Feasibility Study

WESLEYAN UNIVERSITY – PHILIPPINES College of Commerce, Accountancy and Office Administration Cabanatuan City

A FEASIBILITY STUDY OF VULCANIZING AND REPAIR SHOP IN GAPAN CITY

WESLEYAN UNIVERSITY – PHILIPPINES College of Commerce, Accountancy and Office Administration Cabanatuan City

FEASIBILITY ABSTRACT TITLE: The Feasibility Study of Establishing Vulcanizing and Repair Shop in Gapan City RESEARCHER: ADVISER: SCHOOL: DEGREE: Ph D.BA. MAJOR: STATEMENT OF THE PROBLEM: It is the intention of the researcher to determine and analyze the Feasibility of Establishing a Vulcanizing and Repair Shop in Gapan City. This study seeks to answer the following questions: 1. What is the type of business organization suited for the project/business? 2. What are the marketing programs to be used in the business? Is there a demand for the proposed project? 3. What are the technical requirements needed in the operation of the proposed business?

4. How much capital needed for the project? Is the proposed business profitable? 5. What is the social significance of the project? 6. What are the potential problems to be encountered by the business? RESEARCH METHOD USED The researcher employed the descriptive method in this study. According to Good and Scates, a descriptive research is a fact finding survey with adequate interpretation, description, and analysis of the prevailing condition. Descriptive research describes units, occurrence or phenomena. The feasibility study describes, interprets, and analyzes the marketability of putting up business and operating a Vulcanizing and Repair Shop in Gapan City. This study describes the technicalities, the market condition that regards with supply and demand analysis and the current trend of the business in the area related with serving. TECHNIQUES USED IN DATA GATHERING In pursuing data collection, the researcher employed questionnaires, interview and documentation of reviewed literature and studies about the proposed project. 1. Interview. The researcher employed the interview as the means of data collection. They conducted an interview to Mr. Aldrin Tuazon, owner of Vulcanizing Shop. An interview is a verbal communication in which there are existing guidelines or formal questions. 2. Observation. They observed that it is necessary to organize the business in the form of a single proprietorship because it allows the proprietor to have different control over the business. They also observed that many customers rendered their services. 3. Library Techniques. This technique in data gathering procedure is also employed. Documentation of written information about the subject is taken place.

FINDINGS OF THE STUDY It has been found out that there is feasibility and viability in the establishment of Vulcanizing and Repair Shop in Gapan City. It is such a potential and lucrative business. The management aspect showed that single proprietorship is the best organizational set-up to be used in this kind of project. The project can easily be established under the control of one man. Line type of organization is used in project because it has a direct flow of authority from the top position down to the subordinate level. The business will be offered in the proper town of Gapan City and the business will focus on Vulcanizing and Repair Services. The technical procedure in operating the business is very simple. The proponent need to construct the building shop and makes a proper design of the work place in order to operate the business properly. Financial study showed that the project requires enough capital to start the business. Financial analysis showed that the project is moderately profitable and that the total investment could be recovered within 2 years and 8 months. The proposed project is also socially and economically desirable. CONCLUSION Based on presented information regarding the establishment of Vulcanizing and Repair Shop in Gapan City, it can be concluded that this venture is feasible because of the following: 1. That the organization best suited is single proprietorship. 2. That there is a demand for the proposed project.

3. That there is more profit to be derived from the business. 4. That the maintenance of this project is very simple. 5. That the business is very feasible. 6. That the business is socially desirable and gives benefit not only to the owner, customers but also to the government. RECOMMENDATION In the light of conclusion, the following are recommended: 1. Individuals who are interested in Establishing a Vulcanizing and Repair Shop should find good location such as cities and urban areas because that is the place where most costumers/buyers come. 2. They should hire of qualified and skilled workers in the business so that they can carry out business more effectively. 3. Different marketing strategies should be applied in this business in order to make the products and services more attractive. 4. Capitalization requirements should balance the procurement of materials and equipment in the operation of the said business. 5. Systematic financial procedures and control system be given more emphasis.

ACKNOWLEDGEMENT The researchers wish to express his sincerest appreciation and gratitude to Wesleyan University – Philippines, for his valuable and guidance, without this study it would not been made possible. We would like also to express our sincerest thanks/gratitude to all my love who patiently guide us towards financially, morally, and spiritual support. Finally, the writers are dedicating this study to their parents who gave their spiritual and moral support encouragement. Above all, thanks to God who gave them healthy minds to finish this humble work.

THE RESEARCHERS

DEDICATION

This humble work Is lovingly and sincerely Dedicated To our beloved parents And To our loving friends Who are always there In time of ups and downs.

THE RESEARCHER

TABLE OF CONTENTS Page TITLE PAGE……………………………………………………………………………………………………………………………………

I

THESIS ABSTRACT………………………………………………………………………………………………………………………..

II

APPROVAL SHEET………………………………………………………………………………………………………………………… GRADING SHEET………………………………………………………………………………………………………………………….. ACKNOWLEDGEMENT………………………………………………………………………………………………………………….

VI

DEDICATION………………………………………………………………………………………………………………………………..

VII

TABLE OF CONTENTS…………………………………………………………………………………………………………………..

VIII

CHAPTER I.

II.

III.

THE PROBLEM Introduction…………………………………………………………………………………………………………………..

1

Statement of the Problem…………………………………………………………………………………………….

3

Significance of the Study……………………………………………………………………………………………….

3

Scope and Delimitation of the Study…………………………………………………………………………….

4

Definition of Terms………………………………………………………………………………………………………..

5

REVIEW OF RELATED LITERATURE AND STUDIES Foreign Literature…………………………………………………………………………………………………………..

7

Local Literature……………………………………………………………………………………………………………….

10

Justification of the Study………………………………………………………………………………………………..

11

RESEARCH METHODOLY AND SOURCES OF DATA

IV.

V.

Research and Method Used…………………………………………………………………………………………….

12

Techniques Used……………………………………………………………………………………………………………..

12

Treatment of the Data……………………………………………………………………………………………………..

13

Payback Period…………………………………………………………………………………………………………………

13

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA Organization and Management Aspect…………………………………………………………………………..

15

Marketing Aspect……………………………………………………………………………………………………………..

13

Technical Aspect……………………………………………………………………………………………………………….

21

Financial Aspect………………………………………………………………………………………………………………..

25

Financial Analysis……………………………………………………………………………………………………………..

35

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS Summary…………………………………………………………………………………………………………………………..

39

Conclusion………………………………………………………………………………………………………………………..

41

Recommendation…………………………………………………………………………………………………………….

42

BIBLIOGRAPHY……………………………………………………………………………………………………………………………….

43

CURRICULUM VITAE………………………………………………………………………………………………………………………

44

LIST OF FIGURES Figure

Page

1

Organizational Chart

17

2

Vulcanizing Process Chart

23

3

Repair and Wheel Balancing

24

4

Location Map

5

Shop Layout

LIST OF TABLES Table

Page

1

Total Project Cost

26

2

Schedule Revenue

27

3

Computation of Income Tax

28

4

Schedule of Depreciation

29

5

Schedule of Operating Expenses

30

6

Schedule of Salaries and Wages

31

7

Projected Income Statement

32

8

Cash of Flow Statement

33

9

Projected Balance Sheet

34

CHAPTER 1 PROBLEM AND IT’S SETTING INTRODUCTION Although the government claimed for an upsurge of our economy for the last two years, it cannot be denied that the employment is still the pressing problem of society. Majority of the graduates in colleges and universities fail to have a good paying job. Many sought refuge in other countries were graduates of prestigious courses, such as engineering, commerce, education, and others, land as laborers, and domestic helpers. In the local labor market, many graduates enter in the fields different from the courses they pursued in college such as accountants employed as cashiers working as casuals in government offices and others. The introduction of labor contracting even added to the woes of these graduates. The system terminated the chance of the graduates to get a job with benefits and security of tenure. They are employed only for a period of five to six months and are terminated and replaced by another batch of five to six months contract labor. This difficulty to get a job had led others who have the means to venture in business of their own. Venturing in a small or medium scale business would not be as simple as registering the business, securing the necessary permit and licenses, and start the business operation, in this concept, many tried and failed due to lack of proper analysis and preparation, most of all no feasibility study has been conducted. At present the most simple and easily managed business is Vulcanizing and Repair Shop. This business has become the most lucrative and these are small time businessmen who want to engage into this kind of business but they do not have enough knowledge in running the business.

In Gapan City, there are more than thousands of tricycle units passing the streets in Gapan City and increased the doubly in a five year period from 3,600 units in 1992, in the year 2003 based on the legalized volume of tricycles from the record of Gapan City Tricycle Franchising and Legalization Department this figure becomes 4,200 units of tricycle registered in the City. From the above statistics, considering only the legalized volume of tricycle units in Gapan City, there are 21,900 tricycles tires rolling the streets every day. The average life span of a brand new tire is six (6) months such that for the whole year, from the 7,300 units, there are 43,800 tires consumed annually where a brand new tire cost an average of P320.00 per piece. This statistics provided an idea for the researcher to conduct a feasibility study on a business that would help the tricycle operators minimize their growing operational expenses as brought by the increasing prices of gasoline, oil and spare parts. The researcher conducted some surveys on tricycle using recapped tires they are using are from a sole tire recapping in Gapan City, Nueva Ecija. No one among the fourteen (14) stores selling motorcycles spare parts and tires within Gapan City, Nueva Ecija that has been interviewed by the researcher carry vulcanized tires. A comparative computation was conducted by the researchers in order to get a bird’s eye view on the economic difference between a vulcanized tire and a brand new tire. If the average lifespan of a vulcanized tire is 4.5 months at P180.00 per tire, its expenses per month is P53.00. If the average lifespan of a recapped tire is 4.5 months at P180.00 per tire, its expenses per monthwould be P40.00. The difference between the two is P13.00 per month or a 24.5 percent difference making the vulcanized tire more economical to use. Although a motorcycle vulcanizing shop is already in operation in Gapan City, Nueva Ecija, the business is not yet fully tapped since the existing one cater only to tricycle drivers who bring their

carcass in the establishment for vulcanizing. No actual carcass collection system or marketing strategy is undertaken. From the above statistics, the researcher came out for this study. “A Feasibility Study of Establishing a Vulcanizing and Repair Shop in Gapan City, Nueva Ecija.”

STATEMENT OF THE PROBLEM It is the intention of the research to determine and analyze the Feasibility of Establishing a Vulcanizing and Repair Shop in Gapan City. This study seeks to answer the following questions: 1. What is the type of business organization suited for the project/business? 2. What are the marketing programs to be used in the business? Is there a demand for the proposed project? 3. What are the technical requirements needed in the operation of the proposed business? 4. How much capital needed for the project? Is the proposed business profitable? 5. What is the social significance of the project? 6. What are the potential problems to be encountered by the business? SIGNIFICANCE OF THE STUDY This study entitled “Feasibility of Establishing a Vulcanizing and Repair Shop in Gapan City,” could be of help to the following: The Researchers. They will be familiar with the needed information that is essential in handling the business.

The Future Researchers. The result of this study would be a source of information to the future researchers who will be involved in this kind of business. The Prospective Investors. This study will be a guide to a future investors and for them to realize that putting up business like this is very feasible.

SCOPE AND DELIMITATION OF THE STUDY This study is limited only the vulcanization of motorcycle tires, and repair of the tire like the tire rim (rayos), where statistics used were based on the franchised and legalized 7,300 tricycle units in Gapan City. Single motor services were not included and others. Financial analysis is limited to the cost of equipment, tools, and materials used, as well as the process of production expenses, target markets, and projected market grab (share) with the financial analysis on profit statement and Rate of Return of Investment (RROI). To organizational aspect, this study justifies the type of business organizational it intends to put up. This aspect will also define the duties and responsibilities of the required personnel and their compensation. The production aspect, shall limits its discussion with emphasis to the location of the working shop, shop facilities, shop size and the services offered. As to financial aspect, the possible sources of financing the profit will be shown as well as the organized presentation of financial tools and analysis to justify the viability and feasibility of the project.

DEFINITION OF TERMS The following are define in order to guide the readers in understanding this study. AIR COMPRESSOR. A device used to accumulate air with pressure greater than atmospheric pressure used to power a mechanical device or provide a portable supply of air, or oxygen. CARCASS. As used in the study, this term refers to the exterior tire where the outer upper layer has already been consumed. ELECTRIC GRINDER. The term refers to a grindstone electrically operated, used to grind, polish or sharpen tools. EXTERIOR. The term refers to the outer part of rubber tire. INTERIOR. The term refers to the inner part of rubber tire made up of a thin tubular circular rubber which is air inflated. MARKETING STRATEGY. The term refers to the techniques employed in order to penetrate a certain product into the market which is in this particular study, the recapped tire. HEATING PLATE. This term refers to equipment used in hearing the rubber strip in order to cover the damaged part of the tire. WHEEL BALANCING EQUIPMENT. Refers to a simple machine used to repair the river of the tire when the latter is not already circular in nature (oblong). MECHANICAL TOOL SET. These terms refers to equipment used to fixed and loosen the metal screw of the tire. REPAIR. To restore, to sound or a good condition after damage.

SHOP. A place for making or repairing any article, a business subject for conversation.

CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES This chapter presents review of some studies and available literature which are in a way related to the proposed study.

FOREIGN LITERATURE The history of rubber tires began in 1839 when Charles Goodyear discovered the secret of vulcanization. Although the first air-inflated tire was not built until 1845. A young Scottish engineer, Robert W. Thompson, filled rubber tubes with air, encased them in leather and put them on carriage wheels. Thompson’s tire where not strong enough to last long or wear well. In 1888, John Dunlop, an Irish veterinarian built a pneumatic tire for his son’s bicycles. This was successful and Dunlop entered the business of making bicycles tires. At the beginning of 20th century, tires were made of single tub bolted to the wheel through crescent – shaped rims. George W. Rium described how tires are manufactured. According to him, rubber, natural or synthetic, is compounded in a mill between two (2) revolving smooth, hollow steel rolls. Carbon, black sulfur, pigments (such as zinc oxide) and accelerators are included to give the rubber an added strength and wear, heat and aging resistance. A Banbury mixer which contains rotating knives is a rapid and efficient means of mixing these ingredients. When all ingredients have been uniformly needed into the rubber, the mixture is removed from the roll mill in a long thin sheet. Tetile fiber, and for special uses thin steel wires are used to give the tire body strength and resilience. Reylon, nylon, and cotton are most often sued and all new artificial fibers are being tested. Square woven fabrics are combined with

the thin sheets of rubber on a 3-roll colander unto a single sheet, which is out to shape or place in rolls for the various steps in tire making. The rubberized fabrics are cut on the bias into diagonal strips. A tire is made up two (2) main parts, the carcass and the tread. The tread is producted by feeding the rubber into an extruding machine, which forms it to shape and size. The sidewall rubber can be made as part of the same piece or extruded separately. High tensile steel wire is then coated with rubber and formed into sheets to form the head. The tire builder lays several plies of rubberized fabrics on revolving cylinder shaped like a drum. After (2) plies are placed around the drum, the bead are placed on top and additional plies are added to the drum. The tread and sidewall are wrapped around the drum over the rubberized fabric. The drum is collapsed and the heavy rubber-fabric body removed. It is then ready for shaping and curing. The tire is place in pneumatic press where hydraulic pressure compress the heavy casing into shape. A specially contoured tube, called a curing bag, is placed inside the curing die and inflated. These forces softened rubber against the design of the mold to give the sharply outlined design of the treat surface. High pressure steam is sued to cure the tire at a temperature of about 3000F for about 45 minutes. New types of tire molds have the air bag on air bladder, built into the machine rather than as a separate piece of equipment. Richard A. Riley, a chairman of the Firestone Tire and Rubber Company stressed the need to shape the tread of the tire in accordance to the terrain as a tire safety measures. He said that conventional tires provide good traction under most conditions perform relatively poorly on smooth surface all season tires have wide grooves and tread patterns designed to penetrate snow and provide good traction. To reduce skidding, some tires are provided with studs embedded on the tread. Studded tires are, however illegal because they tend to damaged paved roads. Worn thread do not grip the road well and increases possibilities of skids. Tires should be replaced when their tread had

worn down 1/16 inch (1.6mm) this depth is indicated by a built in wear bars that show up as smooth horizontal bands across the tread. This depth is also an ideal wear for possible recapping. Since recapping is in itself a method of recycling used tires, it is worthy to note the words of Akiyama Tadasuke. He said that recycling can refer to variety of ways of refusing resource and products, from the recycling of home garbage to the systematic recovery and reuse of products of other materials and processing of industrial waste by government or industry. With regard to used tires, the researcher has been trying to develop practical methods of disposing of the millions of worned tires scrapped each year. Some of these tires are ground up, and the rubber is reclaimed for use in new rubber products. Some are used as artificial reefs on ocean bottoms, to provide heavens for fish. Still, others are ground up and used in asphalt for paving. Another method of disposing the tires is to use them as a source of energy. By burning them in a specially designed pollution – free incinerators, old tires could become valuable energy resource. But this method is extremely costly (a synthetic rubber fuel containing an oxygen-rich chemical is used in rockets). Aside from studies and literature about tires and recycling, some studies about marketing or business venture is important to note in this study. On entrepreneurship, to enter into a new venture necessities environmental assessment, the economic environmental plays a vital role in the success or failure of any new venture. Too often, it becomes obvious that a little effort was made to determine whether the economic environment was friendly or hostile to a specific venture. Kuratco recommended the following to assess economic environment in order to avoid pitfalls: 1. How many firms are in this venture?

2. Do the firms vary or are they similar? 3. Are they in one area or widely spread? 4. Do the firms serve only to the domestic market? 5. What is the competitive nature of this business?

Answer to these question provide an overall picture of the business eliminate within which a new ventures must realize that certain attitudes and perceptions from prospective clienteles are needed for proper assessment of the environment. Michael E. Porter recommends other useful steps that can assist an entrepreneur in examining any new venture: 1. Adequate definition of the industry for the new venture. 2. Analyze the competition. 3. Determine the strength and characteristics of suppliers. 4. Establish the “value added” measure of the new venture. 5. Project the market size for the particular industry.

LOCAL LITERATURE The role, tasks, and responsibilities of management do not actually vary, to a significant extent, among organizations, instead, it is the manager with his own unique sets of attitudes and norms – and the kind of subordinates he handles that differ widely in all organizations. Andres discourses on the Filipino values and management practices in the Philippines as he believes that the Filipino entrepreneur

has its unique style of management according to Andres, the Filipino manager needs from his subordinates. JUSTIFICATION OF THIS STUDY The researcher found out that the project is feasible and viable and assure that this study is not duplicated or copied from other studies thus this study is original and it is the product of combined effort or the researchers. The scope of this study has similarity and differences to other studies. It is similar in term of techniques used in data gathering and also in treatment of data, but differs in term of explanation and meaning. It also differs in the content of the study, and also its location and capitalization.

CHAPTER III RESEARCH METHODOLOGY AND SOURCES OF DATA This chapter presents the research method utilized by the researchers, the manner of gathering data, their sources and procedures used to test the viability of the project.

RESEARCH METHOD USED In this study the descriptive method of research was utilized by the writer with documentary analysis as the main technique for data gathering. Description research was utilized to describe the ways and methods of producing vulcanizing and repair shop business. Reports and other written documents from private and government agencies such as Department of Trade and Industries, Private Business Publications and other institutions were utilized by the researchers. Interviews with people in vulcanizing business were also undertaken.

TECHNIQUES USED IN DATA GATHERING 1. Interview – needed facts were obtained through interview and it gives the researchers the much more assurance to the accuracy of the results. 2. Observation – they observed that it is necessary to organize the business in the form of a single proprietorship because it allows the proprietor to have different control over the business. 3. Library Technique – was also conducted by the researchers in order to furnish all the needed data that will be a big help to the study. Published books, magazines, journals and internet in

personal computer were used in this study, in this study, in order to find out the difficult problems involved in this research study. TREATMENT OF THE DATA The following financial methods of evaluating the feasibility of a certain project were utilized by the researchers.

1. RETURN ON INVESTMENT Foremost among investors is the rate that these would give. This significance rate of return promise by investment project when investors consider the time value of the investment. ROI = Annual Net Income Total Investment

2. PAYBACK PERIOD Measures the length of time required to recover the amount of initial investment it is the time interval between the time of initial outlay and the full recovery of the investment. Payback = Net Investment Annual Cash Return 3. PRESENT VALUE ANALYSIS It is the excess of the present of the cash inflows generated by the project over the amount of the initial investment. It is the discounted cash flows approach to investment.

It was a required discount rate to find the present value of the project cash flows. If, after deducting the original investment from the sum of equal to or greater than zero, then the study is acceptable.

CHAPTER IV PRESENTATION, ANALYSIS AND INTERPRATATION OF DATA This chapter consist the entire content of the study organization and management, technical, marketing, and financial aspects of the project. Special mention is made concerning potential problems, and social desirability of the proposed study. A. Organization and Management Aspect This business will start on a small case basis. This is a single proprietorship business which will supply the operate as vulcanizing and repair shop. It is usual in this kind of business that the manager will directly supervise the workers. PERSONNEL WORKERS The organizational structure of the business will be composed of the following personnel and workers: 1. Manager / Owner 2. Secretary / Bookkeeper / Cashier 3. Vulcanizers 4. Wheel / Tire Repairmen 5. Shopkeeper / Helper ORGANIZATIONAL STRUCTURE It is usual for this kind of organization to use the line type of organizational structure from where there is a direct flow of authority from the top position to its subordinates. A

characteristics of this this type is the superior – subordinate relationship wherein a superior delegates authority to a subordinate who in turn delegates authority to another subordinate thus forming a line from the very top of the lowest level of the organizational structure. Line type of organization is the simplest form of organization types, hence it is easily understood by its members. Every person knows from whom he receives his order and to whom to report. A person with line authority knows what he is expected from him and he is responsible for the unit to which he is expected or assigned to function for the attainment of the goals of the enterprise. The proposed project, being on a small scale will have simple organizational structure.

FIGURE 1 ORGANIZATIONAL CHART OWNER OR MANAGER

SECRETARY/ BOOKKEEPER/CASHIER

WHEEL/ TIRE REPAIR MEN

VULCANIZERS

SHOPKEEPER/ HELPER

JOB DESCRIPTION AND SPECIFICATION The following are the responsibilities of the employees/ personnel. General Manager/Owner. He is responsible in dealing different kind of persons like tricycle drivers, customers and other persons in the business. He should make an effective plan in the management of the business. He should make an effective plan in the management of the business and create a good marketing strategies. He should be knowledgeable in the whole operation of the business. Secretary. Her primary function is to issue receipts and pay bills of the company. She should have a thorough understanding on different proceedings of the business and very well knowledgeable in proper recording of transaction made by the business. Vulcanizers. They are responsible in dealing with their needs and problems of the customers. Their duties are the main important jobs in the shop and they are also the responsible persons in the repair and maintenance needed by the customers and tricycle drivers. Shop Keeper or Helper. He is responsible in repairing the broken wheel / tire support (rayos). After changing the broken tire support, the repairman makes the necessary balancing the wheel/tire of the tricycle on order to maintain the wheel circular in nature. Salary Distribution Job Title

Salary/Wages per month

Manager / Owner

12, 500

Secretary

8,000

3 Vulcanizers/Workers (P4,000.00) each

12,000

2 wheel Repairmen (P4,000.00) each

8,000

1 Helper or Shop Keeper

3,000

MARKETING ASPECT A business organization such as that of an vulcanizing and repair shop operates on a very competitive organization. Business uses the limited resources available to them as well as for the limited markets of their services. In such situation a project must have a clear idea of the role which it plays in society. It should always aim to offer better quality services that of its competitors for this is the only deciding factor in which a consumer could decide because the prices of the services in this company does not vary with each other. Also the best suited marketing strategy as well as the proper advertisement procedures was revealed in this part. MARKET STUDY In Gapan City, there are only few vulcanizing and repair shops offering a business which is something big and unique. The business is different from the vulcanizing shops shown in pathways of the mainroads (Bangketa). The minimum number of vulcanizing stand is five (5) sets and two (2) sets of wheel balancing equipment are available in the shop, with the rate of increase tricycles in the city, there is a need to install a vulcanizing shop, which is big and has enough space to accommodate at least five customers at a time. According to Land Transportation Office there are at least 5,200 tricycles registered in Gapan City alone aside from the tricycle moving/operating in the adjacent town of Gapan like San Isidro, San Leonardo, and Penaranda. In this situation, the researchers believed that there is a big market.

Market of the Product The primary market place of the business of San Vicente, Gapan City other nearby places also the target market. The manager himself will transact with the tricycle drivers in Gapan and in other nearby places like San Leonardo, San Isidro, and Penaranda, Nueva Ecija wherein there are many existing tricycle driving in the streets of Gapan for the vulcanizing service and repair. Marketing Strategies On the store site the business will simply place a billboards and the numerous poster and banners will be located in different places. The main marketing strategy to be used is by informing the tricycle drivers about the shop and offering lower prices of the products. There is no need for the proponent to advertise the shop eagerly because there is a big demand in vulcanizing and repair business in the City.

Supple and Demand Analysis Market Demand. The proponent considers the analysis of supply and demand of the project. As per survey, the demand for vulcanizing and repair shop is one of the great demands the tricycle in the city. In this connection there will be no problem as far as the demand for the services offered by the shop is concerned. According to the present vulcanizing shop owners (small time) this project is still blooming, thereby allowing a bigger demand for the future and still giving an opportunity for earning for those who are interested in getting into this kind of business. Market Supply. Supply and materials to be used in the operation of the business are not considered a problem because there are many equipment and materials available for purchase nearest the project,

therefore, there is no limitation on the source of supply in operating the said business. Gapan City, being one of the business centers in the province have enough of supplies and materials for vulcanizing and repair shop where materials for the project can easily be secured.

TECHNICAL ASPECT This part of the study was consisted of the necessities in handling the product and it also discuss the store site and the renovation of the shop building.

Location The location of the shop should be in that can reach by many people. The place should have a small workplace to accommodate customers and other tricycle drivers. The store site will be located at San Vicente, Gapan City where anybody in the area could access the shops. The vicinity map of the store was presented in Figure 4. Building Renovation It is estimated that the shop to be renovated will cost P6,000.00 pesos that means this amount was necessary in the renovation of the building shop. The shop site will be renovated in the description appropriate for the vulcanizing and repair services, 5 working places for the vulcanizing and 2 sets for wheel balancing and repair shop. The office of the manager was build inside the shop and the cashier windows as well. The store area should be at least 8 meters wide.

Source of the Products The main source of the products are the leading suppliers of vulcanizing materials in Metro Manila that offers a low wholesale price which means lower cost of the products.

Machineries and Equipment The following are the equipment needed by the project 1. Air Compressor. It is necessary in providing air for the tire when it is already vulcanized. 2. Calculators / Adding Machine. It is usually used by the cashiers and sales clerk for the computation of the sold items. 3. Healing plate (stall). This equipment is important/necessary in heating the rubber strip in order to cover the damaged part of the tire. 4. Lighter / Matches. These items are also needed in lightning the heating plate with diesel. 5. Wheel Balancing Equipment. This in needed in repairing the rim of the tire when the tire is not already circular in nature (oblong tire). 6. Drum. This is necessary in locating the damaged part of the tire (butas). 7. Mechanical Tool Set. This is very important in loosing and fixing the metal screw of the tire. 8. Rubber Strip (Adhesive). This is the main material used in covering the broken interior of the tire.

FIGURE 2 VULCANIZING PROCESS CHART

TIRE REMOVING

AIR FILLING THE TIRE (INTERIOR)

LOCATING THE DAMAGED PART OF THE TIRE

HEATING THE INTERIOR PART OF THE TIRE WITH RUBBER STRIP

REMOVING FROM THE HEATING PLATE

AIR REFILLING THE INTERIOR TIRE

FIXING THE TIRE

FIGURE 3 REPAIR AND WHEEL BALANCING

TIRE REMOVING

LOOSEN ALL THE BROKEN RIM SUPPORT (RAYOS)

PLACE THE WHEEL/TIRE RIM IN THE WHEEL BALANCING EQUIPMENT

BALANCING THE RIM SUPPORT (RAYOS) TO REPLACE THE BROKEN RAYOS Formatted: Tab stops: 5.72", Left

REMOVING FROM THE TIRE BALANCING EQUIPMENT

FIXING THE RIM TO THE TIRE WITH BALANCED SUPPORT

FIX THE WHEEL/TIRE TO THE TRICYCLE

Formatted: Centered

FINANCIAL ASPECT The total capital requirements for the project will amount to about P75,000.00. the equity shall be the owner’s investment without borrowing money from any financial institutions. Since the business is only a small scale industry, the proponent decided not to borrow money from the bank. The proponent’s capital is enough to operate a small business like a vulcanizing shop. The following table shows the detail of the total capital requirement of the proposed business.

Table 1 TOTAL PROJECT COST

PARTICULARS

AMOUNT

Building / Shop Renovations

P6,000.00

Advanced Deposit for Rentals (2 months – P3,500 per month)

7,000.00

Machineries and Equipmet Air Compressor

P20,000.00

Heating Plates (5pcs)

2,500.00

Wheel Balancing Eqpt. (2pcs)

4,000.00

Mechanical Tool Set

5,000.00

Drums (2pcs)

500.00

32,000.00

Working Capital

30,000.00

Total Project Cost

P75,000.00

Table 2 SCHEDULE OF REVENUE (SERVICE FEE COLLECTED) PARTICULARS

DAILY

MOTHLY

ANNUALLY

Vulcanzizing Fees

P750.00

P22,500.00

P270,000.00

Wheel/Tire Repair Fees

P800.00

24,000.00

P288,00.00

Total Revenues

P1,550.00

46,500.00

P558,000.00

Sample Computation: Vulcanizing 50 pcs x P15.00

=

P750.50/day

=

P800.00/day

Wheel Tire Repair 10 pcs x P80.00

Table 3 COMPUTATION OF INCOME TAX

SUBJECT FOR INCOME TAX

INCOME TAX

1st year P31,400 – 30,00

= P1,400 x 15% + P 2,500.00

= P2,710.00

= P5,300 x 15% + P2,500.00

= P3,295.00

= P9,590 x 15% + P2,500.00

= P3,939.00

= P 16,309 – x 15% + P 2,500.00

= P4,946.00

2nd year P35,300 – 30,000 3rd year P39,590 – 30,000 4th year P46,309 – 30,000 5th year P49,500 – 30,00

= P19,500 x 15% + P2,500.00

= P5,425.00

Table 4 SCHEDULE OF DEPRECIATION

PARTICULARS

COST

USEFUL LIFE

DEPRECIATION

Shop Space (Renovation) Machineries and Equipment Total

P6.000.00

5 years

P1,200.00

P32,000.00

5 years

P6,400.00 P7,600.00

Table 5 SCHEDULE OF OPERATION EXPENSES PARTICULARS SALARIES/Wages

YEAR 1 P456,000

YEAR 2 P501,600

YEAR 3 P551,700

YEAR 4 P606,936

YEAR 5 P667,630

Rent

12,000

46,200

50,820

55,902

61,492

Light & Water

6,000

6,600

7,260

7,986

8,785

Supplies

12,000

13,200

14,500

15,972

17,569

Depreciation

7,6000

7,600

7,600

7,600

7,600

Repair & Maint.

1,000

1,100

1,210

1,331

1,464

License and Permit Total

2,000

2,200

2,420

2,662

2,928

P526,000

P578,500

P635,590

P698,389

P767,468

Table 6 SCHEDULE OF SALARIES AND WAGES 1 Manager / Onwer

P9,000.00

1 Secretary

6,000.00

3 Vulcanizers P4,000.00 each

8,000.00

2 Wheel Repair Men P4,000.00 each

8,000.00

1 Helper

3,000.00

Total Salaries and Wages

P 38,000.00/month

387,000.00 x 12 months

= P456,000.00/year

Table 7 PROJECTED INCOME STATEMENT PARTICULARS

YEAR 1 P270,000

YEAR 2 P297,000

YEAR 3 P326,700

YEAR 4 P359,370

YEAR 5 P395,307

Wheel / Tire Repair Gross Revenue

288,000

316,800

348,480

388,328

421,661

558,000

613,8000

675,180

742,698

816,968

Less: Operating Expensing Income before tax Less: Prov. For Income Tax Net Income Tax

526,6000

578,500

635,590

698,389

767,468

31,400

35,300

39,590

46,309

49,500

2,710

3,295

3,939

4,946

5,425

P28,690

P32,005

P35,651

P41,363

P44,075

Vulcanizing

Average Income = P36,367.00 75,000.00

=48%

Table 8 CASH FLOW STATEMENT YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Net Income After tax

P28,690.00

P32,005.00

P35,651.00

P41,363.00

44,075.00

Add: Non cash Items Amortization and Depreciation Increase in tax liability Total

7,600.00

7,600.00

7,600.00

7,600.00

7,600.00

2,710.00

585.00

644.00

1,007.00

479.00

P39,000.00

P40,190.00

P43,895.00

P49,970.00

P52,154.00

Add: Cash bal. Beg

P30,000.00

P6,900.00

P10,919.00

P15,309.00

P20,306.00

Cash end

P69,000.00

P109,190.00

P153,085.00

P203,055.00

P255,209.00

Table 9 PROJECT BALANCE SHEET YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Cash

P69,000.00

P109,190.00

P153,085.00

P203,055.00

P255,209.00

Advance deposit

7,00.0

7,000.00

7,000.00

7,000.00

7,000.00

Bldg. Renovation

6,000.00

6,000.00

6,000.00

6,000.00

6,000.00

Less: Accum Depreciation Machineries

(1,200.00

(2,400.00)

(3,600.00)

(4,800.00)

(6,000.00)

32,000.00

32,000.00

32,000.00

32,000.00

32,000.00

(6,400.00)

(12,800.00)

(19,200.00)

(25,600.00)

(32,000.00)

P106,400.00

P138,990.00

P175,285.00

P217,655.00

P262,209.00

Taxes Payable

2,710.00

3,295.00

3,939.00

4,946.00

5,425.00

Owner’s beg. Cap

75,000.00

P103,690.00

P135,695.00

P171,346.00

P212,709.00

Add: Net Income

28,690.00

32,005.00

35,651.00

41,363.00

44,075.00

Total Operating Expenses Total Liab. And Owner’s Equity

P103,690.00

P135,695.00

P171,346.00

P212,709.00

P246,784.00

P106,400.00

P138,990.00

P175,285.00

P217,655.00

P262,209.00

Less: Accum Depreciation

FINANCIAL ANALYSIS The following are the barometrics/indicators used in the study in order to test the profitability of the proposed project/business. Average rate of return cash payback period and the present value analysis. 1. Average Rate of Return = Average/Annual Income Total Investment

= P36, 367 75,000

ARR = 48% 2. Payback Period Payback period indicates the number of years required to fully recovered the initial investment. This figure shows in the following computations.

CPP

=

Total Project Cost____ Net Income + Depreciation

= ____P75,000______ P28,690 + 7,660.00 = 75,000 36,290 = 2.067 x 12 months CPP

= 2 years and 8 months

3. PRESENT VALUE ANALYSIS YEAR

CASH INFLOWS

PV of P1 At 12%

PRESENT VALUE

1

P 36,290.00

0.893

P32,406.97

2

36,605.00

0.797

31,565.19

3

43,251.00

0.712

30,794.47

4

48,963.00

0.636

31,140.47

5

51,675.00

0.587

30,333.23

Total Present Value of Cash Inflow

P156,240.57

Less: Total Project Cost

75,000.00

Net Present Value

P81,240.57

SOCIAL DESIRABILITY OF THE PROJECT In this study, the proposed viability is not all that is considered when investing in business is concern. The project socio-economic contributions to the country should likewise solicit an equal degree of consideration. The project is expected to be a contributor’s, as well as a helping hand for the upliftment of the social and economic living in the city. The following areas are also considered. Employment Generation. A developed vulcanizing industry and those indirectly involved in the project providing them employment during the renovation of the shop as well as during its actual operation. Income Generation. Considering employment opportunities, this project could contribute income to those who work in the business not only the employees but also the investors who will go into this kind of business. Generating Funds for the Government. By means of licenses and taxes fees to be paid by the business, it can generate funds for the government which will eventually be of assistance in uplifting the socio-economic life in the country.

POTENTIAL PROBLEMS The potential problems as envisioned by the proponent in the actual operation project are as follows: 1. Due to the city ordinances considering the non-franchising of tricycles in the city could affect the operation of the business. 2. There is a tendency that through the development of the city, allowing taxi and multi cab to operate business in the city. Through this change in the system and policies, the project will also be affected.

CHAPTER V SUMMARY, CONCLUSIONS, ANF RECOMMENDATIONS This chapter deals with the summary of findings, the conclusions and the recommendations for the successful management of the business.

SUMMARY This study wants to find out the feasibility study of vulcanizing and repair shop in Gapan City. This study deals with the four aspects of management.

Management Aspect This business will be formed as a single proprietorship. This type of management was adopted because it is easy to start and terminate, profit belongs entirely to the owner and the ownership is vested only to one person. The type of organization used in this project is the line type where there is a direct flow of authority from the top position to the subordinate levels.

Marketing Aspect The best suited marketing strategy as well as the proper advertisement procedure was revealed in this part. In Gapan City, there are only few vulcanizing and repair shops offering a business which is something big and unique. This business is different from the vulcanizing shops shown in pathways of the main roads (Bangketa). The minimum number of vulcanizing stand is five (5) sets and two (2) sets of wheel balancing equipment are available in the shop, with the rate of increase tricycles in the city, there is a need to install a vulcanizing shop, which is big and has enough space to accommodate at least five customers at a time. According to Land Transportation Office there are at least 5,200 tricycles registered in Gapan City alone aside from the tricycle moving/operating in the adjacent town of Gapan like San Isidro, San Leonardo, and Penaranda. In this situation, the researchers believed that there is a big market. The primary market place of the business of San Vicente, Gapan City other nearby places also the target market. The manager himself will transact with the tricycle drivers in Gapan and in other nearby places like San Leonardo, San Isidro, and Penaranda, Nueva Ecija wherein there are many existing tricycle driving in the streets of Gapan for the vulcanizing service and repair. On the store site the business will simply place a billboards and the numerous poster and banners will be located in different places. The main marketing strategy to be used is by informing the tricycle drivers about the shop and offering lower prices of the products. There is no need for the proponent to advertise the shop eagerly because there is a big demand in vulcanizing and repair business in the City.

CONCLUSION Based on presented information regarding the establishment of Vulcanizing and Repair Shop in Gapan City, it can be concluded that is venture is feasible because of the following: 1. That the organization best suited is single proprietorship. 2. That there is a demand for the proposed project. 3. That there is more profit to be derived from the business. 4. That the maintenance of this project is very simple. 5. That the business is very feasible. 6. That the business is socially desirable and gives benefit not only to the owner, consumers, but also to the government.

RECOMMENDATIONS In the light of conclusion, the following are recommended: 1. Individuals who are interested in Establishing a Vulcanizing and Repair Shop should find good location such as cities and urban areas because that is the place where most consumers/buyers come. 2. They should hire qualified and skilled workers in the business so that they can carry out business in order to make the products and services more attractive. 3. Different marketing strategies should be applied in this business in order to make the products and services more attractive 4. Capitalization requirements should balance the procurement of materials and equipment in the operation of the said business. 5. Systematic financial procedures and control system be given more emphasis.

BIBLIOGRAPHY Aquino, Gaudencio V. Fundamentals of Research and Thesis Writing (Quezon City: Phoenix Publishing House, 1978) Brandt, Steven C. Entrepreneurship in Established Companies: Managing Toward the Year 2000 (Homewood, Illinois Dow Jones-Irwin, 1986) Compton’s Interactive Encyclopedia, 1997 Edition Corter V. Good and Douglas Scates, Method of Research (New York McGraw Hill book Co., Inc. 1972) Medina, Roberto G. Entrepreneurship and Small Business Management (Manila REX Printing Co.1996) Patac, Juan. “A Large Scale Business”, The Economic Journal Vol. 18, No. 10 January 1989 Webster Dictionary, Student Ed. (Springfield G. Merriam Book, Co., 1975).

FIGURE 5 SHOP LAYOUT

STOCK ROOM AND UTILITY OFFICE

4m