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Chapter I
BACKGROUND OF THE STUDY

Introduction

Anyone who has been to the Philippines knows how much Filipinos love to

eat. Food is more than just physical nourishment. It is a huge part of culture, community,

and celebration that they very much enjoy sharing with anyone willing to partake. Many

people are so busy to make their own food they prefer to eat outside to make it easy.

The typical meals are usually served with a big bowl of rice and several viands in the

middle of the dining table. As what our body were most familiar with are the viands like

lumpiang shanghai, lumpiang gulay, siomai and barbeques, making it as a daily part of

meal. Rice will always be present. Viand is a term applied to any food (usually fish,

chicken, vegetables etc. that you eat along with rice (Kerin, 2017). This is also why

viands or ulam (anything eaten with rice) in the Philippines are always very rich in flavor

because the rice’s neutrality will balance it out.

Another food that can be distinguish as viand is the patty, which is common to

everyone as the main companion of burger. But this food can be viand in some way like

making it a steak as an example. Patty is very popular viand where the meat is compacted

and shaped, cooked, and served (Sicat, 2011). The patty itself can also be called a burger,

whether or not it is served in a sandwich, especially in the United Kingdom and Ireland,

where the term "patty" is rarely used. Ground beef traditionally has been an expensive. Its

versatility and ease of preparation account for much of its popularity people are very

prone to illness. To avoid risks, they should try new product that is natural of its kind that
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gives them equal satisfaction. Burger is a sandwich consisting of one or more cooked

patties of ground meat usually beef, placed inside a slide bun.

Today products abound the market to suit the needs of people, be it expensive or not

to satisfy the consumer needs. Everyone is finding his way on how to make more profit

out of innovative products. Other business produce new product that will sustain for the

demand needed by our economy. Because of growing population, increasing prices of

good and even the raw materials used, many business look for alternative in the

production of their food item to meet the demand.

Despite of the arising of different Filipino cuisine, there are still people who are

conscious when it comes to their health that’s why they do different types of diet. One of

these diet is the ketogenic diet (keto diet) wherein a low-carb, high-fat diet that shares

many similarities with the Atkins and low-carb diets. It involves drastically reducing

carbohydrate intake and replacing it with fat. This reduction in carbs puts your body into

a metabolic state called ketosis. (Mawer,2018). Hey, Dale Foods Corporation will be

operating a small-scale manufacturing business will offer mussels patty in the market,

primarily made of mussels to customers that add nutrition at the least possible cost. Since

the fat content of the mussel is high that gives it as an ideal food for people who were in

keto diet. The green mussel is considered as a super food. In addition to its anti-

inflammatory properties, the green mussel is considered a super food because it contains

a wide variety of vitamins, minerals, omega-3 fats, amino acids, antioxidants, enzymes,

and many more nutrients. . It can privied lots of beneficial to health (Tervit, 2017). In this

study, it creates beneficial effects to their mind and reducing the chance of disease

brought by meats.
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Brief Background of the Study

Nowadays, developing competitive advantage plays a crucial part for the success

of the product. One of these advantages has a role to satisfy customers with product’s

uniqueness, quality and taste. Snacks plays a various role in entire day of our lives.

Talking about snacks, first come to our mind is burger. A great burger starts with a great

patty, and patty itself can be independent as an alternative viand together with rice. Patty

in food industry, is one of the product that being develop and continually discovering by

the entrepreneurs. CDO Ulam Burger, consider as one of the top producer of burger patty

seems to be costly for such viand. Customers demand for type of patty that is not too

crunchy nor oily and soft, and course an affordable one. The problem that the existing

patty in the market facing today were how to deliver the satisfaction and being nutritious

to the consumers at the same time. According to the research conducted by Caldwell

(2012) shows that the consumption of even small amounts of Beef-meat foods is the root

cause of heart diseases. Aside from that, it shows that people who experience frequent

heart attacks often have high cholesterol levels; many also smoke or have high blood

pressure. When these factors are controlled, heart attacks become rare. The list of

diseases known to be associated with meat, which are commoner among beef eaters are

named; Anemia, appendicitis, arthritis, breast cancer, cancer of the colon, cancer of the

prostate, constipation, diabetes, gall stones, gout, high blood pressure, indigestion,

obesity, piles, strokes and varicose veins are just some of the well-known disorders which

are more likely to affect beef-meat eaters than vegetables (Bakalar, 2017). Increasing

wealth has promoted eating away from home and obesity has increased, as the human

eating behavior and eating pattern were in constant change. The latter will probably affect
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more people than food insecurity at some point in the next few decades. Also, obesity

already co-exists together with food insecurity. As a result of the forces described, there

has been a shift from acute, infectious diseases to chronic, degenerative diseases (the

epidemiological revolution). All of these forces are at work around the world, with

developed countries such as the United States, Germany, Japan and France much further

along in this change or transition than developing countries, such as India, Ghana and

Brazil. With the increasing incidence of obesity and chronic diseases, the negative

consequences of these changes, that is the shift from traditional to modern eating, has

become more salient in the scholarly literature (Monteiro, et. al., 2019). It became a

challenge to the proponents to overshadow this challenge in making this project.

In most marine mussels the shell is longer that it is wide, being wedge-shaped or a

symmetrical. The external color of the shell is often dark blue, blackish or brown, while

the interior is silvery and somewhat nacreous. They formed on ropes in the sea, mussels

can be cultivated on large or small scale. They take literally four minutes to cook, are

nutritious and wonderful to eat. They are really little treasures of the shellfish world.

The proponents decided that mussel’s meat came up to our mind to use as a main

ingredient of this proposal. Discovering health benefits of the mussels and its uncommon

taste that will attract customers. The proponents assure the customers that with this newly

developed and discovered patty will satisfy their pleasure and crave. Availability of raw

materials and demand of patty are highly considered in choosing this proposed product.

Eating lifestyle nowadays that can satisfy people’s pleasure and crave became

common to food industries yet of being high-risk for everyone’s health. When it comes to

health matters, people seem to become more proactive than they used to be, according to
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surveys 7 out of 10 people were now conscious regarding to their health and seek healthy

living lifestyle including diet programs (Gustafson, 2017). While professional healthcare

is generally still practiced in response to disease, an increasing interest in preventive

measures shows a shift in awareness and behavior, especially among the young.

Millennials in particular - those who came of age at the turn the century - are leading the

charge by making health-promoting diet and lifestyle choices a priority, as recent studies

indicate.

The proponents came up with the proposed product to fill the gap between healthy

eating and lifestyle eating habits. Satisfying people eating experience while maintaining

healthy living inspired the researchers for making the proposed product.

Objectives of the Study

The overall objective of the study is to determine the feasibility of Tahong Patty

in the market. In order to achieve the goal, the proponents set specific objectives as

follows:

1. To determine the market feasibility of the product through the demand and

supply situation; market share and gap and other marketing strategies and

programs

2. To determine the technical feasibility of the study through identifying the

appropriate manufacturing process to be used, the production capacity and the

best location site for the proposed business;

3. To determine the management feasibility of the project by identifying the

appropriate form of business organization in its compliance with the legal

requirements for the business to operate;

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4. determine the financial feasibility to assess financing requirements, financial

practicability, company’s position and performance for five-year operation

5. to know socio-economical aspect of the product and the company's impact to

the economy including the administration, its effects to the business and its

advantages to the clients.

Scope and Limitations of the Study

This study focused on the interpretation of the feasibility study including the

market, technical, management, financial and socio-economic aspects of the project.

Those aspects served as a guide and basis in order to determine the scope and limitation

of the study. It also focused on the financial feasibility of the proposed product and its

competitors. Financial feasibility determined the profitability level of the proposed

project which is generally defined as the relationship of the net income after taxes to the

total investment. It is largely based on the opportunity cost in a particular period of time.

It also involved the coverage of overall monetary information of the enterprise. It covered

the detailed information on the total project cost, initial capital investment, sources of

financing, financial statements and the financial analysis.

In terms of marketing aspects, it covered the target market, competitors, different

methods used. SWOT analysis and effective strategy to be used. Consumer survey

questionnaires were distributed to 385 households from nine (9) urban barangays of

Tanauan City. The proponents used the descriptive method of research design wherein

they gathered quantitative data and developed analysis and interpretation of such data.

The questionnaires distributed to respondents returned and tailed afterwards. This aim to

satisfy target market to the new flavor of patty and to penetrate the competitor’s existing
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customers. The proponents, agreed to choose the household of nine (9) urban barangays

in Tanauan City. Since young children are not capable to answer our questionnaire, the

proponents limit their study on the respondents. Using questionnaire to gather with the

consumer’s pulse concerning the manufactured goods, the proponents found the assumed

demand of goods in both consumers and retailers. With the analyzed strengths of the

proposed product which are uniqueness of the product, strong financial stability and cost

advantage, the firm believes that they can overcome their weaknesses which are limited

number of suppliers and business experience. Also, the opportunities to open for new

technology and to exploit new technology may help them to achieve their objectives and

to overshadow the threats they might encounter like unexpected climate change and entry

of potent competitors. And for promotion and marketing strategies, the proponents agreed

to perform online advertising, personal selling, free taste, food bazaar, product bundling

and quantity selling as their promotion mix strategy to reach the target market. They also

set the price of Php 60.00 per pack in 6pcs. Variation which had a competitive advantage

among their competitors.

The technical aspects focused on the production and operational process of the

product to convey the ingredients into a finished product that will be available for resale.

The ingredients used were mussels, meat, carrots onion, garlic, egg, flour. The procedure

for making the product were the preparation of ingredients and equipment, soaking of

mussels, chopping, steaming the mussels, getting the mussels’ meat, grinding, mixing all

ingredients, shaping, packaging, weighing, storing and cleaning. The proponents prepared

Tahong Patty in 6pcs of patty weighed 228g per pack, as same as the competitor’s scale

that will be sold in retail stores of the target market. It also identified the machineries,
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equipment to be use in business operation. The equipment needed are freezer, generator,

LPG tank and weighing scale. While the tools needed are meat grinder, stock pot set,

spoon, knife, chopping board and frying pan. In this study, the availability of the raw

materials was secured for the main ingredients and bought in wholesale purchasing.

Management aspect focused on the form of ownership of the business, which was

a general partnership among partners. The partnership composed of the three partners

namely Henyson R. Libang, Ruby Lea O. Llantero and Daryl B. Malubag. The

management hired 2 workers and a bookkeeper with a fixed monthly salary of

Php7,460.00 and Php3,000.00, respectively. The proponents decided to start with a

capital of P450,000.00, which is P150,000 each. It also discussed the organization

structure of the business, the current market of patties in the city of Tanauan. The

anticipated future market potential of the propose product. The competition that involve

in entering to the market in an existing business undertaking, the sales projections and

potential buyers of the propose product itself.

Financial aspects covered the capital needed by the proponents, the sources of

capital and the possible return on investment with a P450,000.00 total project cost for two

months. The proponents contributed Php150,000.00 equally with the total of

Php450,000.00 as their initial capital to support the business. The profit and losses are

shared equally among partners. The researchers used different financial ratios to assessed

the performance of the firm. The initial contribution must be recovered within 1 year, 11

months and 17 days. The figures in financial statement and analysis were based on the

five (5) year projection.

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Socio-economic benefits focused on the environmental and economic

contribution of the business in the society at large. The proponents applied the

appropriate waste disposal with proper authorities or compliance with legal requirement.

The proponents also billed the right taxes that could help the government and contribute

to the different communities for services and projects.

Definition of Terms

For better analysis, interpretation and understanding of this feasibility study, the

researchers present here under the terms of operational and conception used for the study.

Grinding. It is the process of reducing (something) to small particles or powder

by crushing it (Collins, 2018). In this study, it is one of the manufacturing process for the

main ingredient which is mussel’s meat.

Molding. It is a process of manufacturing by shaping liquid or pliable raw

materials using a rigid frame or molder (Yvonne, 2016). Operationally, molding gives

shapes and compacted the patty.

Mussel meat. It is a sweet and rich taste with a plump and tender texture, can

that be found inside mussel’s shells (Doyle, 2015). Serve as the main ingredient of the

proposed products.

Patty. It is a round piece of ground or minced food, as of meat or the likes and is

typically served in a sort of sandwich (Lehey, 2018). Generally, it is the product line of

the proposed product.

Soaking. It is placing food in a liquid, usually water, and leaving it in so that the

food absorbs the water and becomes softer and easier to eat or cook (Alfaro, 2019). In
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this study, it is one of the manufacturing process to remove the dirt of mussels which is

the main ingredient in making Tahong Patty.

Steaming. Basically a cooking method that employs hot steam to conduct the heat

to the food, without disturbing it in a boiling liquid, leaving us with tender, moist result -

when done correctly (Alfaro, 2019). In this study, it is one of the manufacturing process

in making Tahong Patty.

Tahong patty. It is the proposed proposed product. Serving mussel meat as the

main ingredient instead of beef and pork meat.

Textured Vegetable Protein (TVP). It is a high-fiber, high-protein meat

substitute made from soy flour and it has no fat or cholesterol (Hackett, 2019). It is one of

the direct materials used in making Tahong Patty.

Viand. It is a term applied to any food usually fish, chicken, vegetables etc. that

you eat with rice. (Kerin, 2017) In this study, it refers to the Tahong patty to differentiate

the product from other products.

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Chapter II
MARKET STUDY

This chapter deals with the description, analysis and interpretation of the market

conditions that adversely affect the feasibility of the Tahong patty business. The

interpretation of data will determine the viability of the business in terms of size, nature

and growth, demand and supply for the proponents. This study are the determination of

the demand and supply situation, the needs and wants of the prospective consumers, the

market opportunities and as well as the best marketing strategies to capture the market.

Objectives of the Study

The general objectives of the study are to determine the market feasibility of

Tahong Patty in the market. Specially, it attempts to discuss the following objectives:

1. To identify the target market of the proposed product

2. To analyze the demand and supply of the proposed product

3. To determine the market share and market gap

4. To determine the strengths, weaknesses, opportunities and threats for the

proposed product through SWOT Analysis,

5. To formulate the appropriate marketing strategies and programs in order to

penetrate the market.

Methodology

The proponents used processes that could help to come up with the desired result;

the research design, subject of the study, data gathering instrument, data gathering

procedure, and the statistical treatment of data.

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Research Design

The proponents applied descriptive method of research in obtaining useful

information to determine the marketability of the product through interviews and survey

questionnaires. This approach often requires quantitative measures for variable order

investigation as well as sufficient number of cases or units for data collection and

analysis to attain acceptable levels of accuracy and reliability on the findings. It

accurately suits the study for it provides current data to support the study especially in

terms of analysis of the supply and demand of the conditions and situations affect the

behavior of the consumers towards the product.

Respondents of the study

The proponents focused on the 10,347 households that are located in the 9 urban

barangays of Tanauan City. They focused on the households that would want to try and

sell the new product. They selected those households who have a Php10,000 monthly

income due to their financial ability to purchase the product. They targeted 385

household respondents to analyze the market feasibility of this study.

The proponents also focused on the managers or business owners because as a

company they want to engage in manufacturing the product. They gave 30 questionnaires

to retailers to know the projected supply of the product. As well as get information in

determining the feasibility of the proposed product.

Data Gathering Instrument

The proponents used a self-constructed questionnaire. It is a set of questions that

were answered properly by the required number of selected respondents. This will give
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the necessary information that helped to complete the study. The result was analyzed to

find out how the market would respond to the product.

Two sets of surveys were constructed for the study. One for the direct consumers,

and the other one for the business owners. First set were given to household respondents,

to know the respondent's data, buying patterns, habits and willingness to buy our product.

The second set were given to target the retailers and businesses willingness to resell the

proposed product, as well as their business data, purchasing power and product standard.

Collected data from the two set questionnaire were subjected to finished analysis,

statistical procedures and interpretation. The proponents studied to draw conclusions and

generalizations. The survey results from the customers and business owners were used to

analyze the supply and demand analysis of the product as well the product potential.

The proponents considered secondary sources, such as books and the internet. For

this was the easiest way to get important information and data. Other finished research

which was related the proposed product were also become a guide for proponents in

conducting this study.

Data Gathering Procedure

The proponents invested time to know the effective data gathering by gathering

information from the previous students who were finished their study. They started with

brainstorming and planning, where the proponents thoroughly listed out all the areas of

consideration.

Benchmarking the related questionnaires from the previous researchers, the

proponents came up to satisfy their ideas for their questionnaires which was validated by

the advisers, panel members and chairperson. The questionnaires were distributed to the 9
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urban barangays of Tanauan City had certain representatives for the study. This method

was used to come up with the sample size. With 385 questionnaires set for household and

30 questionnaires for retailers, the researchers began the survey with the barangays with

the most number of respondents needed. They conducted the survey personally until they

finished the data gathering within two (2) weeks. After the distribution and the retrieval

procedure, the researchers tallied the results of the questionnaires.

Some constraints came up along the way like caught up storm in the middle of the

survey and other preparation for academic requirements. The proponents started the

survey in Darasa first which was the most number of respondents and ended in Poblacion

2 were had a least number of respondents needed. They found it challenging when some

respondents did not cooperate much to them and unwilling to answer the questions

seriously.

Right after the information were gathered, the proponents started to score the data

for completion. They undergo with repeated checking of tallied questionnaires to make

sure that the scoring was accurate.

Statistical Treatment of Data

The proponents used Slovin's Formula to come up with sampling unit in order to

determine the number of questionnaires that were distributed which was based from the

estimated number of household for the year 2019.

Using the historical data, one must remember that each of these method yields

different projected figures and trends. One must first determine which method is most

appropriate for the set of figures available on hand. In this study, the proponents used the

statistical straight line method in determining the projected supply and demand.
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In order to come up with the sample size to determine the number of

questionnaires to be distributed to each Barangay, Slovin's Formula was used:

Sample Size:
N
n= -----------
1+Ne2

n= sample size

N= total number of households in 14 Barangays in Tanauan City

e= 5% margin of error

Using the above formula:

10,347
n= -------------
1+(10,347)(0.052)

n= 385

The 385 sets of questionnaires were equally distributed all over the nine (9) urban

Barangays of Tanauan City and thirty (30) sets of questionnaires to the business owners

and retailers.

Demand

In this feasibility study, determining the demand of the product for the past five

years helped the proponents in prominent the approximate increase on the volume of

demand by the consumers in succeeding years. The related products of Tahong patty are

other frozen foods like longanisa, bologna and skinless.

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Major Consumer of the Product

The proponents chose the household as their major consumer, for they are the one

who will benefit the proposed product. Proponents also focused on offering the proposed

product to food restaurants, as they are generally the entity that commonly need for their

operation. Burger stalls will be targeted because those buyers are likely to want or need a

company's offerings, it makes the most sense for the company to focus

its marketing efforts on reaching them. In this feasibility study, retail store, business

owners, and market intermediaries are the major target of the proponents. The proponents

chose this segment for the firm to be the main manufacturer of the product.

Historical Demand

Historical demand is a previous record wherein it tells about the past record of the

same kind product for five (5) years. This table shows the historical demand for the past

five (5) years.

Table 2.1
Historical Demand
Year Historical Demand
2014 1,469,596
2015 1,550,207
2016 1,635,239
2017 1,724,936
2018 1,814,633
TOTAL 8,194,611
(Source: See Exhibit 3)
This table shows the yearly increase in demand of patty in the market for the 5

previous year.
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Projected Demand

The projected demand indicates the anticipated number of products that the

consumers are willing to buy in the future. Determining projections for demand helps the

organization in making decisions such as planning and scheduling the product and

acquiring the inputs accordingly, making the provisions for finances, formulating a

pricing strategy and planning advertisement and implementing it.

Table 2.2
Projected Demand
Year Projected Demand
2021 1,984,843
2022 2,071,323
2023 2,157,804
2024 2,244,284
2025 2,330,764
TOTAL 10,789,018
(Source: See Exhibit 4)

This table shows the projected increase in demand of patty in the market in the

next 5-year projection.

Supply

Supply refers to the willingness and ability of producers to create goods and

services to take them to market. It is also the total amount of (product or services)

available for purchase at any specified price. To obtain information of the previous suppy

and historical supply, the proponents used the information from the questionnaires.

Historical Supply

Historical supply is a previous record wherein it tells about the past production of

supply of the same kind product for five (5) years.

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Table 2.3
Historical Supply
Year Historical Supply
2014 146,500
2015 190,400
2016 195,300
2017 214,300
2018 226,985
TOTAL 973,485
(Source: See Exhibit 6)

This table shows the yearly increase of supply of the patty in the market past 5

years.

Projected Supply

Projected supply is an estimation (based on historical data) of the future levels of

production or distribution demand and other factors affecting profit margins and business

activities. The accuracy of a projected forecast can be negatively impacted by unexpected

events in the financial markets, fluctuation in commodities (such as volatile fuel prices),

upheaval in political arena, environmental disasters etc.

Table 2.4
Projected Supply
Year Projected Supply
2021 268,645
2022 287,132
2023 305,619
2024 324,106
2025 342,593
TOTAL 1,528,095
(Source: See Exhibit 7)

The table shows the computation of projected supply wherein for the year 2020.

The computation was based on the gathered data that the proponents collected.
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Demand and Supply Analysis

Demand and supply analysis is the study of how buyers and sellers interact to

determine transaction prices and quantities. The proponents analyzed the behavior of

buyers and sellers through the data gathered from the questionnaires. The questionnaires

also involved questions that can help the researchers to identify the buying behavior of

both the consumers and businesses.

Market Gap

The projected values of demand and supply were analyzed to determine the

feasibility of a business. The comparison of the demand and supply will determine its

gap. A gap in the market is also an opportunity to make and sell something that is not

available yet.

For companies, a gap in the market represents an opportunity for it to widen its

customer base. You can achieve market penetration by identifying a gap in the market

and filling it.

MARKET GAP = Projected Demand – Projected Supply

Table 2.5
Market Gap
Year Projected Demand Projected Supply Market Gap
2021 1,984,843 268,645 1,716,198
2022 2,071,323 287,132 1,784,191
2023 2,157,804 305,619 1,852,185
2024 2,244,284 324,106 1,920,178
2025 2,330,764 342,593 1,988,171
(Source: See Exhibit 8)

The table above shows the computation of market gap wherein for the year 2020.

It is computed based on the gathered data of proponents.

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Market Share

Market share represents the percentage of an industry, or a market's total sales,

that is earned by a particular company over a specified time period (Medina, 2006).

Market share is calculated by taking the company's sales over the period and dividing it

by the total sales of the industry over the same period. The increasing value of market

share is a good sign that the business can puncture the unsatisfied demand. This tells

whether to conduct the business or not.

MARKET SHARE = ANNUAL SALES

MARKET GAP

Table 2.6
Market Share
Market
Year Projected Annual Sales (per pack) Market Gap
Share

2021 24,000 1,716,198 1.4%

2022 26,400 1,784,191 1.5%

2023 28,800 1,852,185 1.6%

2024 32,400 1,920,178 1.7%

2025 36,000 1,988,171 1.8%

(Source: See Exhibit 9)

The table above shows the computation of market share for the previous five (5)

years. It is computed based on the gathered data of proponents. This table shows the

continuous increase in market share that means the high potential of patty in the market.
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SWOT Analysis

In establishing a business, the industry should be careful scrutinized. For this

study, the strengths and opportunities must be identified so that the proponents will be

able to take advantage. Analyzing the weaknesses and threats should also be considered,

so that the business can develop their weak areas. Strengths, weaknesses, opportunities

and threats analysis is very important as basis in determining the competitive advantage

of the business among the others.

Strengths

Strengths are positive factors or a characteristic that enhances its competitiveness.

The strengths of the business may come from the product itself, good relationship with

the employees and other factors. Strengths of Tahong Patty are as follows:

With several product uses. Patty, as commonly known for its use in burger,

Tahong Patty will serve as viand that can be paired by rice as a meal or another dish like

burger steak.

Strong financial condition. Being a low cost business, the capital needed for

operation is not that much. High quality product can be produce with a little capital.

Uniqueness of the product. Attracts customers due to its uniqueness variety and

gives new taste for seafood lovers. A market that used to real meat patties will now taste

a seafood experience version of it.

Easy to cook. Gives high satisfaction for busy people to sustain their meal in fast-

moving environment. As it can be served as patty itself, some add-ons like home-made

sauce it will be suitable for its taste.

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Cost advantage. Tahong Patty’s ingredients and manufacturing process does not

require much high-end ingredients and equipment that make it low cost.

Weaknesses

Weakness is something a firm lacks or does poorly, or a condition placing it at a

disadvantage. These are the internal aspects of the firm that can be hindrances for the

company’s improvement. It is important to determine the weaknesses of the business for

the management to do something to eliminate it. Among the company’s weaknesses are

the following:

Limited number of suppliers. Being single source of main ingredients unlike

main competitor (real meat) that can substitute nearly like source such as pork and beef

meats.

Limited business experience. The proponents, as a newly graduated student, with

limited experience in business, can be one of the struggles that the business will face

upon the establishment of the business.

Easy to imitate. Business’s lack of patent will allow other competitors to copy the

product.

Limited shelf life. Compare to the shelf life of traditional meat and beef patties,

Tahong patty has a shorter period of availability upon preserving. It must be keep frozen.

Opportunities

Opportunities are considered options by which the business organizations can

explore or venture into to enhance its competitive advantage or pursue the agenda of

growth and expansion. The following are some opportunities of the proposed product

includes:
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Open to exploit new technology. The proponents are open to use or adopt a new

technology for the easiest way of production like molder machine.

Open for forward vertical integration. The potential of the proposed product is

high for its uniqueness that make it possible to have established retail firms.

Population. Rapid population growth means more demand for food that the

proposed business can take advantage of.

Introduction of additional product line. Its uniqueness as a viand can produce

more ideas of product line like it can be a steak.

Threats

A negative situation causes a specific impact in the decision and requires making

adjustments. The following are the threats of the proposed product:

Presence of small-scale competitors. Small scale, home-made or generic patty can

offer more cheap compared to Tahong patty.

Unexpected climate change. Water pollution in the sea will make a continuous

extinction of mussel aside for its slow-reproduction process. Red tide may affect marine

industry especially the mussels.

Entry of new potent competitors. Competitors are anywhere but if there is a

new entrant coming it has a chance it will be compared to our product.

Costly new regulations. Due to gradual growth of market, it also requires high

standard regulation business.

Marketing Strategies and Program

This sector provides discussion of the marketing programs of the establishment in

terms of product, price, place and promotion. It helps the firm gain a competitive
 24

advantage in the market amidst the tough competition with an edge over the existing

players and the new entrants who are trying to establish their brand presence in the

market.

Product

Patty is a flattened, usually round serving of mussel meat. Unlike other patties in

texture, it Tahong has not too chewy due to quality of meat used, but a bit crunchy that

can satisfy the taste of the customer. A mussel as its source of meat, various health

benefits can be attributed to their nutritional value. Its natural profile comprises vitamin

A, B vitamins like folate and B12, source of protein providing 18 grams of protein which

equivalent to nearly 30% of the recommended daily value for an average adult. Other

comparative advantage of mussel made patty in terms of health care it is possess cardio

protective benefits, skin care benefits, anti-aging benefits and helps in dietary

management.

Product Size/ Quantity/ Category

Tahong Patty belongs to food/snack category for its flexibility to stand together

with meals and snacks like burger and steak. Meal and snack taking the huge portion of

eating habit. The proposed product is going to be manufactured per pack at 228g. Each

pack contains 6pcs of patties and 38g of mixture each. Patty’s diameter measure 4 ½

inches with 14.13 inches circumference. Filled with orange-brown due to natural color of

mussel’s meat and carrot. Its smell can be easily distinguished as mussel as its main

ingredient.
 25

Cooked Tahong Patty has a mixture color of orange, black and brown due to its

ingredients’ color. It became dark orange up to reddish brown when it is cooked depends

on how the consumers wished to be its state.

Brand Name

Mejillon Burger came up as its brand name, originated from Spanish “mejillon”

which means mussel. The proponents chose an anchor as its brand mark as its represents

the variety of Tahong Patty which is a seafood. As a seafood, the ocean blue color was

used to give an impression of suppressing appetite as a hint for losing weight. On the

other hand, its blue color reflects the colour of the water to represent freshness of the

product as a seafood.

Figure 2.1
Brand Mark
Packaging

The packaging of the proposed product was a rounded canister made of plastic

with a sticker that includes the information about the product such as product name,

manufacturer’s name, ingredients, bar code and brand name.

 26

Figure 2.2
Packaging

The photo above shows the packaging of Tahong Patty, which includes the brand

mark, brand name, nutritional facts and product barcode.

Pricing

The proponents agreed to use market penetration strategy in order to establish

good market position for new to the market product. This strategy increases the product

sales in the company's present markets through an aggressive marketing mix. It is usually

introduced to: increase the rate of product/service usage; encourage repeat purchases;

attract consumers away from competitors; or attract current non-users.

The table below presents the computed price of the proposed product for retailers.

Table 2.7
Price Scheme
Direct Material Used/Unit 19.31
Labor Cost/Unit 7.46
Factory Overhead/ Unit 17.47
Total Cost/Unit 44.24
Markup to Retailers 21% 9.33
Selling Price for Retailers (Exclusive of VAT) 53.57
Output VAT 12% 6.43
Selling Price for Retailers (Inclusive of VAT) 60.00

Table 2.7 shows the computation of the price of the product.

 27

Table 2.8
Related Price of Competitors
Other Commercial Brand Price/unit
Pampanga’s Best Hamburger Patty P74.00 /6pcs / 228g.
CDO Ulam Burger P59.91 /6pcs/228g.

Table 2.8 shows the related competitor’s price wherein the price of Tahong patty

will be differentiated.

Channel of Distribution

The proponents decided the simplest form of channel distribution – the two level

channel in which the producer will directly sell the products to the retailers and other

intermediaries who will sell it in return to end-user of the product.

Distribution of the product will be easier since the location of the business is

Tanauan City which is accessible for the retailers. The proponents agreed to buy a

motorcycle to be used for distribution as the firm’s mode of transportation.

Channel of Distribution of Tahong Patty

Manufacturer

Retailer

Consumer

Figure 2.3
 28

The figure 2.3 shows the place of distribution of “Tahong Patty” from

manufacturer down to the retailer. The retailers are food stalls, business owners and

groceries stores that served as a middleman for the manufacturer and consumers. The

proponents will use tricycle as the mode of transportation for the delivery of the product

to the retailers near the firm and Tanauan public market.

Promotion

To create awareness on the brand, the proponents agreed to use some promotional

strategies like personal selling, quantity selling of the product, free taste and online

advertising through social media.

Table 2.9
Promotion Mix Strategies
What Who When Where How Budget
It will advertise
and make
Online
brochures P500
Advertising Three (3) 10 days before Facebook,
online, posting Standard
(Social Proponents the operation Blog
on personal use
Media)
accounts of the
proponents
Will start on
Groceries,
the day the Canvassing on
Personal Three (3) canteens and
proposed the given target P2,500
Selling Proponents street burger
product will market
stands
introduced
Will start on
Groceries,
the day the Canvassing on
Three (3) canteens and
Free taste proposed the given target P1,500
proponents street burger
product will market
stands
introduced
Facebook,
Canvassing on
Quantity Three (3) 10 days before groceries,
the target P1,500
Selling proponents the operation canteens
market
stands
 29

During the
operation and
if there’s a
Tanauan
Food bazaar Customers chance to Kiosk or tent P3,000
City area
present the
proposed
product
Selected
On the day the A 10%
retailers
Product proposed discount for a
Retailers throughout P4,000
bundling product will minimum of 5
Tanauan
introduced packs purchase
City
TOTAL P 13,000

The table below shows the information regarding the promotion mix strategies

that the firm plans to conducted.

Generalization

The marketing study of this feasibility focused on the household and consumer

market of Tanauan City as its target market. The location was chosen because it is perfect

for new established firm for their offerings new-to-the-market product. It had a huge

volume of businesses, retailers and consumers who were the proposed target market of

the firm.

The target demand and supply was identified through product’s historical and

projected analysis from the information gathered by surveying numbered respondents.

The historical demand and supply of patty from 2014 to 2018 shows that it increases in

every year, which means that variety of patties had a high potential in the market.

Regarding the market gap, this section of study showed that there will be

increasing trend regarding the product within 5-year projection from 2021 to 2025. The

numerical analysis numbered the market gap each year from 1,716,198 in 2021,

1,784,191 in year 2022, 1,852,185 in year 2023, 1,920,178 in year 2024 and 1,988,171 in
 30

year 2025. The market share, which was the overall revenue contribution of the firm over

the market’s industry, from the next 5 years will 1.4% in 2021, 1.5% in 2022, 1.6% in

2023, 1.7% in 2024, 1.8% in 2025.

The SWOT analysis was also analyzed to determine the marketing strategy and to

handle the unexpected threats. The strengths of the product that can be a huge factor for

the business success were several product uses, strong financial condition, uniqueness of

the product, easy to cook, and cost advantage. The weaknesses that were given for the

firm to improved were limited business experience, limited number of suppliers, and

being prone to imitation. Opportunities for business growth was also discussed in this

section, these were being open to exploit new technology, open for forward vertical

integration, demand from population growth and introduction for additional product line.

As for the threats that the firm might face were presence of small scale, unexpected

climate change which was the main problem of the production of main ingredient, entry

of potent competitors and costly regulations.

To attract potential buyers of the product, the proponents used different kinds of

strategy and promotional activities that depends on the data gathered. 4 P’s commonly

known as Product, Price, Place and Promotion is used. It is essential to know if the

business has a potential to grow in each factors to generate an income and become

successful. The proponents chose Tahong Patty because of its uniqueness in terms of

variety which give it a potential to the market.

In terms of promotion of the product, the proponents considered free taste

strategy, personal selling, quantity selling, food bazaar, product bundling and online

advertising through social media. For introductory stage, it is chosen to use online
 31

advertising (social media) by making brochures online and posting on personal accounts

of the proponents and joining food bazaars. For the long term promotion and

advertisement, personal selling will be planned to use for continuous exposure of the

product to the market. To attract mass consumers and retailers, quantity selling, product

bundling and free taste strategy were considered as one of the promotional activities It is

important to keep the product known to market that it is existing. Furthermore, social

media page will be created for informing the mass market about its benefits.
 32

Chapter III
TECHNICAL STUDY

The Technical Aspects is the discussion of basic and operation flow in the project.

The technical aspect is one of the essentials of this study because this factor responds to

the technicalities and basic structure of the proposed study. This includes the product

description, uses of the product, manufacturing process, factory equipment and office

furniture and fixtures.

Objectives of the Study

The main objective of the study is to determine if the proposed product is technically

feasible to produce and to identify plans and strategies for the success of operations of the

proposed business. Specifically, it seeks to determine the following:

1. To describe the nature of the product and its uses;

2. To determine and illustrate the manufacturing process;

3. To identify the tools and equipment, and furniture and fixture necessary for the

operation of the business;

4. To determine the plant location and plant layout.

5. To determine the labor requirements needed for the business.

Description of the Product

Tahong Patty is a new variety flavor of patty, made of mussel meat. It is easy to

cook patty for burgers and can be serve as dish for a meal together with flavored sauce.

Tahong patty weighs 228 grams in 6 pieces of patty in a pack sealed in rounded plastic

container. Mussel’s meat main ingredient of this patty, together with natural seasonings

make it a health friendly food. Storing in freezer, prolonging its shelf life and lessening
 33

smell due to natural smell of mussel meat. Assured with its good quality and its

affordable price gives it a potential in a market. The proponents went to C.P Reyes

Hospital for nutritional examination of the products.

Nutritional facts of Tahong Patty given at the table below according to Ms.

Angelica Joy D. Marasigan- Registered Nutritionist- Dietitian.

Nutrition Facts:

Serving size: 1 rounded container (228 grams) 6 pcs. patty

Calorie: 167
Fat content: 7g

*The % Daily Value (DV) tells you how much a nutrient in a serving of food contributes
to a daily diet. 2,000 calories a day is used for general nutrition advice.

Table 3.1
Nutritional facts
Amount per serving
Calories – 167 Calories from Fat - 63
* % Daily Value
Total Fat7g 3%
Total Carbohydrate 14g 4%
Dietary Fiber 0.4g
Sugars 0.7g
Protein 13g 3%
Sodium 625mg 125%
Vitamin A 92%
Vitamin B1 30%
Vitamin B2 10%
Vitamin B3 17%
Vitamin C 0.3%
Iron 25%

Nutritional Claims: High source of Calcium, Phosphorus, Sodium, Iron, Vitamin A,

Vitamin B1, Good source of Vitamin B2 and Vitamin B3
 34

Uses of Product

In hamburger, the quality and taste of its patty is the main competition. As a

mussel meat as its main ingredient, it is new to the market’s taste and provide health

benefits to us. Its use is not just as a patty for burger, but it can also be a meal for

everyday together with rice and dietary meals. Consider as a convenience food for being

an easy cook, it gives people a healthy meal for its busy schedule.

Manufacturing Process

In the production of certain product, the manufacturing process is important.

Proper placement and time management for each process helped in minimizing the cost

of producing this product. The firm used the manual process production and the sources

of process.

a. Preparation of tools and equipment (5 minutes) – Worker 1

Prepare the following tools and equipment; knife, chopping board, frying

pan, weighing scale, meat grinder, stock pot set, spoon, mixing bowl and

measuring spoon.
 35

b. Preparation of raw materials (15 minutes) – Worker 2

Prepare the following; 38.46 kg. of mussels, 769.2g of onion, 961.5g of garlic, 39

pcs. of eggs, 1,923g of carrot, 48.075g of pepper, 769.2. of flour, 769.2g of bread

crumbs, 96.15g of salt and 3,846g of TVP.

c. Soak the mussels in water (1 hour) – Worker 1

Soaking the 38.46 kilograms of mussels in water allows it to vomit its waste.

Left it soaked until it removes all the dirt.

 36

d. Chopping secondary ingredients – Worker 2

While soaking the mussels, chop the onions, carrots and garlic lengthwise

and widthwise. Worker 1 and Worker 2

e. Steam the main ingredient (30 minutes) – Worker 1 and Worker 2

Steam the mussels to open its shells at a mid-fire level. Keep on stirring

the mussels to avoid overcooked mussels’s meat.

f. Separate the mussel’s meat out of its shells (1 hour and 40 minutes) –

Worker 1 and Worker 2

Carefully separate the mussel’s meat from its shell. Separate also the one

that has an unpleasant odor from the fresh mussels.

 37

g. Grind the meat using grinder. (30 minutes) – Worker 1 and Worker 2

Use a grinder to grind the mussel’s meat. Grind it hard to remove the

puree from its meat.

h. Mixing ingredients (30 minutes) – Worker 1 and Worker 2

Season the grind mussel’s meat with chopped onion and garlic, pepper,

eggs, carrots, flour and bread crumbs.

i. Molding (1 hour) – Worker 1 and Worker 2

Shape your mixed ingredients into patties, using your thumb to make an

indentation in the center; this will keep the burgers from puffing up.
 38

j. Packaging (30 minutes) – Worker 1 and Worker 2

Pack the patties in round container to keep in its shape. Keep in mind to

put an plastic between the patties.

k. Weighing (20 minutes) – Worker 1 and Worker 2

Check the right quality and quantity of the product.

l. Storing (20 minutes) – Worker 1 and Worker 2

Each pack must contain 6pcs. of patties. Store it in freezer to lessen the

natural odor of patties due to natural smell of mussels and also to solidify the

patties.
 39

m. Soaking TVP – Worker 1

TVP will be soak in water for about 16 hours, which is to be use for the

next production. This process would take about 20 minutes . Worker 1 will be in

charge.

n. Cleaning (1 hour) – Worker 1 and Worker 2

After transferring all the finish product to the storage area, ensure that the

materials and facility used during the process are properly cleaned and ready for

the next production.

 40

Figure 3.1
Process Flow Chart
Start 8:00 A.M

Preparation of tools and equipment (5 minutes) – Worker 1

Preparation of raw materials (15 minutes) – Worker 2

Soaking of mussels - 1 hour (20 minutes chopping of ingredients) – Worker 1 & 2

Steaming (30 minutes) – Worker 1 & 2

Separating mussel’s meat (1 hour and 40 minutes) - Worker 1 & 2

Grinding (30 minutes) - Worker 1 & 2

Lunch break

Mixing (30 minutes) - Worker 1 & 2

Molding (1 hour) - Worker 1 & 2

Packaging (30 minutes) - Worker 1 & 2

Weighing (20 minutes) - Worker 1 & 2

Storing (20 minutes) - Worker 1 & 2

Soaking TVP (20 minutes) – Worker 1

Cleaning equipments (30 minutes) – Worker 1

Cleaning the area (30 minutes) Worker 2

End 5:00 P.M

 41

Legend:

- Start/ End

- Input/Output

- Process

- Decision

Table 3.2
Time and Motion Study
Starting Time Manufacturing Process Duration
8:00 A.M– 8:05 A.M Preparation of tools and 5 minutes
equipment
8:05 A.M– 8:20 A.M Preparation of raw materials 15 minutes
8:20 A.M – 9:20 A.M Soaking of mussels 1 hour
(Chopping of secondary (chopping while
ingredients) soaking)
9:20 A.M– 9:50 A.M Steaming 30 minutes
9:50 A.M –11:30 A.M Separating mussel’s meat 1 hour and 40 minutes
11:30 A.M – 12:00 N.N Grinding mussel’s meat 30 minutes
12:00 NN – 1:00 P.M Lunch Break 1 hour
1:00 A.M – 1:30 P.M Mixing ingredients 30 minutes
1:30 P.M – 2:30 P.M Molding 1 hour
2:30 P.M – 3:00 P.M Packaging 30 minutes
3:00 P.M – 3:20 P.M Weighing 20 minutes
3:20 P.M – 3:40 P.M Storing 20 minutes
3:40 P.M – 4:00 P.M Soaking TVP 20 minutes
4:00 P.M – 4:30 P.M Cleaning equipments 30 minutes
4:30 P.M – 5:00 P.M Cleaning the area 30 minutes

The table above shows the time and process in production of Tahong Patty which

will starts at 8:00 in the morning until 5:00 in the afternoon.

Production Schedule

Production Schedule is the timetable for the use of resources and processes

required by a business to produce goods or provide services. A typical business will

modify its production schedule in response to large customer orders, to accommodate

resource changes, to reduce costs, and to increase overall production efficiency. The
 42

working days of the firm will be 8 hours a day, (1 hour lunch break) 5 days a week, 20

days in a month and 240 days in a year.

Table 3.3
Production Schedule
(228grams per pack)

Year Daily Weekly Monthly Annual

2021 100 500 2,000 24,000

2022 110 550 2,200 26,400

2023 120 600 2,400 28,800

2024 135 675 2,700 32,400

2025 150 750 3,000 36,000

The table above will show the daily, weekly, monthly and annual production unit

of the proposed business. The production schedule is based on the capacity of the

workers and machinery. The increase of production is based on the population growth

rate of Tanauan City.

Factory Tools

When it comes to manufacturing machines and equipment, every purchase needs

to add value to your business. These will help to increase the production, generate

increased

profits and increase the quality of the final product. The proponents acquired the costs of

factory tools and equipment through wide canvassing and paid through cash basis. These

equipments will be necessary for production of Tahong Patty at the most convenient,

faster production and quality product.

 43

Table 3.4
Factory Tools
Description Quantity Unit Cost Total Cost

Meat grinder 2 pcs P500.00 P1000.00

Stock pot set 1 pcs 329.00 329.00

Spoon 1 dozen 60.00 60.00

Mixing bowl 2 pcs 100.00 200.00

Measuring spoon 5 pcs 35.00 175.00

Knife 4 pcs 50.00 200.00

Chopping board 4 pcs 100.00 400.00

Frying fan 2 pcs 88.00 176.00

TOTAL P2,540.00

Source: Century Tanauan, as of September 2019

The tools are listed above. Blender is used for grinding the mussel meat; frying pan

for cooking the preserved good. Weighing scale, used for accurate weight of patty per

serving. Gas stove for boiling the mussel as its cleaning process.

Factory Equipment

Personal property of a capital nature, consisting of equipment, furniture, vehicles,

machine tools, test equipment, andaccessory and auxiliary items, but excluding special to

oling and special test equipment, used or capable of use in themanufacture of supplies or

for any administrative or general plant purpose.

It aims to accomplish faster, better or using less energy to a specific purpose. It

will also maximize the production and efficiency of the business.

 44

Table 3.5
Factory Equipment
Description Quantity Unit cost Total Cost

Freezer 1 P4,750.00 P4,750.00

Generator 1 6,800.00 6,800.00

LPG tank 1 5,000.00 5,000.00

Weighing scale 2 295.00 590.00

TOTAL P17,140.00

Source: Waltermart Tanauan, as of September 2019

The tools are listed above. Knife and chopping board for cutting ingredients, frying fan

for steaming the mussels, and freezer for storing of the finish products.

Factory Furniture and Fixtures

Furniture and fixtures were very well used in order to have an organized working

place, the useful life of the furniture and fixture is 5 years. The cost of furniture and

fixtures are displayed on table

Table 3.6
Factory Furniture and Fixtures
Items Quantity Unit Cost Total Amount

Stainless working table 1 P1500.00 P1,500.00

Chairs 3 300.00 900.00

Supplies and Raw

1 9,000.00 9,000.00
Material Cabinet

Total P11,400.00

Source: Century Tanauan, as of September 2019

 45

Table 3.6 shows the prices of factory furniture and fixture that will be used by the

production workers. This will be used for convenience of business transactions

throughout a year.

Office Furniture and Fixtures

Using the right furniture in your office is important; not just because it looks good

when customers walk in but for other reasons such as being comfortable and accessible

for your employees and customers. In addition, office furniture should also reflect the

nature of your business. A warm and inviting atmosphere is important but your furniture

should also combine design with purpose and function for your business.

Table 3.7
Office Furniture and Fixtures
Description Quantity Unit Cost Total Cost

Office table 1 P1,500.00 P1,500.00

Office chair 1 900.00 900.00

Wall clock 1 150.00 150.00

Filing cabinet 1 6,000.00 6,000.00

TOTAL P8,550.00

Source: Linga Tanauan as of September 2019

Table 3.7 shows the office furniture and fixtures that will be used in the daily

operation of the business. The researchers acquired the costs of furniture and fixtures

through canvassing and paid through cash basis.

Office Supplies

Office supplies are consumables and equipment regularly used in offices by

businesses like making reports, documentation, schedule, letters and other office matters.
 46

The proponents canvassed the following supplies to different stores in Tanauan. It can

help the firm to lessen the expenses in the long run.

The table shows the list of office supplies used in the production and in the office.

These supplies are needed by the firm to record every single detail from listing the orders

from the suppliers by the use of the ballpen, bond paper, folder, and etc. to deliver the

finished products to the target retailers with sales order, record book and etc. and are

using in the plans in internal production.

Table 3.8
Office Supplies
Descriptions Quantity Unit cost Total cost

Ballpen 20 pieces P7.00 P140.00

Brown envelop – 30 pieces 4.00 120.00
long
Brown envelop – 30 pieces 3.00 90.00
short
Coupon bond – long 1 ream 380.00 380.00
Coupon bond – 1 ream 335.00 335.00
short
Daily time sheet 6 pieces 9.50 57.00
Fastener 12 pieces 1.00 12.00
Folder – long 10 pieces 9.00 90.00
Marker 4 pieces 10.00 40.00
Printer ink 1 unit 1,120.00 1,120.00
Pencil 1 box 60.00 60.00
Tape 6 boxes 35.00 210.00
Columnar book 2 pieces 41.00 82.00
TOTAL P2,676.00
Souce: Iskwela School Supplies Tanauan as of September 2019
 47

Office Equipment
Electronic products including, but not limited to, desktop computers, laptop

computers, monitors, printers, fax machines, scanners, copiers, and telephones. This will

bring convenience to business in terms of encoding and recording of daily transactions.

Table 3.9
Office Equipment
Description Quantity Unit Cost Total Cost
Computer 1 P15,000.00 P15,000.00
Electric Fan 2 700.00 1,400.00
Printer 1 4,000.00 4,000.00
Total P20,400.00
Source: Abenson Tanauan as of September 2019

The computer set will be used to make a fastest service communication and

feedback with its different client and suppliers. Computer set also help the business to

keep record about the business.

Maintenance Expense

Maintenance expenses are the costs incurred to keep an item in good condition or

good working order. When purchasing an item that requires upkeep, we, the proponents,

consider the initial price tag as well as the item's ongoing maintenance expenses. The

table below shows the list, unit cost and totality of maintenance expense that will be used

for the maintenance and cleanliness of the station.

 48

Table 3.10
Maintenance Expense
Item Quantity Unit cost Total cost
Trash can 5 P100.00 P500.00
Garbage Bag (Large) 50 rolls 47.00 2,350.00
Garbage Bag (Small) 50 rolls 36.00 1,800.00
Floor Mop 3 70.00 210.00
Dust Pan 2 50.00 100.00
Doormat 10 110.00 1,100.00
Broom 5 60.00 300.00
Dishwasher liquid 15 45.00 675.00
Gloves 2 dozens 50.00 50.00
Hairnet 6 pieces 10.00 60.00
Apron 2 pieces 100.00 200.00
Soap 45 pieces 19.00 855.00
Sponge 40 pieces 16.00 640.00
TOTAL P8,840.00
Source: Waltermart Tanauan as of September 2019

Table 3.10 shows the cost of the supplies needed. This also shows the supplies

needed in order to sustain the cleanliness of the firm. It will cover the cost that will be

good for a year.

Direct Materials

Direct materials are those materials and supplies that are consumed during the

manufacture of a product, and which are directly identified with that product. Raw

materials should be monitored from time to time in order to know which are not enough

to fit the production. It will also help us to observe the scarcity of the materials that will

have a huge effect in production of the firm.

 49

The following are the raw materials needed for production of Tahong Patty

annually. We gather information through wide canvassing to lessen the costs available

near Tanauan City.

Table 3.11
Direct Materials (Annually)
Materials Quantity Unit cost Total cost
Mussel 9,230.4 kg Php 50.00 Php 461,520.00
TVP 923.04 kg 70.00 64,612.80
Onion 184.61 kg 180.00 33,229.80
Garlic 230.76 kg 140.00 32,306.48
Eggs 312 trays 180.00 56,160.00
Carrot 461.52 kg 80.00 36,921.60
Pepper 11.54 kg 400.00 4,616.60
Flour 184.61 kg 30.00 5,538.30
Bread crumbs 184.61 kg 250.00 46,152.50
Salt 23.08 kg 20.00 461.60
TOTAL Php 741,519.00

Source: Tanauan Public Market as of September 2019

Table 3.11 shows the direct materials that will be used in manufacturing process

of Tahong Patty. Computation of annual expense for direct materials was shown. Unit

price gathered by the proponents from wide canvassing.

Indirect Materials

Indirect materials are materials used in the production process, but which cannot

be linked to a specific product or job. These materials add cost to the firm, so it is also

one of the factor to be observe to maximize fund.

 50

Table 3.12
Indirect Materials (Annually)
Description Quantity Unit cost Total Cost

Plastic container 480 boxes (60pcs/box) Php 180.00 Php 86,400.00

Burger plastic 12 box (500 pieces) 40.00 480.00

Paper stickers 12 box (500 pieces) 50.00 600.00

Shrink wrap plastic sealer 5 bundle (500 pieces) 100.00 500.00

Ice box 5 pcs 1,650.00 8,250.00

TOTAL Php 96,230.00

Source: Tanauan Public Market as of September 2019

The following are the indirect materials needed for production of Tahong Patty.

The information was gathered through wide canvassing to lessen the costs available near

Tanauan City.

Table 3.13
Transportation Expense
Description Quantity Unit Cost Total Cost

Tricycle 1 P90,000.00 P90,000.00

TOTAL P90,000.00

Source: Yamaha Motors Tanauan, as of September 2019

Table 3.13 shows the transportation expense needed for annual distribution of

Tahong Patty to the target market. Tricycle will be purchase from Yamaha Motors

Tanauan for the purpose of transporting of proposed product.

 51

Table 3.14
Delivery Expense
Description Quantity Unit Cost Total Cost

Fuel 20 times per month P200.00 P48000.00

Cooler 2 2,000.00 4000.00

TOTAL P52,000.00

Source: Petron Tanauan and Century Tanauan, as of September 2019

Table 3.14 shows the delivery expense needed for annual distribution of Tahong

Patty to the target market. This includes fuel and delivery cooler for securing the safety of

the proposed product.

Lease and Leasehold Improvement

The proponents will provide P 10,000.00 for the expenses of rental place in terms

of one month deposit, one month advance. There will be an alterations or modification on

the leased property made by the lease with the consent of the lessor. The proponents

provide Php 10,000.00 for the expenses in transforming the rental place to suit for the

production area. Modification needed includes division of room for production area,

administrative office, storage area and comfort room. This leasehold improvement will be

depreciated in five years. The proponents will be having a contract to “JsBorja Builders”

located at Tanauan City Batangas to renovate the facilities and make it suitable for

production, the said contract will cost P35,000 including the materials and man power

needed for improvement.

 52

Table 3.15
Leasehold Rental
Description Amount
Rent Expense per month P 10,000.00
Number of months 12
Annual rent expense P 120,000.00

Utilities Expense

Utilities expense reports the cost of the electricity, heat, sewer, and water used

during the period indicated in the heading of the income statement. We gather

information through a wide canvassing to lessen the cost.

Table 3.16
Utilities Expense
Descriptions Monthly consumption Annual consumption
Electricity P5,000.00 P60,000.00
Water 4,000.00 48,000.00
Internet and Telephone 1,499.00 17,988.00
LPG 1,500.00 18,000.00
TOTAL Php 143,988.00

Plant Location

The location of a plant or facility is the geographical positioning of an operation

relative to the input resources and other operations or customers with which it interacts.

Andrew Greasly (2016) identified three main reasons why a location decision is required.

The first reason is that a new company has been created and needs a facility to

manufacture products or deliver a service to its customers. The second reason is that there

is a decision to relocate an existing business due to a number of factors such as the need
 53

for larger premises or to be closer to a particular customer base. The third reason is

relocate into new premises in order to expand operations.

The proponents gathered information regarding the best location suited for

manufacturing Tahong Patty through canvassing. Some certain factors are considered in

evaluating gathered information for plant location of the firm.

Figure 3.2
Plant Location

Plant Size and Layout

Plant layout is the most effective physical arrangement, either existing or in plans

of industrial facilities i.e. arrangement of machines, processing equipment and service

departments to achieve greatest co-ordination and efficiency of 4 M’s (Men, Materials,

Machines and Methods) in a plant.Layout problems are fundamental to every type of

organization/enterprise and are experienced in all kinds of concerns/undertakings. The

 54

adequacy of layout affects the efficiency of subsequent operations. The figure below

shows the plant size and layout of Tahong Patty’s production establishment.

Figure 3.3
Plant Size and Layout

Direct Labor Requirements

Manpower which is also called as Human Resource Planning consists of putting

right number of people, right kind of people at the right place, right time, doing the right

things for which they are suited for the achievement of goals of the organization. The

firm went through proper selection of people for it has a huge effect in the business in

terms of managerial functions, efficient utilization, and motivation inside the

organization, better human relations and higher productivity.

 55

Table 3.17
Direct Labor Requirements
Position No. of staff Daily Salary Monthly salary Annual salary
Worker 1 1 Php373.00 Php 7,460.00 Php89,520.00
Worker 2 1 373.00 7,460.00 89,520.00
TOTAL Php 14,920.00 Php 179,040.00
Source: Department of Labor and Employment, as of 2019
Waste Disposal

The most important reason for waste management is to protect the environment

and for the safe and health of the population. Managing the waste of a business result in

valuable materials to reuse. Hey, Dale Food Manufacturing Enterprise had set their own

business rule to help the environment such as; segregation of non-biodegradable to

biodegradable waste materials, introducing a waste reduction program, and exercising the

3R’s.

Generalization

Tahong Patty is a new variety flavor of patty with mussel’s meat as its main

ingredient far more than the traditional beef and pork meat. Served in 6pcs of Tahong

Patty in 228g. per pack which sealed in round shaped canister. It plays a role of being

viand rather than being a burger patty as everyone commonly known. It is also an

alternative substitute for pork and beef patties as it was cost friendly product with a

quality.

In process of production, proper step by step process was well identified.

Manufacturing process includes preparation of equipment and ingredients, soaking of

mussels for removing its own dirt, chopping of secondary ingredients, steaming of

mussels, separating mussel’s meat from its shells, grinding the main ingredient, mixing
 56

all the ingredients, molding of mixture, packaging, weighing, storing, cleaning the

production area and soaking TVP overnight. The business determined the effective

operating processes in order to know how to minimize their cost and increase the value of

production. There should be a well-organized and systematic process to attain these

measures.

Production schedule of employees was discussed in this chapter. The daily

production schedule was set from 8:00 in the morning to 5:00 in the afternoon with 1

hour break each batch. The regular operation is eight (8) hours a day, five (5) days a

week and 20 days a week with the total of 240 days within a year. The firm projected to

produce 100 packs daily in first year operation. Adds 10 packs per year in the first 3 years

and 15 packs for the remaining years of 5-year projection to sustain the increasing

demand of the market.

This section also identified all the materials needed for the production and

operation of the business. Factory tools includes meat grinder, LPG tank, weighing scale

and stock pot set. Knife, chopping board, frying fan, freezer, and generator for equipment

to be used in production of the proposed product. For furniture and fixtures of both

factory and office includes store table and office table, chairs, office chairs, wall clock,

supplies and raw materials cabinet, and filling cabinet. All the materials listed on the

tables were identified through wide range canvassing of the proponents to lessen the

material cost of the firm.

The chosen plant location was agreed by the proponents, considering the best spot

for establishing a manufacturing business. By the help of City Planning and Development

Office Zoning Division in Tanauan Municipal, the proponents came up with the of
 57

chosing Brgy. Gonzales in Tanauan to be the plant location. It suited the establishment of

the plantation because it was accessible to the resources and also to consumers and

suppliers of raw materials. The convenience for production and distribution of the

proposed product was considered. The plant size covered a floor area of 70 square meters

to accommodate the equipment, furniture, workers for production and employee for

business transactions. The layout of the site was simple with a common division for

production area, accommodation area or lobby, storage of raw materials and equipment,

storage room for finished goods and comfort room.

The firm went through proper selection of people for it has a huge effect in the

business in terms of managerial functions, efficient utilization, and motivation inside the

organization, better human relations and higher productivity. The management hired 2

workers with a fixed monthly salary of Php 7,460.00. The proponents decided to start

with a capital of P450,000, which is P150,000 each.

The proponents acquired information about the pricing in order to determine the

accurate number of raw materials and equipment need. For proper sanitation of the

business, maintenance equipment had included. These aspects are the foundation for the

successful operation of the proposed business.

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Chapter IV
MANAGEMENT STUDY

This study will focus on how the company deal with the different situation by

providing all the strategic planning and implementing of policies to be set by the

management, how to control the manpower and its proper compensation according to

their jobs. It’s also shown the form of business ownership, skills required by the

employees based on their responsibilities and also the legal requirement that must

complied by the company.

Objectives of the Study

In connection with the scope of the Management study, the proponents desired to

fulfill the following objectives for the Hey, Dale Food Manufacturing Enterprise:

1. To determine the form of business organization to be used by the company.

2. To identify the initial capital that will be used on the starting operation the

business that each proponent contributed.

3. To set job description and job specification for each position need for the

production and operation in every line of work.

4. To establish organizational policies for employees, customers, suppliers for the

betterment of the organization.

5. To institute compliance from the law through requirements needed to start the

company.
 59

Forms of Business Organization

The Hey, Dale Food Manufacturing Enterprise will be in the form of partnership

that will manufacture “Tahong Patty”. The three partners namely Henryson R. Libang,

Ruby Lea O. Llantero and Daryl B. Malubag agreed themselves to contribute money or

property to a common fund with the intent of dividing the profits and benefits brought by

the firm during its operations (Civil Code of the Philippines Article 1767). The

partnerships own the company with the purpose of manufacturing that the partners will

share the expenses and also benefits from the profit.

Capitalization

Capitalization measure’s the company’s total value which is necessary to be able

to meet the day to day transactions of a business. It is funded by the owners to support the

operation and expenditure of the business. Unequal capitalization, affect the company not

only to the production but also as a whole.

Through an initial capital of Php450,000.00, and Php450,000.00 will be divided

and contributed equally by the partners amounting to Php150,000.00. The amount

conceived upon considering the total projected cost including payments for equipment,

furniture and fixtures, legal fees and other operation expenses. The contribution of each

partner as shown below would come from their personal savings of each partner.
 60

Table 4.1
Partners Contribution

Name of the Partners Capital Contribution

Libang, Henryson R. P150,000.00

Llantero, Ruby Lea O. P150,000.00

Malubag, Daryl B. P150,000.00

Total Capital Contributed P450,000.00

Table 4.1 shows the initial capital contribution of each partners needed for the

first two months of operation.

Organizational Structure

The figure below shows how Hey, Dale Food Manufacturing Enterprise as an

organization was structures.

General Manager

Bookeeper

Worker 1 Worker 2

Figure 4.1
Organizational Structure

The proponents used line organization as a business structure of the organization.

The manager which is Henryson Libang, will be having the direct line of responsibility

and authority over the activities involving their functional area. It is the simplest form of

the structure in which manager has directly authority and control over the people being
 61

supervised. This form of organization is most commonly used by small and medium

company.

Manpower Requirements

Since the business is just a beginner in the industry the proponents decided to hire

2 workers to be able to operate the business. 2 workers and book keeper will be enough to

managing the business.

Job description is to collect job-related data in order to advertise for a particular

job. It helps in attracting, targeting, recruiting and selecting the right candidate for the

right job. It clarifies what employees are supposed to do if selected for that particular job

opening. Job specification is concern with the educational qualifications, specific

qualities, and level of experience, physical, emotional, technical and communication

skills required to perform a job, responsibilities involved in a job and other unusual

sensory demands.

Job specification and description will be the business' guide and standard of what

kind of employees the firm is looking for and also the duties and responsibilities to be

performed by the employees.

Job Specification

A statement of employee characteristics and qualifications required for

satisfactory performance of defined duties and tasks comprising of specific job or

function. Job specification is derived from job analysis. (Jhon, 2015)

 62

A. General Manager

The general manager is responsible for all aspects of a business, including daily

operations, administrative functions, and finances. Because of the enormity of the role, a

big part of the job is effective delegation. (Kenton, 2019).

 Male or Female, at least 20-30 years old.

 Must be college graduate with a degree in marketing management,

accountancy or any related business course.

 Having an experience in supervising and managing a professional staff.

 Have a strong communication skills.

 Computer literate also in MS office applications

 Must be honest, responsible, hardworking, and trustworthy.

 Ability to lead internal and external business.

 Physically and mentally fit for the job.

 Must be capable of operating reliable financial reports

B. Bookkeeper

 Male or Female, 20 years old and above.

 Looking for a person with a minimum of a two-year relevant financial

experience.

 Good bookkeeping knowledge

 Hands on experience in accounting packages such as QuickBooks and

strong excel skills for spreads hit data ent4ry and general work.

 Ability to work independently with minimum supervision.

 Must be prepared to sit for the proficiency test.

 63

 Must be trustworthy, honest and responsible.

 Must be equipped with the basic know how in financial management.

C. Workers

 Male or Female, 20 years old and above.

 At least High School graduate

 Experience in related field, an advantage

 Must perform all the production process and ensure the quality of the

product.

 Must work in conformity with the firm’s guidelines and policy.

 Must have good moral character

 Physically and mentally fit

Job Description

Job descriptions are based on objective information obtained through job analysis,

an understanding of the competencies and skills required to accomplish needed tasks, and

the needs of the organization to produce work.

A. Manager

 Coach, mentor, and develop staff, including overseeing new employee on

boarding and providing career development planning and opportunities.

 Lead employees using a performance management and development

process that provides an overall context and framework to encourage

employee contribution and includes goal setting, feedback, and

performance development planning.

 64

 Empowering the employees to take responsibility for their jobs and goals.

Delegate responsibility and expect accountability and regular feedback.

 Maintain employee work schedules including assignments, job rotation,

training, vacations and paid time off, telecommuting, cover for

absenteeism, and overtime scheduling.

Lead employees to meet the organization's expectations for productivity, quality,

and goal accomplishment.

Bookkeeper

 Prepares payroll for workers and clients.

 Maintains bookkeeping files

 Perform other accounting responsibilities as requested or assigned by the

management.

 Perform miscellaneous duties as assigned or requested by the agency

management.

 Balance out the profit and expenses of a business. After every accounting

period, prepares a report and submits it to an accountant who is

responsible for calculating tax payments, issuing official reports, etc.

 Perform other duties as assigned.

Worker

 Responsible for the production of the product.

 Performing routine to inspect the production to ensure that the product is

safe.
 65

 Listening to the concern of the clients and bringing them positive

feedback.

 Inform the management all issues regarding to the production aspect.

 Doing works in accordance with the firm’s policy and guidelines.

Compensation

Compensation is the total amount of the monetary and non-monetary pay

provided to an employee by an employer in return for work performed as required. It

means all remuneration for services performed by an employee for his employer unless

specifically exempted by the provision of the National Internal Revenue Code (Sec 2

Rev. Reg. No. 12-86) It includes salaries, wages, emoluments, honoraria, allowance

(transportation, representation, entertainment and clothing), fringe benefits, fees,

including director’s fees, taxable pensions and retirement pay and other income of similar

nature.

Each of the workers will receive the amount of Php7,460.00 every month. The

bookkeeper will receive monthly salary of Php3,000.00. The salary increase will depend

on our production increase.

Table 4.2
Salaries Expense

Position No. of staff Daily Salary Monthly Annual salary

salary
Manager 1 P375.00 P7,500.00 P90,000.00
Bookkeeper 1 3,000.00 36,000.00
TOTAL Php 10,500.00 Php 126,000.00
 66

Benefits and Incentives

Benefits and incentives schemes can be operated side-by-side with a great degree

of success. Indeed, it is frequently more efficient from an employer’s point of view to

attach qualifications to some benefits granted to employees; in this way the benefits

become incentives, and productivity will tend to increase if the incentives are enticing

enough.

The firm agreed to provide the following benefit in order to protect the

employees' income from illness, disability, unemployment or retirement and the

following which are as follows:

1. SSS (Social Security System) — under R.A. No. 1161, employees should

render assistance to employees and their families in case the sources of their

income is terminated, reduced or interrupted because of sickness, disability, death

or old age. SSS grants retirement: benefits, maternity, disability, sickness, funeral,

housing, production arid salary loans to all members.

2. Sickness / Phil Health Program — being an SSS member, an employee is

automatically covered by Phil Health. The premiums of which are shared by the

employer and the employee. It covers hospitalization, surgical and medical

benefits and it also shoulders a portion of hospital expenses.

3. PAG-IBIG Fund Benefit — it is a housing and provident fund where

employees may avail a multi-purpose or housing loan.

4. Thirteenth month Pay — it is a legally required benefit which was designed to

give additional compensation to employee during holiday season.

 67

Organizational Policies

Organizational policies are defined as the course or method of action selected,

usually by an organization, institution, university, society, etc., from among alternatives

to guide and determine present and future decisions and positions on public matters. This

was designed by the management in Order to guide not only the employees but also the

management itself on how to better flow of the company operations. Furthermore, those

policies will also help the management escape from misunderstanding, that will trigger

from greater problem on the business operation.

Those organizational policies were as follows:

1. There should be an appropriate behavior shown in the workplace.

2. Employees are treated equally and promote fair treatment in the workplace.

3. Fully respect the employee condition including their illness.

4. Any information about the company will be treated confidential.

5. Ensuring that the employee compensation and benefits are properly given in

accordance to the effort they rendered.

6. Employees are only given task necessary to prescribed duties.

7. Employees are ensured that they are placed on the environment on which their

skills are given importance and in which there's a chance of life improvement.

Customer/Retailer Policies

To have a better relationship among customers, Hey, Dale Food Manufacturing

Enterprise established the following guidelines:

1. The customer should be treated equally and properly.

2. They are given the right products that they paid for.
 68

3. Delivery will be done accurately based on the agreed time and place.

4. Customers are free to give complaints with regards to the product.

5. Product returns that are distributed to retailers are accepted and changed as long

as the fallowing conditions are present:

✓ Customers should present the official receipt

✓ The product was not yet consumed

✓ The product was returned on reasonable time (3 days after purchased)

Employee Policies

Employee policy is composed of rules and regulation of the firm to its employee,

the company is setting rules and regulation to limit or avoid employees on committing

action that could harm and affect the company’s growth. On the other side, the company

must provide policies and rules that the employee could benefit too, such policies are:

1. Hey, Dale Food Manufacturing Enterprise guarantees that employees will work

in accordance with their values, and at the same time respecting their differences

and beliefs.

2. Employees are given right and equal opportunity.

3. They are appropriated to rest days and non-working holidays.

4. Information about employees is kept private and confidential.

5. Salaries are properly given on the agreed pay day.

6. Safe and health of the employees are well protected and ensured.

7. Will continuously motivate employees to improve their skills and abilities.

 69

Environmental Policies

An environmental policy is consisted of the company’s environmental concerns.

Every firm must consider all aspects that could possibly harm the environment because of

the business. In order to minimized or somehow eliminate those possible aspects that

could harm the environment, the company must comply for the following policies:

1. Proper waste disposal is strictly implemented.

2. Waste will be segregated according biodegradable and non-biodegradable.

3. Strictly ensures that the company prohibits the usage of toxic materials that will

harm the environment.

Supplier Policies

A supplier policy is consisting of policies regarding the rights of both parties

about the supplies.

1. Confidential information about suppliers will be kept secured.

2. Conduct business ethically, without attempt to influence through gifts,

entertainment, or favors that would create a conflict of interest.

Employee Rules and Regulations

Having the following offenses will be subjected to disciplinary actions which will

either result from management warning or further dismissal from the position.

1. Vandalism on the firm's property.

2. Theft of the firm's private documents, as well as the properties owned by

the company.

3. Showing bad conduct and acting beyond the given authority.

 70

4. Working while in the alcohol state, or usage of illegal drugs.

5. Frequent absences from work without valid reason.

6. Recurrent tardiness.

7. Sleeping while in the working hours.

Legal Requirements

The firm must comply with the following requirements in order to acquire its

legal title.

1. Registration to Security and Exchange Commission. It is necessary as condition forth

issuance of licenses to engage in a business. In this way, the tax liabilities of big

partnership cannot be evaded and the public can also determine more accurately their

membership and capital before dealing with them. Together with the registration, the

articles of co-partnership must be submitted to SEC.

2. Application of the Mayor's permit shall be accompanied by the following:

a. Location sketch of the proposed business;

b. Sworn capital investment of the owners;

c. Certificate attesting to the tax or fee exemption, if the business is exempted or

free from payment of tax;

d. Certificate from the tax officer in charge of zoning division that the location of

the proposed business is in accordance with zoning rules and regulation;

e. Tax clearance, showing that the operation has paid all its tax obligations in the

city;

f. Two passport size pictures in case of partnership, the picture of general

manager;
 71

g- Presentation of receipts for the payment of professional tax, occupation fee as

the case maybe, if the application is liable thereof;

h. Lease contract if the building is rented; and Barangay clearance of the business

operation

For Mayor's Permit, the requirements are:

A. Accomplished application form for new/renewal;

B. Follow up the application for the following offices:

• Municipal Planning and Development: Coordination

•Municipal Health offices

• Office of the Municipal Mayor

• Business Permit and license fees, issuance of Community tax Certificate,

assessment of Business Tax fee.

• Payment of the applicant for the corresponding tax at the office of

Municipal Treasurer;

• Mayor's Permit certificate from Municipal Mayor, Permit and Licenses

Division;

• Endorsements of processed application of Mayor's permit certificate in

the office of the Mayor for proper action.

• Releasing of approved Mayor's permit

3. Registration in Bureau of Internal Revenue (BIR) needs the following procedures and

requirements:

1. Get Tax Payer Identification number (TIN)

2. Secure BIR form

 72

Requirements:

• Mayor's Permit (photocopy)

• Capital Investment (notarized)

3. Submit the requirements and apply as Vat or Non VAT Tax Payer

4. Wait for one or two weeks for the release of the certificate.

4. Application for the Social Security System and Phil Health. It is important to secure

the pension fund for the employer or employees.

 Standard Petition Form, duly notarized;

 1 x 1 Picture of Applicant (owner, General Manager):

a. For Corporation/ Partnership photocopy of registration with SEC and articles of

Incorporation and photocopy of DTI registrar of Business name;

b. Mayor's Permit reflecting plant assets;

c. Itemized fixed assets and operating capitals, duly notarized;

d. Floor plan of working area with complete dimension in meters;

e. Location plant size;

f. Notarized contract of lease of building and warehouse;

g. List of products to be manufactured

h. 10.List of technical and non-technical personnel and scholastic attainment;

i. If licensed, submit a duly notarized license agreement.

Additional Requirement:

For manufacturers, floor plan of working area with complete dimension in meters.

5. Registration of BMBE with the Office of the City Treasurer. The following are

the requirements needed in the registration:

 73

a. Duly filled put application form (BMBE Form 01) in triplicate, signed by the

owner or manager of the entity applying for registration; and,

b. Three passport size ID pictures.

c. Registration as a business entity or enterprise from the appropriate government

agency (e.g., Securities and Exchange Commission (SEC) registration in the case

of corporation; partnership or association; Cooperative Development .Authority

(CDA) registration in the case of cooperative; Department of Trade and Industry

Taxpayer Identification Number (TIN):

d. Certificate of Registration from the Bureau of Internal Revenue;

e. Mayor's Permit or City/Municipal Business Permit;

f. Sworn affidavit executed by the sole proprietor or the President of the enterprise,

as the case may be, that the enterprise is barangay-based and micro-business in

nature and scope;

g. Sworn Statement of Assets and Liabilities supported by pertinent documents;

h. Pictures of the place of business and its assets, other than cash, receivables and

intangibles;

i. Copy of Loan Contract/s, if any, and duly-notarized

j. Certification of Amortization Payments on the Loan and Income Tax Return

(ITR).

Technical Requirements

2 copies of the following:

a. Organizational chart, including qualifications of key personnel in the production

of quality control
 74

b. List of production equipment with specification

c. List of quality control facilities and equipment (if any)

d. Flow chart of manufacturing process with emphasis on identification of critical

points e. Detailed description of manufacturing procedures enforced in the plant

e. Quality control procedures enforced in plant g. Certification with current

laboratory analysis (from recognized laboratory)

 Source water: For plant outside Metro Manila, from City/ Municipal Health/

Sanitary Engineer

 Finished product compliance with standards

 Suitability of packaging materials

1. Product Recall Procedure

2. Name and address of supplier of raw and packaging materials.

Table 4.3
Legal Permit, Licenses and Organization Chart
BMBE Registration Php 500.00
Barangay Fee 100.00
SEC Registration 1,500.00
BIR Registration 500.00
Zoning Fee 200.00
Annual Inspection Fee 550.10
Medical Fee 150.00
Garbage Fee 500.00
Sanitary Fee 100.00
Worker’s Permit 500.00
Mayor's Permit 100.00
Business Tax 500.00
Occupational Tax 900.00
Community Tax Clearance 500.00
Business Plate 120.00
Fire Inspection 228.00
Total Taxes and Licenses Fees Php6,948.10
 75

Generalization

The management study explained the details about the business structure and the

overall strategic planning of the company. The proposed business is classified as a

partnership form of business ownership. The proponents agreed to contribute money to a

common fund to establish this business with an agreed capitalization Php450,000.00, the

Php450,000.00 will be divided and contributed equally by the partners amounting to

Php150,000.00.

Having organizational structure in the company can help people inside the

organization to determine their roles and responsibilities. The proposed business will

have the partners that are in charge in decision making, one (1) manager to lead the

workers using performance management, two (2) workers in charge in production and a

bookkeeper who are in charge on keeping records of the financial affairs of the business.

Seeking for the necessary skills and ability of the employee is an important factor

for a higher level of productivity and efficiency of the employee. The proposed business

needs to hire a manager to lead employees using a performance management and

development process, two (2) skilled workers to perform the production and a

bookkeeper to run the business.

Everyone wants to receive the right and just wage according to the kind of work

they perform, that is why, compensation and all of possible benefits they can get is

necessary to determine by the company in order to motivate the workers to do their job

the best that they can. Rules and regulation of the company must be discussed in order for

the employees to be informed by what are do’s and don’ts activities in the workplace.
 76

The permits, licenses, and other legal requirements were also determined in order

for the business to operate legally and have its legal identity. The firm must comply for

all the requirements in order to protect and maintain the operation of the company.
 77

Chapter V
FINANCIAL STUDY

This portion determines the profitability level of the project which is generally

defined as the relationship of the net income after taxes to the total investment. It is also

involved a thorough coverage of all the monetary information of the enterprise. It covers

detailed information on the total project cost, initial capital requirements, sources of

financing, financial statements and the financial analysis.

This study is most beneficial for the proponents since this will be the measure if

the proposed business will be profitable. The financial health and performance of the

business will be assessed with the use of this study.

Objectives of the Study

The proponents endeavor to determine the feasibility of Hey, Dale Food

Manufacturing Enterprise to assess financing requirements, financial practicability,

company’s position and performance for five-year operation. Specifically, it aims to

attain the following:

1. To recognize the initial capital investment needed by the proponents to finance the

funds needed in the formation of the firm.

2. To provide financial assumptions conduit in the preparation of the financial

statements.

3. To use financial mix ratios, cost volume profit analysis and capital budgeting in

determining the activity, profitability, liquidity and solvency of the firm.

 78

4. To present the financial statements of the firm which reflect their financial position,

success of operations, policies and strategies of management and insights of future

performance.

5. To predict Hey, Dale Food Manufacturing Enterprise potential to generate profit in

the future.

Total Project Cost

The total project cost will determine the necessary capital required by the partners

to initialize the formation of the firm. A precise demonstration of the projected cost will

lead to proper recognition of the needed assets for the ample establishment of the firm.

Investments of each partner will be on cash basis, as well as the cautious usage of

debt to finance the total project cost. It is a primary requirement of the partners to have

sufficient amount of capital to provide the necessities for the smooth flow of operation of

the firm. See Table 5.1.

Table 5.1
Total Project Cost - for Two Months
Fixed Assets
Factory Machinery and Equipment 17,140.00
Factory Furniture and Fixtures 11,400.00
Factory Tools 2,540.00
Office Equipment 20,400.00
Office Furniture 8,550.00
Maintenance Supply 8,840.00
Office Supplies and tools 2,736.00
Tricycle 90,000.00
Leasehold Improvements 35,000.00
196,606.00
Working Capital for Two Months
Direct Materials 123,586.50
Direct Labor 29,840.00
Factory Overhead
Indirect Materials 16,038.33
Rent Expense 14,000.00
 79

Contributions - SSS, PAG-IBIG and

2,440.00
PhilHealth
Administrative Expenses
Salaries Expense 21,000.00
Rent Expense 6,000.00
Pre-operating Expenses
Legal Fees and Licenses 6,948.10
Advertisement Expense 13,000.00
79,426.43
Total 454,176.16
Cash for Contingencies 20,541.07
Total Project Costs 450,000.00

Initial Capital Requirements

Recognition of sources of financing is an indispensable element of the feasibility

study. The contribution of money, property or industry of each partner to a common fund

is considered necessary for the formation of partnership. This will finance for the

establishment of the business and smooth flow of operation. See Table 5.2.

Table 5.2
Initial Capital Requirement
Equity Capital P450,000.00
Libang, Capital P150,000.00
Llantero, Capital 150,000.00
Malubag, Capital 150,000.00

Financial Assumptions

Financial assumptions serve as basis and limitations in the preparation of financial

statements and they are as follows:

1. Initial Capital Requirement:

The business has an initial capital of Php 450,000.00 contributed by the

partners in equal amount.

 80

2. Working Days:

There will be eight (8) working hours a day, five (5) working days in a week,

and an average of twenty (20) days in a month with an average of 240 days in

a year.

3. Accounting Reporting Period

A calendar year of business starting on January 2021 will be implemented.

4. Production Capacity:

The firm can produce 24,000 units on the first year of its operation.

Production will increase based 5% growth rate to individual population from

the second year and to the succeeding years.

5. Purchases (Direct Materials and Indirect Materials):

a. The increase in volume of purchases will depend in the increase on

production per year.

b. Purchases of direct and indirect materials are on cash basis only.

c. Cost of direct materials is inclusive of freight-in.

d. Inflation rate is 5% annually.

6. Sales:

a. The initial selling price per piece of the product will be Phpe60.00 per

pack as presented on market study and it is inclusive of VAT, the mark up

of the enterprise. There will be no increase in selling price for the

succeeding years.

b. 95% of sales is on cash the remaining 5% will be under consignment of

goods.
 81

7. Inventory:

a. There will be 5% of ending inventory on the available goods to be sold.

8. Expenses

a. There are no changes in expenses for the period of five years.

b. Expenses incurred will be acquired through cash basis.

9. Labor and Employee Benefits:

a. Labor cost is considered fixed cost since there will be no increase in the

succeeding years.

b. There will be two workers for direct labor and indirect labor given that the

general manager and book keeper will be the partners.

c. Total annual benefits will include the 13th month salary, SSS, PAG-IBIG,

and Philhealth.

10. Property, Plant and Equipment:

a. Acquisition of equipment, furniture and fixtures is on a cash basis. No

additional machinery would be purchased for the first five years of

operation.

b. The firm will use the straight line method of depreciation with no residual

value.

c. All property, plant and equipment will have 5 years useful life which is

equivalent to its lease term.

11. Partnership equity:

a. The partners are allowed to have withdrawal every year depends upon the

agreement of the partners.

 82

b. Remaining profits are shared equally by the partners in accordance with

the agreement of the partners as stipulated in the contract.

12. Growth Rate:

Growth rate of 5% is computed by the proponents from the increase in

household population in given by the City Planning and Development Office.

13. Inflation Rate

The partnership used 5% of inflation rate. Basis are the average inflation rate of

January to December 2018.

14. VAT Payable

The company will have 12% output VAT per year and is allowed to claim

12% input VAT since Gross Sales exceeded Php 3,000,000.00.

Financial Statements

A company’s financial statements can be used as an analytical tool, as a

management report card, as an early warning signal, as a basis for prediction, and as a

measure of accountability. Financial statements also provide an economic history that is

comprehensive and quantitative, and can be used to gauge company performance. For

these reasons, financial statements are indispensable for developing an accurate profile of

ongoing performance and prospects of a company (Robles, 2016). The financial

statements are the means by which the information accumulated and processed in

financial accounting is periodically communicated to the users. Without accounting

information embodied in the financial statements, users may not be able to arrive at

sound economic decisions (Ballada, 2017). Financial statements are a structured financial

representation of the financial position of and the transactions undertaken by an

 83

enterprise. They are the responsibility of the company’s management. This means that the

format by which the financial statements are presented, the information presented therein

and the fairness of their presentation depend on the assessment by the enterprise

management (Robles, 2016).

Statement of Financial Performance

Since the late 1960s or early 1970s, the income statement has been widely

perceived by its various users as the single most significant financial statement of an

enterprise. Creditors refer to the income statement for insights into the ability of a debtor

to generate future cash flows from its operations needed to repay its obligation. Investors

consider the past income of an enterprise as a useful predictor of future earnings and the

best indicator of future dividends and future market price behavior. Management, on the

other hand, uses the income statement as a measure or gauge of its effectiveness and

efficiency in using up the enterprise’s resources. The profit that is provided in the income

statement is the lifeblood of any enterprise organized to earn a satisfactory return on the

capital invested by its owners (Robles, 2016).

The income statement is a formal statement showing the performance of the

enterprise for a given period of time. It summarizes the revenues earned and expenses

incurred for that period time. Information about the performance of an enterprise, in

particular its profitability, is required in order to assess potential changes in the economic

resources that it is likely to control in the future. It is also useful in predicting the capacity

of the enterprise to generate cash flows from its existing resource base (Ballada, 2005).
 84

HEY,DALE FOOD MANUFACTURING ENTERPRISE

Comparative Statements of Profits and Losses
For the Periods Ended December 31, 2021-2025

2021 2022 2023 2024 2025

Sales 1,411,200.00 1,580,544.00 1,721,664.00 1,933,344.00 2,145,024.00
Less: Cost of Goods Sold 967,997.92 1,139,274.10 1,216,935.50 1,269,282.65 1,315,487.97
Gross Profit 443,202.09 441,269.90 504,728.50 664,061.35 829,536.03
Less: Operating Expenses
Administrative Expenses
Taxes and Licenses Fees 6,948.10 6,948.10 6,948.10 6,948.10 6,948.10
Office PPE Depreciation 5,169.64 5,169.64 5,169.64 5,169.64 5,169.64
Office Rent Expense 34,285.71 34,285.71 34,285.71 34,285.71 34,285.71
Utilities Expense 38,012.83 38,012.83 38,012.83 38,012.83 38,012.83
Office Supplies Expense 2,442.86 2,528.06 2,528.06 2,528.06 2,528.06
Advertising Expense 13,000.00 13,000.00 13,000.00 13,000.00 13,000.00
Miscellaneous Expense 7,779.20 8,168.16 8,168.16 8,168.16 8,168.16
Total Operating Expenses 107,638.35 108,112.51 108,112.51 108,112.51 108,112.51
Operating Income 335,563.74 333,157.38 396,615.99 555,948.84 721,423.52
Provision for Income Tax 100,669.12 99,947.22 118,984.80 166,784.65 216,427.06
Net Income 234,894.62 233,210.17 277,631.19 389,164.19 504,996.46
 85

Statement of Financial Position

A statement of financial position (which is conventionally called the balance

sheet) reports the financial position of an entity at a particular date. This statement,

evaluated together with the other components of the financial statements, is useful to

various users of accounting information such as investors and creditors, in order to assess

the economic resources that an enterprise controls, its financial structure, its liquidity and

solvency and its capacity to adapt to changes in the environment in which it operates

(Robles, 2016).

Statement of Financial Position of Hey, Dale Food Manufacturing Enterprise

presented the financial condition of the business in five years. Assets are obviously

increasing every year. Current assets can be perceived as a greater composition of total

assets indicating that the business is highly liquid. The statement reflects that cash is the

major component of the assets. It also shows that there is a slight increase in the

inventory. Decreasing value of plant, property and equipment and constant value of

investment implies that there are no added investments on noncurrent assets. Likewise,

component of current liabilities have shown no changes except VAT payable. Decreasing

amount of noncurrent liabilities can be observed. These liabilities have shown favorable

changes for the financial condition of the business. Increasing equity in the statement

indicates that partners have growing and greater interests over the business’ assets.

Increasing assets and decreasing liabilities gives a positive sign that the business is in

good financial condition and distant from economic failure.

 86

HEY, DALE FOOD MANUFACTURING ENTERPRISE

Comparative Statements in Financial Position
For the Periods Ended December 31, 2021-2025
2021 2022 2023 2024 2025
ASSETS
Current Assets
Cash and Cash Equivalent 357,626.78 477,678.24 632,331.90 901,024.46 1,285,296.89
Accounts Receivable 70,560.00 79,027.20 86,083.20 96,667.20 107,251.20
Prepaid Rent 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
Inventories 25,714.29 28,800.00 31,371.43 35,228.57 39,085.71
Total Current Assets 463,901.06 595,505.44 759,786.53 1,042,920.23 1,441,633.81
Noncurrent Assets
Property, Plant and Equipment 105,350.00 79,012.50 52,675.00 26,337.50 0.00
Total Noncurrent Assets 105,350.00 79,012.50 52,675.00 26,337.50 0.00
Total Assets 569,251.06 674,517.94 812,461.53 1,069,257.73 1,441,633.81
LIABILITIES AND EQUITY
Current Liabilities
Accrued Liability 10,559.12 10,559.12 10,559.12 10,559.12 10,559.12
Loan Payable 0.00 0.00 0.00 0.00 0.00
VAT Payable 23,797.33 45,854.03 56,166.43 73,798.44 91,178.06
Total Current Liabilities 34,356.45 56,413.15 66,725.55 84,357.56 101,737.18
Total Liabilities 34,356.45 56,413.15 66,725.55 84,357.56 101,737.18
Equity
Manacop, Capital 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21
Patricio, Capital 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21
Zamora, Capital 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21
Total Equity 534,894.62 618,104.79 745,735.98 984,900.17 1,339,896.63
Total Liabilities and Equity 569,251.06 674,517.94 812,461.53 1,069,257.73 1,441,633.81
 87

Statement of Changes in Partners’ Equity

The statement of changes in equity is a basic statement that shows the movements

in the elements or components of the partners’ equity. It also demonstrates each

component of equity, the effects of changes in accounting policies and correction of

errors (Valix, 2018).

In addition to the transactions taken to the statement of comprehensive income,

the statement also shows all other transactions affecting the various partner’s equity

accounts including transactions with owners (Robles, 2016).

Statement of changes in equity reflects the deviations of equity of every partner of

Hey, Dale Food Manufacturing Enterprise This explains exactly how the capital of each

partner in statement of financial position increases every year. From the beginning

balance of P450,000.00, partners’ capital increased each year by their share in the net

income including the salary allowances to the partners who have responsibilities in the

established business. Equity is reduced by the drawings of the partners every year.
 88

HEY, DALE FOOD MANUFACTURING ENTERPRISE

Comparative Statements of Changes in Equity
For the Periods Ended December 31, 2021-2025

2021 2022 2023 2024 2025

Libang, Capital
Beginning Balance 150,000.00 178,298.21 206,034.93 248,578.66 328,300.06
Add: Share in Net Income 78,298.21 77,736.72 92,543.73 129,721.40 168,332.15
Less: Drawings (50,000.00) (50,000.00) (50,000.00) (50,000.00) (50,000.00)
Ending Balance 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21

Llantero, Capital
Beginning Balance 150,000.00 178,298.21 206,034.93 248,578.66 328,300.06
Add: Share in Net Income 78,298.21 77,736.72 92,543.73 129,721.40 168,332.15
Less: Drawings (50,000.00) (50,000.00) (50,000.00) (50,000.00) (50,000.00)
Ending Balance 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21

Malubag, Capital
Beginning Balance 150,000.00 178,298.21 206,034.93 248,578.66 328,300.06
Add: Share in Net Income 78,298.21 77,736.72 92,543.73 129,721.40 168,332.15
Less: Drawings (50,000.00) (50,000.00) (50,000.00) (50,000.00) (50,000.00)
Ending Balance 178,298.21 206,034.93 248,578.66 328,300.06 446,632.21
 89

Cash Flow Statement

Users of accounting information are particularly interested in the enterprise’s cash

flow because they need to assess the ability of the enterprise to remain solvent – to pay its

expenses, repay debts and provide returns to investors and creditors (Robles, 2016).

The statement of cash flows provides information about the cash receipts and cash

payments of an entity during a period. It is a formal statement that classifies cash receipts

(inflows) and cash payments (outflows) into operating, investing and financing activities.

This statement shows the net increase or decrease in cash during the period and the cash

balance at the end of the period; it also helps project the future net cash flows of the

entity (Ballada, 2017).

Hey, Dale Food Manufacturing Enterprise’s statement of cash flow shows cash

receipts and payments during five years of operation. During these periods, positive cash

flows from operating activities can be observed. This implies that the business is good in

generating cash in its operations and uses this in financing and investing activities.

Negative cash flows from investing activities represent the use of cash to purchase fixed

assets and invest in deposits.

 90

HEY, DALE FOOD MANUFACTUERING ENTERPRISE

Comparative Statements of Cash Flow
For the Periods Ended December 31, 2021-2025
2021 2022 2023 2024 2025
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income 234,894.62 233,210.17 277,631.19 389,164.19 504,996.46
Adjustments for:
Inventories (25,714.29) (3,085.71) (2,571.43) (3,857.14) (3,857.14)
Accounts Receivable (70,560.00) (8,467.20) (7,056.00) (10,584.00) (10,584.00)

Depreciation 26,337.50 26,337.50 26,337.50 26,337.50 26,337.50

Operating income before changes in working
capital 164,957.83 247,994.75 294,341.26 401,060.54 516,892.82
Decrease (increase) in:
Increase (decrease) in:
Prepaid Rent (10,000.00)
Interst Payable 0.00 0.00 0.00 0.00 0.00
VAT Payable 23,797.33 22,056.71 10,312.39 17,632.01 17,379.61
Accrued Utilities 10,559.12
Net cash provided by (used in) operating
activities 189,314.28 270,051.46 304,653.66 418,692.56 534,272.44
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Equipment (131,687.50)
Net cash provided by (used in) investing
activities (131,687.50) 0.00 0.00 0.00 0.00
 91

CASH FLOWS FROM FINANCING

ACTIVITIES
Initial Investment inclusind debt financing 450,000
Withdrawal (150,000) (150,000) (150,000) (150,000) (150,000)
Net cash provided by (used in) financing
activities 300,000 (150,000) (150,000) (150,000) (150,000)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 357,626.78 120,051.46 154,653.66 268,692.56 384,272.44
CASH AND CASH EQUIVALENTS
BEGINNING 0 357,626.78 477,678.24 632,331.90 901,024.46
CASH AND CASH EQUIVALENTS
ENDING 357,626.78 477,678.24 632,331.90 901,024.46 1,285,296.89
 92

Financial Analysis

Financial statement analysis is an evaluative method of determining the past,

current and projected performance of a company enabling the interested parties to

discover and understand the financial health of the company, and the management to

arrive in more effective decisions.

Financial Mix Ratios

A typical way to analyze the financial statements is by computing ratios. The

key ratios determined are (a) liquidity (b) activity (c) solvency and (d) profitability.

A. Liquidity Ratio

Liquidity ratios show the relationship of a firm’s cash and other current assets

to its current liabilities. If the company is liquid the company employs conservative

strategy in managing their working capital. The company is more concern with their

capability to pay current liabilities with current assets.

Current Ratio

Current ratio measures the number of times current assets could cover current

liabilities. Higher ratio indicates good liquidity position.

Current Asset
Current Ratio =
Current Liabilities

Table 5.3
Current Ratio
Year Current Asset Current Liabilities Current Ratio
2021 463,901.06 34,356.45 13.50
2022 595,505.44 56,413.15 10.56
2023 759,786.53 66,725.55 11.39
2024 1,042,920.23 84,357.56 12.36
2025 1,441,633.81 101,737.18 14.17
 93

Table 5.3 shows the increasing trend of current ratio presenting higher current

ratio is a better indication that the enterprise still has greater ability to pay its liability.

Acid Test Ratio

This ratio includes the quick assets that can be easily converted into cash. It

measures the liquidity position in more conservative way. When acid test ratio is more

than one means that the company has the capability to pay its debt without selling its

inventory.

Quick Assets(Cash and A/R)

Acid Test Ratio =
Current Liabilities

Table 5.4
Quick or Acid Test Ratio
Year Cash Quick Assets Current Liabilities Quick Ratio

2021 357,626.78 357,626.78 34,356.45 10.41

2022 477,678.24 477,678.24 56,413.15 8.47

2023 632,331.90 632,331.90 66,725.55 9.48

2024 901,024.46 901,024.46 84,357.56 10.68

2025 1,285,296.89 1,285,296.89 101,737.18 12.63

The table 5.4 shows that ratios starting from 2021, point out that the business

has high ability to pay its debt through the use of its quick assets. This is due to the

investment of cash in time deposit. Quick asset ratio each year still reflects that the

enterprise is capable of meeting its short-term obligations without liquidating other

current assets. Since quick asset is only composed of cash, there is more than seven to

eighteen pesos available to pay a peso of liability.

 94

Working Capital

Working capital is a measure of both a company's operational efficiency and its short-

term financial health. The working capital ratio (current assets/current liabilities), or current

ratio, indicates whether a company has enough short-term assets to cover its short-term debt.

Working Capital = Current Assets - Current Liabilities

Table 5.5
Working Capital
Year Current Asset Current Liabilities Working Capital
2021 463,901.06 34,356.45 429,544.62
2022 595,505.44 56,413.15 539,092.29
2023 759,786.53 66,725.55 693,060.98
2024 1,042,920.23 84,357.56 958,562.67
2025 1,441,633.81 101,737.18 1,339,896.63

B. Activity Ratios

Activity ratios are measures of how effectively the enterprise is using the

assets employed (Kieso, 2017).

Inventory Turnover

This ratio shows how promptly the inventory is being turned over to generate

sales. A higher ratio implies the firm is more competent in managing inventories by

minimizing the investment in inventories.

Cost of goods sold

Inventory Turnover =
Average Inventory

Table 5.6
Inventory Turnover
Year Cost of Goods Sold Ave. Inventory Inventory Turnover
2021 967,997.92 25,714.29 37.64
2022 1,139,274.10 28,800.00 39.56
2023 1,216,935.50 31,371.43 38.79
2024 1,269,282.65 35,228.57 36.03
2025 1,315,487.97 39,085.71 33.66
 95

Table 5.6 shows that Inventory turnover ratio is increasing in slight

significance. Furthermore, this increasing turnover is a favorable sign for Hey, Dale

Food Manufacturing Enterprise with regards to its inventory management. Though

increase is small, turnover is still high which reflects the competence of the business

when it comes to selling and managing its inventories.

Average Sales Period

Average Sales Period or Days to sell inventory refers to how quickly the

manufactured product is sold off the shelf. It has negative relationship with the

Inventory Turnover Ratio hence when the company has low Inventory Turnover Ratio

the Days to sell inventory is slower.

365 days
Average Sales Period =
Inventory Turnover

Table 5.7
Average Sale Period
Year Days in Year Inventory Turnover Days
2021 365 37.64 9.70
2022 365 39.56 9.23
2023 365 38.79 9.41
2024 365 36.03 10.13
2025 365 33.66 10.84

Table 5.7 shows how fast or how long it takes for the inventory to sell. As

shown above, days to sell is also decreasing which means that the sales somehow

become faster.

Debt Ratio

Debt ratio measures the percentage of funds provided by creditors to purchase

assets. The lower the debt ratio is better for the company. Increasing rate of debt ratio

implies that the company is aggressive which focus on being profitable. In contrast,
 96

decreasing rate or debt ration shows that the firm is conservative which focuses on

liquidity.

Total Liabilities
Debt Ratio =
Total Assets

Table 5.8
Debt Ratio
Year Total Liabilities Total Assets Ratio (%)
2021 34,356.45 569,251.06 6.04%
2022 56,413.15 674,517.94 8.36%
2023 66,725.55 812,461.53 8.21%
2024 84,357.56 1,069,257.73 7.89%
2025 101,737.18 1,441,633.81 7.06%

Table 5.8 displays the decreasing debt ratio for five years of operation of the

business. This shows that the business is reducing its reliance on debt to finance

assets. The lower the ratio, the lower the risk, is better for the enterprise. This also

implies that the business is conservative when it comes to its strategy which focused

on being liquid.

Equity Ratio

Equity ratio indicates proportion of assets provided by owners. It reflects

financial strength and caution to creditors. The equity ratio is indirectly proportional

to debt ratio.

Total Partners' Equity

Equity Ratio =
Total Assets

Table 5.9
Equity Ratio
Year Total Partners Equity Total Assets Ratio (%)
2021 534,894.62 569,251.06 93.96%
2022 618,104.79 674,517.94 91.64%
2023 745,735.98 812,461.53 91.79%
2024 984,900.17 1,069,257.73 92.11%
2025 1,339,896.63 1,441,633.81 92.94%
 97

Table 5.9 shows that equity ratio is significantly high and becomes higher

every year. This reflects the financial strength and conservatism of the Hey, Dale

Food Manufacturing Enterprise. The higher the ratio, the better for the company for it

carries lower risks. This ratio proves that the business is highly liquid in terms of its

activity. Higher equity ratio of the business is due to great amount of current assets.

Debt Equity Ratio

The debt-to-equity ratio measures the use of debt to finance operations. It

provides a measure the relative amount of resources contributed by the creditors and

owners. The lower the debt-to-equity ratio is better for the firm.

Total Liabilities
Debt Equity Ratio =
Total Partners' Equity

Table 5.10
Debt to Equity Ratio
Year Total Liabilities Total Partners Equity Ratio (%)
2021 34,356.45 534,894.62 6.42%
2022 56,413.15 618,104.79 9.13%
2023 66,725.55 745,735.98 8.95%
2024 84,357.56 984,900.17 8.57%
2025 101,737.18 1,339,896.63 7.59%

The table 5.10 presents the decreasing debt-to-equity ratio which states that

the business uses more contributions of partners to finance the operations than

external borrowings. Higher ratio indicates a lower liquidity risk which is good for the

enterprise. Decreasing amount of liability is due to payment of loans from bank to

support the total project cost.

C. Profitability Ratios

Profitability is the ease with which a company generates income (Cabrera,

2011). Profitability is the ability of the business to generate profit. The set of ratios to
 98

measure the profitability of a company includes some of the traditional earnings based

performance such as ROS, ROA and ROE. Profitability ratios are measures of the

degree of success or failure of a given enterprise or division for a given period of time

( Kieso, 2017).

Rate of Return on Equity

Return on equity measures the amount of Net Income earned by utilizing each

dollar of Average Shareholders’ Equity (Agamata, 2016). Through this ratio, it shows

how much the shareholders are going to get for their shares. The higher the ratio is

better for the firm.

Net Profit
Return in Equity =
Ave. Partners Equity

Table 5.11
Rate of Return in Equity
Year Net Income Ave. Partners Equity Ratio (%)
2021 234,894.62 534,894.62 43.91%
2022 233,210.17 885,552.09 26.34%
2023 277,631.19 1,054,788.37 26.32%
2024 389,164.19 1,357,768.16 28.66%
2025 504,996.46 1,832,346.71 27.56%

Table 5.11 shows a diminishing return on equity from 2021 to 2025. This

indicates an unpleasant reflection of generating return to partners. This shows that the

enterprise is inefficient in generating income relative to the partners’ investment. This

is due to large amount of cash are not invested to generate more income.

Gross Profit Margin

Gross profit margin measures profit generated after consideration of cost of

product sold (Agamata, 2016).

 99

Gross Profit
Gross Profit Margin =
Net Sales
Table 5.12
Gross Profit Margin
Year Gross Profit Net Sales Ratio (%)
2021 443,202.09 1,411,200.00 31.41%
2022 441,269.90 1,580,544.00 27.92%
2023 504,728.50 1,721,664.00 29.32%
2024 664,061.35 1,933,344.00 34.35%
2025 829,536.03 2,145,024.00 38.67%

Hey, Dale Food Manufacturing Enterprise gross profit ratios from year 2021-

2025, as shown in the table, have been gradually increasing which is a satisfactory

indication that the enterprise has been able to create an advantageous profit

considering the costs. Slower increase in cost of goods sold compare to increase in

sales reflects good control of costs while sales grew.

Net Profit Margin

Net Profit Margin also called as Rate of Return on Net Sales measures profit

generated after consideration of all expenses and revenues (Cabrera, 2011).

Net Profit
Net Profit Margin =
Net Sales

Table 5.13
Net Profit Margin
Year Net Income Net Sales Ratio (%)
2021 234,894.62 1,411,200.00 16.65%
2022 233,210.17 1,580,544.00 14.76%
2023 277,631.19 1,721,664.00 16.13%
2024 389,164.19 1,933,344.00 20.13%
2025 504,996.46 2,145,024.00 23.54%

As shown in the table 5.13, net profit margin slightly increased every year.

The ratios still project profitability even after considering all revenues and expenses

including interest and non-operating items. Year 2025 shows greater increase in ratio
 100

comparing to other years’. This is due to income received during the year that ended

to a higher net profit margin.

Rate of Return on Assets

Return on assets measures the amount of Net Income earned by utilizing each

dollar of Average Assets (Agamata, 2016). The higher the ratio is better for the firm.

Net Profit
Return on Assets =
Ave. Total Assets
Table 5.14
Rate of Return on Asset
Year Net Income Ave. Total Asset Ratio (%)
2021 234,894.62 569,251.06 41.26%
2022 233,210.17 959,143.47 24.31%
2023 277,631.19 1,149,720.50 24.15%
2024 389,164.19 1,475,488.49 26.38%
2025 504,996.46 1,976,262.67 25.55%

The enterprise’s return on asset conveys that there must be inefficiency in

managing assets. Decreasing return on asset despite of the increasing net income is

displeasing. The decreases are due to large amount of idle cash every year which

would have produced income if had it invested to other income generating assets.

Return on Sales

This ratio measures the ability of the management to produce return to owners

for every peso of net sales. An increase in the return on sales would mean an effective

and efficient handling of all the costs and expenses encountered in the operating cycle

(Agamata, 2012).

Net Profit
Return on Sales =
Total Sales
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Table 5.15
Rate of Return on Sales
Year Net Sales Net Profit Ratio (%)
2021 1,411,200.00 234,894.62 16.65%
2022 1,580,544.00 233,210.17 14.76%
2023 1,721,664.00 277,631.19 16.13%
2024 1,933,344.00 389,164.19 20.13%
2025 2,145,024.00 504,996.46 23.54%

The table 5.15 shows that there is favorable increase on return on sales every

year. This reflects the income net of all expenses which means that there is a return of

almost 21 cents per peso sales on the first year and consistently increasing the

following years. The higher the ratio is better for the company.

Break-Even Point Analysis

A company’s break-even point is the level of activity, in units or peso, at

which total revenues equal total costs. Thus, at BEP, the company incurs neither a

profit nor a loss on operating activities. The BEP is calculated to establish a point of

reference. Knowing BEP, managers are better able to set sales goals that should result

in profits from operations rather than losses ( Raiborn, 20016).

Break-Even Sales Volume and Break-Even Peso Sales

Break-even point can be in units and in peso. Break-even sales volume is the

number of units to be sold by the firm for it not to incur any losses. While, break-

even peso sales is the amount of sales in peso that is needed to be earned by the firm

and must be exceed to gain profit.

Total Fixed Costs

Break-Even Sales Volume =
Contribution Margin per unit
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Table 5.16
Break Even Sales Analysis
Year Fixed Cost Cont. Margin % Break Even Sales Analysis
2021 527,149.95 41.92% 1,257,537.72
2022 527,624.12 44.24% 1,192,508.33
2023 527,624.12 46.34% 1,138,698.52
2024 527,624.12 49.91% 1,057,080.47
Z
2025 527,624.12 52.67% 1,001,790.65

Table will determine the number of units to be sold to reach the break-even

point. This will provide a starting point for planning the future operations of the firm.

Total Fixed Costs

Break-Even Peso Sales =
Contribution Margin Ratio

Table 5.17
Break Even Sales Analysis
Year Fixed Cost Cont. Margin % Break Even Sales Analysis
2021 527,149.95 45.30% 1,163,781.59
2022 527,624.12 47.53% 1,110,055.05
2023 527,624.12 49.50% 1,065,930.54
2024 527,624.12 52.87% 998,046.97
2025 527,624.12 55.46% 951,393.23

Break-even peso sales per year are shown in Table 5.17. The sales in peso

should exceed this amount to ensure profit for the firm. The firm must have operating

profit rather than simply cover total fixed costs.

Margin of Safety

When making decision about business opportunities and changes in sales mix,

managers often consider the margin of safety, which is the excess of budgeted or

actual sales over break-even sales. The margin of safety is the amount that sales can

drop before reaching the BEP, and thus, provides a measure of the amount of cushion

against losses ( Raiborn, 2016).

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Margin of Safety in Peso and Marginal of Safety in Ratio

This is the excess of actual or budgeted sales over break-even sales and

indicates the amount by which sales could decrease before losses are incurred.

(Cabrera, 2017). The margin of safety can be expressed in peso or as a percentage.

Margin of Safety in Peso = Budgeted Sales - Break-even Sales

Table 5.18
Margin of Safety
Year Budgeted Sales Break Even Sales Margin of Safety
2021 1,411,200.00 1,257,537.72 153,662.28
2022 1,580,544.00 1,192,508.33 388,035.67
2023 1,721,664.00 1,138,698.52 582,965.48
2024 1,933,344.00 1,057,080.47 876,263.53
2025 2,145,024.00 1,001,790.65 1,143,233.35

This indicates that there is a high margin of safety in peso which is good for

the company. The firm doesn’t need to watch over its sales and control costs.

Table 5.19
Margin of Safety Ratio
Year Margin of safety Budgeted Sales MOS Ratio
2021 153,662.28 1,411,200.00 10.89%
2022 388,035.67 1,580,544.00 24.55%
2023 582,965.48 1,721,664.00 33.86%
2024 876,263.53 1,933,344.00 45.32%
2025 1,143,233.35 2,145,024.00 53.30%

Margin of Safety in Peso

Marginal of Safety in Ratio =
Actual or Budgeted Sales

Based on the table, it is evident that the firm has high margin of safety in ratio.

Margin of safety calculations help the manager to know if the firm is at threat. Low

ratio depicts danger level for the firm. The high margin of safety in ratio of the firm

entails that it is in good position.

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Average Annual Cash Flow

Analysis of cashflow in conjunction with budgets and other financial reports

provides information on cost reductions, collection policies, dividend payout, impact

of capital projects on total cash flows, and liquidity position (Raiborn, 2016).

Table 5.20
Annual Cash Flow
Year Net income Depreciation Cash Flow
2021 234,894.62 26,337.50 261,232.12
2022 233,210.17 26,337.50 259,547.67
2023 277,631.19 26,337.50 303,968.69
2024 389,164.19 26,337.50 415,501.69
2025 504,996.46 26,337.50 531,333.96

Payback Period

Information on timing of net cash flows is an input to a simple and often used

capital budgeting technique called payback period. This method measures the time

required for a project’s cash inflows to equal the original investment. The payback for

a project is complete when the organization has recouped its investment ( Raiborn,

2016).

Payback Period = Initial Investment

Annual Cash Return

Table 5.21
Payback Period
Net cash provided by (used in) operating Payback
Year Cost of Investment activities Period
2021 1
450,000.00 189,314.28
2022 270,051.46 0.97
260,685.72
1 year, 11 months and 17 days
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Generalization

Since all projects are considered viable only when they are expected to meet

short term obligations, the financial aspect is a very important part of every project

feasibility study. Although the financial study requires a preparation of a number of

financial statements and analysis of several benchmarks in the form of ratios, the

entire study practically boils down to a question of profitability. Therefore, the

proponents formulated major assumptions that will serve as their foundation for

estimating expenditures, expenses and revenues of the projects.

The proponents total projected cost of Php450,000.00 will cover the first two

months of the operation of the business. Careful consideration of the several factors

that affect the present and future financial position, performance and cash flows of the

enterprise must be studied. Hey, Dale Food Manufacturing Enterprise Statement of

Financial Performance revealed that it will earn a net income of Php234,894.62 in

2021 and will increase up to Php504,996.46 in 2025 with payback period 1 year, 11

months and 17 days.

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Chapter VI
SOCIO ECONOMICS CONTRIBUTION

In a feasibility study, socio economics feasibility is being considered as a

major aspect of the business. It does not exist only for profits generation but also for

social acceptance and economics benefits. The study of socio economics benefits

includes employment opportunities, revenue to government, environment benefits,

sustainability, and cost viability.

Objective of the Study

The general goal of the study is to know the product and the company's impact

to the economy including the administration, its effects to the business and its

advantages to the clients. In particular, it sought to determine following:

1. To determine the possible contributions of the firm to the Philippine

Economy;

2. To have the capacity to characterize the conceivable impact of the business

in the life of the general population, to the administration and to the environment;

3. To be able to discern the social desirability resulting from the business

operations; and

4. To be able to distinguish other social and economic impact of the business

in the society.

Contribution to the Philippine Economy

Hey, Dale Food Manufacturing Enterprise will have a mission towards

creating jobs and helping minimize economic crisis in order to uplift the economic

condition. The company’s management will not allow discrimination towards their

workers as long they are hardworking and really determined to do their job well.

Another objective of this project is to promote a new variety of patty which can
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expand the choice of the consumer among the traditional patty. It helps the economy

to grow a healthy competition over the industry and also open new ideas from the

future entrepreneur in the near future.

The proposed business will help the government through its generating income

by paying the right tax due from it. These funds are used by the government in

improving the lives of the people and the economic stability of the country. The

proposed business will also help increase national production since it will contribute

to the country’s gross national product (GNP)

With respect to taxes that the country will have to pay, this will help to

generate additional income for Tanauan City which will be used for the improvement

and development of the community. Furthermore, promoting good relationship with

local authorities and the community will help running a better business.

The needed raw materials of Hey, Dale Food Manufacturing Enterprise were

purchased from the nearest local supplier, thus promoting fair trade, establishing a

better business relationship helping them attain regular client:

In addition, the company will support other local businesses through buying

raw materials from supplier. Through this simple way the economic growth of the

country will be uplifted.

Employment Generation

Building a business generates new employment opportunity especially for the

resident of the chosen site where the business will be established. This will help

decrease the number of the unemployed individual and will provide jobs with the

right remuneration to satisfy daily needs. As the business grows in the years ahead,

more employees are needed through this, more families will benefit from the business.
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Job Requirement

Hey, Dale Food Manufacturing Enterprise will not require any qualification

for a designated position aside from indicated in the job specification. This will give

way to those people who are not able to gain higher education and to those who are

willing to work but having problem with physical health. The business will open its

door to less fortunate people for the belief that this may give them an opportunity to

enhance their morale and lift the standard of their living. Thought this the business

can reflect one of the core values which is the concern for the citizens and the

environment.

Social Desirability

This project is proposed towards not only for the profits but for social

desirability as well. The main objective of this project is to adds up a new choice of

variety to the common taste of patty in the market. The proponents proposed newly

introduced product which provides health benefits in an affordable price which may

attract potential customers. This will make the wide range of competition which

healthy to the industry as well as it will give an opportunity for the new sets of ideas

for entrepreneur. Aside from this, the proposed establishment will provide jobs which

will be a great help for them to raise their families for their daily necessities because

of the previsions of remuneration that can be appealing to group of person making

them seeking for the company. Different promotional strategies are also a great help

to achieve social desirability to put the production and business in a growth stage and

have a chance to stay longer in the industry with a continues growing market share.

Consumer

Consumers who will purchase the product are directly affected by the

business. The business will offer a good quality and effective product in the market.
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The business will assure that the product is non-irritable and not harmful to workers

and consumers. The product of the business is purely natural as it consisted natural

ingredients.

Supplier

The business and the suppliers will have reciprocal obligations and mutual

benefits to and from each other. The demand of Hey, Dale Food Manufacturing

Enterprise for the ingredients and materials needed for the smooth production would

benefit the supplier for the increasing demand for their products, resulting to higher

income on their part. The agreement between the business and the supplier will

continue as long as both parties will meet the satisfaction of each.

Environment

The company will follow the rules and regulations set by the law to help

sustain ecological balance and clean environment since no waste or hazardous

chemical will be discharges. The company assures that the production of the Tahong

Patty will not cause any undesirable situation that may impair the environment.

Generalization

This study was formed with the mutual ideas from the proponents, which is to

introduce a new taste of patty in the market. Breaking the limited choices among

traditional existing patties in the market and opening a newly wide competition in the

industry, drove in mind of the researchers to come up with this ideas. Having concern

in the health of the workers and of people in the community, orderliness and

cleanliness of the environment and providing additional revenues are the best

consideration in establishing a business. The proposed business will bring different

opportunities not just to the partners but also to the whole economy of the country.
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The partner showed that the firm is not just concerned in profit but also on their

responsibilities in the society. The firm will contribute by creating jobs for

unemployed Tanauañeos and paying taxes that help the government in improving the

lives of the people through their project. Concerning the environmental issue, the

company will follow the rules and regulation of the proper waste disposal and the no

plastic policy of the City of Tanauan. The goal of the firm is not only to satisfy the

customers but also to meet the environment and economic expectations.