MAS Final Draft

8/4/2019 MAS Final Draft

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SUMMARY OF THE PROJECT

Name of the Firm : STUDY HAVEN

*The projects proposed signageLocation : 2nd Floor Arcade Building, T. Neri St., Cagayan de Oro City


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The researchers have chosen this location because it is strategically

located near Xavier University thus making the project very accessible to the

prospective customers. Also, for the convenience of the prospective customers,

whenever they need to buy something, 24-hour convenience stores can be found

nearby.

Brief Description

History of the Business

Students, undergraduate or postgraduate, are always saddled withassignments, projects, quizzes, & other works with deadlines to meet. Theyneed a place where they can do their tasks of studying or meeting with groupmates to discuss a project. Though School library is very accessible, it is openonly during class hours and closed after 8:00 pm. Thus, its difficult for students

to find a space or a place where they can do their work and studies conductivelyafter class hours and especially when the library is closed. Students would haveto resort to coffee shops and fast food chains which are very inappropriate placefor studying considering its environment. What's more, students are compelled tobuy products/goods just to get to stay in a coffee shop or a fast food chainoperating late hours just to stay in that place. With this burden on students, theresearchers have been inspired to conduct & establish a feasibility study aboutstudy lounge business because the researchers understand the needs of thestudents for they also experience this dilemma. Furthermore, the researcherssee this business to be very potential of being successful because of the itsproposed strategic location and its very much needed service (product).

Nature/Kind of Industry : Student-Service Industry

Type of Organization : General Partnership


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Officers of the business & their qualifications:

Ayzajamelah Y. Datuharon- General Partner

Linette Katreena V. de la Rita General Partner

Karl Ian Marlon B. Silvestre General Partner

Ms. Datuharon is a graduate of Bachelorof Science in Accountancy at Xavier University.She is currently employed as a Bank Teller inPhilippine Islamic Amanah Bank. She has takenup units in business management, strategicmanagement, production operation, andmarketing subjects in her undergraduate years.She was also active in XU-SIRAJ organizationas its Finance Officer for two years from schoolyear 2008 to 2010, and has gained enoughexperience in handling cash and day to daytransactions.

Ms. de la Rita is a Graduate of Bachelorof Science in Accountancy at Xavier University.She is currently employed as Junior BranchManager in Metro Bank. She has taken up unitsin business management, strategicmanagement, production operation, andmarketing subjects in her undergraduate degree.

She had bookkeeping and posting summer jobexperience at Department of Agrarian Reform,and has been a delegate of 7th MBMYC(Mindanao Business and Management YouthCongress).

Mr. Silvestre is a Graduate of Bachelorof Science in Accountancy at Xavier University.He has taken up units in business

management, strategic management,production operation, and marketing subjects inhis undergraduate degree. He is currently amarketing staff of Ororama Supercenter,Cagayan de Oro City.


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Sittie Naima M. Tomawis Silent Partner

Hazel B. Uy

General Partner

Ms. Tomawis is a graduate of Bachelor ofScience in Accountancy at Xavier University andis currently enrolled as a 3rd year law student in

San Beda College of Law. She has taken upunits in business management, strategicmanagement, production operation, andmarketing subjects in her undergraduate degree.She has worked as an Accounting Officer of FMTomawis Security Agency for 3 years and hasbeen a Barangay Kagawad. She is now holdingthe position of Barangay Treasurer in herhometown barangay in Marawi City.

Ms. Uy is a Graduate of Bachelor ofScience in Accountancy at Xavier University.She was a Valedictorian in high school atLiceo de Cagayan University. She has takenup units in business management, strategicmanagement, production operation, andmarketing subjects in her undergraduatedegree. She has been the treasurer ofPhilippine Society of Youth Science Clubs-

Region X in her high school years. She hasalso been a delegate of the 7th MBMYC(Mindanao Business and Management YouthCongress). Currently, she is a JuniorAccountant in Nestle Philippines Inc.


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Economic aspect in a feasibility study plays a crucial role since it primarily

reveals if the study will work and how will it work. As such, market analysis is done here

to identify and determine if there is potentiality of the study.

This section will basically present a description of the industry, the current market

analysis based on the survey conducted by researchers, the existing entities in the

industry, the anticipated future market potential, potential customers and sales

projections. Also, this section will also tackle and show the methods of data gathering by

the researchers and how they were evaluated to come up with the present and future

demand and supply for the product, competition, selling prices, and marketing plans for

the project.

General Market Description

Cagayan de Oro City, as dubbed on its official website, is a city in bloom and it

booms. And it certainly is. It has been considered as the melting pot of Mindanao in the

Philippines because of its accessibility, business growth, attractions and most of all, its

entire warm and hospitable people. (Wikipedia.org) This city is one of the highly

urbanized city in Northern Mindanao boasting a population of 553,960 population in

2007 (www.census.gov.ph) and its growing still. An estimated percentage increase of

2.54 % per year is established to project the future increase population. Considering that

it was over 3 years already since that number, it can be instituted that there is now an

almost 600,000 population here in the City.

Brought by this increasing population is the increasing various demands and

needs of people which as much as possible must be satisfied. The Local Government tries

to fill this needs by attracting and enticing investors to pour their money in the city and

establish businesses/industries that will meet up peoples needs and also provide jobs.

The Local Government also welcomes local entrepreneurs to create and launch

businesses here in the city which will aid not only the entrepreneurs but also the City

itself. Because of these, the government has made extensive developments and

renovations to various potential and existing business locations in the City. One of this is
http://en.wikipedia.org/wiki/Mindanaohttp://en.wikipedia.org/wiki/Philippineshttp://www.census.gov.ph/http://www.census.gov.ph/http://www.census.gov.ph/http://en.wikipedia.org/wiki/Philippineshttp://en.wikipedia.org/wiki/Mindanao


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the streets of Abejuela and T. Neri or simply commonly known to the locals as Divisoria.

Here, one can see many diverse offices and businesses such as food and coffee stores,

computer/technology shops, convenience/grocery stores, and more establishments. It has

been considered as the heart of CDO for its strategic location for its nearness to schools,

offices and besides lots of people do come here and hang out. It is where also events are

held thus vacant office spaces are seldom found for they are very much coveted for many

eager entrepreneurs grab the chance to sell their products here.

Target Market

The primary target market of the proposed project would be the undergraduate

and post graduate students of Xavier University, one of the schools near Divisoria. This

school has been educating students from various cities in Mindanao for almost 80 years

now. It offers various course programs such as four-year degree, vocational degree, law

and medicine courses. As of this second semester of this year, the Universitys Registrar

has determined that 10,979 students are currently enrolled, majority of which are

undergraduate students and most of them are from the School of Business and

Management (SBM).

The basis for determining the primary target market is that the population of

students at Xavier University comprises approximately 40% of the students in Cagayan

de Oro City, with 30% from Liceo de Cagayan University and the remaining 30% is from

other universities and colleges in the city. This target is further attested in the market

study conducted by 4th year accountancy students from Pilgrim Christian College which

tackles about study lounge business. As shown in Table 1 which as the result of the

market study these Pilgrim students have conducted, majority of their respondents,

specifically 28.40%, who would consider patronizing a study lounge business are from

Xavier University.

Table 1

Capitol University 68 20.54%

Liceo de Cagayan University 83 25.08%

Lourdes College 37 11.18%


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Pilgrim Christian College 49 14.80%

Xavier University- Ateneo De Cagayan 94 28.40%

331 100.00%

Customer/Market Characteristics and Behavior

A market survey was conducted to identify the profile, study behavior and needs

of the market; and also to determine the size of the market; ascertain the acceptability of

the market as to the proposed project. Since it has been established that the primary target

is the Xavier University Students, the researchers have conducted the survey with Xavier

University students as its respondents. There were 100 students - respondents from

different colleges of different courses who have willingly gave time to fill the survey

form provided by the researchers. The results of the market survey are represented by all

the following tables below with its descriptions.

Customers Profile. The target customers, who have considered to patronize the

proposed project are classified according to age, degree, and financial (allowance) status.

As shown in table 2a, 86.67% of prospective customers are of age above nineteen (19)

and table 2b shows that 67.86% of prospective customers are undergraduates and 32.14%

will be postgraduate students. These findings indicate that most of the prospective

customers are students of mature age who are more likely serious in their studies.

Table 2a

Age Group

16-18 13.33%

19-21 56.67%

22 and above 30%

Table 2b

Course Degree (who have considered studying in study lounge)

Undergraduate students 67.86%


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Postgraduate students 32.14%

Table 3

Daily Allowance

Less than 100 35%

P 101P 150 48%

P 151P 200 14%

P 201P 300 10%

Above P 300 5%

In terms of financial capability of the prospective customers, Table 3 shows that

35% have less than a hundred pesos of allowance, 48% has allowance ranging from P101

to P150, 14% have allowance of P151 to P200, while 15% are those who have allowance

above P200.

Table 4

Hours consumed in studying

1 hour 6%

2 hours 21%

3 hours 26%

4 hours and above 46%

In addition and as based on the market survey aided by the survey form as shown

in Exhibit 1, the respondents or the prospective customers, presented in Table 4, 46% of

which or majority of them consumes 4 hours or more to study, while 26% find 3 hours as

to be enough time to study, 21% are satisfied for 2 hours, and 6% study only for an hour.

These respondents have different preferences as to what time they study. As shown in

Table 5a, 49% find it effective to study during evenings, and 35% much prefer to study

during dawn, and 31% prefer mornings, while only 16% choose afternoons as their study

time. Based on this table, it can be seen that it will be an advantage for the project if

students prefer evenings and dawns as their study time for the proposed project will be


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open from five (5) in the afternoon until six (6) in the morning.

Table 5a

Preferred time to study:

During morning 31%

During Afternoon 16%

During Evening 49%

During Dawn 35%

Furthermore, based on the survey and presented in Table 5b, the respondent-

students favor more to study every day as much as possible even though there are no

pressing quizzes in the coming days. While the 13% has different habit in days of

studying, some students much prefer to study only if there is an exam the next day.

Table 5b

How many times in a week do you study?

Every day 40%

Every other day 26%

Thrice a week 12%

Others 13%

After class hours, students can be seen to occupy benches within the university, or

in the Pavilion where two cottages are structured to accommodate students who just want

to relax or talk with fellow students. For those students who want a peaceful environment

to study they go to the schools library which can accommodate almost to three hundred

students a day.


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However the library is usually

full when it is open for, as shown by

Table 6 below based on the survey

conducted by researchers, 78% of

respondent students find it effective to

study in the library. Thus, students avail

themselves of this place to concentrate

in their studies.

Table 6

Place where you can study effectively:

Home Yes 63%

No 7%

Sometimes 28%

School Library Yes 78%

No 2%

Sometimes 18%

Within School premise Yes 10%

No 35%

Sometimes 49%

Coffee Shops Yes 17%

No 45%

Sometimes 34%

Fast Food Chains Yes 5%

No 63%

Sometimes 28%

Furthermore, as shown in the Table 7 below, the library placed second to

respondents preferred place to study. Thus, it is no wonder that the library is jam-packedfor there are even students slumped beside the bookshelves just to stay and study in the

library. For library in the first place was as a place built for students to study.


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Table 7

However, due to large number of students enrolled in the University, and

considering that only limited students can be accommodated by the school library, many

students consider it as a dilemma when the library is full whenever they need to study. As

indicated by the Table 8, 33% of the respondents find it difficult when the library is

unavailable. Thus, it can be implied that clearly, students needs are not fully fulfilled and

that there is a potential niche for this studys business.

Table 8

Do you find it difficult when the library is unavailable?

Yes 33%

No 38%

Sometimes 27%

The unavailability of place to study provides advantage to those establishments

near Xavier University for instead of students doing their studies at home, there are some

or about 16.37% and 11.22% as shown by table, prefers to study at available

establishments such as coffee shops and fast food chains respectively. These

establishments in some ways fill the need of students for a place to study because for onething, they are very accessible and convenient since these are near the school and near

stores. Because of the strategic locations of these shops, students just have to pass by and

choose where they wish to study. Direct channels of distribution exits in here for the

services provided by these establishments are directly given to customers/students.

Preferred place to study:

Home 28.60%

School Library 27.67%

Within Schools premise 16.13%

Coffee Shops 16.37%

Fast Food Chains 11.22%


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Demand

As indicated by table8 and table 9, there is a need of the students that can be

satisfied and that is by providing a place for study to them. Table 9 shows that 68% of

respondents will consider patronizing the proposed business.

Table 9

Will you patronize the proposed study lounge?

Yes 68%

No 14%

Maybe 17%

Based on the interviews conducted by researchers on those establishments near

school like coffee shops and fast food chains and those presented in the Table 10,

majority of these chops and chains customers are students. In addition, as indicated by

Table 11, 12% of respondents frequent coffee shops and fast food chains just to study and

29% responded sometimes.

Table 10

Composition of Coffee shops and Fast food chains customers

Customers Students Non-students Others

Fast Food Chains 75% 20% 5%

Coffee Shops 80% 18% 2%

Table 11

Do you frequent coffee shops and fast food chains just to study?

Yes 12%

No 55%

Sometimes 29%

It is projected by these establishments that same scenario will still be present for

the foreseeable future based on the past years.


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Nonetheless, according to these establishments, about 75% of these

customers/students patronize their place just to study especially before and during exam

weeks, and not to indulge in their primary products that are food like donuts, coffee, and

meal. This scenario is usual every school day from Monday to Saturday. Typically, in

fast food chains, from 10:00 pm onwards, almost all of their customers are students

studying. Aside from that, these students occupy a large space for they are usually in

groups, and order only a drink/coffee per group. This is tolerated by the management of

these chains but it irritates them when there are non-student customers who cannot find a

table, though the management does not discourage students to patronize their business

but it does not also encourage them. Accordingly, as much as possible, they wish students

not to regard their place as an extension of the library. Same view with the coffee shops

that the researchers have interviewed.

Table 12a

Students enrolled in Xavier University*

(Average per year)

2007 9527 -

2008 10028 5.26%

2009 10121 0.927%

2010 10506 3.80%

2011 10979 4.50%

*Office of Registrar, Xavier University

Table 12b

Projected Students (Projected Demand)

2011 10979 -

2012 11374 3.6%**

2013 11783 3.6%

2014 12208 3.6%

2015 12647 3.6%

**Average growth rate of table 12a


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Supply

Xavier Universitys school library has been the primary supplier of XU students

in providing their needs for a place to study. At present, aside from the school library,

students have six choices of patronage for their needs: Dunkin Donuts, Mister Donut,

Coffee Works, Bos Coffee, Jollibee, and McDonalds. These establishments are

conveniently located within or near Divisoria, making them very accessible to Xavier

University students. Based on the Table 13 from the researchers survey, Dunkin Donuts

is the most preferred place to study among the establishments in Divisoria.

Table 13

Most preferred among the 6 establishments:

Mister Donut 15.15%

Dunkin Donuts 33.33%

Coffee Works 9.09%

Jollibee 12.12%

McDonalds 21.12%

Bos Coffee 6.06%

The suppliers for the past years have different descriptions and offerings to its

customers/students. For one, the XU school library can accommodate up to 500 students

a day. Its environment is a convenient and appropriate place to study with strict policy of

observation of silence.

On the other hand, the other suppliers provide

different service to students. Dunkin Donuts in

Divisoria has been open since 1991 and has been

offering to its customers a selection of donuts, coffee,bread, and sandwiches at reasonable prices. It is open

for 24 hours everyday is near a 24-hour convenience

store. Their place is dim lighted, plays music in the

background, and air conditioned. Their ambiance


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encourages customers to chat with each other and tantalize them with their products

savory smell.

Another coffee shop is Mister Donut which has just

been open for a year or more as of today. It offers the same

as with Dunkin Donuts and has been considered as its

competitor. Although, Mister Donuts space is small

compared to the other one but its ambiance is much lighter

than that of the Dunkin Donuts.

Coffee Works is a newly-opened coffee shop

occupying a part of Xavier Universitys Gym. The

ambiance is good with soft and mellow songs being

played on the background and comfortable sofas instead

of usual staid chairs are offered to customers. Majority of

their customers are office workers for their place is

conductive for meetings. Its customers can choose the air-

conditioned room or the tables outside for fresh air. Their products are high quality

products compared to Dunkin Donuts and Mister Donut but at high prices. It provides

free Wi-Fi access to its customers and is open 24 hours.

Last in the coffee shops is the Bos Coffee. Same with Coffee

works, it also offers high quality and high priced food products, free

Wi-Fi, and an air conditioned room or a fresh air space. However, it is

open only from 6:00am to 12:00 am.

As to the fast food chains, McDonalds and

Jollibee compete with each other. Both offers the

same line of food products and are open 24 hours.


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Both of these establishments

environment is not suitable for studying. For

one, their place is usually noisy with the

coming ins and outs of customers and with the

music being played every now and then.

Competitive Position

Selling Price

Availing the study lounge service has an hourly rate of Php20, per person. The

rate for the mini-conference room is also Php20 per hour, per person.

Presently, there is no study lounge business existing near Xavier University.

However, they were two study lounge businesses before but failed to operate longer due

to a not strategic location and an inappropriate ambiance. Thus, the researchers were not

able to conduct a price study of the direct competitors.

In spite of that, there are indirect competitors of this feasibility study. However,

the six establishments (coffee shops & fast food chains) mainly offer food to its

customers and are not really intended to be a place to study. Their ambiance is not

suitable for serious studying of students for a variety of reasons. One, the place lightning

is usually low or dim which discourages reading of textbooks and notebooks, and writing

down some notes. Second, songs are being played the whole duration of the store thus it

distracts and ruins the concentration of students. Third, some customers are loud in their

talking which also ruins concentration. Fourth, the place is very open and students might

be distracted of other customers going in and out of the stores. And some of these

establishments products are costly which can deplete the students meager allowance.

Competitiveness of the quality of the service

Study Haven has competitive advantage over its indirect competitors since this

study lounge offers a quiet ambiance, which creates a more conducive place for studying.

The disadvantages of the existing indirect competitor establishments were already


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discussed in the preceding paragraph. Study Haven is a venue for students who really

want to grasp or fully understand what they are studying since it has a quiet environment

and free from any distractions like loud background music being played in fast food

chains and coffee shops.

Marketing Program

The indirect competitors of the proposed project have many marketing practices

to entice their customers to patronize their place. The following summarizes the

marketing practices of different suppliers:

Dunkin Donuts Open 24 hours a day; Offers coffee, pastries, and

donuts at affordable prices; promos/discounts

especially during holidays such as Valentines day.

Mister Donut Open 24 hours a day; Offers coffee, pastries, and

donuts at affordable prices; promos/discounts

especially during holidays such as Valentines day.

Coffee Works Open 18 hours a day; Offers high quality coffee,

pastries, and donuts at high prices; and free wifi.

Jollibee Open 24 hours a day, diverse products such as meals,desserts, snacks, and pastas are offered to customers

who have different preferences for food.

McDonalds Open 24 hours a day, diverse products such as meals,

desserts, snacks, and pastas are also offered to meet the

needs of customers.

Bos Coffee Open 18 hours a day; Offers high quality coffee,

pastries, and donuts at high prices; free Wi-fi; and

efficient, accommodating and friendly workers.

Proposed Marketing Program

The researchers propose to adopt many marketing practices. First, the researchers


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have focused on the four Ps ofmarketing: product, price, place and promotion. As to the

place, the projects location will be located strategically, meaning it has to be near the

school for easy accessibility for students such as within Divisoria. Based on the preferred

ambiance of the respondents, the researchers will design the business as a quiet and cozy

place in order for it to be very appropriate for studying such as providing the suitable

lighting for reading and writing, with no music being played on the background. Also,

instead of tables being shared with others, a table for one will be facilitated in order to

assure privacy and full concentration for students and to discourage talking with fellow

students. A free Wi-Fi also will be provided for those students who wish research topics

while studying and a mini-couch will be provided for students to sit on and relax into

during breaks from their study. Regarding the price, the entrance fee of the project will be

initially at an affordable price of Php20. This is based on the survey conducted where

71% of respondents are willing to pay Php15-Php20 per hour. The researchers also have

considered the financial status of its potential customers where 35% of respondents have

less than Php100 daily allowance as previously shown in Table 3.

Proposed Projects Logo and Signage

The projects logo was uniquely designed by the

researchers. The logo symbolizes that the what one has

studied can be embedded in ones mind if the place where

one is studying is appropriate for studying.

As to the projects product, since its a service business, the researchers will

insure that the quality of service will meet the expectations of the potential customers.

As to promotion, the researchers plan to avail of leaflets to advertise the project

and distribute them at the front and back gates of the university to students. Aside from

that, the projects leaflets will be posted to every available bulletin board within the

university. Some of the leaflets will also be posted outside of those six establishments

frequented by students. Aside from that, the researchers plan to give away cute ball pens


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and note pads as incentives for the first ten customers on the first day. Furthermore, the

project shall be advertised on the Sun Star, a local newspaper circulation. Table 14

presents the promotional steps and corresponding costs in the projects opening .

Table 14a

Promotions and corresponding costs:

Leaflets (Printing, photocopying, and

thumb tucks)

P 200

Sun Star Advertising P1250

Freebies (ball pens and note pads) P 160

Tarpaulin print P 380

Table 14b shows the proposed marketing program for every month of operation.

The researchers would like to establish a monthly marketing strategy by giving away 10

notebooks and 10 ball pens to the first 10 customers on the first day of every month

starting June. Aside from that, there will be an expense for flyers every month to be

scattered around the area.

Table 14b

Marketing Program (Monthy)

Leaflets (Printing, photocopying, and

thumb tucks)

P 100

Freebies (ball pens and note pads) P 160

The researchers would also consider marketing the project by word of the mouth

to their friends, classmates, family, and colleagues.

In day-to-day transactions, one of the partners will act as a cashier-receptionist to

supervise the operation of the project. He/she shall have the authority to see to it that the

projects rules and regulations will be obeyed by the customers to ensure that the place

will be strictly quiet and peaceful as befit a studying place. These rules and regulations


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must be implemented to ensure that the project will be run smoothly and efficiently thus

making the study of its customers effective. Aside from these, the cashier-receptionist

shall handle and prepare cash flow reports after closing time. Also, so as not to

discourage customers, also another one of the partners will ensure that cleanliness of the

place will be maintained.

Projected Sales

Table 15

Market Share

Coffee Shops 59.32%

Fast Food Chains 40.68%

The researchers propose to have an initial target market share of 3% during the

first 5 years of operation of the project. The projected sales for the project for the next

five (5) years are shown in Table 16. These are based on Tables 4, 7, 9, 11, and 12-B.

Also, the selling price and target market share are considered to come up with the

expected annual sales.

Table 16

Projected Annual Sales

2011 P 340,000.00

2012 P 350,200.00

2013 P 360,700.00

2014 P 371,520.00

2015 P 390,100.00


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Contributions to the Philippine Economy

Labor Employed. The five researchers/partners will function as the staff of the

project. Two partners will have shift in work every other day in a week.

Taxes Paid. Some of the partners are employed in a public and private entities,

and since each partner will have his/her own share from the result of the proposed

project, it is estimated the taxes that will be paid by each partner as individual tax income

will fall under the bracket between P3,000 and P5,000 yearly.


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This aspect presents the proposed projects location, service schedule, lay out and

the equipments needed.

Service

This feasibility study is for a service-related business. The study lounge has study

tables and chairs, lamps, Wi-Fi access, mini-conference room and a comfort room. It also

has a couch wherein students can relax after studying and which can also be used by

customers while they wait if there is no vacant study cubicle yet. Furthermore, the study

lounge has cubicles or divisions to give the customers some privacy. Basically, the study

lounge is a quiet area wherein students can really concentrate while studying. Yet, Study

Haven also has a designated area to cater the needs of customers who prefer to discuss

with group mates. The mini-conference room is intended for group discussions and in

making group projects. The Wi-Fi access is of much help to students especially when

they have research work to do so they can just browse the internet provided they bring

their own laptops to the lounge. Study Haven also has a comfort room for the customers

to use.

Plant Size

The study lounge can accommodate ten to fifteen customers at a time since it has

ten study tables and chairs and a conference table & chairs which has a capacity of five

persons. Study Haven operates for ten months, equivalent to 300 days, and is open for 15

hours a day, 7 days a week. The researchers decided to operate for the months June to

March only since according to the interview conducted with the Xavier UniversityRegistrar, there were about 4,000 enrollees for summer classes last year. Such number of

students during summer would most likely cause a large decrease in sales and might not

be enough to sustain the costs (e.g. electricity) that will be incurred if Study Haven will

still operate during summer. Moreover, it is presumed that the Xavier University library


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can accommodate that lesser number of students during summer classes and the subjects

offered during summer are usually minor subjects.

Machinery and Furniture & Fixtures

Floor Plan of Study Haven

As enumerated above, the study lounge requires machine, furniture and fixtures,

etc. in order to start the business operation and to make Study Haven the best place

conducive for learning. It wants to give customers the convenience that they deserve

while they are studying.


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This is the list, with specifications if any, of machines, furniture and fixtures and

paraphernalia that will be used in the business:

Air-conditioner - horsepower

- Condura brand

Study Chairs - Approximately 3 feet in length

- Preferably, monoblock type so that it would

lessen the cost.

Study Tables

- These furniture and fixtures are made of

wood. The specification of each would vary or

depend on the furniture supplier since it is

advantageous to order rather than buy ready-

made set of furniture in malls.

Couch

Counter table

Meeting/Conference table

Meeting/Conference table

Study Lamps - Preferably, it must be compact fluorescent

lamp (CFL) with low-watt bulbs to lessen

electricity cost.

Clock - Round- Similar wall clocks used in Internet Cafes

Bell -Typical bell(s) used in libraries

Wireless Fidelity (Wi-Fi) Zone - Pocket Wi-Fi from leading internet providers

(e.g. PLDT)

* Setting up of Wi-Fi connection is estimated to be P 1000.00.


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TheProposed

ProjectslocationinAbejuelaS

treet.


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Comparison of Quotations/Prices of different furniture suppliers and leading malls

This table shows the information gathered by the researchers comparing the prices

of different suppliers and stores within the vicinity of Cagayan de Oro.

Ororama Super

Center and

Appliance Stores

Janeth Furniture 3J Furniture

1. Study tables - P 5,000.00 (for 10

cubicles

P 7,000.00

2. Study chairs P 350.00 P 450.00 P 500.00

3. Couch P 11,500.00 P 2,500.00 (wooden;

good for 5-6 people)

P 5,000.00 (wooden;

good for 5-6 people)

4. Counter table - P 2,000.00 P 3,000.00

5. Conference

table

- P 3,000.00 P5,000.00

6. Conference

chairs

-

7. Study Lamps P 120.00 - -

8. Clock P 80.00 - -

9. Bell P 50.00 - -

10. Fluorescent

bulbs

P 120.00 - -

11. Air-

conditioner

P 10,000.00 - -


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The researchers would choose the suppliers for the fixed assets based on who

offer the lowest price shown in the table above. Thus, the chosen suppliers for the

particular assets are shown below with their estimated economic life.

Suppliers Estimated Life (years)

Study Table Janeth Furniture 10

Study Chairs Ororama Super Center 10

Couch Janeth Furniture 10

Counter table Janeth Furniture 10

Conference Table Janeth Furniture 10

Conference Chairs Janeth Furniture 10

Study Lamps Ororama Super Center 1

Clock Ororama Super Center 2

Bell Ororama Super Center 1

Fluorescent bulbs Ororama Super Center n/a

Air-Conditioner Ororama Super Center 10


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Plant Location

Location Map of the Space/Study Lounge:

Legend: - Site Location

Desirability of Location:

This location is strategic since it is near Plaza Divisoria and is at the heart of the

city. Aside from that, our primary target market, the Xavier University students, can

easily go to Study Haven because it is just a few kilometers away from the university.

There are also public utility vehicles which pass along Tirso Neri Street so prospective

customers can easily locate where the study lounge is. As discussed in the economic

aspects portion, it is a strategic location since there are pharmacies, 24/7 convenient

stores and fast food chains located nearby wherein the customers can buy their other

needs.


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Building and Facilities

The researchers have decided to rent a commercial building rather than to

construct a new building to lessen the cost. The researchers have roamed commercial

buildings within Divisoria to find an available and idyllic office space to establish the

proposed project. With this, the researchers have found an available space in Arcade

Building, located in Abejuela Street. So, instead of having costs for construction and

erection, only rental expense of P10,000.00 per month will be incurred for the

establishment of the proposed project. The space has a dimension of 12 square meters.

Utilities

Electricity consumption is expected to run for 15 hours (from 3pm to 6am the

following morning). With only an air condition, lights, and lamps on each table, light bill

is estimated reach between P2500 to P3000. Electricity will be provided by Cagayan de

Oro Electricity, Power and Light Corporation.

Water consumption, however, is shared by all other occupants in the building.

Thus, its rate varies dependently on the water bill of the building as a whole. Water

supply is provided by Cagayan de Oro Water District.

Labor Requirements

There are only two personnel in the work area namely, the cashier and the utility

man. The cashier and utility man will be handled alternately by the partners themselves.

Hence, no compensation is given to the partners.


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This aspect presents the total investment costs and the source of financing for the

proposed project. Furthermore, this section will also present the feasibility of the

proposed project in terms of profitability and liquidity.

Financial Assumptions

In projecting the financial statements for the next five (5) years, the following

assumptions were taken into consideration:

1) Pre-operating expenses would be treated as outright expenses during the first year

of operation.

2) The economic life of some components of Furniture and Fixtures such as study

tables, study chairs, couch, counter table, conference table/chairs, and air-

conditioner, will be 10 years. The other items such as study lamps and bell will

have one year economic life. While the clock will have 2 years, and the calculator

will have 3 years. Straight-line method is used in computing for the annual

depreciation. It is also on the assumption that there is no salvage value on all

furniture and fixtures.3) Sales or Revenue and payment of operating expenses, except depreciation, will be

on Cash Basis. There will be 30-day accrual on payment of electricity, water, and

supplies. Here, the assumption is that the proposed project will be given a month

to pay after the consumption of the said expenses.

4) Sales on the first year of operation is based on the Break Even Analysis (Exhibit

2) at a mark-up cost of 20.77%.

5) Sales growth per year is 3% of the prior year rounded up to the nearest ones.

6) Profit is not taxable as to the entity itself rather taxable income to the individual

partners subject to individual tax rates.

Financial Statements

To appraise the financial prospect of the proposed project, financial projections


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have been made for five years starting this year from 2011 - 2015, or specifically this

month of June which is also the proposed first month of operation.

The financial projections prepared and analyzed are the following:

1) Projected Income Statements for the 5-year period, 20112015

2) Projected Cash Flow Statements, 2011 - 2015

3) Projected Balance Sheet, 20112015

Total Project Cost

The Total Project Cost of the proposed project amounts to P 46, 450.33 broken

down as follows:

STUDYHAVENPROJECT COST

Fixed Capital:

Study Tables 5,000.00

Study Chairs 5,500.00

Couch 2,500.00

Counter table 2,000.00Conference table w/ Chairs 3,000.00

Study lamps 1,200.00

Clock 80.00

Bell 50.00

Air-conditioner 10,000.00

Calculator 200.00 29,530.00

Net Working Capital:

Current Assets:

Total Service Costs 182,306.67

Less: Supplies 1,500.00

Utilities 30,800.00

Total 150,006.67

Cash 7,500.33

Supplies 1,500.00

Current Liabilities 9,000.33


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Less: Current Liabilities 3,080.00

Net Working Capital 5,920.33

Pre-Operating Expenses 11,000.00

Total Project Cost 46,450.33

Sources of Financing

The proposed project will solely be financed by the share contribution of the

partners. Each of the five partners will contribute P10,000.00 hence the total partners

contribution will be P50,000.00. This total capital is adequate enough to meet the

financial requirements of the project.


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Financial Statement Analyses

Certain ratios of profitability and liquidity are applied assess the feasibility and

desirability of the proposed project.

Profitability Measures. The profitability of the proposed project may be measured

with the use of selected ratios.

The Average Ratios for the 5-year period, 2011-2015 are given below:

Average Return on Investment 47.38%Average Return on Capital 20.37%

Average Return on Sales 5.93%

Average Return on Assets 17.61%

*Refer to page 34 for the detailed financial ratios per year.

For every peso of capital contributed, the project would generate an average net

income of 47.38%. The higher the Return on Investment, the more favorable it is for the

business.

For the amount invested by the partners, the management can generate wealth for

an average of 20.37% from the normal operations of the business. Increasing the wealth

of the partners is the end concern of the business. Based on the projected financial

statements, there would be increasing net profit and partners capital. Thus, it would give

a favorable effect on the Return on Capital ratio.

For every peso of net sales, the management can generate a return to owners of an

average of 5.93%. Since it was assumed that sales growth would be 3% per year, it

corresponds to an increasing return on sales. If ever the company would actualize this

assumption, it would mean an effective and efficient handling of all the costs and

expenses encountered in the operating cycle.

For every worth of assets, the return is an average of 17.61% . This indicates that


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through the use and management of assets, the company would yield a profit of 17.61%

for five years (average of net income and total assets per year).

Total Assets. The total assets of the proposed project at the end of 2011 would

amount to P 66,603.33. This would rise to P 85,176.22 at the end of 2012, P 108,938.28

in 2013, and P138, 048.11 in 2014. This would also increase to P176, 645.75 in 2015.

Liquidity Measures. The ability of the project to meet current obligations from the

current assets may be measured in terms of selected ratios.

The average ratios for 20112015 are given below:

Average Current Ratio 6.062

Average Working Capital 0.6946

For every peso of current liabilities, the corresponding worth of current assets that

the company can pay is 6.06 and for every peso of current liabilities, the corresponding

peso worth of quick assets that the company can pay is also 6.06 since only Cash

comprises the current assets. Because the current ratio is greater than 1, this would give a

positive image to the creditors since the company has a high short-term debt paying

capacity. For every peso worth of total assets, P0.6946 represents working capital.

.


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Based on its findings, this study has revealed that the establishment of a study

lounge business in Divisoria, Cagayan de Oro City is a viable project. The study showed

that the project is feasible in all aspects- marketing, technical, and financial.

The feasibility of the project lies in the fact that there is a niche or a market

demand, and the willingness of at least 68% of prospective customers to patronize the

proposed project. Aside from that, the availability of a favorable location which makes it

accessible proved the technical feasibility of the project.

On the financial side, the financial aspect showed that the project is profitable.

With an investment of P50,000, a rate of return of 4.55%, 39.06%, 50.20% and 61.68%

can be generated in 2011, 2012, 20113, and 2014 respectively. This means that the

investment can be recovered in less than four years time. Indeed, the cumulative net

income of the proposed project for 5 years time is P110,039.03, which is 2.20 times the

partners capital contributed.

In conclusion, based on the results of the study, the proposed project is feasible. It

can therefore be recommended to be realized and established in Abejueal St., Cagayan de

Oro City.

SUMMARY and CONCLUSION

MAS Final Draft

Documents

Transcript of MAS Final Draft