Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

During the ancient times when the Alexandrian library was established, people used different

measures to obtain books arousing the energies of the Athenian booksellers (Wikipedia). Years after

Johannes Gutenberg invented the printing press in 1440, the demand for books rose, making book

publishing the major industry in the United States (Talk Business & Politics, 2016). On the other hand,

book rental started before the industrial revolution when books were costly. Kashi-hon, a book business in

Japan, is one of the pioneers in the industry (Wikipedia).

In the modern time, bookstores may be a part of a chain or an independent one. Stores can offer

from several hundred to several hundred thousand titles, moreover, some independent bookstores add

other product lines (Wikipedia). Po (1960), stated that true bookselling is an important and gratifying

occupation. For him, true bookselling should cater general reading materials to general readers, and also

genuine bookstores sell books and nothing but books and to sell every kind of books to every kind of

readers. The researchers aim to establish a true bookstore that will provide every reader the book they

want and need from many types and genre of books.

Based on the 2017 Readership survey conducted by the National Book Development Board

(NBDB), "Majority of Filipino respondents still read printed books” (NBDB,2017). About 75% of

Filipino youth and 73% of adults are willing to spend only up to 199 pesos for a book. 21.35% of youth

are willing to spend 200-599 for a book (NBDB, 2017).Since prices of college books range from 300 to

600 pesos, the researchers thought of a way to help readers to use books they need with minimal

expenses.
 Bringing books closer to its readers is also an objective since most college books, especially of

accounting and other academic books are only available in large cities particularly in Manila, the

researchers thought of an answer to solve this dilemma by establishing a book rental and book selling

shop in San Pablo City.

Statement of the Problem

The central problem of this study is the evaluation of the viability of establishing a book store and

rentals in San Pablo City.

Objectives

The main objective of this study is to determine the viability and feasibility of establishing a book

store and rentals in San Pablo City.

Specifically, objectives from the point of view of the different functional areas of management

are as follows:

Marketing

1. Identifying the right product and service to offer to the customers

2. Analyzing the best pricing strategy for the product and services

3. Recognizing target market and identifying what they want

4. Assessing different factors that makes the business in demand

5. Identifying possible competitors around San Pablo City

Technical
1. To determine the store location, effective shop layout, building facilities, book rental service process,

furniture and fixture, book and office supplies needed;

2. To identify the quantity of books and type of books to be available for rent and for sale;

3. To compute for the most economical operation cost be incurred in the operations.

Organizational

1. To identify what type of business is to be established.

2. To set qualifications for selecting best employee that will fit for the job.

3. To establish rules and regulations to be implemented in the organization.

4. To provide incentives as motivation for employees in performing their duties with excellence.

Strategic Management

1. To be acknowledged as the Best Book Rental Firm in the country.

2. To serve and fulfill the needs of customers.

3. To maintain the loyalty of possible customers using Customer Loyalty Program.

Financial

1. To determine the starting capital required to establish the business.

2. To check into probable sources of funds to be used in the business.

3. To determine the profitability of the business.

5. To assess the stability of the business in the long run.

Socio-Economic Responsibility
1. To contribute to the growth and development of the economy.

2. To identify economic and social factors that affects the business.

3. To distinguish the responsibilities of the business to its customers, community and to the government.

4. To provide services that will give benefits to the customers and also to the business.

5. To seek for strategies that will give the business a sustainable competitive advantage.

Significance of the Study

The bookstore and rentals are significant to the following:

1. Students. This study will be beneficial to students especially those who are in need of academic books

that can only be found in large cities. This business will provide a serene and perfect place to study and

enjoy their reading.

2. Customers. The significance of this study is also to help readers other than students who have great

passion in reading.

3. Community. This study will also benefit the community for it will promote reading in support for the

government's goal of increasing literacy rate.

4. Future investors. This study will be beneficial for future investors who are willing to contribute for the

capital of the business to be established. This will also benefit those investors who are interested in this

kind of business.

5. Future Researchers. This study can be a useful reference for more studies in the future especially for

researchers who would plan to make any related study about bookstore and rentals.

6. Suppliers. This study will be beneficial to suppliers for it can help them expand their market.
Scope and Limitations

The feasibility study primarily focuses on the study of the viability of establishing a Books Store

and Rentals at San Pablo City, Laguna. The data to be used will be collect in the target market. The data

will be conduct at San Pablo City Plaza and near in Laguna College located between Paseo de Escudero

St. and Bautista St. .

The individual residents, students, teachers, and young professionals, living near the firm's

location especially the LC's students and faculty members are the target market of the proposed business.

The researchers plan to select 277 respondents of the survey questionnaires between the ages of 10 and

29. The researchers excluded those residents that are below 10 years old.

The proposed business focuses on providing books rental services for all possible customers and

merchandising academic books to those who avail the membership card that the entity offers. This study

will utilize the information available during the period to fulfill the objectives in marketing, technical,

organization, and financial aspects of management.

Books are only limited for rent and use inside the business premises. Since membership card

would also be offered, purchasing of books is only limited to those who will avail the membership.
 Chapter 2

REVIEW OF LITERATURE AND RELATED STUDIES

Review of Related Literature

Books never go out of style, despite the popularity gain by digital technologies books still make it

to keep pace in the market. Although digital publishing is trending worldwide, the manufacturing value-

added of the publishing and printing industry in the Philippines has increased since 2009 and was valued

at approximately 19.5 billion Philippine pesos in 2017 (Sanchez, 2020).

According to Macro trends LLC, recent estimation of Philippines literacy rate among adults

happened during 2015 which resulted to 98.18%, a 1.78% increase from 2013 (96.40%) and an increase

of 14.86% from 1980 data (83.32%). This shows an indication that Filipinos are in pursuit of learning

which can be associated with reading.

Experts believe that development of a reading habit and attitude among the youth is an essential

feature towards a literate, progressive and caring society given that reading encourages learning and

develops creativity among them (Chaves, 2017). As of today, Filipinos still find reading books enjoyable
regardless of being constantly online. In a survey conducted by the National Book Development Board,

76.75% of adults and 84.99% of kids responded that they've read a printed book within the past year. The

reasons for their reading include learning new things, expanding knowledge, and keeping up with current

events (Rappler.com, 2019). According to the 2017 NBDB Readership Survey, 49.24% of Filipino adults

have read one book at least once a week in the last 12 months. Printed reading materials have the highest

readership led by non-school books, wherein the average hours spent by adults for reading per month is 9

hours and 39 minutes. It also presented that almost 73% and 69% are only willing to spend up to Php 199

on a Filipino-published new book and Foreign-published new book, respectively.

Textbooks are important mostly for college students, According to cappex, the College Board

estimates that students spend more than $1,200 on textbooks a year.

Cappex stated pros and cons whether buying or renting books. In buying books, students have a

choice to buy old books if saving money is their priority. Old books may also include pages in which old

users highlighted some sentences or phrases and leave notes for better understanding of the book. If

students by new textbooks and when semester ends they have options to keep it or sell it more often at a

cheaper amount than the selling price.

According to cappex, renting is much economical than purchasing books. But it is important to

keep in mind that it must be returned on a certain date. Extension for book rentals may depend on

agreements or the business policy. Cappex also noted that sharing with a friend may also be a choice to

consider. Aside from being cheaper, Students must also take responsibility because if one of them

accidentally destroys the book, they will be both liable.

Related Studies

In history there is a business in Japan named Kashi-hon which started to make profit through

renting out books since in that period purchasing books for the public seems to be costly (Wikipedia.com,

n.d.). While in the modern times, through the advent of technology, change in the way books are rented is

seen. From physical books being lent, audio books, e-books and online books are now accessible.

Innovative strategies are also observed in the bookshop industry like the “Book & Bed Hostel” in Kyoto,

Japan, an “accommodation bookshop” wherein beds are constructed into bookshelves (Spoon-

Tamaga.com, 2016). Another one is the “Library Lounge These” in Tokyo which is a combined bar and

bookstore offering drinks in a library-themed place (Beaton, 2019).

In the Philippine setting, there is a study about Parkin Book conducted by the students from

BSBA-HRDM 4-1 of Polytechnic University of the Philippines (Taguig Branch), which was uploaded on

Nov. 12, 2015 by Ms. Jamie Anne Jamoles. The Parkin Book will travel and stay in a specific location to

provide reading services. Parkin Book is going to sell pre-owned books in various genres. The main

objectives of the said business are to offer free access to books, to provide affordable prices for buying

books, and to give their customers a friendly and comfortable atmosphere. In studying, a comfortable

surrounding is a must, a place where you can spend time in lecture while enjoying it, and a place where

you can use different sources to get the information needed. This study
Industry Profile

Reading books never goes out of style and continues to be a part of someone's life making it

stable in the market. Over the recent years, Philippine book publishing industry has been gradually

flourishing with publishers, writers, illustrators and readers who are actively stimulating it. From 2010 to

2018 the steady growth in the industry can be observed. From the data provided by Philippine Statistics

Authority, the stability of the industry's employment can be seen from 2010 to 2016. Family Income and

Expenditure Survey shows that PhP 5.4 billion were spent on books from 2003 to 2015. As for the

Department of Education, a 56% completion of the targeted number of textbooks has been achieved. It

may show low numbers but the book business sector is still lively having retail business as the more

advantageous mode of trade than wholesale (National Book Development Board,2019).

Print media industry is being challenged by digital media in the modern media market. It can be

observed that digital publishing is trending worldwide, but it doesn't stop the manufacturing value added

of the publishing and printing industry to increase since 2009 and was valued at approximately PhP 19.5

billion in 2017 (Sanchez,2020).

Amidst the recent health emergency, bookstores are still trying their best to survive from the

sudden shift in the industry. Booksellers are encouraging their customers to buy books online. In China,

bookstores started pairing with a food delivery app to help get books into the hands of readers. While in

UK, books are being hand delivered by skateboards and bicycles. With these facts, it can be said that the

book industry is not idle in these trying times. Events and book clubs started moving online. Booksellers
are finding options on how they can digitize their activities they would have otherwise organized in their

stores. Some are giving book recommendation through live broadcasts while others are hosting reading

hours for children staying at home (European and International Booksellers Federation, 2020).

As to pricing, it varies from different genres, authors and other classifications. From college

textbooks, to bestsellers, classics, comics, leisure reads and others, books have a wide range of choices.

According to Kaplan, a forty (40) percent markup on books is needed for a bookstore to be profitable

(Hill, no date). Mostly, college textbooks like accounting books ranges from Php 400 to Php 750.

Bestselling novels of both Filipino and international authors generally cost Php 150 to Php 1,000 and pre-

loved books may have a price of as low as Php 10 up to Php 250. There are no current pricing practices in

book renting in the Philippines, however in other renting services particularly in computer shops, the

usual standard rate ranges from Php 10 to Php 20 per hour.

When it comes to advertising, bookstores uses this technique known as Co-op short for

“cooperative advertising.” In this strategy, both the bookstore and the producers contribute in the costs of

marketing and promoting an item. Today, there is a change in this method wherein the publisher shares

just about 3-5 percent of the costs and the bookstore does most of the marketing. Some big companies,

uses print and online ads while other small bookstores arrange in-store events like a book signing event to

attract customers (Sullivan,2020).

Based on the information presented, all in all, the book industry is profitable.

Success Factors

In the book selling industry, maintaining customer-based services by being on top of the new

services and technology can bring success to the business. Having a loyal staff is also significant for the

business during a challenging period (Shaw,n.d.). Being the first book rental in the area can also

contribute to the success.

Strengths

There are internal factors that bring positive effect to the entity. These will help the business

achieve a sustainable competitive advantage against competitors around it. This will discuss the strengths

that the entity possess, one of it is being the first book rental to be established around the vicinity of San

Pablo City, Laguna which indicates positive impact to business for being the only entity that provides

such kind of service. Furthermore, the establishment is to be located near the town plaza where it can

easily be accessed by the customers most especially the students. It is the best place for the business

which is close to colleges and universities in San Pablo.

Some other strengths that the entity have are the good quality of books and services they provide

and the affordable price that they offer for their customers. It is to be assured that every book being rented

is in good condition and will definitely be useful for their customers. Books that are to be sold are surely

all original and will provide updated edition of books specifically the accounting books. All the books and

services are given at an affordable price for everyone. Some incentives and discounts will be provided

for those customers who will avail the membership card which will lessen the expenses of the customers

especially the loyal ones.

Lastly, another factor that will help the entity achieve its success is that it has a good management

control. This aims to have the best employees that fit the job which has the sufficient training needed for

their designated jobs. The entity also provides incentives for their workers that will encourage them to

give their best for their work. In addition, there are some rules and regulations to be implemented in the

organization for them to have proper conduct in their workplace. Having good relationship with the

employees will make each and everyone's work lighter that will make them achieve their goals easier.

Opportunities
 There is an opportunity in the market because of a less intense competition for there are a few

identical businesses in the area, and most are located in Metro Manila. Numerous schools, university and

colleges are also situated in San Pablo City, which is the target customer of the business.

From 2010 to 2018, the book publishing industry in the Philippines has attained a steady growth

and the sector of book business is still viewed to be lively according to the report of The National Book

Development Board (NBDB), therefore there is an opportunity for the business to be stable.

Risk Factors

Being new in the market has possible risks that the entity needs to face and minimize. Many

competitors are present in the area, so being a competent entity is a must in order to survive.

The purchase of books are only limited to those who avail the membership card, the reason why

the entity cannot take orders from possible customers who are not registered as members. The facility

cannot accommodate many renters at the same time given that it has a tight space.

The entity may also experience decrease in sales during summer knowing that the school year has

ended. Given the industry the business is in, the entity has limited flexibility in pricing. Being new in the

market is also a weakness for the business. The entity may have a hard time getting market share for the

business is not yet known to the target market.

Threats

Establishing a rent and bookstore is not easy in the world that everyone has an access to

information they need. You can buy books through the internet; you can read articles, news, fiction stories

and etc. online and even watching tutorials that much better way in getting ideas. Other threats that you

may add in putting a rental and bookstore is the public libraries you may find in the area. Even the books

that they want to serve or sell should from the legal process. The most important thing that they should
consider was the knowledge of their stakeholders (especially their staffs and customers) about the rules

and regulations of the State about copyright.

Definition of Terms

Adult literacy rate- is the percentage of people who can both read and write in the age of 15 and above

with the ability of understanding short simple statement about their everyday life.

Chapter 3

RESEARCH METHODOLOGY
Sources of Data

The researchers used primary sources to gather data the study. Structured survey questionnaires

were given away to selected students, faculty members, and professionals within San Pablo City to

identify their thoughts about books and other relevant information the study needed.

The researchers also used secondary sources for other information needed. Online articles and

online where used for data clarifications and procedures the researchers had made. Online journals we're

also used for other information purposes.

Research Design

The method used by the researchers is descriptive method. According to questionpro.com,

descriptive research is defined as a research method that describes the characteristics of the population or

phenomenon studied. Also, this methodology focuses more on the "what" of the research subject than the

"why" of the research subject.

The researchers used descriptive methods on how the business excels from the other firms that

offers the same services. These researches show the contribution of the company to the community,

especially to those students that don't have enough money to purchase educational books. The Budgeted

Financial Statement that is provided by the researchers will prove the profitability of the firm that will

attract potential investors.

Population and Sampling Technique

The target market of the business are the students, teachers and young professionals in San Pablo

City with ages that range from 10–29 which is 95, 782 of the total population of the city.
 277 respondents were selected from the population using the Slovin's formula with 6% margin of

error. The population were divided into sub-groups the reason why the researchers used stratified random

sampling as the sampling technique.

N
n=
1 + Ne2

Where: N = population Where: n = sample size Where: e = margin of error

95,782
n= = 277
1 + [ ( 95,782) (.06)2 ]

Data Gathering Procedures

Using Slovin’s formula, the researchers come up with a total of 277 respondents among the

95,782 population of San Pablo City which is the target number of respondents to answer the survey

questionnaires for the study. These questionnaires are made through a Google form which is to be

distributed to random residents of San Pablo City with an average age of 10 to 29 years old. The forms

will be sent to the chosen respondents through their email addresses, which will be tallied after they have

completed and returned the forms to the researchers. Respondents may respond according to their will

and would not be forced to answer the forms immediately. Questionnaires that will not be retrieved after

five (5) days will be given to other respondents. After answers have been tallied, results will be presented

and interpreted through the use of tables and graphs.

Analysis of Data

Profitability Ratios. Profitability Ratios are a class of financial metrics that are used to

assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet

assets, or shareholders equity over time, using data from a specific point of time. (Kenton, 2020)
This data demonstrate if a business is doing well if the business had a higher value compared to

competitors’ ratio or from the same ratio from previous periods.

Return on Sales. Return on sales (ROS) is a ratio used to evaluate a company's operational

efficiency. This measure provides perception into how much profit is being created per dollar of sales. A

company is growing more efficiently if an increase in ROS happened, while a decreasing ROS could

signal impending financial troubles. ROS is very closely connected to a firm's operating profit margin.

Net Profit After Tax

Return on Sales =
Sales

Return on Investment. Return on Investment (ROI) is a performance measure used to assess the

efficiency of an investment or to link the efficiency of a number of different investments. ROI tries to

directly measure the amount of return on a particular investment, with regards to the investment’s cost.

Net Income
Return on Investment =
Total Investment

Gross Profit Ratio. Gross Profit Ratio or Gross profit margin, is a metric assessment use to

evaluate business's financial health by calculating the amount of money left over from product sales after

subtracting the cost of goods sold (COGS). Gross profit ratio is frequently expressed as a percentage of

sales.

Gross Profit
Gross Profit Ratio =
Net Sales

Liquidity Ratios. These are the ratios to be used in measuring the ability of a business to

meet or pay off its current or short-term debt obligations when it falls due (ReadyRatios.com,n.d.).

It examines whether a business's liquid assets can cover the current obligations owed to creditors.

Analysis of these is important for both internal and external users for them to come up to a good

decision making that will help the entity to be more profitable (Hayes, 2020).
 Current Ratio. It is sometimes called the Working Capital Ratio, which examines an entity’s

ability to pay current or short-term debt obligations such as wages and tax using current assets such as

cash, accounts receivable, and inventories (LearnManagement2.com,n.d.). It measures whether or not a

business has enough resources to pay its liabilities over the next accounting period. This ratio helps

creditors whether or not to make short-term loans and also gives a sense of the efficiency of an entity's

operating cycle or its ability to turn products into cash (Ready Ratios.com,n.d.). According to Hayes, the

higher the ratio, the better the entity’s liquidity position. To be able to get the current ratio, the formula is:

Current Assets
Current Ratio =
Current Liabilities

Acid Test Ratio. Also known as Quick Ratio, just like the current ratio it examines an entity’s

ability to pay current o short-term debt obligations however, only quick assets (most liquid assets or

assets that can be quickly converted to cash) are used to compute the quick ratio instead of current assets

which excludes the inventories. It is used for evaluating if an entity has adequate liquid assets that can be

instantly converted into cash to pay the short-term debts. This ratio is viewed as a sign of an entity’s

financial strength or weakness; it gives information about the entity’s short-term liquidity. It tells the

creditors how much the entity’s debt can be paid off by selling the entity’s liquid assets in a very short

period (ReadyRatios.com,n.d.). To get the ratio, this formula is used:

Quick Assets ( Cash+Accounts receivable+Marketable securities)

Acid Test Ratio =
Current Liabilities

Inventory Turnover. Also known as Stock Turnover Ratio, which is an efficiency ratio that

measures how efficiently and effectively an inventory is managed by comparing cost of goods sold with

average inventory for a period (MyAccountingCourse.com,n.d.). It shows how many times a company

has sold and replaced inventory during a given period. Calculating inventory turnover can help businesses

make better decisions on pricing, manufacturing, marketing and purchasing new inventory. A high ratio
implies either strong sales or insufficient inventory while a low turnover implies weak sales and possibly

excess inventory (Hargrave, 2020). To calculate the ratio, this formula is used:

Cost of Sales
Inventory Turnover =
Average Inventory

Tests of Operating Leverage. Tests of Operating Leverage are used to measure the degree

to which a firm or project can increase operating by increasing revenue or simply to determine

profit levels from individuals sales. To calculate it, divide the entity's contribution margin by its

Net Operating Income. A higher value of Operating Leverage indicates a higher risk

(Cabrera,2018).

Break Even Volume Analysis. Break Even Volume Analysis are use to determine the number of

service should the firm provide to gain no profit either losses. It was calculated by dividing the total fixed

cost to its contribution margin per unit.

Fixed Costs
Break - Even - Volume =
Selling Price/Unit - Variable Cost/Unit

Break Even Selling Price Analysis. Break Even Selling Price Analysis are use to determine the

minimum price you can sell your product for and still cover its cost. It was computed by dividing the total

fixed cost to the volume of production then add the variable cost per unit (Cabrera,2018).

Variable Costs + Fixed Costs

Break - Even - Selling - Price =
Unit Volume

Break Even Sales Analysis. Break Even Sales Analysis are use to determine if the total sales are

covered the total cost of operation of the entity. Break Even Sales are determined by dividing the fixed

cost to the company's contribution margin.

Fixed Costs
Break - Even - Sales =
( Selling Price-Variable Cost )
1-
Selling Price
 Test of Return on Capital Investment. Return on capital investment is a financial ratio that

measures a company's management performance by looking at how it uses the investments of

shareholders and bondholders in the company to generate additional revenues. This formula is useful for

both investors and the company in measuring its management and if the capital is utilized efficiently (My

Accounting Course,n.d.).

Average Rate of Return. Average rate of return is the average annual amount of cash flow

generated over the life of an investment. It is calculated by dividing the aggregated cashflows by the

number of years the investment is expected to last (Accounting tools, 2018).

Net Income
Average Rate of Return =
Initial Year Cash Flow
2

Payback Period. It refers to the amount of time an investment reaches at break-even point.

Shorter payback means more attractive investments (Kagan, 2020).

Initial Year Cash Outflow

Payback Period in Years =
Succeeding Annual Net Cash Flow

Capital Budgeting. Capital budgeting is the process of examination and selection of long-term

investments which are in line with the company's of goal of maximizing its resources (Gitman & Zutter,

2012). It is a method of assessing whether to accept or reject the proposed investment of fixed assets

(Bragg, 2019).

Net Present Value. According to Jagerson (2020), net present value is used to calculate the

current value of all future cash flows of a certain project compared to initial capital investment. It could

be used by the investors and potential investors to examine a project whether to undertake or not.

b i - ci
Net Present Value =
( 1 + r )n
 Internal Rate of Return. Hayes (2020) stated that internal rate of return is the annual return rate

of an investment. In evaluating the potential return of a new project, the IRR is commonly ideal. In

general, a higher internal rate of return denotes that an investment is more attractive to be undertaken.

bi - ci
Internal Rate of Return = NPV = =0
( 1 + r )n

Benefit-Cost Ratio. Hayes (2020) stated that a benefit cost ratio is a ratio used to point out the

relationship between the relative costs and the benefits of a future project may be expressed in monetary

or qualitative terms. It is computed by dividing the proposed total cash benefit over the total cash cost of

the proposed project.

bi
Benefit-Cost Ratio =
1 = a ( 1 + r )n
ci
i = a ( 1 + r )n

Where: b i = benefit in period i Where: c i = cost in period i Where: r = discount rate

Where: n = discount period