THE GENERAL FORMAT

CHAPTER I
Introduction
Business Feasibility Objectives
Scope and Limitations
Project Background
Project Proponents
Proposed Name of the Business
Type of Business Organization
Location of Head Office and Factory
Definition of Terms

CHAPTER II
Marketing Feasibility
Short Introduction
Objectives of the Study
Methodology
Target Market
Market Segment
Demand
Supply
Demand-Supply Analysis/Demand and Supply Gap
Market Share
Projected Sales
General Marketing Program/Marketing Strategies
Conclusion

CHAPTER III
Management and Personnel Feasibility
Short Introduction
Objectives of the Study
Form of Business Organization
Proposed Organizational Chart
Personnel’s Job Requirements, Specifications, Responsibilities, and Functions
Personnel’s Proposed Salary Rates and Benefits
Professional Firms (Retainer), if any
General Organization Policies
Project’s Flow of Operation/s (Business Process)
Administrative Facilities, Equipment and Machineries
Conclusion

CHAPTER IV
Production or Technical Feasibility
Short Introduction
Objectives of the Study
The Product/s(Service/s)
 Production Process
Alternative Process/es
Materials Handling Design/s
Technological Assistance/s (Retainer’s), if any
Production Schedule
Project Site(Location)
Building and Facilities
Floor Plan
Machineries and Equipment
Utilities
Raw Materials Requirements
Manpower Requirements
Wastes and Waste Disposal Methods
Total Production Costs
Conclusion

CHAPTER V
Financing Feasibility
Total Project Cost
Financiers

CHAPTER VI
Financial Feasibility
Major Assumptions Used and Notes to Financial Statements
Projected Financial Statements
Financial Analysis
Conclusion

CHAPTER VII
Socio-Economic Feasibility
Your Project’s Employees(Personnel)
The Government
Other Beneficiaries
Conclusion

CHAPTER VIII
Project Implementation and Timetable
Gantt-chart of Activities
Budgeting and Costs
Assignment of Activities

CHAPTER IX
Conclusion
Recommendation

BIBLIOGRAPHY
APPENDICES
Survey Questionnaire
Result of Survey (Graphs and Textual Presentation)
Proposed Employment Contract
SSS Contribution Table and its application process
HDMF Contribution Table and its application process
PhilHealth Contribution Table and its application process
Utility Application process (Electric and water)
Location/Land (Assesor’s Value)
Building permit application process
Bank loan process
Etc..
CURRICULUM VITAE
PROJECT BACKGROUND
This Chapter now presents the details of your project’s proponents, and your choices of name,
type of business organization, and project location. These topics are essential before going to
the major aspects of your study.

Details:
1. Project Proponents
Name Nationality Address % Ownership

 For a Partnership, indicate whether the proponents is a Limited or a General

Partner.
1.1 Proposed Name of the Business:
_______________________________________________________________

 Here, you could also state the reason/s for your choice of name.

1.2 Type of business Organization

 State here, if your proposed project is a single Proprietorship, a Limited or

General Partnership, a Corporation, a Subsidiary/Branch/others. Indicate the
reasons for your choice. Please refer to Annex 3.1 for a list of the most
common possibilities of this topic.

1.3 Location of Head Office and Factory:

_______________________________________________________________
Annex 3.1 Types of Business Organization

To guide you in selecting the most suitable type of organization for your project, this Annex
contains the definitions, advantages and disadvantages of the most common choices. Analyze
each carefully and try to select the most suitable one for your project.

A. Single Proprietorships

A single Proprietorship is a business owned and managed (operated) by a single person. The
owner and the business in most instances are the same. All assets of the business are the
proprietor’s ownership.

Advantages:

Simplicity of organization
The owner’s freedom to make all decisions
The owner’s enjoyment to all profits made
Minimum Legal restrictions
Ease of discontinuance
Tax advantages

Disadvantages:

The owner’s possible lack of ability to manage (experience)

Limited opportunities on the part of the employees
The owner’s possible difficulty in raising capital
Limited life of the business
The proprietor’s unlimited liability

B. Partnerships

A Partnerships is defined as a grouping of two or more persons to carry on as co-owners of a

business for profit. The business is based on a Partnerships Agreement, which is known as the
“Articles of Co-Partnerships”, In the absence of this agreement, all profits or losses are usually
divided equally among all partners unless there are special arrangement made and previously
agreed.

Advantages:

Ease of organization
The combined talents, judgments and skills of several or all of the partners
More capital available for the firm from any or all of the partners
Maximization of personal interests of the firm
Definite Legal status of the company
 Tax advantages

Disadvantages:

Unlimited liability nor only of one partner, but also for those contracted by the other
partners.
Limited life of the firm
Possibility of divided authority
Possible danger of disagreement of major decisions and issues

C. Corporations

A corporations is an artificial legal person, created by an approval of its founders through an

“Article of Incorporation”. As specified by law, a Corporation can exercise only its rights as
governed by the laws of the state and powers as expressed by its “By-Laws”.

Ownership of a Corporation is often by transferable stock certificates. The stockholders elect

the members of the Board of Directors of the Corporation. In turn, the Board of Directors
normally appoint the officers who will manage the business.

Advantages:

Limited liability to stockholders

Perpetual life(50 years, in most instances and renewable)
Ease of transferring ownerships
Ease of expansion
Applicability to all sizes of firms

Disadvantages:

Bound by government regulations

May be expensive to organize
2.0 MANAGEMENT AND PERSONNEL FEASIBILITY
This Chapter will guide you into determining the various persons who will manage your project.
It also includes your proposed management strategies and samples of your project’s
administrative flow diagram and forms design.
Details:

 Present your proposed Organizational Chart in detail.

 State your administrative personnel’s job requirements, specifications, responsibilities and
functions. Annex 4.2 defines each of these management terminologies for your convenience.
 State your administrative personnel’s proposed salary rates and benefits Annex 4.3 presents a
selected list of specific books and topics from the labor Code of the Philippines on this item.
 Name any professional firms you may hire an a retainer’s State also these firms responsibilities,
retainer’s fees and your reasons for choosing them.
 Present any pro-forma contracts with the above firms. If possible.
 State your project’s general company policies.
 State trainings. Seminars, and Staff Development programs your may wish to conduct to your
administrative personnel (if any) and your corresponding budget for such.
 Present your project’s business flow chart.
 Enumerate the facilities. Equipment and machineries your will need for your project’s
Administrative department, stating also their description, sources, quantity and costs.
Annex 4.2 Job Terminologies in Personnel Management
To make it easier and not to confuse you of the different job terminologies, this Annex
presents the definitions of each of them.

A. Job Analysis
The process of studying and collecting information related to the operations and
responsibilities of a specific job. The immediate products of these are job descriptions and
job specifications.

B. Job Descriptions
These are organized, factual statements of the duties and responsibilities of a specific job.
They tell us what is to be done, how it is done, and why it is done. They define the
appropriate and authorized contents of a job.

C. Job Specifications
These are statements of the minimum acceptable human qualities necessary to perform a
job properly. They set a standard for personnel and designate the qualities required for
their acceptable performance.

C. Job Classifications
A grouping of jobs on some specified basis such as the kind of work or pay, etc. It can refer
to a grouping by any selected characteristic but probably is used most often in connection
with pay and job evaluation.
 Annex 4.3 A Selected List of Books and Rules from the
Labor Code of the Philippines on Personnel Benefits
This Annex summarizes the specific Books and Rules from the labor Code of the Philippines so
you won’t have to go through volumes of unnecessary parts of this thick book.

Book III: Conditions of Employment

Rule : I Hours of work

II Night shift differentials
III Weekly rest periods
IV Holidays with pay
V Service incentive leave
VI Service charges
VII Wages
VIII Payment of wages

Book IV: Health, Safety and Welfare Benefits

Rule : I Medical and dental services

II Occupational health and safety

Book V: Labor Relations

Rule IX Registration of collective bargaining agreements

XI Voluntary arbitration
XII Labor management cooperation
XIII Picketing, strikes and lockouts
XIV Termination of employment
XV General Provisions

BOOK VI: Post Employment

Rule I Termination of employment and retirement

Also try reading the Social Security Law and the Amended Rules on Employees Compensation
(Rules I to XXI Annexes “A” to “LL”) which are both placed at the last portion of the Labor Code
book.
MARKETING FEASIBILITY
This Chapter will pinpoint your project’s general to specific market feasibility. It will present
your market and an analysis of the past, present and future demand and supply situations of
your particular product/s. If the conditions found are feasible, then a check of the marketing
practices of similar businesses is studied as a guide for you to design your project’s marketing
strategies. The last topics present your project’s sales projections and marketing system and
forms designs.
Details:

Target Market

 State here, the general description of your market: its size and composition,
geographical location(s), population, age group, income level, job categories, family size,
etc.
 Present your product/s’ demand for the last five or ten years indicating your method or
sources of information. Annex 5.1 is a short lecture on demand measurements, which
you may use as a helpful guide on this topic. You could use the table below for your
presentation:

DEMAND FIGURES DATA

Year Local Foreign Total Remarks

Source:______________________________________

 Project these figures for the next five or ten years. Annex 5.2 and 5.3 present a short
lecture on projection methods and which to choose from among the methods
computed. You can present your chosen projection figures in the following table:

Years of Operation Total Projected Demand

First
Second
…

 Present an in-depth analysis and conclusion from your demand projection figures.
 Present a Sensitivity Analysis of the projected demand values of your projects.

5.3 Supply
 Write here, the supply situation of your market.
  Present the supply situation of your intended product/s during these last five or ten
years indicating your sources of information. Annex 5.4 will give you an idea on how to
estimate supply figures. You could use the table below for your supply presentation:

SUPPLY FIGURES DATA

Geographical Sources
Years Remarks
A B … Total

Sources:_______________________________________

 Project these figures for the next five or ten years. You can again refer to Annex 5.2 and
53 for your projection computations. Note here that your chosen projected supply
computation method may not necessarily be the same as that of your chosen demand
projection method. The table below could be used for the presentation of your
computed figures:

PROJECTED SUPPLY FIGURES

Year of Operation Total Projected Supply
First
Second
…

 Come up with an in-depth analysis and conclusion from your projected supply figures.
 Present a Sensitivity Analysis of the projected supply values of your project.
5.4 Demand-Supply

From the Demand and Supply figures obtained in 5.2 and 5.3, present the same past and
projected figures taking note of their discrepancies thus:

Years Demand (D) Supply (S) D-S Gap Percent Unsatisfied

(1) (2) (3) (4)=(2)-(3) (5)=[(4)/(2)]*100%
Past
1
2
Proj.
1
2
…

 Form the above computed figures, show that Demand is greater than Supply throughout
or at most of the time frame involved. This will be one of your main reasons for your
easy penetration of the market.
 Present a Sensitivity Analysis of your projected Demand-Supply Gap.

5.5 General Marketing Practices

 State national and local government marketing policies that could affect and assist you
in the marketing of your products.
 Present, if possible, the market share if your future competitors including their
geographical and demographical limits. You can also present local and foreign market
distributions of your product/s, if applicable.
 Present then it detail your future competitors market and marketing strategies like:
o Incentives and Benefits
o Budget Allocations
o Market Research and Development
o Sales Force
o Quality Standards
o Product-Mix Strategies
o Market Timing and Scheduling
o Pricing Policies
o Terms and Conditions of Sales
o Channels of Distribution
o Transportation and /Delivery Strategies
o Branding and Packaging Strategies
o Advertisement and Promotions Strategies
o Advertisement and Promotions Strategies
o Storage and Warehousing Strategies
o Physical Distribution Strategies
5.6 Proposed Marketing Program
 Present national and local government marketing policies and assistance packages and
programs that will benefit your project.
 For your market Conceptualization, state your proposed Marketing Philosophies and
Tasks. Annex 5.5 will prove a helpful guide in this instance.
 State also your marketing sales force and budget allocations.
 Lastly, present your proposed Product-Mix and Marketing-Mix Strategies like:
o Target Market
o Sales Force
o Marketing Research and Development (R&D) Program
o Product-Mix Strategies
o Market Timing and Scheduling Strategies
o Pricing Strategies
o Terms and Conditions of Sales Strategies
o Pricing Strategies
o Terms and Conditions of Sales Strategies
o Channels of Distribution Strategies
o Transportation and Delivery Strategies
o Branding and Packaging Strategies
o Advertisement and Promotions Strategies
o Storage and Warehousing Strategies
o Physical Distribution Strategies
For a detailed guide on the factors and actual items to consider in coming up with all of
these strategies, please refer to Annex 5.6. Be sure you proposed the best marketing
alternatives for your project. They must be simple and practical to implement.

5.7 Projected Sales

 Present each of your products selling prices for the next five or ten years, stating your
assumptions for arriving at the figures
 Present a table showing your sales forecasts for the next five or ten years. Please refer
to the table on the next page for your presentation guide.
 Come up with a Sensitivity Analysis of your Sales projections.
Sales Projections
Products & Year1
By-Products
Unit Price Quantities to be Solid Sales Revenues
Description
Exp Loc Exp Loc Tot Exp Loc Tot

GRAND TOTAL
 YEARS2 ………………………….. Year n

Unit Price ……………………. ………………………….. Sales Revenues

Exp Loc ……………………. ………………………….. Exp Loc Tot
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..
……………………. …………………………..

Notes: 1. Exp = Export; Loc = Local; Tol = Tolal.

2.Sales Revenues should be “Net” of discounts.
3.Provision is mad for a “Pre-Operating Period”(Year 0). Therefore, Year I Sales would
Then be “Year 0 + 1’.
4.This schedule could be expanded to suit particular Requirements.
Annex 5.1 Demand Measurements

This Annex serves as your review about the theoretical and analytical methods of measuring
demand.

A. Theoretical Demand Measurements

Philip Kolter defined Market Demand as:

“Market demand for a product is the total volume that would be bought by a defined customer
group, in a defined geographical area in a defined period, in a defined marketing environment,
under a defined marketing program.”

The eight (8) elements mentioned in this definition represent the factors to be considered in
the determination of market demand. But while these individual definitions are simple, their
combination as a requirement in actual demand measurement and quantification is not easy.

Several methods have been designed in using these factors in coming up with specific
theoretical demand figures:

So far, the easiest and fastest way is to research for “published statistics” by specialized
government and private agencies. The main problems of published statistical figures are their
reliability and accuracy. Therefore, it is very important that on must go only to the right offices
for the statistics required by one’s specific Study.

Some of our government agencies where you could get some market data are:

a. The National Statistics Office(NSO)

b. The National Economic and Development Authority (NEDA)
c. The Department of trade and Industry (DTI)
d. The Central Bank of the Philippines (“BSP” for Bangko Sentral ng Philipinas)

The first three have their own provincial and regional offices throughout the country.

To some market analysis they use a computed “correction factor” that they multiply to the
obtained figures. To them. This somehow lessens the inaccuracies.

Another method of market Demand Measurement is in terms of “per capita consumption”,

The product of this and your target market population will give you your theoretical
consumption of the target market of your product/s.

A second one is to ask for an estimate of the Total Demand from marketing experts based on a
“percentage share” of your specific products to the total market. By multiplying this
percentage share to your specific product/s’ market, you can arrive at your theoretical demand
of your product/s.

A third method is to commission professional market analysis to come up with theoretical

market demand equations based on computations using various market data. This particular
method involves making intricate computer programs and is very expensive, not to mention the
researches to be conducted in getting the necessary inputs to the project. This method of only
done by very big business establishments.

All of the above methods are of course, very hard to make as a neophyte researcher. In which
case, the Analytical Demand Measurements presented next are usually used in project
feasibility studies.

B. Analytical demand Measurements

1. The Chain Method. In this method, consider the following example:

If you want to estimate the market demand for dark beer, your estimated demand would
be: “ The total population x the population of your target market x your personal estimate
of your target market’s per capita income x your target spent on food x the average of this
amount which is spent on alcoholic beverages x the average percentage of this amount that
is spent on beers x the average expected percentage of this amount that is spent on dark
beers”,

2. The Market Build-up Method. This means identifying all the probable consumers of
your product/s and getting the sum of their potential purchases. Consider the following
table for this example:

Product Annual Total No. of Firms Potential Market Potential

Sales (,000) (2) Sales (3) (4)=(1*2*3)

P2.00 2 15 P60.00
A
P1.00 3 10 P30.00

B P7.50 1 5 P37.00

P1.20 2 5 P12.00

TOTAL MARKET DEMAND P139.50

3. The Index-of-Buying-Power Method. In estimating geographical potentials, you may
assume that your target market potential is directly related to a single factor say,
population. Therefore. if your particular target market represents 5.2% of the total
consuming population, you may then assume that your target market would consume
5.2% of the total products sold in the market.

Single factors are accepted for small company market estimates, but not for big
companies, who usually come up with their own computer-aided formulas for their
products’ market demand that usually involve multi-factor equations.

Bi = 0.7Y1 + 0.5Y2 + 0.3Y3 + 0.2Y4

Where:

Bi = percentage of the total buying power in area I;

Y1 = percentage of total consumers personal income in area I;

Y2 = percentage of total retail sales in area I;

Y3 = percentage of total population in area I;

Y4 = percentage of your total target market’s age group using your product in area I;
and

0.7. 0.5. and 0.2 are the specific weight corresponding to their respective factors: Y1.
Y2. Y3 and Y4 respectively
Annex 5.2 Projection Methods

This Annex will guide you in making your own projection computations. Consider the example:

PHILIPPINES POLYETHYLENE IMPORTS

(in thousands of metric tons)
YEAR ACTUAL VOLUME
1968 14.635
1969 16.548
1970 15.968
1971 23.919
1972 25.968
1973 41.854
1974 27.458
1975 25.039
1976 34.320
1977 42.100
1978 61.752
1979 64.232
Source: Foreign Trade Statistics, Department of
Research, Central Bank of the Philippines,
` Malate, Manila
There are five (5) computational methods presented here. All you have to do is follow the
computation patterns for each method.

A. Arithmetic Methods:
1. The Arithmetic Straight Line Method:

This method is computed in the following manner:

You take the actual demand for the last year (1979): 64.232
Less the demand for the first years(1968) : 14.635

The difference [increase/(decrease)] is :49.597

You now take the average increase/(decrease)] over the same number of years in
question:

These data were taken from the author’s undergraduate project feasibility study thesis: “A
Project Feasibility Study on the Establishment of a Plastics Bag Manufacturing Plant at San
Fernando, Pampanga” in 1981.
B.Statistical Methods:

1.The Statistical Straight Line Method:

Years Actual Values X X2 XY Projected Values

(y) (Yc)
(1) (2) (3) (4) (5) (6)

1968 14.635 -11 121 -160.985

1969 16.548 -9 81 -148.932
1970 15.968 -7 49 -111.779
1971 23.919 -5 25 -119.595
1972 25.968 -3 9 -77.904
1973 41.854 -1 1 - 41.854
1974 27.458 1 1 27.458
1975 25.039 3 9 75.117
1976 34.320 5 25 171.600
1977 42.100 7 49 294.700
1978 61.752 9 81 555.768
1979 64.232 11 121 706.552
1980 --------------------------- 13 ------------- ------------------ 59.410
1981 ∑ = 393.793 15 ∑ = 572 ∑ 1.170.147 63.502
1982 17 67.593
1983 19 71.685
1984 21 75.776
1985 23 79.868
1986 25 83.959
1987 27 88.050
1988 29 92.142
1989 31 96.233

Yc = a + bx

Where:

∑𝑌 393.793
A = ----- = -----------
n 12

= 32.816083

And

∑𝑌 1.170.149
+==== b = ----- = -------------
∑ 𝑋2 572

= 2.045715

Therefore:

Yc = 32.816083 + 2.045715X
Note: For this projection method, as well as for the next two, you can follow these simple computation
Instructions:

a. Columns(1) and (2) are given.

b. For the Column assigned as “X”. the figures are assigned:

 For a given odd number of years, assign “0” to the middle year, and a uniform interval of “1” for all the
order years;
 For a given even number of years, assign “-1” and “+1” to the two middle years and a uniform interval of
“2” for all the other years.
c. The formula for the projection method is given by Yc inside the box of each projection method presented.
d. To solve for Yc, solve for “a” and “b” (and “c” in the third projection method) first as given b their respective
formulas.
e. Substitute the value of “a” and “b” (and “c” in the third projection method) to “Yc” to get your projection
formula.
f. Compute for “Yc” for all your projection years by extending the values of your “x” column.

2. The Statistical Semi-Log Method

Years Actual Values Log Y X X2 XLogY Log Yc Projected

(y) Values
(Yc)
1668 14.635 1.16539 -11 121 -12.81929
1669 16.548 1.21875 -9 81 -10.96875
1970 15.968 1.20325 -7 49 -8.42275
1971 23.919 1.37874 -5 25 -6.89370
1972 25.968 1.41444 -3 9 -4.24332
1973 41.854 1.62174 -1 1 -1.62174
1974 27.458 1.43867 1 1 -1.43867
1975 25.039 1.39896 3 9 -4.19688
1976 34.320 1.53555 5 25 -7.67775
1977 42.100 1.62428 7 49 11.36996
1978 61.752 1.79065 9 81 16.11585
1979 64.232 1.80775 11 121 19.88525
------------------- ------------------ ---------- ------------------
∑ = 393.793 ∑ = 17.59817 ∑ = 572 ∑ = 1.170.147

1680 13 1.82366 66.628

1681 15 1.87861 75.614
1982 17 1.93355 85.813
1983 19 1.98850 97.386
1984 21 2.04344 110.521
1985 23 2.09839 125.426
1986 25 2.15334 142.343
1987 27 2.20828 161.540
1988 29 2.26323 183.327
1989 31 2.31817 208.053
 Log Yc = Log a + X Log b Therefore: Yc = Anti-Log (LogYc) = 10 LogYc

Where:

∑ 𝐿𝑜𝑔 𝑌 17.59817 ∑ 𝑋 𝐿𝑜𝑔𝑌 15.71481

Log a = ----------- = ------------ and Log b = ------------- = ------------
n 12 ∑ 𝑋2 572

= 1.466514166

Therefore:
Yc = Anti-Log (1.466514166 + 0.02747344x)

3.The Statistical Parabolic Projection Method

Years Actual Values X X2 X4 XY X2Y Projected

(y) Values(Yc)

1968 14.635 -11 121 14.641 -160.985 1.700.835

1669 16.548 -9 81 6.561 -148.932 1.340.388
1970 15.968 -7 49 2.401 -111.776 782.432
1971 23.919 -5 25 625 -119.595 597.975
1972 25.968 -3 9 81 -77.904 233.712
1973 41.854 -1 1 1 41.854 41.854
1974 27.458 1 1 1 -27.458 27.458
1975 25.039 3 9 81 75.117 225.351
1976 34.320 5 25 625 171.600 858.000
1977 42.100 7 49 2.401 294.700 2,062.900
1978 61.752 9 81 6.561 555.768 5.001.912
1979 64.232 11 121 14.641 706.552 7.772.072
------------------- ---------- ----------------- ----------------------- --------------------------
∑ = 393.793 ∑ = 572 ∑ = 48,620 ∑ = 1.170.149 ∑ = 20,714.889
1980 13 70.456
1981 15 79.646
1982 17 89.564
1983 19 100.210
1984 21 111.584
1985 23 123.687
1986 25 136.518
1987 27 150.078
1988 29 164.365
1989 31 179.381
Yc = a + bX + cX2

Where:

a = ∑ 𝑋2 (∑ 𝑌) − ∑ 𝑋2 ( ∑ 𝑋2 𝑌) b = ∑𝑋𝑌 c= 𝑛( ∑ 𝑋2 𝑌 ) − ∑ 𝑋2 (𝑋𝑌)
n(= ( ∑ 𝑋4 )-( ∑ 𝑋2 ) ∑ 𝑋2 𝑛( ∑ 𝑋4 ) − ( ∑ 𝑋2 )2

= 48.620(393.793)-572(20,714.889) = 1.170.149 = 12.(20.714.889)-572(393.793)

12(48,620) – (572)2 572

= 28.476598 = 2.045715 = 0.091038

2
 Annex 5.3 Standard Deviation Computations as a Method for Determining Your Project’s Projection
Figures

This Annex will help you select which of your computed projection methods in the preceding Annex is
the most appropriate to use for your Study. The first thing to do is to compute the “theoretical values”
(Yc) for each of the past years i.e ., from 1689-1979 Then you compute for the Standard Deviation (SD)
for each of your projection methods using the formula:

𝑆𝐷 = √∑(𝑌 − 𝑌𝑐)2
𝑛
Thus

Straight Line Method Semi-log Method Parabolic Method

Y Yc Standard Deviation Yc Standard Deviation Yc Standard Deviation

(Y-Yc) (Y-Yc) (Y-Yc)
Years Actual Computed Absolute Squared Computed Absolute Squared Computed Absolut Squared
1968 14.635 10.313 4.322 18.68 14.598 0.037 __ 16.989 2.354 5.54
1969 16.548 14.405 2.143 4.59 16.567 ( 0.019 ) __ 17.439 ( 0.891 ) 0.79
1970 15.960 18.496 ( 2.528 ) 6.39 18.802 ( 2.834 ) 8.03 18.617 ( 2.649 ) 0.79
1971 23.919 22.588 1.331 1.77 21.338 2.581 6.66 20.524 3.395 11.53
1972 25.968 26.679 ( 0.771 ) 0.51 24.215 1.753 3.07 23.159 2.809 7.89
1973 41.854 30.770 11.084 122.86 27.481 14.373 206.58 26.522 15.332 235.07
1974 27.458 34.862 ( 7.404 ) 54.82 31.188 ( 3.73 ) 13.91 30.613 ( 3.155 ) 9.95
1975 25.039 38.953 ( 13.914 ) 193.60 35.394 ( 10.355 ) 107.23 35.433 ( 10.394 ) 108.04
1976 34.320 43.045 ( 8.725 ) 76.13 40.168 ( 5.848 ) 34.20 40.981 ( 6.661 ) 44.37
1977 42.100 47.136 ( 5.236 ) 25.36 45.585 ( 3.485 ) 12.15 47.257 ( 5.157 ) 26.59
1978 61.752 51.228 10.524 110.75 51.733 10.019 100.38 54.262 7.490 56.10
1979 64.232 55.319 8.913 79.44 58.710 5.522 30.49 61.995 ( 3.155 ) 9,95
------------- ----------- ---------
∑ = 694.90 ∑ = 552.70 ∑ = 517.89

𝑆𝐷 = √694.90 𝑆𝐷 = √522.70 SD = √517.89

______ ______ ______
12 12 12

= 7.61 = 6.60 = 6.57

Since the computed Standard Deviation using your Parabolic Projection Method is the smallest,
it means that this particular method offers the “closet” theoretical values to your actual figures.

On the assumption that the past trend will be followed throughout your projection years, then
the projected values using this method will be your vest choices for all your projection years/
this reasoning could best be seen and understood with the graph presented on the following
page.
LEGEND:
STRAIGHT LINE
SEMI-LOG
PARABOLIC

ACTUAL PROJECTIONS

YEARS
5.4Supply Measurements

The existing and past supply of your intended products in the market could be obtained by each
of the following:

A. Local Production Capacities

Your futures competitors’ rated capacities could be summed up together to estimate the total
supply of your products in the market. Sometimes, it would also be good to know their
production and marketing programs which you could consider as part of your market analysis in
your study.

B. Importations

Importations by other companies could provide your other source of supply for your intended
product/s. Since importations usually come from undetermined company sources, and
therefore unknown relative strengths of suppliers, it may help if you will consider their legal
duties. Knowing your approximated delivered (landed) costs, quality standards, etc. could be
help for your analysis of the imported supply of your future competitors.

C.Product Substitutes

Those seemingly cheaper and usually inferior product substitutes could not be taken for
granted. Lately, many consumers resolve of these items because of certain economic factors.

NOTE: Your project’s future market share is computed from your supply figures as follows:

Your proposed production capacity x 100% per year

The total supply available for the same year
Including your proposed rated capacity
5.5 Marketing Philosophies and Tasks

This Annex enumerates the various marketing demand situations from which you could come
up with your project’s proposed marketing philosophy and tasks program:

A. Conversational Marketing. If your potential market does not like marketing strategy that will
produce a potential demand based from this negative situation.

B. Situational Marketing. When your have so many products but there is no demand. In this
particular case, our target market is indifferent or is simply not interested in your product/s. A
good strategy here is to create (stimulate) people into having a need for your product/s

C. Developmental Marketing. If your target market is looking for a product that does not yet
exist. You

D. Remarketing, when the demand for your product declines. In this case, you should make
remedies to stop the (downward) trend by devising a more revitalized marketing program that
will create a ”new life “for your product’s demand.

E.SynchroMarketing. When your market suffers from a very irregular pattern. To offset this.
Why not devise a marketing schedule that will your offset your company’s over-utilization and
under-utilization of production capacities.

F. Maintenance Marketing. When your market is already at full demand. You should carry out a
more vigorous marketing program that will keep up (maintain)n the market demand and sales
of your product/s.

G.Demarketing, when the demand for your product/s will for exceed your supply capacities.
One way to solve this is to try to reduce your market demand on some of your products and
focus your strategies on some of your other products.

H.Countermarketing. if you have products that are undesirable for your consumers. Examples
of this are the so-calles “vice products” In this case, you could focus your marketing strategies
on your other “worthwhile” products.
Annex 5.6 Market Planning and Strategies Considerations.

This Annex contains a checklist of things to consider in coming up with your Product-Mix and
Marketing-Mix Programs and Strategies. In some cases, the choices are already presented for
your to just analyze and copy!

In considering your

A. Target market

 Answer the questions: WHAT needs are to be served and WHOSE need are to be served.
 Consider the Geographical Limits of your market area: national, regional,
provincially/city, municipal; climate; population density.
 Consider also, the Demographical Limits of your market area: age; sex; family size;
family status; income; occupation; education; religion; race or culture; social level.
 Lastly, consider the Psychographic Limits of your market area; Lifestyles; personalities;
benefits sought; user status; usage rates; Loyalty, awareness; market sensitivity.

B. Sales Force,
 Consider your Budget Limit
C. Marketing Research and Development (R&D) Program.
 Consider your R&D Budget Limits.
 Update yourself on:
o Business Analysis: sales estimates, marketing costs and profits, and market tests.
o Sources of information: trade and economic magazines, reviews, business
institutions, and market research and advertising firms.
o Product Development: brand naming (labeling) and packaging.
o Research Activities: advertising research, business economics and corporate
research, corporate responsibility research, product research, sales and market
research.

D. Product-Mix Strategies,
 Consider your budget limits.
 Know your:
o Product-Mix Width: “ how many different product lines will be sold by the
company”?
o Product-Mix Depth: “What will be the average number of items to be offered by
your company per product line?”
o Product-Mix Consistency: “What will be the relationship of your company’s
different product lines to your over-all marketing program?”

E. Marketing Timing and Scheduling Strategies.

 Design Marketing Strategies for your Product/s”,
o Introduction Stage
 o Growth Stage
o Maturity Stage
o Decline Stage

F. Pricing Strategies
 Consider the following:
o Legal pricing Laws
o consumers “behavior
o clientele dictates
o competitors ‘policies
o market factors served/underfed by your competitors
o manufacturers’ suggested prices
o types of products handled
o seasonality
o price limits
o target pricing and alternative pricings
o mark-ups
o availability of product/s
o condition of merchandise
o discounts
o operating expenses(cost of production)

G. Terms and Conditions of Sales Strategies.

 Consider:
o Discounts and Allowances: quantity discounts, trade discounts, cash discounts,
seasonal discounts, forward dating (out-of-season selling).
o Dating(out-of-season selling).
o Promotional Allowances: free samples, free deliveries, etc.

H. Channels of Distribution Strategies.

 Consider your budget limits.
 Select your Channel’s Level: two level (manufacturer-consumers); three-level
(manufacturer- retailer – consumers); four-level (manufacturer – wholesaler – retailer
consumers); five-level (manufacturer – wholesaler – jobber –retailer – consumers).
 Select also your Flow Types: physical flow, payments flow, promotions flow, title
(ownership) flow, and information flow.
 Consider also horizontal and/or vertical growth possibilities.

I. Transportation and Delivery Strategies,

 Consider your budget limits.
 Determine what type of transportation delivery method/s you will use: rail, water,
highway, air, pipeline, etc.

J. Branding and Packaging Strategies,

 Consider your budget limits.
 What kind of Branding Strategies will you use:
o Individual brand names for each of your products
o Common (family) names for all of your products
o Different names for a family of your products
o Your company name mixed with individual or family names for all of your
products
 “Brand Extension “Schemes: e.g., “New Improved’,etc.
 Multi-Brand Schemes i.e., several brand names for the same product.
 What will be your packaging strategies?
 What will be your labeling strategies?

K. Advertising and Promotions Strategies,

 Consider your budget limits.
 Would you consider personal selling?
 Will you give suppliers’ promotional assistances?
 Determine your publicity strategies. Will you use/join:
o Space advertising
o The mail
o The internet
o Sales presentations
o Trading stamps or coupons
o Catalogues
o Trade exhibits
o Endorsements
o Free samples, gifts, etc.
o Market demonstrations
o Contests
o Posters, show cards, streamers, etc.
o Films
o Sales conferences
o Print and/or visual advertisement

 What Mode will you use?

o Television
o Radio
o Print media: newspapers, magazines, etc.
o Outdoor print advertising: posters, billboards, etc.
o Through the internet, e-commerce

L. Storage and Warehousing Strategies,

 Consider your budget limits.
 Consider your capacities”(inventories”) limitations.
 Would you opt for a “Distribution Center” concept?
 Decide on your ownership of storage space: owned or rented/leased.
 Consider also your project’s
o Materials handling
o Expansion possibilities
o Physical distribution

M. Physical Distribution Strategies.

 Consider your budget limits.
 Try:
o The economics of a single plant, single market
o The economics of a single plant, multiple markers
o The economics of multiple plants, multiple markets
6.0 PRODUCTION OR TECHNICAL FEASIBILITY

After concluding the Administrative and Marketing feasibilities of your project, you could now
consider the manufacturing aspects of your study.

In this Chapter, you will present the details of your proposed project’s product/s and/or
services/s; how they will be produced (for manufacturing and industrial projects) or raised (for
agribusiness projects) using your own choice of location/s, building/s and facilities, project
capacity, and lay-outing proposals; what will be your specific machineries and equipments, raw
materials, and manpower requirements; and your project’s utilities, waste disposal
management, and production system documentation and forms.

Due to the many possibilities of technical terminologies required for certain topics for this
Chapter, all topics are presented under their common specific heading. You then select only
which particular topics, terminologies and/or instructions apply to your particular project.

Details:

6.1 Products/s (or Service/s)

 Present here, a detailed description of your intended product/s: its dimensions,

compositions (mechanical, chemical and/or physical properties), quality specifications,
etc. For agribusiness projects their common and scientific names, specie (breed), color,
size, weight, etc. For service projects, the specific service you intend to do.

 Present some drawings, pictures, or photocopies of your intended products.

 State any product segmentation proposals, if any.

 State any modifications: differences or improvements of your intended product/s over

similar or related products from your competitors, if any,

6.2 Production Process

 State here, the most suitable and practical type or operation process in the manufacture
(implementation) of your intended product/s. For manufacturing projects, Annex 6.1
will be a helpful guide.
  Present your operations’ Flow Diagram showing the details of each section activity of
your production process including:

o Lead time
o Processing time
o Materials and/or energy balances(for Chemical related projects. Please refer to
Annex 6.2 for a short review of this topic)
o Production or activity flow
o Care and management program (for Agribusiness projects)
 Present your quality and monitoring standards and schemes (monitoring control
systems), if any Annex 6.3 presents a short review on Production Planning and Control
Systems that you can use as your guide.

 State any plans for production and/or computerization of your project at any period of
your study that will affect your project’s budgeting, if any.

6.3 Alternative Processes

 State here, alternative production processes that you will use as contingencies in case of
sub-normal conditions of your operations.

 State the advantages and disadvantages of each of these alternatives.

 State your preparatory plans for implementation of these alternatives in case of

application.

6.4 Materials Handling Design

 Present your project’s Materials Handling Proposals if possible, per department, section
or subdivision. A list of questions that will guide you in the design of your proposal is
given in Annex 6.4

 Prove that your proposed proposal is better than other possible alternatives.

 State any costs that will be incurred as a result of your proposal

6.5 Technological Assistances

 Enumerate a list of offices and specialists whom you will coordinate with, or hire on a
retainer’s basis who will help you operations period. A short list of government offices
providing such assistances is given in Annex 6.5. You can present these in the following
table:

Type of Assistance Name of Office or Address and Tel. no./

Specialist Contact Person/s

 Include pro-forma technical assistance contracts, if any.

6.6 Project Site

 Present alternative sites for your project indicating the advantages and disadvantages of
each location. Your project’s choice location should prove to be the best alternative in
this case.

 Describe your project’s proposed location in detail.

 State alternative sites for your project indicating the advantages and disadvantages of
each location. Your project’s choice location should prove to be the best alternative in
this case.

 State also some possible obstacles that you may encounter in your choice of project
location, and how you are going to solve each.

 For multi-plant locations, prove the necessity of each project/plant site.

 State allocations for future expansion of your project.

 Present current site conditions and preparations and developmental requirements, if

any and all other costs you may need during your pre-operating period. You may use the
suggested format presented as follows:
 COST ESTMATES OF SITE ACQUISTION AND PREPARATION

Source of Funding
Item Description Qty. Local Foreign

Amount Amount
Total
Land
Legal Expenses
Right of Way
Tenant’s Rights
Etc.

6.7 Production Schedule

 For your Production Schedule Proposal

Shift Department/ Description Time Manpower … Etc.

Section Requirement

 Present your reasons for coming up with the figures in the above table.

 Relate some possible changes in your schedule to suit your project’s capacities during
sub-normal and super-normal operations. State also the equivalent quantities
(increases or decreases) in your plant capacities during these periods.

 Present any alternative production schedules during off-season, and lean or peak
months if you alcove a “ seasonal” project.

 If possible, present schedule for pre-operating or dry runs of your project for seasonal or
cyclic operations if these are warranted.

 List down you project’s civil engineering requirements for both building and non-
building facilities. A checklist of factors in coming up with a sound engineering proposal
of this topic is given in Annex 6.9

 List alternative or contingency facilities you may need for your project.
  Estimate your project’s civil engineering costs. You may use the table below as your
presentation guide:

Costs and Sources

Description Unit Quantity Total
Local Foreign

 Present a detailed drawing of each of your structures drawn to scale.

 State the quality of construction materials you will need for each structure of your
project. In case of construction materials not readily available within the locality of your
project, state their sources and other additional costs you will need for purchases.

 State allowances of buildings and facilities you will need for future expansion of your
project.

6.10 Floor Plan

 Present a detailed list of requirements for each of your project’s floor plan per
department/section.

 Describe in detail, your project’s floor plan layout for each department/section. Include your
reasons for your proposals, In coming up with your designs, be sure to take into consideration
the flowing flows:
o Functional flows
o Quantity flows
o Transportation flows
o Manpower flows
o Materials flows
o Production flows
o Utility flows
o Communications flows
 Present alternative flow plans for possible consideration during sub-normal and super-normal
operations during your operations period. State your reasons for coming up with your
proposals.

 If possible, include a detailed drawing for each of your flow plans

6.11 Machineries and Equipment’s

  Present a detailed list of machineries and equipment’s you will need for your project. If possible,
under the following sub-headings:
o Plant (process) equipment’s and machineries
o Mechanical machineries and equipment’s
o Electrical equipment’s
o Process instrumentation and control machineries and equipment’s
o Auxiliary machineries and equipment’s
o Tools and spare parts

Annex 6.10 present a list that could be useful on this topic.

You may present these items in the following table:

Sub-Heading Description and Sources Unit Quantity Total

Uses
Cost

Note: You can subdivide the last columns of this table into local and foreign sources if
necessary.

 Present the terms and conditions of sale from suppliers of each of the machineries and
equipment’s you intend to purchase.

 Insert some brochures and/or drawings for each of your machineries and equipment’s
you intend to purchase.

 Present a time schedule of your purchases for any new or additional machinery or
equipment you may need during your projection period. State their detailed description
and specifications if they have not yet been described.

 State alternative machineries and equipment’s you will need in case of sudden
breakdowns, unavailability of choice machineries and equipment’s etc.

 Present your machineries and Equipment’s Layout Design as suited from the preceding
topic.
6.12 Utilities

 Present a detailed breakdown of the utilities that will be needed for your project.
Annex 6.11 contains a list of some factors for consideration on this topic. You
may use the suggested table below for your presentation:

Utility Description Source/s Unit Cost Consumption Rate Total

 Present a breakdown of the cost of each utility for the next five or the years. The
table given below could be used for your presentation:

Utility Year 0 Year 1 Year 2 … Year n

 Present an explanation of any increase or decrease in projected values, if any.

 State substitutes or alternative sources of each or all of your utilities in case of

sudden or temporary unavailability.
6.13 Raw Materials Requirements

 Present a detailed breakdown of your project’s raw materials requirements. For your
presentation, you could use the table on the next page:

Department/ Raw Description Unit Oty. Total Source/s

Source Materials Cost Needed Cost

A list of characteristics of raw materials is presented in Annex 6.12 for your reference.

 Present some leaflet or brochures of each of these items, if available.

 State alternatives or substitute raw materials you may use during lean, peak or
emergency months in case of sudden or temporary unavailability of any or all of your
raw materials requirements, and their source/s.
  Present your total raw materials requirement purchases for the next five or ten years.
You may write these projected figures using the tabular format below:

Department/Section Raw Materials Year0 Year1 … Year n

 Present an explanation of any increase or decrease in value of the items in the

table above during your projection years.

 State the terms and conditions of purchase, payment, and delivery of each of
your raw materials requirements, including their availability from your supplier/s

6.14 Manpower Requirements

 Present your direct personnel requirements and organizational layout per

department/section of your project. State the reasons for your proposal.

 State the skills and levels of training qualifications of your direct personnel requirements
per department/section.

 Present the different job functions and responsibilities of your direct personnel per
department/section.

 State your direct personnel’s Skills Development Program.

 State your direct personnel’s workloads, number of hours per shift, shifts per
department/section, and all benefits due them

 Present your direct personnel’s labor costs per department/section. The table below
could be used for your presentation:

Department/ RATE
Section Position No. Total
Basic Benefits
  State increases or decreases in your manpower requirements over your projection
years. State also your reasons for the changes.

 State alternative manpower schemes for seasonal or sub-normal/super-normal periods.

 Present your direct labor costs for your entire projection years you can use the tabular
format below for this item.

Department/ Position Year 1 Year 2 … Total

Section Qty. Amt. Qty. Amt.

 State your reasons for any increase or decrease in the figures of the above table.

6.15 Wastes and Waste Disposal Method/s

 Describe all wastes produced by your plant/project in detail and their effects to your
operations. If possible, include their quantity, schedule of emissions, etc.

 State your means of disposal system: your waste treatment machineries and
equipment’s: and waste disposal sites, treatment plants, recovery plants, and treatment
equipment’s and facilities.

 State all costs your project will require including designing and operating your waste
disposal method, compensation to neighbors, government duties and/or penalties, etc.
Compute these over your projection years. You can follow the table below for your
presentation:

Type/Total Costs Year1 Year2 … Year n

  Come up with a contingency program for sudden increases of wastes and/or sudden
temporary or permanent unavailability of your waste disposal methods or facilities.
Include all corresponding costs as a result.

6.16 Total Production Costs

 Present a breakdown of all your projected Production Costs itemized per

department/section as summarized from all your past topics. You could use the table
below for this item:

Department/Section ITEM Year1 Year2 … Year n

A Raw Materials
…
…
Direct Labor
…
…
Overhead
…
…
B Raw Materials
…
…
Direct Labor
…
…
Overhead
…
…
TOTALS Raw Materials
Direct Labor
Overhead

This Annex is a refresher course of the different types of manufacturing processes. These are:

B. Continuous Manufacturing, This is the type of production where a product is produced

continuously, or for a specified long period of time, Companies that use this type of
manufacturing process are those that “mass-produce” their products in quantity (volume)

In presenting your project’s production flow, the following Production Process Design Symbols
are used:
 ATIVITY SYMBOL DEFINITION/ACTION
Operations Change
Transportation Move
Inspection Check
Storage or Keep
Delay Wait

An illustrative example for a multi-product design is presented on the next page.

PRODUCTION FLOW PROCESS CHART:

B RAW MATERIALS STOCK

TILES WITH STAMPS MOSAIC POTS WITH DECORATIVE C POTS IN ANTIQU FINISH D
A B
FLOWER DESIGN
unload purchased tiles unload purchased pots unload purchased pots
to cleaning section to cleaning section to cleaning section P
cleaning and sanding cleaning and sanding cleaning and sanding R
quality inspection quality inspection quality inspection O
painting of sides painting painting C
drying drying drying E
pasting of stamps rubbing and polishing rubbing and polishing S
on tiles with sandpaper with sandpaper S
drying designing of pots designing of pots I
plastic Lamination varnishing varnishing N
pasting of felt paper drying drying G
quality inspection pasting of decorative flowers quality inspection
to final assembly plant drying to final assembly plant
quality inspection
to final assembly plant

FINISHED PRODUCTS STOCK

Legend storage operation inspection transportation Delay

Annex 6.4 A List of Questions to Guide You the Design of Your Project’s Materials Handling
System,

This Annex contains a list of questions for you to consider in designing your project’s materials
handling system. These questions are:

 Is your inventory delivered on time, and does your storage arrangement needs vertical
or horizontal racks, cabinets, etc.?

 Will it be all right to deliver incoming materials directly to the work areas?

 Will the deliveries of your materials come in single trips, on several trips?

 Are your processes requiring heavy materials placed near your receiving areas?

 Do you need conveyors to handle the flow of your materials?

 Is your materials flow system a single-line flow only, or does it need several flows or
backtrackings?

 Why not use “gravity” for your materials flow if it is possible, and will this be practical
or convenient?

 Are all your manual handling operations minimized?

 Will it be more economical for you to enter into sub-assemblies, or into sub-
contracting?

 Does your materials handling system conserve space?

 Do your pathways get easily clogged up as a result of your proposed operations flow
system?

 Are your conveyors, machineries, equipment’s and facilities checked for safety?
 If there are separated work areas are the placed “within reach” of adjacent or work-
related areas?

 Do you have a contingency plan for your materials handling system in case of
emergencies?

 Are your products that are finished by on operator or department/section easily picked
by the next?

 What have you done to minimize delays and bottlenecks?

 Is your flow easily accessible to inspectors?

 Have you determined vital inspection points in your work areas?

 Does your sub-assembled products need storage “in-between” operations?

 Are your transport containers designed to gave the maximum speed of delivery to their
next operations/departments/sections?

 If you use lift trucks or other heavy materials, are they operated at the desired efficiency
rate?

 Does each of your materials handling proposals fit perfectly into your whole system?

 Does your system reduces the incidence of walking and results in higher efficiency and
quality of your products?
FINANCING STUDY
In this chapter, you will prsent how much capitalization will be needed to finance your project,
and who will be the financier/s of your project. You will also determine what will be the most
adoptable financing scheme for your project.

Details:

Total Project Cost

 State you total investment costs by presenting all your project’s cost requirements
from all your previous chapters. If possible, itemize them using the following format:

Item Category Debt Equity Total

A Fixed Capital Costs:
1 Land
2 Building
3 Operation Machineries and Equipments:
a.
b.
etc.
4 Office Equipments:
a.
b.
etc.
5 Office Furniture and Fixtures:
a.
b.
etc.
6 Contingencies
Total Initial Fixed Capital Costs
B Pre-operating Capital Costs:
1 Legal Permits
2 Others (specify)
3 Contingencies
Total Pre-operating Capital Costs
C Initial Working Capital:
1 Current Assets:
a. Materials Inventory
b. Cash on Hand (required cash)
etc.
2 Pre-operating Production Costs:
a. Personnel Cost
b. Raw Materials
c. Packaging materials
 Overheads.. etc
Contingencies
Total Initial Working Capital
TOTAL COST OF PROJECT

Financier/s
 Present your sources of capital for your project. You may follow the table below
for your presentation:

Item Category Debt Equity % Contribution

1 NAME, Cash, Personal Resources XXX 10
2 NAME, Cash, Personal Resources XXX 10
3 NAME, Cash, Personal Resources XXX 10
4 NAME, Cash, Personal Resources XXX 10
5 NAME, Cash, Personal Resources XXX 10
6 BANK NAME, Cash, Creditor XXX 10
7 SUPPLIER NAME, Inventory, Creditor XXX 10
8 SUPPLIER NAME, Machines, Creditor XXX 10
9 SUPPLIER NAME, Equipment, Creditor XXX 10
10 SUPPLIER NAME, Supplies, Creditor XXX 10
TOTAL XXXX XXXX 100

(Provide timetable for the loan application, processing and release)