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A Business Plan Presented to the Faculty of the Graduate School ASIAN FOUNDATION DEVELOPMENT COLLEGE Tacloban City, Philippines
In Partial Fulfillment of the Requirement for the Degree MASTERS IN BUSINESS ADMINISTRATION
Frederick Carlos Bartolome Ma. Gina Franco Loreta Baldonaza Erlette Mendoza Asel Dacatimbang
TABLE OF CONTENTS Page Title Page Table of Contents List of Tables List of Figures Executive Summary THE BUSINESS PLAN THE BUSINESS NAME BUSINESS BACKGROUND THE MANAGEMENT TEAM STRATEGY FORMULATION Vision Mission MARKET SUMMARY STRENGTH-WEAKNESSES OPPORTUNITIES-THREATS External Factors Economy Demography Customers Competition Technology Political/Social Forces i ii v vii 1 2 2 2 3 4 4 4 5 6 6 6 7 7 8 8 11
Government Taxation Climate Internal Factors Products and Services Financial Resources Facilities, Machineries and Equipments Management and Labor Relations Managerial Competence Human Resource Management Marketing Finance and Accounting Operations/Production Research and Development Management Information System BUSINESS STRATEGY (STRATEGY SELECTION) OBJECTIVES AND GOALS
11 12 13 13 14 14 15 16 20 21 22 23 25 26 29 32
Projected Sales Market Share Return on Investment (ROI) Human Resource Requirement PROCESS: FUNCTIONAL PLANS
32 33 34 34 35
iv Historical Demand Analysis Historical Supply Analysis Historical Demand-Supply Analysis Projected Demand-Supply Analysis Market Share Computation Marketing Mix Strategies Marketing Budget Production Plan Product Specification Production Process Equipment and Machinery Management and Labor Relations Production Management/Personnel Organizational Plan Legal Form of the Organization Organizational Structure Personnel Policies Financial Plan Total Capitalization Source of Funds Projected Income Statement Projected Balance Sheet Projected Cash Flow 35 36 37 40 41 42 43 43 44 44 49 50 50 51 51 51 55 56 56 57 57 59 63 .
v Financial Analysis CONCLUSION SCHEDULES 66 73 74 .
vi LIST OF TABLES Table 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Permits and Licenses Projected Sales Human Resource Requirement Historical Demand for Agar-agar Products Historical Supply of Agar-agar Products Historical Demand-Supply Analysis for Agar Products Projected Demand Projected Supply Projected Demand-Supply Analysis for Agar-agar Products Market Share Equipment and Machinery Production Personnel Administrative Personnel and Support Staff The Project Cost Projected Income Statement Projected Balance Sheet Projected Cash Flow Annual Net Profit Margin Return on Investment Current Ratio Debt Ratio Page 12 33 35 36 37 38 39 40 40 41 49 50 52 57 58 60 64 66 68 69 70 .
vii 22 23 Equity Ratio Growth Ratio 71 72 .
viii LIST OF FIGURES Figure 1 2 3 4 Graphical Presentation of the Management Information System Schematic Diagram of the Production Process Flow The Marketing Plan Layout The Organizational Structure of FGLEA Manufacturing Industry Page 28 46 48 53 .
00 : P 17.00 .278.150.278. Gina Franco Loreta Baldonaza Erlette Mendoza Asel Dacatimbang Estimated Project Cost Fund Source Loan Equity : : P 10.150.000.000.1 EXECUTIVE SUMMARY Highlights of the Study Name of the Project Project Proponents : : FGLEA Manufacturing Industry Frederick Carlos Bartolome Ma.00 P 7.
Hence it is advantageous for the business. thickening or water-holding properties in various products. One of the most important varieties of seaweeds is Agar or Agar-agar. which is commonly grown in the Philippines. Agar or agar-agar is a gelatinous substance derived from a polysaccharide that accumulates in the cell walls of agarophyte red algae. Tacloban City was the best choice since the location is the regional economic epicenter of Region 8. suspending. It is located in the agro-economic section considering that there is a vacant and spacious lot. the words ³manufacturing industry´ are included in the business name to indicate the main features of the project. It is chiefly used as an ingredient in . The idea of processing agar-agar was conceived when five individuals agreed to establish a business that will venture into the manufacturing/processing niche. It is a valuable substance used in gelling. On the other hand. II. the choice of this acronym will avoid duplication which is a common problem when registering a business with the government. THE BUSINESS NAME The name of the business is FGLEA Manufacturing Industry. The proponents decided to establish their business in Brgy. BUSINESS BACKGROUND FGLEA Manufacturing Industry is a processing plant for Agar-agar seaweeds with Region VIII as the target market. Seaweed is a mass growth of marine algae from natural stock or from pond culture. Tacloban City. one of the world's foremost food and industrial additives. Agar is the source of agarose. The first five letters is an acronym consisting of the first letter of the given names of the five project proponents. Virtually. Bagacay.2 THE BUSINESS PLAN I.
in jellies. a thickener for soups. However. Agar can be used as a laxative. Frederick Bartolome . They have very wide spectrum of experiences in the government and private sectors that make it very advantageous in so far as managing the business is concern. . this business will concentrate and specialize on a product for human consumption. ice cream and other desserts. the biggest Cooperative in Tacloban City. Hence. And this demand will continue to rise since it is use for human consumption. III. The processing of agar seaweeds into gelatin has a large business opportunity.He is a member of the Board of Directors of PHCCI. THE MANAGEMENT TEAM The management team of the business is the project proponents and/or owners of FGLEA Manufacturing Industry. It will click in the market being ³health-friendly´ as an organic derivative rather than the one with animal origin. and for sizing paper and fabrics. Hence. The members of the Management Team are: 1. The demand is high even if there are competitors.3 desserts and also as a solid substrate to contain culture medium for microbiological work. It is called Organic Gelatin which is to be derived from the raw material of red and brown seaweeds that are grown in large and commercial quantities in the country. the project has a good prospect for a viable business endeavor. as a clarifying agent in brewing. there is no problem in so far as the availability of raw materials for the processing plant is concern. He is experienced in managerial work. a vegetarian gelatin substitute.
he is willing to do so anytime. In fact should there be a need for him to resign as Board of Director of PHCCI. 4.4 2.She is the Planning Officer of the Department of Environment and Natural Resources. Mission To produce steady supply of agar processed products in order to satisfy the needs for gelatin as derivative for food. Ma. Frederick Bartolome will act as the General Manager because his present work is not full-time. she is a planner. Loreta Baldonaza . all of the officers listed above have been in the service for more than ten (10) years and all of them are still active in their present positions. She is an expert in records management. and snacks in Region VIII. IV. Actually. Asel Dacatimbang ± She is a Social Welfare Officer at the Department of Social Welfare and Development. hence good in managing the management information system or promotion and/or advertisement. Gina Logronio Franco ± She is a Cashier at the Department of Work and Highways. STRATEGY FORMULATION Vision FGLEA Manufacturing Industry seeks to be one of the leading business organizations in the processing of agar-agar seaweeds producing high quality Organic Gelatin for human consumption. However. 3. 5. She knows accounting and/or financial management. . Erlette Mendoza ± She is a Registrar of the National Maritime Polytechnic. beverage. Obviously.
It was estimated in 2009. Bureau of Trade and Exports). Western Visayas accounts for 35% of the total agar production while Region VIII.000 families are engaged in seaweeds farming and about 72% of these families are located in Mindanao. Eastern Visayas contributed 2.88% only (http:/www. shipped to Cebu or Manila (Bureau of Fisheries and Aquatic Resources). small bars of gelatinous extracted agar will be packaged and labeled with a catchy name ³Organic Gelatin´. there are three processing plants in Zamboanga City producing agar gel. In Zamboanga City. which is the target market of this business has only a share of 15% of the total production. the Philippines as of 2009 had a total production of 283. Presently processed and dried agar seaweeds are exported to numerous international markets. On the other hand.000 families. agar powder and dried agar. particularly in the ARMM provinces and the Zamboanga Peninsula.org/docrep/field/ . What is lacking in the present marketing of dried agar seaweeds is packaging. Of this production. MARKET SUMMARY The Philippines is a dominant producer of the cultured Gracilliara and Gellidium species upon which the Agar industry depends (DTI. In this business. At present. In terms of volume of production. Farms for the culture of seaweed in Region VIII are mostly located in the province of Southern Leyte.fao.5 V. it has more than 2.785 metric tons of cultured seaweeds. that some 100. Another processing plant will operate in year 2011 that will also produce the same products. Mindanao accounts for 50% of the agar seaweeds production of the entire Philippines.482 metric tons which is about 0.000 hectares devoted to the agar seaweeds farming providing livelihood to more than 3.
local seaweed processing is limited only to agar-agar which is utilized purely for food. External Factors 1.6 003/ACO72E/ACOP72E04. and other desserts. seaweed industry contributed about 27% of the total 2002 fisheries production. It is full of unexplored opportunities. According to the website cited above.670. the market performance of seaweed industry has manifested a remarkable performance. STRENGTH-WEAKNESSES -OPPORTUNITIES-THREATS (SWOT ANALYSIS) A. Roughly. However. the value of these cultured seaweeds in the Philippines is P1. Economy It has been said that seaweed is an important component of the marine ecosystem along with the mangrove and coral reefs and can be viewed into two perspectives. the value of cultured seaweeds in Eastern Visayas is nil.net/ InvestmentSeaweeds.00 only (http://www. However. Organic Gelatin as the sole product of this business will be sold in the market for thickener for soup. beverages. On the same period.zamboanga. it is only 0.htm).00. the target market of this business (Eastern Visayas) has rich potential for FGLEA Manufacturing Industry. Indeed.220. for Eastern Visayas the value of cultured seaweeds is P388. In other words.000.´ Along this line. ice cream. from the ecological value as well as its economic uses. Therefore.023% of the entire country¶s value. The steady increase in production for the past five years (1997-2002) can be attributed to high market . VI. ³the industry (seaweed) is finding a growing use of processed seaweeds as evidenced by the increasing demand in the market. In terms of its economic considerations. fruit preserves.htm).000.
Seaweed farming used to be an alternative livelihood in the 80s. canteens who are servicing meals and snacks that include gelatin. and good weather condition that encourage farmers to expand their areas for seaweed culture. Ormoc City. Demography The targeted market of agar products is Eastern Visayas. Customers FGLEA Manufacturing Industry seeks to specifically capture a portion of the local market where customers consist of End-users (for home consumption) and Consumermarket (sellers of food and beverage).´ The seaweed industry in the Philippines is considered to be a huge contribution to the economy of the country. Tacloban City.000 manpower where 90% are seaweed farmers and the rest are seaweed processors and traders. However. better price. Nonetheless. the population of the younger generation who are frequenting fast-foods. the Philippines is the world¶s largest supplier of Agaragar products garnering 68% of the total demand. Calbayog. But it is now emerging to be an important and major livelihood in the coastal areas.ph/pages/Programs/prog-seaweed.html). and Catarman. The center of distribution are Tacloban City. Borongan.7 demand. snack bars. Naval. Maasin City.gov.bfar. End-users are those who will be served by ³door-to- . the location of the processing plant is the focal point of the marketing network. eateries. Catbalogan.000-120. According to the Bureau of Trade and Exports of the Department of Trade and Industry. the industry employs between 100. 3. Biliran. ³In the Philippines. 2. According to the website (http//www.da.
Nula-Tula. improvements in presses and freezing equipment must be noted. Gracilaria and Gelidium are the principal seaweeds for commercially producing agar.8 door´ delivery system. Gaisano. as to the use of raw materials. because it has been successfully cultivated in the country. it can be considered a competitor. although some are using the freeze/thaw technology. High-pressure membrane presses have greatly improved dewatering of agar and thereby reducing energy requirements for final drying before powder milling. Technology Most processors are using the press/syneresis technology. Gracilaria has become the preferred seaweed for making food grade agar. and Wilmar¶s. FGLEA Manufacturing Industry has no competitor as regards marketing. the consumer-market are groceries and/or stores who are either retailing or wholesaling food items. Highway Commercials. The major consumer-market in Tacloban City identified for this business include Robinsons Tacloban Place. 74. While the basic processes may not have changed. a combination of these two technologies is also used. Nena¶s Trading. Hollywood Hills. The only one industry processing agar seaweed (TBK Manufacturing Industry. However. 4. They are the household members who would purchase food items to be cooked at home. Gelidium continues to be the . But this problem can be easily solved with the idea of establishing ³contract growers´ and supporting seaweed farmers to expand their seaweed culture. On the other hand. However. Inc.) located in Brgy. Competition In Region VIII. 5. Tacloban City is not into selling its product in the local market the fact that it is exporting to foreign market.
and sand entrained in the seaweeds to produce a clean and good quality product. the one summarized by the website (http://www. It also reduces bacterial contamination in the seaweed. This is important for agar product quality and yield.html) will be adopted by them.com/2008/10/seaweeds-processing-village-level. Alkali treatment results in a purer product and facilitates the filtering stage as the viscosity of the agar solution is lowered by this treatment. The alkali treatment converts the galactose 6-SO4 to 3. There are eleven (11) steps in this chosen technology. Among many other things. The project proponents have studied some basic procedures in processing agar-agar seaweeds. . well-known chemistry that ³de-kinks´ the polygalactose molecules and enhances the gelling process. e) Chopping to increase the efficiency of extraction. Strong-gelling agar is extracted directly from Gelidium with a dilute acid solution to break down cell walls in a pressure cooker. c) Post-alkali washing to remove as much of alkali from the treated Glacilaria.9 preferred seaweed for making bacteriological and pharmaceutical grade agars and agarose. mud. 6 anhydrogalactose. These process differences explain why it is difficult to optimize the production of agar from both seaweeds in the same process line. to wit: a) Washing of raw materials to remove the sea salts. b) Alkali treatment to improve the getting properties of the product (agar) and making it more valuable. dirt. whereas extracting strong-gelling agar from Gracilaria requires the use of a boiling alkali solution. d) Bleaching to improve the color and appearance of the product.mixph.
This is a convenient method of recovering agar from dilute solutions. It appears from the enumerations of the step by step activities in processing agaragar that it is not highly technical. But since there is more than enough cheap labor in the project area. It is noteworthy however.10 f) Extraction of agar from the Glacilaria is facilitated by utilizing the highest temperature as possible. . that the procedure is labor intensive aside from the need to use machines. In order to dissolve the contained agar. Grinding or milling in order to pulverize the agar bar. the temperature must be above the agar melting point. although this procedure costs considerably more both in equipment capital cost and operational cost than the alternative pressure de-watering method. It can be done in a solar dryer or homemade dryer. and k). i) Thawing to remove the water from the chilled agar bar or frozen gel blocks by exposing it to a normal temperature and air. saves energy during the freezing process for agar bars. g) Gelification to get the filtered extract solution by cooling at ambient temperature. The procedure can be considered easy and simple. The agar solid contained in the gel form a matrix surrounded by ice. there would be no problem in recruiting labor force for the project. normally above 90° C. h) Freezing as the only way to manufacture agar strips and bars. Gel is cut into correct size for agar bars and into small pieces for gel de-watering operation. j) Drying to obtain the maximum of 15% moisture content for good quality product results.
In fact the city was recently approved as a Highly Urbanized City. or Jollibee have changed the eating habit of the people that more and more are consuming foods and beverages with agar-agar as an indispensable ingredients. Only recently. Government Taxation The FGLEA Manufacturing Industry will be subjected to the required taxes and other tariffs that the government may impose upon it. Robinsons was opened in Tacloban. and it keeps on expanding. During the operation period. there is the livelihood program of the city government which highly supports small time entrepreneurs to put up economic activities. licenses and certifications. 7. The City had recently organized the Office of Cooperative and Development in support of the livelihood program. On its pre-operation period. which is a brainchild of the City Mayor. The existence of other equally popular establishments. there is stability of the present governance which naturally supports economic activities in the City. the business will pay its annual income taxes . it will pay the needed permits. Political/Social Forces Tacloban City is one of the best locations in establishing a new business considering that the present set of elected leaders is encouraging entrepreneurs to open investment in the City. Specifically. there are no restraining forces that will slow down the implementation of programs related to commerce and industry since the incumbent City Mayor is aptly supported by the majority of the City Councilors. Gaisano had opened another branch. These are basic requirements for the business to operate. like MacDonald. Apparently.11 6. Shakeys. In other words.
Table 1 Permits and Licenses Permits and Licenses DTI Registration City and Business Tax Mayor's Permit Application Fee Clearance Fee Sanitary's Fee Weight and Measure Fire Inspection Total Annual projections: 2012 2013 2014 2015 2016 Note: Permits and Licenses are assumed to increase 5% annually. Cost 600 1500 1800 100 100 500 500 600 5. Table 1 shows the list of permits and licenses with their corresponding cost.00 5.46 6.985. In other words. contracts to purchase with seaweed .25 6. This is a major factor which could contribute to the fluctuation in the supply of raw materials. In the Philippines with so many weather depressions and/or storms in a year. during months and/or periods that these weather depressions and/or storms are less expected.598. Climate One of the major factors that affect FGLEA Manufacturing Industry¶s operation is climate.928.700.39 8.00 6.284.12 and other necessary tariffs that may be levied upon it by the government on its operational activities. the cultural management of the seaweed is naturally affected by the disturbance of the sea in the form of strong waves.00 5.700.
. there is sunlight to hasten photosynthetic activity to assimilate food nutrients by the seaweeds. management will establish network of ³contract growers´ who will be the exclusive suppliers of seaweeds to the business. The specialized service that will be offered by the business is ³door-to-door´ delivery of packaged agar gelatin. this product and kind of service are exclusive of The FGLEA Manufacturing Industry. This is to be utilized purely for food as substitute for animal origin gelatin. In view hereof. The hot and humid temperature of the Philippines is an ideal climatic condition for the cultivation of the said seaweeds. It is noteworthy that the reason why the project is highly feasible is the climate in the Region. The other one is seawater or at least brackish water. At present. This is so because according to the website (http://en. Internal Factors 1. when climate is not favorable to the culture of the seaweed. B. the FGLEA Manufacturing Industry management will jibe its production target with the supply of raw materials.wikipedia. the need for raw materials will be reduced by lowering its operation target.org/wiki/Seaweed). On the other hand. Products and Services The FGLEA Manufacturing Industry will concentrate and specialize on the production of Organic Gelatin. one of the two specific environmental requirements for seaweed ecology is the presence of sunlight to drive photosynthesis. Obviously.13 producers can be optimized. But to handle the bad effects of fluctuation in the supply of raw materials.
3. including building construction supervision will be entrusted to a Civil Engineer. The floor plan of the processing plant that will be constructed will have nine (9) sections such as.000. The remaining area will be allocated for parking lots. the administration building and processing plant building with modern equipment and machineries in order to provide quality. Hence.14 2.150. 2) cleaning . The equity contribution amounting to P 7. The external fund amounting to P 10. 3. 1) raw materials storage area.1 Project Facilities ± The proposed project will occupy a lot area of 1.00% per annum payable in 10 years. Tacloban City.500 square meters with a one-storey administration building occupying about 225 square meters and a processing plant building using approximately 297 square meters. 93 (Bagacay). building design and estimates. and for future plant expansion. Facilities. The ground development plan. the internal and the external sources. Financial Resources The financial resources of the FGLEA Manufacturing Industry will be generated from two sources.278. The internal fund is the equity of the project proponents as their investment to the business. The proposed project will be located at the Agri-Economic Zone of Tacloban City in Brgy.278.150 will be equally divided among the five project proponents. Machineries and Equipments The proposed business will build two buildings. fast and efficient processing of agar. water treatment facility. namely. will be loaned at the Development Bank of the Philippines with an interest of 12. the total estimated project cost of the business is P 17. quarters for production personnel. building plan.000 on the other hand.
4.2 Equipment and Machineries . It will have adequate fixtures of a presentable office. 8) milling area. 7) drying area. All equipment and machineries to be installed in the processing plant including tricycles will be brand new. while cargo trucks and vans are to be slightly used secondhand units. and 9) finished goods storage area. 3) extraction area. 5) gelation area (bleaching). vehicles will also be purchased to transport raw materials from the source to the processing plant and deliver finished products to the costumers. 6) gelation area (syneresis). 4) filtration area. the Administration Building will be furnished with electric funs and will be provided with one computer.15 area. The table on equipment and machineries is to be presented later (Table 11). In addition. On the other hand. Management and Labor Relations .The proposed Agar processing plant will be equipped with different equipment from preliminary process up to the last stage of processing network. 3.
The confidentiality agreement lays out binding terms and conditions that prohibit the employee from disclosing company confidential and proprietary information. and employee expectations. behavior. In order to uphold its reputation as an employer of choice. Hence. the decision to terminate an individual¶s employment carries with it the risk of a possible legal challenge. promotions. there should be confidentiality agreement which is a written legal contract between the business and its employees. .16 Understanding legal decisions and legislations is fundamental in the increasingly litigious society. records of contribution and achievement. the management should make it a point to be cautious in making managerial decisions that may pertain to labor relations. The upper level management in adopting a policy of directive democratic managerial system shall respect the right of its employees and shall give them their respective benefits tantamount to the service that they provide to the company. A confidentiality agreement is in effect for the duration of an employee¶s employment. values. Moreover. For the benefit of the company. A Code of Conduct is a written collection of the rules. On the other hand. hence it is but wise to determine first whether it is rightful to terminate an employee or not. a Code of Conduct should be imposed by the company to its employees. relationships that an organization considers significant. disciplinary notices. principles. and performance record shall be kept on file in the hard disk. It's a good idea for business to maintain a personnel file for each employee. To avoid this problem. labor requirement that can be classified as seasonal shall be hired on contractual basis. FGLEA Manufacturing Industry shall maintain trust and cohesion with the employees and shall avoid wrongful and unjust terminations. Documentation of employment history.
Research and Development .17 and beliefs that are fundamental to successful operation. Managerial Competence In order to have a successful business. A code of conduct enumerates those standards and values that make an organization remarkable and that enable it to stand out from similar organizations. This would avoid conflict of interest. points of view. or allegiances. 5. so the agar is more pure. the proponents of this study who will compose the ³Management Team´ of the project will ensure managerial competence on all levels of operation. By applying these methods. Although they have different college educational qualifications and disciplines. they are both studying Masters in Management (MM) that unifies them to a common denominator of being potential effective business managers. but they are certainly very adequately prepared to put the theories in their heads into actual practice. FGLEA Manufacturing Industry will have a smooth sailing operation. They understand how to exercise their managerial functions. 10. The desire of the project proponents to acquire managerial competence is shown in their present desire to graduate MM. which causes an employee to experience a struggle between diverging interests. . Less energy is also needed in the drying process since less water needs to be removed. This process based on syneresis has been widely adopted by large agar producers who can afford the higher capital costs for this equipment. While it is true that they lack actual experience in running a business. less soluble matter remains.
classify. Management Information System FGLEA Manufacturing Industry will install a centralized Management Information System (MIS) that keeps a database using a computer programmed for the purpose. researching the product according to allocated budget. It will strive to keep the company product range ahead should there be any competitor in the near future. The MIS of FGLEA Manufacturing Industry will reduce the need for multiple hardware. 11. software. supplier of raw materials. R&D of FGLEA Manufacturing Industry is specializing in just one product. and store any item of data which might be potentially useful to the decision maker. This would be advantageous for the business since it provides for the standardization in the collection of data and the release of information. delivering products in time and in full range. space. production quota . Examples of the kind of data that might be recorded in the database are. The business will endeavor to maintain and even enhance the quality of the product.18 In the area of research and development of. and databases because it is centralized. checking if the product meets production costs. personnel. The system's remote users are served by transporting input and output data physically or electronically. and developing the product to comply with regulatory requirements and specified quality levels are serious concerns of the business. On the other hand. It will require high quality control that the new product will meet the product specification. It will be using the Databank Information System which will observe. The equipment will have a password only known to the Administrative Head who will handle MIS to avoid from being corrupted if other users are free to open it. The business will sustain that the new product will be able to comply with some regulations and/or requirements pertaining to quality.
production inputs (daily. data are collected. and total production cost (materials.19 (daily. strategies. processed. projections and models of the business will be re-studied to design possible alternative. Hence. Figure 1 is the graphical illustration of the Management Information System. monitoring of implementation is important to the MIS. . number of work hours devoted by staff to the respective working area. The data that will be contained in the databases stated above can be summarized and converted to single tabular presentation of information easy to understand to management. If the selected alternatives or strategies will not yield to a satisfactory solution. If data is insufficient. production staff assigned in the working area. It is obvious in the figure that the MIS needs reports and/or information. The best alternative will be selected. monthly and annual basis). There will be continuous feedback and follow-up to review the outcome. monthly and annual basis). So. and forecast. changes in assumptions will be done before such alternative is implemented. classified. and presented to aid in the decision-making. labor and over head).
Alternatives (Expected scenario) .What if? . processing. and presentation of data) INFORMATION REQUIRED - Status reports Trend reports Other reports Ad-hoc inquiry Insufficient data DESIGN (Outline alternative.Models and analytical tools . classification. and possible outcome of each alternative) . strategies.Evaluation of alternatives Change in assumptions CHOICE (Selection of the best alternative) REVIEW (Monitoring of implementation) Feedback and follow-up Figure 1: Graphical Presentation of the Management Information System .20 DECISION STAGE INTELLIGENCE (Collection. .Projections No satisfactory solution . forecast.
like its business. production and operations. return on investment. FGLEA Manufacturing Industry will avoid these causes of failure by using market research to confirm demand and assess suitability of proposed offerings. A key to getting through these early years is to avoid the obvious mistakes. Projected Sales After conducting its market study. and human resource requirement. it satisfies the taste of the users´. The Management Team of FGLEA Manufacturing Industry is conscious that any business venture. that of being socially concern of its customers by producing high quality product. BUSINESS STRATEGY (STRATEGY SELECTION) The main strategy of FGLEA Manufacturing Industry is stated in its vision and mission. The trick in avoiding them is to anticipate them by executing appropriate strategies at the outset. management. and raising equity to reduce exposure to interest from loans. the five project proponents have laid down the proposed capacity of the business. market share. It means that ³if it¶s high quality. operations. is most susceptible to failure during its first few years of operation. The discussions are all linked with the business¶ vision and mission of being a producer of high quality organic gelatin agar product. and offering. A. It is apparent from the listing above that there are very many obvious mistakes that the business needs to avoid if only to shun from early failure. FGLEA Manufacturing Industry management will try to avoid these obvious mistakes which include the area of finance.21 VII. VIII. OBJECTIVES AND GOALS The discussion on this topic deals on sales. Table 2 in the next page reflects the projected sales that . market/sales. creating a management team to offset any gaps in experience or expertise.
000.310 Legend: * . the business will start with a production capacity of 100.g.00. how well FGLEA Manufacturing Industry will par against businesses dealing with similar but . ** .000 21.850 15.** (Pesos) 600 618 637 656 675 Projected Sales (Pesos) 12.409.978.Expected to increase by 5% annually.250 2016 24.153 Unit Price/Kg. Market Share While it was said earlier that the business has no competitor in Region VIII in marketing agar organic gelatin. getting a market share will indicate the business¶ market competitiveness. it is actually competing with the ³animal gelatin´ products. the proposed capacity of the processing plant is 121. After five years. Hence. B. In the table. Table 2 Projected Sales Year 2012 2013 2014 2015 Proposed Capacity* (Kgs.000 kilograms of dried agar with a selling price of six hundred pesos per kilo.000 14.000 12.045.188.) 20.Expected to increase by 3% annually.22 the business has targeted over the period of five years.550 kilograms with a selling price of P 675. e. These projected sales were computed by multiplying the proposed capacity of the processing plant by the unit selling price of the product.050 23.000 22.368 16.
C. Thus. The computation of market share for FGLEA Manufacturing Industry is presented in the ³financial plan´ aspect that will be discussed later. Nonetheless. and in order to determine whether the business was capable of handling its assets in order to gain profit. Therefore. Return on Investment (ROI) The Return on Investment will be used to evaluate the investment efficiency of FGLEA Manufacturing Industry. losing. it will enable them to judge not only total market growth or decline but also determine customers¶ selections between organic gelatin or animal gelatin. The business will translate its sales targets into market share in order to demonstrate whether forecasts are to be attained by going with the market or by capturing share from those buying animal gelatin. That is.23 not the same products. The market share will supplement the changes in sales revenue of FGLEA Manufacturing Industry and help its Management Team evaluate both primary and selective demand in the market. It will be adopted in assessing the financial consequences of business as to whether it is gaining. or the rate of return that the business has on its investment. or just break-even so that appropriate decisions and/or actions can be made. . the Return on Investment (ROI) is being computed in order to ascertain whether the proposed project has garnered a positive performance or whether it is a financial failure. the profitability of FGLEA Manufacturing Industry will be measured through its income growth and the marginal return of its invested capital. FGLEA understands that market share is almost always difficult to achieve. it will closely monitor for signs of changes in the competitive landscape. Hence.
000 10.000 10. There are 47 personnel to be hired for the project.000 14.500 5.24 The ROI of FGLEA Manufacturing Industry is computed and presented in the Financial Plan to be discussed later.000 112.000 8.000 5.000 NA Total Monthly Salary 20.000 56. D.000 8.000 15.386.000 11.500 10.000 10. Table 3 Human Resource Requirement Name of Position Manager Production Head Production Unit Operators Production Helpers Administrative Head Supply Officer Storekeepers Accounting Clerk Truck and Van Drivers Tricycle Drivers Janitors Marketing Head Marketing Assistants Total IX.000 15.000 7. the total annual salary is P 4.000 7.000 7. For this number of personnel.000 12.000 7.000 12.000 8.000 8.000 7. It is assumed that this expense will increase 7% per annum. Their corresponding salaries are also indicated. PROCESS: FUNCTIONAL PLANS Number of Personnel 1 1 7 16 1 1 2 1 2 3 2 1 2 47 Monthly Salary 20.000 365. Human Resource Requirement The human resource requirement of FGLEA Manufacturing Industry is presented in Table 3.000.500 .000 16.
Based on the gathered data from the Department of Trade and Industry and the National Statistical Coordinating Board. Table 4 shows the historical demand for dried agar. advertisement and merchandizing.In order to meet with the growing demand.368 4. five-year sales forecast. Supply Analysis .25 A. the demand for Agar Seaweeds has showed a very promising investment opportunity. the demand for dried agar has shown a relative increasing trend in the market. Since year 2006. 1. market share computation. producer of these products continued to supply the market.605 4.605 Years 2006 2007 2008 2009 2010 It is reflected in Table 4 that the historical demand for dried agar is steadily increasing every year. marketing mix strategy. This clearly manifest that the said venture is indeed profitable as reflected by its continued growth in demand.278 5.368] ÷ [5. Demand Analysis . Over the past five years the supply of dried agar had increased by 22% [5.954 5.605 ± 4. Table 4 Historical Demand for Dried Agar Demand (Metric Tons) 4. As shown by the data gathered from the same . 2. Marketing Plan The marketing plan of FGLEA Manufacturing Industry will describe the demandsupply analysis.605]. and marketing budget for promotions.
542 3.334] ÷ [4.822 4.569 2006 2007 2008 2009 2010 A close look at Table 6 shows that the supply has an increasing trend every year. .334 3. Over the past five years the supply of dried agar had increased by 27% [4. This increasing trend in the supply does not only reflect the efforts of the suppliers to produce more but also a natural phenomenon of trying to meet the increasing demand in the market. the quantity of supply for these products has also shown a relative increasing trend.179 4. Table 5 Historical Supply of Dried Agar Year Supply (Metric Tons) 3. .569].26 source above stated. The historical supply of dried agar in metric tons is shown in Table 5.569 ± 3.
The data above reflect that the commercial potential of the Agar-agar seaweeds is an example of a demand-driven development.334 D-S Gap 1. While the trend of both demand and supply are increasing annually. the proponents studied the market situation for the project. Demand-Supply Analysis . Hence. As what can be observed from the data below.368 Supply 3.A close scrutiny of Tables 4 and 5 presented above reveals that the supply is always lower than the demand.With the discussions above. a gap has occurred resulting to an unsatisfied demand in the world market. This clearly implies that the situation can offer a market space for another player. 3. but supply always lags behind throughout the period covered by this analysis. the supply cannot fully supplement the growing demand of the local and world market. The continued growth of its market has made it an important industry in the seaweed sector. wherein the right mixes of financial and institutional support in tandem with private investments has made the prospect of this industry bright. and with the records on demand and supply taken from DTI and NSCB.1 Historical Demand-Supply Analysis .27 3. The market study conducted by the project proponents showed that not only in Region VIII but also in the entire Philippines that agar seaweed is a profitable business. Table 6 Historical Demand-Supply Analysis for Dried Agar Year 2006 Demand 4.034 UD (%) 24 . Table 6 reflects the historical demand ± supply analysis. which might be attributed to different kinds of production or technical factors.
seaweed is one of the richest plant sources of calcium. Roughly this is 4. chlorine. calcium. Seaweed has such a large proportion of iodine compared to dietary minimum requirements´ (http://www. magnesium. The gap in 2006 was 398 metric tons and gradually increased every year that hit 486 metric tons in 2010.099 1.132 1. ranging from 1-5% of dry matter.In order to determine the market situation of the business venture. iron. selenium. The mineral macronutrients include sodium.605 4. respectively.822 4.605 3. molybdenum. The same website also cited that aside from iodine. In the historical demand shown in Table 5.72%. ³seaweed draws an extraordinary wealth of mineral elements from the sea that can account for up to 36% of its dry mass.4%.954 5. the unsatisfied demand in 2006 and 2010 were 24. Hence. protein.32% and 23. potassium.htm).036 23 23 21 18 It is shown in Table 6 that the demand is higher than the supply.179 4. zinc. fluoride. manganese. it is reflected that the percentage increase is 22% over five years. several vitamins.063 1.569 1.org/arts/seaweed. The reason why dried agar seaweed is in demand is it is very nutritious. the micronutrients include iodine. Noteworthy to mention is that the gap between demand and supply is increasing annually. using the Straight-Line Method of the Time Series Analysis. boron.2 Projected Demand .278 5. copper. Hence. sulfur and phosphorus. This is computed by dividing the gap by the demand multiplied by a constant of 100. nickel and cobalt. the proponents conducted a study based on the trends from the gathered data.28 2007 2008 2009 2010 4. 3. the projected demand using 5% increment yearly is adopted.itmonline.542 3. According to the website. and has very little fat. .
180 6.29 The result of the study is shown in Table 7.885 6.Supply was likewise projected in order to have a clear idea of the future market situation of the products.814 7. there is a growing market for the products.289 5. Table 8 indicates the projection of the supply. Table 7 Projected Demand Year 2012 2013 2014 2015 Demand in Metric Tons 5.3 Projected Supply . Table 8 Projected Supply Year 2012 2013 2014 2015 2016 Supply in Metric Tons 4.554 5.830 . Obviously.490 6.154 2016 3.798 5.037 5. The projection is based on the trend of the historical supply shown in Table 5.
324 19 7.087 1.885 6. 4.143 1. the gaps between demand and supply are increasing annually.180 6.154 5. Market Share Computation .The equation used in computing the market share is as follows: Market Share = Proposed Capacity Proposed Capacity + Projected Supply x 100 The results of the computation of the market share of the FGLEA Manufacturing Industry for the next five years are shown in Table 10. This indicates that there is a potential market for the product. Obviously.30 3.201 1. the data disclosed that demand cannot be satisfied by the supply.4 Projected Demand-Supply Analysis .By using the data on the projected demand and projected supply.037 5.554 D-S Gap 1. the Projected Demand-Supply Analysis was computed and presented in Table 9.490 6.260 UD (%) 19 19 19 19 2016 1.798 5. hence opening another market for a new player. Table 9 Projected Demand-Supply Analysis Year 2012 2013 2014 2015 Demand 5. Table 10 Market Share .830 The results in the projection on demand-supply as indicated in the table shows that the unserved demand is 19% yearly. However.814 Supply 4.289 5.
and business developments.848 5.089.289 5.5 5.03 1. Marketing Mix Strategies .611.03 1. These data indicate that there is a good market opportunity for the product of the business since the market share that it requires will not require getting most of it.03%. It generates the strategy that underlies sales techniques.037 5.554 5. It is an integrated process through which the business will build strong customer relationships and create value for their customers and for themselves. a thorough marketing plan is indeed needed in order for the business to be successful. FGLEA Manufacturing Industry¶s marketing mix is a combination of marketing tools that are used .Since the primary objective of FGLEA Manufacturing Industry is to gain profit.13 (Tons) 4. 5.798 5.344.890.03 1.88 5.Refer to Table 2 on projected sales.03 57.13 5.5 55. ** .31 It is shown in the table below that there is a good market opportunity for the products of the business.Refer to Table 8 on projected supply.88 60. Projected * Supply Proposed ** Capacity Proposed Capacity + Projected Supply Market Share Year (Tons) 2012 2013 2014 2015 2016 4.830 (Tons) 50 52.03 1. business promotion. It is shown in Table 10 that the market share of FGLEA Manufacturing Industry for the next five years is only 1.77 * . It is a process through which the customers may gain interest of the product thereby producing vital sales to the business. Specifically.77 (Percent) 1.
3 Place ± The FGLEA Manufacturing Industry will distribute its product in wholesale to its consumers-market (grocery stores) and retail to end-users (homeowners).com. Its strategy is controlled by the following variables: 3. Our marketing strategy will depend on how effective and efficient we are in reaching our targeted market identified earlier. 3. raw materials.4 Promotion ± The marketing strategy of FGLEA Manufacturing Industry will include less expensive modes of promotion but are effective and efficient. such as. The product will be promoted as health-friendly being non-fat. And the cost of promotion is very . 3. 3.2 Price ± FGLEA Manufacturing Industry will adopt the generally accepted pricing of adding 20% net income over and above its production cost. It will also distribute free samples in limited quantities from time to time. All other expenses. Marketing Budget ± The marketing budget of FGLEA Manufacturing Industry is mainly for promotions. labor.32 to satisfy customers and company objectives.google. 4. the selling price of the product will be influenced by the factors affecting production cost.1 Product ± The best marketing strategy of FGLEA Manufacturing Industry is its product. such as salaries for employees making the promotion are built-in in the other areas of budgeting. It will also take advantage of the free ads at http://www. and other expenditures directly related to it. Therefore. It will distribute printed leaflets at the main entrance of malls/grocery stores. The business will produce and deliver quality products to its customers and will make sure that its product satisfies the consumers.
this business has a very conservative estimate of ten thousand pesos (P10. 2.The basic extraction of agar from seaweeds starts with washing and cleaning the seaweed to remove foreign matter.The proposed business will offer good quality products of processed seaweeds (Gelidium and Gracilaria) into a dried agar bar called organic gelatin with a dimensions of 12 inches x 1. As a thickening agent. soft drinks. shells and other foreign matter and is then placed in tanks for extraction with hot water.5 inches. pastries. But it is assume that these expenses for promotions will increase by 3% annually.33 minimal since it will utilize ³free-of-charge´ advertisement in the Mozilla Firefox. salts. It is to be used for thickening agent. depending on the type of seaweed used. Gracilaria is also washed. Product Specification . and the product management. Therefore. resulting in a product with increased gel . the product facilities and equipment. Production Process . B. Gelidium is simply washed to remove sand. but it must be treated with alkali before extraction. They are discussed as follows: 1. It is a non-fat and non-caloric fiber good for the human health. cakes. There are some differences in the processing of the various seaweeds prior to extraction. soups. the product process. and other beverages. printed leaflets. it will substitute animal gelatin in making ice creams. from the above stated mode of promotion. this alkaline pre-treatment causes a chemical change in the agar from Gracilaria.000) for marketing budget for the first year of operation. Production Plan The production plan of FGLEA Manufacturing Industry states in general terms the product specifications. and limited samples.
Gracilaria seaweed is usually treated with water at 95-100°C for 2-4 hours. carbohydrates and colour molecules. Without this alkaline pre-treatment. The remainder of the process is the same for both types of raw material. The remaining 99 percent is water containing salts. The structure of the gel is broken by the ice crystals and when it thaws again a lot of the water drains away. filter aid is added and the extract is pumped through a filter press. this gel is placed between porous filter cloths and squeezed in a hydraulic press to remove more water. most Gracilaria species yield an agar with a gel strength that is too low for commercial use. However. In the next processing step. The hot extract is given a coarse filtration to remove the seaweed residue. and sometimes with a very weak acid to neutralize any residual alkali. this is a slow process. After removal of the alkali. the seaweed is heated with water for several hours during which the agar dissolves in the water. and.34 strength. Gelidium seaweed is more resistant and extraction under pressure (105-110°C for 2-4 hours) is faster and gives higher yields. it is bleached to reduce the colour. the strength of the alkali varies with the seaweed species and is determined by testing on a small scale. leaving a concentrated gel which contains about 10-12 percent agar. the seaweed is washed with water. and usually the . The gel is broken into pieces. Sometimes. Then it might be washed again to remove the bleach and remaining salts. if necessary. The extract is thick and will gel if allowed to cool. proteins. The alkali treatment is heating the seaweed in a 2-5 percent sodium hydroxide at 85-90°C for 1 hour. So it must be kept hot during the filtration processes. The next step is removing the remainder of the water from the gel. The hot filtrate is cooled and forms a gel which contains about 1 percent agar. the gel is slowly frozen so that large ice crystals form. There are two methods commonly used: either a freeze-thaw process or by using pressure (synerisis). In the freeze-thaw process.
Washing and Cleaning of Seaweeds GELIDIUM Remove sand.35 thawed material is simply drained and placed in a hot-air dryer. salts. it is milled to the required particle size. shells and other foreign matter GRACILARIA Treat with Alkali and wash EXTRACTION FILTRATI GELATION BLEACHING DIALYSIS . the proposed project will use the process of syneresis rather than the freeze thaw process because of its cost effective viability. While the process involves press/syneresis technology is simply by bleaching dialysis and syneresis. The press/syneresis is the most commonly use process among different agar manufacturing company for it is not costly and becomes efficient to operate. After drying. The schematic diagram of the production process flow is reflected in Figure 2. However.
8) milling area. 7) drying area. The dimension of the plant layout is 14. and 9) finished goods storage areas.90 by 19.36 SYNERISIS DRYING MILLING Block/Bar Form Powder Form Strip Form AGAR Figure 2. 5) gelation area (bleaching). 2) cleaning area. Product Facilities and Equipment . 4) filtration area. the equipment are generally for processing and transportation. The layout plan of the processing plant building has nine (9) main sections which are: 1) the raw materials storage area.The manufacturing plan layout is shown next page. Schematic Diagram of the Production Process Flow 3.The proposed project will include product facilities and product equipment vital to production. It is drawn to a scale of 1:100 in metric. 3) extraction area. 6) gelation area (syneresis). . The main features of the facilities are the administration building and processing plant. Whereas. 3.95 meters.1 Product Facilities .
of Unit 1 1 3 5 1 1 1 Unit Price 300.000 150.2 Equipment and Machinery . Conveyors 5. Filter Press Function Transport raw materials from sources to processing plant Deliver finished products to customer-markets Deliver finished products to endusers Transport raw materials mechanically from different areas of production Use for cleaning/washing graciliara before extraction Use for extraction of Agar (Gelidium and Graciliara) Use in filtration process of agar No.000 150.000 250. Cargo Truck 2.000 .000 50. Tricycles 4.000 20.000 100. Slightly used van 3.000 240.38 Figure 3 : The Manufacturing Plan Layout 3. Table 11 reflects the brand new equipment that will be used for the production of Agar products.000 120. Alkali treatment Machine 6.000 120.000 80.000 20.The proposed Agar processing plant will be equipped with different equipment suitable to the different processing stages. Boiler with 2 tanks 7.000 Total Cost 300.000 100. Table 11 Equipment and Machinery Equipment 1.
Table 12 Production Personnel Number of Items 1 2 1 2 Monthly Salary 8. Milling Machine Machine use for milling Agar into 3 (w/ 3 class of different class of Agar mill) 12.000 270.000 50.000 270.000 8.000 250.500 7.000 50. Water Tank 13.000 150.000 250. 198cm) 14.000 8.000 10. All production personnel must arrive on time because operation will not start if anyone is not on their respective post before operation starts.000 4.495.500 14. Bleaching Machine Use in gelation process of Agar through bleaching dialysis Machine use for separation of agar 9. The operation of the production will start at 7 o¶clock in the morning until 4 o¶clock in the afternoon. Storage Tank Use for storing seaweeds and other (100cm x raw materials. Management and Labor Relations 4.000 14. Production Management/Personnel .000 170.000 7.000 Particulars Production Head Assistant Storage Area Production Helper Cleaning Area Production Operator Production Helper .000 3 35.000 320. Table 12 shows the list of production personnel with their corresponding salary.39 8.000 Total Monthly Salary 8.000 2. Synerator gel into water 10.000 170.50cm x Use for storing final goods/products.The proposed project will employ personnel in every area of production and it will have to operate 8 hours in a day from Monday to Saturday.000 105. Storage Tank (23. 24cm) Over-all Total Cost 1 1 1 1 3 5 320. High Efficiency Machine use for drying the gel and Drying Machine forms into sheets 11.
000 14.000 8. And in case of insolvency or bankruptcy.500 The organizational plan briefly includes the discussions on the legal form of FGLEA Manufacturing Industry.000 7. Legal Form of the Organization FGLEA Manufacturing Industry which is owned by five individuals shall have the Partnership Style as its form of organization.000 8.000 7.000 8.000 8.000 14.000 8. They have also equal share in the profit.000 NA 14.000 14.40 Extraction Area Production Operator Production Helper Filtration Area Production Operator Production Helper Gelation Area (Bleaching Dialysis) Production Operator Production Helper Gelation Area (Syneresis) Production Operator Production Helper Drying Area Production Operator Table 12 to be continued Continuation of Table 12.000 14.000 7. . and personnel policies. 1 2 1 2 8.000 7. wherein each and every one has co-equal share on its capital contribution and has equal responsibility in managing the business being a management team. 1.000 176.000 8. its organizational structure.000 14. Organizational Plan 2 1 2 24 7.000 8.000 Production Helper Drying Area Production Operator Production Helper TOTAL C.000 8.000 7.000 8.000 1 2 1 2 1 8. Its business style is based on the premise that the five individuals are general partners of the business. the liabilities will be equally shouldered by them.000 8.
000 7.000 8. However. one of them will be the General Manager.000 7.000 NA Total Monthly Salary 20. Table 13 shows the list of administrative personnel and support staff with their corresponding salaries.000 14.000 12.000 138.000 10.500 12.000 10.000 16.41 2.000 7. The processing plant will hire 24 production personnel as previously shown in Table 12.000 8.000 8. In addition to these production personnel.000 10. Organizational Structure The five project proponents who are the members of the management team are the decision makers as a body of the business.000 5.000 11.500 5.000 10.000 15.000 7. administrative personnel and support staff will also be hired. Table 13 Administrative Personnel and Support Staff Particulars Manager Marketing Head Marketing Assistants Administrative Head Supply Officer Storekeepers Accounting Clerk Truck and Van Drivers Tricycle Drivers Janitors Production Head Number 1 1 2 1 1 2 1 2 3 2 1 17 Monthly Salary 20.000 .000 15.
The Organizational Structure of FGLEA Manufacturing Industry . Manager Management Team Production Head Administrative Head Marketing Head Production Personnel Supply Officer Storekeepers Accounting Clerk Marketing Assistants Janitors Drivers Figure 4.42 Total The organizational structure of the business was designed and reflected as Figure 4 on the next page.
but preferably with 2 years experience in processing and a holder of Masters Degree. All the production personnel are directly under the Production Head. His/her main concerns are quality control and production quota. He shall conduct studies on the existing marketing trends and shall recommend changes in the marketing mode/strategy when needed. He shall endeavor to periodically report to the Manager on the status of operation. the primary function of the Manager is to serve as the chief executive of the organization. The qualification for this position is at least a graduate of a business baccalaureate course. He is also at present a member of the Board of Directors of the ³Perpetual Help Credit Cooperative. He will oversee the over-all operation of the business and will indulge in strategic activities among the three Division Heads of the business in order to enhance coordination and inter-dependence. All Marketing Assistants are directly under him/her. The team is a policy-making body. The qualification for this position is at least a graduate of a business . the Production Head will automatically act as Officer Incharge. The Marketing Head shall oversee the distribution of the products to its respective customers. in the absence of the Manager. and the final arbiter should there be any problem/issue that the Manager will find difficulty in solving it.43 As shown in the above organizational structure. However. especially on problems that might transpire within the production area. Inc´. the adviser of the Manager. The Production Head has the primary function of overseeing the production process of the business. The Manager is Frederick Bartolome who is one of the owners and a graduating student of Master of Management. On the other hand. the Management Team will perform a staff function as indicated by the broken line.
1 Recruitment policy . b) The organization adheres to the principle of ³Command Responsibility´. c) Respect of duly constituted authority is a mandate. Drivers. but preferably a graduate of Bachelor of Science in Commerce major in marketing. and ³incentives and reward system´. and janitorial services are functions of the Administrative Head. Therefore. research and development. The most vital support is coordinating with the Production Head that there will always adequate supply of raw materials. f) The industry will give remuneration commensurate to services rendered. ³training´. In order for the organization to work harmoniously.44 baccalaureate course and with 2 years experience in marketing. Other supports like financial and accounting management. and management information system. 3. The Administrative Head will likewise handle the responsibilities of human resource management. Storekeepers. d) There shall be unity of direction by understanding goals. e) Goals of the business are always paramount over personal interest. Accounting Clerk. Personnel Policies The personnel policies that are deemed vital for the business include ³recruitment´. and Janitors are directly under him/her. the Supply Officer. The Administrative Head is responsible in providing administrative supports. ³selection´. Obedience is required. FGLEA Manufacturing Industry will adopt the following principles: a) Specialization is encouraged to build up expertise. 3. project facilities and equipment maintenance.
2 No recommendations from anyone will be entertained. including other relevant information.1.1. 3.2. 3.1 Technical training will be given to workers in the processing plant.2. 3.1.1 Announcement for the opening of positions will be posted in public places. D. The qualification standard for each position will be indicated in the announcement. Radio and TV plug-ins will also be made. The Panel of Interviewer is composed of the Management Team.1.2 Those that will pass in the Psycho Exam will be interviewed.3 Training 3.4. 3.2 Annual bonuses will be given to the employees computed based on the net income of the business.3.3 The best one that will come out during the interview will be selected.4 Applicants with bio-data that fits to the position he/she is applying will be called for the selection process.4. 3. 3. 3. 3.3 Applicants who will be late in submitting their bio-data will not be entertained.2.1 Adopt a program on ³honor-system´. Employees with high accomplishment will be given a certificate as honor roll for the month and a cash incentive.2 Selection policy 3.2 Only those who will pass the training will be hired.4 Incentives and Reward System 3. Financial Plan .1 All applicants are given Psycho Exam 3.3.45 3. 3.
Total Capitalization The FGLEA Manufacturing Industry will have a total project cost of P 17.278.000 828.000 2. Table 14 The Project Cost Fixed Asset Land Buildings Furniture and Fixtures Utilities Installation Machineries and Equipments Organization Cost Total Fixed Asset Working Capital (6 months) Salaries Administration Production Cost Operating Expense Total Working Capital Total Project Cost 1.150 17.150 2. cash flow.547.500. 1.500.46 The discussion on financial plan for this business includes total capitalization. source(s) of funds.000 50.000 100.176.495.542. Source of Funds .000 6.850 2.000 2.000 86. and financial analysis. balance sheet.150 as reflected in Table 14.300 10.278. . projected income statement.731.000 7.
278.000 will be borrowed from the Development Bank of the Philippines with an interest rate of 12% per annum payable in 10 years. . The data on the table were taken from various tables and schedules previously computed. The remaining capital of P 10.455.47 Each of the five proponents of the FGLEA Manufacturing Industry shall have a capital share of P 1. Projected Income Statement Below is the projected Income Statement of the FGLEA Manufacturing Industry for five consecutive years from 2012 to 2016 which is shown hereunder as Table 15.150 which is 42% of the over-all project cost.630 amounting to the total owner¶s equity of P 7.000. 3.
850 5.442 840.356 2.535 24.106 960.833.080.815.00 4.409.708 720.275.978.00 2015 15.609.00 5.311.045.542.00 6.368 6.000.00 6.000.250 6.00 1.00 558.00 4.700 903.700.600.071.927.132.000 826.200 20.974.656.089.636.143 2.078 1.585 1.600 2.000.00 4.401.047 11.00 547.000 826.800 19.027 20.188.260 10.594.00 30.576.598.910.200 20.255.200 20.46 54.00 6.00 2014 14.000.836.878 21.738.903 5.329.00 50.300 1.235 7.39 56.700 10.00 5.000.000 4.00 2016 16.00 4.473.838 10.153.00 31.00 526.200 20.000.000 826.000.000.00 32.012.00 30.000 18.453 1.045.500.684 1.823.694 2.111 1.284.00 51.918.127.000 826.000 20.383 .700 7.298.00 2013 12.289.214.814.394 4.050.00 516.00 31.000.300.765 1.441 8.00 4.000 826.000 5.058.409 1.352.589 1.524.320 21.310.00 536.200.985.25 53.000.846 22.917.259.200 20.556.740 19.070 3.000.965 3.928.736.013.894 9.58 Table 15 Projected Income Statement Account Titles Sales Less: Cost of Goods Sold Gross Income Less: Operating Expenses Salaries Administration Office Supplies and Materials Promotions and Advertising Permits and Licenses Building (Repair and Maintenance) Machineries & Equipment (R&M) Utilities Expenses Miscellaneous Expenses Interest Expenses Depreciation Amortization (Organization Cost) Total Operating Expenses Net Income Before Taxes Less: Income Taxes Net Income After Taxes 2012 12.701.675.800 1.434 10.824 3.825.290 8.212.976 3.583 23.
The balance sheet gives investors an idea as to what the company owns and owes. On the other hand.59 4. liabilities and shareholders' equity at a specific point in time. building. as well as the amount invested by the shareholders. The Balance Sheet of FGLEA Manufacturing Industry is presented in Table 16. . the fixed assets are land. furniture and fixture. and machineries and equipment. The current assets in the balance sheet are all cash. The estimates are reflected in the Schedules. Balance Sheet A balance sheet is a financial statement that summarizes a company's assets. utilities.
200 50.000 0 2.000 86.497.500.000 499.000 2.495.000 1.030 17.500.495.000 2.495.250.000 2.500. 10.996.000 2.883.000 2.000 2.000 24.000.500.60 Table 16 Projected Balance Sheet Account Titles ASSETS Current Assets Cash Total Current Assets Fixed Assets Land Building Less:Accumulated Depreciation Net Book Value Machineries and Equipment Less:Accumulated Depreciation Net Book Value Furniture and Fixtures Less:Accumulated Depreciation Net Book Value Utilities Installation Table 17 to be continued.000 1.250.150 1.000 2.200 68.000 2.000 500.144.000 2.000 21.000 1.500.000 0 50.000 0 2.000 2.883.130.150 10.495.600 50.000 998.000 2.500.500.800 50.000.500.055.450 24.000 `1.793.000 1.000 0 86.996.500.495.000 250.600 34.939 15.400 51.000 2.495.000 17.000 1.000 86.000 15.500.771 21.500.000 1.793.000 750.000 1.000 2.000 51.000 1.144.000 50.547.771 1.000 13.800 17.250.000 0 86.000 68.750.000 34.450 1.000 86.050 13.500.000 86.000 2.400 50.000 2.050 1.055.500.000 86.000 86.495.000 499.000 Pre-Operating 2012 2013 2014 2015 2016 .495.497.000 998.030 1.939 1.000 17.500.547.130.
000 100.000.542.000 3.430 100.000 40.850 100.000 100.000 40.694 7.000 19.382.400 40.000 60.000 5.000.000 7.971 100.000.070 10.960.976 5.450 0 0 0 903.111 2.000 3.150 100.000 6.000 0 100.631.000 40.000 10.539 100.000 100.000 9.000 11.000 5.601.000 22.000 60.000 0 2.000 40.526.135.61 Continuation of Table 17.750.143 6.143 1.840.078.000 3.000.694 1.278. Less:Accumulated Depreciation Net Book Value Total Fixed Assets Other Assets Organizational Cost Less: Amortization Net Book Value Total Other Assets TOTAL ASSETS LIABILITIES & CAPITAL LIABILITIES Current Liabilities Income Taxes Payable Loans Payable Current Total Current Liabilities Noncurrent Liabilities Loans Payable Noncurrent Total Noncurrent Liabilities Total Liabilities 0 50.976 1.302.000 20.000 20.000 20.093.633.000 8.000 5.000 8.000.000.382.259.000 80.000 6.000 24.000 20.070 2.600 30.000 20.000 3.000.000 4.543.000 12.013.219.000 3.000 9.283.111 8.080.200 50.000.543.000 10.111 1.000 80.200.000.000 3.823.000 80.000 30.000 10.000.000 9.000 17.000.103.000 60.000.000 10.103.064.093.694 1.976 1.000.854.070 Table 17 to be continued .143 1.000 0 0 27.720.800 20.219.000 10.
150 0 7.111.442 13.560.971 16.278.106 11.111.850 9.278 22.058.739 2.450 .62 Continuation of Table 17 CAPITAL Owners Equity Net Income Total Capital TOTAL LIABILITIES & CAPITAL 7.169.726.283.726.278.601.995 3.135.278.150 1.708 16.169.739 19.633.539 11.064.278.150 7.858.378 27.833.995 24.858.383 20.430 13.132.845 20.150 17.556.278 3.589 9.701.845 2.
It can be deduced from the results of the computation of cash flow that FGLEA Manufacturing Industry has adequate cash to support its operational activities. The cash flow of the business is presented in Table 17. . Cash Flow The Cash Flow is the movement of cash into or out of FGLEA Manufacturing Industry. The movement of cash is used to calculate other parameters that give information on the business like ³rate of return´ or ³liquidity´.63 5.
188.738.700 10.000 2.917.000 7.214.255 .235 1.290 1.594.700 1.656.000 100.894 2.260 10.918.850 0 0 0 0 15.495.800 19.278.927 0 0 0 0 6.409.64 Table 17 Projected Cash Flow Account Titles Cash Inflow Cash received from bank loan Cash received from owners Sales Total Cash Inflow Cash Outflow Purchase of Land Purchase of Building Purchase of Machineries & Equipment Purchase of Furniture & Fixtures Utilities Installation Organization Cost Cost of goods sold Salaries Administration Office Supplies and Materials Promotions and Advertising Pre-operating 2012 2013 2014 2015 2016 10.000 12.825.250 0 0 17.000 0 0 0 0 12.838 10.500.000 18.150 0.000.000 12.368 0 0 0 0 16.012.00 0 0 12.000 2.000 0 0 0 0 14.000 50.409.045.278.045.368 15.441 1.576.910.300 0 0 0 0 5.150 1.500.000.000.878 21.027 20.188.978.434 10.000 0 0 0 0 4.000 86.250 16.047 11.609 0 0 0 0 6.978.850 14.740 19.000 0 0 0 0 5.
500 30.473 558.284 53.547.000 1.976 12.130.928 56.889 13.771 720.111 2.055.000 516.000 20.050 15.111 10.130.571 3.963.013.080.144.014.000 1.310 1.925627 3.000.883.771 24.793.030 21.000 1.320 21.200.636 31.547.000 30.000.143 11.000 6.050 6.581.741 17.055.583 23.827.547.275 32.000 1.846 22.535 24.793.000.598 54.939 960.144.050 1.836 547.000 1.150 .731.212 536.582.000 1.000. beg.900 10.65 Permits and Licenses Building (Repair and Maintenance) Machineries & Equipment (R&M) Utilities Expenses Miscellaneous Expenses Interest Expenses Payment of Loan Payment of income taxes Total Cash Outflow Net Cash Add: Cash Balance.091 15.000 1.153 6.397.150 13.679 21.045 31.600 526.939 17.542.150 0.648.000 5.985 51.000 1.259.000 0 9.100 2.000.000 903.450 6.00 10.262.000 10.759 2.700 50.694 11. Cash Balance Ending 5.030 840.417.
One of the financial analyses that will be used to determine the profitability of this business is the net profit margin. Financial Analysis The financial analysis presented herein includes the discussions as regards net profit margin.00 it generates in sales. For FGLEA Manufacturing Industry.701.66 6. Table 18 Annual Net Profit Margin Year 2012 2013 2014 2015 2016 Net Income After Taxes 1. and growth ratios. 6.850 15.000 14.1 Net Profit Margin .132.368 16.106 2.409. return on investment. The equation in computing net profit margin is reflected below: Net Profit Margin = Net Income After Taxes Sales x 100 Table 18 below shows the annual net profit margin for the proposed venture. The net profit margin manifests how much profit this business makes for every P 1.188.250 Net Profit Margin (%) 15 16 18 21 23 . leverage ratios. This helps to determine whether the prices set by the business or its operating costs are on a viable ceiling.833.383 Sales 12. liquidity ratios.708 3.589 2.000 12. a profit margin of 5% indicates that its sales prices are relatively low or the costs are high or both.442 3.045.556.058.000.978.
It is reflected in the table that during the first year of its operation, FGLEA Manufacturing Industry made a net profit margin of 15% which is relatively high for it is above 5%, the danger zone for a net profit margin. This suggests that despite its effort of competing with the existing players in the market, the venture will still be able to manage and earn a high income. Moreover, the project is able to maintain its high profit from the first to the fifth years of operation. The same profit margin went up from 15% during the first year to 23% in the fifth year of operation. In other words, despite the fact that the net profit margin is already high, it has an increasing trend. 6.2 Return on Investment (ROI) ± Another way of measuring the efficiency of investment of FGLEA Manufacturing Industry is with the use of ROI. To calculate ROI, the benefit (net income after taxes) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. FGLEA Manufacturing Industry has an ROI target of 6%. Therefore, any computed ROI higher than this target is considered high, which means the business is financially viable. The formula in computing ROI is shown below: Return on Investment = Net Income After Taxes Total Investment x 100
The results of ROI computation is shown in Table 19.
Table 19 Return on Investment
Year 2012 2013 2014 2015 2016
Net Income After Taxes
1,833,589 2,058,106 2,556,442 3,132,708 3,701,383
Total Investment 26,949,100 27,227,615 27,558,866 27,945,489 28,390,253
ROI 7% 8% 9% 11% 13%
During its first year of operation in the year 2012, FGLEA Manufacturing Industry reflected an ROI of 7% which is above the suggested ceiling of 6%. This is normal for a new business considering that there are lots of things to know about its operation and marketing. However, the table above further indicates that the ROI is increasing which means that the expected financial performance of the business is improving. 6.3 Liquidity Ratio - This ratio measures the firm¶s ability to meet maturing short-term obligations. The safety of the business provides a basis for the rational pursuit of profit which is identified with the ultimate goal of business activities and serves as an important means of measuring the safety of invested capital. For FGLEA Manufacturing Industry, testing of liquidity will use ³Current Ratio´. This ratio indicates the extent to which the claims of short-term creditors are expected to be converted into cash in a period corresponding to the maturity of claims. The solvency of the business shall be appraised by comparing its current assets with current liabilities. The Current Ratio is computed by dividing the current assets by the current liabilities. A
current ratio below ³1´ suggests that the business would be unable to pay off its obligations if they came due at that point. Using the above procedure, the current ratio of FGLEA Manufacturing Industry is presented in Table 20. Table 20 Current Ratio
Years 2012 2013 2014 2015 2016
13,130,050 15,144,939 17,793,030 21,055,771 24,883,450
3,103,111 3,093,694 3,219,143 3,382,976 3,543,070
Current Ratio 4 5 6 6 7
It is shown in the above table that the current ratio of FGLEA Manufacturing Industry is very high since the current assets are exceedingly higher than the current liabilities. It means that the business has the capacity to pay back its bank loan payables because it has adequate current assets in cash. 6.4 Leverage Ratios - This ratio measures the extent to which the firm has been financed by debt. Leverage ratio provides several implications. Firstly, creditors look at the equity for margin of safety. Secondly, raising funds through debts allows answers to gain benefits of controlling the firm with limited investments. Thirdly, the firm may earn more on borrowed funds that it pays interest. However, it should be noted that when the
The formula for Debt Ratio is shown below: Debt Ratio = Total Liabilities Total Assets Using the above formula and computing the debt ratios.135.450 Debt Ratio 0. FGLEA Manufacturing Industry is using this ratio. the firm comes in trouble since cost of debt is more than what assets earn.4.093. It is a measure of the company's total debt to its total assets. the Debt Ratio indicates the percentage of the total assets provided by the creditors.971 27.633.219.382.38 0.976 8.070 Total Assets 19.143 9. Table 21 Debt Ratio Years 2012 2013 2014 2015 2016 Total Liabilities 12. while a ratio of more than one means the opposite.31 . In other words. A ratio less than one means that a company has more assets than debt.111 11.55 0. A debt ratio is a measure of how risky it would be for a bank to extend a loan to a company.850 20.694 10. 6.1 Debt Ratio .One leverage ratio is called ³Debt Ratio´.543.46 0.283.70 return on assets goes below interest rates. with a higher ratio indicating great risk. the results are presented in Table 21.103.63 0.430 24.539 22.601.064.
283.430 24. it is therefore relatively simple to calculate assets from the equity ratio.71 It is reflected in Table 21 that all the computed debt ratios are less than ³1´.858.726. Moreover.53 74. Since the equity ratio includes the firm's total assets in its calculation.169. the trend of the debt ratio is going down which means that the risk of having a loan is becoming lesser every year.79% which means higher assets were provided from loans as .278 16. The formula in computing equity ratio is shown below: Equity Ratio = Total Capital Total Assets x 100 The results of the computation of the equity ratio are presented in Table 22.40 The table above indicates that the capitalization that was provided by the project proponents was only 47.995 20.539 22.739 11.111.07 62. Equity ratio is a financial metric that is used to measure the amount of leverage employed by a company. It mans that FGLEA Manufacturing Industry is very bankable.2 Equity Ratio ± Another leverage ratio used in this study is the equity ratio.971 27.560.79 55.633.378 Total Assets (Pesos) 19.01 68.135.064.845 13.4. 6. This ratio indicates the percentage of the assets provided by the owners. Table 22 Equity Ratio Years 2012 2013 2014 2015 2016 Total Capital (Pesos) 9.850 20.601.450 Equity Ratio (Percentage) 47.
383 Previous Net Income (Pesos) 1.556.833.266 568. Its formula to calculate the ratio is indicated below: Growth Ratio = Present Net Income ± Previous Net Income Present Net Income x 100 Using the net income after tax in the projected income statement in Table 15.72 compared to the owners¶ equity.This ratio reflects the growth that the proposed project will gain in its operation.517 498.132.40 15. the equity ratios registered higher than 50%. The above results mean that the financial leverage of the business is very high.49 18.708 3.91 19.058.132.589 2. However.442 3. Table 23 Growth Ratio Present Net Income (Pesos) 2.675 Growth Ratio (Percentage) 10.442 3.5 Growth Ratio . However. starting from the second to the fifth years of operation.106 2.Previous Net Incomes 224.701. There is no reason for the creditors of FGLEA Manufacturing Industry to worry because they do not assume large degree of risk. it is observable that the annual present net income is always .36 16.336 576.556.058. 6. It indicates how the business is growing in terms of income.708 Present .106 2. The business earns enough to cover payment of loan with interest.04 Years 2013 2014 2015 2016 Average A close look at the table reveals that the growth ratio has not established an increasing trend. the growth ratio was computed and the results are presented in Table 23.
04 percent. On the other hand. CONCLUSION After a thorough study on the market. the project proponents were able to deduce that the concept of establishing a processing plant for Agar-agar Seaweeds has indeed a positive investment opportunity. the technical study has shown that the venture is viable for the region since an existing supplier of raw materials is located within the region and there is only one competitor within the project area. organizational. the average growth ratio is 16. it is therefore concluded that the proposed FGLEA Manufacturing Industry is technically and financially feasible and is therefore highly implementable. On the other hand. technical and financial aspects of the study. Furthermore.73 higher than the net income of the previous year which simply means the business is financially gaining. Finally. This means that FGLEA Manufacturing Industry is earning. The market study has provided a bird¶s eye view on the market situation of the venture and it clearly shows that the project being a million dollar industry still has a market space because of its gap on the demand and supply. . the financial aspects of the study have shown all positive financial conditions indicating that the business is financial viability.
refer to Schedule A.000 52. while price per kilo of raw material is expected to increase by 2% every two years.000 2.223.500.500 55.214.894 2.574.335.625. 2.910. (in kls.248 .75 Schedule A Cost of Raw Materials in Pesos Year 2012 2013 2014 2015 2016 Note: Proposed Cap. For direct labor.335 771.700 5.000 2.451.880 3.000 2.) 50.375 2. Direct Labor 2.441 6.971 810.235 5.290 6.160.850 2.375 2.095 2.811.951.774 Proposed capacity of production is assumed to increase 5% per year.118.442 Direct Materials Overhead Cost 692. 3. Schedule B Cost of Goods Sold in Pesos Year 2012 2013 2014 2015 2016 Notes: 1.000 2.576.811. it is assumed to increase 5% per annum.125 Price/kilo 50 50 51 51 52 Total Cost 2.900 2.594.951.918.204 Total Cost 4.160.880 3.625.248 57. For overhead cost.000 2.700 727.500. it is 15% of direct labor and direct materials.880 60.560 860. For direct materials.
000 15.000 4. of Units 15 30 10 1 2 2 .000 1.000 4.000 Furniture and Fixtures Office Table Office Chair Filing Cabinet Conference Table Computer Table Bulletin Board Total No.76 Schedule C Furniture and Fixtures Unit Cost (Pesos 2.000 2.000 500 3.500 Total Cost (Pesos) 30.000 4.000 30.000 3.000 86.
738.535 24.598 54.000 4.824 840.275 32.000 826.000 826.917.000 536.027 20.636 31.927 6.047 11.200 20.928 56.500 30.000 826.000 526.284 53.700 50.000 4. Cost) Total Operating Expenses 2013 1.000 30.000 4.656.965 960.740 19.153 558.903 Notes: a b c Expected to increase 5% annually. Expected to increase 3% annually.77 Schedule D Operating Expenses Year Items 2012 Salaries Administration a Office Supplies & Materials b Promotions and Advertising b Permits and Licenses a Building (R & M) b Machineries and c Equipment (R&M) Utilities Expense c Miscellaneous Expenses a Interest Expense Depreciation Expense Amortization (Org.200 20.846 22.000 5.836 2016 2.200 20.000 4.000 4.045 31.838 10.434 10.255 6.394 720. Expected to increase 2% annually.600 2014 1.000 516.000 20.352.320 21.311.000 826.212 2015 1.200.289.600 1.050 547.300 5.200 20.012.200 20.298.800 19.700 10.000 826.473 1.000 18. .260 10.583 23.880 21.080.985 51.609 6.329.825.310 1.
78 Schedule E Office Supplies and Materials Items Bond Paper Printer Ink Paper Clip Paper Fasteners Pencil Ball pen Accounting Forms Folder Total Projected Cost of Office Supplies and Materials Unit Ream Pc Box Box Box Box Ream Box Quantity 50 5 0 10 50 10 10 10 Unit Cost 150 1.000 500 18.047 Office Supplies and Materials are expected to increase 3% yearly.500 30 10 10 30 200 50 Total Cost 7. .500 7.700 Year 2012 2013 2014 2015 2016 Note: Amount 18.434 21.700 19.260 19.000 300 100 500 300 2.838 20.
000 516.320 536.000 526.79 Schedule F Utilities Expenses Source LEYECO II LMWD Globelines Total Monthly due 30.846 547.000 Annual due 360.535 . Amount 516.000 36.000 120.000 10.583 558.000 Projected Utilities Expenses Year 2012 2013 2014 2015 2016 Note: Utilities Expense is Expected to increase 2% every year.000 3.
000 3. 2.000 50.000 86.000.000 10.000 5 20.000 17.200 100.000 826.495.80 Schedule G Depreciation and Amortization Useful Life/Maturity Item Depreciation Machineries and Equipments Furniture and Fixtures Building Utilities Installation Total Depreciation Amortization Organization Cost Total Depreciation & Amortization Cost Dep.200 . & Amort.000 5 5 10 5 499.000.00 846.200 300.
302.400 3.000 5.000 960.289 25.960.000 1.000 8.080.000.200.000 6.000 1.000 Working Capital 21.466 24.000.000.949.800 5.000 1.854.000.149.000 1.526.615 27.000 9.000 2.945.489 28.390.015 23.000 1.000.000.256.000.000 1.000 2.000 Schedule I Investment Cost in Pesos Year 2012 2013 2014 2015 2016 Fixed Assets 5.000 7.558.253 Total 26.253 .000 720.600 4.000.750.419.866 27.81 Schedule H Loan Amortization in Pesos Year 0 1 2 3 4 5 Interest Principal Amortization Balance 10.000 840.000 1.000 1.200.200 2.000 1.000.080.094.000.078.000.100 27.227.640.720.840.300 22.000 1.