Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Why is it necessary to conduct this study? Is there a need or problem that needs a

solution? What are the factors that made you decide to choose this topic?

Do not just say something from your mind! There must be sources!

Include at least one to two pages in this section of your study.

Statement of the Problem

The central problem of this study is the evaluation of the viability of establishing a

__________________________ in ________________________.

Objectives

The main objective of this study is to determine the viability and feasibility of

establishing a __________________________ in ________________________.

Specifically, objectives from the point of view of the different functional areas of

management are as follows:

Marketing

1. To describe the nature of the primary and secondary products and services.

2. …

3. …
Technical

1. To determine the process involved in operating the project in the most effective and

economical way.

2. …

3. …

4. …

5. …

6. …

7. …

8. …

9. …

10. …

Organizational

1. To decide on the most appropriate form of business ownership.

2. …

3. …

4. …

5. …

6. …

7. …

8. …
 Strategic Management

1. To develop the mission, vision, and objectives, key result areas (KRA), and

performance indicators (PI) for the proposed organization.

2. …

3. …

Financial

1. To make realistic assumptions that will be the guide in the preparation of financial

statements.

2. …

3. …

4. …

5. …

Socio-Economic Responsibility

1. To examine the operations of the organization so as to be responsible to the

stakeholders.

2. …

Significance of the Study

How is this study important? Who will benefit from this study? What are the specific

advantages of establishing this business? What will this study contribute to the readers,

researchers, community, body of knowledge, etc.?

To the researchers?

To the customers?
 To the potential investors?

To the community?

Scope and Limitations

SCOPE ~ What are the parameters or boundaries of this study as to target market, time

horizon, survey area, and span of data gathering?

LIMITATION/S ~ What are the weaknesses of the study that are beyond the control of

the researchers?
 Chapter 2

REVIEW OF LITERATURE AND RELATED STUDIES

Related Literature

What knowledge is documented about this topic or business today both locally and

internationally? Explain further the importance of the study and discuss the historical

perspective of the topic. Review materials that will be useful in the different areas of the study.

Please summarize or paraphrase — do not cut and paste! Do not forget to properly cite

the references using APA style to avoid plagiarism. This section should not exceed one page. If

you need to have two pages, make sure the additional paragraphs are really relevant to the study.

Related Studies

What do other research studies say about this topic? How do other researches support the

proposed business? What is the difference between the past researches and this study?

Again, please summarize or paraphrase — do not cut and paste! Do not forget to

properly cite the references using APA style to avoid plagiarism. This section should not exceed

one page. This section should not exceed one page. If you need to have two pages, make sure

the additional paragraphs are really relevant to the study.

Industry Profile

What is the condition of the industry to which the proposed business is specifically

related? What are the current practices in terms of pricing, advertising, hiring, packaging,

purchasing, etc.?
 Do not just say something from your mind! There must be sources! Do not forget to

properly cite the references using APA style to avoid plagiarism. This section should not exceed

two pages.

Success Factors

Write a short introductory paragraph focusing of the more general factors that can make

this kind of business successful.

Strengths

These are the internal factors that makes the business competitive and profitable. Be

realistic and cite references! Write in paragraph form and briefly explain each strength. Include

at least two paragraphs.

Opportunities

These are the external factors that creates potential to generate profit. Be realistic and

cite references! Write in paragraph form and briefly explain each opportunity. Include at least

two paragraphs.

Risk Factors

Include a short introductory paragraph focusing of the more general risks that this kind of

business is exposed.
 Weaknesses

These are the internal factors that makes the business less competitive or not profitable.

Be realistic and cite references! Write in paragraph form and briefly explain each weakness.

Include at least two paragraphs.

Threats

These are the external factors that may cause the failure of the proposed business. Be

realistic and cite references! Write in paragraph form and briefly explain each threat. Include at

least two paragraphs.

Definition of Terms

Define terms that have special meaning in the study. Do not define words that everybody

understands. Arrange the defined words alphabetically.

Apple. This is a personal computer brand, not a fruit.

Building. This is a concrete structure that protects people from the elements of nature

such as heat and rain.

 Chapter 3

RESEARCH METHODOLOGY

Sources of Data

Describe the sources of data used in the study. What are the primary sources of data used

in the study? What are the secondary sources? This section should just have two to three

paragraphs.

Research Design

Business research usually require the use of descriptive and exploratory methods of

research design utilizing historical trends and projections…

Describe the research design used in the study. Is it descriptive, exploratory, or both?

This section should have two or three paragraphs only.

Population and Sampling Technique

Who or what is your target market (which is the total population)? Describe the

population according to their demographics.

Indicate the sample size and how it was computed if the total population is large. State

the sampling technique used — restricted or unrestricted, probability or non-probability, random

or convenience sampling? Mention the margin of error applied. Present the historical data about

the population and the sample size in table form.

 Remember: Sample accuracy is more important than sample size!

N
n=
1 + Ne2

Where: N = population Where: n = sample size Where: e = margin of error

1,000
n= = 286
1 + [ ( 1,000) (.05)2 ]

Data Gathering Procedures

Describe how the questionnaires were distributed to the chosen samples and subsequently

retrieved and how the data was summarized and tabulated. What about those questionnaires that

were not retrieved and those who refuse to answer the questionnaires?

How was the interview conducted? How did you record the conversation? Did you do

observation? What evidences do you have to document your observation?

Analysis of Data

Enumerate and discuss each of the formulas which will be used in determining the

sample size, projections, financial ratios, etc.

Explain the how each formula can help in evaluating the proposed project — whether it is

feasible or not. These are the criteria for judging the reasonableness proposed business.

Profitability Ratios. Definition? Usefulness? Tells about what? Write at least one

paragraph.

Return on Sales. Definition? Interpretation? Reference? Write at least one paragraph.

Net Profit After Tax

Return on Sales =
Sales
 Return on Investment. Definition? Interpretation? Reference? Write at least one

paragraph.

Net Income
Return on Investment =
Total Investment

Gross Profit Ratio. Definition? Interpretation? Reference? Reference? Write at least

one paragraph.

Gross Profit
Gross Profit Ratio =
Net Sales

Liquidity Ratios. Definition? Usefulness? Tells about what? Write at least one

paragraph.

Current Ratio. Definition? Interpretation? Reference? Write at least one paragraph.

Current Assets
Current Ratio =
Current Liabilities

Acid Test Ratio. Definition? Interpretation? Reference? Write at least one paragraph.

Quick Assets
Acid Test Ratio =
Current Liabilities

Inventory Turnover. Definition? Interpretation? Reference? Write at least one

paragraph.

Cost of Sales
Inventory Turnover =
Average Inventory

Tests of Operating Leverage. Definition? Usefulness? Tells about what? Write at

least one paragraph.

Break Even Volume Analysis. Definition? Interpretation? Reference? Write at least

one paragraph.
 Fixed Costs
Break-Even-Volume =
Selling Price/Unit - Variable Cost/Unit

Break Even Selling Price Analysis. Definition? Interpretation? Reference? Write at

least one paragraph.

Variable Costs + Fixed Costs

Break-Even-Selling-Price =
Unit Volume

Break Even Sales Analysis. Definition? Interpretation? Reference? Write at least one

paragraph.

Fixed Costs
Break-Even-Sales =
( Selling Price-Variable Cost )
1-
Selling Price

Test of Return on Capital Investment. Definition? Usefulness? Tells about what?

Write at least one paragraph.

Average Rate of Return. Definition? Interpretation? Reference? Write at least one

paragraph.

Net Income
Average Rate of Return =
Initial Year Cash Flow
2

Payback Period. Definition? Interpretation? Reference? Write at least one paragraph.

Initial Year Cash Outflow

Payback Period in Years =
Succeeding Annual Net Cash Flow

Capital Budgeting. Definition? Usefulness? Tells about what? Write at least one

paragraph.

Net Present Value. Definition? Interpretation? Reference? Write at least one

paragraph.
 bi - c i
Net Present Value =
( 1 + r )n

Internal Rate of Return. Definition? Interpretation? Reference? Write at least one

paragraph.

bi - ci
Internal Rate of Return = NPV = =0
( 1 + r )n

Benefit-Cost Ratio. Definition? Interpretation? Reference? Write at least one

paragraph.

bi
Benefit-Cost Ratio =
1 = a ( 1 + r )n
ci
i = a( 1 + r )n

Where: b i = benefit in period i Where: c i = cost in period i

Where: r = discount rate Where: n = discount period

Chapter 4

RESULTS AND DISCUSSION

Marketing Study
Product Description

Describe the main product or service of the proposed business as well as other secondary

products. Compare the product or service to that of competitors. Include all costs involved in

the packaging of the product. This section can have 2 to 3 paragraphs.

Demand Analysis

Mention the target market of the proposed business. Gather the historical population (at

least for the past 6 years) which will be the basis of the 5-year projected population (excluding

2015). Summarize the historical population on the table below and indicate the source.

Table 4-1
Historical Number of Households
Number of Increase Growth
Year
Households (Decrease) Rate
2009 3,025
2010 3,138 113 3.74%
2011 3,156 18 0.57%
2012 3,254 98 3.11%
2013 3,318 64 1.97%
2014 3,396 78 2.35%
Total 19,287 371
Average 3,215 74 2.45%
Source: City/Municipal/Barangay Hall of _______________.

Choose the projection method to be used on the historical data based on the observed

trend and briefly explain why it is the appropriate method. Indicate the formula and present the

supporting computations in Appendix ?. Also tabulate the projected population and refer to the

detailed computations in the appendices.

 Statistical Straight Line Formula

Y = a + bX

∑Y - b∑ X
Where: a =
n

∑X∑Y
∑XY -
n
Where: b =
∑X2
∑X2 -
n

Table 4-2
Projected Number of Households
Number of Increase Growth
Year
Households (Decrease) Rate
2015 X,XXX
2016 X,XXX XXX X.XX%
2017 X,XXX XXX X.XX%
2018 X,XXX XXX X.XX%
2019 X,XXX XXX X.XX%
2020 X,XXX XXX X.XX%
Total X,XXX XXX
Average X,XXX XXX X.XX%
Source: Appendix 3

Say something about how the questionnaires were distributed to the sample size in

Chapter 3 under Population and Sampling Technique and summarize in the table below.

Table 4-3
Questionnaires Distributed and Retrieved
Questionnaires Questionnaires
Location Population Sample Size
Distributed Retrieved
Barangay A 0,400 114 120 115
Barangay B 0,300 086 095 086
 Barangay C 0,300 086 095 087
Total 1,000 286 310 288
Source: Appendix ?

Use the results from the retrieved survey questionnaires to measure total demand and the

proposed business’ demand in quantity and in peso for the next 5 years (2016 – 2020). (Present

the actual questionnaires to your adviser for verification when you submit your Marketing Study

for checking.)

Demand is present when there are customers who are both willing and capable to buy

your product or avail of your service. Present the tabulated results of the survey questionnaire

and structured interview/s in the appendices. Describe, interpret and explain each of the results

of the survey questionnaire in determining total demand. So, what can you say? Is there a great

demand for the product or service? Include 2 to 3 paragraphs in this section.

Table 4-4
Projected Total Demand in Quantity and in Peso
Demand in Increase Growth Demand in Increase Growth
Year
Quantity (Decrease) Rate Peso (Decrease) Rate
2016 000,000 ₱0,000,000
2017 000,000 0,000 % ₱0,000,000 ₱000,000 %
2018 000,000 0,000 % ₱0,000,000 ₱000,000 %
2019 000,000 0,000 % ₱0,000,000 ₱000,000 %
2020 000,000 0,000 % ₱0,000,000 ₱000,000 %
Total 000,000 0,000 ₱0,000,000 ₱000,000
Average 000,000 0,000 % ₱0,000,000 ₱000,000 %

Source: Appendix ?

After total demand, start discussing the demand for the proposed business based on the

question: “If a new _____________ business will be established, will you patronize the

product/service?”
 Describe, interpret and explain the results of the survey questionnaire in determining

demand for the organization’s products/services. So, is there a demand for your proposed

product or service? Out of the total population, how many are willing to avail of your products

or services? What product/service do they prefer? Include 2 to 3 paragraphs in this section.

You may show a graph to depict the trend in demand.

Table 4-5
Projected Organization’s Demand in Quantity and in Peso
Demand in Increase Growth Rate Demand in Increase
Year Growth Rate
Quantity (Decrease) Peso (Decrease)
2016 000,000 ₱ 0,000,000
2017 000,000 0,000 % ₱ 0,000,000 ₱ 000,000 %
2018 000,000 0,000 % ₱ 0,000,000 ₱ 000,000 %
2019 000,000 0,000 % ₱ 0,000,000 ₱ 000,000 %
2020 000,000 0,000 % ₱ 0,000,000 ₱ 000,000 %
Total 000,000 ₱ 0,000,000
Average 000,000 0,000 % ₱ 0,000,000 ₱ 000,000 %

Source: Appendix ?

Supply Analysis

Who are your competitors within the target market? How many competitors are there? If

there is no direct competitor, identify those businesses that provides a similar or substitute

product or service.

Know the unique characteristics of the products/services of your competitors, their sales

trend, their capacity, etc. Write at least two to three paragraphs about these matters.

Gather historical data on the supply situation within the target market for the past 6 years

(2009-2014). Say something about the supply situation upon analysis of the detailed supply

computation shown as part of the appendices. Who’s your strongest competitor?

Table 4-6
Historical Capacity of Competitors
Historical Increase Growth
Year
Capacity (Decrease) Rate
2009 ₱ 0,000,000
2010 ₱ 0,000,000 ₱ 000,000 %
2011 ₱ 0,000,000 ₱ 000,000 %
2012 ₱ 0,000,000 ₱ 000,000 %
2013 ₱ 0,000,000 ₱ 000,000 %
2014 ₱ 0,000,000 ₱ 000,000 %
Total ₱ 0,000,000
Average ₱ 0,000,000 ₱ 000,000 %
Source: City/Municipal Hall of _______________ or Interview shown on Appendix ?

If historical data is not available, at least gather enough data to fill up the following table.

Table 4-7
Projected Supply in Quantity and in Peso
Capacity in Capacity
Name of Competitor Location
Quantity in Peso
AAA Company Dasmariñas City 000,000 ₱ 0,000,000
BBB Company Batangas City 000,000 ₱ 0,000,000
CCC Company AUP City 000,000 ₱ 0,000,000
DDD Company Greenfield City 000,000 ₱ 0,000,000
EEE Company SM City 000,000 ₱ 0,000,000
FFF Company Naga City 000,000 ₱ 0,000,000
GGG Company Pasay City 000,000 ₱ 0,000,000
Total 000,000 ₱ 0,000,000

Source: Appendix ?

After analyzing historical data, project the supply for the next 6 years using the projection

technique that is considered appropriate. Explain how this might affect the overall performance

of the proposed business.

 You may show a graph to depict the trend in supply.

Table 4-7
Projected Capacity of Competitors
Projected Increase Growth
Year
Capacity (Decrease) Rate
2009 ₱ 0,000,000
2010 ₱ 0,000,000 ₱ 000,000 %
2011 ₱ 0,000,000 ₱ 000,000 %
2012 ₱ 0,000,000 ₱ 000,000 %
2013 ₱ 0,000,000 ₱ 000,000 %
2014 ₱ 0,000,000 ₱ 000,000 %
Total ₱ 0,000,000
Average ₱ 0,000,000 ₱ 000,000 %
Source: City/Municipal Hall of _______________ or Interview shown on Appendix ?

Demand and Supply Analysis

Is there a gap between demand and supply? Is demand greater? Or is supply greater?

Remember to compare total demand against total supply. Don’t use the organization’s demand.

Assuming total demand is greater than supply, what is the market share of the proposed

business? Is it greater or lesser than the organization’s demand? Summarize the comparison in

the table below. You may also choose to present a graph to visually compare the relationships

among total demand, total supply, market share and the organization’s demand.

Table 4-7
Comparison of Demand and Supply in Quantity
Total Demand Total Supply Market Organization’s
Year
in Peso in Peso Share Demand
2016 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
2017 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
2018 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
 2019 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
2020 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
Total ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000 ₱ 0,000,000
Source: Appendix ?

Marketing Plan

Product. Discuss what you plan to do with the product to make it more attractive than

the products of the competitors as to design, style, packaging, etc.

Explain how the sales people will be chosen, trained, and motivated to push forward the

sales of the proposed business.

Include the product planning cost in the production budget.

Promotion. What will be the promotional activities of the proposed business? Choose

activities that are appropriate based on industry practices. Indicate the budget needed to execute

the promotions. Be realistic!

Price. How will the product be priced? What pricing technique will be used? How is

the organization’s price compared to that of competitors? Remember: most of the time, the price

influences a customer’s decision whether to buy or not. If the price is right, then your business is

right on track.

Place. Describe how the product or service will be made accessible or available to the

target market. How will the product be distributed to the customers? Estimate the costs and

include in the technical and financial studies.

Prepare a table to summarize the Marketing Plan of the proposed business using the

following guide.
Table 4-8
Marketing Plan
Programs Resources Needed
Strategies Activities Schedule Cost People Tools

Technical Study
Production or Service Process

How will the product/s be produced? How will the service be provided? Indicate and

discuss the steps as well as the time consumed and the cost added in each step. Prepare a flow

chart to summarize the process.

Include around 1 or 2 pages in this section. Make sure that you are able to sufficiently

document and explain every step. If there are additional terms that need to be defined, add it in

your list in Chapter 2.

Purchasing of Materials. ?

Preparation. ?

Execution. ?

Storage. ?

Step ?. ?

Equipment, Machinery, Furniture and Fixture

What technology will be used in the production process? Will it be manual, mechanical,

automated, or robotics?

List and briefly describe all the necessary machinery, equipment, furniture and fixture

and from where they can be acquired. Summarize the costs, estimated useful lives and

depreciation method in a table and indicate the source/s. Set a capitalization policy such as “the

business shall only capitalize furniture and equipment costing at least ₱10,000 per unit and all

other items below this amount will be recorded as an outright expense under the account title

Small Equipment, Furniture and Equipment.”

Explain why it is appropriate to use straight-line depreciation or any of the accelerated or

activity-based depreciation methods.

Table 4-?
List of Equipment, Furniture and Fixtures
Unit Total Estimated Annual
Description Quantity
Cost Cost Life Depreciation
Lenovo Laptop 13” ₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
Carrier Air Conditioner ₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
₱ 000,000 1 ₱ 000,000 3 ₱ 00,000
Total ₱ 000,000 ₱ 000,000 ₱ 00,000

Source: Appendix ?

List and briefly describe all the small machinery, equipment, furniture and fixture and

from where they can be acquired. Summarize the related costs on the table below.

Table 4-?
List of Small Equipment, Furniture and Fixtures
Description Unit Cost Quantity Total Cost
2009 ₱ 0,000 1 ₱ 00,000
2010 ₱ 0,000 1 ₱ 00,000
2011 ₱ 0,000 1 ₱ 00,000
2012 ₱ 0,000 1 ₱ 00,000
2013 ₱ 0,000 1 ₱ 00,000
2014 ₱ 0,000 1 ₱ 00,000
Average ₱ 0,000 ₱ 00,000

Source: Appendix ?
Building

Will the proposed business need construct its own building or just lease/rent an existing

building? Explain the reason for the choice.

If the building is to be constructed, include the bill of materials with corresponding

itemized costs and the total cost to be presented in the appendices. What will be the estimated

useful life of the building and how will it be depreciated?

If the building will be leased, include a copy of the lease contract in the appendices and

show the computation of the monthly rental.

Location

Gather the provincial map and highlight the town/city where the business will be

established. On the town/city map, indicate the specific barangay. Then, on a site map of a

portion of the barangay, pinpoint the exact location. Put legends on the map.

Describe the distance of the proposed project from its competitors, suppliers, public

markets, roads, and communication facilities. Also describe the environmental condition of the

place. Indicate the cost of going to the proposed from a certain point.

Layout / Floor Plan

Describe the arrangement of the interior of the building as well as the surroundings.

Where will be the office, reception area, CR, production area, entrance, exit, etc.? Also indicate

where each equipment/furniture/fixture will be positioned to ensure the smooth flow of

operations.
Capacity and Scheduling

Based on your description of the production/service process, determine the maximum

capacity of the business considering the employees, equipment, and time available.

What time will the business open and close? Will the business operate for 5 days a week

or 6 days? Prepare the work schedule of every employee from the first minute of the day up to

the last minute. Would it be necessary to have two shifts? Remember that a normal working day

has 8 hours excluding 1 hour lunch break and at least 15 minutes break in the morning and in the

afternoon.

Waste Disposal

Identify the wastes that the business will produce and discuss how it should be disposed.

Who will pick-up the trash and where will it be dumped? How much should the business pay for

the service?

Utilities and Other Operating Costs

Indicate the utilities that the business will need to incur such as electricity, water,

telephone, internet. Estimate the monthly and annual cost for each. You will include this in the

income statement that will be prepared in the Financial Study.

Imagine all the other operating costs that will be normal for such a business and also

estimate the monthly and annual cost. Please try to be as realistic as possible in making the

estimates by asking people who are knowledgeable about these expenses. You will also include

this in the income statement that will be prepared in the Financial Study.
Table 4-?
Utilities Expense
Monthly Annual Allocated to Allocated to
Utilities
Cost Cost Production Operations
Electricity ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000
Water ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000
Telephone ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000
Internet ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000
Fuel ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000
Total ₱ 0,000 ₱ 00,000 ₱ 00,000 ₱ 00,000

Source: City/Municipal Hall of _______________ or Interview shown on Appendix ?

Production Cost

Determine the costs that would be directly part of the product/service — all inventoriable

costs based on what you learned in cost accounting.

Start by determining the quantities for direct materials, indirect materials and direct labor

depending on how much will be produced per batch, considering the capacity of machinery and

equipment, the number of employees available, and the availability of raw materials.

How much raw materials and labor hours will be needed to produce a certain output per

batch or shift? Just multiply quantity by the price per kilo/sack/liter of raw materials or the rate

per direct labor hour.

For factory overhead, make a reasonable estimate of the percentage of other operating

costs as determined on the previous section that applies to production. For example, 80% of

electricity is related to production. So, assuming the total monthly cost is ₱2,000, multiply by

80% so you get ₱1,600 then divide by the 40 (assumed total number of batches in a month) so
the allocated electricity cost per batch will be ₱40. Don’t forget to also include indirect labor

and other expense items that are solely related to production.

Upon considering factors such as ordering, transportation, and other processing costs and

storage costs, determine the economic order quantity, reorder point, and safety stock levels.

Present the detailed computations of total production cost per week, per month, and per

year on the appendices.

Quality Control

How will the business ensure the quality of its product/service? Who will be in-charge?

At what point/s of the production/service process would quality checks be placed? Identify the

costs involved in ensuring consistent quality output and add to operating expenses.

Other Forms of Internal Control

Internal control is a process designed to provide reasonable assurance of achieving the

following: (1) Generating reliable financial accounting information, (2) Safeguarding assets, (3)

Complying with applicable laws and regulations, (4) Operating efficiently and effectively.

The internal control process starts with the (1) identification of organizational risks that

affect the accomplishment of objectives. Next is the (2) design of the control environment, (3)

design and implementation of controls activities to prevent or detect errors, (4) communicate the

policies effectively through information and communication process, and (5) monitoring of the

effectiveness of the controls to operate effectively.

So enough for all the FYI about the COSO internal control framework…
 Practically, what you must do is imagine/create/design a strong system within your

proposed business to ensure good cash flows, avoid uncollectible accounts receivable, safeguard

assets such as inventories and PPE, control production and other operating expenses.

Chapter 4

RESULTS AND DISCUSSION

Organizational and Human Resource Study

Form of Ownership

Sole proprietorship, partnership, corporation or cooperative?

Organizational Requirements

List all the requirements to form the business

Organizational Structure

How would authority flow through the organization?

Manager

Secretary

Staff Staff Staff

Personnel Requirement

How many employees would the proposed business hire?

Qualification Standards

Basis for hiring employees

Table ?
Qualification Standards
Job Title Education / Experience Personal Qualities
Manager BS Accountancy or BS Accounting Trustworthy
Technology
1-year experience
Secretary BS Office Administration Friendly
1-year experience Courteous
Staff High School

Job Descriptions

Duties and responsibilities of each employee

Compensation Package

How much will each employee receive every month? What benefits will be granted to

employees in addition to the basic salary/wage?

Projected Time Table

What are the steps in organizing the business and the time allotted for each?

Activities 1 2 3 4 5 6 7
Preparation of Feasibility
Study
Renovation
Acquisition of Equipment
Hiring of Employees
Promotion
Start of Operations

Figure ?. Gantt Chart of Projected Time Table

Strategic Management Study

Strategic Framework

Mission. This is the main reason for the existence of the business — what the business

wants to achieve at the present time and in the not so distant future.

Vision. This is what the business wants to become in 5 or 10 years’ time. You look

forward into the future and imagine what your business will be like.

Objectives. These are the specific …

Marketing.

4. To …

5. To …

6. To …

Operations.

7. To …

8. To …
 9. To …

Human Resource.

Finance.

10. To …

11. To …

12. To …

Key Result Areas (KRA). ???

Performance Indicators (PI). ???

Strategies. ???

Programs. ???

Activities. ???

Tasks. ???

Strategic Evaluation

How will you know if the business, product/service, employee is performing well? Who

will evaluate the business, product/service, employee? When will the evaluation take place?

Other Strategies and Plans

Contingency Plan. If there is sudden power failure, natural calamities, absent

employee/s, what will you do?

 Alternative Plan. If Plan A (the Strategic Framework) fails, what will you do? Can the

assets be diverted into a different business or industry? Can the employees be transferred to that

new business?

Exit Strategy. If the business needs to shut down for financial reasons, what will happen

to the employees? What will you do with the assets of the business? How will you pay

outstanding liabilities?