CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Modern technology really changes the world and the people as

well, it is very visible that almost everyone wants everything to be one click away

even the food they eat. Fast food chains become so popular that you can almost

see it in every busy street, but in reality establishing or franchising a fast food

chain is too costly hence most of the new venture capitalist and entrepreneur

choose to focus on the most popular fast food --- the burger and Batangas City is

not an exemption.

In times where unemployment becomes one of the country’s major

problem, it is good to know that there are some who decide to enter the business

in order to earn profit and at the same time give jobs to others but entering and

staying in the industry is not that easy, you have to take risk, a calculated one, in

order to survive. One way to stay outlast is to check on how well a business

financial performance is doing.

According to a study published under Journal of Accounting and

Marketing, Financial performance measurement has been discussed as a key

priority in all economic decision making relating to public and private companies

to identify the difficult locations and areas of business. Continuous assessment of

performance will cause the emergence of timely and valuable documentary

and improving their activity. Understanding the important criteria for evaluating

the performance and its indicators is useful for managers, investors, financial

creditors such as banks. In order to address the goals of the organization,

performance measurement plays a crucial role. One of the vital parts in

assessing the financial performance is the manufacturing cost. Manufacturing

cost known as the cost to convert the raw materials into a finished product is

important to proper computation of selling price and inventory valuation and it is

also important for the computation of the cost of goods sold to arrive with a

correct income statement. According to Guerrero, the ability to make specific and

detailed identification and measurement of cost elements permits management

to reach decisions and to evaluate results with greater intelligence.

In conducting this study, the main objective of the researchers is to know if

the problems on manufacturing directly affect the financial performance.

Statement of the Problem

The objective of this study was to determine the common problems on

manufacturing and its effect on the perception of managers on the financial

performance of selected Burger Restaurants in Batangas City. It also discussed

that the preventive measures to alleviate the problems encountered by the

participants.

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 The study, however, sought to answer the following questions:

1. What is the profile of burger restaurants in terms of:

1.1 Form of business organization;

1.2 Years of operation; and

1.3 Number of Employees?

2. How often do the burger restaurants encounter problems in terms of:

2.1 Materials;

2.2 Labor; and

2.3 Manufacturing Overhead?

3. To what extent do the problems on manufacturing cost affect the financial

performance of burger restaurants?

4. Are the problems on manufacturing cost encountered have significant effects

on the financial performance of burger restaurants?

Conceptual Framework

The main objective of the study was to determine the common problems

on manufacturing and its effect on the perception of managers on the financial

performance of selected Burger Restaurants in Batangas City. In the course of

this study, the researchers analyzed the problems incurred in manufacturing and

gained insight from previous studies on the problems that affect the financial

performance of fast food chains.

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 Input Process Output
Common Problems
Common problems in Conducting on Manufacturing and
Manufacturing Survey Its Effect on the
Perception of
Materials Analysis of data Managers on the
Labor gathered from Financial
Overhead questionnaires Performance of
Selected Burger
Financial Performance Presentation of Restaurants in
Findings Batangas City

Figure 1.1: Conceptual Framework

As shown in the paradigm, the first box presents the input or the variables

considered in this study namely the common problems in manufacturing in terms

of materials, labor, and overhead and the financial performance of burger

restaurants in Batangas City. On the other hand, the second box presents the

processes that the variables will undergo in order to arrive on the output of the

common problems on manufacturing and its effect on the perception of

managers on the financial performance of selected burger restaurants in

Batangas City.

Hypothesis

The problems in manufacturing encountered by the management of the burger

restaurants have no significant effect on the financial performance of the burger

restaurants in Batangas City.

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Assumptions of the Study

The researchers, in the conduct of the study, assumed that:

1. The researchers could finish the thesis on or before the deadline.

relevant to the study.

researchers.
4. The study would help the researchers to know how fast-food restaurants

such as burger restaurants, operate and the importance of management in

handling problems encountered.

Scope, Delimitation, and Limitation of the Study

The study aims to find out if the problems on manufacturing have a

significant effect to the financial performance of burger restaurants and to find out

the problems that have a great impact in the operations of burger restaurants.

Hence, this study will focus on the profile of the burger restaurants only which

include those fast food chain or restaurants that serve burgers as their main

product and does not include franchise burger stall like Angels, Franks, Burger

Machine and Queen’s Burger; problems related to manufacturing; preventive

measures to alleviate the problem. This study includes prior periods in analysis at

least 5 years.

Participants in this research were the managers of the burger restaurant in

Batangas City. Though the researchers want to give the questionnaire to all the

burger restaurants in Batangas City, some of the participants refuse to answer.

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For this reason, this study only considered 15 burger restaurants in Batangas

City. The study is limited only on the common problems in manufacturing being

encountered thus the technical area and other aspects were not further studied

because the objective of the researchers was to determine the common

problems on manufacturing and its effect on the perception of managers on the

financial performance of selected Burger Restaurants to improve their financial

performance and mainly focused on this they will not able to give solutions to the

managers in other aspects of business operations.

This study will be limited from the result of the questionnaire, observation,

and information acquired from general references gathered by the researchers.

The researchers encounter an obstacle in making the survey because most of

them have limited time to entertain in the researchers.

Significance of the Study

This was designed to give benefits to the intended beneficiaries. It would

provide importance to the following:

For the workers of burger shop, this study will give them information on

how to be efficient to their assigned jobs for the smooth operation of the

business.

For the consumers, this study will have an understanding of the price of

the products given by the owners of burger shop. It will also help them to

purchase a product with quality that will satisfy their needs.

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 For the government agencies, this will guide them about the nature and

operation of burger shop for them to impose a reasonable amount of tax to be

paid by the burger shop.

For the policymakers, this study will enable them to develop and impose

proper regulations concerning tax and other business policies to be followed by

the burger shop.

For the researchers, they will have the knowledge on what problems were

encountered in manufacturing particularly by the burger shop business. This will

guide them on what to do in case of problem occur.

For future researchers, the study may serve as a tool in attaining reliable

knowledge concerning the subject of the study that would provide the

information, who may opt to conduct a similar study.

Lastly, this study will also help those institutions engaged in the

specialization online with burger management. They will be aware of the

problems encountered by this kind of business, therefore they can provide

possible guidelines.

Definition of Terms

The following terms are defined to help the readers understand more the

concept of the study.

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 Advertising. It is a paid non-personal type of promotion where a product

or idea is presented by an identified firm. It is also one of the widely-used

promotion that is done using broadcast media. (Balasan, 2014)

Burger Restaurant. It is a restaurant that specializes in making burgers

as their main product but it does not include franchise burger stall like Angels,

Franks, Burger Machine and Queen’s Burger.

Direct Materials. Also called raw materials, are those materials used in

the manufacturing process that become a significant part of the finished product.

the (Guerrero 2014-2015)

Direct Labor. It is the work of employees that can be physically and

directly associated with converting raw materials into finished goods. (Weygandt

2015)

Fast-food Restaurant. It is a specific type of restaurant that serves fast

food cuisine and has minimal table service.

(http://en.wikipidea.org/wiki/Fast_food_restau

rant)

Financial Performance. It is a subjective measure of how well a firm can

use assets from its primary mode of business and generate revenues.

(http://www.investopedia.com/terms/f/financialperformance.asp)

Management. It is a distinct process of planning, organizing, staffing,

directing, and controlling, performed to determine and accomplish stated

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objectives by the use of human being and other business resources. (Iñigo,

2011)

Manufacturing overhead. Manufacturing overhead includes all

manufacturing costs that cannot be classified as direct materials or direct labor

which are further classified as indirect materials, indirect labor, and other indirect

manufacturing costs. (Ballada 2015)

Profit. It is the money that is earned in trade or business after paying the

costs of producing and selling goods and services.

(https://dictionary.cambridge.org/dictionary/english/profit)

Sales. It involves most or many of the following activities, including

cultivating prospective buyers (or leads) in a market segment; conveying the

features, advantages, and benefits of a product or service to the lead; and

closing the sale. (or coming to agreement on pricing and services)

(https://managementhelp.org/marketing/advertising/defined.htm)