BATANGAS STATE UNIVERSITY Graduate School ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN LIPA CITY, BATANGAS A Business Plan Presented to the Faculty of College of Accountancy, Business, Economics and International Hospitality Management – Graduate School Batangas State University Batangas City In Partial Fulfillment of the Requirements for the Degree Master of Business Administration (Non-Thesis Program) By: de Ocampo, Mark L. December 2021 BATANGAS STATE UNIVERSITY Graduate School APPROVAL SHEET This feasibility study, entitled ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN LIPA CITY, BATANGAS, prepared and submitted by Mark L. de Ocampo, in partial fulfillment of the requirements for the Master in Business Administration NonThesis Program, has been examined and is recommended for acceptance for oral examination. IRENE H. MARALIT, DBA Adviser Accepted and approved in partial fulfillment of the requirements for the degree of Master of Business Administration Non-Thesis Program. _________________ Date BENDALYN M. LANDICHO, Ph.D., AFBE Dean, CABEIHM BATANGAS STATE UNIVERSITY Graduate School ACKNOWLEDGEMENT The proponent would like to extend his heartfelt gratitude and appreciation of the following persons and institutions who have contributed greatly towards the completion of this project development study. First and foremost, I thank God for constantly providing me with strength, guidance, protection, and insight, especially while conducting this business research; To Batangas State University and the College of Accountancy, Business, Economics and International Hospitality Management (CABEIHM) officials, faculty, and staff, for the knowledge and expertise they have shared; To Dr. Bendalyn M. Landicho, Dean of CABEIHM, Batangas State University - Main Campus for her advice and for her unending support and guidance to the entire student body where the proponent belongs; To Dr. Irene H. Maralit, Business Research Project adviser and professor for the knowledge for her expertise and time she shared to the class and for her guidance and valuable contributions towards the completion of this project; To Dr. Dennis B. Legaspi, Graduate School Coordinator and professor of Batangas State University-Malvar Campus for his support and guidance on the first batch of Master of Business Administration; To the faculty and staff of the BatStateU - JPLPC Malvar Campus’ College of Accountancy, Business, Economics and International Hospitality Management for their unwavering support, and undying love and understanding which keep the proponent motivated in finishing this research undertaking; iii BATANGAS STATE UNIVERSITY Graduate School To the panel members, for their recommendation and suggestion towards the improvement of this project development study; To the City Government Lipa, Batangas, for assisting the proponent with the necessary legal documents and materials; To Ms. Ma. Jasmin A. Balisi, RND for sharing her expertise in the computation of the nutrient content of the proposed product; To the dear MBA classmates and Red Spartan friends for giving motivation and inspiration to make this research possible; To Mr. Nonwat “Mike” Pasawat, who helped and supported me in this product; To Mr. Jesureth S. Boboyo, who made my visualized logo; To Ms. Camille J. Ramirez, who lent me her rolling pin and giving ideas about commodities’ prices; To Engr. Christian Banta and Angelica Banta, MBA, who drew and designed my business plan layout; To Mr. Vincent Bobby Lacerna, Ms. Arjen M. Laguerta and Mr. Dave Nichole Aldaba, who answered my queries and helping me out doing this project; To the proponents’ beloved family for their support financially, emotionally and spiritually towards accomplishing this goal; To all of you, Thank you! Mark L. de Ocampo iv BATANGAS STATE UNIVERSITY Graduate School TABLE OF CONTENTS Page TITLE PAGE................................................................................................. APPROVAL SHEET..................................................................................... ACKNOWLEDGEMENT............................................................................... TABLE OF CONTENTS............................................................................... LIST OF TABLES......................................................................................... LIST OF FIGURES....................................................................................... EXECUTIVE SUMMARY.............................................................................. i ii iv iv vii ix x CHAPTER I. II. III. BACKGROUND OF THE STUDY Introduction....................................................................................... Overview of the Business................................................................. Objectives of the Study .................................................................. Scope and Limitations of the Study................................................. 1 3 6 7 MARKETING PLAN Product/Service Description............................................................. Target Market……........................................................................... Demand and Supply Analysis.......................................................... Projected Sales……………….......................................................... Marketing Program/Strategies.......................................................... Marketing/Selling Expenses….......................................................... 9 14 18 20 24 26 PRODUCTION/OPERATION PLAN Technical/Production Description..................................................... Production/Operations Process........................................................ Production Schedule……................................................................. Labor Requirement………................................................................ Machinery/Equipment Requirement................................................. Raw Materials Requirement……….................................................. Plant/Factory Location…………….................................................. Plant Layout…….…………..………................................................. Waste Disposal System……………................................................. Quality Control System…………...................................................... Production Cost……………………................................................... 27 28 32 33 34 40 42 43 44 44 45 IV. ORGANIZATIONAL PLAN Page Legal Form of Business …............................................................... 47 Organizational Structure .................................................................. 50 Qualification of Officers .................................................................... 51 v BATANGAS STATE UNIVERSITY Graduate School Gantt Chart of Activities.................................................................... 54 Administrative Expenses……………………………………................ 56 V. VI. FINANCIAL PLAN Total Project Cost ............................................................................. Sources of Financing......................................................................... List of Assumptions Used.................................................................. Projected Financial Statements ........................................................ Financial Analysis ............................................................................. 63 64 65 68 74 SOCIO-ECONOMIC CONTRIBUTION Economic Desirability ........................................................................ 92 Social Desirability............................................................................... 92 Environmental Desirability.................................................................. 93 BIBLIOGRAPHY ........................................................................................... 94 APPENDICES CURRICULUM VITAE vi BATANGAS STATE UNIVERSITY Graduate School LIST OF TABLES TITLE TABLE PAGE NO. 1 Price Scheme …………………………………………………… 13 2 Retail Price Competitors ………………..……………………... 13 3 Local Population ………………………………………….…….. 15 4 Determining Sample Size………………………………………. 16 5 Historical Demand …………...……..…………………………... 16 6 Historical Supply ………………………………………………... 17 7 Market Gap ……….……………………………………………... 19 8 Market Share …………………….………….………………….. 19 9 Projected Sales ………………….……………………………… 20 10 Promotion Mix Strategies ……………………………………... 25 11 Marketing and Selling Expenses …………………………….. 26 12 Time and Motion Study ……….………………………………. 32 13 Production Schedule ………………………………………….. 33 14 Salaries and Wages ………………….………………………… 34 15 Factory Equipment ………….. ………………………………… 34 16 Factory Furniture and Fixtures ……….………………………. 35 17 Factory Tools …. ……………………………………………….. 35 18 Factory Supplies …………….………………………………….. 36 19 Office Furniture and Fixtures ………..………………………… 36 20 Office Equipment …..…………………………………………... 37 21 Office Tools ……….….…………………………..…………….. 37 22 Office Supplies …………………………………………………. 38 23 Delivery Equipment ……..……………………………………... 38 24 Maintenance Supply ……………………...……………………. 39 25 Direct Materials ………………..……………………………….. 40 26 Indirect Materials ..……………………………………………... 40 27 Utilities Expense …..…………………….……………………... 41 28 Delivery Expense ………………………………………………. 41 29 Rent Expense …………………………………………………... 41 30 Project Cost Allocation ………………………….……………... 45 31 Fees and Licenses ……………………………………………... 61 32 Financial Requirement …………….…………………………… 69 33 Financial Position ………………………………………………. 70 34 Changes in Equity ……………………………………………… 72 35 Cash Flows ……………………………………………………… 73 36 Current Ratio ……….…………………………………………... 76 37 Quick Ratio …………………………….……………………….. 76 vii BATANGAS STATE UNIVERSITY Graduate School 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 Working Capital ……...…………………………………………. Inventory Turnover ……..………………………………………. Average Sale ……………………………………………………. Assets Turnover …..…………………………………………….. Debt Ratio ………………………..……………………………… Equity Ratio ……………..………………………………………. Debt to Equity …….…………………………………………….. Rate of Return on Assets …….……………………………….. Rate of Return on Equity …..………………………………….. Operating Profit Margin ……………………………………….. Gross Profit Margin ….………………………………………… Net Profit Margin ……………………………………………….. Break-even Volume Analysis …………………………………. Break-even Sales Analysis ……..…………………………….. Break-even Selling Price ….………………………………….. Margin of Safety ……………………………………………….. Margin of Safety Ratio ………………………………………… Operating Leverage ……..…………………………………….. Contribution Margin ……………………………………………. Financial Leverage …………………………………………….. Payback Period ………………………………………………… viii 77 78 79 80 81 81 82 83 84 84 85 86 87 87 88 88 88 89 89 90 90 BATANGAS STATE UNIVERSITY Graduate School LIST OF FIGURES TITLE FIGURE NO. 1 Business Logo ………………………………………………….. 2 Brand Logo …….………………………………………………... 3 Packaging ………………..……..……………………………….. 4 Channel of Distribution ………………………………………… 5 Facebook page …………………………………………………. 6 Process Flowchart ……………………………………………... 7 Plant Location …………………………………………………... 8 Plant Layout …………………………………………………….. 9 Organizational Structure ………………………………………. 10 Gantt Chart of Activities ……………………………………….. ix PAGE 9 10 12 12 25 31 42 43 50 55 BATANGAS STATE UNIVERSITY Graduate School EXECUTIVE SUMMARY This section jeopardizes a project proposal that includes a business name, location, a brief description of the product and a summary of market potential, as well as technical, managerial, financial and economic well-being. Nature of the Business Taki Foods Manufacturing is the company's name. The word "taki" in Japanese means "waterfall." Waterfall is a common system development life cycle model in business that employs a linear and sequential approach to system design while the brand name is Chicken Chips. The product is made from chicken breast which is the main materials and added with different seasonings. The business is sole proprietorship that owned by Mark L. de Ocampo and will also be the General Manager of the business. Because the company is new, it has secured a two-year lease to construct a booth or stall that will combine the production and operation process. Multiple people may be employed to run the business. Location of the Business Taki Foods Manufacturing is located in Barangay Antipolo del Sur, Lipa City. The proponent chose the location because of its accessibility to all employees as well as the fact that it is near to the national road and different establishments in the business. Aside from that, the business is also located near grade school. x BATANGAS STATE UNIVERSITY Graduate School Project Summary This part summarizes the studies of proposed product conducted by the proponents to assess its feasibility in the market. There are different factors which specifically include in the market, technical, management financial and socio-economic aspects that might affect the marketability of the product. This study comprises the business operations of Taki Foods Manufacturing for the first five (5) years from 2022-2026. Market Feasibility Taki Foods Manufacturing will focus on manufacturing and distribution of Chicken Chips. The proponents determine the marketability of Chicken Chips by conducting an online survey using google form. The respondents of the study include the 100 individuals from seven (7) barangays in Lipa City, Batangas. Prospective retailers such as groceries, sari-sari stores, convenient store and other related food suppliers are considered target market and some consumers nearby. Upon compiling and analyzing the data gathered, it was noted that there is a demand for the proposed product and could also become as prolific as the other same products existing in the market today. In connection to the demand and supply analysis, the market gap, as well as the market share of the business is increasing during the first five (5) years of operations. This is an indication that the enterprise has the chance to penetrate the market. xi BATANGAS STATE UNIVERSITY Graduate School Chicken Chips will be sold at an estimated price of 12.30 and 13.77 or 14.00 for consumers. In order to fulfill the marketplace, there will be promotional strategies will be used such as free taste sampling, internet marketing, flyers and word of mouth to encourage potential consumers. Technical Feasibility The technical study focuses on the product description, manufacturing processes, production capacity of the enterprise, materials, machineries and tools necessary for the operations, location of the plant or factory and the utilities and direct labor requirement. Taki Foods Manufacturing will be producing a healthy and delicious chicken chips. The ingredients to be used are fresh chicken breasts, salt, paprika powder, black pepper and garlic powder. Direct materials alone cannot be materialized without equipment or tools need to be used in producing chicken chips such as rolling pin, knife, chopping board, measuring spoon, meat grinder, cling wrap and baking paper. The business will also provide an accurate measurement for accurate taste of the product. The proponent will prepare a 14 grams of chicken chips in a zip lock with beautiful logo of the business with nutrition facts. Chicken chips involves several processes including preparation of materials, mincing the chicken, mixing, flattening, baking, cutting, quality inspection and packing. Two (2 employees) are responsible for the production of chicken chips. A detailed flow chart and time study motion study is indicated to present the definite duration of each process xii BATANGAS STATE UNIVERSITY Graduate School which will start at 7:30 am and ends at 5:00 pm. The workers require to produce 400 packs of chicken chips per day, a total of 2,400 pack per week and 115,200 annually. The production is subject to increase 5% annually. Moreover, the plant is located in Barangay Antipolo del Sur, Lipa City with a 20 square meters, an ideal space for newly start business. Management Feasibility This part discusses the soundness of the business to its management aspects. This study describes how the proposed business manage the overall business operations of the firm through aspect of planning, organizing, directing and controlling. Taki Foods Manufacturing is a sole proprietorship. The owner of the business is Mark L. de Ocampo. This type of business ownership is more suitable since it is a start up or newly established business. The initial capital needed for the operations of the business will be financed by the owner. General Manager who will do the bookkeeping is to be compensated at monthly rates. On the other hand, the two (2) workers will be compensated at a daily rate salary. And for the legal operation of the business, registration and payments of necessary permits and licenses fees are to be complied regularly. xiii BATANGAS STATE UNIVERSITY Graduate School Financial Feasibility The financial study involves planning, organizing, directing and controlling the financial activities of the firm. This gives emphasis to the estimated total project cost, initial capital requirement, source and modes of financing, key assumptions, and financial ratios. The total project cost for the first two (2) months of operations amounts to Php 400,000.00. Major financial assumptions were established which will serve as the basis of the financial computations. During the first year of operations, Taki Foods Manufacturing would be able to yield a net profit of ₱49,742.65 on the first year as presented in the Comparative Profits and Losses schedule. This will increase as years pass by, thus resulting to a favorable financial condition for the firm and the recovery of the initial project costs. Moreover, the business is highly liquid as it has the ability to meet its current obligations since the current ratio is 11.05 and 33.88 in 2026 and it indicates also that the business is in a good financial position. It could also be inferred that the enterprise does not concentrate much on debt financing, instead, it focuses more on equity financing from its own investments. On the other hand, the breakeven point during the first year is 77,485 packs wherein the enterprise will experience neither profit nor loss and therefore, the firm must be able to sell more than the said quantity in order to gain equitable profit. The payback period wherein the business would be able to recover the cost of its investments is 2.006 years. xiv BATANGAS STATE UNIVERSITY Graduate School Socio-Economic Contribution Socio-economic contribution discusses the obligation and responsibility of Taki Foods Manufacturing to the environment as a whole. As an organization which is not just engaged to producing quality products, but also to set goals of uplifting the degree of responsibility it takes to the government and the community. The company will contribute the economy Putting up a business like this is a good opportunity for the residents of the community to improve their quality of life by providing employment. The proponents would be responsible to the employees by paying the right amount of salary and giving them the right benefits. They will become earning members of their family and productive residents of the society. xv BATANGAS STATE UNIVERSITY Graduate School Chapter I BACKGROUND OF THE STUDY This chapter tackles with the presentation of background of the study. Precisely, this presents an introduction, the overview of the business, objectives of the study and the scope and limitations. Introduction Snacks are normally eaten between meals. People are buying snack, “chichirya” to eat during snack break or in midnight snack because it is easy to digest. The usual shelf life of snack is just 1-2 days because they are meant for immediate consumption, but it can be extended through tolerable packaging. Packaged and processed foods and items made form fresh ingredients at home are different snack’s variety of forms. Some of its kinds are Salty and Sweet snacks. Salty Snacks are part of today’s consumer diet. It is traditionally prepared commonly at home from usual ingredients while on the other hand, Sweet Snacks have a high sugar content and mainly made from peanuts and popcorn combined with molasses. Salty Snacks have different segments such as pretzels which are commonly twisted into knot-like shape while salted peanuts considered one of the earliest processed snack foods. On the other hand, the most famous snack is the potato chips. In the USA, almost 63% eat potato chips daily. While popcorn is a type of corn that is when heated it explodes and puffs up. Sweet snacks are BATANGAS STATE UNIVERSITY Graduate School classified into four types: hard candy, chocolates, baked goods, and frozen sweets. Being the most famous snack, have no finite origin and who made the first ever chips and what it looks like. There are two undeniable truths regarding chip history. It is as follows: In the late 16th century, potatoes arrived in Europe from Peru, and Britain began consuming early versions of chips. (Miriam Carey, Lovefood 2019). Normally, chips are made from corn, potatoes, chocolates etc., which are usually flat or bowl shaped and it is bite-sized unit. Some of the snacks that are made from potatoes are Potato Chips and VCut while Boy Bawang, Tortillos and Nachos are made from corn. But these chips are already by and large in the market. The market of Snack Food segments is expectedly grown annually by almost 5.07% in the year 2021-2026. The revenue of the Philippines in the Snack Food amounts to US$ 8,338M or Php 416,900,000.00 in 2020 (Statista, 2021). This shows how snack foods love by many of us and a good indicator despite pandemic. As the time goes by, many innovations are happening not only in technology but also in food industry. Through the unsteady innovative human thinking, chips can also be made from chicken breasts. It is the lean cut of meat taken from the pectoral muscle on the underside of the chicken and this is one of the main sources of protein (MaterClass staff, 2021). This is the idea of formulating Chicken Chips, chips made from meat and not on corn or potatoes. 2 BATANGAS STATE UNIVERSITY Graduate School Chicken Chips is made from chicken breasts. Aside from that, it is also a healthy snack because it provides gluten-free, no sugar and seven (7) grams of protein per serving. Chicken Chips is also versatile as like as other chips that we see in the market. Overview of the Business In this section, the proponent discusses the overview of what the proposed business is. The present status and the future direction of the business together with the purpose, goals and objectives are also clearly stated in this chapter. Nature of the Business Taki Foods Manufacturing is the name of the company that provides the best tasting and nutritious Chicken Chips made from chicken breasts and consists of starting and operating a snack industry. It will be run as a sole proprietorship owned by Mark L. de Ocampo and registered with the Department of Trade Industry (DTI), following DTI rules and regulations. Because the company is new, it has secured a two-year lease to construct a booth or stall that will combine the production and operation process. Multiple people may be employed to run the business. Taki Foods Manufacturing segmentation includes millennials and adults from seven (7) barangays in Lipa City such as Anilao, Anilao-Labac, Antipolo del Norte, Antipolo del Sur, Pagolingin East, Pagolingin West and Pinagkawitan who 3 BATANGAS STATE UNIVERSITY Graduate School enjoy eating snacks and experiencing chips produced form chicken breasts. Orders shall be fulfilled with respect and courtesy by the staff/s, who will also give high-quality service and introduce the product to the customers and consumers. Customers will be able to buy the product at the leased space in Antipolo de Sur Lipa City, Batangas, through direct sales. As part of the business’s advertising, it will be posted on social media platform such as Facebook, Instagram, and even Tiktok. The chatbot will be used for delivery, customer service, orders and inquiries. Taki Foods Manufacturing focuses on the customer’s viewpoint of the product and service by soliciting feedback via chatbot. The operating, marketing, financial and administrative tasks that keep the firm structured and successful are the focus point. The key partners of Taki Foods Manufacturing include Chicken Chips suppliers and packaging suppliers. Taki Foods Manufacturing’s cost structure is defined in terms of fixed expenditures such as rent and depreciation and variable expenses such as labor, marketing, supply and raw materials. The revenue stream of the business is generally made up of one-time sales, which is most widely understood revenue stream and through pricing mechanism. 4 BATANGAS STATE UNIVERSITY Graduate School Product Design Chicken Chips are made using chicken breasts and seasonings including black pepper, salt, garlic powder, and paprika powder. It’s incredibly thin, like the chips we’re used to seeing on the market, but it’s not derived from potato or corn. It’s grittier and lower in fat than thick chips. Because of thinness, chicken chips are crunchy and easy to consume. The product is pretty convenient and lightweight. It slices like Mang Juan size chips. To retain the crisp while not in use, the goods will be packaged in a zip lock bag. Good packaging is also a tactic for attracting people's attention and selling to them. With this plan, the company will be able to raise revenue while also remaining competitive. Furthermore, the company not only sells unique chips, but it also sells happy feelings to its customers. Vision To be one of the leaders in food snack industry by giving nutritious quality products through excellence, passion, integrity and honesty. Mission Taki Foods Manufacturing strives to provide high-quality, nutritional, and one-of-a-kind products for the market. Providing individuals opportunities to work and live in a healthy society. 5 BATANGAS STATE UNIVERSITY Graduate School Location It is critical for the business to choose the right location in order for it to be successful. Taki Foods Manufacturing will be situated at Antipolo de Sur, one of the busiest throughfare in Lipa where people buy essential commodities. Because of foot traffic, it represents a big significant possibility for the firm. Furthermore, due of product availability, people from adjacent places such like Padre Garcia, Rosario, San Juan and nearby towns in Quezon province will have the opportunity to buy the product. Objectives of the Study The objective of the study is to establish a snack enterprise that is simple yet impressive snack for everyone seeking for unique chips. The owner aims to achieve the following: 1. To determine the socio-economic benefits of the proposed business. 2. To develop marketing strategies applicable to the proposed product for the organizational growth. 3. To evaluate the effectiveness of management setting policies regarding the organization of employees, customers and suppliers. 4. To describe the financial status of the business and its earnings performance. 6 BATANGAS STATE UNIVERSITY Graduate School 5. To identify the marketability of the product by analyzing the demand and supply, determining the market share, and formulate appropriate market program, strategies, and promotion. Scope and Limitations of the Study The proponent proposed business is named Taki Foods Manufacturing: Manufacturer of Chicken Chips in Lipa City Batangas. The feasibility study concentrated on the study of chicken chips, which also included market, technological, managerial, financial, and socioeconomic elements of the project. These characteristics serve as the foundation for determining the scope and constraints of the study. The marketing portion of the research looked at rivals, potential markets, and historical and forecast demand and supply. The research focuses on a single person from the seven (7) barangays in Lipa City, Batangas. The entire number of respondents is obtained by the researchers from the City Planning and Development Office in Lipa City, Batangas. The proponent will then limit his research to retailers in seven barangays in Lipa City, and he will choose some chips retailers to serve as his foundation for historical demand and supply analysis, market analysis, and marketing programs and strategies to be implemented by the business in order to determine the feasibility of the product and to gauge consumer sentiment toward the manufactured goods. The technical element of the research will concentrate on the product's production and operating procedure to transform the materials into a completed 7 BATANGAS STATE UNIVERSITY Graduate School product that will be sold. Chicken breasts and seasonings such as black pepper, salt, garlic powder, and paprika powder will be utilized. To create a quality product, accurate ingredient measurements are required. The Chicken Chips will be prepared in a 14-gram zip lock plastic bag and sold in the target market, according to the proponents. In this study, the proponents will look for the finest supplier in Lipa City and adjacent areas who will provide a comprehensive list of components as well as a price reduction due to bulk purchase. 8 BATANGAS STATE UNIVERSITY Graduate School Chapter II MARKETING PLAN Taki Foods Manufacturing introduces a new product to the market that will appeal to a wide range of consumers. This sector is critical to any business because it brings sales into the firm, analyzes competition and market conditions, and comprises a wide scope of activities related to the distribution and sale of goods and services. It also includes information on the manufacturing, target market, demand and supply analyses, predicted sales, marketing plans or strategies, and marketing or selling expenses. Product Description Chicken Chips are the newest chips on the market, with a unique flavor and a fresh appearance for customers. Figure 1 Business Logo Chicken Chips are manufactured from chicken breasts that have been seasoned in various ways. It has a crisp and coarse texture, and it's best served in a zip-lock plastic bag to keep it fresh. Its chips are similar in size to Mang Juan's, but they are flat and thin, making them simpler to chew for 9 BATANGAS STATE UNIVERSITY Graduate School children and adults alike. Branding/ Logo Taki Foods Manufacturing is the company's name. The word "taki" in Japanese means "waterfall." Waterfall is a common system development life cycle model in business that employs a linear and sequential approach to system design. Natural, wholesome, practical, accessible, friendly, stable, supporting, soothing, trustworthy, protective, honest, and sincere are some of the positive connotations associated with the color brown. As a result, the color brown may thrive in office services and quietly confident enterprises. Figure 2- Logo Chicken Chips is a brand name with a delicious flavor. Because chicken is the major component of the product, the manufacturer incorporated a chicken holding a pack of excellent chips made entirely of chicken breasts. The mix of red and yellow in the emblem is very eye-catching. Attractiveness, warmth, power, passion, and action. Red causes people to get hungry. Joyful, inquisitive, happy, and warm. Yellow attracts attention and encourages pleasure and warmth. 10 BATANGAS STATE UNIVERSITY Graduate School With this meaning, we can now actually tell why some establishments uses red and yellow colors. Packaging People nowadays usually purchase things based on their packaging as well as their quality. It is critical in the presentation of the goods to customers. The package, as well as the product itself, should be trendy. To keep the goods fresh, the company will utilize a 9x14 centimeter gold/brown zip lock plastic bag. The product's relevant information, like that of other manufacturers, may be visible outside the container. Outside the package, you can see the company logo, the product layout, the nutrition data, the expiration date, and the date of manufacturing. It's also water-resistant. Figure 3 Packaging 11 BATANGAS STATE UNIVERSITY Graduate School Placement or Distribution Process Finished goods should be offered for purchase on the market. When they are needed, they must be made on time or ahead of time. It is difficult to fulfill marketing goals if there is a chasm between the supplier and the clients. When the appropriate marketing channels are used, the location and timing requirements may be met. Taki Foods Manufacturing will distribute its goods through stores and post it on social media applications in order to reach the target market. The route will decrease costs, time, and effort in delivering items to the intended recipients. In terms of geographical distribution of items to retailers, the general manager will utilize his own car to supply the products, and he will be accountable for aiding the products to shops. The distribution channel will be using by Taki Foods Manufacturing as illustrated below. MANUFACTURE R RETAILERS CONSUMER Figure 4 Channel of Distribution Figure 4 depicts the channel distribution, which typically begins with the producer and progresses through the retailers and, lastly, to the consumer. Direct marketing will be used by the proponents, who will connect up with sari-sari 12 BATANGAS STATE UNIVERSITY Graduate School stores, grocers, and other associated businesses to reach their end clients and also to nearby consumers. Pricing Strategy The price of the product to be sold by the business to retailers is ₱ 14.00 per 14 grams pack of chicken chips. The business will be use dynamic pricing in which is based on the market condition in determining what price will the product be offered to the customers. But, sometimes, the price of the product also volume dependent. The business will give trade discount for bulk orders. To fully understand, the table below shows the quoted price per pack by every considered competitor of Taki Foods Manufacturing in the 7 barangays. Table 1 Price Scheme Particulars Direct Material Used/Unit Labor Cost/Unit Factory Overhead/ Unit Total Cost/Unit Markup to Retailers (35%) Selling Price- Retailers (VAT Exc) Input VAT Selling price Retailers Markup to Consumers Selling Price-Consumers (VAT Exc) Input VAT Selling price Consumers 2022 3.11 1.87 3.16 8.13 2.85 10.97 1.32 12.29 12.29 1.47 13.77/ 14.00 Table 1 shows the price per 14 grams of chicken chips which is based upon product cost. A marked up of 35% is added to the total manufacturing cost. Total cost includes direct materials, direct labor and factory overhead. 13 BATANGAS STATE UNIVERSITY Graduate School The selling price to retailers is 12.30. Table 2 Related Price of Competitors Other Commercial Brand Price per 14 grams Lays 45.00 Mang Juan 15.00 Nova 17.00 Source: 7/11, Southern Twin, SM Supermarket, SM Snacks Nov. 2021 The table above indicates that the prices of similar items given by competitors in the region are higher over Taki Foods Manufacturing's pricing. This is a positive sign that it can convince more customers to buy this product over others. Target Market Proper segmentation is critical for every business that wants to identify and distinguish its clients. Particularly if the product is very new on the market. Chicken chips are primarily targeted at youths, millennials, and young people in Lipa who enjoy eating chips. The area has 36,508 residents and it is almost 10% of the population of Lipa City, the majority of whom are millennials and young adults. A large number of people purchase chicken chips as a result of these. Demand Demand is the schedule showing the amounts of goods and services that buyer wishes to purchase at various prices during some time period. To gain high 14 BATANGAS STATE UNIVERSITY Graduate School demand, the business shall take into consideration the factors on how to convince the consumers to purchase the product. Without demand, no business would ever bother producing anything (Amadeo, 2017). Historical Demand The table 3 represents the total number of populations of seven barangays in the City of Lipa. Table 3 Local Population Year 2016 2017 2018 2019 2020 Population 31,369 32,337 33,332 34,358 35,419 Lipa's average annual population growth rate is 3.05 percent and the area of seven barangays has 2.99% growth rate. Lipa City's population is growing at a faster rate than the national average, implying that demand for Chicken Chips is growing as well. It also shows that Lipa City is still the business capital of Batangas province due to its strategic position and poss. The information above was gathered City Planning Development Office of Lipa City, and it is still growing. The proponent chose to utilize the Raosoft tool to compute the needed sample size for the dissemination of an online survey, as shown in Table 4. 15 BATANGAS STATE UNIVERSITY Graduate School Table 4 Determining the sample size Margin of Error 10% Confidence Level 95% Population Size 36,508 Response Distribution 50% Recommended Sample Size 96 According to the results of an online poll, 91 percent of respondents aged 17 to 30 years old with significant purchasing power are eager to acquire the suggested product, while the remaining 9% are not. Table 5 Historical Demand Year 2016 2017 2018 2019 2020 Demand 2,369,300.57 2,442,413.61 2,517,565.96 2,595,059.74 2,675,197.07 Table 5 indicates the demand for the proposed product, as well as the number of people ready to buy it at a certain price. The market for Chicken Chips may be studied by taking into account the 96 percent of the seven barangays in Lipa City's population. Supply Supply is the willingness and ability of producers to provide goods and services at different prices in the marketplace (Miller, 2008). The proponent 16 BATANGAS STATE UNIVERSITY Graduate School utilized the information gathered from the retailers to determine the viability of the production increase. Survey surveys, observations, and personal interviews with various retailers and suppliers within the target market were used to gather information on supply from 2016 to 2020. Supply is also a resource pool from which a person or location can obtain the required amount of that resource. Historical Supply Knowing and enumerating your competition is critical in business. For calculating projected supply, each competitor's supply will be considered. Every company has a set amount of goods it needs each year. Each year, the business owner evaluates the number of supplies supplied by competitors in order to forecast supply. The total amount of a certain commodity or service accessible to consumers is referred to as supply. Because of the large number of clients, geographical dispersion, and low unit value of commodities, they were generally sold through intermediaries. Table 6 Historical Supply Year 2016 2017 2018 2019 2020 Historical Supply 36,000 35,190 38,100 40,350 35,380 17 BATANGAS STATE UNIVERSITY Graduate School Table 6 illustrates the total number of chips accessible to customers from the seven barangays in Lipa City. The proponent identifies markets that are currently underserved or the market gap, which is calculated by subtracting predicted supply from projected demand, based on the mentioned historical numbers. Based on past demand and supply of the product offering, anticipated demand and supply were calculated using the statistical straight-line approach. The survey that was done yielded historical data. Demand and Supply Analysis The link between the quantity of commodity that producers want to sell at various prices and the quantity that customers want to buy is known as demand and supply analysis. The proponent researches the interactions of buyers and sellers in the chosen place in order to identify the pricing that would entice people to acquire the proposed product while also ensuring that the firm produces enough in the most cost-effective and efficient manner. The best predictors of an economy's growth and health are supply and demand. As demonstrated in Table 7, there is a rising demand, indicating that the suggested product may be offered to seven barangays in Lipa City, Batangas citizens. It's also worth noting that the supply is growing, implying that the manufacturers intend to sell more at any price. The market gap is positive, 18 BATANGAS STATE UNIVERSITY Graduate School indicating that the market is currently underserved, providing a potential for Chicken Chips to tap into a previously untapped market. It is more crucial to look at the supply and demand of Chicken Chips individually in order to readily identify the supply and demand analysis. Year 2022 2023 2024 2025 2026 Table 7 Market Gap Projected Demand Projected Supply 2,825,683 38,572 2,902,127 38,964 2,978,571 39,356 3,055,015 39,748 3,131,459 40,140 Market Gap 2,787,111 2,863,163 2,939,215 3,015,267 3,091,319 Market Share Market share is the ratio of the of sale revenue of the firm to the total sales revenue of all firms in the industry including the firm itself. (Kerin, et. al, 2010). Table 6 indicates the potential market share of the proponents. Divide estimated yearly output by the market gap to get market share. Year 2022 2023 2024 2025 2026 Table 8 Market Share Projected Annual Market Gap Production 115,200 2,787,111 138,240 2,863,163 165,888 2,939,215 199,066 3,015,267 238,879 3,091,319 Market Share 4.13% 4.22% 5.64% 6.60% 7.72% The table above shows the company's market share over the next several years. By 2022, the company expects to make 400 pieces of 14 grams of chicken 19 BATANGAS STATE UNIVERSITY Graduate School chips each day, or roughly 115,200 per year. Every year, production is predicted to rise by five percent. The market share of 4.13% of the first year of operation was calculated by dividing predicted unit sales by the market gap and to all succeeding years. Projected Sales After considering the market's demand and supply, the company must additionally consider its current capacity when determining its predicted sales. According to Table 9, sales are expected to increase from 2022 to 2026. This simply means that the company is expected to make more money in the future. For the first year of operations, total planned revenues constitute a 4.13% estimated market share. Year 2022 2023 2024 2025 2026 Table 9 Projected Sales Projected Sales (VAT inclusive) 1,596,700 1,916,007 2,299,208 2,759,055 3,310,877 SWOT ANALYSIS SWOT analysis is a strategy for evaluating the study's strengths, weaknesses, opportunities, and threats. It entails defining the business venture's or project's objectives as well as identifying potential internal and external elements that may help or hinder the firm from achieving its goals. The 4p's, 20 BATANGAS STATE UNIVERSITY Graduate School which are Product, Places, Price, and Promotion, are used to identify SWOT analysis. Strengths The traits of a firm or project team that provide it an advantage over others are referred to as its strengths. The proponents believe that the proposed product possesses strengths that will be a great factor for the feasibility of the product. Strength of the firm result the core and distinctive strategies which the firms later transform into operational strategies. Known and proven strength of the firm can be competitive advantage of the firm. (Orcullo,2010) Product Innovation Capabilities. Consumers frequently discover new and distinct flavors of food. The benefit of this product is that, while it has the same features and texture as the previous product, it still has a distinct flavor and quality but differ in main ingredient. In addition, flavors will be added in the future such as adobo, caldereta and inasal. Nutritious Value of the Product. Customers can get health advantages from this product since it has low saturated fats but with Vitamin B1 and B2. Packaging- The product's packaging is resealable. This type of packaging is unusual for a chip. It will aid in the preservation of the product's crispness. Weaknesses Weaknesses are features that put a team at a disadvantage in comparison to others. It makes it difficult for the company to attain its objectives. 21 BATANGAS STATE UNIVERSITY Graduate School Limited Financial Resources- Since the proponents are just starting the business, it faces financial constraints. As a response, the proponents might request financial support to invest in a new firm. Brand Recognition- As a new entry in the sector, it is difficult to compete with the established players since consumers are already familiar with their brand. Opportunities Typically, opportunities are thought of in terms of new technology and new markets. These are the conditions, time, and location that are accompanied by specific courses of action on the part of the business and are likely to bring considerable rewards. Population growth. As time passes, the population will grow, creating a huge chance for proponents. As the population grows, so does the likelihood that demand for the commodity. Consumers who are health-conscious. Many individuals nowadays are concerned about their health. Those who desire to live a healthy lifestyle will benefit greatly from our goods. Expansion of the Company. Expansion of the firm with several potential prospects for success through effective promotion and advertising. It's a fantastic opportunity to assist boost sales. 22 BATANGAS STATE UNIVERSITY Graduate School Threats Threats are unfavorable conditions that may jeopardize the firm's market position. And, because the proposed firm is new to the sector, there are likely to be fewer public acceptances; customers are more inclined to favor rivals who have already established their goods in the market. Existence of a well-known brand. A growing number of competitors from comparable businesses operating in the same place, as well as well-established and well-known brands in the market. Simple to replicate. Making ice cream is simple; simply combine all of the components, add the appropriate flavor, and freeze until the required temperature is reached. This will provide a wonderful chance for rivals while putting the company's performance at danger. Customer devotion. One of the restraints was consumer loyalty to the old product. Consumers may have second thoughts about whether or not to test the new product. Marketing Strategies/ Programs Marketing strategies are intended to assist managers in delivering items or services to consumers and persuading them to purchase. This covers product, location, price, and marketing methods. The marketing plan as a whole achieves the intended market position for the product. This would assist the proponents in making their product marketable. 23 BATANGAS STATE UNIVERSITY Graduate School Product Chicken chips are one of the new goods that will be available in the market. It is produced with chicken breasts that have been seasoned to taste deliciously and are actually fashioned into chips. Its peculiarity will make the product well-known in the Lipa City snack market. It is extremely nutritious and may be consumed by elderly people who have health issues. The product's thinness and crispness are further benefits. Place/ Location The location of the business is very visible and accessible to the target market of seven barangays in Lipa City. The business is located near national road and near establishments such as elementary school, offices and others. Promotion The proponent will utilize advertising and e-marketing in the promotion mix to persuade clients to actively buy the product in order to promote the business and the suggested product. This will be accomplished through utilizing offline mediums and enhancing the usage of internet mediums to increase client awareness of the company and its products. It is also recommendable today because of pandemic and people now are social media addict. 24 BATANGAS STATE UNIVERSITY Graduate School Figure 5 Facebook page Table 10 Promotion Mix Strategies What Free Taste Who Proponent Internet Marketing Proponent Flyers/ Posters Proponent When Will be started on the day the proposal of the product that will be introduced Between the days that the place/location renovating Every Anytime day/ Where Public Places, Parks, markets, churches and Streets where most people passing through Social Media Every individual, retail store, and street where people are passing by 25 How Every person passing through the places will be given free taste Through Facebook, IG, Twitter and other apps Face to intervention Budget ₱ 2,000.00 1,000.00 face 2,000.00 BATANGAS STATE UNIVERSITY Graduate School Price When it comes to purchasing items, people have traditionally prioritized price. Customers want to purchase things with lesser pricing yet the same quality. It is usually based on a cost-benefit analysis, customer demand and capabilities, competitive pricing, and government regulatory and political mandates. It is the most important factor of market share and profitability. It is cheaper compare to other brands. Marketing/ Selling Expenses The costs of distributing, marketing, and selling a product or service are referred to as selling expenditures. It is essential especially when the business is about to start. It answers the questions “what should I do?”, “how people will recognize my product?”. Table 11 summarizes the marketing and selling expenses for Chicken Chips. The costs for product introduction and free tasting are one-time, whereas the costs for flyers and internet marketing are cumulative. Loyal retailers, on the other hand, will compete seasonally, and loyalty program fees will be incurred on an annual basis. Table 11 Marketing and Selling Expenses Marketing Strategy Selling Expenses Flyers ₱ 2,000.00 Free Taste 1,000.00 Internet Marketing 2,000.00 Customer Loyalty Program 2,000.00 Product Launching 2,000.00 Total Marketing and Selling Expenses ₱ 9,000.00 26 BATANGAS STATE UNIVERSITY Graduate School Chapter 3 PRODUCTION/ OPERATION PLAN This research aids in the selection of the most effective technique, methods, and designs to be employed, the work environment, plant layout, job design, kind of machine and equipment, materials, and other associated technical elements in order to minimize costs and maximize profits for the firm. Technical or Production Description Chicken Chips are simple to make, but it takes time to mince the chicken breasts and mix the ingredients. The preparation of all materials is the first step in the production of Chicken Chips. The proponent’s initial step is to identify the finest sources of components and supplies. This should emphasize the necessity of the firm obtaining high-quality raw materials in order to provide high-quality products to its consumers. The materials in making Chicken Chips are chicken breasts, black pepper, salt, garlic powder, paprika powder, rolling pin, chopping board, bowl, knife, baking paper, cling film, oven, and spatula. The proponent then continues to produce the goods at the desired site, Lipa City Public Market. In order to meet the demand of chicken chips for the day and it will continue until the closing of the store. 27 BATANGAS STATE UNIVERSITY Graduate School Production and Operation Process The business’s production process is critical, and it should be concentrated on one specific process in order for the organization to reduce costs and increase income. The manufacturing flow is the step-by-step method of making chicken chips. It should be detailed, including the number of personnel for each procedure. (1) Preparation of Tools and Cleaning the area Cleaning and sanitizing the tools and area of production comes first for the making of chicken chips. It is crucial if we are also concerned about the customers’ safety and health. To avoid undesirable aromas, tastes, and a poor end product, the components should be fresh. The items should be organized in each storage area to eliminate confusion and to make them easier to discover and notice. This level is expected to complete in ten (10) minutes. (2) Mincing the Chicken Slice chicken breast weighing 4 kilograms into small pieces with a knife on a chopping board and put in a meat grinder and continue mincing chicken breasts into fine texture. This stage is predicted to take 1 hour to complete before mixing the ingredients. 28 BATANGAS STATE UNIVERSITY Graduate School (3) Mixing the Ingredients In a mixing bowl, put the minced chicken breasts. Mix the seasonings into the minced chicken breasts using a spatula. This step is anticipated to take 30 minutes to complete. (4) Flattening the Mixture Place the mixture on a baking sheet or paper and cover with cling film to let the meat flatten. Using a rolling pin, flatten the mixture. The ingredients should be gently flattened to create a very thin, crispy, and crunchy layer. Flatten the meat till you can see the light through it. This stage takes 1 hour. (5) Baking the Mixture Bake the mixture in a pre-heated oven for 30 minutes at 150 degrees Celsius and wait. (6) Cutting the Chicken Chips Cut the baked chicken chips into pieces as like as Mang Juan chips size and expected to finish within 15 minutes. (7) Quality Inspection It is necessary for the business to have a quality to the finished products to avoid customers complain. These are the quality measures of Chicken Chips: a) The products should be in desired weight. b) There’s no unpleasant aroma. c) The products are cooked-well. 29 BATANGAS STATE UNIVERSITY Graduate School This stage takes 15 minutes to complete. (9) Packing Weigh the chicken chips in a zip lock bag and make sure it is 14 grams to avoid losses. This step is expected to be done in 1 hour. (11) Recording and Tallying Keep track of the sales and compare them to remaining inventory. This should be done on a regular basis to monitor product’s sales and inventories. (12) Delivery The worker will deliver the products to the retailers and lasts for 50 minutes every day. (13) Cleaning and closing the store The store will be cleaned by workers before it closed. Figure show the process of making a chicken chips from preparation of materilas until cleaning the materials and equipment used in the produciton. It is very crucial if the materials used that day is already spotless. The duration in the flowchart is already included for us to easy monitor the time of each process and to avoid delay and complaints of retailers. 30 BATANGAS STATE UNIVERSITY Graduate School FLOW CHART Figure 6 Flow Chart 31 BATANGAS STATE UNIVERSITY Graduate School Starting Time 0730 0741 0841 0911 1011 1240 1411 1426 1441 1541 1601 1601 Table 12 Time and Motion Study Manufacturing Process Duration Clean and sanitize the area Mincing the Chicken Mixing the ingredients Flattening the mixture Baking the mixture LUNCH Baking the mixture Cutting the Chips Quality Inspection Packing Recording and Tallying Delivery (TTh) Cleaning and closing the store Ending Time 10 mins 1 hour 30 mins 1 hour 1.5 hours 0740 0840 0910 1010 1140 1.5 hours 15 mins 15 mins 1 hour 20 mins 50 mins 1 hour 1410 1425 1440 1540 1600 1650 1700 Production Schedule The production functions as a guiding tool for both the workers and the owner in making required changes to efficient and valuable work. It specifies the number of outputs required to achieve the estimated first goal market share. Taki Foods Manufacturing production schedule shows the number of units that will be produced by the workers on a daily, weekly, monthly and annual basis. It also determined the number of Chicken Chips to be produced in the next five years using the demand information of chips. 32 BATANGAS STATE UNIVERSITY Graduate School Year 2022 2023 2024 2025 2026 Table 13 Production Schedule (per 14 grams) Daily Weekly Monthly 400 2,400 9,600 420 2,520 10,080 441 2,646 10,584 464 2,784 11,136 487 2,918 11,668 Annually 115,200 138,240 165,888 199,066 238,879 The table shows that the business is targeting to sell 400 packs of 14 grams daily. The owner of the company aims to increase its production by 5% yearly. Labor Requirement Labor is the lifeblood of every company. It is thought to be a crucial aspect in maintaining a competitive edge and establishing a product that is not just good but also high-quality. Workers in the production industry must have the essential abilities. To execute their work, they must be interested and patient. Their capacity must be sufficient to match the required production. To optimize personnel capabilities, the owner would recruit two workers, a crew and a delivery guy, who would be trained in all job duties. The two employees will be on the job for eight hours. These personnel will ensure that the product is of high quality, and the owner will be liable for the product’s quality check. From Mondays through Saturdays, the company is open for business for 288 days. 33 BATANGAS STATE UNIVERSITY Graduate School Designation General Manager/ Bookkeeper Crew 1 Crew 2 Total Table 14 Salaries and Wages Rate Monthly ₱ 15,000.00 ₱ 373.00/ day 373.00/ day 8,952.00 8,952.00 Annually ₱ 180, 000.00 107, 424.00 107, 424.00 ₱ 394, 848.00 Machinery or Equipment Requirement The conversion of raw materials into the intended finished product necessitates the use of factory machinery or equipment. For continuous production activities, these are required. These are required to improve the operation’s efficiency and effectiveness. Taki Foods has made use of factory equipment, which is stated in the tables below along with the price and quantity. Factory Requirement The following items are the factory equipment needed to operate and facilitate the manufacturing process of the proposed product. Table 15 Factory Equipment (Annually) Description Quantity Unit Cost Microwave Oven 2 ₱ 18,900.00/ pc Air conditioner 1 HP (split type) 1 18,995.00/ pc Meat Grinder 1 1,575.00/ pc Weighing Scale 2 199.00/ pc Total Total Cost ₱ 37,800.00 18,995.00 1,575.00 398.00 ₱ 58,768.00 Sources: Shopee Mall and LazMall, Nov 2021 Factory equipment is expected to have a useful life of 5 to 15 years as shown in Table 15. The company will depreciate using the straight-line approach. The digital weighing scale has a maximum capacity of 3 kilograms. 34 BATANGAS STATE UNIVERSITY Graduate School Table 16 Factory Furniture and Fixtures (Annually) Description Quantity Unit Cost Stainless Working Table 2 ₱ 4,999.00/ pc Exhaust Ceiling/ Wall Fan 2 1,199.00/ pc Wall Clock 1 399.00/ pc Total Total Cost ₱ 9,998.00 2,398.00 399.00 ₱ 12,795.00 Sources: LazMall and Shopee, Nov 2021 The table 16 shows the annual prices of factory furniture and fixture amounting ₱12, 795.00 and has 5 years useful life. The organization employs an exhaust ceiling/wall fan to provide a better working environment by removing moisture and aromas from the space. Factory tools and supplies will also be required for use in production since it is critical for the operation to ensure the quality of the product. Description Knife (Master Z) Chopping Board Seasoning Rack Rolling Pin Cling wrap Stainless Mixing Bowl Baking paper (10 meters) Measuring Spoon Total Table 17 Factory Tools Quantity Unit Cost 3 ₱ 499.75/ pc 2 449.00/ pc 4 198.00/ set 2 389.00/ pc 4 169.00/ roll 4 139.00/ pc 4 49.00/ roll 2 138.00/ set Total Cost ₱ 1,499.25 898.00 792.00 778.00 676.00 556.00 396.00 376.00 ₱ 5,971.25 Sources: Shopee and LazMall, Nov 2021 Table 17 shows that the knife has the highest total cost because of the quality of the knife and it is stainless to avoid rust. 35 BATANGAS STATE UNIVERSITY Graduate School Table 18 Factory Supplies Quantity Unit Cost 20 ₱ 20.00/ pc 10 30.00/ pc 6 35.00/ pc 3 8.00/ pack Description Mouth mask Aprons Hair net Plastic Gloves Total Total Cost ₱ 400.00 300.00 210.00 24.00 ₱ 934.00 Sources: Shopee and LazMall, Nov 2021 Table 18 illustrates that the number of mouth masks is more than any other manufacturing supply because the business is concerned about the safety of retailers and end-users. Aside from that, plastic gloves and a hair net have been added to the supplies to ensure everyone's safety. Office Equipment and Supplies Office equipment is important for businesses since it aids in the recording and filing of paperwork, as well as the verification of important information. These include the office equipment needed for the business, such as a laptop, calculator, cash box, smartphone, and as well as the goods. Description File drawer Office Table Office chair Total Table 19 Office Furniture and Fixture Quantity Unit Cost 1 ₱ 2,500.00/ pc 1 2,000.00/ pc 1 850.00/ pc Total Cost ₱ 2,500.00 2,000.00 850.00 ₱ 5,350.00 Sources: Home Depot (Fiesta Mall), Nov. 2021 Table 19 shows the Office Furnitures and Fixtures required to run the business. The previously specified office furniture and fittings will be put in the 36 BATANGAS STATE UNIVERSITY Graduate School office. It also ensures the safety of the papers for record keeping and the storage of other legal documents as needed. Description Laptop (core i5) Printer (with scanner) Mobile phone Ordinary chair Total Table 20 Office Equipment Quantity Unit Cost 1 ₱ 24,000.00/ pc 1 10,500.00/ pc 2 2,000.00/ pc 2 210.00/ pc Total Cost ₱ 24,000.00 10,500.00 4,000.00 420.00 ₱ 38,920.00 Sources: Shopee and SM Cyberzone, Nov. 2021 Table 20 displays the office equipment necessary for the planned business's functioning. The company employs a laptop with a core i5 processor and a minimum of 256 gigabytes of solid-state drive (SSD) to provide rapid and reliable data and monitoring, as well as to eliminate lagging. Description Calculator Puncher Scissor Stapler Total Table 21 Office Tools Quantity Unit Cost 2 ₱ 75.00/ pc 1 73.00/ pc 1 50.00/ pc 1 44.00/ pc Total Cost ₱ 150.00 73.00 50.00 44.00 ₱ 317.00 Sources: LazMall, Shopee and Golden Formosa Trading, Nov. 2021 Table 21 lists the office supplies required for the process. Though they may not be vital to the business's overall success, they are critical to its day-today operations. Their uses include office tasks such as document filing. 37 BATANGAS STATE UNIVERSITY Graduate School Description Ink Epson L3110 Columnar Book/ Journal Bond paper (long- 70 gsm) Bond paper (short- 70 gsm) Marker Paper Rack (vertical) Scotch tape (1 inch) Binder clips (medium) Puncher Envelope (brown) Ballpen Stapler Paper Clips Staple wire Fastener Total Table 22 Office Supplies Quantity Unit Cost 4 ₱ 57.00/ pc 2 100.00/ pc 1 195.00/ ream 1 174.00/ ream 3 37.00/ pc 2 106.00/ pc 1 105.00/ pc 1 75.00/ box 1 73.00/ pc 10 5.00/ pc 1 48.00/ box 1 44.00/ pc 1 40.00/ box 1 39.00/ box 12 1.00/ pc Total Cost ₱ 228.00 200.00 195.00 174.00 148.00 106.00 105.00 75.00 73.00 50.00 48.00 44.00 40.00 39.00 12.00 ₱ 1,537.00 Sources: Shopee Mall and National Bookstore, Nov. 2021 Table 22 illustrates Taki Foods Manufacturing’s office supplies for a onemonth operation. The company will utilize these products on a regular basis for written communications, record keeping, and data storage. To preserve the high quality of the items, delivery equipment is required to distribute them to shops. Description Delivery Box Total Table 23 Delivery Equipment Quantity Unit Cost 1 ₱ 950.00/ pc Total Cost ₱ 950.00 ₱ 950.00 Sources: Shopee Mall, Nov. 2021 The following are the maintenance supplies needed to maintain cleanliness and orderliness in the manufacturing environment for good maintenance and sanitation. The following goods will be purchased to create an 38 BATANGAS STATE UNIVERSITY Graduate School appropriate and orderly interior atmosphere for a comfortable working environment. Table 24 Maintenance Supply (Annually) Description Quantity Unit Cost Dishwashing liquid (970 ml) 15 ₱ 100.00/ pc Fire Extinguisher (10 lbs.) 1 1,250.00/ pc Insecticide 2 250.00/ pc Broom with dust pan 1 461.00/ pc Mop 1 360.00/ pc Pail with dipper 1 199.00/ pc Sponge w/ Scotch Bright 3 64.00/ pc Doormat 4 25.00/ pc Dust Bin 3 45.00/ pc Rags 10 5.00/ pc Total Total Cost ₱ 1,500.00 1,250.00 500.00 461.00 360.00 199.00 192.00 100.00 135.00 50.00 ₱ 4,747.00 Sources: Shopee and LazMall, Nov. 2021 Raw Materials Requirements The raw materials and supplies required for the manufacturing of Chicken Chips are listed below. Material costs include both direct materials and indirect materials. These are readily accessible and may be obtained in Lipa City, Batangas. The supply of the product's major ingredient, chicken breasts, came mostly from Lipa Public Market and other small local farmers in the region of the facility location. The chicken breasts will be delivered by the suppliers to the business location. 39 BATANGAS STATE UNIVERSITY Graduate School Description Chicken breasts Paprika Powder Garlic Powder Black Pepper Salt Total Table 25 Direct Materials (Annually) Quantity Unit Cost 1,152 kilos ₱ 150.00 284 kilos 480.00 284 kilos 200.00 142 kilos 150.00 284 kilos 50.00 Total Cost ₱ 172,800.00 136,029.00 56,679.00 21,255.00 14,170.00 ₱ 400,933.00 Sources: Lipa Public Market and Shopee, Nov. 2021 Table 25 shows the computation for direct materials for annual operation of the business entity including zip lock. The chicken breasts deliver to the business location by our partner suppliers before the start of the operation. Description Zip lock (9x14) with stand Label Total Table 26 Indirect Materials Quantity Unit Cost 1,152 packs ₱ 118.00 115,200 pcs. .75 Total Cost ₱ 135,936.00 86,400.00 ₱ 222,336.00 Sources: G&J Graphics and Design and Shopee, Nov. 2021 Table 26 shows the indirect items that will be utilized, such as the 9x14 zip lock for packing and label is an indirect material that carries the brand name, company name and logo, business location, expiration date, and other relevant information about the goods. Utilities Utilities to be utilized have also been highlighted in order for the firm to run more efficiently. Every day, the company consumed energy, water, the phone, and the internet. 40 BATANGAS STATE UNIVERSITY Graduate School Description Electricity Water Telecommunication Total Table 27 Utilities Expense Company’s Name Batelec II MLWD Smart Total Cost ₱ 36,000.00 3,600.00 7,200.00 ₱ 46,800.00 Sources: MLWD, BATELEC II and Smart Comm., Nov. 2021 The yearly usage of utilities and service providers is shown in Table 24. The power cost is ₱ 3,000.00 per month, the water bill is ₱ 300.00, and the corporation pays ₱ 300.00 per plan for a total of ₱ 3,600.00 per plan for the postpaid plan. Table 28 Delivery Expense Description Delivery Expense per week Number of Months Annual Delivery Expense Amount ₱ 1,200.00 12 ₱ 14,400.00 Table 28 shows the company's shipping costs. This cost is incurred in order to transport the merchandise to the merchants. It is the provision for fuel for the motorcycle to be used in carrying the goods to retailers. Table 29 shows the rent expense for leasing and building costs ₱ 5,000.00 per month. The rental shall be paid every 1st Monday of the month without prior demand. Table 29 Rent Expense Description Rent Expense per Month Number of Months Annual Rent Expense Amount ₱ 5,000.00 12 ₱ 60,000.00 41 BATANGAS STATE UNIVERSITY Graduate School Plant/ Factory Location The proponent has picked the plant site carefully in order to be a competitive enterprise. Antipolo del Sur, Lipa City, will be the production location. The proponent picked the area because of its geographical position, as well as other reasons such as transportation, facility availability such as school and establishments, existing robust competition, and the availability of materials and utilities required for the product. Figure 7 Plant Location Plant Layout Plant layout is a strategy for maximizing the use of manufacturing facilities by arranging equipment, materials, workers, storage space, and other supporting services in the most efficient and cost-effective manner possible within available floor space. 42 BATANGAS STATE UNIVERSITY Graduate School The factory is 5x4 meters and has a total space of 20 square meters, including the tiny office, which is sufficient to manufacture the proposed product. The building features permanent cabinets large enough to store spices as well as various office supplies. A kitchen sink is also available for washing. ENTRANCE MINI STORE/ MINI OFFICE EXIT Figure 8 Plant Layout The plant layout also considered the safety of everyone who will enter the facility. It has safety measures like fire exit/ exit which allow the people to easily go out in case of emergency. There are also a proper ventilation and wellorganized flow of raw of materials to finished goods. 43 BATANGAS STATE UNIVERSITY Graduate School Waste Disposal As consumers grow more conscious of the negative repercussions of trash, there is a lot of waste and a lot of money going into plastics that are only used once. To save expenses and improve the business's image in order to attract additional shops, Chicken Chips will provide a loyalty program to clients in which they may obtain magic mugs with their store name and receive a 10% discount on all orders. Customers should be educated about the dangers of waste to the environment, and shopkeepers should record a video and submit it to Taki Foods' Facebook page as evidence. Baking paper and cling wrap are the store's major wastes. It should be properly disposed of in the garbage can, however it should be maintained inside the store before being disposed of in the right collecting location. Because the barangay has a garbage collector, companies must stick to the timetable and deposit waste in the appropriate location for collection. Trash bin will be placed in the area. The firm will assist to reduce environmental consequences by reducing trash, but this will not increase the company's popularity. Quality Control System Quality control is critical for growing a successful organization that provides products that meet or exceed expectations. To guarantee that manufactured items fulfill a set of predefined quality standards, the owner will 44 BATANGAS STATE UNIVERSITY Graduate School verify raw materials and packaging from suppliers throughout each transaction. This involves the following: ➢ This ensures that providers give a satisfactory service to the company. ➢ Workers will clean and sanitize the factory in order to enhance health and hygiene and encourage sustainable development because the company is in the food sector. ➢ Make sure that the products are in right weight and the ordered should delivered on time. Production Cost The total production cost year is calculated by multiplying the cost of production per unit by the total items produced in one year, which is 115,200 packs. The sum is made up of the direct material costs, direct labor costs, and manufacturing overhead costs. Table 30 Taki Foods Manufacturing Total Project Cost - for Two Months Category Amount Fixed Assets Office Equipment and Furniture Factory Machinery and Equipment Leasehold Improvements-Factory Total Working Capital for One Month Direct Materials 45 Total 44,270.00 58,768.00 60,000.00 163,038.00 66,822.17 BATANGAS STATE UNIVERSITY Graduate School Direct Labor Factory Overhead Indirect Materials Rent Expense Utilities Expense Maintenance Expense Supplies – Factory SSS, Philhealth & Pag-ibig Contributions Total Administrative Expenses Administrators' Salary SSS, Philhealth & Pag-ibig Contributions Supplies – Office Legal Fees and Licenses Total Selling Expense Delivery Expense Advertising Expense Total Grand Total Cash Contingencies Total Project Costs 35,808.00 37,056.00 10,000.00 7,800.00 4,747.00 6,905.25 7,225.68 73,733.93 30,000.00 5,960.00 (3,873.00) 6,895.00 38,982.00 2,400.00 9,000.00 11,400.00 389,784.10 10,215.90 400,000.00 46 BATANGAS STATE UNIVERSITY Graduate School Chapter 4 ORGANIZATIONAL PLAN Choosing the proper form of ownership is one of the most important decisions to make before starting a business. Because each type of business ownership has its own set of characteristics, the success of the enterprise may hinge on the suitability of the form chosen to carry it out. If a company is to achieve its goals on time and within budget, it must be efficiently managed. A successful firm must be built on a well-thought-out strategy. Management must be capable of expanding, as well as efficient, effective, and intelligent. This research reveals the organizational structure, corporate ownership, required skills of personnel based on their jobs and responsibilities, as well as the legal criteria that the company must meet. Legal Form of Business This project's suggested business structure is sole proprietorship. Mr. Mark L. de Ocampo, who possesses a Master's Degree in Business Administration from Batangas State University, is the firm's owner and bookkeeper. The firm's losses and debts are personally liable to the owner. This means that if a creditor, such as a supplier, a lender, or a landlord, cannot be paid, the creditor can legally seize the business's assets. All gains, on the other hand, are the owner's property after taxes are paid. According to the legislation, the company must adhere to specific regulations. These conditions must be met 47 BATANGAS STATE UNIVERSITY Graduate School Regardless of job description or title of all employees, they are expected to conduct themselves the following policies listed below: in order for the business to begin operations. The government must, evaluate, and analyze the paper. Organizational Policies Organizational structure improves as the organization grows and changes over time. A business employs skilled and qualified workers for specific jobs to help the company achieve its goals. This increases the business potential to grow in the following years of operation. In line with this, the punctuality of employees, as well as their supervisors, is constantly monitored and maintained. Confidentiality should be strictly enforced, especially by those who have access to confidential information about the business. A valid receipt is required for all transactions in order to have supporting documents and all transactions must be recorded even in the smallest detail. General Policies- Employees 1. Employees will work eight hours a day from 7:30 am to 4:30 pm for worker 1 and 8:00 am to 5:00 pm for worker 2 and the general should be at store form 7:30 am to 5:00 pm, (Monday to Saturday) and will be given onehour lunch break. 48 BATANGAS STATE UNIVERSITY Graduate School 2. Employees are expected to be at working area five (5) minutes before the working hours otherwise, tardiness will be penalized through salary deduction. 3. Employees are required to wear proper uniform (with face mask, hairnet and apron). 4. Employees has equal rights and opportunity. 5. Employees are not allowed to smoke during working hours. 6. Employees are not allowed to work under the influence of alcohol. 7. Employees should maintain the cleanliness of the production area. 8. Employees are strictly prohibited to loiter during working hours. 9. A leave of absence must be filed by the employees two (2) days before; absence without filed official leave will be considered void. In case of emergency, the employees are expected to inform the manager through phone calls or text messages and must immediately report to work after the incident. Supplier Policies 1. Delivery of raw and packaging materials should be on time, free from any defects and must conform with the specifications agreed upon. 2. Confidential information about suppliers will be kept secured 3. Purchases will be every day to secure the freshness of the goods and on cash basis. 49 BATANGAS STATE UNIVERSITY Graduate School Retailer Policies 1. The company will ensure the security and confidentiality of retailer’s information. 2. Damaged products are not refundable but it can be replaced. 3. Payment scheme will be on a cash basis and retailers will be given 15 days grace period for their credit. 4. Delivery of the products will be done by the company and in the event that damage has occurred during the delivery it is advised that the retailers should contact the office within the day otherwise the company will not be liable to refund or supply with a replacement. Organizational Structure Figure 9 Organizational Structure 50 BATANGAS STATE UNIVERSITY Graduate School Individual involvement in the accomplishment of the company's aims and objectives is facilitated by the organizational structure. The organizational structure dictates how and to what degree authority, duties, and roles are managed, coordinated, and delegated, as well as how significant information moves across management levels. The company's business structure will be focused on line organization. The general manager will have direct control and accountability over the operations that connect their functional area. It is a simple organization in which the general manager has direct control and power over the employees under his supervision. Taki Foods Manufacturing is made up of a general manager/ bookkeeper who will be held liable for handling the business's affairs, as well as two (2) employees. Qualifications of Officers Employees are the most important resources for starting a business because without employees the business cannot function effectively. Listed below are employee requirements, as well as job specification and job descriptions required by the business. Job Description Job descriptions are information that sets out the responsibilities and duties of every employee. Each employee has his or her own job description and varies depending on the position in the business. 51 BATANGAS STATE UNIVERSITY Graduate School General Manager/ Bookkeeper The General Manager is held responsible to do the following tasks and duties: • Plans, organize, direct and control the entire operation to ensure effective and efficient quality is attained; • Monitors the over-all progress; • Maintains the quality service by establishing and enforcing business standards; • Transact business with the retailers and customers; • Keeps and checks the company’s records; • Formulates and coordinates marketing promotional strategies; • Creates new ideas and product innovation • Responsible for the preparation of all financial reports to determine business growth, solvency and profitability; • Records all daily financial/ business transactions (sales and expenses); • Performs banking transactions and process payment of all business obligations. • Keeps all financial information/ book of accounts of the business with confidentiality. 52 BATANGAS STATE UNIVERSITY Graduate School Workers Employees are responsible for the following functions: • in-charge of the product process from the preparation of raw materials, preparation of tools and equipment and packaging and storing of the finished product; • ensures the quality of the product manufactured such as consistency, textures and presentation; • maintaining the production area clean and cleaning of tools and equipment; • report to the management all issues and problems regarding the production aspect. Job Specification Job specification provides the detailed information, knowledge, education, skills, and experience required to perform a job. It is also a statement used in the recruitment and selection of employees for a particular job as it reflects the descriptive qualities required for employment. General Manager/ Bookkeeper • One of the business partners; • A college graduate of any 4-year business related courses; • Must possess good oral and written communication skills and equipped with basic financial management; 53 BATANGAS STATE UNIVERSITY Graduate School • Must be result-oriented, responsible and has good leadership skills; • Must be responsible, trustworthy and physically and mentally fit; • Must be computer literate Workers • Male or Female and must be at least 18 years old; • With or without working experience; • Must be hardworking, responsible, honest and are eager to learn; • Are able to read and write; • Must possess good moral character; • Must be physically and mentally fit Gantt Chart of Activities Figure present the Gantt chart of projected summary plan of activities for the establishment of Chicken Chips. The establishment of Chicken Chips had undergone four (4) phases, the planning, recruitment and training, design and implementation. Under the Phase 1: Planning, environmental scanning or choosing the business location followed by the review of possibility of the project to be feasible. Then followed by drafting of Articles of Partnership and sourcing of capital investment from the business partners. 54 BATANGAS STATE UNIVERSITY Graduate School Phase 2: Recruitment and Training activities which includes hiring and training of qualified workers as well as searching for a supplier for its day-to-day operations. Phase 3: Design stage, it involves site renovation and preparation of the working area, purchase of the necessary tools and supplies, furniture and fixtures, machines and equipment and the raw materials to be used in the business operations. Then Phase 4: Implementation is the last phase; this is where the business will be starting its marketing and promotional campaign before the formal start-up of its business operation. Figure 10 Gantt Chart Phase / Stage Phase 1: Planning Phase 2: Recruitme nt and Training Phase 3: Design Phase 4: Implement ation Activities Environmental Scanning Reviewing of Business Plan Hiring of Workers Training of Hired Workers Search for Suppliers Factory Site Renovation Setting-Up of Distribution Site Purchase of Machines and Equipment Purchase and set up of Furnitures Purchase of Raw Materials Preliminary Campaign Formal Business Start Up JANUARY 2022 W W W W 1 2 3 4 FEBRUARY 2022 W W W W 1 2 3 4 55 MARCH 2022 W W W W 1 2 3 4 APRIL 2022 W W W W 1 2 3 4 W 1 MAY 2022 W W W 2 3 4 BATANGAS STATE UNIVERSITY Graduate School Administrative Expense This section sets out the significant costs that a company should incur before and during its day-to-day operations. Legal Requirements The company must comply with the following requirements in order to obtain its official title. 1. The Securities and Exchange Commission's registration. Participation in the business is needed as a requirement of the license. The corporate tax obligation is thus inescapable, and the public may more precisely evaluate their membership and finances before dealing with them. Co-partnership articles should be submitted to the SEC in addition to registration. 2. Application of the Mayor’s / Business Permit shall be accompanied by the following: a. Location sketch of the business; b. Sworn capital investment in the owners; c. Certificate attesting to the tax or free exemption, if the business is exempted or free from payment of tax; d. Certificate from the tax officer in charge of zoning division that the location of the proposed business is in accordance with zoning rules and regulation; 56 BATANGAS STATE UNIVERSITY Graduate School e. Certificate of Non-Delinquency or Tax clearance, showing that the operation has paid all its tax obligations in the city; f. Two passport size pictures in case of partnerships, the picture of general manager; g. Presentation of receipts for the payment of professional tax, occupation fee as the case maybe if the application is liable thereof; h. Lease contract if the building is rented; and i. Barangay clearance of the business operation. For Mayor’s / Business Permit, the requirements are: A. Accomplished application form for new/renewal; and B. Follow up the application for the following offices stationed at the Business One Stop Shop: • Issuance of Community Tax Certificate at the City Treasurer’s Office; • City Engineering Office • City Health Office • Business Permit and License Fees, and Assessment of Business Taxes, fees and charges • Payment of the applicant for the corresponding tax at the Office of the City Treasurer • Mayor’s / Business Permit certificate from City Mayor Office 57 BATANGAS STATE UNIVERSITY Graduate School • Endorsements of processed application of Mayor’s / Business Permit certificate in the Office of the City Mayor for proper action; • Releasing of approved Mayor’s / Business Permit 3. Registration in Bureau of Internal Revenue (BIR) needs the following procedure and requirements: a. Get Tax Payer Identification Number (TIN); b. Secure BIR Form Requirements: • Mayor’s Permit (photocopy) • Capital Investment (notarized) c. Submit the requirements and apply as VAT or Non-VAT Tax Payer d. Wait for one or two weeks for the release of the certificate. 4. Application for the Social Security System and Phil Health. It is important to secure the pension fund for the employer or employees. • Standard Petition Form, duly notarized; • 1x1 picture of Applicant (owner, General Manager); a. For Corporation / Partnership photocopy of registration with SEC and articles of Incorporation and photocopy of DTI registrar of Business name; b. Mayor’s /Business Permit reflecting plant assets; c. Itemized fixed assets and operating capitals, duly notarized; d. Floor plan of working area with complete dimension in meters; 58 BATANGAS STATE UNIVERSITY Graduate School e. Location plant size; f. Notarized contract of lease of building and warehouse; g. List of products to be manufactured; h. List of technical and non-technical personnel and scholastic attainment; i. If licensed, submit a duly notarized license agreement. Additional Requirement: • For manufacturers, floor plan of working area with complete dimension in meters 5. Registration of BMBE with the Department of Trade and Industry (DTI). The following are the requirements needed in the registration: a. Duly filed out application form (BMBE Form 01) in triplicate, signed by the owner or manager of the entity applying for registration; and; b. Three passport size identification pictures; c. Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission, SEC registration in the case of corporation, partnership or association; Cooperative Development Authority, CDA registration in the case of cooperative; Department of Trade and Industry, DTI business name registration in the case of sole proprietorship); d. Tax payer identification number (TIN); e. Certificate of registration from Bureau of Internal Revenue; 59 BATANGAS STATE UNIVERSITY Graduate School f. Mayor's /Business Permit or City / Municipal Permit; g. Sworn affidavit executed by the sole proprietor or the president of the enterprise, as the case may be, that the enterprise is barangay based and micro-business in nature and scope; h. Sworn statement of assets and liabilities supported by pertinent documents; i. Pictures of the place of business and its assets, other than cash, receivables and intangibles; j. Copy of loan contract/s, if any, and duly notarized; k. Certification of amortization payments on the loan; and l. Income tax return (ITR) Technical Requirements Two (2) copies of the following: a. Organizational chart, including qualifications of key personnel in the production of quality control; b. List of production and equipment with specification; c. List of quality control facilities and equipment (if any); d. Flow chart of manufacturing process with emphasis on identification of critical points; e. Detailed description of manufacturing procedures enforced in the plant; 60 BATANGAS STATE UNIVERSITY Graduate School f. Quality control procedures enforced in plant; g. Certification with current laboratory analysis (from recognized laboratory) • Source water: For plant outside Metro Manila, from City / Municipal Health / Sanitary Engineer • Finished product compliance with standards • Suitability of packaging materials 1. Product Recall Procedure 2. Name and address of supplier of raw and packaging materials. Figure presents the necessary business fee requirements in putting up a business. National Government fees are fixed for five years while all local fees are renewable every year and increasing based on the net income of the enterprise per year. Table 31 Legal Documents and Fees DTI Certificate of Registration (Regional Level) Barangay Business Clearance Mayor's Permit Application Form Sanitary Permit Health Permit Zoning Fee MFMSW Business Plat and Sticker Fire Safety Inspection Fee (10% of Total Fee for LGU) Certificate of Registration (BIR) Total Taxes and Licenses Fees 61 1000 500 3500 20 150 180 100 300 200 445 500 6,895.00 BATANGAS STATE UNIVERSITY Graduate School Chapter 5 FINANCIAL STUDY This chapter identifies the project's profitability level, which is generally defined as the ratio of net income after taxes to total investment. It also provides a detailed examination of all of the company's financial data. It includes detailed information on the entire project cost, initial capital requirements, funding sources, financial statements, and financial analysis. This analysis is most valuable to the proponents since it will determine whether or not the planned firm will be lucrative. This research was used to examine the financial health and performance of the company. Objectives of the study The proponent attempt to determine the feasibility of Taki Foods Manufacturing to assess financing requirements, financial practicability, company’s position and performance for five-year operation. Specifically, it aims to attain the following: 1. to recognize the initial capital needed by the proponents to finance the funds needed in the formation of the firm; 2. to provide financial assumptions conduit in the preparation of the financial statements; 3. to use financial mix ratios, cost volume profit analysis and capital budgeting in determining the activity, profitability, liquidity and solvency of the firm; 62 BATANGAS STATE UNIVERSITY Graduate School 4. to present the financial statements of the firm which reflect their financial position, success of operations, policies and strategies of management and insights of future performance; and 5. to predict the potential of Taki Foods Manufacturing’s potential to generate income. Total Projected Cost The final cost of the project will determine the amount of money required by partners to present the company. A clear presentation of the predicted expenditure will lead to an accurate recognition of the assets required in the company’s adequate setup Investments will be made on a cash basis, with debt used sparingly to fund the entire project cost. It is a basic demand of the owner to have adequate capital to offer the necessities for the firm's smooth functioning. Total Project Cost - for Two Month Category Amount Fixed Assets Office Equipment and Furniture Factory Machinery and Equipment Leasehold Improvements-Factory Total Working Capital for One Month Direct Materials Direct Labor Factory Overhead Indirect Materials Rent Expense Total 44,270.00 58,768.00 60,000.00 163,038.00 66,822.17 35,808.00 37,056.00 10,000.00 63 BATANGAS STATE UNIVERSITY Graduate School Utilities Expense Maintenance Expense Supplies – Factory SSS, Philhealth & Pag-ibig Contributions Total Administrative Expenses Administrators' Salary SSS, Philhealth & Pag-ibig Contributions Supplies – Office Legal Fees and Licenses Total Selling Expense Delivery Expense Advertising Expense Total Grand Total Cash Contingencies Total Project Costs 7,800.00 4,747.00 6,905.25 7,225.68 73,733.93 30,000.00 5,960.00 (3,873.00) 6,895.00 38,982.00 2,400.00 9,000.00 11,400.00 389,784.10 10,215.90 400,000.00 Sources of Financing The identification of potential sources of funding is a critical component of the feasibility study. The owner shall finance the business amounting 350,000.00. This will be used to fund the establishment of the business and the smooth functioning of the firm. All transaction is cash basis and for the future plan, the business will apply loans for expansion purposes. 64 BATANGAS STATE UNIVERSITY Graduate School Financial Assumptions The identification of prospective financing sources is an essential component of the feasibility study. The commitment of each partner's money, property, or industry to a common fund is viewed as essential for the formation of a partnership. This will be utilized to fund the formation of the company and its successful operation. 1. Initial Capital Requirement: The business has an initial capital of ₱ 350,000.00. 2. Working days: There will be eight (8) hours a day, six (6) working days in a week, and an average of twenty-four (24) days in a month with an average of 288 days in a year. 3. Accounting Reporting Period A calendar year of business starting on January 2022 would be implemented. 4. Production Capacity: The firm can produce 115,200 pieces of finished product on its first year of its operation. Production will increase based on 5% growth rate to individual population from the second year and to the succeeding years. 5. Purchases (Direct Materials and Indirect Materials): 65 BATANGAS STATE UNIVERSITY Graduate School a. The increase in volume of purchases will depend in the increase on production per year. b. Purchases of direct and indirect materials are on cash basis only. c. Cost of direct materials is inclusive of freight-in. 6. Sales: a. The initial selling price per piece of the product to its retailers will be ₱ 12.44 per 14 grams inclusive of VAT as presented on market study. There will be an increase in selling price for the succeeding years. b. 99% of sales are on cash the remaining 5% will be under consignment of goods. 7. Inventory: a. There will be 1% of ending inventory from total goods available for sale. b. There will be no work-in-process inventory. 8. Utilities Expense: a. There will be an increase in utilities expense in the succeeding years. b. Utilities expense will be allocated 100% to factory. 9. Labor and Employee Benefits: a. There will be an increase in labor cost since the company is also increasing its price and sales. 66 BATANGAS STATE UNIVERSITY Graduate School b. There will be two workers for direct labor and one indirect labor given that the general manager acts also as a bookkeeper. c. Labor rate for the workers is ₱ 373.00 per day and ₱ 15,000.00 monthly for General Manager/ Bookkeeper. d. Total annual benefits will include the SSS, PAG-IBIG, and PhilHealth. 10. Property, Plant and Equipment: a. Acquisition of equipment, furniture and fixtures is on a cash basis. No additional machinery would be purchased for the first five years of operation. b. The firm will use the straight-line method of depreciation with no residual value. c. All property, plant and equipment will have 10 years useful life which is equivalent to its lease term. 11. Delivery Expense: a. Delivery expense will amount to ₱ 14,400.00 per year. The business’s allotted budget for delivery per week is ₱ 300.00 for the delivery of finished goods to the retailers. 12. Equity: a. The owner will have the full access for withdrawal or company decision when it comes to financial matters since it is sole proprietorship. 67 BATANGAS STATE UNIVERSITY Graduate School 13. Growth Rate: a. Growth rate of 4% is computed by the proponents from the increase in household population in given by the City Planning and Development Office. 14. Inflation Rate: a. Inflation rate as peg at an average rate of 4.50% per year provided, by the Philippine Statistics Authority. 15. VAT Payable: a. The company will have 12% output VAT per year and is not allowed to claim 12% input VAT since Gross Sales do not exceeded ₱ 3,000,000.00. Projected Financial Statements Financial statements are a documented record of an entity's financial activity. These are written reports that quantify a company's financial strength, performance, and liquidity. The financial impact of business transactions and events on the entity are reflected in financial statements. It provides a summary of a company's financial situation in the short and long term. Statement of Financial Performance/Income Statement, Statement of Financial Position/Balance Sheet, Statement of Cash Flows, and Statement of Changes in Owner’s Equity are the four main financial statements. 68 BATANGAS STATE UNIVERSITY Graduate School Table 32 Projected Financial Performance For the Years Ended December 31, 2022 to 2026 Particulars 2022 2023 2024 2025 2026 1,249,862.98 1,676,578.24 2,246,388.05 3,035,888.42 4,135,472.29 930,476.81 1,092,414.20 1,280,646.98 1,514,288.53 1,804,792.00 Gross Profit Less: Operating Expense 319,386.17 584,164.04 965,741.08 1,521,599.89 2,330,680.29 Selling Expense Administrative Expense Total Operating Expenses 20,892.86 18,605.14 20,645.97 21,110.75 21,589.66 248,750.66 253,727.37 260,064.21 266,627.81 273,183.71 269,643.52 272,332.51 280,710.18 287,738.56 294,773.37 Net Income/ Loss 49,742.65 311,831.53 685,030.89 1,233,861.34 2,035,906.91 Net Sales Less: Cost of Goods Sold Statement of Financial Performance One of the most fundamental types of financial statements is the statement of financial performance, generally known as the Income Statement. It is a formal declaration that indicates the enterprise's performance throughout a specific time period. The firm's success is largely assessed in terms of the amount of money made by the enterprise through effective and efficient resource usage (Valix,2005). It also displays revenue, which is defined as the inflow of assets resulting from the sale of products and services, as well as interest profits. There are expenses, which are the economic charges that a firm incurs as a result of its activities in order to generate income. Businesses must try to minimize expenditures without reducing revenues in order to maximize profitability. Taki Foods Manufacturing sales in the first year of operation is 69 BATANGAS STATE UNIVERSITY Graduate School ₱1,249,862.98; cost of goods sold is ₱930,476.81 and the total operating expense which composed of selling and administrative expenses is ₱269,643.52 which result to net income of ₱48,742.65. Statement of Final Position A statement of financial position (also known as a balance sheet) reflects an entity's financial situation as of a specific date. This statement, when evaluated alongside the other components of the financial statements, is useful to various users of accounting information, such as investors and creditors, in assessing an enterprise's economic resources, financial structure, liquidity and solvency, and ability to adapt to changes in the environment in which it operates (Robles, 2009). Table 33 TAKI FOODS MANUFACTURING Comparative Statement of Financial Position December 2022 to 2026 2022 2023 2024 2025 2026 330,338.30 668,241.52 1,382,189.37 2,649,116.36 4,724,018.46 13,737.92 19,811.33 26,696.18 36,084.45 49,142.31 9,365.01 10,905.80 12,791.58 15,132.54 18,043.28 Total Current Assets 353,441.22 698,958.65 1,421,677.12 2,700,333.35 4,791,204.05 Non-Current Assets Property, Plant and Equip. 127,132.95 108,696.25 90,259.55 71,822.86 53,386.16 - - - - - ASSETS Currents Assets Cash Accounts Receivable, Net Inventory Plant Expansion Fund 70 BATANGAS STATE UNIVERSITY Graduate School Total Non-Current Assets 127,132.95 108,696.25 90,259.55 71,822.86 53,386.16 TOTAL ASSETS 480,574.17 807,654.90 1,511,936.68 2,772,156.21 4,844,590.21 Accounts Payable 27,824.51 36,283.16 45,568.64 57,146.56 71,661.96 Vat Payable 4,152.89 12,740.65 25,242.26 43,403.19 69,760.61 Total Current Liabilities 31,977.40 49,023.81 70,810.91 100,549.74 141,422.57 Capital 448,596.77 758,631.08 1,441,125.77 2,671,606.46 4,703,167.65 Total Owner's Equity 448,596.77 758,631.08 1,441,125.77 2,671,606.46 4,703,167.65 TOTAL LIABILITIES & EQUITY 480,574.17 807,654.90 1,511,936.68 2,772,156.21 4,844,590.21 LIABILITIES & OWNER'S EQUITY Current Liabilities Owner's Equity Taki Foods Manufacturing's Statement of Financial Position summarizes the company's financial situation during the last five years. Assets are clearly expanding year after year. Current assets might be regarded as having a higher proportion of overall assets, suggesting that the company is highly liquid. The statement shows that cash is the most important component of the assets. It also shows that the inventory has increased somewhat. Furthermore, the declining value of plant, property, and equipment and the constant value of investment imply that no additional investments in noncurrent assets are made. Taki Foods Manufacturing shows Financial Position of the company for the first year of operation with the total assets of ₱480,574.17 which is composed of current assets amounting ₱358,006.98 and noncurrent assets amounting ₱ 71 BATANGAS STATE UNIVERSITY Graduate School 127,132.95. Likewise, component of Total Liabilities is only VAT payable amounting ₱4,152.89 since the company did not borrow or loan in bank. Increasing equity in the statement shows that the owner's stake in the company's assets is expanding. Increasing assets and declining liabilities indicate that the company is in solid financial shape and is not on the verge of going bankrupt. Statement of Changes in Owner’s Equity The statement of changes in equity is a fundamental statement that depicts the movements of the parts or components of the owner's equity. It also shows each component of equity, the impact of accounting policy changes, and the rectification of mistakes (Valix, 2009). The table below shows that the owner’s equity. This explains that the owner’s equity is increases every year from the beginning balance of ₱400,000.00. Table 34 TAKI FOODS MANUFACTURING Projected Statement of Changes in Equity For the Years Ended December 2022 to 2026 2022 Capital balance beginning Add: Share in Operating Income 2023 2024 2025 2026 400,000.00 448,596.77 758,631.08 1,441,125.77 2,671,606.46 48,596.77 310,034.31 682,494.69 1,230,480.69 2,031,561.18 Less: Withdrawal - - - - - Capital Balance, End 448,596.77 758,631.08 1,441,125.77 2,671,606.46 4,703,167.65 72 BATANGAS STATE UNIVERSITY Graduate School Cash Flow Statement The statement of cash flows summarizes an entity's cash inflows and cash payments over a certain time period. It is a formal declaration that categorizes cash receives (inflows) and outflows (outflows) as operating, investing, and financing operations. This statement indicates the net growth or reduction in cash during the period as well as the cash balance at the conclusion of the period; it also aids in projecting the entity's future net cash flows (Ballada, 2005). Table 35 TAKI FOODS MANUNFACTURING Projected Statement of Cash Flows December 2022 to 2026 Particulars Cash Flow from Operating Activities Annual Cash Return (Net Income +Dep.) 2022 2023 2024 2025 2026 67,033.47 328,471.01 700,931.38 1,248,917.39 2,049,997.88 Add (Less) Increase in Accounts Receivable (13,737.92) (6,073.41) (6,884.85) (9,388.27) (13,057.86) Increase in Inventory Increase in Accounts Payable Increase in VAT Payable (9,365.01) (1,540.79) (1,885.78) (2,340.97) (2,910.73) 27,824.51 8,458.65 9,285.48 11,577.91 14,515.40 4,152.89 8,587.76 12,501.61 18,160.92 26,357.42 Net Cash Flow 75,907.94 337,903.22 713,947.85 1,266,926.99 2,074,902.11 Cash Flow from Investing Activity Acquisition of Fixed Asset 145,569.64 - - - - - - - - Net Cash Used (145,569.64) Cash Flow from Financing Initial Investment - Withdrawal - 73 BATANGAS STATE UNIVERSITY Graduate School Net Cash Provided - - - - - Net Increase in Cash (69,661.70) 337,903.22 713,947.85 1,266,926.99 2,074,902.11 Cash Balance Beg 400,000.00 330,338.30 668,241.52 1,382,189.37 2,649,116.36 Cash Balance Ending Cash Allocated to Plant Expansion Fund Cash, Unrestricted for use 330,338.30 668,241.52 1,382,189.37 2,649,116.36 4,724,018.46 - - - - - 330,338.30 668,241.52 1,382,189.37 2,649,116.36 4,724,018.46 Taki Foods Manufacturing cash flow statement shows cash receipts and payments within five years of operation. At these times, the positive cash flow from operating activities can be detected. This means that the business is good at producing cash in its operations and uses this for financing and investment. Negative cash flows from investment activities represent spending money on fixed assets and invested in deposits. Financial Analysis Financial analysis involves evaluating businesses, projects, budgets and other financial related entities to determine a company's financial viability. Generally, financial analysis is used to determine whether a business is stable, melting, liquid, or profitable enough to invest in it. One key area of financial analysis involves the expansion of a company's previous operations in the company's future performance measurement. Financial Ratios 74 BATANGAS STATE UNIVERSITY Graduate School A financial ratio (or accounting ratio) is the relative size of the selected two-digit amounts taken from the entity's financial statements. Commonly used in accounting, there are many common scales used to try to assess the overall financial position of a business or other organization. Financial estimates can be used by management within the firm, by current and potential shareholders of the firm, and by the company's creditors. Financial analysts use financial estimates to compare strengths and weaknesses in various companies. When a company's shares are traded in the financial market, the stock market price is used in certain financial terms. (Agamata, 2012). A. Liquidity Ratio Liquidity ratio measure a company's ability to meet its short-term liability obligations. These rates measure the company's ability to pay off its short-term liabilities when compelled to pay. Loan rates are the result of the separation of cash and other liquid assets over short-term loans and current liabilities. They show the number of times that temporary debt liabilities are covered for cash and liquid assets. If the value is greater than 1, it means that the short-term bonds are fully covered. Generally, the higher the liquidity level, the higher the security level for companies to meet their current debts. Liquidity levels above 1 indicate that the company is in good financial health and is less likely to fall into financial difficulties. 75 BATANGAS STATE UNIVERSITY Graduate School Table 36 Current Ratio Current Asset Current Liabilities 353,441.22 31,977.40 698,958.65 49,023.81 1,421,677.12 70,810.91 2,700,333.35 100,549.74 4,791,204.05 141,422.57 Year 2022 2023 2024 2025 2026 Current Ratio 11.05 14.26 20.08 26.86 33.88 The table above shows the current ratio of Taki Foods Manufacturing is increasing. This shows how liquid the business by comparing the current assets to the current liabilities. Table 37 Quick or Acid Test Ratio Year Cash Accounts Receivable Quick Assets Current Liabilities Quick Ratio 2022 330,338.30 13,737.92 344,076.22 31,977.40 10.76 2023 668,241.52 19,811.33 688,052.85 49,023.81 14.04 2024 1,382,189.37 26,696.18 1,408,885.55 70,810.91 19.90 2025 2,649,116.36 36,084.45 2,685,200.81 100,549.74 26.71 2026 4,724,018.46 49,142.31 4,773,160.77 141,422.57 33.75 It is shown in the table above the quick ratio of Taki Foods Manufacturing for the year 2022 is 10.75. This simply means that the business is very feasible in the market and still increasing on the following years. 76 BATANGAS STATE UNIVERSITY Graduate School Working Capital Working capital is the amount of current assets remaining after the provision of current liabilities (Mejorada, 2006). Working capital, which is the backbone of the organization, needs to be managed efficiently and effectively in order for the organization to improve its performance, increase its growth potential, and achieve its desired financial position. Table 38 shows that during the first year of operations, Taki Foods Manufacturing has a working capital of ₱321,463.83 in the year 2022 after payment of its current liabilities. It can be noticed that the enterprise has an increasing working capital for the proceeding years which means that the firm could be able to meet its annual operating expenses and other necessary expenditures, and that the firm could sufficiently use this working capital for the effective conduct of the business operations. The ending working capital of ₱4,649,781.49 by year 2026 may create doors for the business to have more investors. Year 2022 2023 2024 2025 2026 Current Asset 353,441.22 698,958.65 1,421,677.12 2,700,333.35 4,791,204.05 Table 38 Working Capital Current Liabilities 31,977.40 49,023.81 70,810.91 100,549.74 141,422.57 77 Working Capital 321,463.83 649,934.83 1,350,866.22 2,599,783.61 4,649,781.49 BATANGAS STATE UNIVERSITY Graduate School B. Activity Ratios The performance measure measures money in managing assets such as receivables, inventory and fixed assets. Efficiency assesses how well a company manages its assets. Inventory Turnover Inventory turnover measures the efficiency of the firm in managing and selling inventory. It shows the number of times average inventory was sold during the period (Cabrera, 2011). The formula is: Year 2022 2023 2024 2025 2026 Table 39 Inventory Turnover Cost of Goods Sold Ave. Inventory Inventory Turnover 927,135.56 9,365.01 99.00 1,089,039.20 10,135.40 107.45 1,277,271.98 11,848.69 107.80 1,510,913.53 13,962.06 108.22 1,801,417.00 16,587.91 108.60 The inventory has increased every year which shows the firm is able to successfully manage its inventories. It is able to sell its inventories faster than expected. Average Sales Period This helps to assess the financial viability of the asset and the firm's credit policies. The average selling time is the number of days required for the sale or 78 BATANGAS STATE UNIVERSITY Graduate School use of a medium asset (Mejorada, 2006). The average number of days that inventory can be converted into a sale. The inventory turnover rate is why when a company has a low asset cost, the sales days go by slowly. Year 2022 2023 2024 2025 2026 Table 40 Average Sale Period Days in Year Inventory Turnover 365 99.00 365 107.45 365 107.80 365 108.22 365 108.60 Days 4 3 3 3 3 The table shows how fast or how long it takes for stock to sell. As indicated above, it will take the company four days (4) days to sell its inventory for the first year but just 3 days for the following years. This means that additional funds are tied to inventory; cash flows faster and actually more profit for the business. Asset Turnover Asset turnover indicates the efficiency in the use of total resources (Mejorada, 2006). This is a measure of the efficiency of the management to generate sales and thus earn more profit for the firm through the maximum utilization of assets. 79 BATANGAS STATE UNIVERSITY Graduate School Year 2022 2023 2024 2025 2026 Net Sales 1,245,374.84 1,671,405.77 2,240,476.66 3,029,132.57 4,127,751.32 Table 41 Asset Turnover Ave. Total asset 480,574.17 644,114.53 1,159,795.79 2,142,046.44 3,808,373.21 Asset Turnover 2.59 2.59 1.93 1.41 1.08 The table shows that the factory assets have a declining profit during the first five (5) years of operation. The decline in commodity year losses, as shown in the table above, is not a good indicator of asset management for sale. As cash produced by sale remained as cash and was not invested in cash-generating assets. C. Solvency Ratio The Solvency rating reflects the level at which a company relies on credit to finance its investments and how well it can manage its debt liability. It is an indication of the extent to which a company is using other people's money to buy goods. An additional loan means that the asset can be purchased without the investment of additional shares by shareholders. 80 BATANGAS STATE UNIVERSITY Graduate School Debt Ratio This indicates what portion of total assets is provided by the creditors (Mejorada, 2006). It measures the relative share of creditors over total resources of the firm. Table 42 Debt Ratio Year Total Liabilities Total Assets Ratio (%) 2022 31,977.40 480,574.17 6.65% 2023 49,023.81 807,654.90 6.07% 2024 70,810.91 1,511,936.68 4.68% 2025 100,549.74 2,772,156.21 3.63% 2026 141,422.57 4,844,590.21 2.92% Taki Foods Manufacturing has a decreasing debt ratio as presented in the table above which signifies the percentage change in total liabilities is decreasing from the first year of operation to 2026. Equity Ratio The equity ratio indicates what portion of the total assets is provided by the owner. Year 2022 2023 2024 2025 2026 Table 43 Equity Ratio Total Owner’s Equity Total Assets 448,596.77 480,574.17 758,631.08 807,654.90 1,441,125.77 1,511,936.68 2,671,606.46 2,772,156.21 4,703,167.65 4,844,590.21 81 Ratio (%) 93.35% 93.93% 95.32% 96.37% 97.08% BATANGAS STATE UNIVERSITY Graduate School The table shows that the equity ratio of the business tends to rise. This shows that most of the firm's assets are funded by the owner’s investment rather than debt, as shown in the credit rating table. This only shows that the company's credit operations have not been expanded. Debt Equity Ratio Debt-to-equity ratio measures the use of credit to finance operations. Provides an average number of related services provided by creditors and owners. A decrease in the credit-to-equity ratio is better for the company. Year 2022 2023 2024 2025 2026 Table 44 Debt to Equity Ratio Total Liabilities Total Partners Equity 31,977.40 448,596.77 49,023.81 758,631.08 70,810.91 1,441,125.77 100,549.74 2,671,606.46 141,422.57 4,703,167.65 Ratio (%) 7.13% 6.46% 4.91% 3.76% 3.01% Table 44 shows decreasing trend on debt-to-equity ratio which is favorable to the first year of the business to 2026. This shows the owner contributes to finance the operations of the business than external borrowings. Increasing amount of liabilities is due to the VAT payable of the business, no loans are obtained in the establishment of the organization. Profitability Ratio Profitability ratios are class of financial metrics used to assess an entity's ability to generate revenue in relation to revenue, operating costs, balance sheet 82 BATANGAS STATE UNIVERSITY Graduate School assets, or equity shareholders over time, using data from a specific location over time. Profitability ratios can be compared to effective rates, which take into account how well a company uses its assets internally to generate revenue (as opposed to recent capital gains). Rate of Return on Asset Rate of Return on Assets demonstrates efficiency in the use of total resources (Mejorada, 2006). This is a measure of the efficiency of managers to produce sales and thus earn more company profits through higher consumption of assets. Year 2022 2023 2024 2025 2026 Table 45 Rate of Return on Asset Net Income Ave. Total Asset 48,596.77 480,574.17 310,034.31 644,114.53 682,494.69 1,159,795.79 1,230,480.69 2,142,046.44 2,031,561.18 3,808,373.21 Ratio (%) 10.11% 48.13% 58.85% 57.44% 53.34% It clearly seen from the table that the organization’s rate of return on investment increased from the first year of operation and this figure presented a good indicator of a company’s profitability. 83 BATANGAS STATE UNIVERSITY Graduate School Return on Equity Return on equity indicates the profitability in the use if invested capital or the amount of amount of return per peso of owner’s capital. (Mejorada, 2006). Year 2022 2023 2024 2025 2026 Table 46 Rate of Return in Equity Net Income Ave. Owner’s Equity 48,596.77 448,596.77 310,034.31 603,613.93 682,494.69 1,099,878.43 1,230,480.69 2,056,366.12 2,031,561.18 3,687,387.06 Ratio (%) 10.83% 51.36% 62.05% 59.84% 55.09% The table shows the increase of rate of return in equity from the beginning of the business up to 2026 but slightly decreased from 2025 to 2026. Decreasing on rate of return in equity is unfavorable. It is because of not able to make the best use of the capital to maximize the profit. Operating Profit Margin Operating profit margin measures profit generated after consideration of operating costs (Cabrera, 2011). Year 2022 2023 2024 2025 2025 Table 47 Operating Profit Margin Operating Profit Net Sales 48,596.77 1,245,374.84 310,034.31 1,671,405.77 682,494.69 2,240,476.66 1,230,480.69 3,029,132.57 2,031,561.18 4,127,751.32 84 Ratio (%) 3.90% 18.55% 30.46% 40.62% 49.22% BATANGAS STATE UNIVERSITY Graduate School The table shows the profitability of the business operation. Increasing trends can be seen within five years. The increase reflects good management of the business, from managing the costs to the operating costs to generating revenue. Gross Profit Margin Gross profit margin calculates the percentage of sales that exceed the cost of goods sold. It measures how efficiently a company uses its materials and labor to produce and sell products profitably. Year 2022 2023 2024 2025 2026 Table 48 Gross Profit Margin Gross Profit 48,596.77 310,034.31 682,494.69 1,230,480.69 2,031,561.18 Net Sales 1,245,374.84 1,671,405.77 2,240,476.66 3,029,132.57 4,127,751.32 Ratio (%) 3.90% 18.55% 30.46% 40.62% 49.22% The gross profit margin is increasing from the start of the operation. Aside from that, the business is able to control its production or manufacturing costs. Then, the annual gross profit is reasonably adequate to cover the annual operating fixed expenses and to achieve the desired return. 85 BATANGAS STATE UNIVERSITY Graduate School Net Profit Margin Net profit margin also called as rate of return on net sales measures the profit generated after consideration of all expenses and revenues (Cabrera, 2011). Year 2022 2023 2024 2025 2026 Table 49 Net Profit Margin Net Income Net Sales 48,596.77 1,245,374.84 310,034.31 1,671,405.77 682,494.69 2,240,476.66 1,230,480.69 3,029,132.57 2,031,561.18 4,127,751.32 Ratio (%) 3.90% 18.55% 30.46% 40.62% 49.22% As shown in the table 49 the profit margin increases every year. The ratio is still profitability even it considers all the revenues and expenses including interest and non-operating items. Almost 50% of net profit margin in 2026. The figure is desirable as it means that the firm generates more profits from its sales. Break Even Point Analysis A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs. 86 BATANGAS STATE UNIVERSITY Graduate School Year 2022 2023 2024 2025 2026 Table 50 Break Even Volume Analysis Fixed Cost Cont. Margin/ Unit 428,359.13 5.53 434,080.63 6.95 443,472.19 8.53 451,516.54 10.40 459,581.58 12.64 Break Even Point 77,485 62,467 52,006 43,409 36,364 The table shows how many units must be sold in order to avoid losses, comparing it with actual sales in units, there is really a large gap, therefore the proposed business is generating profit. The break-even sales analysis shows how many sales should be earned in order to avoid losses, comparing it with actual sales there is really a large gap, therefore the proposed business is generating profit. Year 2022 2023 2024 2025 2026 Table 51 Break Even Sales Analysis Fixed Cost Cont. Margin % 428,359.13 44.98% 434,080.63 50.97% 443,472.19 56.00% 451,516.54 60.63% 459,581.58 64.87% 952,410.80 851,562.70 791,944.86 744,762.15 708,477.98 Table 52 show the decreasing trend in BEP selling price that indicates that the business is flexible enough to lower its prices but still generate a positive profit. 87 BATANGAS STATE UNIVERSITY Graduate School Year 2022 2023 2024 2025 2026 Table 52 Break Even Selling Price per Unit Fixed Cost per Unit Cont. Margin % 3.72 44.98% 3.14 50.97% 2.67 56.00% 2.27 60.63% 1.92 64.87% 8.27 6.16 4.77 3.74 2.97 Table 53 shows a positive and increasing Margin of Safety that indicates that the business has slim chances of incurring a loss because its budgeted sales is by far greater that the Margin of Safety Sales. Year 2022 2023 2024 2025 2026 Year 2022 2023 2024 2025 2026 Table 53 Margin of Safety Budgeted Sales Break Even Sales 1,245,374.84 952,410.80 1,671,405.77 851,562.70 2,240,476.66 791,944.86 3,029,132.57 744,762.15 4,127,751.32 708,477.98 Table 54 Margin of Safety Ratio Margin of safety Budgeted Sales 292,964.04 1,245,374.84 819,843.07 1,671,405.77 1,448,531.80 2,240,476.66 2,284,370.41 3,029,132.57 3,419,273.34 4,127,751.32 88 Margin of Safety 292,964.04 819,843.07 1,448,531.80 2,284,370.41 3,419,273.34 MOS Ratio 23.52% 49.05% 64.65% 75.41% 82.84% BATANGAS STATE UNIVERSITY Graduate School Table 54 shows increasing MOS ratio indicates that the business has slim chances of incurring a loss because its budgeted sales is by far greater than the MOS sales. Year 2022 2023 2024 2025 2026 Table 55 Operating Leverage Contribution Margin Net operating Income 630,490.79 48,596.77 959,026.52 310,034.31 1,412,234.48 682,494.69 2,067,137.10 1,230,480.69 3,014,010.24 2,031,561.18 Operating Leverage 12.97 3.09 2.07 1.68 1.48 A decreasing operating leverage indicates the business is generating enough contribution margin or they might be able to control fixed costs efficiently thus resulting to a lesser gap between the contribution margin and the final income figure. Table 56 Contribution Margin Sales Total Variable Costs Contribution Margin Units Sold Contribution Margin per Unit Contribution Margin Percentage 2022 2023 2024 2025 2026 1,401,828.97 1,881,381.37 2,521,943.57 3,409,676.86 4,646,313.05 771,338.18 922,354.84 1,109,709.10 1,342,539.76 1,632,302.81 630,490.79 959,026.52 1,412,234.48 2,067,137.10 3,014,010.24 114,048 138,010 165,612 198,734 238,481 5.53 6.95 8.53 10.40 12.64 44.98% 50.97% 56.00% 60.63% 64.87% 89 BATANGAS STATE UNIVERSITY Graduate School Table 56 illustrates that Taki Foods' contribution margin is expanding from 2022 onwards. Because of the increasing percentage of Chicken Chips in the market, it is a very excellent indicator for the business. Year 2022 2023 2024 2025 2026 Table 57 Financial Leverage Index ROE ROA 10.83% 10.11% 51.36% 48.13% 62.05% 58.85% 59.84% 57.44% 55.09% 53.34% Ratio 1.07 1.07 1.05 1.04 1.03 Table 57 shows the ratio by comparing the return on equity against the return on assets which indicates that the investments of the proponent are more being placed in generating profits. Payback Period YEAR 2022 2023 2024 2025 2026 Payback Period Table 58 Payback Period Cost of Annual Cumulative net Payback Investment Cash Inflow cash flow Period 400,000.00 67,313.84 467,313.84 2.006 328,594.95 795,908.79 701,071.89 1,496,980.68 1,249,108.99 2,746,089.67 2,050,264.37 4,796,354.03 2.006 years 90 BATANGAS STATE UNIVERSITY Graduate School In terms of measuring how long the business can recover its initial investment, it shows that the business can recover it less than the forecasted five-year operations, specifically more than just 2 years. Net Present Value and Internal Rate of Return Net Present Value is defined as the difference between the present value of cash inflows and the present value of cash outflows over time. If the net present value of Taki Foods Manufacturing, using 5% as the rate of market interest for the present value, is more than zero, then the planned firm is regarded financially worthwhile. The internal rate of return is a metric that is used to determine the profitability of a possible venture. Taki Foods Manufacturing has a project with a 176 percent return based on predicted cash flows. Because the internal rate of return exceeds the discount rate, the proposed firm is viable. Investment Discount Rate Year Amount 1 330,338.30 2 668,241.52 3 1,382,189.37 4 2,649,116.36 5 4,724,018.46 Total Net Present Value Internal Rate of Return PV Factor 0.952381 0.907029 0.863838 0.822702 0.783526 91 (400,000.00) 5% Present Value 314,607.90 606,114.75 1,193,987.14 2,179,434.58 3,701,392.08 7,995,536.45 7,595,536.45 139% BATANGAS STATE UNIVERSITY Graduate School Chapter 6 SOCIO-ECONOMIC CONTRIBUTION Every company should have work done behind the scenes. These projects are typically not for profit, but rather to assist the community in growing and developing a healthy way of life. Even if the company spends a lot of money on social responsibility, it is critical since it may help the firm become more well-known and have a positive influence on sales because it is a win-win situation. Economic Desirability Small businesses may not create as much revenue as giant firms, but they are important components and substantial contributors to the economy’s vitality. Taki Foods Manufacturing contributes to the advancement of the economy by meeting all of the essential requirements for starting a business, as well as paying the appropriate taxes and adhering to all legally pertaining to business rules and regulations. It would also help small poultry farmers to supply raw materials to the company. Social Desirability The proposed project will give consumers with prompt, responsive, and cheery service, ensuring that their requirements are satisfied in a manner that reflects well on the company, as it will aim to maintain close relationship with the 92 BATANGAS STATE UNIVERSITY Graduate School community and its customers. The company will also give helpful customer service by encouraging consumers to buy the proposed goods. The proponents are also eager to collaborate with the local government in order to promote initiatives and activities that will benefit the community. Environmental Desirability The owner benefits greatly from a thorough understanding and awareness of the business environment. Because policies and strategies must be implemented in the context of environmental conditions, the organization’s primary strategies, plans, and policies are developed with the business environment in mind. Waste is unavoidable in the business world. Taki Foods Manufacturing will contribute to environmental protection by segregating waste materials and following correct waste disposal procedures to guarantee that the company’s operations are not hazardous to human health, the government, or the communities in which it operates. The company shall establish procedures and policies to encourage environmental awareness while causing no harm or further environmental damage. The business shall adopt an effective waste disposal system in accordance with the City Environment and Natural Resources Office (CENRO) of the City Government’s environmental rules and ordinances. 93 BATANGAS STATE UNIVERSITY Graduate School • Valix, Conrado T., Valix, Christian (Hughson, D. (1817). The New Family Receipt Book. BIBLIOGRAPHY Published Business Research Project: • Olayao, Angelica Dana, Establishment of Cup O’ Gel at Barangay Santiago, Malvar, Batangas, June 2020 Books: • Agamata, Franklin T. CPA, Management Advisory Services, A Comprehensive Guide, 2019 Issue • Ballada, Win, CPA, CPE, MBA, Financial Accounting and Reporting, 2019 issue – 22nd Edition • Kennedy, Rick, Business Plan – How to Start your Own Business, 2018 editionMcNeil, Ruth, Business to Business Market Research Understanding and Measuring Business Markets, 2019 edition 94 – BATANGAS STATE UNIVERSITY Graduate School APPENDICES Exhibit 1 Total Number of Households per Barangay Area Household No. (%) Number of Respondents Anilao 11.83 4329 Anilao-Labac 10.36 3792 Antipolo de Norte 20.45 7498 Antipolo de Sur 22.47 8223 Pagolingin East 6.92 2534 Pagolingin West 4.80 1757 Pinagkawitan 23.13 8465 Source: City Planning and Development Office, City of Lipa, Batangas, November 2021 Exhibit 2 Supporting Computation for Average Annual Consumption 1 2 3 TOTAL Everyday 365 4 0 2 6 Weekly 52 47 13 3 63 Semi-Annual 0 0 0 Monthly 12 22 5 1 28 Once a Year 1 2 1 0 3 Never 0 0 Total 75 19 6 100 Everyday Weekly Semi-Annual Monthly Once a Year Never Total 365 52 12 1 0 1,460 2,444 264 2 4,170 1,352 120 1 1,473 Average Annual Consumption: 83.37 Percentage of Buying: 91% No. of Respondents: 100 95 2,190 468 36 2,694 3,650 4,264 420 3 8,337 BATANGAS STATE UNIVERSITY Graduate School Year 2016 2017 2018 2019 2020 Year 2022 2023 2024 2025 2026 Total Exhibit 3 Supporting Computation for Historical Demand Market Frequency of Historical Population Acceptability Consumption Demand 31,369 91.00% 83 2,369,300.57 32,337 91.00% 83 2,442,413.61 33,332 91.00% 83 2,517,565.96 34,358 91.00% 83 2,595,059.74 35,419 91.00% 83 2,675,197.07 Supporting Computation for Projected Demand Y X X2 XY 2,369,300.57 1 1 2,369,300.57 2,442,413.61 2 4 4,884,827.22 2,517,565.96 3 9 7,552,697.88 2,595,059.74 4 16 10,380,238.96 2,675,197.07 5 25 13,375,985.35 12,599,536.95 15.00 55.00 38,563,049.98 n= number of pairs of x and y ∑y= sum of the value of y ∑x= sum of the value of x ∑xy= sum of the value of x and y delivered by multiplying paired values of x and y Σx²= the sum of the column x² which is delivered by multiplying paired values of x 96 BATANGAS STATE UNIVERSITY Graduate School a= 12,599,536.95 – (15) (76,443.91) 5 = 12,599,536.96 – 1,146,658.65 5 = 11,425,878.26 5 = 2,290,575.65 Year 2022 2023 2024 2025 2026 b= 5*(38,563,049.98) – (15) (12,599,536.95) 5(55) – (15)2 b= 3,822,195.65 50 b= 76,443.91 Exhibit 4 Supporting Computation for Projected Demand A B X Projected Demand 2,290,575.65 76,443.91 7 2,825,683 2,290,575.65 76,443.91 8 2,902,127 2,290,575.65 76,443.91 9 2,978,571 2,290,575.65 76,443.91 10 3,055,015 2,290,575.65 76,443.91 11 3,131,459 Formula: YC= a + bx 2022= 2,290,757,65 + 76,443.91 * 7 = 2,825,683.00 2023= 2,290,757,65 + 76,443.91 * 8 = 2,902,127.00 2024= 2,290,757,65 + 76,443.91 * 9 = 2,978,571.00 2025= 2,290,757,65 + 76,443.91 * 10 = 3,055,015.00 2026= 2,290,757,65 + 76,443.91 * 11 = 3,131,459.00 97 BATANGAS STATE UNIVERSITY Graduate School Exhibit 5 Historical Supply of Related Products Name of Store 2016 2017 2018 2019 Isidora’s Store Ailyn’s Store Susan’s Sari Sari Store Puring’s Store Ka Edie’s Store None Marites Store Ka Mely’s Store Jenny’s Store Violy’s Store Roselyn Store Nick’s Store Marj’s Sari-sari Store Armie’s Store Lucy’s Sari-sari Store Nanay Ayo’s Store Iamie’s Yummy Treats Teng’s Food Hub Burnok’s Store Kimchi’s Store TOTAL 2020 3000 1000 2000 1000 5000 1000 3000 1000 4000 0 1000 10000 10000 10000 23500 29000 26000 18000 30000 16000 35500 20000 41000 21000 1000 10000 1000 10000 21500 32000 27500 19000 31000 15000 35000 19000 42000 22000 20000 10000 1000 10000 22000 31000 27000 18500 32000 15500 37000 20600 42000 22500 20000 10000 10000 10000 23000 33600 30000 19200 33600 16800 38400 21600 43200 24000 20000 10000 1000 10000 24000 30000 28800 17000 29000 14000 36000 18000 39000 20000 2500 4000 9500 49000 360000 2500 3000 9400 48000 351900 2500 3500 9000 50000 380100 2500 4000 9600 50000 403500 2500 2500 8000 40000 353800 Exhibit 6 Supporting Computation for Historical Supply Year 2016 2017 2018 2019 2020 Historical Supply 36,000.00 35,190.00 38,100.00 40,350.00 35,380.00 98 BATANGAS STATE UNIVERSITY Graduate School a= 185,020 – (15) (392) 5 = 185,020 – 5880 5 = 179,040 5 = 35,828.00 b= 5*(38,572) – (15) (185,020) 5(55) – (15)2 b= 19,600 50 b= 392.00 Year 2016 2017 2018 2019 2020 Total Supporting Computation for Historical Supply Y X X2 36,000.00 1 1 35,190.00 2 4 38,100.00 3 9 40,350.00 4 16 35,380.00 5 25 185,020.00 15.00 55.00 Year 2022 2023 2024 2025 2026 Exhibit 7 Supporting Computation for Projected Supply A B X Projected Supply 35,828.00 392.00 7 38,572 35,828.00 392.00 8 38,964 35,828.00 392.00 9 39,356 35,828.00 392.00 10 39,748 35,828.00 392.00 11 40,140 Formula: YC= a + bx 2022= 35,828.00 + 392.00 * 7 = 38,572.00 2023= 35,828.00 + 392.00 * 8 = 38,964.00 2024= 35,828.00 + 392.00 * 9 = 39,356.00 2025= 35,828.00 + 392.00 * 10 99 XY 36,000.00 70,380.00 114,300.00 161,400.00 176,900.00 558,980.00 BATANGAS STATE UNIVERSITY Graduate School = 39,748.00 2026= 35,828.00 + 392.00 * 11 = 40,140.00 Year 2022 2023 2024 2025 2026 Exhibit 8 Market Gap Projected Demand Projected Supply 2,825,683 38,572 2,902,127 38,964 2,978,571 39,356 3,055,015 39,748 3,131,459 40,140 196,780 Market Gap 2,787,111 2,863,163 2,939,215 3,015,267 3,091,319 Formula: Market Gap= Projected Demand – Projected Supply 2022= 2,825,683.00 – 38,572.00 = 2,787,111.00 2023= 2,902,127.00 – 38,964.00 = 2,863,163.00 2024= 2,978,571.00 – 39,356.00 = 2,939,215.00 2025= 3,055,105.00 – 39,748.00 = 3,015,267 2026= 3,131,459.00 – 40,140.00 = 3,091,319.00 100 BATANGAS STATE UNIVERSITY Graduate School Exhibit 9 Market Share Projected Annual Market Gap Production 115,200 2,787,111 138,240 2,863,163 165,888 2,939,215 199,066 3,015,267 238,879 3,091,319 Year 2022 2023 2024 2025 2026 Market Share 4.13% 4.22% 5.64% 6.60% 7.72% Formula: Market Share= Annual Projected Sales/ Market Gap x 100 2022= 115,200/ 2,787,111.00 = 4.13% 2023= 138,240/ 2,863,163.00 = 4.22% 2024= 165,888/ 2,939,215.00 = 5.64% 2025= 199,066/ 3,015,267.00 = 6.60% 2026= 238,879/ 3,091,319.00 = 7.72% 101 BATANGAS STATE UNIVERSITY Graduate School ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN SEVEN BARANGAYS IN LIPA CITY, BATANGAS CONSUMER’S SURVEY QUESTIONNAIRE I. Respondents Profile Category Female Male Barangay Anilao Anilao-Labac Antipolo del Norte Antipolo del Sur Pagolingin East Pagolingin West Pinagkawitan Gender No. Respondents 33 67 Percentage 33% 67% Address No. of Respondents 14 14 14 14 14 14 16 Percentage 14% 14% 14% 14% 14% 14% 16% II. Related Products 1. Do you eat chips in 14 grams pack? Category Yes No No. of Respondents 80 20 102 Percentage 80% 20% BATANGAS STATE UNIVERSITY Graduate School 2. How do you often eat chips? Catergory Daily Weekly Monthly Once a year No. of Respondents 66 24 6 4 Percentage 66% 24% 6% 4% 3. How many grams do you eat every day? Category 14 grams 19 grams 24 grams No. of Respondents 81 11 8 Percentage 81% 11% 8% 4. Which of the following flavors do you prefer in buying chips? Category Natural Spicy No. of Respondents 48 52 Percentage 48% 52% 5. Where do you usually buy chips Category Sari-sari Store Convenient Store Mini-mart Supermarket No. of Respondents 60 14 12 12 Percentage 60% 14% 12% 12% 6. How much do you spend in buying chips? Category 10.00 12.00 15.00 17.00 No. of Respondents 31 11 37 21 103 Percentage 31% 11% 37% 21% BATANGAS STATE UNIVERSITY Graduate School 7. What do you consider in buying chips Category Price Packaging Quality Price and Quality Crispiness in open air Taste Others No. of Respondents 19 5 72 1 1 1 1 Percentage 19% 5% 72% 1% 1% 1% 1% 8. Have you heard chips made from chicken breast in Lipa City, Batangas? Category Yes No No. of Respondents 94 6 Percentage 94% 6% 9. If chicken will be established in Lipa City, Batangas are you willing to purchase chicken chips from them? Category Yes No No. of Respondents 98 2 Percentage 98% 2% 10. At what price are you willing to pay for chicken chips? Category No. of Respondents Percentage 14.00 72 72% 17.00 6 6% 19.00 18 18% 20.00 4 4% 104 BATANGAS STATE UNIVERSITY Graduate School ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN SEVEN BARANGAYS IN LIPA CITY, BATANGAS RETAILER’S SURVEY QUESTIONNAIRE I. Respondents Profile Category Sole Proprietorship Partnership Corporation Category 1-5 6-10 11-15 16 - above Form of Business Ownership No. of Respondents 19 1 0 Years of Operation No. of Respondents 19 1 0 0 Percentage 95% 5% 0 Percentage 95% 5% 0% 0% II. Related Products 1. Do you sell Chips? Category Yes No No. of Respondents 19 1 105 Percentage 95% 5% BATANGAS STATE UNIVERSITY Graduate School Category Within Batangas Outside Batangas 2. Where do you sell chips? No. of Respondents 100 0 Percentage 100% 0% 3. What kind of chips do you sell in the market? Category No. of Respondents Percentage Potato 14 70% Vegetable 1 5% Meat 1 5% Corn 6 20% 4. How often do you order or purchase chips? Category No. of Respondents Percentage Daily 0 0% Weekly 16 80% Monthly 4 20% 5. How much do you pay for one pack of chips? Category No. of Respondents Percentage 10.00 5 14.00 10 17.00 4 20.00 1 106 BATANGAS STATE UNIVERSITY Graduate School LEGAL DOCUMENTS 107 BATANGAS STATE UNIVERSITY Graduate School 108 BATANGAS STATE UNIVERSITY Graduate School 109 BATANGAS STATE UNIVERSITY Graduate School 110 BATANGAS STATE UNIVERSITY Graduate School 111 BATANGAS STATE UNIVERSITY Graduate School 112 BATANGAS STATE UNIVERSITY Graduate School 113 BATANGAS STATE UNIVERSITY Graduate School CERTIFICATION This is to cerfity that the feasibility study entitled “ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPs IN LIPA CITY, BATANGAS” authored by Mark L. de Ocampo has been checked by the undersigned nutritionist. Ma. Jasmin A. Balisi, RND Lic. No. 0018630 Nutritionist-Dietitian 114 BATANGAS STATE UNIVERSITY Graduate School Nutrition Facts 115 BATANGAS STATE UNIVERSITY Graduate School Certification This is to cerfity that the feasibility study entitled “ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN LIPA CITY, BATANGAS” authored by Mark L. de Ocampo has been checked by the undersigned accounting practitioner. 116 BATANGAS STATE UNIVERSITY Graduate School CERTIFICATION This is to cerfity that this Business Research Project entitled “ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN LIPA CITY, BATANGAS” in partial fulfillment of the requirements for the degree Masters in Business Administration has been reviewed and edited by the undersigned based on the minutes of the Final Defense. It now follows the standard format of the University and conventions of research writing. _________________________ Signature over Printed Name Editor Date Signed:_________ 117 BATANGAS STATE UNIVERSITY Graduate School Dear Sir/Ma’am, Hi! I am Mark L. de Ocampo, an MBA student at Batangas State University and I am doing a Business Research Project of coming up with Chicken Chips, a snack made up of glutinous rice floor for an innovation. This study is entitled “ESTABLISHMENT OF TAKI FOODS MANUFACTURING: MANUFACTURER OF CHICKEN CHIPS IN LIPA CITY, BATANGAS” Having you answer these questions would be a big help. Thank you! ________________________ Mark L. de Ocampo Researcher 118 BATANGAS STATE UNIVERSITY Graduate School 119