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Principles of Management

The Project Feasibility Study


How to register your business?
The Entrepreneur and the Manager
Small Business Associations in the Philippines
(Written Report)

Group 3
Abad, Joshua F.
Gutay, Jenize Rojean D.
Miguel, Jerome
BSA 2-A
MGT 201 WTh 1- 2:30 PM
Mr. William Garcia

The Project Feasibility Study


The Project Feasibility sometimes called a project study or a feasibility study
evaluates the viability of a business undertaking. The undertaking may be a new or
proposed venture, or an existing business. The enterprise may or may not have an
expansion program. Normally, a project study is merely considered as a procedural
requirement for securing financing or government assistance. Its real objective is to
guide the project promoters, business executives, and financial managers in
determining the actions they must take on a project in order to bring about its
successful operation.
The preparation of a project study covers:
1. The collection of data (through research work) which is significant to all areas
of undertaking:
2. The analysis of the collected data; and
3. The formulation of recommendations, based on the analysis.
Various Aspects of Project Feasibility Study
A good project study should cover the various aspects of the operations of a
project management, marketing, technical, financial, and socio-economic.
Marketing Aspect
The marketing aspect is considered the life blood of virtually all project feasibility
studies for the extent of the data and the information gathering because the
succeeding aspects depend largely on it. This serves as the basis of the financial
section through the projected demand. Indeed, profitability is the focal point of
every study. However, there can be no discussion of profitability or of the other
aspects of the study, if in the first place; there is no demand or market.
This aspect includes the following topics: demand, supply, demand and
supply gap analysis, marketing program, and the projected sales.
The objective of the marketing aspect of a feasibility study is to determine
the quantity of the product that can be sold at a certain price given the competitive
situation.
Organization and Management Aspect
The overall implementation plan is discussed in the organization and
management study. This aspect includes a study of the officers and key personnel,
basic considerations in forming the organizations, form of ownership, organizational
chart, and project schedule.
The objective of the management aspect of a feasibility study is to determine
the option effectiveness of the organizational set-up and the qualifications of the

individuals who will make up the organization. This aspect will determine the
successful realization of the project study.

Technical Aspect
After having determined the market size and area, product demand and
growth, the potential and technical feasibility of the project may be analyzed. The
technical soundness analysis will be considered complete if all pertinent technical
aspects of the project have been taken into account in the analysis and if the
planned construction or procurement conforms to accepted engineering standards
and practice. The estimated cost of the project should be as low as any other
reasonably available alternate which would produce the intended results.
The objective of this portion of the feasibility study is to determine to what
extent the project meets the technical soundness criteria.
Technical Requirements of the Project
Prior to projecting technical feasibility, the technical requirements of the
project must be analyzed. This may be done by
A. Stating:
1. The quantity and quality of the products to be produced
2. The specifications of raw materials
3. The supplies to be used
4. The labor needed, both skilled and unskilled
5. The waste disposal methods
6. The manufacturing process
B. Providing estimates of total project cost and enumerating the major items of
capital cost.
C. Listing down in detail estimated production cost and overhead cost that will
go into the operating of the proposed plan.
D. Taking into consideration any major technological development in the
industry which may affect the commercial or technical soundness of the
project. Once the technical requirements have been prepared, the project
proponent is ready to analyze technical feasibility.
Financial Aspect
The financial aspect of the project feasibility study quantifies the results of
the marketing, technical, management, taxation and legal phases of the project
study, and expresses in peso terms the possible outcome of operating the project.
The major parts of the financial study are:

1. Statements of assumptions;
2. Possible sources of outside financing, if the capital requirements cannot be
met entirely by the proponents;
3. Projected financial statements;
4. Details of various amounts contained in the projected financial statements;
and
5. Analysis of the financial projections.
Basically, project studies consist of the skillful coordination of the various
information of all the factors in the form of financial projections. It covers all the
factors that are pertinent to an intended venture having established the existence
of a sample market and the feasibility of the production facilitates to supply this
market, the investigation should move on to the study of finance cost. What
remains is to study the result of the market and technical studies.
The financial study attempts to meet the following objectives:
1. To make a realistic, complete, and conservative estimate of the total cost to
put up a project to its capital requirements.
2. To determine the amount of capital financing available and borrowings
needed, including possible source and terms.
3. To make complete, safe, and realistic projections of operating cost and
revenues.
4. To determine whether the project will be able to pay its total debt with a
reasonable margin of safety.
5. To determine the necessary financial arrangements to insure that the project
will have the cash it needs when required.
6. To determine the companys earnings performance and the soundness and
the liquidity of its financial positions.
Socio-Economic Aspect
A proposed venture, to be worthy of financing, should be pre-convinced not
only for profit but also for social and economic benefits. It becomes even more
worthy of establishing a business unit if it will be for the welfare of others rather
than simply for the wealth or power of the proprietor.
The objective of the socio-economic aspect of the feasibility study is to
determine how the project will affect:
1. Income, considering the benefits it will give to families and individuals;
2. Taxes, indicating the amount of revenue it could raise for the government;
3. Prices, considering the influence of the proposed project on supply of goods,
and foreign exchange balances;
4. Local producers, considering the use of locally manufactured machines, raw
materials, and labor; and,
5. The community, in terms of benefits the proposed business will directly or
indirectly share on the development of the place, community, and the nation.

Parties Requiring Project Feasibility Study


Project Feasibility Studies are prepared for the following parties and purposes:
1. Management of on-going concerns.
a. To determine the feasibility of expansion programs.
b. To set the reasonable price of an existing business which they are
considering to take over.
2. Proponents or promoters of new projects.
a. To ascertain the viability of new projects.
b. To select or improve the project specifications in terms of form of
business organization, location, market, distribution channel, plant
capacity, sources of financing, and other designs.
3. Stockholders
a. To decide on the sale of existing companies and if so, to set the selling
prices.
b. To find out if an investment in a project or an existing enterprise is still
attractive.
4. Lending institutions
a. To ascertain the advisability of lending to a new project or existing
undertaking.
b. To define the conditions to be imposed in order to safeguard the
position of the institution.
5. Government office
a. To determine if a project is entitled to government incentives.
b. To specify the level of incentives to be granted (if the office has this
discretion).
Limitations of Project Feasibility Study
A project feasibility study is primarily based on forecast of demand, prices,
new products coming in, technological developments, amendments to laws,
changes in tariff rates, sale revenues, cost and expenses, and available financing.
Such forecasts are based on available information, and on the opinion of the
party preparing the project study. Thus, the basic limitations of the study are as
follows:

Certain required information is usually not available.

The one preparing the study may not be professionally competent, and hence
the opinion he forms may be deficient. Professional competence is an opinion
on the project based on the analyses.
Even assuming that all the required data are available, and the one preparing
is competent, the study is still a forecast. The results of a forecast do not
usually tally with the actual events.
Utility of Project Studies. Notwithstanding the above inherent limitations (but
assuming that the one preparing the study is competent), the project study
still offers the advantage of consulting the most realistic basis of calculated
action to implement or stop a project. Hence, a project studies minimize the
profitability of business failures.

How to Register Your Business?


A new small enterprise has to be registered in various government agencies.
The complexity of registration varies according to the legal for of the business. A
single proprietorship is the easiest to register while corporation requires more
elaborate procedures.
Business registration is undertaken for the following purposes:
-

to establish the legal personality of the business


to obtain a Permit to Operate (PTO)
To comply with the requirements of special regulatory or promotional
programs of government.

There are two government agencies involved in the registration of business


for the first purpose depending on the type of organization. These are the Securities
and Exchange Commission (SEC) and the Bureau of Trade and Regulation and
Consumer Protection (BTRCP). SEC is responsible for registering partnerships and
corporations while BTRCP is responsible for single proprietorships.
The agencies involved in the issuance of permits to operate depend on the
location or area of operation and the nature of the business. All businesses are
required to obtain a PTO from the city or municipal government where the business
activity is to be undertaken. On the other hand, there are some business activities
that are regulated by law. A company that wishes to carry out a regulated business
activity is required to obtain a PTO from the agency that is mandated to regulate
the industry. For example, drug manufacturing and trading is being regulated by the
Bureau of Food and Drug (BFAD)
The two key agencies involved in implementing two major programs of the
government are the Bureau of Internal Revenue for revenue collection and the
Social Security System for the promotion of social justice. All business regardless of
the type of organization, location of operation or nature of business activity are
required to comply with the registration requirements of the BIR and the SSS.

The normal sequence of registering with the different government agencies is as


follows:
1. Securities and Exchange Commission of Bureau of Trade Regulation and
Consumer Protection
2. Bureau of internal Revenue
3. Local Government Unit
4. Social Security System
If the company will engage in a regulated business activity, a Permit to
Operate will have to be obtained first from the government agency mandated to
regulate the industry before registration with the Local Government Unit can be
done. If it plans to avail of incentives, it should apply with the Board of Investment
(BOI) first before proceeding with the SEC or BTRCP and the rest of the required
registrations with government agencies.

Registering with the Department Of Trade and Industry (DTI)


I.

Purpose of Licensing:

Republic Act3883 (approved on November 14, 1931) otherwise known as the


Business Names Law was enacted so that no two businesses (whether in the same
line or not) would have the same or similar names.
The Department of Trade and Industry (DTI), through its Bureau of Trade
Regulation and Consumer Protection (BTRCP) administers the registration of
business names.
II.

Who are required to register?

If you are a single proprietor and your business is using a name other than
your own name, that business name should be registered.
For partnerships and corporations, registration of business name with BTRCP
is optional. By registering with the Bureau, you are assured that no other entity can
legally use your business anywhere in the Philippines.
Register your business name at the DTI regional office where your business is
located (those from National Capital Region may register at the BTRCP office in
Makati;.. The following are the procedures to follow:
1. Pay a registration/ processing fee (P121.00 at 1992 rates) and secure
application form,

2. Fill up the form and file it with the DTI office, Attach original receipt, and,
3. With the form, file the following basic supporting documents:
For Single Proprietorship

For natural-born Filipinos, recent passport-sized photo.


For aliens, Photostat copy of Alien Certificate of Registration (ACR) for current
year (bring original for comparison); and the certificate of authority to engage
in business in the Philippines from the Board of Investments
For Partnership And Corporations

If fully-owned by Filipinos, Articles of Partnership or Incorporation and


Photostat copy of the SEC certificate of Registration.
If fully or partially owned by an alien, Articles of Partnership or Incorporation;
SEC Certificate of Registration; and Certificate of Authority to engage in business in
the Philippines from the BOI.
If owners are citizens by naturalization or election, Photostat copy of
naturalization certificate and oath of allegiance/affidavit of election or identification
card issued by the Commission on Immigration and Deportation (CID)
Those who are natural-born citizens but have names suggestive of foreign
nationality are often required to submit proof of citizenship like birth certificate or
voters ID.
III.

IV.

Requirements for Registration


a. Original Registration (New)
1. Individuals
- Accomplished Application Form
- Accomplished Index Card
- Two Passport Sized Photos of Owner
2. Entities
- Accomplished Application Form
- Accomplished Index Card
- Articles of Incorporation / Partnership
- SEC Certificate of Registration
b. Application for Renewal (for Individual Entities)
1. Application Form
2. Old Certificate of Registration

Estimated Time Processing:

Processing time normally takes four days from date of filing. During peak
season (usually 1st quarter) processing time is seven working days.

V.

Validity of Registration

The BTRCP Certificate of Registration is valid for a period of five (5) years.
Different procedures apply for provincial and metro manila applicants.
VI.

Accreditation

Accreditation is the legal recognition that a service and/or repair enterprise


and the technical personnel therein have complied with the requirements of law and
fulfilled the basic requirements of the industry for their operation and are therefore
reliable and competent to practice the trade.

The Manager and the Entrepreneur

Manager one who manage an organization


Entrepreneur a person who organize and manages any enterprises,
especially a business, usually with the considerable initiative and risk.

Difference
Entrepreneurs are go-getters. After they build a business, they are ready to push
the envelope once again.
Day-to-day operations bore them to a certain degree. Sure, they are interested in
continuing to grow their first company, but in their mind, the daily grind of business
is something to be delegated.
Entrepreneurs start companies because they want to change things. They expose
gaps in the market. They are always moving on to the next idea.
Once entrepreneurs build one profitable business, they say, "Watch me. I did this
once and now I'm going to do it again."
Managers believe in the business they built so much that they want to cultivate it
on a daily basis. Once their first business is profitable, they view it as their personal
responsibility to take it to the next level.

Once managers build one profitable business, they say, "We're profitable. Now
watch me take this worldwide."
Let's get one thing straight: both entrepreneurs and managers can be wildly
successful with their businesses.
It's not about one style being better than the other; it's about choosing the style
that's best for you. I'll give you an example using two of the most successful
business men of our time.
Richard Branson vs. Steve Jobs
Branson is an entrepreneur. His Virgin brand now encompasses over 400 different
businesses. 400! When he succeeds with one business idea, he is on to the next. In
fact, the following quote from Branson is one of the reasons I wrote this article.
"An entrepreneur is not a manager. An entrepreneur is someone who is great at
conceiving ideas, starting ideas, building ideas...and then handing them over to
really good managers to run the business."
Steve Jobs was a manager. Last month, Apple had the largest market cap of any
company in the S&P 500. Jobs built a $300+ billion dollar business by operating in a
manner very different from Branson.
Jobs was famously a micromanager and a perfectionist. Employees have noted him
calling out tiny details in design changes (all of which had to be approved by him),
grammatical and spelling errors in company documents, and so on. He would even
answer customer service complaints as the CEO on occasion.
You can be successful either way
Which are you?
Branson and Jobs have both been incredibly successful at building their businesses,
but they have done so in very different ways.
For some of us, being a manager is the path to success. For others, being an
entrepreneur is the best bet.
If you're an entrepreneur, then keep building businesses. If you're a manager, then
focus on a single subject matter and become brilliant. This is about finding your
strength.
Characteristic of Manager
1. Leadership
Good managers should be able to lead the employees they manage.
Leadership traits include emotional stability, enthusiasm and self-assurance,

according to the U.S. Small Business Administration. Managers display emotional


stability by not letting frustration and stress become overwhelming. Enthusiasm
means the manager is energetic and engaged. Managers display self-assurance by
not being overly affected by mistakes or failures.
2. Communication
Good managers must be able to communicate well. Managers communicate
to employees who report to them, other managers and clients. Communication may
be in person, over the phone or via email. Managers also facilitate communication
between employees who report to them. Good managers are also able to listen
effectively. They take the time to listen to what employees and customers have to
say and are able to communicate that they understood what was said and act
accordingly. Good managers are also aware of nonverbal communication. What they
do communicates as loudly as anything they say. Good managers are aware of the
example they set for the employees they manage.
3. Planning
Good managers are organized. They know what needs to be done and when it
needs to be done. They know and understand the goals of your business and what
the employees they supervise need to do to achieve that goal. If you give them a
task or goal, they are able to plan the steps involved in achieving that goal and
communicate the steps to the employees that need to carry those steps out.
Exactly what needs to be planned varies depending on the type of business.
Typically, good managers need to be able to plan out schedules, inventory and
departmental budgets.
4. Problem-Solving
Good managers are able to identify and solve problems. Whether its a
personnel issue, an upset customer or a difficult vendor, good managers can think
of creative solutions to problems, then execute the solutions. Good managers also
take responsibility for problems that arise rather than seeing them as someone
elses responsibility and take an ethical approach to problem-solving.
Roles and Function
Peter Druckers 1954 The Practice of Management was the first book written
about management as a profession and it as a unique role in organizations.
Druckers book remains a must-read book for students, aspiring managers, new
managers, and experienced executives.
Drucker's Five Functions
In his book, Drucker described the primary goal of a manager as make
people productive.

In order to do that, according to Drucker, they need to perform five functions:


1. Set objectives and establish the goals that employees need to reach.
2. Organize tasks, coordinate his/her allocation, and arrange the right roles for
the right people.
3. Motivate and communicate in order to mold staffers into cooperative teams
and to convey information continually up, down, and around the organization.
4. Establish targets and yardsticks that measure results and clarify outcomes to
ensure that the firm is moving in the right direction.
5. Develop people through finding, training and nurturing employees, a firms
primary resource.
Since Druckers classic book on management, there have been hundreds, if
not thousands, of books written about management and leadership, yet somehow,
50 years later, new and experienced managers still often lack a clear understanding
of their roles and essential functions.
All too often, they act like their jobs are just a glorified super individual
contributor (I was just promoted because Im the best at what we do), or even
worse, someone that micromanages and does work one to two levels below what
he/she is supposed to be doing.
The Ten Roles
1. Hire great people. It all starts here with great talent, the rest is easy. For
some reason, managers often take short-cuts when it comes to sourcing,
screening, and selection, or they overly rely on HR or recruiters, instead of
seeing selection as a critical part of his/her job.
2. Performance management. Performance management is a broad
category, and covers the people-management aspect of a managers job. It
includes clarifying and setting expectations and goals, coaching, measuring,
and
monitoring
employees
work,
addressing
performance
problems, providing feedback and recognition, coaching, developing, training,
and doing performance reviews. Depending on the number of direct reports a
manager has, this can take up the majority of a managers week.
3. Team development. In addition to individual employee management and
development, a manager is responsible for the development of a high
performing team. An interdependent team is usually more productive than a
group of individuals working independently.
4. Setting overall direction. A manager sets the long and short term direction
of the team or organization. This includes the vision, mission, goals, and
objectives in other words, strategy. Strategic managers spend a lot of time
thinking about mission and direction; always on the look-out for the need to
change priorities or reinvent. Of course, they involve others, including their
team members, but they take ultimate responsibilities for final decisions.

5. Being an important and supportive team member. Patrick Lencioini,


author of the bestselling book The Five Dysfunctions of a Team, says
that team number one should be your managers team, not your own. He
says, We all know that if there is any daylight between executive team
members, it ultimately results in unwinnable battles that those lower in the
organization are left to fight.
6. Doing unique work that no one else could or should do. Just about
every manager, no matter what level, has their own set of individual
contributor responsibilities. The higher the level, the fewer there are, but
even CEOs have to do things that just cannot be delegated. However,
managers should be very careful to make sure that they are really doing work
that only they can do, not work that they like to do, are good at, or dont trust
their team to do.
7. Manage resources. Managers have to make sure the team has the
resources they need to do they work, while at the same time making sure
that a team does not overspend or waste resources.
8. Improve processes and quality. While individual should take responsibility
for the quality of their own work, managers are usually in the best position to
see the overall workflow (the sum of the parts) and make adjustments and
improvements.
9. Self-development. Managers are not just responsible for the development
of their employees and teams they are responsible for their own
development as a manager as well. That includes taking on stretch,
developmental assignments, participating in management training, seeking
mentors, asking for feedback, and reading about management and
leadership. By doing so, they are role modeling continuous improvement.
10.
Communicate information. They make sure information is flowing
from above, sideways, and upwards.
Importance
Entrepreneurs are frequently thought of as national assets to be cultivated,
motivated and remunerated to the greatest possible extent.
Entrepreneurs can change the way we live and work. If successful, their innovations
may improve our standard of living. In short, in addition to creating wealth from
their entrepreneurial ventures, they also create jobs and the conditions for a
prosperous society.
The following are six reasons why entrepreneurs are important to the economy.
1. Entrepreneurs Create New Businesses
Path breaking offerings by entrepreneurs, in the form of new goods & services,
result in new employment, which can produce a cascading effect or virtuous circle in

the economy. The stimulation of related businesses or sectors that support the new
venture add to further economic development.
2. Entrepreneurs Add to National Income
Entrepreneurial ventures literally generate new wealth. Existing businesses may
remain confined to the scope of existing markets and may hit the glass ceiling in
terms of income. New and improved offerings, products or technologies from
entrepreneurs enable new markets to be developed and new wealth created.
3. Entrepreneurs Also Create Social Change
Through their unique offerings of new goods and services, entrepreneurs break
away from tradition and indirectly support freedom by reducing dependence on
obsolete systems and technologies. Overall, this results in an improved quality of
life, greater morale and economic freedom.
4. Community Development
Entrepreneurs regularly nurture entrepreneurial ventures by other like-minded
individuals. They also invest in community projects and provide financial support to
local charities. This enables further development beyond their own ventures.

Small Business Associations in the Philippines


Be aware of your prospects, legal rights, and privileges as small and medium
businessmen. Also be alert on the nuances of these terms. Even if you happen to be
a self-employed businessman jobbing out small orders for micro enterprises, you

deserve to join in lobbying for the interest of the Filipino small business sector.
Joining them can also open new markets for yourself since bigger businesses can
also job out smaller orders to you. Also, the more magnanimous businessmen can
also introduce their buyers to you. After all, it is not often that job orders can be
filled up by a single item. Business friends are needed to fill up big ones, and the
intelligent businessmen know that.
The following is a list of existing Filipino business associations:
Artificial Plant Manufacturers Association of the Philippines
Address: c/o Trees Company 45 Ligertad St., Mandaluyong, Manila
Composition: Artificial Plant Manufacturers
Association of Footwear Industries of the Philippines
Address: 56 J. de Jesus St., Caloocan City
Composition: Footwear Manufacturers
Association of Shrimp Producers and Exporters
Address: Domestic Insurance Bldg., Bonifacio Drive, Port Are, Manila
Composition: Shrimp Producers and Exporters
Ceramics Association of the Philippines
Address: c/oSaniwares Standard Bldg., 151 Paseo de Roxas, Makati
Composition: Ceramics Manufacturers and Exporters
Chamber of Furniture Industries of the Philippines
Address: 9/t, Strata 100 Bldg., Emerald Ave., Pasig
Composition: Furniture Manufacturers
Christmas Decors Producers and Exporters Association
Address: c/o Makbel Enterprises, 1617 Sisa St., Sampaloc, Manila
Composition: Christmas Dcor Producers and Exporters
Coconut Oil Refiners Association
Address: Muella de Binondo, manila
Composition: Coconut Oil Refiners

Coffee Exporters Association of the Philippines


Address: 191 Pasadena St., San Juan
Composition: Coffee Exporters
Board of investments
Industry and Investments Bldg. 385 Sen. Gil J. Puyat Ave., Makati, Metro manila
Development Bank of the Philippines
DBP Building Sen. Gil J. Puyat Ave., Makati
Department of Science and Technology
DOST Compound Gen. Santos Ave., Bicutan Taguig, Rizal
Department of Agriculture
DA Building, Eliptical Road, Diliman, Quezon City
University of the Philippines Institutes for Small- Scale Industries
E. Virata Hall, E. Jacinto St., UP Campus, Diliman, Quezon City
National Manpower and Youth Council
NMYC Complex East Service Road South Expressway, Taguig
Department of Local Government
PNCC Building EDSA cor. Reliance St., Mandaluyong City
Department of Environment and Natural Resources
DENR Building Visayas Ave., Diliman, Quezon City
Government Resource Institution for Entrepreneurs
Department of Trade and Industry
De and Industry Building
361 Se. Gil J. Puyat, Makati, Metro Manila
Technology and Livelihood Resource Center
TLRS Building Sen. Gil J. Puyat Ave., Makati, Metro Manila