Chapter 1

BACKGROUND OF THE BUSINESS AND INDUSTRY

Overview of the Business

Education is a fundamental human right. Not only is this provided for in the Universal

Bill of Rights (Art. 26) and the Philippine Constitution (Art. XIV, Sec. 1-2), but education is also

highlighted as a strategy in accelerating human capital development in the Philippine

Development Plan 2017-2022 and the Duterte Administration’s 10-point Socio-economic

Agenda. As such, the Department of Education (DepEd) will always have a budget for its

personnel, operating expenses, facilities, and equipment.

In particular interest to this study is the DepEd’s budget for office and other supplies

under its Maintenance and Other Operating Expenses (MOOE) because the business intends to

cater to office and school needs of public high school implementing units (IUs) in the 1st district

of Batangas. There are 15 of these schools in the district with an estimated annual budget of

close to 10 million for office supplies and other supplies and materials.

The business was conceptualized in early 2017 in an informal discussion with school

purchase decision-makers who were lamenting on the need to fully utilize their MOOE by the

end of each quarter and the lack of legitimate suppliers who can provide for their needs,

regardless of the amount of purchase. While the business was able to take-off with regard to

formalizing the set

up like acquiring the necessary permits, it was not able to operate fully due to other commitments

by the owner. Therefore, due to the time that has passed, the business plan has to be revisited for
applicability in the way forward, especially in the light of the recent pandemic. Current

Situation of Business

At present, the business has an active business permit to supply office and school needs. It

caters to a maximum of 3 of the target 15 clients, only from Nasugbu, and only for select

(convenient) orders. Main issues in the last 3 years include lack of time to deal with suppliers

which affected timeliness of RFQs and delivery of certain goods, lack of time to deal with clients

which affected revenues and opportunities for service improvement, and the Taal Volcano

eruption and Covid-19 pandemic which disrupted school activities, and consequently, the needs

of the schools and revenues of the business.

Because the business does not maintain an inventory and has no receivables at the

moment, it can be treated as a new business needing capitalization though with existing suppliers

and target clients. The business has a registered business name but for purposes of this study and

to protect the interests of the business, it shall be referred to as Amici Enterprises.

Vision

To be the preferred supplier of office and school needs in public schools in the 1st District

of Batangas.

Mission Statement

Guided by FAITH (fairness, accessibility, integrity, trustworthiness, humanity), to provide

a value-for-money, one-stop shop to public schools in their purchasing needs.

Objectives of the Project

 General Objective:

The study aimed to determine the viability of operating Amici Enterprises in the 1 st

District of Batangas from 2021 onwards.

Specific Objectives:

• To create the marketing plan of the business;

• To identify the requirements needed for its legitimate operations;

• To provide for its organizational and managerial specifications;

• To create the strategic plan for the business;

• To ascertain the profitability of the business; and

• To present the socio-economic contribution of the business.

Industry Background and Overview

The Maintenance and Other Operating Expenses (MOOE) of a school is the main source

of fund for its operational needs – travelling and transportation, training expenses, ICT supplies

and equipment, accountable forms, drugs and medicines and medical equipment and supplies,

repairs and maintenance, utilities, sports materials and equipment, and office supplies and other

supplies and materials, to name a few.

In the 2020 National Expenditure Program, the total MOOE budget of the 15 public high

school Implementing Units (IUs) in the 1st district of Batangas totalled Php39,587,000.00. For

office and other supplies alone, the focus of the business, the estimated budget is around P10

million or about 25% of the total MOOE, based on a figure presented in a study by Al-Samarrai
(2016) on elementary and non-IU public high school MOOE expenditures. Since the difference

between IUs and non-IUS is mainly on financial administration and not on the system of

instruction or curriculum, the needs of IU and non-IU schools, and consequently their level of

expenditures on those needs, would be comparable.

Public High School IUs comprise only a small percentage of public schools in the 1st

district. In Nasugbu alone, only 6 out of 14 public high schools are IUs. Non-IU’s in the entire

first district though, number more than a hundred public high schools and more than 200 public

elementary schools, considering that the 1st district has 284 barangays, 56 of which are in the

Poblacion. Since the business offers supplies and materials relevant to all schools, the market

potential is huge. The main reason for choosing IUs as initial target is that IUs are capable of

administering their own funds (regular, direct from DBM) with dedicated personnel for

budgeting, disbursing, and accounting functions which means that the likelihood of default or

delayed payments is minimal. In non-IUs who receive allocations of school MOOE in the form

of cash advance, various literatures have pointed out issues with liquidation which affect

subsequent receipt of funds (Mayor, 2019).

At present, there are key suppliers of office and other supplies in each of the towns. But

because of lack of competition, these suppliers tend to charge huge mark-ups for supplies, for

profit and/or for the ‘extras’ they provide to the school/school contact. By providing competition

to these suppliers, schools will have choices, and consequently, likely to get better value-for

money goods and services from its suppliers.

Growth Potential and Outlook in the Future

 While the business targets public high school IUs at present, the demand, both for

products and value-added service the business can offer, is much higher among non-IUs,

including elementary schools. Thus, the growth potential of the business is strong. From its

initial client base of 3 schools in Nasugbu on select orders, it could build relationship with clients

to expand product categories being provided. It could also target the other twelve (12) IUs

outside of the initial client base or it could target other public schools (elementary, non-IU high

schools, senior high schools) by geographic area.

In light of the current pandemic, the business has an opportunity to provide PPEs, medical

supplies, disinfectants, and supplies and materials for distance or modular learning. The current

pandemic also warrants that the business provides alternatives to the usual processes of

procurement; hence, having an online website is ideal. The website will showcase the products

and variants carried by the business so clients can choose the product and quantity desired, with

the output being an RFQ exportable to Excel. This facilitates turn-around time for RFQs.

Definition of Terms:

The following are some of the terms used extensively in this study:

Implementing Units (IUs) – public secondary schools in the 1st District of Batangas that are

capable of administering their own funds since they have position items assigned to handle

cashiering and bookkeeping functions, whether on a permanent or temporary basis, as identified

in DepEd order No. 12; s. 2014.

Office and school needs – supplies, materials, and equipment used by schools in their day-to-day

operations, whether in the office, classroom, activities, or maintenance of school premises, and
charged to the Maintenance and Other Operating Expenses (MOOE) of the school.

Generalization

Amici Enterprises intends to supply office and school needs to public high school IUs in

the 1st district of Batangas which is a Php 10M market. There are only 15 of these schools in the

entire district with rest of the public high schools, elementary schools, and senior high schools

being non-IUs. The rationale for choosing IUs over non-IUs is the minimal likelihood of default

or delayed payments among the former due to its established system of financial administration.

Because IUs and non-IUs follow the same curriculum, needs are likely the same, hence, the

growth potential of the business is strong.