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;
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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
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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
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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
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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
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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 …………………………………………………
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77
78
79
80
81
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82
83
84
84
85
86
87
87
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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 ………………………………………..
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9
10
12
12
25
31
42
43
50
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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.
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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.
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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
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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.
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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
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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.
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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
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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.
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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
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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
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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.
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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
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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.
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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
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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
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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,
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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
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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,
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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.
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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.
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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.
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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.
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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
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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
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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.
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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.
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(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.
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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.
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FLOW CHART
Figure 6
Flow Chart
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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.
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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.
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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.
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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.
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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.
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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;
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•
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.
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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
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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;
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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
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•
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;
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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;
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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;
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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;
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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
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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.
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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):
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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.
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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.
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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.
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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
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₱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
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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 ₱
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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
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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
-
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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
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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.
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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.
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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
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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
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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.
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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.
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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
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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
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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.
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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%
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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.
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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.
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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.
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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%
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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%
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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
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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%
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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
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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.
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• 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
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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
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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
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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
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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
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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
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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