capital requirement of ______ which will cover the defraying cost that the company will incur for two (2) months of the operation. The partner will be contributing an amount of ____ each. Table 5.1 JID Manufacturing Enterprise Total Project Cost for Two (2) Months Fixed Assets Office furniture & fixtures Office supplies Factory equipment Factory furniture & fixtures Factory tools & supplies Leasehold improvement Total Fixed Assets Requirements Working Capital in Two Months Direct Materials Freight In Labor

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Overhead Indirect Materials Rent Security Deposit Rent Expense Factory Utilities Expense Factory Maintenance Expense Factory Other Expense: SSS Contribution Phil Health Contribution Maintenance Expense Office Taxes and licenses Salary Manager Salary Bookkeeper Total Working Capital Requirements Pre-operating Expenses Advertising Expense Utilities Expense Office 30% Rent Expense Office Total pre-operating Requirements Cash requirements Cash Contingencies Total Project Costs Initial Capital Requirements Table 5.2 Initial Capital Capital Contribution

Partners De Torres, Desiree A. Galac, Irene H. Latade, Jomer A. TOTAL

Sources of Financing The JID Manufacturing Enterprise will be financed by the partners. Each of them will contribute an initial capital of ____ for a total of ___. If the partnership

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cannot meet the liquidation of the liabilities, the partnership will have an additional contribution. Financial Statements Financial statement is an important type of accounting report. This is a formal record of the financial activities of a person, business, or an entity. This also provides information about the financial position or performance of the firm as the basis in making economic decisions. In most cases, financial statement cannot provide all the necessary information for the users to make economic decisions because it largely portrays the financial effects of the past events and not nonfinancial information. The four basic financial statements are the following: The Balance Sheet represents how every asset was bought or acquired. This contains two (2) sections which must be equal to each other. The first section contains all the resources available to the company to conduct the business including the cash and cash equivalents, inventory, lands, building and equipment. The opposing section contains the liabilities and the shareholders equity. The Income Statement which shows if the company made a profit over a specific period of time. This is where the revenues, expenses, and net profit or loss for the accounting period are being represented. The Statement of Cash Flow which keeps track the cash coming into and going out of the business.

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The Statement of Shareholders Equity presents changes in shareholder equity over the period being examined. (Kline, Brian.2007) Financial Assumptions The following assumptions were used by the proponents in the computation and analysis of the financial capacity and stability of the firm: 1. Initial Capital Requirement The business has initial capital requirement of _____ contributed by the partners in equal amount 2. Working Days The business would operate for 288 working days or an average of 24 days per month. 3. Production Capacity Production capacity is expected to increase up to 10% every year based on the learning theory. 4. Sales: a. Selling price is stated at ____ above cost. Increased in the selling price is brought by many factors such as production increase and due to the ____ inflation rate. b. Cash sales would be____% of gross sales. c. Credit sales would be ____% of gross sales and retailers would pay on the following basis: ___% of credit sale will be collected on the year of the sale

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___% of buyers will avail th sales discount of ___, ___ Provisions for doubtful account would be ___% of te outstanding receivables for the current year, there would be no write-off of account receivables.

Sales return and allowances account are estimated to be ___% of gross sales.

5. Purchases: a. The volume of purchase would proportionately increase in production. Prices at purchases were assumed to increase by ____% every year based on the average inflation rate. b. The company will avail the purchase discount under ___, ___ credit terms the corresponding freight cost would be ____ c. Sixty percent of the total direct materials purchases on the first succeeding years would be on the credit basis and would be paid as follows: _____ of the total credit purchase would be paid on the current year and the rest is payable the following year. 6. Inventory: a. The FIFO method would be used in valuing the inventory. b. Direct materials ending inventory would be 10% of the direct materials available for the current use of the current year. c. There would be no-work-in process in the inventory.

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d. Finished goods ending inventory would be 10% of goods available for the sale of the current year. 7. Labor: a. The manager will be compensated with ____. b. There would be no withholding taxes. c. Thirteenth month pay will be given to the manager and workers based on their monthly salary divided by 12 months a multiplied by the number of months he/she has worked in the current year. 8. Rent Expense: Rent expense s assumed to be ____ per month and assumed to be fixed throughout the years and following years. Rent expense would be allocated to factory and office according to the land each occupies. (_____) 9. Utilities Utilities would be allocated to factory and office (____). Utilities expense increase is based on the average inflation rate of ___. 10. Maintenance Expense: Maintenance expense may increase based on the average inflation rate of ___. It is allocated to office (%) and factory (0%). 11. Delivery expense: Delivery expense would be ____ monthly or ____ per year. Delivery expense is based on the average inflation rate of ____

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12. Equipment: Equipment factory furniture and fixture and other equipment would be depreciated using straight line method. There will be no residual value on neither of the equipment. 13. Advertising expense: Advertising expense is composed of free tasting that will be conducted at the first week of the start of the business. There will be no advertising expense on the following years. 14. Other expense: All expenses were expected to increase by 4.78% based on the average inflation rate except expense for depreciation, rent and doubtful accounts. 15. Taxes The partnership will not be able to pay an amount equal to one month of the total VAT payable for the current year.12% will be used for the computation of VAT. 16. Fees and licenses are based on the assessment given by the Office of the municipal Treasurer. 17. Partnership equity a. The partner will contribute Php____.each to start the business. A total ofPhp_______.

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b. Net income or loss is divided in the ratio of ________ to be given to partners De Torres, Galac, and Latade respectively in accordance with the agreement of the partners as stipulated in their contract. c. Each partner is allowed to withdraw the amount of

Php________ annually. 18. The JID manufacturing enterprise will adopt the calendar year which start on January and will end its reporting period on December of the same year. Financial Statement Analysis Financial Ratio A. Liquidity Ratios Current Ratio Current Ratio= __Current Assets__ Current Liabilities

Year 2015 2016 2017 2018 2019

Current Ratio Current Assets Current Liabilities Ratio

Quick Ratio Quick Ratio= Cash+ Receivables Current Liabilities Current Ratio Quick Assets Current Liabilities Ratio

Year

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2015 2016 2017 2018 2019

Working Capital Working Capital= Current Assets-Current Liabilities Working Capital to Total Assets Working Capital to Total Assets= Working Capital Total Assets Working Capital Current Assets Current Liabilities

Year 2015 2016 2017 2018 2019

Working Capital

Year 2015 2016 2017 2018 2019

Working Capital to Total Assets Working Capital Total Assets Ratio

Defensive Interval Ratio Defensive Interval Ratio= ___Quick Assets____ Operating Expenses Defensive Interval Ratio Year 2015 Quick Assets Operating Expense Ratio

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2016 2017 2018 2019

B. Activity Ratios Inventory Turnover Inventory turnover measures the efficiency of the firm in managing and selling inventory. This shows how quickly the inventory is turning into receivables/ cash through sales. This ratio indicates the number of times the stock is turned over on the average and must be replaced during a given period. (Bose, 2006) Inventory Turnover = __ Cost of Goods Sold___ Average Inventory Balance

Year 2015 2016 2017 2018 2019 (EXPLANATION)

Table 5.7 Inventory Turnover Cost of Goods Sold Average Inventory

Times

Average Sales Period This is also known as conversion period which measures the number of days to sell or consume the average inventory. The three hundred sixty five (365) days must be used for better accuracy of the results.

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Average Sales Period = ____365 Days____ Inventory Turnover Table 5.8 Average Sales Period Days in a Year Average Sales Period

Year

Days

(EXPLANATION) Accounts Receivables Turnover This is the rate at which accounts receivables turnover indicates how quickly a firm collects cash from credit firms. This is equal to the net sales or credit sales divided by the average account receivables. (Weil, 2012) Accounts Receivables Turnover = ___Net Sales or Credit Sales__ Average Account Receivables

Table 5.9 Accounts Receivables Turnover Year Credit Sales Average Accounts Receivables Times

(EXPLANATION) Average Collection Period Average collection period is also known as days sales outstanding (Graham, et al,. 2011). This is the number of days required to convert

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receivables into cash (Cabrera, 2010). The days of JID Manufacturing Enterprise collection is as follows: Average Collection Period = ________365 Days__________ Accounts Receivables Turnover Table 5.10 Average Collection Period Year Days in a Year AR Turnover Days

(EXPLANATION) Total Asset Turnover This indicates the efficiency with which a firm uses all its assets to generate sales(Megginson, et al, 2008).

Total Asset Turnover = _____Net Sales_____ Average Total Asset

Table 5.11 Total Asset Turnover Year Net Sales Average Assets Ratio

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C. Leverage Ratios Leverage ratios, also called capital structure ratios, are one measure of how an organization is financed. For-profit firms can either borrow funds using debt instruments (notes payable or bonds) or sell shares of stock (equity financing). (Taylor, et al, 2006)

Debt Ratio This is the measure of the proportion of total assets financed by a firms creditors (Megginson, et al, 2008). Generally, the higher the debt, the higher the risk. Creditors must be stated first before the owners in the event of bankruptcy. Debt Ratio= Total Liabilities Total assets (EXPLANATION) Table 5.12 Debt Ratio Year Total Liabilities Total Assets Ratio

(EXPLANATION) Debt to Equity Ratio

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Debt to Equity Ratio measures the riskiness of the firms capital structure in terms of relationship between the funds supplied by the creditors (debt) and investors (equity). This indicates what proportion of equity and debt the company is using to finance its assets (Cabrera, 2010). Debt to Equity Ratio = ___Total Liabilities__ Total Partners Equity Table 5.13 Debt to Equity Ratio Year Total Liabilities Total Partners Equity Ratio

(EXPLANATION) Equity Ratio This indicates proportion of assets provided by owners which reflects financial strength and caution to creditors (Cabrera, 2010). Equity Ratio =Total Partners Equity Total Assets Table 5.14 Equity Ratio Year Total Partners Equity Total Assets Ratio

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(EXPLANATION) D. Profitability Ratios Profitability ratios indicate the profit earning capacity of a business (Thukaram, 2007). This also measures the overall performance of the firm and its efficiency in managing assets, liabilities and equity. Operating Profit Margin Operating profit margin is a measure of profitability that represents the percentage of each sales remaining after deducting all costs and expenses other than interest and taxes. As with the gross profit margin, the higher the operating profit margin, the better (Megginson, et al, 2008). Operating Profit Margin = Operating Profit Net Sales Table 5.15 Operating Profit Margin Year Operating Profit Net Sales

ratio

Explanation Gross Profit Margin The gross profit margin indicates the percentage of each sales remaining after a business had paid for its costs. It is the actual markup you have on the goods sold (Pinson, 2008) Gross Profit Margin = Gross Profit Net sales Table 5.16

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Year

Gross Profit Margin Gross Profit Net Sales

Ratio

(EXPLANATION) Rate of Return on Assets Rate of Return on Assets or return on investmentsconsiders the amount of asset invested. It is useful because the three factors subject to control by

division managers (revenues, expenses and invested assets) are considered. The higher the rate of return on investment, the better the division is using its assets to generate income. In effect, the return on investment measures the income (return) on investment. As a result, the return on investment can be used as a common basis for comparing divisions with each other (Warren, 2012). Rate of ROA = ___Net Income_____ Average Total Assets

(EXPLANATION) Table 5.17 Rate of Return on Asset Net Profit Average Asset

Year

Ratio

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Rate of Return on Equity Rate of return on equity measures the overall efficiency of the firm and the rate of return on resources provided by the owners. It indicates the amount of profit earned relative to the level of the investment of the partners. (Cabrera, 2010) Rate of ROE= _____Net Income_____ Average Partners Equity

Year

Table 5.18 Rate of Return on Equity Net Income Average Partners Equity

Ratio

(EXPLANATION)

Break-Even Point Analysis Break even analysis refers to the sales necessary to cover costs so that there is zero profit or loss.
Jae K. Shim, Joel G. Siegel 2007

I.

Break Even Volume Analysis Break even volume is derived by dividing the total fixed cost with the contribution margin per unit. This indicates the volume sales necessary to breakeven or to have neither loss nor gain. BEP Volume= _____Total Fixed Cost______

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Contribution Margin per Unit Table 5.19 Break Even Volume Analysis Year Fixed Costs CM/ Unit Break Even Point

(EXPLANATION)

II.

Break Even Sales Analysis Break Even Sales Analysis is obtained by dividing the total fixed cost by the contribution margin ratio. This is the peso amount of the breakeven point in units.

BEP Sales= ____Total Fixed Cost____ Contribution Margin Ratio Table 5.20 Break Even Sales Analysis Year Total Fixed Cost Margin Ratio Break Even Point

(EXPLANATION) Annual Cash Return Annual cash inflow or cash return is the annual earning or profit before depreciation and after taxes.S. A. Siddiqui 2006 Annual Cash Inflow= Net Income + Depreciation Expense

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Table 5.21 Annual Cash Return 2015 Net Income Add: Depreciation expense Annual Cash Return (EXPLANATION) Payback Period The payback period is the amount of time required for the return on an investment to recoup the original investment. David O. Kazmer 2009This is also the time period where the cumulative cash flows is equal to the cost of investment. It is otherwise known as the unadjusted breakeven time. (Agamata, 2010) Cash to Date = Cost of Investment Table 5.22 Payback Period Year Cost of Investment Annual Cash Inflow Balance Payback Period 2016 2017 2018 2019

2015 2016 2017 2018 2019 (EXPLANATION) Sensitivity Analysis This is an analysis that is use to examine the sensitivity of profits to changes in sales. JID Manufacturing Enterprise will use two measures for analysis.

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Margin of Safety The margin of safety is the difference between actual or budgeted sales and break-even point sales. Margin of Safety= Budgeted Sales- Breakeven Sales

Table 5.23 Margin of Safety Year 2015 2016 2017 2018 2019 (EXPLANATION) Margin of Safety Ratio Margin of safety ratio is useful for comparing the risk of two alternative products or for assessing the riskiness in any given product. The lower margin of safety the riskier the product is and it requires more management ayttentiuon. (Cabrera, 2010) Table 5.24 Margin of Safety Ratio Year 2015 2016 2017 2018 2019 Margin of Safety Budgeted Sales Margin of SafetyRatio Budgeted Sales BEP Peso Sales Margin of Safety

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(EXPLANATION) Generalization

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Chapter VI SOCIO-ECONOMIC CONTRIBUTION Knowing how your business establishment could have a great impact to the community is very important. Assessing the socio-economic contribution of the business may contain quantitative and qualitative measurements. This includes studying how to satisfy the needs and wants of the consumers, same as putting into consideration much social responsibility of the user and the community. This study shows how the proposed project will be beneficial not only to the proponents themselves but also to the consumers, same as the community. This could help at least in increasing the employment rate of the society and encourage other people to engage in business. Contribution to the Economy The enterprise will be paying right taxes since taxes are where the government gets funds for the infrastructures and projects for the society. Also, the enterprise will be patronizing the local suppliers of the raw materials needed for the production of the product. Since employment is one of the problems of the country, then the enterprise will be hiring human resources needed by the firm. The enterprise will keep on innovating new products for its consumers which can contribute as well to the economy.

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Employment Generation Generating employment could benefit the society, same as the families. This is through increasing the employment rate of the country through the help of the proposed product. As the business will be establish, this would hire manpower needed by the company. Employment determines the family status of an individual. For this reason, it is an obligation of the firm to give protection for the employees welfare by giving employees the right and just compensation needed. This could trigger the employees to do their job correctly and improved the production of the firm which will directly contribute to the society. Social Benefit As the business will be established, nature conservation must be observed. The use of light materials for the packaging of the product will be maintained and at the same time proper waste disposal should be done. Establishment of this business aims to be a role model for the young generation for them to enter to the business world in their young age, to think that they will produce quality product for the satisfaction of the consumers needs and wants. Economic Benefit The business was established not only for the sole benefit of profit but also for the economic level of the country. As the business will help increase the employability rate of the country, the owner of the business will be giving enough and proper salary to the employees for them to pay enough taxes which when

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received by the government will be used for the development of the infrastructure projects for public use. The business will also contribute for such activity. Generalization The JID Manufacturing Enterprise is a business that is not thinking only for the profit maximization alone but also for the socio-economic contribution as well. The business will contribute a lot for the employment generation, social benefit, and economic benefit of the country. Generating taxes from the business is a help for the government to extend service to the people. Being an eco-friendly business, nature conservation is an important activity which should be done. Through the socio-economic contribution of the business, a positive image to the consumers will be created. The business could also be a role model for other business firms to be responsible enough as they exists for the country.