Corn Husk Stuff Organizer

ESTABLISHMENT OF AIS MANUFACTURING: MAKER OF CORN HUSK
STUFF ORGANIZER AT SAN CARLOS, LIPA CITY
A Feasibility Study Presented to

The Faculty of College of Accountancy Business and Economics
Batangas State University
Don Claro Mayo Recto Campus
Maraouy, Lipa City
In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Business Administration
Major in Marketing Management
Andal, Maribel A.
Benedicto, Leiwiehilda S.
Gulla, Mary Rose P.
Lucero, Cristine L.
October 2013
APPROVAL SHEET
In partial fulfillment of the requirements for the degree of Bachelor of

Science in Business Administration major in Marketing Management, this project
feasibility study entitled “ESTABLISHMENT OF AIS MANUFACTURING:
MAKER OF CORN HUSK STUFF ORGANIZER AT SAN CARLOS, LIPA
CITY”, prepared and submitted by Maribel A. Andal, Leiwiehilda S. Benedicto,
Mary Rose P. Gulla and Cristine L. Lucero has been submitted and
recommended for acceptance and approval for Oral Examination.
__________________________
ROSELLE B. TIBAYAN, MBA
Adviser
Approved by the Committee of Oral Examination with a grade of ____.
PANEL OF EXAMINERS
______________________________
CARMELA S.MACATANGAY, MBA
Chairman
JERRY P. LUMBERA LUCILA V. HERNANDEZ, CPA

Member Member
Accepted and approved in partial fulfillment of the requirements for the

degree of Bachelor of Science inBusiness Administration Major in
Marketing Management.
____________________ ________________________
Date MICHAEL C. GODOY, MBA
Dean of Colleges
ACKNOWLEDGEMENT
The proponents would have never been able to finish their feasibility study
without the guidance of their dean, associate dean, adviser, support from family,
friends and classmates, help from their panels, grammarian, different offices,
their respondents and retailers, support from school, and lastly, from our
Almighty God.
The proponents would also want to thank their Associate Dean, Mr. Sandy
Gonzales, for advises and ideas he had shared for the betterment of the study.
Also, the proponents want to express their sincere gratitude to their
adviser, Ms. Roselle B.Tibayan for her continuous support to their feasibility
study, for her patience, motivation, enthusiasm, and immense knowledge. Her
guidance helped the proponents in the entire days of research and writing of the
feasibility study. The proponents could not have imagined having a better adviser
and mentor for this study.
The proponents also wish to thank the members of their panel, Ms.
Carmela Macatangay, their chairman and its members Mr. Jerry Lumbera and
Ms. Lucy Hernandez for giving suggestion for the betterment of the study.
The proponents also wish to thank Batangas State University for imparting
knowledge that greatly helps them not only for the pursuance of the study but
also for dealing in day to day challenges of their life.
To their grammarian, Ms. Kathrina Perez for sharing her knowledge and
for making the study grammatically correct.

To the different offices which provided the proponents with different
information crucial in the pursuance of the study.
To the respondents and retailers for the ideas they shared for the
betterment of the study and for the time they allocated in answering
questionnaire provided by the proponents which served as the basis of their
study.
To their friends and classmates for believing that the proponents can finish
the feasibility study before the date of submission and for all their insightful
comments.
To their families for their generous support, encouragement and
inspiration. Also, for morally uplifting the proponents and for the financial support
granted for the study.
Lastly, to Our Almighty God for helping them and enabling them to carry
out the study. Also, for all the grace and guidance they receive upon completion
of the study.
Maribel A. Andal
Leiwiehilda S. Benedicto
Mary Rose P. Gulla
Cristine L. Lucero
TABLE OF CONTENTS
TITLE PAGE ......................................................................................................... i

APPROVAL SHEET ............................................................................................. ii
ACKNOWLEDGEMENT ..................................................................................... iii
TABLE OF CONTENTS ....................................................................................... v
LIST OF TABLES ............................................................................................... ix
LIST OF FIGURES ............................................................................................... x
SUMMARY OF THE PROJECT

Name of the Firm ........................................................................................... xi
Location.......................................................................................................... xi
Brief Description of the Study ........................................................................ xii
Market Feasibility .......................................................................................... xii
Technical Feasibility ..................................................................................... xiii
Management Feasibility ............................................................................... xiv
Financial Feasibility ...................................................................................... xiv
Socio-Economic Contribution ........................................................................ xv
CHAPTER
I. BACKGROUND OF THE STUDY

Introduction ..................................................................................... 1
Brief background of the Study ......................................................... 2
Objectives of the Study ................................................................... 3
Definition of Terms .......................................................................... 4
Scope and Limitations of the Study ................................................. 4
II. MARKET STUDY

Objectives of the Study ................................................................... 9
Methodology ................................................................................. 10
Research Design........................................................................... 10
Subject of the Study ...................................................................... 10
Data Gathering Instrument ............................................................ 11
Data Gathering Procedure ............................................................ 12
Statistical Treatment Data ............................................................. 13
Demand ........................................................................................ 14
Major Consumer of the Product .................................................... 14
Historical Demand .............................................................. 15
Projected Demand .............................................................. 15
Supply ........................................................................................... 16
Historical Supply................................................................. 16
Projected Supply ................................................................ 17
Demand and Supply Analysis ....................................................... 18
Market Gap......................................................................... 18
Market Share ...................................................................... 19
SWOT Analysis ............................................................................. 19
Strength .............................................................................. 20
Weaknesses ....................................................................... 22
Opportunities ...................................................................... 23
Threats ............................................................................... 24
Marketing Strategies/Programs ..................................................... 25
Product ............................................................................... 25
Product Category, Quality and Style ........................ 27
Brand Name ............................................................ 27
Packaging ................................................................ 28
Pricing ................................................................................ 30
Place of Distribution ........................................................... 31
Promotion ........................................................................... 32
Generalization ............................................................................... 36
III. TECHNICAL STUDY

Objectives of the Study ................................................................. 38
Product.......................................................................................... 39
Description of the Product ............................................................. 39
Uses of the Product....................................................................... 40
Manufacturing Process ................................................................. 40
Flow Chart ..................................................................................... 48
Production Schedule ..................................................................... 49
Number of Working Days per Year ............................................... 49
Plant Layout .................................................................................. 50
Plant Location ............................................................................... 52
Factory Furniture and Fixture ........................................................ 53
Factory Tools and Equipment ....................................................... 54
Maintenance Supplies ................................................................... 55
Office Furniture and Fixture .......................................................... 57
Office Supplies .............................................................................. 58
Raw Materials ............................................................................... 59
Direct Materials .................................................................. 59
Indirect Materials ................................................................ 60
Leasehold Improvement ................................................................ 60
Utilities .......................................................................................... 61
Waste Disposal ............................................................................. 62
Direct Labor Requirement ............................................................. 63
Generalization ............................................................................... 64
IV. MANAGEMENT STUDY

Form of Business Ownership ........................................................ 67
Capitalization................................................................................. 67
Organizational Structure ............................................................... 68
Organizational Chart ..................................................................... 69
Manpower Requirements ................................................... 70
Job Specification ................................................................ 70
Job Description................................................................... 72
Compensation Benefits ...................................................... 74
Fringe Benefits .............................................................................. 75
Organizational Policy .................................................................... 76
Policies towards Employees ............................................... 76
Policies towards Customers ............................................... 78
Policies towards Suppliers.................................................. 78
Legal Requirements ...................................................................... 79
Generalization ............................................................................... 84
V. FINANCIAL STUDY
Capital Requirements.................................................................... 86
Total Project Costs ........................................................................ 87
Financial Assumptions .................................................................. 88
Financial Statements..................................................................... 89
Statement of Financial Performance .................................. 89
Statement of Cash Flows ................................................... 90
Statement of Changes in Partner’s Equity .......................... 90
Statement of Financial Position .......................................... 91
Financial Analysis ......................................................................... 91
Financial Ratio Analysis ................................................................ 92
Liquidity Ratio ..................................................................... 92
Current Ratio ........................................................... 92
Quick Ratio .............................................................. 93
Working Capital .................................................................. 94
Working Capital to Asset Ratio ........................... 95
Cash Flow Liquidity Ratio ................................... 96
Activity Ratios ..................................................................... 97
Accounts Receivable Turnover ................................ 97
Average Collection Period ....................................... 98
Inventory Turnover................................................... 98
Leverage Ratio ................................................................... 99
Debt Ratio ................................................................ 99
Debt to Equity Ratio ............................................... 100
Equity Ratio ........................................................... 101
Profitability Ratio .............................................................. 102
Gross Profit Margin ................................................ 102
Net Profit Margin .................................................... 102
Rate of Return on Asset ........................................ 103
Rate of Return on Equity ....................................... 104
Test of Capital in Investment ............................................ 105
Payback Period...................................................... 105
Break-Even Analysis ........................................................ 106
Break-Even Volume ............................................... 106
Break-Even Volume in Pesos ................................ 106
Break-Even Analysis Selling Price ......................... 107
Margin of Safety..................................................... 108
Generalization ............................................................................. 109
VI. SOCIO-ECONOMIC CONTRIBUTION

Contribution to the Philippine Economy ...................................... 110
Employment Generalization ........................................................ 111
Social Desirability ........................................................................ 111
Suppliers ..................................................................................... 111
Consumers .................................................................................. 112
Environment ................................................................................ 112
Generalization ............................................................................. 113
BIBLIOGRAPHY
EXHIBITS
SCHEDULES
NOTES
APPENDICES
CURRICULUM VITAE
LIST OF TABLES
Table No. Title Pages
2.1 Historical Demand of Corn Husk Stuff Organizer..................... 15

2.2 Projected Demand of Corn Husk Stuff organizer ..................... 16
2.3 Historical Supply of Corn Husk Stuff Organizer ....................... 17
2.4 Projected Supply of Corn Husk Stuff Organizer ....................... 17
2.5 Demand and Supply Gap ........................................................ 18
2.6 Market Share ........................................................................... 19
2.7 Pricing Scheme........................................................................ 30
2.8 Competitor’s Selling Price ........................................................ 31
3.1 Production Schedule................................................................ 49
3.2 Factory Furniture and Fixtures ................................................. 53
3.3 Tools and Equipment ............................................................... 54
3.4 Maintenance Supplies ............................................................. 55
3.5 Office Furniture and Fixtures ................................................... 57
3.6 Office Supplies......................................................................... 58
3.7 Direct Raw Materials ................................................................ 59
3.8 Indirect Materials ..................................................................... 60
3.9 Leasehold Improvement .......................................................... 61
3.10 Utilities ..................................................................................... 61
3.11 Labor Requirement .................................................................. 63
4.1 Capitalization of Partners ......................................................... 68
4.2 Compensation Schedule .......................................................... 75
4.3 Taxes and Licenses ................................................................. 83
5.1 Total Project Cost .................................................................... 87
5.2 Current Ratio ........................................................................... 93
5.3 Quick Ratio .............................................................................. 94
5.4 Working Capital ....................................................................... 94
5.5 Working Capital to Asset Ratio ................................................ 95
5.6 Cash Flow Liquidity Ratio ........................................................ 96
5.7 Accounts Receivable Turnover ................................................ 97
5.8 Average Collection Period ....................................................... 98
5.9 Inventory Turnover................................................................... 99
5.10 Debt Ratio .............................................................................. 100
5.11 Debt to Equity Ratio ............................................................... 100
5.12 Equity Ratio ........................................................................... 101
5.13 Gross Profit Margin ................................................................ 102
5.14 Net Profit Margin .................................................................... 103
5.15 Rate of Return on Asset ........................................................ 103
5.16 Rate of Return on Equity ....................................................... 104
5.17 Payback Period...................................................................... 105
5.18 Break-Even Sales Volume ..................................................... 106
5.19 Break-Even Point Peso Sales ................................................ 107
5.20 Break-Even Analysis Selling Price ......................................... 108
5.21 Margin of Safety Percentage ................................................. 109
LIST OF FIGURES
Figure No. Title Pages
2.1 Tag .......................................................................................... 29

2.2 Tarpaulin and Leaflet ............................................................... 29
2.3 Distribution Channel ................................................................ 32
3.1 Process Flow Chart ................................................................. 48
3.2 Plant Layout ............................................................................. 51
3.3 Plant Location .......................................................................... 52
4.1 Organizational Chart ................................................................ 69
SUMMARY OF THE PROJECT
This portion is about the creation of AIS Manufacturing, the maker of Corn
Husk Stuff Organizer. This part sums up all information about the paper which
includes the name of the firm, location, brief description of the product, market
feasibility, technical feasibility, management feasibility, financial feasibility and
socio economic contribution of the business.
Name of the Firm
The proposed business is named as AIS Manufacturing. The name was
derived from the organization the proponents had when they were still in college.
AIS stands for Association of Irregular Students since the proponents are
considered as irregular students when they were in college. Moreover, the idea
of using AIS as a name is to forever recall the friendship and happy moments
they had with the other irregular students. It’s the same thing the proponents
want for their business. They want to develop friendship with their customer as a
way of having loyal customers and bring them happiness and satisfaction with
the product they are offering.
Location
The business will be located at Purok 1, San Carlos, Lipa City. It is 64
sq.m. It is chosen because it is near to the possiblesuppliers and accessible for
the transportation of the raw materials needed for the production. Also, it is near
to its retailer for easy distribution of the finished product. Aside from that, the
proponents sought advices from the experts and they recommended the location
because it will suit the business.

Brief Description of the Project
The project is named as Establishment of AIS Manufacturing: Maker of
Corn Husk Stuff Organizer at San Carlos, Lipa City. The organizer is made up
from corn husk which is normally thrown elsewhere after peeling from corn. Upon
the introduction of the aforementioned organizer, waste is reduced thereby
making the environment safe place to live in. Also, the proponents want to come
up with something new to offer in the market.
Market Feasibility
In the market aspect, the study aims to determine the market feasibility of
the proposed business having Corn Husk Stuff Organizer as the product. The
proponents used descriptive research design and chooses household in urban
barangay in Lipa City having an income of Php10,000.00 and above as target
market. They used questionnaire as a mode of gathering pertinent information
about their target market and they went in their houses to ask their respondents
to fill up the questionnaires. In computing for the sample size, the proponents
made use of the Slovins formula and they came up having 369 as sample size.
Demand and supply were also computed to assess if the product would be
viable. The historical demand for the first year of operation is 9,659 and will
increase to 10,666 in 2019. The historical supply on the other hand is 1,620 for
the first year of business operation and will increase to 2,194 in 2019. Projected
demand for the first year of operation is 11,412 and the projected supply is 2,618.
The market gap to be filled for the first year of operation is 8,794 while the market
share is 31.975. SWOT analysis were also taken into consideration to determine
in what aspect the product is weak so it could be turned into strength through
strategic planning to cope up with the competitive environment. This will be done
through the use of marketing strategies. The product Corn Husk Stuff Organizer
falls under category of handicraft and its brand name is Handi-Stuff. It cost
Php292.77 per unit. In terms of product distribution, the flow will be from
manufacturer down to retailers then to the customers. In terms of promotion, the
proponents will use flyers, internet marketing and tarpaulin as a mode of
introducing their product to the market.
Technical Feasibility
The proponents named their product as Corn Husk Stuff Organizer which
is four (4) inches in height, eleven (11) inches in length and eight and one-half (8
½) inches width. The manufacturing of the aforementioned product involves
eleven (11) processes to secure the quality of the output. The annual production
will be 3,840 pieces for 2015 and will increase by 4,800 pieces in the year 2019
considering the 240 working days per year. In terms of manufacturing plant, the
proponents will rent a 64 sq.m plant area which will be divided into eight (8)
parts. The location of the plant will be at San Carlos, Lipa City. The raw
materials, equipment and maintenance supplies which will ensure the efficiency
of the production process are also indicated in this paper. Proper waste
segregation and disposal will be highly observed in the production since the main
goal of the business is to help the environment so strict compliance to waste
segregation will be observed.

Management Feasibility
The proposed business will operate under the general partnership and will
abide on all the laws that govern the aforementioned partnership. The business
will be registered with the name AIS Manufacturing having Corn husk Stuff
Organizer as the product.
The proponents will start by having Php160, 000.00 as initial capital which
is equally contributed by the four partners. They will hire two workers which will
be paid at Php322.50 per day and will be given all the benefits a worker must
have. A bookkeeper will also be hired to monitor the financial and accounting
matters of the business. He will be compensated with at Php 1,600.00 per month
since he will work as part time only. The general manager who will be
responsible in supervising the business will be compensated with of Php 500.00
per day. The firm had established organizational policies to be followed for a
proper systematic operation of the business. This will lead to the success of the
business and as well as its employees and workers. Before the business
operates, all necessary documents needed will be accomplished. All fees and
license will be paid as well amounting to Php 5,928.42.
Financial Feasibility
In the financial aspect, AIS Manufacturing will have an initial capital of
P160, 000.00 from the initial investment of four partners. Financial feasibility will
have a five-year financial projection and the sales will be assumed as 60 % cash
sales and 40% credit sales. The firm will have a net income of Php 55,298.51for
the first year of operation and it will increase to Php 159,327.64 in 2019. Net
cash flow for the first year would be Php 213,066.51. Financial ratios were also
computed to analyze the financial health of the business. Current ratio for the first
year of operation is 2.82 while the quick acid ratio is 1.99 which indicates that the
firm is expected to gain profit for the next year of operation with the payback
period of 1.62 which means that in a year and a half period of business
operation, the partners can recover their initial investment.
With a breakeven point of 2,348.24, the company is expected to earn
profit having the aforementioned sales volume.With the efficient management of
inventory and other assets of the firm, the business is expected to gain profit.
Socio-Economic Contribution
The purpose of the proposed business is not solely for profit generation
but also it is geared toward social and economic benefits. AIS Manufacturing will
contribute in employment generation in Lipa City in such way that it can provide
jobs for Lipeños to lessen the number of unemployment. In social desirability, the
firm will be beneficial in such way that it can contribute to promote waste
reduction since the raw materials it will be using is out of corn husk which can be
considered as waste. For suppliers, the firm could be another customer who can
generate sales and will serve as a new customer for the suppliers. Customers,
on the other hand, can also benefit from the firm since they can avail a new and
unique kind of organizer in a low price but with high quality. Lastly, for the
environment, the proposed product will also be beneficialsince it will lessen the
waste. Instead of throwing the corn husk elsewhere, it will be converted into a
more useful product.

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Chapter I
BACKGROUND OF THE STUDY
Introduction
Philippines is said to be blessed for having a rich natural resources.
Agriculture is one of the primary sources of income in this country. Some of the
commonly planted crops are rice, corn and variety of vegetables. Corn, as a
close substitute for rice is planted after rice has been harvested. The top ten
regions that produce corn are Cagayan Valley, where 25 % of their harvest which
is approximately 7,389,425 metric tons is derived from corn. Next are Northern
Mindanao with 17 %, SOCCSKSARGEN with 16 %, ARMM with 10 %, Ilocos
Region with 10%, Western Visayas with 4.5%, Bicol Region with 3.1 %, CAR with
3%, Zamboaga Peninsula with 2.9%, and Central Luzon with 2.8%.
Given the fact that almost all regions in the Philippines are planting corn,
there is an abundant supply of corn husk. Corn husk is normally thrown after it
has been peeled from the corn. It is considered as waste since its only function is
to serve as the outer covering of corn.
AIS Manufacturing is a firm that will be producing an organizer out of corn
husk. It will belong to the handicraft industry that will continue to spread the
culture of Filipinos with the touch of innovation on its product. The proponents
aim to utilize the use of corn husk. Instead of throwing corn husk, they will
instead use this material in making an organizer that will be beneficial for most of
the Filipinos since they are known to be organized with their things. The
organizer that the firm will be proposing will meet the taste and preferences of its
consumer without compromising the quality of the product. This proposed study
will be calling the product as Corn Husk Stuff Organizer.
Brief Background of the Study
In this modernized and civilized society where in technology produces
advance products and services, people overlook things that are environment-
friendly and products that anticipate reusability of waste materials. Handicraft
also talks about making articles by hand that uses scrap materials and this
product is manufactured by recycling. In relation to this, the proponents came up
with the idea of making Corn Husk Stuff Organizer using the waste material from
corn which is its husk. They thought of turning the said material into a useful,
functional and trendy organizer that can satisfy consumers in organizing their
stuffs in one place. The product is durable and affordable for the consumers.
Handicraft is a type of work where useful and decorative things are made
completely by hand or by using only some simple tools (Schaffer, 2008).
Handicraft business in the municipality of Lipa is small in number. Some of
the stores that sell handicraft products import them from Bicol, Laguna, Taal,
Pangasinan and other provinces. There is no certain manufacturing firm that
produces handicrafts in Lipa City. This scenario helps the proponents to uplift the
handicraft industry by offering Lipa City the Corn Husk Stuff Organizer which is
environment-friendly, unique and with good quality because it is made by skillful
hands of the workers. Given the fact that the material to be used is considered as
waste, Corn Husk Stuff Organizer is cheaper compared to the organizer
previously offered in the market in which quality is almost the same. The
proponents also see that elimination of plastic in the said city is an advantage,
that’s why handicraft business fit the latest trend in the market.
Objectives of the Study
The main objective of this study is to determine the viability of Corn Husk
organizer in the market. To make the study viable, the proponents set specific
objectives.
1. To assess the potential of the product in the market and to determine the gap
that needs to be filled taking into consideration the SWOT analysis and
marketing strategies to survive the competitive environment.
2. To determine the technical feasibility of the product, the manufacturing
process used in the production, the annual production, working days in a year,
plant location and layout, tools and equipments and other necessary
requirements needed in the operation.
3. To ascertain the management feasibility of the project through the selection of
the right management structure, form of business ownership, capitalization, man
power requirements, job specification and description and legal requirements
needed in the operation of business.
4. To evaluate the profitability of the proposed business through analyzing the
financial statement, statement of financial performance, cash flows and through
the use of financial ratios such as liquidity ratios, activity ratios, leverage ratios,
and profitability ratios to determine the liquidity of the proposed business.

5. To determine the contribution to the community and economy derived from the
proposed product.
Definition of Terms
In this study, the following terms are defined theoretically and operationally.
Corn Husk. This refers to the leaves of the corn (Trumbauer, 2009). In this
study, it is the main raw materials that will be used in the production of the
organizer.
Handicraft. This refers to decorative artifacts or anything made by hand
(Schaffer, 2008). In this study, it is the industry business where the proposed
product belongs to.
Basketry. This refers to product of culturally distinct tribes at different times and
different places. It is the process of weaving vegetable fibers into a basket or
other similar form. (Porter, 2003) In this study, the proponents consider the
organizer as one of those products that can be classified as basket.
Stuff. This refers to a person’s belonging, equipment or baggage. (Friedlob,
2008) In this study, it refers to the materials that will be placed inside the
organizer.
Organizer. This refers to a container with number of compartments for storage.
(Montanaro, 2008) In this study, it refers to the product the proponents will be
producing.
Scope and Limitation
The study is entitled “Establishment of AIS Manufacturing: Maker of Corn
Husk Stuff Organizer at San Carlos, Lipa City”. The business is a maker of stuff
organizer out of corn husk. The business will be located at Purok 1, San Carlos
along Ayala Highway, Lipa City. The proponents chose the location of their
business because it is near the retailers it will be serving and to the source of raw
materials the business needs for its production. Also, upon seeking the help of
experts, they suggested the location is suited for the business.
Insufficient published materials which will support and help the proponents
in developing the potentials of the business became the major limitation of the
study. The researchers found difficulty in looking for enough information to
support the study due to the fact that there are few retailers of same industry.
Because the proposed business is new in the native product industry, adopting
corn husk organizer design and qualities that conforms to what an organizer
should be become narrow and experimental.
In the market aspect, chosen target markets were households residing in
the Bgry 1-11 of Lipa City having a monthly income of Php10,000.00 and above.
The target market was chosen with the conviction that they are able to avail the
product, they have the purchasing power. The proponents used descriptive
method of research in conducting its study and the primary tool used in
determining the viability of the business is survey questionnaire. These
questionnaires were distributed to the proponents’ chosen target market who the
households were residing in the municipality of Lipa, Barangay 1 to 11 to be
specific. Questionnaires were first validated and revised by their adviser and
panels before handing it to its respondents to ensure that the details are correct.
Strengths, weaknesses, opportunities and threats analysis were also discussed

to help on how to create a strategy that fully utilizes one’s strength and
opportunities and improves and prepare for its own weaknesses and threats.
Promotional strategies are also a great help in introducing the product so the
proponents make sure that the strategies will help in launching the product in the
market.
Giving awareness to consumers became significant and may require
extensive marketing effort on the part of the proponents. Aside from that, viability
of the business was difficult to determine due to respondent’s personal reasons.
Some were afraid to answer questionnaire because of uncertainty of where the
information will be used. Others were busy and had urgent appointments to
attend to. There were some who didn’t want to take the questions seriously which
affected the reliability of the results and others were not honest to mark their true
choices.
In the technical aspect, the business will be manufacturing Corn Husk
Stuff Organizer and its main material is corn husk. It indicates the manufacturing
process the product will undergo as well as the production schedule for its five
years of operation. Supplies, furniture, fixtures and equipments that are needed
to make the production area, offices and stockrooms more comfortable to work at
are also included in this portion. Direct materials and indirect materials used are
also stated. Utilities and proper waste management are also indicated in this
part.
Suppliers of corn husk have difficult for no formal establishment or location
can be contacted. The processing was also difficult because the texture of the
corn husk to make the design perfect is unidentifiable. Compatibility of the
materials to be used with the procedure took much of the time of the proponents.
In the management aspect, the study aims to determine the appropriate
form of business ownership and suitable organization structure to be adopted by
the proposed business. Manpower needed by the firm and their job specifications
and descriptions were formulated to better suit the industry. Effective and
efficient policies will be implemented to serve as guidelines to the process and to
the organization.
Faced with the truth that even the proponents are taking up Business
Administration course, they still encountered problems in conducting this study.
They looked for the help of different government agencies to supply them the
needed documents as well as different private offices and individuals. Some
were not cooperative enough and gaining of the needed materials was slow. The
proponents considered their lack of personal experience in handling a business
and limited resources as limitation which resulted to an average performance.
In financial feasibility, it focused on the financial stability of the proposed
business. It tackles the financial ratios as well as the income statement of the
proposed business. It indicates the five years financial projections of cost that will
be incurred as well as the sales projection for the next five years. Statement of
cash flow and changes in partner’s equity is also indicated here. Different ratios
are also indicated to secure the liquidity of the business.

Given the fact that the proponents are Business Students, they
experienced difficulty in computing the entire financial statement. Applying the
knowledge their acquired in their accounting subjects and with the aid of their
accountant, they were able to create a reliable financial assumption of their
proposed business.
In socio-economic aspect, the proposed business focused on its benefits
and contribution to the welfare of the community as well as to the economy of the
Philippines. It aims to create jobs for Filipinos, promote environment friendly
product, contribute to the number of tax payer for the improvement of the society
and relive the handicraft business in Lipa City. For customers, it offers an
additional variety of organizer for them to choose from. Since most of the
organizers present in the market are made out of plastic or metal, the
proponents’ organizer could be a new option for those who want to avail new
organizer. It could also be beneficial for the environment in such way that the
outer covering of the corn which is the husk is no longer thrown anywhere but
converted into a more useful product. It could help to minimize the waste seen in
our environment.
The foreseen conflict that may be faced by the proponents is a negative
relation with its suppliers. Since suppliers are important, having conflict with them
will delay the raw materials needed in the production of the organizer. Suppliers
are assets of every business so a good relationship with them must always be
put into consideration.

Chapter II
MARKET STUDY
Market study is crucial to assess if the business will have an adequate
demand to pursue its operation. Also, it is vital in gathering information which is
essential in formation of strategies.
Generally, the main purpose of a business is to gain profit. In line with this,
the proponents conducted market study to analyze whether the business to
establish will meet its purpose. Also, in this part, the proponents were gathered
information needed in evaluating the market share of the proposed business
along with the SWOT analysis and marketing strategies to be used.
The proponents aimed to assess the potential of the product in the market
and to determine the gap that needs to be filled taking into consideration the
SWOT analysis and marketing strategies to survive the competitive environment.
1. The research methodology, design and data gathering, instrument and
procedure to be used.
2. The historical and projected demand and supply of the proposed
business.
3. The strengths, weaknesses, opportunities and threats of the proposed
business.
4. The marketing programs and strategies that will be utilized.

Methodology
This part discusses about the design of the study, the subject, data
gathering instrument, procedures and statistical treatment of data.
In determining the crucial points regarding the aspects of the feasibility
study, the proponents, through the use of descriptive method, prepared
questionnaire for the customers and business related services. Survey and
interview with the respondents were also done to gather information.
Research Design
Descriptive research design involves measuring a variety or set of
variables as they exist naturally. It describes the characteristics or behaviors of a
particular population in a systematic and accurate fashion (Gravetter, 2010).
Through the aid of this method, the proponents were able to determine the
position of their proposed business in the market.
Using survey questionnaires as the primary tool for the gathering of
information, along with interviews and observations, the group was able to use
descriptive method which helped them forecast the feasibility of Corn Husk Stuff
Organizer. Descriptive method was used because it observes its subjects without
affecting them.
Subject of the Study
The proponents choose urban barangays in Lipa City as subject of their
study. Incorporated in their identified respondents are households from Barangay

1 up to 11 with an income of P10, 000.00. This categorization of barangays was
gathered from the record of the City Planning and Development Office.
The subject was chosen to represent the potential consumers of the
product with the assumption of their status to have the purchasing power which is
relatively higher compared to urbanizing and rural barangays. The total
population of the subject is 4,823 having 369 as the sample size for the
distribution of questionnaire.
In terms of the supply, the proponents chose retailers which will help them
establish the supply of the product and other aspects with regards to the related
products. The retailers which were chosen to be the respondents are Jose
Garcia native products, Mane’s native products, Ben’s native products, Luz
native products, and San Vicente native products, SM Department store, SM
Supermarket, Ace Hardware, National Bookstore, Robinsons Supermarket, Lipa
Sampaguita Mart, and Tagumpay Mart.
Data Gathering Instrument
The proponents constructed a questionnaire to be used as an instrument
to gather data from selected respondents and retailers. They created two sets of
questionnaires: one for the consumers and one for the retailer of the product.
Both questionnaires were divided into four parts but the contents were not the
same. The first is respondent’s profile which contains the customer name,
address, and income bracket. For retailers, the first part of the questionnaire was
the demographic profile which is comprised of the name and location of the store,
nature of the business and forms of business organization. Related product, the
second part, is comprised of the information about the related product. Product
introduction intends to make the customer familiar with the product. Lastly,
willingness is the part which evaluates whether the respondent is interested in
buying or selling the product or not. With the help and suggestion from their
adviser and panels, the proponents were able to improve and revise the
questionnaire
After it was constructed, it was checked by their adviser and validated by
the chairman of the panelist. The questionnaires were distributed to their
respondents and retailers to gather data about the feasibility of the product and
suggestions about the possible improvements. The proponents used
questionnaire as a mode of gathering pertinent data to determine the viability of
product. The obtain results were tallied and served as the basis in pursuant of
the study.
Data Gathering Procedure
The formulated questionnaires were distributed to the urban barangays of
Lipa City for the determination of the demand of the product and retailer within
the municipality for the supply. The proponents went to each barangay asking the
people they run by if qualified to answer the survey before handing them the
questionnaire. They went door to door, interviewed bystanders and even
passersby. The proponents waited the target consumers to finish answering the
set of questions and aided answers to their queries about the questionnaires and
the product. Some of the respondents were kind enough to give suggestions and
recommendations for the betterment of the proposal. Private establishments

were given copies of questionnaires where some answered and surrendered it
immediately while others asked for time in answering the survey due to
operational conflicts.
Statistical Treatment of Data
To complete the sample size of the population of the households of urban
barangays in Lipa City, the proponents used the Slovin’s formula. From
probability sampling, the Slovin’s formula is presented:
n= ____N_______
1 + Ne²
Where:
N=population size
n= sample size
e= margin of error (0.05)
Substituting the data gathered:
n= N
1 + Ne²
= 4,823
1+ (4,823) (0.05)2
= 4,823
13.06
n= 369.295 or 369
Demand
Demands are human wants that are backed by buying power. Consumers
view products as bundles of benefits and choose products that give them the
best bundle for their money. People demand products with the benefits that add
up to the most satisfaction. (Ac –ac, 2009)
The setting of demand would help the proponents to analyze if the
proposed stuff organizer made of corn husk will prosper. Also it will guide the
proponents to determine the needs and wants of its customers.
Major Consumers of the Product
The major buyers of Corn Husk Stuff Organizer are the households. There
are an approximately 4,823 households in Lipa City as of 2012 having the
income of P10, 000 and above serve as the target market of the proponents. This
target market is set due to the realization that they are capable of buying the
product and mostly, in households many things are not placed properly that’s
why when someone need something it is hard for them to find it. Unlike if they
have the Corn Husk Stuff Organizer, there is a designated place where they can
place their stuff and get it when needed. It can be placed anywhere in the house
such as in the kitchen, bedroom, living room and also in the bathroom if they
desire. Different things can be placed in the Corn Husk Stuff Organizer according
to where it would be located. For example, in the living room, they can put the
remote of television, stereo and DVD player into it, pen and paper for the
telephone contacts and other stuffs they have.

Historical Demand
The historical demand is founded by the information accumulated through
surveys and interviews. The population of Lipa City’s urban barangays
households from CPDO helped in determining the product’s historical demand.
Since Corn Husk Stuff Organizer is a new entrant in the market, the proponents
decided to base their historical demand on the previous sales of related product
in which those organizers were made of plastic and metal.
Table 2.1
Historical Demand of Corn Husk Stuff Organizer
Year Historical Demand

2008 9,659
2009 9,903
2010 10,150
2011 10,405
2012 10,666
Refer to Exhibit 1
Table 2.1 summarizes the historical demand of the stuff organizer in Lipa
City. The demand for the year 2008 is 9,659 and 10,666 for the year 2012. It is
seen in the table 2.1 that organizers have an increasing demand over the past
five years which is advantageous on the part of the proponents. It simply means
that there is a demand for organizer.
Projected Demand
To know the potential of the product in the future, projected demand is
essential. The population of the target market ascertains the demand for the
product. To know the possible increase in demand for the product, the
proponents used the straight line method. By applying this method, they were
able to measure the projected demand of the product in Lipa City from 2015 to
2019.
Table 2.2
Projected Demand of Corn Husk Stuff Organizer
Year Projected Demand

2015 11,412
2016 11,663
2017 11,914
2018 12,165
2019 12,416
Refer to Exhibit 2
Table 2.2 shows the possible demand of the product for the next five
years. The projected increase would be from 11,412 in 2015 up to 12,416 in
2019. This indicates that AIS Manufacturing can go through in the market and
has high contingency of success.
Supply
Supply refers to the quantity of a good that a seller is willing and able to
sell at a given price (Wessels, 2007). It is one of the forces that make the
economies work. It determines the quantity of each good produced and the price
at which it is sold (Mankiw, 2011).
Historical Supply
Historical supply is the record of the related product’s supply for the past
years. The proponents were aided by the information they have gotten from the
retailers through surveys and interviews. Based on the data supplied, it is
noticeabe and is consistently increasing which signifies that the product is viable
in the market.
Table 2.3
Historical Supply of Corn Husk Stuff Organizer
Year Historical Supply

2008 1,620
2009 1,727
2010 1,850
2011 2,036
2012 2,194
Refer to Exhibit 3
Table 2.3 shows the historical supply of the retailers in Lipa City for the
past five years. The supply for the year 2008 is 1,620 and for the year 2012 is
2,194. It shows an increasing supply to suffice the increasing demand of product.
Projected Supply
Projected supply can be determined by the use of historical supply.
The proponents evaluated the growth in the supply of the product through the
information gathered from retailers’ interview. The statistical straight line method
was used in forecasting its supply.
Table 2. 4
Projected Supply of Corn Husk Stuff Organizer
Year Projected Supply

2015 2,618
2016 2,764
2017 2,910
2018 3,056
2019 3,202
Refer to Exhibit 4
Table 2.4 presents the projected supply of the product for the year is
2,618 and 3,202 for the year 2019. The table shows an increasing supply for the
next five years.
Demand and Supply Analysis
One of the main purposes of business is to gain profit so demand and
supply must be analyzed accordingly. Its analysis is crucial to forecast if the
product could penetrate the market. It could also serve as the basis for the
evaluation of market share.
Market Gap
Market gap analysis is used to identify gaps in market segment. If such
gap is found it represents a market opportunity that might be an opportunity for
the firm (Oashaughnessy, 2008).
Market Gap = Projected Demand - Projected Supply
Table 2.5
Demand and Supply Gap
Year Projected Demand Projected Supply Market Gap

2015 11,412 2,618 8,794
2016 11,663 2,764 8,899
2017 11,914 2,910 9,004
2018 12,165 3,056 9,109
2019 12,416 3,202 9,214
Refer to Exhibit 5
Table 2.5 indicates the market gap of Corn Husk Stuff Organizer for 2015-
2019. This gave the proponents an idea of the total number of market to be filled
out. The market gap is 8,794 for 2015 and 9,214 for 2019. It shows that AIS
Manufacturing could enter the market since it reflects high and increasing market
gap considering the volume of products needed per year.
Market Share
Market share is a percentage of a market accounted for by a specific
entity and used to establish the product’s strengths in a particular market
(Grewal, Levy, 2010). Market share is obtained by dividing the projected sales
volume by projected demand and multiplying the answer by 100.
Table 2.6
Market Share
Year Sales Volume Projected Market Share

Demand
2015 3,648 11,412 31.97%
2016 4,058 11,663 34.79%
2017 4,307 11,914 36.15%
2018 4,547 12,165 37.38%
2019 4,787 12,416 38.56%
Refer to Exhibit 6
Table 2.6 shows the market share from 2015 – 2019. The results show an
increasing market share ranging from 31.97% up to 38.56%. This implies that for
five years of business operation, the business will earn profit since there is a
continuous patronage of product by their customer.
SWOT Analysis
SWOT analysis provides a basis for improving weaknesses or at least
minimizing them and avoiding or managing environmental threats to operations.
SWOT study helps identify a distinctive competence that can be used to tap an
important opportunity in the environment. It is the process of reviewing internal
operations for strengths and weaknesses and scanning the organization’s
external environment for opportunities. (Routledge, 2009)
The starting point in formulating strategy is usually SWOT Analysis. This
analysis works well for strategic planning, evaluating competitors and business
development. It helps on how to create a strategy that fully utilizes one’s strength
and opportunities and improves and prepare for its own weaknesses and threats.
Strengths
Strengths are something internal to the organization. It is something the
organization is good at or a resource that gives it an important capability, a useful
competence, a critical or proprietary know how, or a valuable organizational
achievement (Beekun, 2008).Strengths are the qualities that enable us to
accomplish the organization’s mission. This involves the distinctive capability that
can be used effectively to achieve its performance objectives. The following
factors are the strengths of the proposed business have.
Competitive price. The main raw material to be used which is a corn
husk is abundant and can be collected at low cost. Therefore the cost incurred in
the production of the organizer is cheaper compared to the production cost of
other organizer manufacturing. As a result, the price of the organizer is cheaper
than its competitor. The price of Corn Husk Stuff Organizer is P 272.19
compared to P 394.15 which is the average price of competitor’s related product.

Availability of raw materials. Philippines is an agricultural country and
corn is one of the major crops planted in the country. The abundant supply of
corn makes it possible for the production of corn husk organizer. Instead of
throwing the corn husk, it will be converted and used in the production of the
organizer. To strengthen this statement, we found different suppliers in Lipa City
and from its nearby municipality. Vendors in public market of Lipa City agreed to
sell their corn husk to us as well as the plantations in Padre Garcia, Rosario,
Ibaan, and Malvar which will be harvesting two times a year depending on the
time they plant it.
Competitive management. The proponents are students of Bachelor of
Science in Business Administration major in Marketing Management giving them
background on how to run a business along with its operation. Their skills gained
and knowledge obtained while taking up the course secures an edge for the
firm’s success.
Being eco-friendly. Corn husk is being considered as waste. Through the
pursuant of Corn Husk Stuff Organizer, corn husk which is thrown after peeled off
from corn is converted to more useful product. The raw material being used
cannot harm the environment and will help to eliminate waste and turn into being
a useful material.
Well oriented and trained workers. Workers are assets of the
enterprise. Before letting them do the real work, they must first undergo trainings
in order to be prepared and equipped with all knowledge they need so they won’t
be shocked upon starting their work. Having skilled and trained workers will
fasten the production, thereby, making more quality output.
Weaknesses
Weaknesses are considered to be anything the organization lacks, does
not perform well, or a condition that hampers in some way (Beekun, 2008).
Weaknesses deteriorate influences on the organizational success and growth.
These are factors which can obstruct the attainment of the proposed study. The
following are the disadvantages of the business which are internally observed
and must be surpassed.
Limited source of funds. Capital must first be considered when
establishing a business. Financial source will be very limited, thus, creating funds
for the business to be minimal. Loan grants may not be that possible for lack of
personal background for its approval is subject to the proponents. Thus,
necessary equipments and other financial related betterment must be prioritized
and managed properly.
Lack of customer awareness. Since the product is a new entrant, it is
hard to penetrate the market. Through the effective use of different strategies,
this will help make the public knowledgeable about the product offered.
High cost of labor. Labor cost is considered as one factor in the
operation of the business. It plays a prominent role in business operations. The
employees who will be hired must have the skills needed to produce high quality
product.
Capacity to handle limited orders. Since the business is a start up
having two workers, chances are, the business cannot at first accommodate bulk
orders.
Still confined to rural areas and small cities. Handicraft is a type of
business usually present in rural places since this type of business is handmade
and less technology is used.
Opportunities
Opportunities originate from the external environment of the organization.
They represent potential areas for growth, technological changes, and
demographic trends (Beekun, 2008).
Technological change. The evolution of technology is continuously
growing. It helps the proponents to acquire the latest equipment to be used which
can increase the production and assure the quality output of the product.
New trends on the market. Since most of the organizers present in the
market place are made of plastic, Filipinos will be curious about the organizer
made out of corn husk. Their curiosity will be maximized by the proponents for
them to avail the product. Being new in the market will attract the customers
interest to try the product.
Business expansion. The goal of every business is to expand their
business to cater more customer needs. As long as there is an increasing
demand for a product, an entity can get the opportunity for the growth of the
business. It sees an opportunity for the enterprise because it can cater the
increasing of the product.
Environmental usefulness of raw materials used. The adaptation of an
eco-friendly product where more and more are being captivated that has been a
trend not only domestically but also internationally. Stuff organizer made of Corn
Husk is one of these products which represent creativity in recycling the scrap
corn husk that lessens the waste in our municipality.
Similar product in the market is more expensive. Since the related
products offer in the market are more expensive, chances are, the customers are
more likely to shift in the proponents’ organizer since it has a more affordable
price and the quality is just the same.
Threats
Threats are external factors that have the potential to reduce the
organization’s performance (Pershing, 2008). It arises when conditions in
external environment risk the reliability and profitability of the business.
Changing preference. This is the responsibility of the firm. As AIS
Manufacturing is made to satisfy the consumer needs, they should also conform
to its consumer’s changing preferences as time goes by.
Strong competition. AIS Manufacturing is considered new in the field of
native product industry. Competition in the said industry is very stiff and
rendering consumer with quality products at cheap price while still giving variety
that meets the qualification of more than one segment of the market is never
easy. That illustrates the difficulty that AIS manufacturing must overcome.
Economic instability. It has been the greatest threat not only to starting
up businesses but even with those which are established by years. This
economic instability scopes up to the devaluation of peso, inflation, poverty and
others. It must be handled well for it dictates the status of manufacturing of the
product as well as the purchasing power of Lipeños.
Price of substitute product. Prices of substitute product could hinder the
business to raise the price since it could be the reason for its customer to switch
to another product.
Marketing Program and Strategies
A successful marketing planning and development begins with the
consideration of marketing strategies through careful and precise evaluation of a
marketing program. Marketing Programs and Strategies focus on customer
satisfaction base on product, promotion, pricing, and place which will be further
discussed in the latter part of the study.
Product
The product is under the category of household handicraft. It is used to
keep small things in place for the future use. Unlike any other product which falls
into its competition, Corn Husk Stuff Organizer possesses unique characteristics
that could be an edge over the stiff competition it may face as it enters the
market. The following could be seen in its features, benefits and advantages.
The product is made of corn husk which is used to weave on the outer
part of the organizer to cover up the frame. The frame is made of yantok as the
base of organizer which cannot easily crack. The corn husk has the quality that
cannot be simply split and cut into strips.
The product is the best example of encapsulating and satisfying one’s
need while contributing to the human welfare and environment. It conforms to the
organization’s principle on low capitalization and production cost to offer it
cheaper in the market while still securing profit. These types of products tend to
be those which are prioritized with today’s attention.
Corn Husk Stuff Organizer has its benefits that are apparently valuable
than others. Its aid in the conservation of the environment and minimize waste
are big factors considered in making purchase decision. It is made up of waste
corn husk that is ready to be disposed but helpful to humans if used in a
functional way. The emergence of awareness in how people can contribute to the
greater and friendlier products to be able to conserve the natural resources helps
the proposed product to be seen more significant and wiser choice than the
others.
The greatest advantage of this product could be its cheaper price
compared to competing brands which are made of plastic. It consists of many
divisions where people can put lots of personal belongings. In terms of raw
materials, instead of throwing away and additional to the waste of municipality, it
will be converted into functional stuff organizer. It is a great advantage in line with
the disposal of wastages. The product, being affordable, secures the quality that
is lacking in the lower priced brands, making it a good alternative to high
organizer that is too expensive and cheaper brands that lacks the quality.
Product Category/Quality and Size
A product category is a way to organize products in a store by the type of
products people will be selling. The proponents’ product falls under the category
of handicraft. Its main purpose is to provide convenience on the part of the
customer since it will put things in order.
Product quality is a collection of features and characteristics of a product
that contribute to its ability to meet the given requirements. It includes the
products’ overall reliability, ease of use and other valued attributes. In terms of
quality, Corn Husk Stuff Organizer is made out from corn husk as the main raw
material of the organizer. The corn husk contains fiber and even it is thrown and
ignored after peeling from corn, it has been proven to be sturdy. The finished
product out of it is said to be durable because the proponents examined the
durability of the husk with or without the use of chemicals in preserving and
strengthening the corn husk before using.
The product’s size will be 8 ½ inches in width, 11 inches in length and 4
inches in height. Different sizes will be made to accommodate the needs of the
consumers with different preferences. Designs will be incorporated to give more
value and add beauty to the product.
Brand Name
Brand is a promise of something. That something is intangible; it could be
guarantee of quality, sense of prestige, or of heritage. Brands also offer a

differentiating factor that makes it easier to choose between the many competing
product variants (Davis, 2009). Brands help the consumers recognize a specific
product among others.
The proponents decided that the brand name is Handi-Stuff. This brand
name is easy to be recognized by an individual because it comes from the word
handicraft and the stuff which is something we can put in place. As a business
entity, it is important to identify the right positioning of the brand name. A
competitive branding can simply increase the potential of getting the prospects in
order to attain profit maximization. A good brand will serve a strategy on how to
recognize the value of the business and it can motivate the customers to buy the
products.
Packaging
Packaging is the activity of designing the container or wrapper for a
product. (Ac –ac, 2009). The proponents view packaging as the first point of
contact that a consumer has with the brand, so they believe that it is important
that it initially draws their attention and also quickly convey the message that
both present and support the brand. There will be consistency with the message
of positioning the product.
In line with this, the proponents will use a tag as its primary packaging.
The name of the business and the picture of raw materials to be used will be
printed on the tag for customer awareness. The secondary packaging would be
plastic bags to cover up when the customers buy.

Figure 2.1
Tag
Figure 2.2
Tarpaulin and Leaflet
Pricing
Price is the amount of money paid in exchange of service rendered.
Pricing on the other hand is those activities involved in the determination of the
price at which products that will be offered for sale considering the various
objective of the firm (Medina, 2008). Pricing is done to consider the cost incurred
as well as the budget for the promotion of the product.
Table 2.7
Pricing Scheme
Direct Material Used/Unit 64.30

Labor Cost/Unit 40.31
Factory Overhead/ Unit 40.05
Total Cost/Unit 144.66
Markup (40%) 57.86
Selling Price-Retailers (VAT Exc) 202.52
VAT 12% 24.30
Selling Price-Retailers 226.82
Mark up 20% 45.36
Selling price- Consumers 272.19
In determining the price of corn husk organizer, the proponents used the
cost- plus method. This method is used to generate accurate estimates of
marginal costs and revenues. This is considered as the most rational approach in
maximizing profits. It can determine if the price is competitive among the others.
It simply illustrates the variable and fixed cost being incurred in the operation of
the business.
The table 2.7 presents on how the selling price is figure out in order
to generate accurate price of the corn husk organizer. It shows that the selling
price of the organizer to the customer will be worth of P272.19.
Table 2.8
Competitor’s Selling Price
Name of Store Specification Price

National bookstore plastic(11x8) P 459.00
Lipa Sampaguita Mart plastic(11x8) P 422.00
Tagumpay Mart plastic(11x8) P 439.00
Average Selling Price P 440.00
The table 2.8 indicates the competitor’s selling price which is related to our
product. As noticed, the price of the corn husk organizer will be much lower than
to its competitors. And competitive pricing can influence the customers on how
they will be able purchase the product.
Place of Distribution
Distribution channel is a medium by which goods and services are made
available to the customer for uses and consumption. It is a mean by which goods
move from producer or manufacturer to customer. Speed in product or service
delivery and physical location significantly affects the efficiency of distribution
channel. (Young, 2008)
The proponents used the indirect channel of distribution wherein it falls to
one level channel that the manufacturer sells goods to customer through
retailers. AIS Manufacturing, being the manufacturer will seek retailers who will
sell their product to their customers. These retailers will be from the urban
barangays in Lipa City. These retailers will be monitored carefully to update their
supplies and to check proper implementation of prices. However the
manufacturing firm could also direct sell its product to final customers if
necessary.
Manufacturer
Retailer
Customer
Figure 2.3
Distribution Channel
Promotion
Promotion in a broad sense consists of coordinated seller efforts to
establish channels of information and persuasion to foster the sale of good or
service or the acceptance of ideas to the marketers effort to make the product or
service actively moves through the marketing channel and to the end users
(Young, 2008). Promotion is also a form of corporate communication that uses

various methods to reach targeted customers with a certain message in order to
achieve specific organizational objectives. Like most marketing decisions, an
effective promotional strategy requires the marketer to understand how
promotion fits with other pieces of the marketing puzzle. Consequently,
promotion decisions should be made with an appreciation to how it affects other
areas of the business. In addition to coordinating general promotion decisions
with other business areas, individual promotions must also work together. Under
the concept of Integrated Marketing Communication (IMC) marketers attempt to
develop a unified promotional strategy involving the coordination of many
different types of promotional techniques. The key idea for the marketer who
employs several promotional options to reach objectives for the service is to
employ a consistent message across all options.
The proponents then chose sales promotion and internet marketing as
factors of its IMC program. The use of advertising is too expensive for the firm
yet and lower promotional tools are considered until necessary.
Under sales promotion, it offers three distinctive benefits such as
communication, incentive and invitation. This IMC program draws a quicker
customer response. The sales promotion tools to be used are loyalty reward.
Since customers wants to be pampered by businesses, loyalty rewards can help
to develop loyal customers and to encourage repeat purchased among this
customers. A good sales promotion will not only increase profit by also help to
build a long relationship with the customers which is crucial to sustain business
operation and to remain in business.

The proponents will also use flyers and tarpaulins that will be posted and
distributed in areas allowed and near to its retailers so that the customer could
easily recognized the store where they can avail the product. Flyers will also be
distributed to help the customer be more aware of the product. Flyers will be
distributed in the public market three days before of the opening. Public market is
the places suited for the distribution since most of the retailers are found near the
area.
The use of social media marketing will also be considered to take
advantage of posting free promotion online (Young, 2008). This strategy could
lessen the cost on the part of the proponents while also helping to promote the
product. The growth of social media can provide its full potential to promote the
product as well as the brand. It also serves as strategy on how an entity will
introduce the product. As competition continuously growing, efficient and
effective used of promotional tool and strategy will serve as a perimeter to defy
the stiff competition in the market. Also, this could be an edge of a company to
stand among its competitors.

Promotion Mix Strategies
WHAT WHO WHEN WHERE HOW BUDGET

1.Flyers Proponents 3 days Public market, The flyers created P 2,000.00
before the along the by the 1,000 pieces
operation Urban proponents will P 2.00/unit
barangays of be distributed to
Lipa. the people going
inside the mall
and to the
passersby.
2.Internet Proponents 30 days Facebook, The accounts in P 250.00
Marketing before the Twitter these sites will be Internet Fee
operation created by the
proponents and
will serve as the
dissemination of
the firm’s
background such
as vision, mission,
objectives,
products and
other related
information.
These sites will
be
maintained and
updated by the
proponents to
secure more
visits and
maintain viewers.
3.Tarpaulin Proponents 7 days In the streets of It will be posted P 3,000.00
before the CM Recto, to streets where
operation public market there are many 12 units
and transport people passing by P 250.00 per
vehicles who with the help of
unit (4x4m)
are willing to residents who are
place the willing to post the
tarpaulins in tarpaulins for
their vehicles free and to
for free. vehicles who are
willing to place it
and serve as
moving
advertisement
TOTAL P 5,250.00
Generalization
Market study is essential in determining the feasibility of Corn Husk Stuff
Organizer in the market. To determine this, the proponent used descriptive
research design through the use of survey questionnaire to gather pertinent
information about the subject of the study which were the households in urban
barangay in Lipa City with the monthly income of P10,000.00 and above. The
proponents went in different barangays in Lipa City to hand their respondents the
questionnaires they need to filled up. The sample size is 369 and it is computed
through the use of Slovin’s formula from the total household of 4823. Data about
the total household are from CPDO. Questionnaire for the retailer was also
prepared and the proponents also conduct interview with its retailers namely:
Jose Garcia Native Store, Manes Native Store, Ben’s Native Store, Luz Native
Store, San Vicente Native Product, SM Department store, SM Supermarket, Ace
Hardware, National Bookstore, Robinsons Supermarket, Lipa Sampaguita Mart,
and Tagumpay Mart. The data gather from the retailers serve as the basis for the
historical demand of the product which is crucial in the pursuance of the study
and determining the viability of the research.
The historical demand of the related product from 2008-2012 are 9,659 to
10,666 respectively, while the historical supply are 1,620 to 2,194 accumulating
this data from the retailer’s interview and observation. The projected demand and
supply are computed to straight line method. The results are 11,412 in 2015 and
12,416 in 2019 for projected demand while 2,618and 3,202 for projected supply
respectively.
Advantages and disadvantages were also evaluated by the proponents.
Among the strengths considered by the proponents are competitive price,
availability of raw materials, competitive management and being earth friendly.
The weaknesses foreseen by the proponents are availability of capital, lack of
customer awareness, high cost of labor, capacity to handle limited orders and still
confined to rural areas and small cities. The opportunities are technological
change, new trend on the market, business expansion and environment
usefulness. However, the possible threats to be faced are changing preference,
strong competition and economic instability. The business will maximize the
strength and opportunities and will strategize to cover weaknesses and avoid
threats.
The proponents had also created their marketing strategy while focusing
the four P’s of marketing mix. The product developed with high consideration of
quality and the price establishes is reasonable with its characteristics and
competitive enough to wind stand the competition in the market. Its distribution is
simple yet flexible to ensure that the customers are serving well and their
expectations about the product and service of the business are met. And lastly,
for promotion, it will use sales promotion using flyers and tarpaulins that will be
distributed and posted near its retailer so the customer will easily recognized
where they can avail the product. Online advertisement will also be used not only
to reduce cost but also to maximize the opportunities that now a days most of the
people are browsing the internet and through posting online, the people will be
aware of the product.

Chapter III
TECHNICAL STUDY
After determining the market feasibility, the proponents proceeded in
analyzing the technical feasibility of the proposed business. This part could be
considered complete if all pertinent technical aspects of the project have been
taken into account in the analysis and if the planned construction conforms to
accept engineering standard and practices. The estimated cost of the project
should be as low as any other reasonably available alternative which would
produce the intended results. (Iñigo, 2008)
Objectives of the Study:
In technical study, the proponents aimed to determine the technical
feasibility of the product, the manufacturing process used in the production, the
annual production, working days in a year, plant location and layout, tools and
equipment and other necessary requirements needed in the operation.
1. To impel the product description and its uses.
2. To determine the manufacturing process and the time scheme of each
process.
3. To identify the raw materials, tools, and equipment to be used.
4. To choose the best plant location and its layout.
5. To conform to the strict compliance of waste management.

Product
The proponents’ product is named “Corn Husk Stuff Organizer”. It is the
conversion of corn husk, its main raw material that makes it different from any
other organizer and native products in the market. This came from the thought of
using them into more useful and unique way.
The corn husk will be woven on its designed frame as an outer layer and
also for its design. This product can help the environment through minimization
of wastages in the municipality. Processing of plastics will be lessened and
creativity and craftsmanship can be developed.
Description of the Product
The product is made of corn husk as its main raw materials supported by
yantok and bamboo as their base. Twined wicker is the kind of weaving the
proponents used, wherein the two curled corn husk are woven one over and one
under single bamboo divider twisted over each other between bamboo divider
and alternated in the next sequence. The overall size of the corn husk stuff
organizer is four inches in height, eight and one-half inches in width and eleven
inches in length. It contains five divisions: the two divisions in the side have a
size of four inches in height, four inches in width and four inches in length each.
The middle division on the other side have a size of four inches in height, three
and one-half inches in width and six and one-half inches in length and the other
two divisions on the side has a size of four inches in height, two and one-half
inches in width and six and one-half inches in length. It has shiny brown color
that makes it look more native. It weighs about three-fourth kilo and its durable
unlike those made in plastic that cracks if falls on the ground. The proponents
used sanding sealer and solignum to protect the stuff organizer from any insect
that might devastate the product. The corn husk stuff organizer used tag as its
primary packaging. It is tied on the product to show its name and also the
company name.
Uses of the Product
Corn Husk Stuff Organizer will be used in the indoor or outdoor area of the
house or in the office depending on customer’s preference. It can be placed in
the living room containing remote control, pens and paper for telephone use and
other small stuff. In the bedroom, girl’s stuffs like combs, pens, accessories, and
cosmetics can also be placed. In the office, office supplies such as pens,
notepads, stapler, scissors and other supplies can be put in to organized those
things in one place. With this product, consumers will be organized with their
stuffs and can avoid the clutter and acquire more free space inside and outside
of their premises.
Manufacturing Process
Manufacturing is the process of converting raw materials, components, or
parts into finished goods that meets a customer expectation and specifications.
This process should be done in order or step by step to ensure the quality of the
product. Also, manufacturing process entails the length of time allotted for each
process as well as the task to be performed by the workers.

1. Preparation of materials, tools and equipment
For efficient flow of production process, all materials such as corn
husk, yantok, bamboo, nails, varnish, stickwell and glue; tools and
equipment including electric hand drill, hammer, measuring tool, and paint
brush that must be prepared prior to production to avoid delay and to save
time and effort as well. Preparation of materials, tools and equipments
before production which will take 15 minutes of worker time will guarantee
a smooth flow of process. Also, this step will check if equipment is in good
condition and ready to be used. Worker 1 and 2 will perform this step.
2. Measuring and cutting of wood
After preparing the materials needed, measuring and cutting will be
done to ensure that the sizes of materials will conform to the standard size
necessary in assembling the product. Proper measurement and cutting is
crucial to produce a product with quality. This process will take 45
minutes; therefore, worker 1 and 2 will be responsible in doing this step.
3. Making of frame
This process is crucial and must be done carefully. Frame will be
the foundation of the stuff organizer so it must be strong and all edges
must be aligned. Worker 1 and 2 who are responsible for this step must
drill yantok carefully making hole big enough for bamboo to be attached.
Stick well must be place after the bamboo has been inserted in holes of
yantok. This step will require 1hour to be accomplished.

4. Weaving of corn husk
Corn husk must be curl firmly and inserted in interval on bamboos.
Stickwell will be used to attach the edges of corn husk. Stickwell will
connect the end of corn husk. Worker 1 and 2 will be responsible in this
process and it has to be done 1 hour and 45 minutes.
5. Quality Inspection
After the product is woven, it must be inspected by worker 1and 2.
This is to ensure that the product has quality and to remove defects and
excess husk before varnishing. This will be done in 30 minutes.

6. Varnishing
Varnishing the organizer is a great way to protect it from scratches,
stains and water damage. In doing this step, the varnish must be stirred in
a can before applying. This is for the convenience of the worker. The
worker must remember to stir periodically, as the varnish can settle out a
little bit. Using the brush paint the varnish onto the wood in long, smooth
strokes. Paint along the grain of the wood; this helps the varnish to
penetrate evenly. Hold the brush vertically, so that just the tip is touching
the wood. Otherwise, you will apply the varnish unevenly. You will get a
much better finish if you work in thin coats. Then let it dry and apply the
next coating. This will take 30 minutes and worker 1and 2 will do this step.
7. Drying
In this process, worker 1and 2 will place the organizer in the
designated placed and leave the organizer there to let it dry. Electric fan or
dryer will be used for dying process but the proponents also consider sun
drying since the process is cheaper. This step will take 1 hour to ensure
that the product is completely dry.
8. Quality Inspection
After the product has been dried, the next step is quality inspection
which will be done by the manager. All areas must be checked to ensure
that all excess part or defects are removed before it reaches the
customers. This is to avoid complains and to establish a good relationship
with the firm’s customers. This will be done in 30 minutes.

9. Packaging
Packaging is done to protect the product and to avoid dust and
other foreign materials that could deteriorate it. It will be placed inside a
paper bag with product picture and company logo outside. Afterwards it
will be sealed. Worker 1and 2 will perform this step in 15 minutes.
10. Storing
At last, the final step it to keep the products in a safe place which is
the stockroom. This room will also serve as the display/ exhibit area of the
plant. This process will require 20 minutes and worker 1and 2 will be
responsible to it.
11. Cleaning the equipment used and working area
Clean as you go must also be observed. After every production
process, working area must be cleaned to keep it ready for the following
operation day. Also, this is done to ensure safety and avoid pests to reside
in the area. Equipments must be cleaned to prevent it from early
deterioration and must be returned to its designated position so that the
workers can easily locate it when they needed it the following day.
Working area is vital in every business operation since production process
is done in it, so workers must ensure that everything in the area are
properly cleaned and in proper place before leaving the area. Worker 1
and 2 will do this step and it will require 40 minutes of their time before
leaving the manufacturing area.

Symbols Responsible Person Details
Start
Preparation of
materials, tools and
equipment Worker 1 and 2 8:00 – 8:15am
Measuring and
cutting of Worker 1 and 2 8:15 – 9:00sm
woods
Making of
frame Worker 1 and 2 9:00-10:00am
Weaving of
Worker 1 and 2 10:15 – 12:00nn
corn husk
Quality Worker 1 and 2 1:00- 1:30 pm

Inspection
Varnishing Worker 1 and 2 1:30- 2:00 pm
Drying Worker 1 and 2 2:00- 3:00 pm
Quality
Inspection Manager 3:15 – 3:45 pm
Packaging Worker 1 and 2 3:45 – 5:00 pm
Storing Worker 1 and 2 4:00 – 4:20 pm
Cleaning the
equipment used
Worker 1 and 2 4:20 – 5:00 pm
and working area
Figure 3.1
END Process Flow Chart
LEGEND: Process Start/End Decision Connector

Production Schedule
Production schedule transform the manufacturing objectives of
quantity and delivery dates for the final product. It is a coordinating function
among manufacturing, marketing, finance and management. It is the basis for
future detailed production planning. Its main objective is to plan a realistic
production programmed that ensures even utilization of plant resources – people
and machines. This will be the driving input for detailed planning and will guard,
as much as possible against overload and under load of resources. If formulated
properly, the production schedule can serve for marketing personnel in promising
delivery dates (Halevi, 2010).
The table below shows the annual production of the manufacturing
firm for the next five years with assumed 5% increase every year.
Table 3.1
Production Schedule
Year Daily Monthly Annually

2015 16 320 3,840
2016 17 340 4,080
1017 18 360 4,320
2018 18 380 4,560
2019 20 400 4,800
Refer to Exhibit 7
Number of Working Days per Year
It is a number of days on which a work is done, especially for an agreed or
stipulated number of hours in return for a salary or wage. It is any day a legal
business can be conducted.

Total Number of Days in a Year 365
Less:
Unproductive Days
All Sundays and Saturdays of the Year 105
Legal Holidays
New Years Day (January 01)
Maundy Thursday
Good Friday
Labor Day (May01)
Independence Day (June12)
All Saints Day (November 01)
Bonifacio Day (November 30)
Christmas Day (December 25)
Rizal Day (December 30)
9
Total 240
Number of Working Hours per day
It is the period of time that an individual spends at paid occupational labor.
The proponents followed the legal working hour of eight hours per day.
Plant Layout
The total land area to be rented is 64 sq. mt. It will be divided into eight
divisions which are composed of administrative office measuring 8 sq. mt.,
finished product display measuring 6 sq. mt., frame station measuring 6 sq. mt.,
weaving station measuring 7 sq. mt., varnishing and drying section measuring 5
sq. mt., storage measuring 3 sq. mt., comfort rooms measuring 3 sq. mt. and raw
materials storage measuring 4sq. mt. It will be rented at P 3,000.00 per month.
Figure 3.2
Plant Layout
Plant Location
Location is vital to a business. A business, whether it has strong
chance of aiding a need, if poorly located could still face its near end. Location
attributes with the advantages and disadvantages it has must be considered. The
proponents went to the Assessors’ Office of Lipa Municipal Hall to ask help from
the experts. According to them the plant is cited at Purok 1, San Carlos, Lipa
City. It is relatively near from the retailers for sourcing their supply and accessible
for the transportation of the materials for the production. It is also reasonably
priced which is essential for the budget allocation of the firm with its limited
financial sources. It is located in small household where noise of the production
is secured in and not disturbing the community.
Figure 3.3
Plant Location
Factory Furniture and Fixtures
Furniture and fixtures are tangible assets that have no permanent
connection from the structure of a building or utilities. These items depreciate
substantially but definitely an important cost to consider when valuing a
company, especially in liquidation. These are acquired to ease the working
condition of workers and staff. Also, furniture and fixtures are long term assets
which are shown in assets side of balance sheet. These assets are the part of
fixed asset and every year, the proponents charged depreciation on these
assets. Depreciation is calculated on their useful life and it is deducted from all
furniture and fixtures book value for showing written down value in balance
sheet.
Table 3.2
Factory Furniture and Fixtures
Particulars Specifications Quantity Unit Cost Annual

Projection
Working Wood/3mx2m 2pcs P 1,500.00 P 3,000.00
table
Monoblock Plastic/Standard 3pcs 150.00 450.00
chair size
Stand fan 16”/ 65 watts 2pcs 1,240.00 2,480.00
Wall clock Standard size 1pc 170.00 170.00
Total P6,100.00
Source: Dios Marketing
WorkingTable. It is made out of wood. It is where raw materials are
placed as well as the goods are processed.
Monoblock chair. It is used to give comfort for the workers. While doing
their job especially when weaving and making frame, the worker sit on this
monoblock chair.
Stand Fan. To make the work place more conducive to work, wall fan are
used to make the place cool. Also, it is used in drying of product.
Wall Clock. Since most of the process requires time monitoring, putting a
wall clock in the production area is a big help. It will become convenient on the
side of the worker to monitor the output.
Factory Tools and Equipment
Tools and equipment are tangible property used in the operation of
business. These are design to make the production easier and faster. It simplifies
work and avoids delay. Through the aid of these tools and equipments, the
proponents can assure that the product to be produced is in good quality.
Table 3.3
Tools and Equipment
Particulars Specification Quantity Unit Cost Annual

Projection
Electric Hand Stanley/620watts 1pc P 3,100.00 P 3,100.00
Drill
Hammer Small 4pcs 150.00 600.00
Measuring Stanley 2pcs 150.00 300.00
tape
Paint brush Standard size 10pcs 60.00 600.00
Total P 4,600.00
Source: Ace Hardware
Electric hand drill. It is used in making hole in yantok where bamboo will
be placed.
Hammer. This tool is used for affixing the nail in making a frame to secure
its durability.
Measuring tape. It is used to ensure that the yantok and bamboo have
the right measurement so that the product that will be produce has standard
sizes and with quality.

Paint brush. This tool is used to apply the coating in the organizer as
finishing touches. Also, this is used to make sure that the coating is evenly
distributed on the organizer.
Maintenance Supplies
Maintenance supplies are supplies consumed in the production process
but which do not either become part of the end product or are not central to the
firm’s output. The following are the maintenance supplies used in the business
process.
Table 3.4
Maintenance Supplies
Particulars Specifications Quantity Unit Cost Annual

Projection
Hand soap Liquid 1 gallon P 250.00 P 250.00
Pail 16 liters 2pcs 85.00 170.00
Broom Standard Size 4pcs 35.00 140.00
Dust pan Large size 3pcs 23.00 69.00
Door mat Meduim 10pcs 27.00 270.00
Detergent 250 grams 4pcs 150.00 600.00
Powder
Rugs Medium 20pcs 5.00 100.00
Trash can 10”H x 6”D 5pcs 85.00 425.00
Floor mop Standard Size 2pcs 98.00 196.00
Fire 10 pounds 2pcs 1499.75 2,999.50
extinguisher
Mop Head Standard Size 4pcs 50.00 200.00
First-aid kit Class A 1pc 750.00 750.00
Total P 6,169.50
Source: Dios Marketing, Ace Hardware
Hand soap. Worker’s health and safety is the top priority of the business
so the proponents give a keen emphasis on worker’s hygiene. Hand washing,
through the use of soap is done before they start the production process, before
they eat and when they are done in doing the organizer.
Pail. This serves as the container of water placed and used in the comfort
room.
Broom. It is used in sweeping the dirt that fell on the floor. Also, it is used
to clean the production area.
Dust pan. After sweeping the floor, dust pan is used to carry the dirt that
is removed in the floor and throw it in the trash can.
Door mat. To ensure the cleanliness of the production area, door mat is
used for the employee to rub their shoes on it before they enter the production
area.
Detergent powder. It is a disinfectant used in cleaning the comfort room.
Proponents want to ensure that the cleanliness will always be practice.
Rugs. It is used in cleaning the tools and equipment as well as cleaning
the soiled area in the production.
Trash can. It is where garbage is placed. In the production area, proper
waste segregation is observed because the firm will strictly abide to the proper
waste segregation implemented by the government.
Floor mop. To ensure the cleanliness of the floor, floor mop is used to
remove the stains.
Mop Head. It is the end of a mop, to which the thrums or rags are
fastened. Mop head serve as the rug used in wiping dirt and stain in the floor of
the plant.
Fire extinguisher. No one can predict the occurrence of fire so it is crucial
that a fire extinguisher is always present to fix fire if ever it will occur. Through
this, fire will be prevented upon starting and will prevent the spreading of fire.
Office Furniture and Fixtures
Furniture and fixtures are not necessarily acquired just to beautify one
place. These may have its function to perform in the area far more reasonable
more than to be just as decoration in the office area. The following are the
furniture and fixture needed in the administrative office.
Table 3.5
Office Furniture and Fixtures

Projection
Office table 1m x 2m 2pcs P 2100 P 4,200.00
Office chair Standard size 2pcs 150.00 300.00
Visitor’s Standard size 2pcs 250.00 500.00
Chair
Orbit fan 16”/ 60 watts 2pcs 1120.00 2,240.00
Wall clock Standard size 2pcs 170.00 340.00
File Drawer Standard Legal (4 2pcs 495.00 990.00
slots)
Total P 8,570.00
Source: Dios Marketing, Leonor’s Furniture
Office Table. It is used by the office staff in doing their daily routine and
where some of their valuables are placed. It is also where business negotiation
with the customer occurs.
Office chair. This is for the manager to sit upon in its stay in the office as
he/she does his/her job; these are the chairs to be offered if visitors and
customers come by the firm.

Orbit fan. It is used in the office for well ventilation if visitors or customers
happen to visit.
Wall clock. It updates the staff about the time.
Office Supplies
Office supplies encompass a wide range of materials that are used on a
daily, regular basis by businesses. These are essentials in the daily transaction
of the business. Among the office supplies to be used are as follows.
Table 3.6
Office Supplies

Projection
Stapler Standard size 2pcs 273.00 P 546.00
Staple wire 5cm 3boxes 39.00 117.00
Bond Paper Sub 1ream 164.00 164.00
(short) 20/70gsm
Ballpen Bic (.04) 1box 52.00 52.00
Folder Short 50pcs 3.00 150.00
Regular Standard 4pads 47.00 188.00
receipt Booklet
Record book 500 sheets 2pcs 66.00 132.00
Calculator 12 digits Deli 2pcs 460.00 920.00
Total P 2,269.00
Source: Sampaguita Mini Mart
Stapler. It is used to file documents that are needed to be together.
Staple wire. It is used to file documents that are needed to be together.
Bond Paper. It is used in printing manuals of the process, announcement
and other documents needed.
Ballpen. It is used in writing or in signing documents or receipts.
Folder. It is used to keep the documents intact.

Regular receipt. In every transaction with the customer, official receipt is
issue.
Record book. It is used to record the events in the business such as time
in and out of employees, purchases or list of visitors.
Calculator. It is used in computing for the transactions in the business to
secure accuracy of the computations.
Direct Materials
Direct material is directly identifiable with the product and forms a part of
the product (Dutta, 2008). Also, it is the material used in manufacturing
processes which becomes an integral part of the product and the cost of which is
identifiable and chargeable directly to it.
Table 3.7
Direct Raw Materials
Particulars Specifications Annual Unit Cost Total Annual

Consumption Consumption
Corn husk Dried husk 5,760 kilos P 5.00 P28,800.00
Yantok 1 yard 4,800 pieces 20.00 96,000.00
Bamboo 3 meters(Big) 480 pieces 20.00 9,600.00
Nail kalabito 480 kilos 30.00 14,400.00
Varnish 1liter 360liters 100.00 12,000.00
Paper tag 3”x3” 3,840 pieces 5.00 19,200.00
Total P 180,000.00
Source: Jose Garcia Native Product, Luz Native Product
Corn husk. It is main raw material in producing the organizer. It is used in
weaving.
Yantok. It is used to make a frame for the corn husk organizer.
Bamboo. It is used to make a frame for the corn husk organizer.

Nail. It is used to secure the durability of the frame. Also it connects the
ends of the yantok.
Varnish. It is applied in the corn husk to protect it and to add shine and
beauty.
Paper tag. It is used for packaging of the product.
Indirect Materials
All materials which cannot be classified under direct materials are known
as indirect materials (Dutta, 2008). Also, these are materials used in
manufacturing processes which does not become an integral part of the product
and the cost of which is not identifiable with or directly chargeable to it.
Table 3.8
Indirect Materials
Specification Annual Unit Cost Total Annual
Particulars Consumption Consumption
Stick well 1liter 120 liters P 180.00 P 21,600.00
Glue 1liter 240 liters 180.00 43,200.00
Total P 64,800.00
Source: Sampaguita Mart
Stickwell. It is a kind of glue used to connect the ends of corn husk and to
attach the bamboo in yantok.
Glue. It is used to attach the description of the product in its packaging.
Lease and Leasehold Improvements
The proponents decided to lease a place in San Carlos along Ayala
Highway. The rent cost of the said establishment is P 3,000.00 per month.
Contracts will be made for the agreement of lease with the owner. Contracts are
reviewed to make sure that both parties will benefits from the contract. Below is
the table for cost incurred by the proponents for the improvements they will do in
the said establishment.
Table 3.9
Leasehold Improvement
Particular Specification Cost
Dividers Plywood 9x5 feet Php 1,500.00
Decoration Wallpaper 15x10 1,000.00
inches
Lighting 100 watts bulb 950.00
Repainting 1.5 gallons of paint 1,000.00
Labor 2 workers 1,200.00
(2 days)
Total Php 5,650.00
They will hire 2 workers which they will be compensated with Php 300.00
per day and will be working for two days. They will be responsible for repainting
the building, setting the lights, constructing dividers to make rooms for production
and decorating the entire building with the help of the proponents. Budget for the
aforementioned changes was indicated in the above table.
Utilities
Utilities are crucial for the smooth operation of business. In this paper,
utilities refer to the electricity, water and communication. They are needed in the
production of product and in delivering quality service to customers.
Table 3.10
Utilities
Utilities Monthly Bill Annual Bill
Electricity Php 1,465.00 Php 17,580.00
Telephone 500.00 6,000.00
Water 300.00 3,600.00
Total Php 27,180.00
Refer to Exhibit 8
Electricity
The source of electric supply will be BATELEC II and the monthly
consumption will be P 1,465.00. Electricity will be used in the production as well
as in the office. This will provide light and will ventilate the establishment. Also,
this will provide energy for the equipment to be used in the production.
Telephone
Communication is crucial in every business. Through the aid of this, the
proponent can keep in touch with their customers and they can also use this to
obtain orders from their customers.
Digitel will provide the telecommunication system. The estimated monthly
consumption charge will be P500.00 based on the promo they are offering.
Water
Water is vital to maintain the cleanliness of the establishment. The
provider of water will be Metro Lipa Water District. The manufacturing will have
minimum monthly consumption of P300.00 since water will not be used most of
the time in the manufacturing process. It will only be used in cleaning and in
comfort rooms.
Waste Disposal
The proposed business is responsible in making sure that the wastes are
handled and disposed properly. Waste- garbage will be located at a particular
place wherein it could be easily spotted by the garbage collector. The business
will have strict conformance to the standards and procedures of City Environment
and Natural Resources Office or CENRO with regards to the waste management.
Direct Labor Requirements
The production process of a business would not be possible without
manpower. One of the proponents will act as the manager. She will be
responsible for the financial aspects of the company, supervision of personnel
and negotiations with the suppliers and consumers. Also, she will be responsible
for the final inspection of the product to make sure that the quality is always
observe. In manufacturing process, two (2) workers will be hired who are also
responsible in overall cleanliness and ensuring the quality of products. Also,
these workers will be responsible in the production process. They will be trained
beforehand to ensure that they are knowledgeable enough for the production
process. Table 3.11 indicated the number of employees and their perspective
annual salaries.
Table 3.11
Labor Requirement
Employees Daily Monthly Annually
Manager Php500.00 Php10,000.00 Php120,000.00
Workers (2) 322.50(2) 12,900.00 154,800.00
Bookkeeper 1,600.00 19,200.00
(part-time)
Total Php 294,000.00
The salary of the workers will be given in the 15th and 30th of the month.
Aside from SSS, Phil Health and 13th month pay, the firm will give incentives to
the additional output the worker can do. Incentives will serve as a reward for the
job well done by the employees. Also, this is to encourage or motivate the
employees to give their best in producing the product.

Generalization
The proposed business is entitled Establishment of AIS Manufacturing:
Maker of Corn Husk Stuff Organizer at San Carlos, Lipa City. The proponent’s
product was named “Corn Husk Stuff Organizer”. The product is made of corn
husk as its main raw materials supported by yantok and bamboo as their base.
Twined wicker is the kind of weaving the proponents used. The overall size of the
corn husk stuff organizer is four inches in height, eight and one-half inches in
width and eleven inches in length. It contains five divisions: the two divisions in
the side have a size of four inches in height, four inches in width and four inches
in length each. The middle division on the other side have a size of four inches in
height, three and one-half inches in width and six and one-half inches in length
and the other two divisions on the side has a size of four inches in height, two
and one-half inches in width and six and one-half inches in length. It has shiny
brown color that makes it look more native. It weighs about three-fourth kilo and
its durable unlike those made in plastic that cracks if falls on the ground. The
proponents used sanding sealer and solignum to protect the stuff organizer from
any insect that might devastate the product. The corn husk stuff organizer used
tag as its primary packaging. It is tied on the product to show its name and also
the company name. Corn Husk Stuff Organizer will be used in the indoor or
outdoor area of the house or in the office depends on customer’s preference. It
can be placed in the living room containing remote control, pens and paper for
telephone use and other small stuff. In bedroom, girl’s stuffs like combs, pens,
accessories, and cosmetics can also be placed. In the office, office supplies such
as pens, notepads, stapler, scissors and other supplies can be put in to
organized those things in one place. With this product, consumers will be
organized with their stuffs and avoided the clutter and acquire more free space
inside and outside of their premises.
In making the aforementioned organizer, eleven processes are required
namely; preparation of materials, tools and equipment; measuring and cutting of
food; making of frame; preparation and weaving of corn husk; quality inspection:
varnishing; drying; quality inspection; packaging; storing and cleaning the
equipment used and working area. This designed manufacturing process can
produced 16 pieces per and 3,840 pieces per year.
To produce this kind of product, the materials to be used are corn husk,
yantok, bamboo, nails, varnish, stickwell and glue and for the tools and
equipment are electric hand drill, hammer, measuring tool, and paint brush. The
assurance of the quality output will conform to the standards in choosing the
materials to be used in the operation.
The proposed business will be located at San Carlos, Lipa City. The
location is suited for a start up business like this due to its nearness to different
business establishment like malls and other fast food restaurant. Also, the placed
is visible and accessible to its retailer and suppliers. Since this organizer is an
eco-friendly product, the organization can secure the proper waste management.
Also, the materials to be used will not sacrifice the health of an individual since
the product is made to satisfy the need of its customers.

Chapter IV
MANAGEMENT STUDY
Management is the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently accomplish selected
goals (Koontz& Weihrich, 2007) Management focuses on the entire organization
from both a short and a long-term perspective. Management aims to increase the
effectiveness of organizations. It’s about making the most of the resources
entrusted to you, and making sure the expectations of customers, employees
and shareholders are met.
Management aspect includes the study on how the business will be
managed and how the process will be guided before and during the operation,
form of the business ownership, organization structure and its chart, manpower
requirement and its corresponding job description, compensation and benefits,
organizational policies to be followed and the legal requirements needed.
The proponents’ management study aims to ascertain the management
feasibility of the project through the selection of the right management structure,
form of business ownership, capitalization, man power requirements, job
specification and description and legal requirements needed in the operation.
1. To determine the appropriate form of business ownership.
2. To decide the initial capitalization needed and the contribution by each
partners.
3. To determine the suitable organization structure to be adopted by the
proposed business.
4. To determine the manpower needed by the firm with their specification
and description.
5. To be able to generate an effective and efficient policy that will serve as
guidelines to the organization.
6. To be able to comply with the requirements for the legality of the business.
Form of Business Ownership
The business will be named as AIS Manufacturing owned by four
individuals. The business is a manufacturer of stuff organizer out of corn husk.
For this venture, these four people agreed to form a business under general
partnership due to its advantages that can help more for its future expansion.
Such advantages are it is easy to establish especially for new entrant business.
The ability to raise fund may increase because there are only four people in the
partnership. There is a benefit from the combination of complementary skills of
two or more people. There will be a wider pool of knowledge, skills and contacts.
It will provide moral support and will allow for more creative brainstorming.
Capitalization
It is essential for every business to provide funds for its start-up and
continual operation. The fund of the AIS Manufacturing will come from the share
investments of the partners. The partners will be contributing Php 40,000.00
each that will serve as their initial capital contribution to start the business
accumulating to Php 160,000.00.

Table 4.1
Capitalization of Partners
Proponents Capitalization
Andal, Maribel A. Php 40,000.00
Benedicto, Leiwiehilda S. 40,000.00
Gulla, Mary Rose P. 40,000.00
Lucero, Cristine L. 40,000.00
Total Capital Contribution Php160,000.00
Organizational Structure
Organization Structure is defined as the framework in which the
organization defines how tasks are divided, resources are deployed, and
departments are coordinated. (Daft, 2012) It determines how the roles, power
and responsibilities are assigned, controlled, and coordinated, and how
information flows between the different levels of management.
AIS Manufacturing implements line organization as the firm’s type of
organization because of its simplest approach and clear authority structure. The
authority lies to firm’s general manager who happens to be one of the
contributing partners of the business. The general manager has the sole
authority and direct control over the other partners and workers. In this kind of
organization structure, the superior and subordinates relationship is clearly
distinguished because of fixed responsibility of all employees in the firm. Every
employees of the firm must abide to the laws that governed the business to
maintain the smooth relationship between the boss and the workers which is
crucial in every business operation.

Organization Chart
The organizational chart is the visual representation of a whole set of
underlying activities and processes in the organization. The concept of an
organization chart shows what positions exist, how they are grouped and reports
to whom. (Daft, 2010)
General Manager
Bookkeeper
Worker 1 Worker 2
Figure 4.1
Organizational Chart
The figure above shows visual representation of AIS organization’s
structure. The vertical structure implies that the firm’s general manager has
superior control and authority over his/her subordinates. The line connecting
general manager, bookkeeper and workers shows a simple superior-
subordinates relationship. Being at the top level, general manager has full control
and is accountable for effectively managing business operations and resources.
On the other hand, workers are also accountable to follow whatever the firm’s set
up organizational plans and must report directly to general manager. The line
connecting bookkeeper and general manager signifies that bookkeeper has part
time responsibility and accountable directly to general manager. Since the book
keeper is only responsible in financial aspect of the firm, he can work on part
time basis considering that he will ensure the liquidity and profitability of the
establishment is stable.
Manpower requirement
Manpower is in terms of the number of people available or needed to do
something (Terry, 2000).
Investment doesn’t always talk about how much capital is needed and the
plant, property and equipment to be used but more importantly, business must
empower manpower resources. It is essential for every business to hire qualified
workers because they are the one who works everyday to produce products and
services of the firm.
AIS Manufacturing will be having general manager who will formulate
functional, administrative and operational policies of the business, two
employees to be deployed at the production section and a part time bookkeeper
to assist the business financial transaction. In line with this, the firm enumerates
job specification of desired positions and description of the job that they must
perform.
Job Specification
Job specification states the qualities needed in an individual to perform the
job description successfully. It prescribes the qualities required for acceptable

performance of a particular job such as formal education, experience
psychological attitude, physical measurements, etc. (Bose, 2006)
The following are the detailed job specifications for AIS manufacturing
proposed business.
General Manager
 At least 21 years old; male or female
 Must be a graduate of a business related course and bonafide partner
 Possesses adequate managerial and entrepreneurial skills
 Must have excellent oral and written communication skills
 Must be physically and mentally fit for the job
 Able to observe changes in the internal and external environment of the
business
 Must know how to relate and cooperate with workers and customers
 Effective decision maker and has sense of responsibility
 Must be honest, hardworking, motivated, and of good moral character
 Strong leadership skills and hands-on manager with financial knowledge
 Must inspect the quality of the product made by the workers
Bookkeeper (Part-time)
 Male or female; 23 years old
 Must be a graduate of BS Accountancy or has Certificate of Bookkeeping
 Computer literate
 Must be physically and mentally fit for the job

 Ability to work to tight deadlines.
 Must be capable of preparing reliable financial reports and attention to
detail and accuracy.
 Must be competent in his/her field
 Must be honest, hardworking, motivated, and of good moral character
 Reporting
Workers
 Male; 18-35 years old
 Must be physically and mentally fit
 Must have knowledge in producing the product and different kinds of
weaving preferably TESDA graduate or has related work experience
 Must be hardworking and responsible
 Possesses good moral character
Job Description
Job description describes a job and specifies the requirements of the job.
(Bose, 2006)
The following are the designed job description of AIS Manufacturing for
the positions available.
General Manager
 Overseeing the production process, drawing up a production schedule
 Ensuring that the production is cost effective

 Making sure that products are produced on time and are of good quality
 Working out the human and material resources needed
 Drafting a timescale for the job
 Estimating costs and setting the quality standards
 Monitoring the production processes and adjusting schedules as needed
 Do the quality inspection of every finished product
 Being responsible for the selection and maintenance of equipment
 Monitoring product standards and implementing quality-control
 Ensuring that health and safety guidelines are followed
 Supervising and motivating workers
 Reviewing worker performance
 Identifying training needs
Bookkeeper
 Creates financial transactions and creates financial reports
 Reconciles accounts to the manager to ensure their accuracy
 Analyzes the company’s financial position
 In charge of ensuring that there is existing funds for the operations
 Secures all the company records, makes sales inventory, financial
statements and payroll administration
 Helps the manager in all management activities
 Must report at least twice a month
 Checking company bank statements

 Repairing cash flow statements
 Completing VAT returns
 Monitoring the liquidity of the firms operation.
Workers
 Prepares the needed raw materials and tools for production
 Responsible for the efficient flow of the production process and efficiently
utilizes the company’s resources
 Performs manual jobs and actual assembly of the product
 Meet the demand schedule in line with the quality standard
 Inform the manager about the problems concerning the production
 Organize and maintain cleanliness in the working area as well as to the
equipments
 Works in accordance with the objectives of the business
Compensation benefits
Compensation is defined as monetary payments (wages, salaries) and
nonmonetary goods/commodities (benefits, vacations) used to rewards
employees. (Daft, 2012). It is a payment meant to give someone a fair exchange
for their effort and output.
Employees are applying for work because they are expecting something in
return for the service they will provide. These can be in the form of money or
benefits. In exchange to employee’s work service, AIS manufacturing will give

their employee salaries every 15th and 30th day of the month. The labor rate that
AIS manufacturing will be giving is according to labor laws that other business is
practicing within the locality. Their salaries will be increased at the agreed rate of
three percent (3%) annually. Benefits will also be given. The firm will ensure that
their employees will receive what is just for them. In term of sick leave and
vacation leaves, employees must expect that they can receive such kind of
benefit.
Table 4.2
Compensation Schedule
Employee Quantity Daily Monthly Annually

Manager 1 P 500.00 P 10,000.00 P 120,000.00
Worker 2 322.50 14,190.00 170,280.00
Bookkeeper 1 400.00 1,600.00 19,200.00
Total P 309,480.00
Fringe Benefits
Fringe benefits are the additional benefits provided to an employee. It is
any additional or incidental advantage derived from a particular activity (Drebin,
2000).
Nowadays, company employees are expecting extra in addition to their
cash salary. These fringe benefits or employee benefits will help the firm in
motivating their employees to work hard, avoid absences and feel satisfied with
their job. AIS Manufacturing will give their employees thirteenth (13th) month pay,
contribution on SSS and Phil health in accordance to government laws.

Organizational policies
Policy is defined as a general guideline for management when making
decisions and sets the limits within which such decisions must be made when
similar situations occur repeatedly. (Kroon, 2008)
To ensure that there is unified set of rules and actions within organization
business policies must be clearly defined. These policies serve as guidelines for
conducting business operations and other resources of the firm. Policies are
formulated by general manager and other contributing partners in the proposed
business. Below are policies that AIS management considered in conducting its
business.
Policies towards the Employees
 Workers are required to provide the firm all the relevant personal
information about himself and complete all the necessary forms so that the
firm will have something to work on if needs in relation to employment
arises.
 Working days will be from Monday to Friday from 8:00 am to 5:00 pm.
 Workers/employees must affix their signatures at the logbook for their
“time in and time out”.
 There will be a one (1) hour lunch break per day and 15 minutes break in
the morning and in the afternoon.
 Punctuality must be observed by the personnel. Tardiness and
unreasonable absences will not be tolerated. There will be a

corresponding salary deduction based on a daily rate which will serve as a
punishment for non- compliance.
 Employees who have accumulated a tardiness of 30 minutes during one
week period shall be subject to disciplinary action and a salary deduction
which is computed proportionally in accordance with his monthly
compensation.
 Absences shall mean failure to report on work without prior application for
leave or notice given to the manager during the first hour of work.
However, unreasonable absences will be subject to disciplinary actions.
 For the efficient production and for superior quality, workers will undergo
training before they start the regular work.
 Workers must maintain cleanliness in the workplace.
 Those workers, who suffered from any injury or damages due to non-
compliance with the policies previously enumerated will not be the
responsibility of the firm.
 Labor wage will be paid every 15th and 30th day of the month. Employees
working on regular/ special holidays will be fully compensated based on
current rate and practices in the industry.
 Benefits from SSS and Philhealth are also provided and their contributions
will be deducted from their monthly salaries. These benefits will provide
assistance hospitalization, retirement and other benefits.
 Workers who shall be found guilty of illegal acts and/or fraud will be
suspended or terminated depending upon the degree of the offense.

Policies towards the Customers
 The product will be subjected to customer inspection before and after
purchase.
 Return of defective product will be entertained only within 7 days warranty
with official receipt.
 To avoid possible damages to the product, it will be delivered to the
respective distributor/ retailer a day after the purchase order has been
received.
 Concerning credit sales, payment shall be made within a month after the
date of purchase with a term n/30.
 Cash sales of retailers will be given 3% discount for the first year of
operation and no credit discount are imposed.
Policies towards the Supplier
 The forms and conditions between and suppliers must be clearly stated to
avoid conflicts.
 Quality of raw materials, especially the outsourced product parts must be
ensured by their corresponding suppliers.
 Damaged supplies will be returned immediately after inspection and will
be replaced by another of same quality.
 The suppliers must deliver the product on agreed specification and date.
 Since the firm has not yet established a good credit rating, purchase will
be more on cash basis.

 If not avoided, punctual payment of the firm’s debts toward its suppliers
will be exercised to be able to create a sound customer-supplier
relationship.
Legal requirements
Government creates way of protecting the people from hideous scams
and illegal conducts of business. To prevent this from happening, different
agencies and stages with it are formed to make all the transaction of an
established business to legal and at their watch. The process includes the
submission of articles of partnership to the Securities and Exchange
Commission, registration in the Department of Trade and Industry and the
Bureau of Internal Revenue and securing a mayor’s permit and others.
Articles of Partnership must be registered in the Security and Exchange
Commission.
The following essential provisions are contained in the article: the
partnership name, nature, purpose and location.
1. The name, citizenship and residence of the partners.
2. The date of formation and duration of partnership.
3. The capital contribution of each partner, the procedure for non-cash
investments, treatment of excise contribution and the penalties for a partner’s
failure to invest and to maintain the agreed capital.
4. The rights and duties of each partner.
5. The accounting period to be adopted, the nature of accounting records,
financial statements and audits by independent public accountants.

6. The method of sharing net income or net loss, frequency of income
measurement and distribution, including the provisions for the recognition of
differences in contributions.
7. The drawings or salaries allowed to partners.
8. The provision for arbitration or disputes, dissolution and liquidation.
II. Registration of the Business Name at the Department of Trade and
Industry
A firm needs an identity to create a better positioning in the mindset of its
consumers. This is the very reason why business names are needed to be
registered at Department of Trade and Industry (DTI). The prevention of
duplication and misidentification are the primary objective of this establishment.
In the process, applicant would pay the amount of Php500.00. An
application form is filled up and submitted along with two passport size pictures,
a certificate of Filipino Citizenship or both certificate and three business
proposals.
III. Acquisition of Barangay Clearance
The proposed business will be benefiting to the community where it is
located, thus it must return the favor by giving its right contribution to such
community. It should acquire a clearance from the barangay where the industry
is to be located for it to be considered legal and legitimate. A community tax must
be paid to secure this clearance.

IV. Application for Mayor’s Permit
An application for Mayor’s Permit is done be able to monitor the business
establishments within the municipality. It is also important to secure that
businesses are complying not only to the national rules implemented but by the
municipal declarations as well. Application of these is done at the City Mayor’s
Office at the Permits and Licenses Division. The requirements that should be
complied with are the following:
1. Location sketch of the proposed business
2. Sworn Capital investment of the partners
3. Certificate attesting to the tax free exemption, if the business is exempted
from payment of fee or tax.
4. Certification from the officer-in-charge of the zoning division where the
location of the proposed business is in accordance with the zoning rules and
regulation.
5. Tax clearance showing that the operation has paid all the taxes obligations.
6. Two passport size pictures
7. Presentation of the community tax certificate and receipt for the payments of
professionals tax, occupation fee, as the case maybe, the applicant is liable
thereof
8. Lease Contract if the building is rented
9. Barangay Clearance, and
10. Photocopy of the DTI registration form.

V. Confirmation of the Application form with the following offices for its
inspection, endorsement, assessment and signing.
1. City Planning and Development Office
2. City Engineer’s Office
3. City Treasurer’s Office
4. City Health Office
VI. Payment of all the necessary fees and taxes at City Treasurer’s Office.
1. Legal Fees
2. Environmental Protection Fee
3. Fire Inspection Fee
VII. Registration with the Bureau of Internal Revenue
The last part of the registration process is the registration with the Bureau
of Internal Revenue. This is done for the systematic payment of tax, for the
registration of books of accounts and business forms to be used in the
partnership. Registration in this agency is crucial before the opening of any
establishment since this agency will be responsible in collecting taxes from
different establishment.
Table 4.3 shows the taxes and licenses paid by the proponents. The
proponents make sure that all necessary bills are paid before opening so that the
business will not be sue of any penalty especially those against the law.
Table 4.3
Taxes and Licenses
BMBE Registration P 1,000.00

10%FSI 20.00
Business Plate 120.00
Business tax 162.50
CAI 120.00
DTI Registration 500.00
Fire Inspection fee 20.00
Garbage fee 1,375.92
Mayor’s Permit 250.00
Medical Certificate fee 150.00
Occ./Prof.tax 300.00
Sanitary fee 1,000.00
SEC Registration 500.00
Zoning Fee 410.00
Taxes and Licenses P 5,928.42
SOURCE:Lipa City Treasurer’s Office, Lipa City Hall
Generalization
AIS manufacturing chose to be formed as general partnership because of
benefits that the partnership has. Through this, contribution of each partner can
be in the form of money, skills, property and equipment. This advantage of
general partnership is very beneficial to the proposed business because of wider
scope of contribution.
The proposed business has Php 160,000 as its initial capital. The partners
agreed to contribute Php 40,000 each to make the business run successfully.
AIS Manufacturing is a new entrant in the business under the category of
small scale industry. In relation to this, the firm integrates line organization as its
organization structure because its best suits to the proposed business size.
Because of fixed responsibility, clear task and authority of every partners and
employees in the business, improper management will be avoided.
The firm also discussed manpower needed, their requirements for the job
and the qualities of employees to perform the job description successfully. The
employees will also be given Php322.50 per day as their minimum wage salary
and 13th month pay, SSS and Phil Health contribution as their additional
compensation. The manager will be given Php10, 000.00 monthly salary and the
bookkeeper will be receiving Php1, 600.00 per month.
AIS Manufacturing set policy towards employees, customers, suppliers
and prescribed legal requirements for lawfully managing the proposed business.
AIS Manufacturing comply with the requirements needed to legalized the
business. The said requirements are Registration of Business Name, acquisition
of Barangay Clearance, application of Mayor’s Permit, payment of necessary
fees and taxes, and the registration at the Bureau of Internal Revenue. The
conformance of the said requirements will assure that the proposed business is
legally registered.
Chapter V
FINANCIAL STUDY
This chapter will present the financial aspect of the whole study expressed
in terms of peso. Since the company is just a new entrant, and the competition is
very stiff, it is necessary to know if the company will spawn income. In addition, it
will cover the capital requirements needed, the company’s over-all financial
performance and the analysis and interpretation of its financial statements.
The study specifically aims to evaluate the profitability of the proposed
business through analyzing the financial statement, statement of financial
performance, cash flows and through the use of financial ratios such as liquidity
ratios, activity ratios, leverage ratios and profitability ratios to determine the
liquidity of the proposed business.
1. To determine the initial requirements needed to cover the projected cost of
the proposed business.
2. To evaluate the company's performance, solvency, liquidity and stability.
3. To analyze the projected financial statement through the use of financial
ratios.
4. To oversee the growth of the company through its performance and
status.
Initial Capital Requirement
The proponents will equally contribute cash in the amount of forty
thousand pesos (Php 40,000.00) to finance the project cost worth one hundred
sixty thousand pesos (Php 160,000.00) with a contingency of Php34, 519.31 that
will be enough to support unexpected expenses.
Total Project Cost
It includes the pre - operating expenses and working capital. This is the
cost that the proponents need to establish the proposed business, which is AIS
Manufacturing with its product Corn Husk Stuff Organizer. Thorough and careful
placing of values, which came from reliable sources, was made by the
proponents to prevent the occurrence of loss to be able to exceed the breakeven
point of the company.
Table 5.1
Total Project Cost
For the First Two Months of Operations
Fixed Assets:
Factory Equipment 4,600.00
Factory Furniture and Fixtures 4,600.00
Office Furniture and fixtures 8,570.00
Leasehold Improvements 5,650.00
Office Supplies Expense 567.25
Total Fixed Assets 23,987.25
Pre-operating Expenses:
Permit and Licenses 5,928.42
Advertising Expenses 875.00
Rent Expense 17,000.00
Total Pre-operating Expenses 23,803.42
Working Capital
Direct Materials 41,152.00
Direct Labor 25,800.00
SSS Contribution 2,158.80
PhilHealth Contribution 550.00
Maintenance Expense 299.23
Salary Bookkeeper 3,200.00
Utilities Expense 4,530.00
Total Working Capital 77,690.03
Total 125,480.70
Cash for Contingency 34,519.31
Total Project Cost 160,000.00
Financial Assumptions
The following assumptions were used in this study.
1. A five year financial projection was made to determine the
financial stability and profitability of the proposed business.
2. Sales are assumed to be 60 % cash sales and 40% credit sales.
3. The business will start at January 2015 under the general
partnership form of business.
4. The partnership will hire two workers. Each worker will receive P
322.50 per day as their salary. It will be given every 15 th and
30th of the month. Salary of workers will be increase by 5%
every year.
5. Workers will receive benefits such as SSS, PhilHealth and 13th
month pay.
6. Raw materials usage will be based on the projected production
schedule. The projected production schedule for the first year is
3840 pieces and it will be increase by 5 % every year.
7. The allocation of expense for rent, utilities, maintenance
supplies, leasehold improvements and administrative expense
is 70% and 30% respectively.
8. Advertising expense is 5,250.00 on the first year because of the
intensive promotion for the introduction of the proposed product.
This advertising expense will decrease the following year.

9. Net income and loss will be shared by all partners. Partners are
allowed to withdraw 25% of their share in net income.
10. Available cash balance will be used for the other expense for
the following year.
Financial Statements
Financial statement refers to that statement which reflects collection of
fund from various sources, cost of using such funds, investment of such funds in
various assets, return accrued from such resources and similar bits of
information. Financial statements speak of the impact of exchanges but these
statements cannot speak directly about employee relation, consumer loyalty, or
intellectual capacity of an entity. (Sinha, 2013)
Statement of Financial Performance
It is a measure of how well a firm can use assets from its primary mode of
business and generate revenues. It is also used as a general measure of a firm’s
overall financial health over a given period of time, and can be used to compare
similar firms across the same industry or to compare industries or sectors in
aggregation.
Financial performance is also called “income statement”. It is assessed by
giving a summary of how the business incurs its revenues and expenses through
both operating and non operating activities. It also shows the net profit or loss
incurred over a specific accounting period, typically over a fiscal quarter or year.
AIS Manufacturing is forecasted to have a net income of P 55,298.51 on
its first year. It will increase to P 159,327.64 for the next four years of operation.
Statement of Cash Flow
Cash flow is either an inflow (source of receipt) or an outflow (use or
disbursement) are classified as operating activities, investing activities and
financing activities. It is vital to the financial health of the business (Manuel,
2009).
The net cash flow of AIS Manufacturing for 2015 is Php 213, 066.51and it
will be increased by Php157, 176.50 in 2019.
Cash flow is the amount of money generated and used by the company in
a given period. It is essential in company’s solvency. It can be presented as
record of something that has happened in the past or forecasted in the future,
representing what the business expect to take in and to spend. Cash flow is also
crucial in entity’s survival. Having ample cash on hand will ensure that creditor,
employees and others can be paid on time.
Statement of Changes in Partner’s Equity
Partner’s equity is the equity of a partner which is affected by investment,
withdrawals, share of net income or net loss. There are two important ledger
accounts which are maintained for each partner for the purpose of recording
transactions affecting equity. These are Partner’s Capital and Partner’s Equity
(Carillo, 2008). A business entity is required to prepare a separate statement that
shows the changes in its owner’s equity between two or more balance sheet
dates. It is necessary to maintain separate capital and withdrawal accounts for
each partner and to divide the income and losses of the company among
partners.
Andal, Gulla and Lucero are expected to have the ending share of Php
51,059.70 each equally shared and Benedicto is expected to have an ending
share of Php 62, 119.40.
Statement of Financial Position
Financial position or structure of an enterprise is affected by the economic
resources it controls, its financial structure, its liquidity and solvency. It refers to
the financing or borrowing posture of the enterprise. It shows how much of the
assets of the enterprise are being funded by the creditors and how much are
being contributed by the investors (Manuel, 2009).
The firm is projected to have Php 322, 498.11 as total asset, wherein Php
302, 429.11 is the current asset while Php 20,072.00is the non current asset for
the first year of operation. For liabilities, the firm will have Php 107,199.61as total
liabilities for its first year of operation. This show that firm is liquid and capable to
pay all its liabilities with remaining cash to suffice its operating expense.
Financial Analysis
Financial Analysis is the selection, evaluation and interpretation of
financial data and other pertinent information to assist in evaluating the operating
performance and financial condition of a company (Peterson, 2008). Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid, or
profitable enough to be invested in. One key area of financial analysis involves
extrapolating the company's past performance into an estimate of the company's
future performance.
Financial Ratio Analysis
Financial ratio is simply an expression of the relation between two
financial statement accounts. Financial ratio analysis is the investigation of the
company’s condition and performance using one or more ratios (Peterson, 2008).
A sustainable business and mission requires effective planning and financial
management. Financial ratio analysis is a useful management tool that will
improve an understanding of financial results and trends over time, and provide
key indicators of organizational performance. It use ratio analysis to pinpoint
strengths and weaknesses from which strategies and initiatives can be formed.
A. Liquidity Ratio
Liquidity ratio is a ratio that shows relationship of a firm’s cash and other
current assets to its current liabilities (Houston, 2010). It gives the idea of the
firm’s ability to pay off debts that are maturing within a year.
Current Ratio
Current ratio indicates the extent to which current liabilities are covered by
those assets expected to be converted to cash in the near future. An indication of
a company’s abilities to meet short term debt obligations: the higher the ratio the
more liquid the company is. If the current asset of a company is more than twice
the current liabilities, then the company is considered to have good short term
financial strength. If the liabilities exceed current assets, then the company may
have problems meeting its short term obligations.
Current Ratio = Total Current Assets / Total Current Liabilities

Table 5.2
Current Ratio
Year Current Assets Current Liabilities Ratio

2015 302,426.11 107,199.61 2.82
2016 342,932.72 110,608.38 3.10
2017 428,851.84 137,041.51 3.13
2018 544,563.05 166,511.54 3.27
2019 712,211.94 209,646.70 3.40
Table 5.2 indicates that the current ratio for the 2015 which is 2.82 states
that the firm has the ability to repay its debt. The ratio of current assets is high
compare to the current liabilities. The higher the ratio means the more liquid the
company is. Commonly, acceptable ratio is 2, it is a comfortable financial position
for most enterprise. For the succeeding years, the current ratios are as follow:
3.10, 3.13, 3.27 and 3.40 which only means that for the projected five years
operation of the enterprise, the company will stay liquid.
Quick Ratio
The quick ratio is a measure of a company's ability to meet its short-term
obligations using its most liquid assets (near cash or quick assets). It indicates
whether a company has sufficient quick or highly liquid assets to cover current
liabilities (Heisinger, 2009). Quick assets include those current assets that
presumably can be quickly converted to cash at close to their book values. Quick
ratio is viewed as a sign of a company's financial strength or weakness; it gives
information about a company’s short term liquidity.
Quick Ratio = Quick Assets

Current Liabilities
Table 5.3
Quick Ratio
Year Quick Assets Current Liabilities Ratio

2015 213,066.51 107,199.61 1.99
2016 240,075.27 110,608.38 2.17
2017 317,357.75 137,041.51 2.32
2018 423,926.74 166,511.54 2.55
2019 581,103.25 209,646.70 2.77
Table 5.3 means that with the ratio of 1.99 for the first year, the company
can meet its short term obligation with its most liquid asset. For the succeeding
year, the ratios are 2.17, 2.32, 2.55 and 2.77 which also means that the company
can meet its short term liabilities without liquidating the non-current assets.
Working Capital
Working capital is defined as the difference between current assets and
current liabilities. It is the amount of current assets left after providing for current
liabilities. As such, it is the amount of current assets financed by long-term capital
of the business. Therefore, considering the given information, it is the amount of
long-term capital that is made to revolve in conducting operations and serves as
the lifeblood of a company. (Mejorada, 2008)
Working Capital = Current Assets – Current Liabilities
Table 5.4
Working Capital
Year Current Assets Current Liabilities Working Capital

2015 302,426.11 107,199.61 195,226.51
2016 342,932.72 110,608.38 232,324.35
2017 428,851.84 137,041.51 291,810.33
2018 544,563.05 166,511.54 378,051.51
2019 712,211.94 209,646.70 502,565.24
Table 5.4 shows that for the first year of operation, the working capital is
Php195,226.51 and will be increase to Php502,565.24 by 2019. Working capital
is a measure of company’s liquidity, efficiency and overall health. Since the table
above indicates a positive working capital, it means that a company is able to pay
off its short term liabilities almost immediately.
Working Capital to Total Assets Ratio
Working capital to total asset ratio show the ratio of working capital to the
total asset. It is a measure of a firm’s ability to meet its financial obligations and
gives an indication as to the distribution of a business’s asset into liquid and non
liquid resources (Nelson, 2008).
Working Capital to Total Assets = Working Capital

Total Asset
Table 5.5
Working Capital to Asset Ratio
Year Working Capital Total Assets Ratio

2015 195,226.51 322,498.11 0.61
2016 232,324.35 357,986.72 0.65
2017 291,810.33 438,887.84 0.66
2018 378,051.51 549,581.05 0.69
2019 502,565.24 712,211.94 0.71
Table 5.5 shows that the working capital to total asset ratio is 61 % which
only means that the company has the ability to pay its short term obligation
through the use of most liquid assets.

Cash Flow Liquidity Ratio
Another approach to measuring short-term solvency is the cash-flow
liquidity ratio, which considers cash flow from operating activities (from the
statement of cash flows). The cash flow liquidity ratio is equal to the total cash,
marketable securities and net cash provided by operating activities divided by
current liabilities. The ratio is a test of company’s short term, debt paying activity.
The higher the ratio, the better (Hermanson, 2010). It is helpful to compare this
ratio to the current and quick ratios.
Cash Flow Liquidity Ratio = Cash + Cash Flow from Operating Activities
Current Liabilities
Table 5.6
Cash Flow Liquidity Ratio
Year Cash Flow from OA Current Liabilities Ratio

2015 78,156.51 107,199.61 0.73
2016 37,702.04 110,608.38 0.34
2017 95,438.47 137,041.51 0.70
2018 133,643.39 166,511.54 0.80
2019 197,008.41 209,646.70 0.94
Table 5.6 shows an increasing cash flow liquidity ratio ranging from 73%
on the first year up to 94% on 2019. This increase indicates improvement in short
term solvency. The ratio is high and it means that the firm is able to pay its short
term liabilities.
B. Activity Ratios
A ratio used in management accounting consisting of the production
achieved for an accounting period divided by the production level regarded as
achievable for that period. (Clark, 2010)
Accounts Receivable Turnover
It is the ratio of net sales for a period and the average balance of net
accounts receivable. Also, it is the rate at which accounts receivable turn over
indicates how quickly the firm collect cash from the credit sales (Weil, 2012).
Accounts Receivable Turnover = Credit Sales

Average AR Balance
Table 5.7
Accounts Receivable Turnover
Average Accounts
Year Net Sales Receivable Turnover
2015 330,982.63 21,141.52 15.66
2016 369,252.50 23,135.42 15.96
2017 410,521.90 26,592.93 15.44
2018 454,995.10 29,583.73 15.38
2019 512,318.50 33,053.19 15.50
Table 5.7 indicates that from 2015 the accounts receivable turnover is
15.66 increases to 15.50 on the year 2019. As seen on the table, increase in
accounts receivable turnover is favorable in the company because it indicates
improvements in the process of cash collection on credit sale. This is good since
the cash collected from credit sales can be used for another business
transactions.
Average Collection Period
Average collection period measures how many days, on average, the
company’s credit customers take to pay their accounts (Gallagher and Andrew,
2000).
Average Collection Period = 365 / Receivable Turnover
Table 5.8
Average Collection Period
Accounts Receivable Collection

Year Days in Year Turnover Period
2015 365 15.66 23
2016 365 15.96 23
2017 365 15.44 24
2018 365 15.38 24
2019 365 15.50 24
Table 5.8 shows the average collection period which is 23 days. This
indicates that the company only needs 23 days to convert the receivable into
cash which is healthy on the part of the company since they can use cash for
other projected expenses they will incur.
Inventory Turnover
Inventory turnover shows how quickly the inventory is turning into
receivables/ cash through sales. It measures how quickly a firm sells its product
(Megginson, 2008). This indicates the number of times the stock is turned over
on the average and must be replaced during a given a period.
Inventory Turnover = Cost of Goods Sold

Average Inventory
Table 5.9
Inventory Turnover
Year Cost of Sales Average Inventory Turnover

2015 490,187.02 68,218.09 7.19
2016 583,988.36 72,973.11 8.00
2017 625,965.34 80,582.84 7.77
2018 668,580.07 86,481.47 7.73
2019 714,496.27 92,819.31 7.70
Table 5.9 shows that the inventory turnover for 2015 is 7.19 and was
increased to 7.70 by the year 2019. Since the company obtains a high inventory
turnover, it means the company performance is better and it is efficient in
controlling its inventory levels. More inventories are converted into cash faster
thereby making profit for the company.
C. Leverage Ratios
Leverage ratio is used to calculate the financial leverage of a company to get
an idea of the company’s method of financing or to measures its ability to meet
financial obligation (Brewer, 2008).
Debt Ratio
Debt ratio measures the proportion of the total assets financed by the
firm’s creditors (Megginson, 2008) .A debt ratio of greater than 1 indicates that a
company has more debt than assets; meanwhile, a debt ratio of less than 1
indicates that a company has more assets than debt.
Debt Ratio = Total Liabilities

Total Assets
Table 5.10
Debt Ratio
Year Total Assets Total Liabilities Ratio

2015 322,498.11 107,199.61 0.33
2016 357,986.72 110,608.38 0.31
2017 438,887.84 137,041.51 0.31
2018 549,581.05 166,511.54 0.30
2019 712,211.94 209,646.70 0.29
Table 5.10 shows that the debt ratio for the year 2015 to 2019 is 0.33 to
0.29 respectively which only means that the company has more assets than
debts.
Debt to Equity Ratio
Debt to equity ratio is a long term solvency ratio that indicates the
soundness of long-term financial policies of the company. It is a measure firm’s
financial leverage (Megginson, 2008). It shows the relation between the portion
of assets provided by the stockholders and the portion of assets provided by
creditors.
Debt to Equity Ratio = Total Liabilities

Total Equity
Table 5.11
Debt to Equity Ratio
Year Total Liabilities Total Partners' Equity Ratio

2015 107,199.61 215,298.51 0.50
2016 110,608.38 247,378.35 0.45
2017 137,041.51 301,846.33 0.45
2018 166,511.54 383,069.51 0.43
2019 209,646.70 502,565.24 0.42
Debt to equity ratio as indicated in the Table 5.11 has 0.50 on 2015 and
0.42 for 2019 which means that the portion provided by the stockholder is greater
than the portion provided by the creditor.
Equity Ratio
The equity ratio refers to a financial ratio indicative of the relative
proportion of equity applied to finance the assets of a company. This equity ratio
is a measure of proportion of total assets finance by the firm’s equity (Megginson,
2008).This equity ratio is a variant of the debt-to-equity-ratio and is also,
sometimes, referred as net worth to total assets ratio. The equity ratio
communicates the shareholder’s funds to total assets in addition to indicating the
long-term or prospective solvency position of the business.
Equity Ratio = Total Equity

Total Assets
Table 5.12
Equity Ratio
Year Total Partners' Equity Total Assets Ratio

2015 215,298.51 322,498.11 0.67
2016 247,378.35 357,986.72 0.69
2017 301,846.33 438,887.84 0.69
2018 383,069.51 549,581.05 0.70
2019 502,565.24 712,211.94 0.71
Table 5.12 indicates the equity ratio for the year 2015 is 67% and 71% for the
year 2019. This ratio Indicates that as the business goes on, the equity needs to
finance the asset is becoming lower. This means that the investment of
shareholders will be recover more quickly.

D. Profitability Ratios
Profitability ratio is a group of ratios that show the combined effects of
liquidity, asset management, and debt on operating result (Houston, 2010).
Gross Profit Margin
This is a measures of profitability that represents the percentage of each
dollar remaining after a firm has paid for its goods (Megginson, 2008)
Gross Profit Margin = Gross Profit

Net Sales
Table 5.13
Gross Profit Margin
Year Gross Profit Net Sales Ratio

2015 271,073.04 761,260.06 36%
2016 265,292.39 849,280.75 31%
2017 318,235.02 944,200.36 34%
2018 377,908.67 1,046,488.74 36%
2019 463,836.28 1,178,332.55 39%
Table 5.13 shows the gross profit margin for the year 2015-2019. It ranges
from 36% to 39% which means that the company is efficient in using its labor and
materials in the production process. The expenses are minimized and the sales
are increasing.
Net Profit Margin
Net operating margin is a measure of profitability that represents the
percentage of each sales remaining after all cost and expenses, including
interest, taxes, and preferred stocks dividends, have been deducted (Smart,
2009).
Net Profit Margin = Net Income
Net Sales
Table 5.14
Net Profit Margin
Year Net Profit Net Sales Ratio

2015 55,298.51 761,260.06 7%
2016 42,773.12 849,280.75 5%
2017 72,623.98 944,200.36 8%
2018 108,297.58 1,046,488.74 10%
2019 159,327.64 1,178,332.55 14%
Table 5.14 shows an increasing profit margin from 7% in the year 2015 to
14% in the year 2019. This indicates that the company is effective in cost control
since it is generating an increasing percentage of profit each year.
Rate of Return on Assets (ROA)
Return on asset is an operating income divided by the average book value
of the total assets, where the average is calculated as the sum of year beginning
and year-end book value of total assets. It measures the overall effectiveness of
management in using its assets to generate returns. (Pojezny, 2008)
Rate of Return on Assets = Net Income

Average Total Asset
Table 5.15
Rate of Return on Asset (ROA)
Year Net Income Average Total Assets Ratio

2015 55,298.51 322,498.11 17%
2016 42,773.12 357,986.72 12%
2017 72,623.98 438,887.84 17%
2018 108,297.58 549,581.05 20%
2019 159,327.64 712,211.94 22%
Table 5.15 shows the rate on return on assets for the five years operation
of the business. The rate on return on assets is increasing each year from 17 %
on 2015 to 22% in 2019 which means that the company is efficient in managing
its assets and it is an indicator that the business is gaining profit.
Rate of Return on Equity (ROE)
Rate on return on equity is the amount of net income returned as a
percentage of shareholders equity. Return on equity measures a corporation's
profitability by revealing how much profit a company generates with the money
shareholders have invested.
Rate of Return on Equity = Net Income

Average Partner's Equity
Table 5.16
Rate of Return on Equity (ROE)
Year Net Income Average Partner's Equity Ratio

2015 55,298.51 215,298.51 26%
2016 42,773.12 247,378.35 17%
2017 72,623.98 301,846.33 24%
2018 108,297.58 383,069.51 28%
2019 159,327.64 502,565.24 32%
Table 5.16 shows the return on equity for five year operation of the
business. For 2015 the return in equity is 26% which was increase to 32% by the
year 2019. This increase in equity indicates that the company is profitable and
generates more profit the money the stockholders had invested. Increase of
percentage indicates that the investment of the shareholders are worthy since it
generates profit faster.

E. Test of Capital Investment
Capital investment is a fund invested in a firm or enterprise for the purpose of
furthering its business objective. It is also a firm acquisition of capital assets or
fixed assets.
Payback Period
Payback period is the number of years it takes for the cash flows from a
project to recover the project’s initial investment (Moles, 2011). It measures the
dimension of project risk by focusing on the timing of cash flows. The longer it
takes to recover the initial investment, the greater the project’s risk, because
cash flows in the more distant future are more uncertain than relatively near term
cash flows. Another reason for concern for long payback period relates to capital
reinvestment. The faster the capital is returned from an investment, the more
rapid it can be invested in other project.
Table 5.17
Payback Period
Year Annual Cash Flow Cash-to-Date Payback Period
2015 60,316.51 60,316.51 1
2016 47,791.12 160,000.00 0.62
2017 77,641.98
2018 113,315.58
2019 164,345.64
Payback Period 1.62
Table 5.17 shows the payback period or the time the business is expected
to recover its investment which is 1.62 years. This indicates that there is a better
investment because the payback period is shorter and the business is said to be
feasible and profitable.

Break Even Point Analysis
Break even analysis is used to give answers to questions such as ‘what is
the minimal level of sales that ensures the company will not experience loss” or
“how much can sales be decreased and the company still continue to be
profitable. Break even analysis is the analysis of the level of sales at which a
company would make zero profit (Tsorakidis, 2010)
Break Even Volume Analysis
BEP Volume Analysis = Total Fixed Cost

Contribution Margin / Net Sales per Unit
Table 5.18
Break- even Sales Volume
Contribution Margin per Break-even

Year Fixed Cost Unit Point
2015 285,460.92 121.56 2,348.24
2016 291,156.79 132.05 2,204.93
2017 302,559.54 137.08 2,207.17
2018 312,028.68 141.92 2,198.63
2019 324,436.81 147.79 2,195.24
Table 5.18 shows break – even volume analysis for its first year of
operation is 2,348.24 and for the year 2019 is 2,195.24. At these volume sales,
the company earns neither profit nor loss.
Break Even Analysis in Pesos
Break even analysis is a continual way of thinking used by people
potentially everywhere in the organization as they deal with a variety of
decisions. As such it embraces the common ground of thinking that is used in

accounting and economics. It is a way of comparing the amount of incoming
value that an organization needs in order to serve its customers by delivering
outgoing value of an equal amount. (Cafferky, 2010)
Table 5.19
Break-even Point Peso Sales
Contribution Margin Break-even

Year Fixed Cost Percentage Peso Sales
2015 285,460.92 53.59% 532,638.29
2016 291,156.79 55.44% 525,138.61
2017 302,559.54 54.82% 551,957.24
2018 312,028.68 54.05% 577,312.60
2019 324,436.81 53.60% 605,241.69
Table 5.19 shows the break even analysis in pesos for the year 2015
which is 532,638.29 and 605,241.69 for the year 2019. The table above indicates
the break even profit indicates in peso.
Break – Even Analysis Selling Price
If the product can be sold in a larger quantity that occurs at breakeven
point, then the firm will make a profit; below point, the firm will make a loss.
Break-even analysis calculates what is known as a margin of safety, the amount
that revenues exceed the break-even point. This is the amount that revenues can
fall while still staying above the break-even point. Breakeven analysis is used to
determine when your business will be able to cover all its expenses and begin to
make profit.
BEP Analysis Selling Price = Break Even Sales

Units Sold
Table 5.20
Break-Even Analysis Selling Price
Year Fixed Cost per Unit CM Ratio Break even SP/unit

2015 74.34 54% 138.71
2016 71.36 55% 128.71
2017 70.04 55% 127.77
2018 68.43 54% 126.60
2019 67.59 54% 126.09
Table 5.20 shows a relatively low amount of selling price from 2015 –
2019. This indicates that the product can be offered to lower price but gaining
income as well.
Margin of Safety
Margin of safety is the difference between actual and expected sales and
sales at the breakeven points. It indicates by how much sales decrease before a
loss may occur. It also represents the portion of sales which determine the profits
of the business. (Weygantt, 2009)
Margin of safety= Actual Sales - Break-even Sale
Table 5.21
Margin of Safety Percentage
Year Margin of Safety Sales Percentage
2015 228,621.76 761,260.06 30%
2016 324,142.14 849,280.75 38%
2017 392,243.12 944,200.36 42%
2018 469,176.14 1,046,488.74 45%
2019 573,090.85 1,178,332.55 49%
Table 5.21 shows the margin of safety percentage for the year 2015 is
30% and 49% on 2019. This indicates that there is a larger buffer between the
breakeven point and the anticipated sales.

Generalization
The initial capital investment of the four partners is P40, 000.00 with the
total of P160, 000.00 as initial capital to be used in the operation of business. It
has the contingency of P 34,519.31 which is enough to support the unexpected
expenses.
The company can maintain its liquidity for the five years of operation. For
the first year the current ratio is 2.82 which mean that the company is capable of
paying its liabilities. The quick acid ratio is 1.99 which mean that the company is
capable of paying its short term liabilities using its most liquid assets. Working
capital is Php 195,226.51 and the average collection period is 23 day to convert
the receivable into cash which is healthy on the part of the company since they
can use cash for other projected expenses they will incur. The partnership
managed its inventory efficiently. Flow of inventory is fast so they were able to
sustain more assets than debts.
The business has a high margin of safety of 7% on its first year which
means that the business will be profitable for the next four years of operation.
The business has a return on equity of 26% which equity indicates that the
company is profitable and generates more profit the money the stockholders had
invested. The payback period of 1.62 which is short that means the partners can
recover their investment in a shorter period of time. Also, this indicates that there
is a better investment because the payback period is shorter and the business is
said to be feasible and profitable.

Chapter VI
SOCIO-ECONOMIC CONTRIBUTION
Business is the cornerstone of prosperity in society and considered as the
growth engine of the most successful economy. The purpose of business is not
only to increase profit but also to support social development and welfare. AIS
Manufacturing is committed to providing products that contributes in uplifting the
standard of living of any Filipinos and concern with what is beneficial to society.
Contribution to Philippine Economy
The term economy refers to all the production and consumption decision
and all activities that relate to the use of resources in a society (O’Connor, Faile,
2008). Like any other businesses, AIS Manufacturing contribute a lot in
reinforcing Philippine economy. It adds to the income of the country specifically in
Lipa City by means of paying taxes, thus strengthen the city’s economic
sustainability. Moreover, the establishment of AIS Manufacturing helps in
providing employment to every Lipenos which will in turn reduce the problem of
increasing rate of unemployed in the city. AIS Manufacturing also creates young
entrepreneurs who will enhance corporate prosperity, provide comfortable living
environment and will become pioneers for next generation. Also, the
establishment the business will help to relive the handicraft business in the
municipality.
AIS Manufacturing is maker of corn husk stuff organizer which uses corn
husk to produce a product. The good side of business production helps the
society in proper waste disposal in the Lipa City.

Employment Generation
The establishment of AIS manufacturing generate employability by means
of providing work for every Filipino especially Lipenos. Job growth permits
improvement of the society’s quality of life and make the city more attractive
location for businesses in the future. The proponents proposed business gives
additional employment to Lipenos and serves as an additional attraction for
future entrepreneurs to create more jobs in Lipa City.
Social Desirability
Since the business operation of the firm is mainly traditional because of its
simple approach of handicraft making such as weaving, measuring, varnishing
and cutting, workers health and safety is secure. The fact that the firm uses the
outer part of the corn which is the husk, agricultural waste in the locality will be
minimized. And also the partners will maintain clean and green approach for their
waste management system. The partners also assure that no harmful waste is
created within the environment and will observe safety first.
Suppliers
AIS Manufacturing will benefit from its supplier as their suppliers will also
benefit from them. AIS Manufacturing will create a win-win relationship with its
suppliers. It will ensure that they will maintain a good communication, an open
communication in able to create a sound relationship with its supplier since
suppliers is crucial in the operation of the enterprise. All documents and
transaction will be handle with utmost confidentiality to ensure that trust will
always dominates their relationship.

Consumers
The offering of cornhusk stuff organizer in the market adds awareness to
consumers that the waste part of a corn is worthy. Handicraft making has
become a means of livelihood that can be done at home or in the community.
Consumers will be sure that Corn husk stuff is unique because this product is
producing using the creativity and artistic hands of the workers. Consumer
suggestion for product improvement is one of the partners concern and this
suggestions are greatly appreciated.
Environment
Waste is an inevitable by-product of our use of natural resources. The
amount and make-up of waste in any given area depends on factors such as the
local population density, economic prosperity, time of year, type of housing and
whether there are local waste minimisation initiatives such as home composting.
Waste is everywhere. Through simple consumption of corn husk, the business
can contribute in minimizing waste thereby making the environment safe to live
with.
AIS Manufacturing use raw materials from corn that are very abundant in
Lipa City. The firm utilizes the use of its outer covering by making Corn Husk
Stuff Organizer offer in the market. Corn Husk Stuff Organizer is eco-friendly
products. It produces minimum waste output. Through creativeness of partners,
resourcefulness and environmental friendliness, the firm turn corn husk into
simple, yet useful tools which market can use for whatever purpose it may serve
them.
Generalization
Every business enterprise is accountable for the society’s social and
economic development. Like any other business, AIS Manufacturing is
concerned with every part of the community and with the things that is beneficial
to others. The proposed business contributes to Philippine economy specifically
to Lipa City’s economy by means of paying income taxes that could help to
improve infrastructure in the municipality or can be used to other projects for the
betterment of the Lipa City. Also, through the pursuant of this business, it could
help to lessen the unemployment rate in the aforementioned municipality. For
suppliers, the business could help them in terms of increasing their profit since
AIS will be another customer. For customers, this establishment could offer them
a new variety of organizer. AIS Manufacturing helps the environment eliminate
agricultural waste and promote products to market that is worthy and unique.
In general, the business will strengthen handicraft making in Lipa City and
strengthens economic growth because of employment generation and initiate the
use of local materials in the locality. The business is also eco-friendly because it
uses fewer amounts of energy and produce less waste output. AIS
Manufacturing is open for product innovation and advancement to comply with
the consumers changing preferences. Since the product is formulated to suffice
the preference f the customers, suggestions and comments from customers will
be highly appreciated by the firm. After, the firm will assess and work out the
pursuance of their suggestions for the betterment of the product.

Corn Husk Stuff Organizer

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ESTABLISHMENT OF AIS MANUFACTURING: MAKER OF CORN HUSK

STUFF ORGANIZER AT SAN CARLOS, LIPA CITY

A Feasibility Study Presented to

In Partial Fulfillment of the Requirements for the Degree

In partial fulfillment of the requirements for the degree of Bachelor of

Approved by the Committee of Oral Examination with a grade of ____.

JERRY P. LUMBERA LUCILA V. HERNANDEZ, CPA

Accepted and approved in partial fulfillment of the requirements for the

Also, the proponents want to express their sincere gratitude to their

and mentor for this study.

also for dealing in day to day challenges of their life.

for making the study grammatically correct.

information crucial in the pursuance of the study.

questionnaire provided by the proponents which served as the basis of their

To their families for their generous support, encouragement and

granted for the study.

Mary Rose P. Gulla

TITLE PAGE ......................................................................................................... i

SUMMARY OF THE PROJECT

I. BACKGROUND OF THE STUDY

II. MARKET STUDY

III. TECHNICAL STUDY

IV. MANAGEMENT STUDY

VI. SOCIO-ECONOMIC CONTRIBUTION

Table No. Title Pages

2.1 Historical Demand of Corn Husk Stuff Organizer..................... 15

Figure No. Title Pages

2.1 Tag .......................................................................................... 29

feasibility, technical feasibility, management feasibility, financial feasibility and

socio economic contribution of the business.

Name of the Firm

The proposed business is named as AIS Manufacturing. The name was

the product they are offering.

The business will be located at Purok 1, San Carlos, Lipa City. It is 64

sq.m. It is chosen because it is near to the possiblesuppliers and accessible for

because it will suit the business.

The project is named as Establishment of AIS Manufacturing: Maker of

the introduction of the aforementioned organizer, waste is reduced thereby

up with something new to offer in the market.

proponents used descriptive research design and chooses household in urban

barangay in Lipa City having an income of Php10,000.00 and above as target

market. They used questionnaire as a mode of gathering pertinent information

manufacturer down to retailers then to the customers. In terms of promotion, the

proponents will use flyers, internet marketing and tarpaulin as a mode of

introducing their product to the market.

½) inches width. The manufacturing of the aforementioned product involves

goal of the business is to help the environment so strict compliance to waste

segregation will be observed.

Organizer as the product.

responsible in supervising the business will be compensated with of Php 500.00

license will be paid as well amounting to Php 5,928.42.

In the financial aspect, AIS Manufacturing will have an initial capital of

operation, the partners can recover their initial investment.

With a breakeven point of 2,348.24, the company is expected to earn

profit having the aforementioned sales volume.With the efficient management of

more useful product.

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