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EXECUTIVE SUMMARY

Lighthouse Enterprise is a company engaged in the manufacturing and selling of

lightboxes. In manufacturing and selling its main product, Lumos, its focus lies on quality,
affordability, and creativity. It is organized as a stock corporation that is 100% owned by the
incorporators.

Lumos serves as a decorative item that provides a unique and creative way to display
messages that can be customized to fit the users’ needs and preferences. It mainly functions
similarly to motivational posters but the message can be changed as many times as the user
wants. It can also function as an in-store advertising tool for modern cafes and similarly themed
small businesses. The acrylic plate can act as a whiteboard, where reminders and notes can be
written. The magnetic tile holders on the plate can also function as post it holders, stuck onto it
by magnets. Another customizable feature is its replaceable lights which gives users the option to
change the color of the lights according to their preference. The character tiles that come with it
are also customizable as they can be used to form any message that the user wants to display. In
total, a lightbox would cost P999. What sets Lumos apart from its competitors are its multi-
purpose aspect, customization aspect, and affordability.

Its primary target customers are above middle class young adults who identify themselves
as artistic and stylish. They can use the product as a decoration for their rooms to display
different messages such as motivational ones in a way that fits with their artsy vibe or aesthetic.
Secondary target customers include university students, small businesses such as cafes, and
churches. Geographically, the company will focus on Metro Manila since it is where most of its
target customers are located but it will also cater to customers nationwide through an online
store. Lumos will be sold through online selling, direct selling through a physical store or office
as well as door to door direct selling, and consignment. The company will also be participating in
bazaars in order to get brand exposure and reach more customers.

Much of the company’s advertising and promotion efforts will be focused on online
advertising methods such as the use of social media and websites as this is the most relevant
source of information for buyers or potential buyers nowadays. Together with online advertising
through Facebook, blogs, and OLX, the company will also advertise through print ads such as
flyers.

With regards to production, the lightbox itself would be subcontracted. It has been
guaranteed that 5 units per week would be produced. The letter tiles would be made by the
members. Since the bulk of the product would be subcontracted, there would be no need to buy
any tools or equipment, except some minimal supplies for the letter tile process. Production of
both products will start in the second week of January 2016.

In the future, the company aims to appeal to a wider range of customers by introducing
product developments that will make it more functional to medical practitioners and artists. Part
of the company’s future plans is introducing a separate acrylic plate that will serve as an add-on
to the lightbox. It is used to change the function of the lightbox from displaying messages to
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viewing X-rays or transferring and tracing drawings. This is planned to be executed in May
2016.

To facilitate the course of its day-to-day operations and help it achieve its corporate
objectives and plans, the company has defined specific policies regarding matters such as
receiving orders, billing customers, paying the supplier, and other matters essential to the
business. It has also set the required reports and forms to be submitted.

Lighthouse Enterprise will require a start-up capital of P33,000 which will be contributed
equally by the founders. Each member will each contribute P6,600, either from their own funds
or with parental support. Based on the results of the conducted market survey and market testing,
as well as seasonality factors and availability of materials, the company projects to produce and
sell 200 lightboxes for entire duration of the 10-month period. The projected net income to be
realized at the end of the 10-month period is P10,314.63. Based on the projected net income and
the initial investment, the company is expected to get a 31.66% return on its capital investments.

As with any other business, risks are expected to be present. Some of the risks the
company is expected to face include not having enough capacity and inconsistency in quality.
However, the company will strive to eliminate these risks as much as possible through the use of
different strategies such as employing quality control methods and continuous product
development.
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CHAPTER 1: MANAGEMENT AND ORGANIZATION

1.1 Company Name, Logo and Address

● Company Name: Lighthouse Enterprise

Lighthouse Enterprise’s name was inspired from the vision of the company to
give each of the firm’s client’s spaces, whether it be a store or a home, quality products
that showcase lighting features. This is exemplified by the firm’s first product, the
lightbox. While the firm may be small, the enthusiasm and strength that will be exhibited
through the designing, production, and selling of the products by its team will be a
reminder of the firm’s vision, like a lighthouse guiding ships in a fog. Hence, the name
Lighthouse Enterprise.

● Logo:

This logo is a literal and symbolic interpretation of the firm’s name. A picture of
a lighthouse is included for easy identification, which also stresses the fact that the firm’s
vision is to provide quality products that includes a lighting feature. The font used was
chosen because of its resemblance to the circuitry used in lighting features, a main focus
of the firm's products. The colors, black and white, were utilized to represent the humble
simplicity of the firm’s products, and the objective of shedding a little light in the client's
spaces.

● Address: 1144 Camachile St, Malate, Manila

This house, one of the group member’s family’s, was appointed as the firm’s
main office because of three main reasons: one, its proximity to the campus; two, the
relative ease in finding it, should stakeholders want to have meetings or potential buyers
want to examine the products; three, the availability of enough space to produce the
products, and to entertain stakeholders, if need be. (*See Appendix A)
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1.2 Vision

“To be the top manufacturing company of lightboxes providing quality products to

the client’s room, house, office, and other spaces.”

In the long run, the firm wants to be known as a manufacturer of quality

lightboxes. Moreover, it aims to be recognized as a firm that rivals existing companies
that sell similar products. Additionally, the firm aspires to be able to satisfy the clients’
expectations.

1.3 Mission

“To supply customizable, affordable, and quality lightboxes that can enhance living
experience through creativity and usability.”

The firm aims to produce quality lightboxes, and plans to further enhance it
through creativity and usability upgrades, while maintaining its affordability. Through
this continuous improvement process, the clients can expect an increase in satisfaction.

1.4 Objectives

1.4.1Corporate Objectives

● To develop products that meet the preferences of the client.

● To utilize sustainable resources effectively.
● To ensure quality in every lightbox produced.
● To perform to the highest of standards in terms of customer service.
● To expand and reach the national market.

1.4.2 Functional Objectives

Marketing Department

● To achieve sales of at least 200 units for the whole period of the
practicum.
● To participate in two bazaars for the period of the practicum.

Production Department

● To produce an initial output of 10 lightboxes.

● To produce high quality lightboxes with the subcontractor for the
remaining 9 months of operations.

Finance Department

● To achieve break-even during the period of the practicum.

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Human Resources Department

● To participate in three corporate social responsibility activities for the 10

months in partnership with Young Entrepreneur’s Society.

1.5 Board of Directors

Name Address

Chua, Nicole Angelica Rm. 204, Moraga Mansion, Plaza Moraga St, Binondo, Manila

Go, Irvinne Heather 396 F Roxas St. 10th Ave. Caloocan City

Inocencio, Mary Carlmine 107 Shaw Blvd. Oranbo, Pasig City

Miguel, Christimarie 790 Ocampo Street, Manila, 1000 Metro Manila Grand Towers
2 Unit 3316

Raymundo, Danielle 1591 Camino de la Fe St. Guadalupe Nuevo, Makati City

 Page |6

1.6 Management Team and Compensation

1.6.1 Duties and Responsibilities

WEEKLY
POSITION DUTIES AND RESPONSIBILITIES
PAY

Board of Directors ● Assesses the overall direction and strategy of the

business.
● Directs the company’s affairs.
● Oversees the management and operation of the
corporation.
● Creates policies and conducts the ordinary business
of the corporation .
● Controls and holds all property of the corporation.
● Responsible for matters involving exercise of
judgment and discretion for the organization.

Chairman of the ● Manages and provides leadership to the board of P30.00

Board - directors.
Nicole Chua ● Presides the meetings of the directors and the
stockholders.

President - ● Oversees, coordinates, directs and controls all the P30.00

Chua, Nicole activities of the corporation.
Angelica ● Initiates, develops and finalizes corporate objectives
and policies.
● Supervises and manages all business affairs and
property of the corporation.
● Ensures that the administrative and operational
policies of the corporation are carried out under his
supervision and control.
● Appoints, removes, suspends, or disciplines
employees of the corporation as prescribed by law.
● Represents the corporation at all functions and
proceedings.
● Executes in behalf of the corporation all contracts,
agreements and other instruments affecting the
interest of the corporation.
● Signs stock certificates.
● Is one of the signatories of the corporation’s bank
account.
● Prepares and submits president report to the adviser.
● Makes sure the company is running well, with
smooth efficient service that meets the expectations
 Page |7

and needs of customers and clients.

● Ensures the submission of the other department’s
monthly reports to the adviser.
● Directs and evaluates the work of other executive
leaders.

Corporate ● In charge of registration and dissolution of the

Secretary - corporation.
Inocencio, Mary ● Keeps records of books showing the details required
Carlmine by law with respect to the stock certificate
corporation, including ledgers and transfer books
showing all shares of the corporation subscribed and
issued.
● Notifies board members and stockholders of
meetings.
● Takes down minutes of all the board meetings as
well as the attendance of every board member.
● Informs every member regarding regular meetings.
● Makes proper entries of the votes, resolutions, and
proceedings of the shareholders and directors in the
management of the corporation and all other matters
required to be entered into records.

Corporate ● Renders financial reports to the board of directors.

Treasurer - ● Co-signs withdrawals.
Raymundo, ● Ensures that cash flow is adequate .
Danielle ● Makes decision regarding funding options of the
company and other financial issues.

Marketing and ● Is in charge of overall marketing operations. P25.00

Sales Head - ● Coordinates with sales officer and production
Inocencio, Mary manager regarding the number of units needed to be
Carlmine produced and sold.
● Develops marketing strategies to further improve the
sales performance of the company.
● Prepares monthly reports and submits to the
president.
● Looks for other opportunities in the market.
● Evaluates the performance of the sales officer.
● Oversees brand development, public relations,
competitive intelligence and customer feedback.
● Manages the sales administration function.
● Responsible for developing a business plan covering
sales, revenue, and expense controls, meeting agreed
targets, and promoting the organisation’s presence
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throughout Manila.
● Performs other related functions as may be assigned.

Production and ● Is in charge of overall production operations. P25.00

Research & ● Directs and supervises all production operations.
Development Head ● Is in charge of repairs and maintenance of all plant
- Go, Irvinne machineries and equipment.
Heather ● Maintains proper working conditions of workers in
the plant site.
● Ensures that workers are performing assigned tasks
during production hours.
● Is in charge of overall quality control.
● Coordinates with marketing manager regarding the
number of units to produced.
● Ensures that tools are complete.
● Coordinates with finance manager as to inventory
valuation.
● Prepares the monthly production reports and submits
to the president.
● Research and analyze the products other businesses
are creating, as well as the new trends within the
industry.
● Performs other related functions as may be assigned.

Human Resource & ● Is responsible for administrative and human resource P25.00
Administration department and planning.
Head - Miguel, ● Defines the job description of each position.
Christimarie ● Conducts recruitments .
● Develops policies and duties for workers to follow.
● Resolves conflicts in the organization.
● Motivates workers and officers to work efficiently
and effectively.
● Listens to employee complaints and suggestions.
● Records the attendance of workers during
production days.
● Collects fines for penalties.
● Prepares the payroll and distributes salaries.
● Turnovers collected fines to the cashier.
● Coordinates with the cashier regarding payroll and
salary deduction.
● Prepares and submits monthly and attendance
reports to the president.
● Evaluates performance of the workers.
● Provides policies, procedures, and people-friendly
guidelines and support for the employees.
● Performs other related functions as may be assigned.
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Finance Head - ● Is in charge of financial planning and analysis. P25.00

Raymundo, ● Reviews the payroll sheets.
Danielle ● Prepares the budget.
● Informs the various departments of their financial
budget performance.
● Reviews the financial reports prepared by the
accountant.
● Submits reviewed financial reports to the president.
● Coordinates with production manager concerning
inventory valuation.
● Performs other related functions as may be assigned.

(*See Appendix C for basis)

1.6.2 Organizational Charts

1.7 Forms of Ownership, Capitalization, and Incentives

1.7.1 Form of Ownership

This simulated company would be a stock corporation considering the number of

members in the group. A corporation is considered as an artificial being that is created
and operated by law and has the right of succession. Also, a corporation is a separate
legal entity which is why the stockholders will not be personally liable.
 P a g e | 10

1.7.2 Form of Capitalization

The corporation will be issuing 26,400 shares and each with a par value of P 5.00,
thus having P132,000 as the total amount of authorized capital stock. This amount will
cover the raw materials expense, rent, purchases and other expenses for the 10 month
period of operation. The breakdown will be in Chapter 2. The paid-up capital will be
enough for the initial startup. The corporation is 100% owned by the incorporators.

1.7.3 Form of Incentives

Incentives will not apply in the corporation.

Name Authorized No. of Shares Amount Amount Paid

Capital stock Subscribed Subscribed

Chua, Nicole 5280 shares 1320 shares P 6 ,600 P 6 ,600

Angelica
Go, Irvinne 5280 shares 1320 shares 6 ,600 6 ,600
Heather
Inocencio, Mary 5280 shares 1320 shares 6 ,600 6 ,600
Carlmine
Miguel, 5280 shares 1320 shares 6 ,600 6 ,600
Christimarie
Raymundo, 5280 shares 1320 shares 6 ,600 6 ,600
Danielle

TOTAL 26,400 shares 6,600 shares P 33, 000 P 33, 000

 P a g e | 11

1.8 Infrastructure (External Management Support)

To be able to fully operate the company, a lawyer for the contracts and legal advice, and
an accountant for Financial Statements and auditing, will be hired. (* See Appendix C for basis of
pay, and Appendix D for resumes)

NAME POSITION PAY

JAMMY KATE S. LAWYER Free consultation

REMULLA, J.D., M.B.A. ● Consulting and (The law firm does not charge
handling all legal consultation fee)
processes of the
company.
● Guiding managers and
ensuring compliance
with rules and
regulations.
● Drafting and
administering all
contracts.
● Preparing and filing
government reports.

ELENA R. RAYMUNDO ACCOUNTANT P599/consultation

● Preparing, examining
and auditing accounts
records, financial
statements and other
financial reports to
assess accuracy,
completeness and
conformance to
reporting and
procedural standards.
● Makes the monthly
financial statements at
the end of each month.
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1.9 Contracts and Other Forms of Agreement

1.9.1 Articles of Incorporation

This is the document that contains the general information about the corporation,
such as its name and purpose. It also states all other provisions required by the
Corporation Code, as well as necessary matters provided by the incorporators. This
includes the actual article, by-laws, acknowledgement, and the treasurer’s affidavit. (*See
Appendix B)

1.9.2 Full-Time Permanent Employment Contract

This is where the employers put clearly the outline of rights, responsibilities, and
obligations of the staff during the work period. It includes information about the job
description and duties, probationary periods, duties of confidentiality, termination
procedures, and information about both the employee and employer.
(*See Appendix E)

1.9.3 Subcontract Agreement

This is the document between the subcontractor and the owners that states the
agreement regarding the number of output to be made and delivered for the whole 10
months of operation and other matters concerning the production of the lightbox as well
as the packaging. (*See Appendix E)
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CHAPTER 2: PRODUCT/SERVICE

2.1 Purpose of the Product/Service

2.2.1 Main Purpose

The main purpose of the light box is to send a message from the owner to himself
in a unique and creative way that can be changed to his needs and preferences. It is
similar to a motivational poster but in a light box one can change the message as many
times as he wants. It mainly functions as a decorative item that can be displayed in
rooms, houses, offices, and other spaces.

2.2.2 Additional Uses

It can also act as an advertising tool for modern cafes and such to announce their
new product item. It may also be used as a reminder board for individuals, since the
acrylic plate would be whiteboard marker writable. Additionally, post-its can be stuck
onto the magnetic strips with magnets, for reminders as well.

2.2.3 Reason for Choice of Product

The light box is customizable, which allows it to serve several purposes and can
therefore be used by different kinds of people. Based on our market survey, about 60%
use motivational posters, which corresponds to our main use. Based on observation from
modern and trendy cafes, there are a number who use similar products to announce new
items. Additionally, the item is also something that the group can effectively execute
given our limited resources, since it is relatively easy and not too expensive to
manufacture.

2.2 Product’s Unique Features

The light box has the following features:

1. Replaceable acrylic plate

2. Interchangeable Lights, which allows users to change the light itself or its color.
3. On-Off button, which allows the product to be turned on and off.
4. Fuse switch, which acts as a safety precaution from electrical problems.
5. Letter Tiles, which allows users to create messages.
6. Stand, which enables the product to stand alone.
7. Hooks, which allows the product to be hung.
8. Metallic Slots, which enables the use of magnets.
9. Writable acrylic plate, which allows the face of the box to be written on with a
whiteboard marker.
 P a g e | 14

2.2.1 Basic Technical Description of the Product

The light box contains two small fluorescent lamps, an on-off button, a fuse
switch, and a power cord. On its face, there would be metallic placeholders, which allow
the letter tiles to be slid in. Two hooks attached to the product would allow the user to
hang it. A logo will be on it, too. Two accessories come with the product- the letter tiles
and the stand.

PART MEASUREMENT DESCRIPTION

Assembled Light box 11.5 ×15 inches This is the main product.
Stand 1 piece This is an accessory to the
product so that it can stand
alone.
Letter Tiles 2.05 x 2.91 inches This is an accessory to the
product to allow user to place
messages.

2.2.2 Basic Technical Description of Packaging

For the light box, there would be two kinds of packaging: a plastic bag as the
internal one, and a box as an external one. This is to avoid the item from being scratched
once it is in the client's possession. The same also applies to the accessory stand, but in a
smaller size.The letter tiles would be placed inside a small plastic box. To allow the
buyer to carry the whole package, a large paper bag would be used.

For the labeling, a sticker with the logo would be sticked onto the boxes, and the
paper bag. A brochure packed with the lightbox inside contains the company name and
logo, product name, a brief product description, product specifics including the
accessories, recommended uses, and contact information.

PART MEASUREMENT DESCRIPTION

Box 1 piece This is the outer packaging of the product.

Big Plastic Bag 1 piece This is the inner cover for the product.

Paper Bag 1 piece This is to allow customer to carry the product.

Small Box 1 piece This is the outer packaging for the stand.

Small Plastic Bag 1 piece This is the inner cover for the stand

Plastic box 1 piece This is the packaging for the letter tiles.
 P a g e | 15

2.2.3 Unique Selling Features

The main selling point of the light box is its affordability, as the firm aims to sell
the item lower than the competition’s while still earning. Existing light boxes in the local
market are being sold at P3,000 or P6,000, depending on the size.

The secondary selling point is the the customization aspect. The letter tiles allow
the users to display any message that they would like. The lights are also interchangeable
so the users can choose the color that they prefer.

The third selling point is its multi-purpose aspect. It can be used for individuals as
home decor and for businesses as advertising. Not only that, the acrylic plate of the light
box can be written on with a whiteboard marker, whether for individual reminders or
business offerings. It can also be used to hold important reminders because of the
metallic slots.

2.3 Stage of Development

Stage Description Level of Completion

Idea Generation Coming up with concept. Done
Screening the Idea Concept evaluation by panel. Done
Concept Research is still ongoing on ways to improve Currently being
Development the product, and the potential outcomes of executed
going through with the product, like the
financial and operations aspects.
Product The design of the product is currently under Currently being
Development work and research on the most cost effective executed
way to produce it.
Commercialization This would come after finalizing the design, Not yet being done
production, and business plan.

2.4 Future Research and Development

Once the company reaches the net profit, the company will invest in plans to expand the
product line and enlarge the market share. The proposed item would be an additional acrylic
plate with the metallic slot that could serve as an x-ray viewer or a tracing tool for artists.

The budget for the Research and Development would come from the profits that the
company would yield.
 P a g e | 16

2.5 Related Products and Spin-Offs

Related products and spin-offs can be done once the business is actually registered. There
are various products that the company can spin-off from the materials used in making the light
box. Leftover plastic sheets can be used to make plastic containers. Additional letters and special
character pieces can be made into nameplates by attaching it to leftover frames or to the plastic
sheets, and can also be packaged like the fridge magnet poetry kits, which contains words that
can be formed into poems.

2.6 Product Limitations

The following are the product limitations associated with light box. Since it involves
circuitry, toddlers and children should have supervision. The product should avoid contact with
water, and is not fireproof. The product is fragile in terms of the lights inside it, therefore careful
handling should be observed. The product can be used continuously throughout the day, but it
should be used with precaution.

2.7 Product Liability to Customers and/or Society

The production of this product is not harmful to the environment, as every component is
recyclable, and all the waste or excess materials will be segregated and sold to a junk shop. It
comes with necessary precautions and instructions that would be written on the brochure that is
included in the packaging, which also helps ensure proper use of the items for the users. There
will be a product testing before the customers purchase the item to ensure that it is working
correctly. The items are not very prone to accidents, save from short circuiting lights, so there is
not much concern when it comes to liability.

2.8 Production Process

2.8.1 The Production Process

The production of Lumos Light box shall be handled by a subcontractor, IRMAX

ENTERPRISE. The group shall provide the raw materials as well as the design concepts
for the production of the product. The subcontractor shall be in charge of the bulk of the
production process except for: the designing of the product, hand and visual inspection,
and buying of raw materials. The subcontractor has the maximum capacity of 40 units per
month. The quality of workmanship was assessed by the group with the following factors
in mind, minimal flaws, and functionality. Time constraints with the proponent’s
schedule and plant capacity were also taken into account when deciding whether or not to
subcontract. Time constraints and plant capacity constraints are shown in computation
form in 2.9.5 of this chapter.

In instances of delay, poor quality, or insufficient supply the company will make
use of a secondary subcontractor. The secondary subcontractor shall have all the same
duties and responsibilities as the primary subcontractor. The capacities of the
subcontractors were predicted by use of past volumes of orders they have received and
produced. The proponents have opted to utilize a subcontractor due to time constraints
 P a g e | 17

and the inability to produce output efficiently with as of standard quality the company
desires.

2.8.1.1 Step by Step Process

Process Component Time in

Minute

A. Put necessary marks on the stainless case Main Product 10

and on acrylic plate.

B. Drill necessary holes to stainless case and Main Product 5

plate.

C. Attach the 4 metallic tile placeholders Main Product 6

basing from the marks using book binding
tape.

D. Attach the metal hangers to the back using Main Product 3

the small screws, while following the marks
made.

E. Attach the Stand placeholder with Main Product 5

screws while following the marks made.

F. Attach the fuse switch, push button and Main Product 3

grommet to the holes made earlier.

G. Insert in power cord through the Main Product 2

grommet.

H. Connect the power cord to button and Main Product 13

switch to control the fluorescent lamps using
flat cord with electrical tape.

I. Check if lights are working. Main Product 6

J. Place the lights to its corresponding Main Product 3

mark with double foam adhesive tape.

K. Use twistee wire tie to keep cords or Main Product 2

wires from interfering with the light.

L. Use masking tape to keep them in place. Main Product 1

M. Screw in plate to the case using the 4 big Main Product 3

screws.

N. Stick logo to the product. Main Product 1

 P a g e | 18

O. Put the light box in large plastic bag. Main Product 2

P. Stick logo to large box and close. Main Product 2

Q. Put stand in small plastic bag. Accessory - 1

stand

R. Put it in small box and close. Accessory – 2

stand

S. Cut PVC sheet Accessory – 8

Letter Tiles

T. Stick character stickers. Accessory – 7

Letter Tiles

U. Check if letter tiles are complete. Accessory – 5

Letter Tiles

V. Put it in the plastic box. Accessory – 1

Letter Tiles

W. Stick logo to paper bag. Final Packaging 1

X. Put all 3 boxes inside the paper bag. Final Packaging 3

TOTAL 95 minutes
 P a g e | 19

2.8.1.1 Production Flowchart

2.8.2 Labor Requirements

2.8.2.1 Company Made

For the first month of the company’s operations, the inventory shall be
made by the company’s proponents in order to develop an initial design as well as
familiarize the proponents with the production process. The group will utilize the
job shop system where each proponent will make product individually, the one
who knows the process the most as the worker for the first month. As the
production head, Go, Irvinne knows the process the most, therefore she could the
product fastest, seen in the time motion studies. This move is made to make the
number of products made in the first month lessen, because it resulted to
inconsistent and obvious mistakes. This would lessen costs and losses.
 P a g e | 20

2.8.2.1.1 First Month of Production

Name Steps

Go, Irvinne Heather A, B, C, D, E, F, G, H, I, J, K, L, M,

N, O, P, Q, R, S, T, U, V, W, X

2.8.2.2 Subcontractor

After the first month of operation the proponents will make use of the
subcontractor, for they are able to produce a consistent standard of. The reason for
this that if the group would continue making the product there would be lack of
consistency in the quality as they are not experts in this. Generally, this move will
help the group produce more consistent light boxes.

2.8.3 Production Schedule

2.8.3.1 Company Made

Production would take place every week, on Saturdays. Eight hours would
be allotted to the actual manufacturing, while 32 hours would go to marketing,
management, and administrating the firm done in the DLSU’s Incubator, for a
total of 40 hours a week.

Time Activity
7:30 AM-8:00 AM Setting Up
8:00 AM-10:00 AM Production
10:00 AM-10:15 AM Snack
10:15 AM-12:15 PM Production
12:15 PM-1:15 PM Lunch Break
1:15 PM-3:15 PM Production
3:15 PM-3:30 PM Snack
3:30 PM-5:30 PM Production
5:30 PM-6:00 PM Clean up
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2.8.3.2 Subcontractor

The subcontractor can allot more time in the production of the product and
make the product faster. This led the group to opt to use the subcontractor. The
number of production output will be based on the projected sales per month. The
subcontractor will start producing by the second month of 2016.

2.8.4 Production Cost

2.8.4.1 Company Made

The cost of production at the maximum capacity on a weekly basis would

be as follows:

Per unit Total 1 week

(5 units)

Direct Materials

4 Tile Placeholders P28.00 P140.00

Metal Stand 34.00 170.00

Stand Place Holder 6.00 30.00

2 Metal Hangers 3.00 15.00

Power Cord with Plug 15.00 75.00

Fuse Holder with Fuse 12.00 60.00

Push Button Switch 10.00 50.00

Stainless Case 50.00 250.00

Translucent Acrylic Diffuser 80.00 400.00

Grommet 3.00 15.00

PVC Sheet 10.00 50.00

Letter Stickers 60.00 300.00

Total Direct Materials P311.00 P1555.00

Indirect Materials

Carbon Box for Light box P20.00 P100.00

 P a g e | 22

Carbon Box for Stand 40.00 200.00

Plastic Bag for Light box 0.60 3.00

Plastic Bag for Stand 0.30 1.50

Paper Bag 24.00 120.00

Plastic Box for Tiles 4.00 20.00

4 Stainless Big Screws 10.00 50.00

8 Stainless Small Screws 5.00 25.00

Masking Tape 0.40 2.00

Twistee Wire Tie 0.20 1.00

Double Foam Adhesive Tape 5.00 25.00

Flat Cord 5.00 25.00

Nylon Ties 6.00 30.00

Book Binding Tape 1.00 5.00

2 Fluorescent Lamp 120.00 600.00

Logo Sticker 3.00 15.00

Total Indirect Materials P244.50 P1222.50

Direct Labor

1 worker P16.00 P80.00

Total Direct Labor P16.00 P80.00

Indirect Labor

1 Production Head P5.00 P25.00

Total Indirect labor P5.00 P25.00

Factory Overhead
 P a g e | 23

Production Rent 7.5.00 37.50

Production Equipment and Tool 100.00 500.00

Rent

Total P107.50 P537.50

TOTAL P684.00 P3420.00

2.8.4.2 Subcontractor

The cost of production of the subcontractor matching the maximum

capacity the proponents will be able to produce at a weekly basis would be as
follows:

Per unit Total 1 week

(5 units)

Direct Materials

4 Tile Placeholders P 28.00 P 140.00

Metal Stand 34.00 170.00

Stand Place Holder 6.00 30.00

2 Metal Hangers 3.00 15.00

Power Cord with Plug 15.00 75.00

Fuse Holder with Fuse 12.00 60.00

Push Button Switch 10.00 50.00

Stainless Case 50.00 250.00

Translucent Acrylic Diffuser 80.00 400.00

Grommet 3.00 15.00

PVC Sheet 10.00 50.00

Letter Stickers 60.00 300.00

Total Direct Materials P 311.00 P 1,555.00

 P a g e | 24

Indirect Materials

Carbon Box for Light box P 40.00 P 200.00

Carbon Box for Stand 20.00 100.00

Plastic Bag for Light box 0.60 3.00

Plastic Bag for Stand 0.30 1.5.00

Paper Bag 24.00 120.00

Plastic Box for Tiles 4.00 20.00

4 Stainless Big Screws 10.00 50.00

8 Stainless Small Screws 5.00 25.00

Masking Tape 0.40 2.00

Twistee Wire Tie 0.20 1.00

Double Foam Adhesive 5.00 25.00

Tape

Flat Cord 5.00 25.00

Nylon Ties 6.00 30.00

Book Binding Tape 1.00 5.00

2 Fluorescent Lamp 120.00 600.00

Logo Sticker 3.00 15.00

Total Indirect Materials P244.50 P1,222.50

Direct Labor

Subcontractor's Fee P200.00 P1,000.00

Total Direct Labor P200.00 P1,000.00

Indirect Labor

1 Production Head P5.00 P25.00

 P a g e | 25

Total Indirect labor P5.00 P25.00

Factory Overhead

Production Rent P7.50 P37.50

Total P7.50 P37.50

TOTAL P768.00 P3,840.00

2.8.5 Production Forecast

Month Company Made Subcontractor

January (2 weeks of 10 0
production)

February 0 20

March 0 20

April 0 20

May 0 25

June 0 20

July 0 20

August 0 20

September 0 20

October 0 25

Total 10 190

Company Made Computations:

Average Production Time per Proponent: 480 Minutes / 95 Minutes = 5.05 Round down
= 5 Unit per Week.
 P a g e | 26

Subcontractor Computations:

Forecast values made for the subcontractor are based on forecasted sales, while
considering the capacity of it to produce the product. It will be discussed in chapter 3.

2.9 Facilities, Machinery, and Equipment

The facility needed is a room with adequate space for the proper execution of all the steps
involved in the entire production process. There will be no machineries and equipment needed to
create the product.

2.9.1 Plant Location

The main office and assembly site will be located at 1144 Camachile St., Malate,
Manila. (*See Appendix A for actual location)

2.9.2 Building Facilities and Utilities

One room will be used for production, which contains tables and chairs where the
units will be assembled, a part of that room would be storage space for the finished
goods. Once subcontracting starts, it will solely serve as storage.

The other room will serve as a small office space and there will also be a comfort
room. The electricity, water, and telephone bills will be included in the dues.

2.9.3 Plant Layout

This floor plan is for the second floor of the house in Camachile St. The company
has been permitted to use the unoccupied bedroom 2, as the main production site, and the
storage area. The office space would be in the also unoccupied bedroom 1. The group has
also been given permission to use the bathrooms, the kitchen, the dining room, and the
living room, due to the fact that no one is home during the day, and during the expected
production hours. (*See Appendix J for Illustration.)
 P a g e | 27

2.9.4 Equipment and Tools

During the first month of production which is 2 weeks, the company will be
renting the tools and equipment from its founders. After that the company will cease
renting, as the subcontractor have already the tools and equipment needed. The following
are the tools and Equipment:

Tools and Equipment Use Supplier

Electric Screwdriver To screw in screws Rented from Founders

Electric Drill To put in necessary holes Rented from Founders

Cutter To cut PVC Sheet Rented from Founders

Pliers To connect wires and cords Rented from Founders

2.10 Suppliers

MATERIAL Supplier 1 Supplier 2

Book Binding Tape S-one Office Warehouse

Carbon Box for Light box HITOX Trading Divisoria

Carbon Box for Stand HITOX Trading Divisoria

Double Foam Adhesive Tape S-one Office Warehouse

Flat Cord Divisoria CD-R King

Fluorescent Lamp Divisoria CD-R King

Fuse Holder with Fuse Divisoria CD-R King

Gromet Divisoria CD-R King

Letter Stickers Eastwind Nextgen

Advertising

Logo Sticker Eastwind Nextgen

Advertising

Masking Tape S-one Office Warehouse

Metal Hangers Helix Fasteners

Metal Stand HITOX Trading Primark Tooling

 P a g e | 28

Nylon Ties S-one CD-R King

Paper Bag Master Cedie Office Warehouse

Plastic Bag for Light box Divisoria Office Warehouse

Plastic Bag for Stand Divisoria Office Warehouse

Plastic Box for Tiles Divisoria Office Warehouse

Power Cord with Plug Divisoria CD-R King

Push Button Switch Divisoria CD-R King

PVC Sheet AQM Office Warehouse

Stainless Big Screws Helix Fasteners

Stainless Case Divisoria Cytronix Trading

Stainless Small Screws Helix Fasteners

Stand Place Holder HITOX Trading Cytronix Trading

Tile Placeholders HITOX Trading T and S Laser

Solutions

Translucent Acrylic Diffuser AQM Divisoria

Twistee Wire Tie Divisoria CD-R King

Should there be any change in the primary supplier’s price that would exceed the
budget or availability of the materials, there would be two back up suppliers that can
readily supply the materials at the same price.

2.11 Environmental Factors

The company expects that minimal impact would be made on the environment. This is
due to the production process that consumes electricity only, and the would-be waste or excess
would be from recyclable materials, and as long as it is segregated properly it would pose no
harm. For example, the excess PVC sheet and metallic sheet would be put together in respective
bags and sold to a junk shop.

2.12 Government Approval

The group would be opting for the simulation, so the permits would be coming from the
school.
 P a g e | 29

2.13 Corporate Social Responsibility

The company’s Corporate Social Responsibility will be to joining the socio-civic

activities of the YES organization. It will be done at least once a term.
 P a g e | 30

CHAPTER 3: MARKETING PLAN

3.1 Industry Profile

Under the 1994 Philippine Standard Industrial Classification, as amended, the company
falls under Section D, Manufacturing, Division 25, the manufacture of rubber and plastic
products. Specifically, the manufacture of plastic products for industrial, office, and school
supplies.

Additionally, the company may also be considered as part of Section G, Wholesale and
Retail Trade, Division 52, retail trade, except of motor vehicles and motorcycles, repair of
personal and household goods, specifically under other retail trade of new goods in specialized
stores (excluding computers computer peripheral equipment and software).

These classifications apply to the company, because the lightbox is majorly made of
acrylic and PVC, both plastics, that may be used in small businesses and in households as well.
Moreover, the company falls under retail, since the office would serve as the selling area, and the
items would be sold per unit.

3.1.1 Current Size

According to the latest final results of the Philippine Statistics Authority 2009
Annual Survey of Philippine Business and Industry (ASPBI) Wholesale and Retail Trade,
from the 59,398 establishments that fall under the category, other retail trade of new
goods in specialized store (excluding computers and non-customized computer software)
comprised 30,364 establishments, or over 51.1% of the industry. (PSA, 2009)

3.1.2 Growth Potential

From the same survey mentioned above, it has been forecasted that the other retail
trade of new goods in specialized store, that had 30,364 establishments in 2009, would
only keep on growing. This is due to higher specialization, and emerging market
demands. (PSA, 2009)

3.1.3 Geographic Locations

The aforementioned survey was conducted throughout the nation, and it was
found out that there was a concentration of the industry in Metro Manila. There are a lot
of retailers that are selling plastic products, but the items themselves vary, meaning they
may be school supplies or storage boxes. Not many retailers sell lightboxes, at least there
is no exact same that is being sold, but there are a sizeable number of a firms that make
signages and specialize in advertising materials around the area. (PSA, 2009)
 P a g e | 31

3.1.4 Industry Trends

Although the industry that the company is a part of is the plastic manufacturing
and retail industry, the company has a more specific version in view. This would be the
home decor and advertising point of views. More specifically, the firm is concerned with
the fabrication of signages. For these two points, trends are not that changeable, but they
do evolve over the years.

The home market has been transformed from a largely functional to a fashion
business, thus allowing consumers to dress and decorate their houses like they dress and
accessorize themselves. Consumers are wanting products that reflect their tastes, values
and sensibilities. This is evidenced by how people In the past few years consumers spent
more money on home furnishings than they did on clothes. Consumers are not just
striving to make their homes more 'beautiful,' rather they are seeking decorative items
that can positively impact the mood and emotional climate of their home.

Trends in the advertising industry have more and more leaned towards the internet
and digital aspects, since it can reach countless more potential clients all around the
world. But physical advertising is also an important factor, since not everyone has
internet access. One physical advertising trends according to an analysis done by Vend, a
POS company, is the emphasis on customer experience. Meaning, everything from the
creation to the delivery of use of the item should leave the customer satisfied. Creative
advertisements are a part of this, as a way to grab attention and cultivate a better
experience for the customer. Another trend is integrating both the physical and digital.
For instance, a website may exist for a certain product, complemented with physical
displays.

3.1.5 Seasonality Factors

Based on the industry, there is no seasonality, since it mostly caters to businesses

and individuals.

3.1.6 Profit/Sales Characteristics

For this kind of item, the usual profit is over double the projected cost. This is
exemplified by one of the existing firms that manufactures a similar product, Typo,
where the item is retailed for P3000-P6000 each, depending on the size.

3.1.7 Distribution Channels

Based on the industry, the most prominent form of selling is through storefronts.
The second most prominent would be online selling. Through these two channels, the
industry profits the most.
 P a g e | 32

3.2 Competition Profile

3.2.1 Strategies for 4P’s

STRATEGIES OF TYPO TICKLES

COMPETITORS

Product ● Used for decorative ● Used as a way to express

purposes, as a way to messages.
showcase style and ● Messages displayed cannot
creativity through be changed.
messages and symbols. ● Functions primarily as a
● Functions primarily as decorative item for homes.
decorative objects used in
both residential units and
businesses.

Price ● P3,000 to P6,000, based on ● P3,000 to P5,000

the size and color of the depending on the size,
lightbox. color, shape, and message.
● An additional of at least
P1,000 is needed for
additional letter tiles.

Place ● Physical boutique in malls. ● Physical stores in malls.

● Online store that ships
worldwide.

Promotion ● Word of mouth. ● Word of mouth.

● Social media pages.

The company’s product, Lumos, is used to display messages in a customizable

and creative way. It can function as decor for rooms, offices, and houses, as a form of in-
store advertisement, and as a reminder board. Among its unique features are the
replaceable acrylic plate, interchangeable lights, on-off button, fuse switch, letter tiles,
stand, hooks, metallic slots, and writable acrylic plate. The lightbox will be packaged
inside a plastic bag, which will be placed inside a box with logo. The same will be done
separately for the stand. As for the letter tiles, it will be placed inside a ziplock pouch
with logo. The entire package will be placed inside a paper bag also containing the logo.
The company will be using cost plus pricing (cost plus mark-up) and the product will be
priced at P999. Lumos will be distributed through a direct distribution channel wherein
the product will be sold directly to the customer. The physical office will be located in
1144 Camachile St., Malate, Manila. The company will be advertising through social
media, blogs, and print ads.
 P a g e | 33

3.2.2 Porters’ Five Forces

FORCE LEVEL DESCRIPTION

Rivalry Among Existing Moderate COMPETITORS:

Firms ● Direct substitute: Typo
● Selling price: P3000-P6000
● Direct substitute: online shops
● Selling price: P2000 plus shipping fee
● Indirect competitors: advertising alternatives,
fabrication firms that manufacture according to
customer specifications.
● Selling price: depends on type of item.
LUMOS:
○ Selling price: P1500
○ Less expensive decor and ad alternative.
○ High customizability.

Threat of Substitutes Moderate COMPETITORS:

● Direct substitute: physical store
● Indirect alternatives: fabricators and online stores
LUMOS:
○ Get clients through relative affordability
and quality.
○ Different target market.

Threat of New Entrants Low COMPETITORS:

● Economies of Scale & Funds: home decor and
advertising companies
● Cost Advantages: larger firms
● Distribution Channels: challenge in identifying
and securing channels
LUMOS:
○ Smaller scale
○ Product differentiation

Bargaining Power of Low COMPETITORS:

Buyers ● Buyer Group Concentration: low, since there are
many firms, and clients usually buy only once.

● Buyer’s Costs: high, given that other firms with

similar products sell them at a premium.
● Standardization: high, as there are different
designs.
● Comparability: moderate, since the purpose is
the same.
 P a g e | 34

LUMOS:
○ Targets individuals (teens, college students,
young adults, young professionals,
micropreneurs) and small businesses.
○ Selling price as affordable as possible
while still making a profit.
○ High degree of standardization in the item,
but also high customization.
○ Unique features, even if there is
comparability.

Bargaining Power of Low COMPETITORS:

Suppliers ● Supplier Concentration: different firms have
different suppliers.
● Switching Costs: low, since materials are readily
available.
LUMOS:
○ Made from readily available materials.
○ Standardly prices materials.
○ Substitute materials are available.

3.3 Customer Profile

Based on the results of the FGD, the respondents recommended that the group focus on
selling the product to creative individuals. According to the market survey, the main customer
profile would be women between the ages of 18-24.

The main customer profile of the company, as seen in the FGD and market survey results,
are customers who are fond of decorative items that are highly customizable according to their
own preference, which enables them to use their creativity. This product is cheaper compared to
others of the same kind. The potential customer would be able to find out the product through
flyers, online advertisements, social media, and bazaars.

The secondary customers are small businesses that are looking for aesthetically pleasing,
customizable, and relatively inexpensive form of advertising. The targeted businesses would be
able to afford the item, and would be able to use it effectively as signage. This was also inferred
from the data gathered during the FGD session.
 P a g e | 35

3.4 Target Market Profile

3.4.1 Primary Market Profiles

Based on the FGD and market survey results, the primary target customers are 18-
24 young adults, students or newly employed, who identify themselves artistic or stylish.
They use motivational quotes, and are included in the above middle class margin residing
in Manila. They can use the product as a motivational tool. It can also be decoration to
their rooms, which sticks with their artistic or stylish vibe. The ideal buyer resides within
Metro Manila but we would also be catering to customers nationwide by forwarding
through our online store.

3.4.2 Secondary Market Profiles

The secondary target customers are university students. Small business are part of
this too, since it can be an inexpensive and unique form of advertising as well as a
decorative accessory that can enhance the aesthetic appeal of their stores. Since they are
businesses for profit, the targeted firms would be able to afford the item and its
accessories. Churches will also be targeted, as they can insert verses from the Bible,
which may be the the important verse for that day.

3.5 Pricing Profile

The company would not be offering discounts for bulk orders, since it is targeting young,
newly employed adults that would most likely buy a unit or 2 of the item. For the small
businesses, those targeted would not have much branches, so they would not be buying in bulk as
well. Based on the surveys and market tests that the group conducted, the group would be
adapting the mark up pricing. This way, the group can sell at a reasonable price where profit is
still possible.

3.5.1 Mark-up Pricing

The company decided to use cost-based pricing for the mark-up pricing because it
is the most equitable for both the firm and its consumers. The cost, as shown below, was added
with a mark up to get the selling prices. This is done on a per piece basis. This is also based on
the break even computations in the earlier chapter.
 P a g e | 36

3.6 Gross Margin on Products

3.7 Break-Even Analysis

3.7.1 Potential Demand Analysis

Based on the market survey carried out by the group to its target market of
individuals, it was found out that the market consisted mainly of female individuals,
72.3% of the respondents, aged 18-24, 85.7% of the respondents, whose yearly income is
P665,001 and above, 48.2% of the respondents. From theses respondents, 67.9% would
buy the item, while 32,1% would not. According to the data from indexmundi’s
Philippines Demographics Profile 2014, Metro Manila has a population of 11.862
million. Of this, 7,908,000 are female. Female individuals aged 18-24 number 1,502,520.
Of this, 1,491,984 are employed.

Using the formula, the potential demand is computed as 200.

The computation is as follows:

 P a g e | 37

3.7.2 Sales Forecast with Assumptions

The following sales forecast is based upon the market testing and the market
survey that the group executed. Both activities had a positive response, in that a majority
said that they would be willing to buy the item. Additionally, the group has factored in
the seasonality factors and the availability of materials into the forecast as well.

Below are the potential demand compared with the expected sales and capacity as
computed from the survey and testing results.

In this assumption, we are expecting that our demand and stock are equal for both
products.

3.8 Market Penetration

The group will be participating in at least two off-campus bazaars, and another YES
bazaar in the campus. Although required, joining bazaars is a good way to get brand exposure,
and to reach the broader target market. Not only that, but the people who usually visit bazaars
can afford to buy the products being exhibited, which can help the group gain potential clients, as
well as sell more items that can be usually sold on a normal day. For this, the group is
considering joining Christmas in October at Il Terrazo Mall, happening on October 23 to 25,
2016 and Bazaar @ Station Alley happening on May 14 to 15, 2016 at Centris Station. Aside
from the bazaars, the firm would also find suitable distribution channels, have the members act
as sales representatives, and sell online through OLX and Facebook.

3.8.1 Distribution Channels

Based on the market and customer surveys and the FGD results, the most popular
and suggested channel is online selling. This channel is fast, convenient, and cost
friendly, for both the company and the clients. The shipping fee would be charged to the
client, and the delivery would be made by a forwarder, as normally done by a majority of
online businesses. The company currently has a Facebook page in which clients can place
their orders.

The company's primary channel would be the second most popular and suggested
method, which is direct selling through a store or an office, or producer to client, and
involves seeing the product physically. The group is considering to do door-to-door direct
selling by using the flyers as a form of advertising so that the group members would not
need to bring the product itself. Under this method, face to face conversations with
 P a g e | 38

potential secondary clients, the small businesses, are also included as a direct selling
method. The group would also be selling to medical students through personal contacts.

3.8.2 Sales Representatives

The 5 group members would serve as the company's sales representatives, and
would handle clients that visit the office, where purchases can be made. This way, the
clients can be assured that they are receiving accurate and true information about the
product, since the members are the producers of the item too. Also, there would not be a
big issue on trust, or on the members not doing their job properly, since it is every
member's goal for the venture to succeed. They would handle the direct selling and the
giving out of fliers. Once the office or store is set up, one of the members would always
be present during its operating hours to demonstrate and sell the product.

3.8.3 Direct Sales Force

This would be similar to the sales representatives, only the members would have
different jobs. There would be two different methods of this to better reach the primary
and secondary target markets. For the primary target, individuals, the direct selling would
be done by the members in the office or store that would be set up. For the secondary
target, small businesses, direct selling would be done through sales representative visits
to their offices, phone calls should the owners consent to it, and the distribution of fliers
during on site visits. In addition to looking for clients for profit, the members would also
be participating in at least 3 CSR activities during the 10 months, as required by the
program. This could help the company's image, foster goodwill, and help the company
give back.

3.8.4 Online Selling

As mentioned before as part of the distribution channels, this is the most popular,
but only secondary, choice based on the surveys conducted. This would be fast,
convenient, and cost friendly for both the company and the clients. Setting up an online
store is free of charge. All that is needed for this is an internet connection and a mobile
device. The shipping fee would be charged to the client, and the shipping would be done
by a forwarder, as is customary in a majority of online shops. This can help the company
reach a broader target market.

The following steps would be employed:

● Publish advertisements in OLX
● Tell clients on Facebook and direct selling that an option to buy online is
available.
● To make a purchase, the client only has to go to the Facebook page, and
fill out an order form. Once it is filled out, details would be collected for
the forwarder’s use, and the item would be sent to the client after payment
has been received.
 P a g e | 39

3.9 Advertising and Promotion

Based on the market survey, market testing, customer survey, and FGD, the most popular
and most recommended mode of advertising and promotion is through the use of social media,
followed by online advertisements, and print ads such as flyers. Since these are in line with what
the group had in mind, the group decided to take them into consideration. Additionally, the group
has decided to make a dedicated facebook page for the company and to join bazaars.

3.9.1 Social Media Account

Since the group's primary target market are female individuals aged 18-24,
it only seems apt to create a social media account for the company. This can help
greatly in generating brand awareness, and is a fast and convenient way to get
information about the product, since using social media has become a habit of the
target market. The company already has a Facebook page setup, and is
considering setting up an Instagram account to better reach the target market.
Currently, the company's Facebook page already has over a 100 likes, and has
received inquiries about the product. The page would also be publishing updates
thrice a day.

To enumerate the steps:

● Create a Facebook page that’s classified as a “small business.”
● Send invites for people to like the page by first targeting friends
and acquaintances.
● Post daily about the item and promotions.
● Tell clients about the online shop in the posts.
● Respond to inquiries.

3.9.2 Online Advertisements

There are a variety of online advertisements. The variation that the group
is considering is on blogs. Based on the survey results, the target market consults
blogs and their product reviews before buying a product. The group members
have several friends who are bloggers, and will try to contact the to see if the
group's ads can be put up on their blogs. The duration of the ad would depend on
the agreement with the bloggers.The company would be contacting 1 blogger, and
she asked P10.00 per post. The agreement would be 2 posts per month.
 P a g e | 40

3.9.3 Print Ads

Based on the survey results, the print ads that the target market usually
responds to are in the form of flyers and brochures. The group has decided to
execute the use of flyers.

For individuals, the flyers would contain information about the product,
like the features, price, and add ons, that can help garner their interest in it. At
least 10 flyers would be given out once a week, during the member's’ free time.
The printing per flyer would cost P3.00 per piece.

Digital copies of these print ads would also be available, and would be
disseminated through the social media page.

3.9.4 Trade Bazaars

As mentioned earlier in market penetration, the group, as required, would

be participating in at least 2 off campus bazaars. Currently, the group is planning
to join Christmas in October at Il Terrazo Mall, happening on October 23 to 25 of
2016. We plan also to join Bazaar @ Station Alley happening on May 14 to 15 of
2016 at Centris Station. This would be an opportunity to expand the reach of the
target market, and to increase sales, since most of the people who visit bazaars
can afford what is being sold. Additionally, the group would be participating in
another in campus bazaar hosted by YES. This can help in increasing the number
of students in the client base. Other possible bazaars the company would
participate in would be student or university sponsored bazaars at the following
colleges: University of Santo Tomas, Ateneo De Manila University, the
University of The Philippines, and De La Salle University.
 P a g e | 41

3.10 Service and Warranties

● Carry In - Repair for readily made products can covered if the customer is responsible for
delivery, including packaging, to an authorized warranty provider and also if damage is
minimal. This does not apply to cracks or any mishandling effect that needs to replace the
whole part of a product which was made by the customer. Also, if there are signs of
customer prying to the product at the inspection, the warranty is void. This only will be
applicable if all the requirements are available. This only will be applicable after 2 weeks
from the date of purchase.

● Exchange for Defect - If the bought item is proven to have a manufacturing defect, the
customer can ask for an exchange for a new one. This only will be applicable after 2
weeks from the date of purchase. Also, if there are signs of customer prying to the
product at the inspection, the warranty is void.

● Fix it - Repair for customer mishandling to readily made products can covered if the
customer is responsible for delivery, including packaging, to an authorized warranty
provider, but this one comes with a corresponding fee, depending on the service required.
This only will be applicable if all the requirements are available.

3.11 Future Markets

● Medical Practitioners or Students - a version with acrylic plate that could hold the x-rays
will be available. They can use the product to help them easily examine the x-rays films.

● Art Students - a version with acrylic plate that could hold the papers for tracing will be
available. They can use the product to tracce or compare pieces for any discrepancies.
 P a g e | 42

CHAPTER 4: OPERATING AND CONTROL SYSTEMS

4.1 Administrative policies, Procedures and Control

4.1.1 Receiving Orders

4.1.1.1 For Online Orders

First, the customer will fill up and submit an online order form on
the company’s facebook page. Second, a sales representative will check if
the product is available. If it is available, the third step is that a sales
representative will send the customer a message containing the company’s
bank account information wherein the customer will be asked to deposit
the full payment, including shipping fee, in order to confirm their order.
Fourth, the sales representative will create an order slip and update the
inventory document. Finally, the order is received once the full payment
comes through. However, if the product is not available, the representative
will ask the customer if they can order at another time. If the customer can
wait another time, then the representative will get the customer’s contact
number and include their planned order to the future orders list so that the
company can inform them once the product is available. If the customer
refuses, then the order will not be received.

4.1.1.2 For On-site Orders

Once an order is made personally, the first step is that the sales
representative will check the inventory document to see if the product is
available. If it is available, the second step is that the sales representative
will create an order slip and update the inventory document. Finally, the
order will be considered received. However, if the product is not
available, the representative will ask the customer if they can come back
to order at another time. If the customer can wait another time, then the
representative will get the customer’s contact number and include their
planned order to the future orders list so that the company can inform
them once the product is available. If the customer cannot return, then the
order will not be received.
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4.1.2 Billing the Customers

Once an order is received, a sales invoice will be created and issued to the
customers. The sales invoice would include the time and date it was created, items
ordered and its quantity, the name and signature of the representative who made the
invoice, and the total sum amount of items purchased. If the invoice does not include the
former details, it will not be considered as a bill. The bill cannot be paid in partial or in
credit. The representative will only receive cash as payment. Also, the bill will have two
copies; one copy is for the company and the other copy is for the customer. The bill will
be submitted to Finance Department and be inputted to the General Ledger.

4.1.3 Paying the Supplier

The production head will first determine the materials which have been ordered
but have not yet been paid with their corresponding prices based on the agreed selling
price between the company and supplier and its calculated total amount. Then a purchase
order will be created and be sent to the finance head for approval. Once approved, the
production head will send the purchase order to the supplier. The production head will
also prepare a cash voucher and submit it to the finance head. In return, the finance head
will release the cash needed. Afterwards, the production representative can use the cash
to purchase the materials needed from the supplier. Once the materials are received, the
representative will pay the supplier with cash on hand, as per the agreement between the
company and supplier, and receive a sales invoice from the supplier. The sales invoice
will be given to the finance head and it will be inputted to the general ledger. If there are
any miscalculations in the sum amount as comparing the purchase order and sales
invoice, the excess will be given back to finance head. For the opposite, reimbursement
will be given to the representative who initially paid for the discrepancy. After that, the
purchase order will be updated to reflect the discrepancy.

4.1.4 Collecting Accounts Receivables

The company will not have any accounts receivable, as the product must be paid
fully in cash before it can be released; therefore, it will be implementing cash on delivery.

However, if for some reason there needs to be accounts receivables, they shall be
payable within 15 days. Otherwise, the order will be canceled.
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4.1.5 Reporting to Management

Each division head will report to the board of directors in executive meetings. The
specific reports submitted by each division to the president can be found in the
Documents and Paper Flow below. Executives will have a meeting every last Friday of
the month. A notice containing the time and venue of the meeting will be given a week
before. The meeting will be held at the company’s principal office unless otherwise stated
in the notice. Executives who cannot attend the meeting should create a summary of their
respective reports to be submitted to the president in hard copy and soft copy. The
meeting will comprise of progress reports of activities made by the respective heads.
Goals and targets for the coming month will also be tackled. This action will inform each
division of the status of the whole company.

4.1.6 Staff Development

The HR head will be the one to do the recruitment for the company. Before new
employees are hired, the HR head will administer physical and intellectual tests that are
appropriate for the position they are applying for. Once they are hired, the HR head will
introduce them to the company and their respective division head will be showing them
the ropes. Guidelines will be given and they will be monitored for their first 2 weeks to
identify their strengths and weaknesses. If they perform well, they will be acknowledged.
If not, the head will pinpoint their weaknesses and retrain them in such areas. Another
assessment will be made and if they improve, they will be acknowledged. If there is no
improvement, they will either be transferred or dismissed; the final judgement will be
made by the HR head.

The company will be implementing a ranking system between divisions based on

their outputs graded by the president in order to develop their skills and competitiveness.
At the end of the year, the highest ranked division will get a bonus. Every mid-year, the
company will also conduct a small group activity which will be lead by the HR and
Administration Head. This will combine different divisions and they can create plans and
proposals that can improve the company. This can improve their working relationships,
which will lead to better employee performance. The company allows open
communication. People can directly talk to other departments, or even the president, as
long as it is about company concerns and conflicts. Also, on an employee’s birthday
month, his name will be posted in the company cork board. The company will also
conduct team building activities for the employees annually to foster good working
relationships. For the duration of the practicum, this will be done by all the employees
sharing meals together. In the long run, team building will be done by taking employees
on trips.

4.1.7 Inventory Control

In inventory control, the company will exercise perpetual control system, which
will be done by manually tallying the materials after every production day. This will be
done by the production head.
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4.1.7.1 Raw Materials

Receiving

If the raw materials reach a level that will not be enough to produce for the
coming week, the production head will list the materials that need to be refilled
and create a purchase order. The purchase order will then be sent to the supplier.
A cash voucher will be prepared and submitted to the finance head, who will
release cash in return. Once the raw materials are received, inventory is refilled
and inventory document is updated.

Releasing

Only the production head will be authorized to release raw materials to be

used for production. Every time raw materials are taken out of the storage room,
the production head will update the inventory document.

4.1.7.2 Finished Goods

Receiving

The production head will store newly produced finished goods in the
company’s storage room. They will manually tally the number of finished goods
and reflect it in the inventory document. The inventory document will
continuously be updated as finished goods are received.

Releasing

The finished goods will be stored in the storage room of the company’s
principal office. The production head will be the one in charge of monitoring the
finished goods inventory and they are the sole person who can take out finished
goods from the storage room. The production head will manually tally the amount
of finished goods and update the inventory document every time there are
changes.

4.1.8 Monitoring the Company Budget

The finance head will be in charge of monitoring the budget of the company. By
checking all the documents such as official receipts and purchase orders, the finance head
will ensure that the expenses are still within its budget. This will be done at the end of
each week.
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4.1.9 Security System

● Materials and Place

The company’s production facility is already installed with smoke alarms,

which is beneficial, as the company handles electric wiring. Additionally, since it
will also be the stockroom, the company will be locking the production room. For
assurance and security purposes, only the production head and the president will
have the key to lock or unlock the facility. This also applies to the office room,
where only the administration head and president have access to the key. Also, all
employees of every position must log-in or out every time they leave the facility,
even if it will only be for a few minutes. This system will help the company
pinpoint and keep track of the people entering and exiting, should any issue arise.

● Finances

Every document evidencing business transactions will be signed by the

finance head. The company’s bank account will be jointly managed by the finance
and production heads. All transactions involving amounts exceeding ten thousand
pesos (P10,000) shall be approved and signed by the president.

● Trade secrets

One of the company’s trade secrets is its supplier of acrylic frame which
provides the material to the company for a lower price compared to others. This
trade secret will be protected by ensuring that only the company’s executive will
have access to it. It will not be discussed outside of meetings between executives.
The contact information of the supplier will only be accessed through a computer
file that is protected with a password that only the executives will know.
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4.2 Documents and Paper Flow

4.2.1 Receiving Orders and Billing the Customers

4.2.1.1 For Online Orders

● Order Form: It is a form accessed by customers who are interested in

buying the product which can be found at the company’s Facebook page.

● Order slip: It is created when there is an order, and helps in keeping track
of sales.

● Inventory Document: It is used to monitor inventory items received and

released.

● Digital Official Receipt: This is the proof that a transaction was

completed.

● General Ledger: This is used to keep track of all financial transactions the
company has made.
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4.2.1.2 For On-site Orders

● Order slip: It is created when there is an order; this also helps in keeping
track of sales.

● Inventory Document: It is used to monitor inventory items received and

released.

● Sales Invoice: This is the proof that a transaction was completed.

● General Ledger: This is used to keep track of all financial transactions the
company has made.
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4.2.2 Paying the Supplier

● Purchase Order: This is the document issued to the supplier indicating

types, quantities, and agreed prices for products that the supplier will
provide.

● Cash Voucher: This is the document given by the respective head to the
finance department in order to withdraw cash. This is used to record the
disbursements to the fund.

● Sales Invoice: This is the proof that a transaction was completed.

General Ledger: This is used to keep track of all financial transactions the company has made.
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4.2.3 Reporting to Management

● R&D and Production Reports: These reports are mainly about the product
or inventory used to make the product.

● Marketing and Sales Reports: These reports are about the marketing and
efforts to sell the product.

● Finance Reports: These include financial statements and reports that

pertain to cash inflow or outflow.

● HR and Administration Reports: These tackle internal concerns and issues.

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4.2.4 Staff Development

4.2.4.1 New Recruits

● Guidelines: This is where the instructions are written.

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4.2.5 Inventory Control

4.2.5.1 Raw Materials

● Inventory Document: It is used to monitor inventory received and

released.

● Purchase Order: This is the document signed by the respective head and
given to the Finance Division; it used to let the company know that such
material is needed and bought using company money.
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4.2.5.2 Finished Goods

● Inventory Document: It is used to monitor inventory received and

released.

● Order slip: It created when there is a order, this also helps in keeping track
of sales.
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4.2.6 Monitoring the Company Budget

● General Ledger: This is used to keep track of all financial transactions the
company has made.

● Document: May be Purchase Order, Marketing Expense and such

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4.2.7 Security System

● Material and Place

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4.3 Planning Chart

The company settled most of its pre operating responsibilities during BUPLAN2. This
includes brainstorming, feasibility analysis, prototyping, FGD, market survey, and other
components of the business plan. It also included creation of organizational plan, product and
service plan, marketing plan, operating plan, and financial plan.

Since the company will be under simulation program of DSI, its registration will be held
during the second week of the first month of PRCENT1. During the 10 month venture, the
company will consistently produce and sell their products, and pay salaries to the employees. On
the last few months, the company will be readying for its liquidation and dissolution. (*See
Appendix T for Gantt Chart)
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CHAPTER 5: FINANCIAL PLAN

5.1 Cash Requirements (Start up Capital)

The Lighthouse Enterprise will require a start up cost of PHP 32, 577.50 this will cover
all expenses that will incur during the planning phase and sustain for the first two months of
operation. The business requires funds to continue its operations for the duration of the next 10
months. A total of PHP 10,302.50 will be allotted for operating expense; this covers expenditure
under cost of advertising and promotions, office supplies expense, photocopying expense,
organization costs, salaries and benefits, auditing expense, and transportation expense.
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5.2 Sources of Financing

Total capital of the Lighthouse Enterprise will acquire its funds through two methods: (1)
self-financing and (2) parental support. For the first method, each of the 5 incorporators in the
group will provide a quota of PHP 6,600 each; all members of the group have agreed to this
settlement, funds will come from personal savings and allowances. The company's second source
of income is from the group member’s respective parents or guardians. It is understandable that
the funds allotted by the members are not enough to support the needed expense of the business
for the reason that they are still studying. Cash reimbursements to the parents and guardians will
be made after dissolution.
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5.3 Sales and Production Projections

Sales Forecast

Month Lightbox Total

Units Selling Price

January 10 999 ₱9,990.00

February 20 999 19,980.00

March 20 999 19,980.00

April 20 999 19,980.00

May 25 999 24,975.00

June 20 999 19,980.00

July 20 999 19,980.00

August 20 999 19,980.00

September 20 999 19,980.00

October 25 999 24,975.00

Total 200 ₱199,800.00

Production Forecast

Month Lightbox Total

Units Cost

January 10 778.77 ₱7,787.70

February 20 778.77 15,575.40

March 20 778.77 15,575.40

April 20 778.77 15,575.40

May 25 778.77 19,469.25

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June 20 778.77 15,575.40

July 20 778.77 15,575.40

August 20 778.77 15,575.40

September 20 778.77 15,575.40

October 25 778.77 19,469.25

Total 200 ₱155,754.00

Month Assumption

January The business is relatively new, and still has not developed any reputation with its
target market.

February The business is still developing its reputation with its target market.

March Sales are normal.

April Sales are normal.

May There will be a bazzar this month.

June Sales are normal.

July Sales are normal.

August Sales are normal.

September Sales are normal.

October There will be a bazzar this month.

The sales and production forecast for the entire 10 months from January to October is
shown in the tables above. It is based on the results of the market survey and market testing that
the company conducted. Seasonality factors and availability of materials, including the
production capacity of the fabricator of acrylic frame were also considered.
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5.4 Income Projections

Based on the group’s current projections, the net income that will be realized at the end
of the 10 month period would be P10, 314.63. This is based on the projections of the group that
there would be a steady sales of at least 20 units per month, and according to the seasonality
factors
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5.5 Financial Ratio Analysis

5.5.1 Profitability Ratios:

1. Gross Margin

Gross margin measures the peso retention of the company after deducting the
production costs. From the computation above, the company would be able to retain
about 23.54% of the sales, meaning this percentage of the cash can be spent for
something other than production costs. This is a moderate result, and can still be
improved.

2. Operating Margin

Operating margin determines if a company is operating well, and if its pricing

scheme is helping the company make a profit. Based on the computation above, the
operating margin is around 5.43%, or less than half the optimal. This is an okay result,
but it needs to be improved.

3. Net Margin

Net margin identifies how much per peso sales can be translated into profit. From
the computation above, the current projected net margin is 5.16%. This is an okay result,
and could still be improved upon.
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4. Return on Assets

Return on assets measures how well the company is using its assets to gain more
profits. Based on the computation above, the company’s return is 2.66%. This can still be
improved.

5. Return on Equity

Return on equity determines how well a company is using shareholders’ money to

generate more profits. Like the ROA, the company’s ROE is 2.66%, which can be seen in
the above computation. This can still be further improved.

6. Return on Investment

Return on investment identifies the amount of return on investment has relative to

its cost. Based on the computation above, the company is able to get a 31.66% return on
its capital investments. This is a good sign, and can still be further improved.
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5.5.2 Efficiency/Turnover Ratios:

1. Inventory Turnover

Inventory turnover determines how fast inventory is sold. Based on the

computation, inventory would be turned over as soon as it is manufactured, as the
production will depend on the demand forecast.

2. Days Sales Outstanding

Days sales outstanding measures the time it takes to collect a receivable. Since the
company currently has no plans to offer terms to the customers, and only plans to accept
cash, the time to collect a sale is immediately after purchase, as seen in the computation
above.

3. Inventory Turnover Ratio

Inventory turnover ratio identifies how fast inventory is sold and replaced. From
the above computation, it seems that the percentage is good. It means that with the
projected sales, the company would be able to replenish the product stock.
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5.5.3 Project Feasibility:

1. Payback Period

Payback period is the computation for when the total investment in the
company would be fully paid. Based on the computation above, it can be seen that
on the 3rd month, the company’s cash flow would be able to pay back the cash
investment used to start the company.
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2. NPV

Net present value is used to analyze the profitability of a venture, and should be
more than 0. In this company’s case, it can be seen in the computation above that the
NPV is 95,472.91. Since it is more than 0, this venture is acceptable.

3. IRR = 17%

The internal rate of return, computed through the IRR excel function using the cah
inflows is 17%. Since the IRR is greater than k (15%), the project is acceptable.

5.6 Risk Analysis

5.6.1 Risks

Marketing

The use of a direct distribution channel might be insufficient especially during the
first few months of operations because by then the company might not have enough
means to make it work as effectively as it should so it might result to the company only
being able to reach a limited portion of its target market.

Operations and Production

Certain parts of the production process such as cutting the plastic sheets and
placing the stickers on the tiles to produce the letter tiles will be done manually by the
founders themselves so there are chances that there will be inconsistencies that might
result to a decline in product quality.
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Human Resource

When demand for the product increases, the founders might not have the capacity
to produce enough to satisfy it so it might be necessary to hire workers that will allow the
company to increase its capacity to produce. Another is that since much of the work done
to produce the product will be done manually, there might be variations among the
different workers’ output.

Finance

Initially, there is a possibility that some mistakes will be made in the

computations regarding the company’s finances since the founders are not really experts
in financial management.

Buyers

It is possible that the current design of the product will only appeal to a limited
number of buyers with a specific preference or taste. Without further developments,
buyers might not have enough options to choose from. This might result to a limited
number of buyers.

Suppliers

The supplier for the acrylic frame might not be able to produce the needed
quantity on time as it may not have enough capacity to produce. Also, there might be
inconsistencies and variations among the acrylic frames that the supplier provides which
might decrease the overall quality of the product.

Competitors

The current direct competitor might have the means to further develop and
innovate the product which can be disadvantageous to the company as such developments
might cause customers to see the competitor’s product as a better alternative.

Substitutes

Customers might choose to buy products that might not be exactly the same as
ours but will serve the same purpose. Individuals might choose other kinds of decorative
products and small businesses might choose other kinds of advertising tools that will
better suit their needs.

New Entrants

Although the threat of new entrants is low, some new entrants who will actually
enter the industry might be able to produce products of higher quality and sell them at a
lower price which might cause the company to lose its customers.
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5.6.2 Strategies to Eliminate Risks

Marketing

The use of other distribution channels such as retailers will be considered in order
to reach as many customers as possible and increase awareness regarding the product.
Possible retailers can be specialty shops that cater mostly to artsy individuals. Focus in
advertising will also be increased to generate more customers for the product. This will
be done mainly through social media as this is most relevant to the primary target market.
Participation in trade shows and bazaars will also be done in order to reach a larger
portion of the target market.

Operations and Production

Quality control methods will be strictly implemented in the production process to

minimize inconsistencies and variations as much as possible. Quality will be checked
both during and after the production process to ensure that the products are of the highest
quality possible. An alternative that can be implemented in the long run is automating
some parts of the process in order to lessen the errors committed and to increase the
uniformity in output.

Human Resource

Additional employees or workers will be hired as needed by the company. This is

to make production and operations more manageable, to ensure that demand and
production schedules are met, and to increase the company’s production capacity.
Appropriate training programs will be provided to the workers so that they will be able to
master the performance of their jobs and produce products of the highest quality possible.

Finance

Initially, financial computations will be double checked to see if any errors were
committed. In the long run, the company will also hire experts that will handle its
financials to ensure that everything is done correctly.

Buyers

Variations in product design will be introduced in order to appeal to a wider range

of buyers. Possible variations can be different colors, sizes, and shapes. Special purpose
products for art and medical practitioners will also be created in order to gain new buyers.

Suppliers

A specific production schedule that should be strictly followed will be arranged

with the supplier to ensure that supplies will not run out and the amount needed will
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always be present. A backup supplier will also be contacted in case the current one is not
able to meet the demand due to its limited capacity.

Competitors

The company will continuously develop the product to differentiate it further

from the competitor’s. This can be done by investing in research and development to
keep up with the industry trends and introduce new developments to the product.

Substitutes

Through research and development, new features will be added and the product
will continuously be improved to differentiate it from other products with similar
purposes.

New Entrants

The company will focus on employing quality management practices in its

production to ensure that the product will be of high quality so that it will remain
competitive even as new entrants start to become part of the picture.

5.7 Salvaging Assets

In the event that the incorporators decide to terminate the business, all the
remaining unsold inventory will be salvaged in order to reimburse it into cash. The
company will not own any fixed assets so no fixed assets will be sold.

5.8 Exit Strategy

Once everyone has agreed for the dissolution of the corporation, the company
would then start with the process of liquidation wherein the division of profits gained
from liquidation would be divided among the incorporators according to what they have
agreed for or if there is no agreement, they divide it through pro rata.