CHAPTER 2: MARKETING PLAN

A. Market Analysis
1. Target Customers
The Companys primary target customer includes, but is not limited to,
the households of National Capital Region.
Geographic Segmentation
Country: Philippines
Region: National Capital Region
Demographic Segmentation
Income Class:
Middle Class (Php 31,560 Php 78,900 per month)
Upper Middle Income (Php 78,900 Php 118,350 per month)
Upper Income (Php 118,350 Php 157,800per month)
Rich (Php 157,800 and over per month)
2. Total Market Potential
The population of the Philippines grew to over 100 million in 2015,
according to the latest Census of Population (POPCEN 2015).
As of August 2015, the number of Filipinos hit 100,981,437. The
latest figure is 8.64 million or 9.36% higher than in 2010 when the
population of 92,337,852 was recorded.

YEAR

POPULATION

2015

100,981,437

2010

92,337,852

2007

88,548,366

2000

76,506,928

The Philippine population has grown by 24,474,509 over the past 15 years.
Just like in 2010, Regions IV-A, III, and the National Capital Region (NCR) are
still the 3 most populous regions. The combined population of 3 regions
accounted for 38.1% of the 2015 Philippine population.

Philippines Population (Year 2015)

REGION IV-B ; 3% REGION XIII ; 3% CAR; 2% REGION IV-A ; 14%

REGION II ; 3%
REGION IX ; 4%
ARMM; 4%
NCR; 13%
NEGROS ISLAND REGION ; 4%
REGION VIII ; 4%
REGION VI ; 4%
REGION XII ; 5%
REGION III ; 11%
REGION X ; 5%
REGION VII ; 6%
REGION XI ; 5%
REGION I ; 5% REGION V ; 6%

REGION

POPULATION

REGION IV-A (CALABARZON)

14,414,774

NATIONAL CAPITAL REGION (NCR)

12,877,253

REGION III (CENTRAL LUZON)

11,218,177

REGION VII (CENTRAL VISAYAS)

6,041,903

REGION V (BICOL REGION)

5,796,989

REGION I (ILOCOS REGION)

5,026,128

REGION XI (DAVAO REGION)

4,893,318

REGION X (NORTHERN MINDANAO)

4,689,302

REGION XII (SOCCSKSARGEN)

4,545,276

REGION VI (WESTERN VISAYAS)

4,477,247

REGION VIII (EASTERN VISAYAS)

4,440,150

NEGROS ISLAND REGION (NIR)

4,414,131

AUTONOMOUS REGION IN MUSLIM MINDANAO

(ARMM)

3,781,387

REGION IX (ZAMBOANGA PENINSULA)

3,629,783

REGION II (CAGAYAN VALLEY)

3,451,410

REGION IV-B (MIMAROPA)

2,963,360

REGION XIII (Caraga)

2,596,709

CORDILLERA ADMINISTRATIVE REGION (CAR)

1,722,006

Region IV-A (CALABARZON) registered the biggest population in 2015 with

14,414,774 among the 18 administrative regions. NCR placed second with
12,877,253, followed by Region III (Central Luzon) with 11,218,177.

The Cordillera Administrative Region (CAR), with 1,722,006, was the least
populous region in 2015.
In order for the company to increase their market size, Asgard Innovations
will be targeting the other regions when they already dominated the whole NCR.
To observe the graphic representation of the population of NCR
geographic segmentation, see the chart below.

NCR Population

Mandaluyong; 3% Navotas; 2% San Juan; 1%Pateros; 1%

Malabon; 3%
Pasay; 4%
Muntinlupa; 4%
Pasig; 5%
Marikina; 4%
Paranaque; 5%
Valenzuela;
Makati; 5%

Quezon City; 21%

Manila; 16%

Las Pinas; 5% Taguig; 5% Caloocan; 11%

The following table shows the distribution of the number of households per
income class in NCR.
Number of Households by Income Class: Philippines, 2012 (via RAPPLER)
Number of Households
Income Class
Middle Class (Php 31,560 Php 78,900 per month)
921,600
Upper Middle Income (Php 78,900 Php 118,350 per
148,050
month)
Upper Income (Php 118,350 Php 157,800per month)
Rich (Php 157,800 and over per month)

46,070
54,900

As a result of segmenting the market, the total market size would be

1,170,620 households. Furthermore, a survey was conducted in order to
determine the likelihood of these target audience about preferring the product
that the company offers.
It was distributed to 100 families wherein 60% considered buying the
featured product. A 10% margin of error is applied in this computation.
3. Targeted Share
With total number of households in NCR with the middle class to
rich class (1,170,620 in total) and with the possibility that 60% is the
estimated percentage of the household population that are capable of
buying the companys products, the resulting number of potential buyers
would be 702,372.

Middle class to rich class households in Manila will be the target

customer in NCR of E-Port.
Total households: 1,170,620 households
Price of E-Port: PHP 4392.5
Survey percentage: 60%
Margin of Error: (1/100) = 10%
Targeted share in units: 1,170,620 * (.60-.10) = 585,310 units
Targeted share in peso: 1,170,620 *Php 4392.5*(.60-.10) = Php
2,570,974,175

4. Market Trends
The price of this product may vary with time since technology
quickly changes. Market of E-Port has simply reached the highest point
that it will, for some time. But the company will make sure of the
continuous improvement and development of the product to maintain the
upward moving market trend.
5. Profile of Competitors
There are no known existing direct competitors here in the
Philippines with the same concept of the proposed product. Extendable
wall mount are present in the market which helps a person reach the back
of the TV and able to change the viewing position of the TV.
6. Competitive Advantage and Benefits to Clients
Buying the E-Port is a great solution for someone who has a
problem reaching the back of the TV looking for ports for their cables.
Now, with the help of E-Port they can enjoy their devices without any
inconvenience and can avoid damages to their TVs, cables and ports.
The competitive advantage of this business lies with the product EPort, as well as the successful planning and implementation of this whole
business plan. One competitive advantage of the company is its
positioning as a strategic ally with major home appliances stores, who are
clients more than customers. Through building a business based on
relationships that are considered to be long-standing, Asgard Innovations
builds protection against competition. This would be by the demonstrated
value of E-Port and its partners loyalties. As to its channel sales partners,
the product being offered will be translated into new customers and
additional recurring sales. The longer the relationships stand, the more its
clients will understand why they offer it and why they need it.

B. Marketing/Sales Strategy
1. Income Sources
Annual Forecast (Demand)
The annual forecast is based on the estimated 5 year targeted share in
units
-

585,310 units / 5 years = 117,062 units per year

117,062 units per year / 12 months = 9,756 units per month
9,756 units per month / 30 days = 326 units per day
Annual Forecast (Sales)
The annual forecast is based on the estimated 5 year targeted share in

sales
- Php 2,570,974,175/ 5 years = Php 514,194,835 per year
- Php 514,194,835 per year / 12 months = Php 42,849,570 per month
- Php 42,849,570 per month / 30 days = Php 1,428,319 per day

2. Marketing Strategy
Segmenting
The company will focus on the segment of medium class and first class
individual or family in Manila who can afford the product. Another segment that
the company can focus on is other establishments that will use the said product.
Targeting
Concentrated marketing will be applied in targeting the companys market
segment as it is a strategy which targets very defined and specific segments of
the consumer population. Mainly focusing in the production E-Port and rendering
services for the convenience of the customers houses or establishments.
Positioning

E-Port is easy to operate, good to use. It is convenient, attractive, and

effective TV cables multiport box. It can also be partnered with any major home
appliances stores.
3. Pricing
Material

Quantit

Price each

Cost

RCA Barrel Jack

Component Barrel Jack
RJ45 Coupler
Coaxial Coupler
VGA coupler
HDMI Coupler
RCA Cable 1.5m
Component Cable 1.5m
VGA cable 1.5m
HDMI cable 1.5m

y
2
2
1
1
1
2
2
2
1
2

PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP

25.00
25.00
15.00
15.00
75.00
75.00
25.00
35.00
75.00
75.00

PHP 50.00
PHP 50.00
PHP 15.00
PHP 15.00
PHP 75.00
PHP 150.00
PHP 50.00
PHP 70.00
PHP 75.00
PHP 150.00

USB female to male cable 1.5m

3.5mm Stereo Jack female to male

2
2

PHP
PHP

25.00
25.00

PHP 50.00
PHP 50.00

1.5m
Bluetooth Module
Usb power cable 1.5m
Black Plastic Case
2W stereo speaker
5v amplifier board
Rocker Switch
Misc wirings

1
1
1
2
1
1
1

PHP 175.00
PHP 25.00
PHP 150.00
PHP 25.00
PHP 25.00
PHP 15.00
PHP 15.00
TOTAL

PHP 175.00
PHP 25.00
PHP 150.00
PHP 50.00
PHP 25.00
PHP 15.00
PHP 15.00
PHP

1,255.00
Premium Pricing
Since E-Port is a unique product, the company decided to set the image
as premium product with a reasonable price.
Cost plus Mark-up
An additional 250% to the total cost of the product will be the markup for
this product.
Product Cost: Php 1,255.00
Selling Price = (Php 1,255*2.5) + Php 1,255 = Php 4,392.5

Mark up = Php 4,392.5 Php 1,255 = Php 3,137.5

Profit Margin
Estimated gross profit (w/o fixed cost) = Selling price Variable cost X 5
yrs. forecasted demand
= (Php 4,392.5 Php 1,255) X 585,310 = 1,836,419,125
Sales forecast for 5 years = 2,570,974,175
The profit margin based on variable cost and selling price multiplied by the
forecasted demand for 5 years
1,836,419,125
Profit Margin = 2,570,974,175 X 100% = 71.43%

4. Advertising and Promotion

Initial exposure and promotion of the E-Port will be accomplished through a
combination of the following promotional activities:
Social media
Advertising will be through magazines, television commercials, and
billboards
Referrals and recommendations from current buyers (word of mouth)
Working with major home appliances stores

5. Sales Strategy
Product
The product that the company offers should always be innovated and
differentiated as its strategy to achieve its competitive advantage.
Financial
Increase productivity three years from now and have an efficient cost
of compensation.
Employees
Train employees on service quality especially those who have direct
interaction with the customers.

6. Marketing and Sales Budget

The pie chart below shows the distribution of the budget for marketing the
product. It depicts that the Online Selling Platform has the highest percentage in
the budget since in todays society; almost everybody is into Online Shopping.
Marketing Budget

Sales

10%

Online Selling Platform

5%

Online retailing firm

40%

15%

Social Media
Free Trial
Print Ads

30%

CHAPTER 3: OPERATIONS/TECHNICAL PLAN

A. Design and Development
1. Concept Selection
Todays household knows the struggle of having a wall mounted flat
screen TV. When inserting cables or devices like HDMI, VGA, input and output
video, flash drives, etc. you will have a hard time looking for the ports and
reaching the back of the TV exposes you to danger of being electrocuted.
This product was created to create a convenient, stable and dependable TV
cables multiport box. It comes handy that doesnt consume a large space and
safe to use in any situation.
2. Product Comparators
The E-Port is created by integrating multiport to the case that will be
connected to a TV using cable wires and addition to that it has also a Bluetooth
speaker for entertainment. E-Port can be used as an external port that connects
the TV any device but doesnt consume a large space. E-Port has a multiport that
will easily connect any cable through the help of E-Port going to the TV. The
ports includes HDMI/DVI IN, LAN/Ethernet, PC IN (VGA Audio), component IN,
ANT IN, Audio Out, AV IN, S-Video IN, Audio IN, Optical digital audio out and
USB.

3. Patent Concerns

So far, as to the idea of the companys E-Port and its specifications, there
is no any patent infringement.
4. Changes/Trends in Customer Needs
As changes in technology increases, customers needs also increase
along with their demands in innovative products. Controlling technology to grow
is so hard, same as the growth of population. Residential areas and
establishments are increasing thats why the modern and convenient E-Port is
much needed.
5. Future Product Improvements
As mentioned above, in order to keep up with the changes in technology
and demands of the consumers, future developments of the E-Port will be
implemented. The company plans to innovate this product by having additional
specs. The company will improve more on the product design and adapt market
trends. These parts will be based on the newest trend in the society in order to
attract more buyers.

B. Products Standard
The materials used will be discussed in the Bill of Materials. The product is
measuring 23.7cm x 4.3 cm x 15.2 cm and weighing just 0.5kg, you can easily
balance it in the palm of your hands, making it far easier to slip into a small slot in
you TV cabinet.

2. Bill of Materials
The following table if Bill of Materials is applicable for only one finished
product.
Material

Quantit

Price each

Cost

RCA Barrel Jack

y
2

PHP

25.00

PHP 50.00

Component Barrel Jack

RJ45 Coupler
Coaxial Coupler
VGA coupler
HDMI Coupler
RCA Cable 1.5m
Component Cable 1.5m
VGA cable 1.5m
HDMI cable 1.5m

2
1
1
1
2
2
2
1
2

PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP

25.00
15.00
15.00
75.00
75.00
25.00
35.00
75.00
75.00

PHP 50.00
PHP 15.00
PHP 15.00
PHP 75.00
PHP 150.00
PHP 50.00
PHP 70.00
PHP 75.00
PHP 150.00

USB female to male cable 1.5m

3.5mm Stereo Jack female to male

2
2

PHP
PHP

25.00
25.00

PHP 50.00
PHP 50.00

1.5m
Bluetooth Module
Usb power cable 1.5m
Black Plastic Case
2W stereo speaker

1
1
1
2

PHP 175.00
PHP 25.00
PHP 150.00
PHP 25.00

PHP 175.00
PHP 25.00
PHP 150.00
PHP 50.00

5v amplifier board
Rocker Switch
Misc wirings

1
1
1

PHP 25.00
PHP 15.00
PHP 15.00
TOTAL

PHP 25.00
PHP 15.00
PHP 15.00
PHP
1,255.00

C. Manufacturing Operations
1. Assembly Process Chart

The following process shows specifically the steps on how the

product will be made.

Drilling holes Front

Plate.

Installing
components to the
front plate

Assembly of
speaker and
amplifier board
ang bluetooth
module

assembly of front
plate and back
plate

wiring of internal
parts

drilling holes on
side of the box for
speaker drivers

Stress Test

Quality Check

Packaging

2. Process Flow Chart

The following table shows the flow of the steps in producing the finished
product starting from ordering of the electronic parts and other materials up to storing
the finished products.

Process

1. Order parts and other materials

2. Receive orders
3. Store orders in storage room
4. Pick-up raw materials from
storage room to work area
5. Assemble the product
6. Stress test
7. Inspect the product for quality
control
8. Package the product

9. Store finished product in

warehouse

Direct and Indirect Manpower Complement

Direct Labor
Assembly Worker
Skilled Worker
Quality Checker

Indirect Labor
General Manager
Production Head
Inventory Head
Marketing Head
Accounting Head

The Facility operates 5 days a week, with 8hrs a day and a 1hr break.
Production Rate per Month
Monthly forecasted demand = 12,807 units
Approximate Production Time per unit = 20 minutes

1unit
20 mins

60 mins
1 hour

= 3 units per hour per 1 worker

*In order to find the number of assembly workers to meet the demand
= 12,807 / (20 days x 8 hrs. per day x 3 units per hour) = 26.68= 27
assembly workers
= 27 workers / 9 stations = 3 workers/ station
Monthly production capacity
= 20 days x 8hrs. / Day x 3 units / hr. x 27 workers = 12960 units per mo.

D. Product Distribution
1. Handling
The company will provide material handling devices or systems to
move the right amount of right material/s at the right place, at the right
sequence, in the right position, and at the right cost. Focusing on handling
the movement, storage, and control of raw materials and finished products
all throughout the process of production and distribution will promote
efficiency.
2. Packaging
The packaging of the product will be a box with a picture showing
the product. It also includes a user guide manual explaining how to use it
and its features.
3. Delivery Scheme
The companys product will be delivered in major home appliances
stores. These stores, as mentioned in the earlier part of this business
plan, are their target collaborators in marketing and selling their product.

E. Office, Physical Plant and Warehouse Location

Warehouses will be constructed strategically so that they are not too far
from the stores. This stems out from the practicality of wanting to save on freight
cost or transportation cost incurred while delivering these units to stores or
homes.

F. Business Process
The idea here is to have a small scale introduction to the market of the
product by introducing the brand in appliance stores and then when we have
made some sort of customer retention from it have it used and advertised by
larger companies. The company plan to expand our target market not only to
homes but also to office buildings, schools and as well as bigger corporations.
1. Potential Partners:
Abenson
Ace Hardware
SM Appliance Store
Lazada (online store)
The figure shows the sales order process. The company will be receiving
an inquiry which they will process into a quotation. Once the quotation is
accepted by the customer, theyll create a sales order referencing the quotation.
As they will have enough lock systems in stock, they deliver the products sold to

the customer, create an invoice and receive the payment.

START

Receive customer's
purchase order

Create quotation
for customer

(Goods Issue
Receipt)
Post goods issue

(Outbound
delivery) Schedule
delivery of product

(Purchase Order)
Create sales order
referencing
quotation

(Invoice Receipt)
Create customer's
invoice

Receive customer's
payment

END.

The following figure below shows the steps involved in purchasing

the needed electronic parts and other materials from selection of supplier
to required payment.

START

RECEIVE BIDS
FROM SUPPLIERS

SELECT BEST
PROPOSAL FROM
SUPPLIERS

DELIVERY OF
ORDERED
ELECTRONIC PARTS
AND OTHER
MATERIALS

PLACE ORDER

FINALIZE
REQUIREMENTS

PAYMENT

UPDATE
INVENTORY

END.

2. Product Costing (Assuming that they are being produced bulky)

It has already been stated that the following direct costs are applicable for
only one finished product.
Material

Qty

Price each

Cost

RCA Barrel Jack

PHP

25.00

PHP 50.00

Component Barrel Jack

RJ45 Coupler
Coaxial Coupler
VGA coupler
HDMI Coupler
RCA Cable 1.5m
Component Cable 1.5m
VGA cable 1.5m
HDMI cable 1.5m

2
1
1
1
2
2
2
1
2

PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP
PHP

25.00
15.00
15.00
75.00
75.00
25.00
35.00
75.00
75.00

PHP 50.00
PHP 15.00
PHP 15.00
PHP 75.00
PHP 150.00
PHP 50.00
PHP 70.00
PHP 75.00
PHP 150.00

USB female to male cable 1.5m

3.5mm Stereo Jack female to male

2
2

PHP
PHP

25.00
25.00

PHP 50.00
PHP 50.00

1.5m
Bluetooth Module
Usb power cable 1.5m
Black Plastic Case
2W stereo speaker

1
1
1
2

PHP 175.00
PHP 25.00
PHP 150.00
PHP 25.00

PHP 175.00
PHP 25.00
PHP 150.00
PHP 50.00

5v amplifier board
Rocker Switch
Misc wirings

1
1
1

PHP 25.00
PHP 15.00
PHP 15.00
TOTAL

PHP 25.00
PHP 15.00
PHP 15.00
PHP 1,255.00

CHAPTER 4: ORGANIZATIONAL PLAN

A. Company Name and Logo

Asgard Innovations is founded by Mr. Lyndon S. Cabang. He is an

Engineering Management student at Mapua Institute of Technology. As to one of
their course requirements in Entrepreneurial Engineering, they are tasked to
innovate a product that will be introduced in the market after completing a
business plan.
The founder named the company after the domain of the gods in the
Norse mythology which depicts the godly and convenient life theyre living in. The
company aims to improve the lives of those people who use the simple product
by introducing the innovated product that the company will produce.
B. Form of Ownership

The company has a sole proprietorship form of ownership. The founder,

Mr. Lyndon S. Cabang, owns and manages the company. This depicts the fact
that he is the only one who has full control and/or authority for the whole
business process.

C. Management Team and Organization Chart

General
Manager
(Lyndon S.
Cabang)

Marketing and
Sales
(Rey Verzosa Jr.)

Accounting
(Paul Patrick
Juanillo)

Production
(Kenneth Go)

Inventory
(Ellainne Castor)

Roles and responsibilities of each department:

1. General Manager
Mr. Lyndon Cabang is responsible for overseeing all administrative
functions in Asgard Innovations. He is basically involved in leading and
directing employees. He delegates administrative tasks, such as
accounting, paperwork and payroll, while giving the other members the
freedom to deal with other issues. In doing so, he ensures administrative
efficiency, proper procedure, implementation of policies and employee
morale.
2. Marketing and Sales

The Marketing Department does the research and strategic

communication planning and implements selling-specific promotional
strategies. Rey Verzosa Jr. is assigned in this particular department of
Asgard Innovations. He is tasked to manage and oversee product, pricing
and distribution strategies, and participate in trade shows and public
relations activities.
3. Accounting
At the Accounting Department, Mr. Paul Patrick Juanillo is the
assigned person. He reviews the records of each department to determine
the companys financial position and any changes required to run the
organization cost effectively.
4. Production
The Production Department is responsible for the conversion of raw
materials into more valuable finished products. Mr. Kenneth Go is
assigned in this department.
5. Inventory
The Inventory department is assigned to Ms. Ellainne Castor and is
responsible for storing of the raw materials and finished goods. They are
the ones who make the master list of inventory that will be submitted to
the general manager and also to the finance department to be recorded.
In addition, this department is responsible in reordering raw materials
depending on the report/s forwarded by the Production Department. This
department will be computing for the Re-order Point depending on the
projected order (in terms of units) for the coming months based on the
current activities of the production department.

D. Staffing and Training Plans

1. Staffing
Asgard innovations believe that their employees will be their
greatest asset, and therefore, as they increase personnel, they will be
looking only for individuals whose experience, skills, contacts and
expertise will help foster the development and growth of the company.
While there is a temptation to hire inexpensive personnel in order to
further control costs, their philosophy is that there is a better rate of return
in hiring more experienced personnel with expertise in areas they need, so
they can immediately contribute to helping attain or exceed the companys
goals and objectives.
Here are some requirements by the HR department in recruiting new workers:
HR Requirements for Skilled Workers

Candidate must possess a TESDA vocational course electrical works

Must be 18 years of age and above
Must have basic knowledge about electrical wiring

HR Requirements for Assembly Workers

Candidate must possess at least a High School Diploma, Vocational

Diploma / Short Course Certificate, Bachelor's/College Degree, any field

Must be 18 years of age and above
Must be efficient in Packaging
Must be efficient in assembling

HR Requirements for Quality Checker

Candidate must possess at least a High School Diploma, Vocational

Diploma / Short Course Certificate, Bachelor's/College Degree, any field

Must be 18 years of age and above
Have at least 1 2 years experience in quality management

manufacturing field
Must be strict and keen

2. Training Plan
Cable wire tests - Proficiency in handling manufacturing equipment. This is
where we test the employees in their capability of using the machines in the
process.
Testing and Quality Control - It is important that before the releasing of actual
product that employees are able to test and troubleshoot these items in cases
where defects are found. They must learn the skills of detecting where the
problem area is in the product and have a solution for the defect
Maintenance and Quality - Maintenance is an important after sales service that
needs attention to ensure that the strength of the brand name is intact.
People Relations - The most important asset of this company are its people so
we build the foundation early on by making sure that employees are working in a
stress free working environment.

E. Fixed and Administrative Expense Budget

Personnel Plan

The following table shows the list of positions in Asgard Innovations and
the corresponding payroll budget for five years from the start of the business.

General Manager
Marketing and Sales
Coordinator
Marketing Assistant 1
Accountant
Production Head
Production Staffs
(29 heads)
Inventory Head
Inventory Staff
Receptionist/Secretar
y
TOTAL PAYROLL

2017

2018

2019

2020

2021

711,189.00

711,189.00

711,189.00

817,867.35

817,867.35

572,679.00
175,031.00
281,528.10
292,510.80
3,347,760.00

572,679.00
175,031.00
281,528.10
292,510.80
3,347,760.00

572,679.00
175,031.00
281,528.10
292,510.80
3,347,760.00

658,580.85
175,031.00
323,757.32
336,387.42
3,347,760.00

658,580.85
201,285.65
323,757.32
336,387.42
3,849,924.00

210,000.00
175,031.00
115,440.00

210,000.00
175,031.00
115,440.00

210,000.00
175,031.00
115,440.00

241,500.00
175,031.00
115,440.00

241,500.00
201,285.65
132,756.00

5,881,168.90

5,881,168.90

5,881,168.90

6,191,354.94

6,763,344.24

The table below shows the budget summary for the operating expenses of
ECTech Enterprises Private Co. for five years from the start of the business.
OPERATING
EXPENSES
Payroll
Sales and
Marketing
and Other
Expenses
Depreciation
Rent
Telephone
Utilities
Insurance
Legal
Company
Vehicle and
Related
Expenses
TOTAL

2017

2018

2019

2020

2021

5,881,168.90

5,881,168.90

5,881,168.90

6,191,354.94

6,763,344.24

450,000.00

495,000.00

472,500.00

382,500.00

337,500.00

7,948.32
480,000.00
18,000.00
120,000.00
18,000.00
50,000.00

7,948.32
480,000.00
18,000.00
120,000.00
18,000.00
66,666.67

7,948.32
480,000.00
18,000.00
120,000.00
18,000.00
66,666.67

7,948.32
480,000.00
18,000.00
120,000.00
18,000.00
66,666.67

7,948.32
480,000.00
18,000.00
120,000.00
18,000.00
66,666.67

193,500.00

258,000.00

258,000.00

258,000.00

258,000.00

7,216,630.14

7,344,783.89

7,322,283.89

7,542,469.92

8,069,459.22

CHAPTER 5: FINANCIAL PLAN

A. Capital Funding
Asgard Innovations begins start-up period during which they will focus
primarily on setting up their offices and developing their system designs, but also
including significant initial marketing work. Their start-up expenses for these first
three months will be used for further product development, legal costs, payroll,
marketing and typical expenses associated with opening their first office. The
founder, Mr. Lyndon Cabang will provide the first round financing to launch the
company, initiate a small production run of their innovative Multiport Box
extension, and initiate further product development, while marketing and preselling their products. They plan to fund future growth from sales revenues.
Initially, they will be leasing a relatively small area in for administrative and
production functions in order to keep their first year expenses to a minimum, as
they continue product development while marketing and pre-selling their
innovative trash bin prior to production. They will consider a larger space only
when they have outgrown their current facility, dependent on sales, budgets and
personnel needs.

START-UP FUNDING
Start-up
Expenses to
Fund
Start-up Assets
to Fund

7,218,617.2
2

TOTAL
FUNDING
REQUIRED

8,000,000.0
0

ASSETS
Non-cash
Assets from
Start-up
Cash
Requirements
from Start-up
Additional Cash
Raised
Cash Balance
on Starting Date
TOTAL ASSETS

781,382.7
8

781,382.7
8
781,382.7
8
781,382.7
8

LIABILITIES AND CAPITAL

LIABILITIES
Current
Borrowing
Long-Term
Liabilities
Accounts
Payable
(Outstanding
Bills)
Other Current
Liabilities
(Interest-free)
TOTAL
LIABILITIES
CAPITAL

Planned
Investment
Founder
Investor
Other
Additional
Investment
Requirement
TOTAL
PLANNED
INVESTMENT
Loss at Start-up
(Start-up
Expenses)
TOTAL CAPITAL
TOTAL
LIABILITIES AND
CAPITAL
Total Funding

6,000,000.0
0
2,000,000.0
0
-

8,000,000.0
0
(7,218,617.2
2)
781,382.7
8
781,382.7
8
8,000,000.0
0

START-UP EXPENSES
Payroll
5,881,168.9
0
Sales and
450,000.0
Marketing and
0
Other Expenses
Depreciation
7,948.3
2
Rent
480,000.0
0
Telephone
18,000.0
0
Utilities
120,000.0
0
Insurance
18,000.0
0
Legal
50,000.0
0
Company
193,500.0
Vehicle and
0
Related
Expenses
TOTAL START7,218,617.2
UP EXPENSES
2

START-UP ASSETS
Cash Required
781,382.7
8
Start-up
Inventory
Other Current
Assets
Long-Term
Assets
TOTAL ASSETS
781,382.7
8

TOTAL STARTUP EXPENSES

TOTAL ASSETS
TOTAL
REQUIREMENTS

7,218,617.2
2
781,382.7
8
8,000,000.0
0

B. Key Assumptions
1. Economic and Business Factors
Philippines Interest Rate

Philippines central bank kept its overnight borrowing rate on hold at 4

percent for the seventh consecutive time on August 13th, as widely expected.
Policymakers expect the inflation rate to remain within target over the rest of the
policy horizon.
In the Philippines, interest rate decisions are taken by The Monetary
Board of The Bangko Sentral ng Pilipinas (BSP). The official interest rate is the
reverse repo rate (RR/P) which is the overnight borrowing rate. The central bank

of the Republic of the Philippines is committed to promote and maintain price

stability and provide proactive leadership in bringing about a strong financial
system conducive to a balanced and sustainable growth of the economy.

Philippines Inflation Rate

In the Philippines, the most important categories in the Consumer Price

Index are: food and non-alcoholic beverages (39 percent of total weight);
housing, water, electricity, gas and other fuels (22 percent) and transport (8
percent). The index also includes health (3 percent), education (3 percent),
clothing and footwear (3 percent), communication (2 percent) and recreation and
culture (2 percent). Alcoholic beverages, tobacco, furnishing, household
equipment, restaurants and other goods and services account for the remaining
15 percent. This page provides the latest reported value for - Philippines Inflation
Rate - plus previous releases, historical high and low, short-term forecast and

long-term prediction, economic calendar, survey consensus and news.

Philippines Inflation Rate - actual data, historical chart and calendar of releases.

Philippines GDP Growth Rate

The Philippines has a status of emerging economy. In recent years, the

country has been steadily growing mainly due to inflow of foreign direct
investment and remittances. The Philippines is the worlds largest center for
business process outsourcing. The country also has a strong industrial sector
based on the manufacturing of electronics and other high-tech components for
overseas corporations. The Philippines is rich in natural resources; it has
significant reserves of chromite, nickel, copper, coal and oil. This page provides Philippines GDP Growth Rate - actual values, historical data, forecast, chart,
statistics, economic calendar and news. Philippines GDP Growth Rate - actual

data, historical chart and calendar of releases - was last updated on June of
2016.

2. Bases and Schedule of Revenues and Expenses

Five-Year Projection of Sales Target
2017

2018

2019

2020

2021

Target
Demand

12807

14088

15496

17046

18751

Selling
Price
per Unit

4,392.50

4,392.50

4,392.50

4,392.50

4,392.50

Project
ed
Sales
Target

56,254,747.
50

61,880,222.
25

68,068,244.
48

74,875,068.
92

82,362,575.
81

Five Year Projection of Production Cost

Target
Demand

Productio
n Cost per
Unit
Projected
Productio
n Costs

2017

2018

2019

2020

2021

12,807

14,088

15,496

17,046

18,751

1,255.00

1,255.00

1,255.00

1,255.00

1,255.00

16,072,785.00

17,680,063.50

19,448,069.85

21,392,876.84

23,532,164.52

C. Financial Projections
1. Pro-forma Profit-and-Loss Statements
The Profit and Loss table below shows the companys projected sales,
cost of sales, and operating expenses for the first five years.
The company anticipates that sales will begin to generate a stable profit
for Asgard Innovations in 2017.

FIVE-YEAR PROJECTION OF PRO FORMA PROFIT AND LOSS

2017
2018
2019
2020

2021

Sales

56,254,747.50

61,880,222.25

68,068,244.48

74,875,068.92

82,362,575.81

Direct Cost
of Sales
Total Costs
of Sales

16,072,785.00

17,680,063.50

19,448,069.85

21,392,876.84

23,532,164.52

16,072,785.00

17,680,063.50

19,448,069.85

21,392,876.84

23,532,164.52

Gross Margin
Gross Margin
%

40,181,962.50
71%

44,200,158.75
71%

48,620,174.63
71%

53,482,192.09
71%

58,830,411.30
71%

Operating Expenses
Payroll
5,881,168.90

5,881,168.90

5,881,168.90

6,191,354.94

6,763,344.24

Sales and
Marketing and
Other
Expenses
Depreciation

450,000.00

495,000.00

472,500.00

382,500.00

337,500.00

7,948.32

7,948.32

7,948.32

7,948.32

7,948.32

Rent

480,000.00

480,000.00

480,000.00

480,000.00

480,000.00

Telephone

18,000.00

18,000.00

18,000.00

18,000.00

18,000.00

Utilities

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

Insurance

18,000.00

18,000.00

18,000.00

18,000.00

18,000.00

Legal

50,000.00

66,666.67

66,666.67

66,666.67

66,666.67

Company
Vehicle and
Related
Expenses
Total
Operating
Expenses
Earnings
Before Tax
(EBT)
Income Tax
(@ 32%)
Earnings
After Tax
(EAT)

193,500.00

258,000.00

258,000.00

258,000.00

258,000.00

7,218,617.22

7,344,783.89

7,322,283.89

7,542,469.92

8,069,459.22

32,963,345.28

36,855,374.86

41,297,890.74

45,939,722.17

50,760,952.07

10,548,270.49

11,793,719.96

13,215,325.04

14,700,711.09

16,243,504.66

22,415,074.79

25,061,654.91

28,082,565.70

31,239,011.07

34,517,447.41

2. Balance Sheet
The Balance Sheet shows an increasingly stable cash position and net
worth over the first five years, as the companys products become more
established in the market. They do not plan to borrow money to fund growth, so
their liabilities in all years represent simple Accounts Payable stemming from
ongoing operating expenses.
FIVE-YEAR PROJECTION OF PRO FORMA BALANCE SHEET
2017
ASSETS
Cash
Accounts
Receivable
Inventories
Equipment
(Net)

781,3
82.78
56,254,7
47.50
785,8
48.45
560,5
50.00

2018

57,036,13
0.28
61,880,22
2.25
707,26
3.61
504,49
5.00

2019

118,916,35
2.53
68,068,24
4.48
636,53
7.24
454,04
5.50

2020

186,984,59
7.01
74,875,06
8.92
572,88
3.52
408,64
0.95

2021

261,859,6
65.93
82,362,5
75.81
515,5
95.17
367,7
76.86

TOTAL
ASSETS

58,382,5
28.73

120,128,11
1.14

188,075,17
9.75

262,841,19
0.40

345,105,6
13.77

72,651,38
1.44
72,651,38
1.44

120,515,88
4.35
120,515,88
4.35

172,042,88
3.93
172,042,88
3.93

227,789,8
59.88
227,789,8
59.88

22,415,074.79

39,476,729.70

59,559,295.40

82,798,306.47

22,415,074.7
9
22,415,0
74.79

25,061,654.91

28,082,565.70

31,239,011.07

34,517,447.41

47,476,72
9.70

67,559,29
5.40

90,798,30
6.47

117,315,7
53.88

58,382,528.7
3

120,128,111.14

188,075,179.7
5

262,841,190.4
0

345,105,613.7
7

LIABILITIES AND OWNERS EQUITY

Accounts
Payable
Total
Liabilities

Retained
Earnings
Current
Income
Total
Owner's
Equity
TOTAL
LIABILITIES
AND
OWNERS
EQUITY

35,967,4
53.94
35,967,4
53.94

3. Financial Ratios
The companys main business ratios can be found in the following table,
along with standard ratios for their industry.
FIVE-YEAR PROJECTION OF FINANCIAL RATIOS

Debt Ratio (Total

Liabilities / Total
Assets)
Current Ratio
(Current Assets /
Current
Liabilities)
Working Capital
(Current Assets Current
Liabilities)
Assets-to-Equity
Ratio (Total

2017

2018

2019

2020

0.62

0.60

0.64

0.65

1.61

1.65

1.56

1.53

21854524.
79

46972234.
70

67105249.
90

90389665.
52

2.60

2.53

2.78

2.89

116

Assets / Owner's
Equity)
Debt-to-Equity
Ratio (Total
Liabilities /
Owner's Equity)

2.60

2.53

2.78

2.89

CHAPTER 6: CONCLUSION
A. Business Viability and Attractiveness
1. Market Growth Potential
With total number of households in NCR with the middle class to rich class
(1,170,620 in total) and with the possibility that 60% is the estimated percentage
of the household population that are capable of buying the companys products,
the resulting number of potential buyers would be 702,372.
Middle class to rich class households in Manila will be the target customer
in NCR of E-Port.
Total households: 1,170,620 households
Price of E-Port: PHP 4392.5
Survey percentage: 60%

Margin of Error: (1/100) = 10%

Targeted share in units: 1,170,620 * (.60-.10) = 585,310 units
Targeted share in peso: 1,170,620 *Php 4392.5*(.60-.10) = Php
2,570,974,175
2. Return on Investment
For the first five years in the business, Asgard Innovations would be
having {{insert}} on return on investment.
Formula used:
ROI = [(Average Earnings for 5 Years Initial Invested Amount) / (Initial
Invested Amount)] x 100
Initial Invested Amount = PHP 5,000,000
Average Earnings for 5 Years = PHP 6,351,461.35
3. Payback Period
As to the companys payback period with respect to irregular cash flow, it
is expected that it would be approximately 1.34 years.
B. Key Success Factors and Sustainability of the Business
The keys to success of Asgard Innovations are:
Product quality and value in real-life situations.
Utilizing next-generation technology in order to improve upon
current systems, while differentiating the company from their
competition.
Marketing: either dealing with channel issues and/or barriers to
entry, or solving problems with major advertising and promotion
budgets in order to penetrate their target markets.
Management: products delivered on time, costs controlled,
marketing budgets managed. There is a temptation to increase

growth at the expense of profits; the company will keep a close eye
on this temptation in order to live up to their plan.
Sustaining controlled growth in order to manage start-up costs
more efficiently.
To maintain these key factors, Asgard Innovations needs include start-up
funding, partnering with value-added investor/partners, aggressive marketing,
quality management, product branding, increasing reach into target markets,
affiliating with the right channel partners, competitive intelligence and appropriate
use of evolving technologies.
C. Assessment of Risks
1. Durability of the product
The trash bin must be taken care of in the case of making it soaked with
water or any form of liquid or putting heavy pressure on it as the battery and
electric wires can easily be broken and malfunctioned.
2. Weaknesses of the Business
- Weak brand name
- Doubt for the technology
- Current product design

3. Contingency Plan
First of all, since in todays environment, fire is the most common industrial
accident for a business, the company has provided plans when it comes. The
companys contingency plan might call for its owner to lay off workers and to stop
ordering materials and equipment if it loses its physical location due to a fire. The
plan might then call for scouting then leasing a new location and rehiring a

reduced amount of staff, only returning to the pre-disaster staff level when
business establishes itself in the new location.
But in general, the following table shows the risk management action for
ECTech Enterprises Private Co.