ACT1112 -

STRATEGIC
BUSINESS
ANALYSIS
GROUP MEMBERS:
PESTAÑO, HANNAH

CASTRO, ANN

CONVEND VENDING ARCANGEL, CHRISTIAN

SEMILLA, LANCE

MACHINES AND
SERVICES
FEASIBILITY STUDY
 PROJECT SUMMARY
BACKGROUND OF THE STUDY

Vending machines can be defined as automated machines that dispense various products
which are functioned when a customer inserts currency or credit into the machine (Ratnasri, 2021).
Generally, vending machines are used to dispense snacks and beverages. The CONVEND Vending
Machine (CONVEND) however, is one that allows customers to purchase school and office supplies.
It guarantees a much shorter waiting in line due to easier payment and claiming of products. It also
makes it convenient for the customers to purchase their needs within the area, such as an university
campus, without having to commute.

Additionally, CONVEND can sell school merchandise, such as uniforms, t-shirts, and ID
laces. Thus, this business can be treated as an extension of the universities' bookstore business. This
may lead to more free area for the clients, as the bookstore can be compacted in vending machines.
Since the machine is unmanned, it also calls for less cost.

The concept of CONVEND is present in some universities in abroad, such as the University
of California (Intelligent Dispensing Solutions, 2015). Our team has taken inspiration specifically
from Japan. However upon review and survey, these kinds of vending machines are not thoroughly
present in Philippine universities and colleges. Thus, we purposed to create CONVEND as we,
students, have experienced the need of such the most. Being FEU students, we currently plan to focus
on establishing our business in FEU branches.

In the future, the business plans to incorporate for the purpose of increasing capital and
decreasing the risk of being personally liable for liability. Aside from equity financing, the business
also plans to entertain the idea of debt financing through loans from financial institutions. Such capital
will be used to acquire more vending machines to expand the business.

BUSINESS NAME

The business name for the business is CONVEND Vending Machines, or CONVEND for
short. It is a name that is easy to understand and remember while still carrying with it the main
purpose of the business. Simply it stands for 'convenient vending'. The name emphasizes the type of
service we wish to provide, as well as the main factor as to how our business is in advantage
compared to normal retailing stores.

BUSINESS LOGO
 As you may see, the business logo is an illustration of a vending machine. The art style,
which is like chalk on a blackboard, symbolizes the market (schools and universities) and product
(school and office supplies) our business is to supply. The logo also illustrates different shapes and
colors that represent the variety of products the business plans to sell. Lastly, the logo contains the
business' tradename which is highlighted in bright color to induce its significance.

FORM OF BUSINESS ORGANIZATION

We opt our business to be a limited partnership, having general managing partners and limited
partners.

BUSINESS LOCATION

The target location during the start up of the business is at the FEU Makati Campus. Further
on, the business plans to expand to other FEU branches such as FEU Manila and FEU Cavite.
Specifically, CONVENDs are suggested to be placed in locations like the cafeteria, waiting areas, and
lobbies.

Images to be added.

OBJECTIVES OF THE STUDY (TO FOLLOW)

INVESTMENT COSTS AND MODE OF FINANCING

Investment costs may range from P230,000.00 to P300,000.00 (Online Vending Machine
Sales & Services Inc., 2022). However, the useful life of vending machines may range from twelve
years to twenty-four years. The business also considers buying second-hand vending machines for a
smaller investment cost.

To finance such costs, there are options to either finance it with capital from investors or
finance it through long-term loans due to high costs. However, with the current inflation rates and
dollar-to-peso exchanges, it is not recommended to enter loans due to consequently high interest rates
that may significantly affect profit. Attached is a screenshot of brand new vending machines with
prices that are being sold in an online website.
 MARKETING STUDY
MARKET DESCRIPTION

The target area, as mentioned previously is the FEU Makati Campus. Direct competitors are
limited to the university's bookstore, of which does not purposely sell school and office supplies.

Indirectly, there are many probable competitors against the business. Nearby convenience
stores like Lawson sell such items. Bookstores or stores that sell supplies in a non-walkable distance
from the university may also be considered as indirect competition.

However, in terms of selling supplies in a vending machine, it is the only provider in the
university.

TARGET MARKET

To be determined in the survey: Income or budget & age of possible market

SAMPLING AREA & SIZE

Need to request for authorization: How many IABF students are enrolled in FEU Makati?

SAMPLING METHOD

The sampling method to be used was the simple random sample. Per year level of IABF, a
certain number of students will be surveyed.

SURVEY QUESTIONNAIRE

1. How many times have you been able to visit the in-house Tam Bookstore? [Choose what is most
applicable to you: never, once, at least twice, more than five times]

2. Have you encountered any issues with acquiring school supplies within the FEU vicinity for the last
face to face semesters? [Yes or No]

3. How accessible are stores that sell school and office supplies around FEU (ex. National Bookstore,
Office Warehouse, Lawson, etc.)? [In a scale ranging from 'very accessible' to 'I have not visited it
more than five times in the last semester']

4. How much school and office supplies do you usually consume per semester (ex. ballpens, pencils,
correctors, etc.)? [Choose from a range of: less than P100, P100-P200, P300-400, P500+]

5. How much would you be willing to spend for school and office supplies? [Choose from a range of:
less than P100, P100-P200, P300-400, P500+]

6. Select as needed. Which of the following would you say are essential school and office supplies?

Pens (any kind), Erasers, Pen corrector/correction tape, White board markers, Highlighters, Index
Cards, Tape, Glue stick, Envelopes, Rubber bands, Paper fastener, Pins, 20 sheets of 1/4 yellow pad,
super strong glue
7. If there is a school supply vending machine located within FEU Makati campus, would you use it?
[Yes or No]

SURVEY RESULTS

DEMAND AND SUPPLY ANALYSIS

DEMAND GAP

SWOT ANALYSIS

For

strengths, the business offers a unique concept to Philippines universities because it is the first of its
kind to exist for that area. It is also the most convenient option around the campus being the nearest to
the customers (aside from the universities' own bookstore). It also requires a few employees because it
is a self-service machine. At most it requires a technician for installation, maintenance, and repair. No
other employees are vital as partners are to be involved in the supervision and management of the
business during the startup to lessen cost.
 For weaknesses, the CONVEND do have limited offerings because of the storage capacity of
each machine, thus, it cannot meet the demands of every customer. Second, being a machine, it is
susceptible to suffering technical problems that may delay productivity until fixed. Third,
CONVENDs may be inaccessible for those who are not used to operating them. This may result in
customer loss and increased waiting time for other customers. Lastly, since the CONVEND depends
on profiting from generally cheap products like pencils and ballpens, the markup may make the
product more costly for the customers.

The business also recognizes its opportunities. After establishing itself in the FEU Makati
Campus, its good performance may allow it to branch out to other FEU campuses and to other
universities. With the decline of physical bookstores due to e-commerce, CONVEND may provide to
new customers. New technology may also upgrade the existing or future CONVENDs, making them
more accessible to those who use online payments like Gcash and PayMaya. Lastly, with the decline
of Covid-19 cases, more universities and schools are offering face to face classes. This may increase
the demand for CONVEND in new areas.

Lastly, there are the threats for the business. In the advancement of technology, students may
opt to use digital notepads and pencils for class. Universities may also require students to take exams
online, lessening the need for both students and faculty to purchase school and office supplies. Nearby
competition with bigger stores may offer more variety contrary to CONVEND. Another threat is the
probable change in law and regulations pertaining to vending machines. It may result in added cost
and competition.

PRICING STUDY

MARKTETING PROGRAM, MIX, & STRATEGIES

 MANAGEMENT STUDY
FORM OF BUSINESS ORGANIZATION

We opt our business to be a limited partnership, having general managing partners and limited
partners. The managing partner controls all operations and management while limited partners are to
supply capital needed.

The partnership is to rely mainly on leasing of vending machines to earn income. Partners are
to share income according to their capital contribution, with managing partners having an addition of
salary for their work. Loss are also to be shared according to capital contribution. The partnership has
no fixed term and may be dissolved at will.

LEGAL REQUIREMENTS AND STEPS TO REGISTER THE BUSINESS

LEGAL REQUIREMENTS:

Name Verification Slip (Can be • The contact number of the partner

obtained on SEC’s website)
• Articles of Partnership
• Joint Affidavit (Not required if already
stated in Articles of Partnership)
• Name, citizenship, address, birthday,
and Taxpayer Identification Number (TIN) of
the partners
• Capital contribution of the partners

• Registration of datasheet • Purpose of the partnership

• Certificate of Bank Deposit • Endorsement of Clearance [Unneeded

since not required]
• Name of the partnership
• FIA Form 105 (If you have a foreigner
• Principal office address partner)

STEPS TO REGISTER THE BUSINESS: [https://www.sec.gov.ph/company/primary-registration-

2/processing-of-applications-for-partnerships/]

1. Verify or reserve proposed name. If proposed name is allowed by the system, the reservation and
confirmation notice is printed and given to the applicant;

2. Present Articles of Incorporation and By-Laws at Green Lane Unit Ground Floor, Secretariat Bldg.,
PICC Complex, Roxas Boulevard Pasay City.

3. Pay filing fee at the Cashier located at the Ground Floor, Secretariat Bldg., PICC Complex, Roxas
Boulevard Pasay City and file application with the Receiving Unit, CRMD located at the Ground
Floor, Secretariat Bldg., PICC Complex, Roxas Boulevard Pasay City. After receipt of the
application, CPRD staff generates the Certificate of Recording of the Articles of Partnership bearing
applicant`s SEC registration no. and Unified Registration Report (URR).

4. Present Official Receipt to Releasing Unit, Ground Floor, Secretariat Bldg., PICC Complex, Roxas
Boulevard Pasay City to get the Certificate of Recording of the Articles of Partnership. The Asst.
Director reviews the application and forward it for approval of the CRMD Director.
 PROJECT'S TIMETABLE & GANTT CHART

Gantt Chart is to follow.

ORGANIZATIONAL CHART

MANPOWER REQUIREMENTS

ORGANIZATIONAL REQUIREMENTS

INTERNAL CONTROL
 OPERATIONAL STUDY
STEP BY STEP PROCESS: [CREATION OF FLOWCHART ONCE WRITTEN PROCESS
IS REVIEWED AND CORRECTED]

First of the process is to acquire the main component of the business, which is the vending
machine itself. From hereon, investment capital is already needed. This process may time as the
machine may be acquired abroad due to the specialty of such vending machine. However, this process
may be shortened if it can be acquired locally. We estimate such to take half a year and to a year at the
most.

Second, to stock the machine, supplies are to be bought in bulk and stored in the office
storage. Supplies are stocked according to the results of the survey as to which is in demand. Other
merchandise may be considered after the establishment of the vending machine. It is estimated for the
process to take less than half a year for delivery, considering that an agreement is reached with the
suppliers.

Third of the process is reaching out to possible clients and entertaining any interests in the
business. In this process, the business is introduced by the partners to university administration. It is
discussed also which fees are to be covered by the university and the minimum time of operation. In
this time, the business inspects the probable areas where the vending machines may be operated (i.e.
electrical and delivery pathway concerns). If an agreement is concluded, the next process may begin
immediately.

The next process is the installation of the vending machine by the specialized technician
provided by the business or the supplier of the vending machine. After it is able to function, it is
stocked by the merchandise previously bought.

Last part of the process is the receipt of payment. The business rents out the machine and
provides supplies at a fixed monthly cost. The university is the one to claim the payment accrued in
the machine, whether the payment is done through credit card or through currency. Further part of the
process also includes maintenance and related services.

As to the selling process of the vending machine itself, products are refilled depending on the
demand of the customers. Upon experience and trial, the vending machine may be restocked more
frequently or infrequently.

The vending machine is in operation while the university premise is open. Office hours,
however, are open on regular business time. Precisely, 9 AM to 5 PM, from Monday to Saturday.

BUSINESS LOCATION
 FLOOR PLAN

A studio-type office is suggested for the company's operations. Clients can be entertained in
the main studio area and part of it may also serve as the working space of the partners and employees.
The business also opts to have its own storage area where products and equipment are to be stored
and kept. Documents of the business are also stored in this office, including official documents
required for operation as this office is to serve as the domicile of the business.
 CAPITALIZED COSTS & EXPENSES

Property, plant, and equipment involved in the business are at most, the vending machines
(since it is not sold but leased), office furniture and equipment, such as computers.

Product costs include the materials and supplies being restocked at a regular basis in the
vending machines. Estimates of such supplies are based on two of nationwide bookstore sellers in the
Philippines, as well as merchandise being sold by the university's bookstore.

Direct labor cost are limited to maintenance, restocking, and installation of the vending
machine. Such is to be done by technicians hired from the manufacturer of the vending machine itself,
or it may also be done by the technician trained and provided by the business. The schedule of the
technician is to be based of the minimum wage requirements provided by the Department of Labor
and Employment. Should the technician be provided by the company, he/she may be considered as a
contractual and part-time employee.

However, this may be changed after the vending machine operations of an area increases.
With that the technician may be a considered as a full time employee as he/she is required to work
more frequently. However, the business plans to hire at least one full-time technician to be on duty in
cases of emergency and other similar cases, if such cost can be shouldered by the profit earned.

Schedule of overhead and expenses include the following items: One is rental of the office
and storage area. Rent must also be paid if upon agreement with the client, the business is required to
pay for such. Non-current assets such as the vending machines and office equipment are also to be
depreciated according to the straight-line method. Utilities expense are also to be part of the expenses
shouldered by the company. This may be part of administration expense or operation expense, should
the university require the business to pay for the electrical fees of the vending machine. Training of
the in-house technician is also to be expensed outright. In case of risk, vending machines are insured
since liability is to be assumed by the business during the lease. No supervisory fees are to be
expensed as the duty may be done by the managing partner during the start of the business.
FINANCIAL FEASIBILITY
 SOCIO-ECONOMIC STUDY
DESCRIPTION OF THE INDUSTRY

According to the Observatory of Economic Complexity (OEC), in 2020, Philippines was the
56th largest importer of Vending Machines in the world. The country imported $3.05 million in
Vending Machines. It is estimated that the Philippines have at least one thousand of vending machines
in operation.

TAXES

Per each vending machine in operation, it is required of the business to pay to the BIR an
annual registration fee of five hundred Pesos. Products being sold are also subject to VAT or OPT.
Partners are then subject to personal taxes.

GENERAL IMPACT TO THE PUBLIC

The business would simply benefit the public as it makes their school supply needs more
easily accessible.
WORKS CITED AND SOURCED