CHAPTER 2

MANAGEMENT FEASIBILITY

BUSINESS ORGANIZATION

Business organization pertains to the framework and structure that governs the

functioning and management of a company or enterprise. It encompasses how resources are

managed and business activities are conducted. Different types of business organizations exist,

each with distinct characteristics and legal ramifications. The common forms include sole

proprietorships, partnerships, corporations, and limited liability companies (LLCs).

Sole proprietorships are the simplest and most widespread form of business

organization. In this setup, a single individual owns and operates the business, and legally,

there is no separation between the owner and the business entity. While it offers ease and full

control to the proprietor, it also exposes them to personal liability for all business debts and

obligations. Partnerships involve two or more individuals who jointly own and run the business,

sharing responsibilities and profits. These partnerships can be general, where all partners have

equal liability, or limited, where some partners enjoy limited liability. On the other hand,

corporations are distinct legal entities from their owners, providing shareholders with limited

liability protection. Although they require more complex management and record-keeping,

corporations offer significant advantages in terms of fundraising and expansion. LLCs combine

aspects of both partnerships and corporations, granting owners limited liability while maintaining

a simpler organizational structure.

For a sole proprietorship operating an Avocado Powder company, the individual would have

complete autonomy over all aspects of the business, including decision-making, operations,
marketing, and finances. However, they would also bear personal liability for any debts or legal

issues arising in the course of the business.

Advantages of operating as a sole proprietorship:

 Easy and inexpensive setup: No complex legal requirements; only business name

registration and permits are needed.

 Full control: Sole owner makes decisions quickly, adapting easily to market changes.

 Keep all profits: Unlike other business types, sole proprietors retain all business

earnings.

 Tax benefits: Profits and losses reported on the owner's personal tax return, offering tax

deductions and benefits.

 Privacy: Financial information and business details kept private, providing greater

confidentiality.

 Simple dissolution: Easy to close the business without legal complications.

Disadvantages of running a sole proprietorship are:

 No protection from personal liability.

 Difficulty in selling the business.

 Unlimited personal liability for business debts.

 Challenges in obtaining financing and business credit.

 Difficulty in raising capital for business expansion.

 Limited financial control and tracking of expenses.

 It is crucial for individuals to carefully consider these factors before opting for a sole

proprietorship as their chosen business organization. Prior to starting such a venture, it's

essential to assess their financial capacity to maintain stable cash flows and procure necessary

materials and equipment for smooth operations. Additionally, possessing the required

knowledge and skills in producing Avocado Powderis vital, along with effective business

management abilities to ensure consistent production of high-quality products over the long

term.

The proposed business will be structured as a sole proprietorship, with one individual

overseeing all aspects of production. This ownership model grants the proprietor complete

control over profitability, returns, and decision-making flexibility. It also entails simplified

bookkeeping and a low start-up cost. However, a drawback of sole proprietorship lies in the

owner's personal liability for all business debts and decisions. The owner is solely accountable

for any liabilities or debt obligations that may arise.

ORGANIZATIONAL STRUCTURE

The organizational structure refers to the formal system that outlines the hierarchy, roles,

and responsibilities within a company. It can adopt different forms, such as functional, divisional,

matrix, or flat structures, and has a profound impact on a company's culture, communication

patterns, decision-making processes, and overall success.

The chosen organizational structure determines the allocation, management, and

organization of positions, strengths, and obligations, as well as how communication flows

among all management levels to achieve a competitive advantage. For organizations to thrive,

they need to be effective, adaptable, creative, and compassionate.

 Depending on the organization's objectives, it can be structured in various ways. The

way a company conducts its business is influenced by its structure. The proponents opted for

the line structure because it is direct, concise, and commonly used in business.

OWNER/CASHIER/MANAGER

WORKER 1 WORKER 2

FIGURE 2.0 Organizational Chart of Avocado Powder Production

The diagram, Figure 2.0, illustrates a hierarchical structure where the business owner

holds the highest position, and two workers directly report to them. The owner possesses

ultimate decision-making authority and bears the responsibility for the overall success of the

business. The two workers are tasked with handling day-to-day operations, following the

owner's guidance. Their responsibilities include completing assigned tasks and achieving set

goals and objectives. Communication and feedback play a crucial role in maintaining alignment

and addressing any issues or concerns promptly. As the business expands, the hierarchy may

evolve, potentially incorporating additional layers of management. Effective communication,

well-defined roles and responsibilities, and a collaborative approach are vital elements that

contribute to the business's and its employees' success.

BUSINESS LOCATION

The success of a business heavily relies on its chosen location. A well-selected location

can offer excellent visibility and accessibility to customers while remaining cost-effective. When

deciding on a business location, it is essential to consider factors such as the target customer

base, the level of competition in the area, accessibility, and operating costs. Optimal choices

involve high-traffic areas with good visibility, easy access for customers, and a strong presence

of the target customer demographic. Additionally, compliance with zoning regulations and

operating costs that fit within the business's budget are crucial considerations. By making the

right location choice, a business can position itself for long-term success and profitability. So the

final Brgy.Taft, Surigao City Nueva Street

Location Map

FIGURE 2.1 Location Map for the Proposed Business

 Brgy. Taft, Nueva Street, holds strategic importance as a business location due to its

prominent position and accessibility. Situated in a high-traffic area with good visibility,

businesses here can attract a diverse customer base and benefit from potential walk-in traffic.

Moreover, being in compliance with zoning regulations ensures smooth operations without legal

hindrances. Entrepreneurs seeking to establish their ventures in this area should carefully

assess operating costs, ensuring they align with their budgetary constraints. By capitalizing on

this well-chosen location, businesses can position themselves for long-term success and

profitability, tapping into the vibrant market that Brgy. Taft, Nueva Street, offers.

Sketch Map

FIGURE 2.2 Business Location Sketch Map

The Figure 2.2 show the business establishment will be located in Surigao City, Brgy

Taft. Nueva Street, Near at, Hot Pandesal the Estimated Square meters of the area is 80

Square meters.
MANAGEMENT PERSONNEL REQUIREMENT

Having a management team that possesses a deep understanding of the local market,

culture, and regulations is critical for the success of local businesses. Strong leadership skills,

effective communication, and industry expertise are indispensable qualities for the management

personnel. Furthermore, a well-established network of contacts can significantly support

business growth and overall success.

The relationships between the workforces are highly significant, as they play a pivotal

role in achieving the business's goals. It is advisable to carefully consider the benefits that the

proposed business can bring in terms of productivity, accountability, customer relations, and

safety. For the Avocado Powderbusiness, two personnel are required to handle the production,

while the manager/cashier will be responsible for advertising and selling the product.

TABLE 2.0 MANAGEMENT PERSONNEL REQUIREMENT

POSITION QUALIFICATION RESPONSIBILITIES DAILY WAGES MONTHLY WAGES

*MANAGE AND OVERSIGHT
OPERATIONS OF A BUSINESS
FINANCIAL STABILITY NONE NONE
OWNER/CASHIER
*HANDLE CASH TRANSACTIONS
AND MAINTAIN FINANCIAL
RECORDS
*POSSES KNOWLEDGE AND EXPERIENCE POSSESS RELEVANT
IN MAKING AVOCADO POWDER EDUCATION AND TRAINING
WORKER 1 & 2 *RELIABLE IN THE FIELD
*FLEXIBLE *HAVE RELEVANT WORK
*EAGER TO LEARN EXPERIENCE IN THE SAME INDUSTRY 700.00 18200.00
ANNUAL SALARY 218400.00
ANNUAL SALARY(Inclusive 13'th Pay) 236600.00
SALARY AND WAGES

As an employer, employee salary, wages, and 13th-month pay are of utmost

importance. These financial aspects serve as essential assurances to employees, motivating

them to work diligently for the business, as mandated by government regulations. Ensuring fair

and timely compensation not only promotes employee satisfaction but also fosters a productive

and committed workforce.

TABLE 2.1 Personnel Contribution (Employee)

POSITION DAILY WAGES MONTHLY SALARY ANNUAL SALARY DEDUCTIONS 13'TH MONTH NET PAY
SSS HMDF PHIC TOTAL
Worker 1&2 700.00 18200.00 218400.00 6720.00 13104.00 19656.00 39480.00 18200.00 57680.00

TABLE 2.2 Personnel Contribution (Employer)

POSITION DAILY WAGES MONTHLY SALARY ANNUAL SALARY DEDUCTION TOTAL CONTRIBUTION
SSS HMDF PHIC
Worker 1&2 700.00 18200.00 218400.00 13920.00 13104.00 19656.00 46680.00
REGULATORY REQUIREMENTS

When starting a new business, it is essential to complete all of the regulatory obligations.

The following are montages of the regulatory requirements for Avocado Powder

• Barangay Clearance: Obtaining a barangay clearance is a mandatory requirement for

businesses to obtain a mayor's permit. This clearance is issued by the local barangay and

serves as an official document indicating the business's compliance with local regulations.

• Certificate of Business Registration from the Department of Trade and Industry (DTI):

Entrepreneurs wishing to start a business must register their business name with the DTI before

commencing operations. This registration is a prerequisite for starting any business venture.

• Mayor's Permit/Business Permit: Every business is required to secure a mayor's permit

or municipal permit license from the local municipality. This permit is issued by the municipality

and is contingent upon fulfilling various requirements, including barangay clearance, locational

clearance, fire safety inspection certificate, and sanitary permits (for food-related

establishments).

• BIR Certificate of Registration: Prior to commencing operations, businesses must

register with the Bureau of Internal Revenue (BIR) for tax purposes. This registration process

includes obtaining a Taxpayer Identification Number (TIN), registering accounting records, and

securing authorization for printing or providing official certificates.

• Sanitary Permit: An establishment needs to secure a sanitary permit as one of the

requirements to be issued a business permit. This certificate ensures that the establishment

maintains a safe and hygienic environment for both guests and staff.

• Bureau of Food and Drug Administration: As a vital regulatory agency under the

Department of Health, Philippines, the Bureau of Food and Drug Administration is responsible

for ensuring the safety and efficacy of products such as in vitro diagnostic reagents, medical

devices, cosmetics, and household hazardous substances. Compliance with their regulations is

essential for businesses dealing with such products.

TABLE 2.3 Costs of Regulatory Requirements

REGULATORY REQUIREMENTS COST FOR 2023 COST FOR 2024-2027
Barangay Clearance 100 100
Certificate of Registration DTI 530
Mayor's Permit 1,500 2800
Certificate of BIR 700 700
Sanitary Permit 400 400
Bureau of Food Drug Administration 3000 3000
Total Regulatory Requirements Cost 6230 7000

Building Facilities and Equipment Requirements

Having suitable building, facilities, and equipment is vital for the efficient functioning of

any business or organization. It entails providing a safe and accessible physical space for

employees, customers, and visitors. Buildings must adhere to local safety and building codes,

while facilities should be equipped with essential amenities like restrooms, break rooms, and

storage areas. In some cases, businesses may require specialized machinery or equipment for

specific tasks, necessitating investments in quality tools to ensure safety and productivity.

Regular maintenance and upgrades of equipment and facilities are equally crucial to maintain
their optimal working condition. Opting for the right, high-quality materials at cost-effective prices

can significantly impact cost reduction and enhance overall business productivity.

Building Requirements

Building requirements is very essential to improve the quality of a product as a work

environment, at which Avocado is created as well as an office where all the transaction of the

business is located

TABLE 2.4 Production Building Cost Requirements

DESCRIPTION SOURCE QTY UNIT UNIT COST TOTAL COST

Cement 35.00 sack 250.00 8750.00
Steel Bar 50.00 pcs 175.00 8750.00
Sand 50.00 bgs 35.00 1750.00
Marine Plywood 10.00 pcs 1100.00 11000.00
Nail #1 1.00 kl 80.00 80.00
Nail #2 1.00 kl 80.00 80.00
Concrete Nails 1.00 kl 100.00 100.00
Lumber 2/2 10.00 pcs 320.00 3200.00
Paint Latex 8.00 gals 800.00 6400.00
Paint Enamel 8.00 gals 800.00 6400.00
Rolling Paint Brush 3.00 pcs 50.00 150.00
Long Rolling Paint Brush 3.00 pcs 170.00 510.00
Thinner 2.00 pcs 100.00 200.00
Paint Pad Tray 3.00 pcs 150.00 450.00
Labor 4.00 days 500.00 2000.00
Gravel 50.00 sack 175.00 8750.00
Total Estimated Renovation Cost 58570.00
Estimated life 5.00
Annual Depreciation 11714.00

TABLE 2.5 Building Rental Requirements

.
DESCRIPTION TOTAL COSTANNUAL TOTAL
RENTAL BUILDING 3500 42000
TOTAL COST 42000
Perspective View

FIGURE 2.3 Perspective View of the Proposed Building

Figure 2.3 illustrates the perspective view of the production building where the product is

being process by the workers and being sold by the customers.

Floor Plan

A floor plan is a detailed and scaled technical drawing that provides an overhead view of

the relationships between rooms, spaces, traffic flow, and physical features within a single level

of a structure. In the context of the Avocado Powder business, the floor plan specifies the

specific sizes and layout of the Production area, office space, and bathroom. It offers a clear

visualization of how these areas are organized and interconnected, ensuring efficient use of

space and facilitating smooth operations within the business premises.

FIGURE 2.4 FIGURE Production Building Floor Plan

 Figure 2.4 presents a rough floor plan of a building, featuring outdoor seating, an

entrance porch, office space, manufacturing area, and parking area. The dimensions of the floor

plan are labeled as A, B, and C, and are represented in meters. For example, Area A measures

3.70m x 4.20m, and Area B measures 5.50m x 9.70m. However, a comprehensive analysis of

the floor plan is challenging without additional information, such as the building's purpose,

location, and layout.

OFFICE FURNITURE AND FIXTURE REQUIREMENTS

Office furniture and fixture requirements refer to the essential equipment and furnishings

needed to set up a functional office space. These may include desks, chairs, filing cabinets,

bookshelves, lighting fixtures, and other necessary items. The choice of furniture and fixtures

depends on factors such as office size, the number of employees, and the nature of work. It is

crucial for businesses to prioritize ergonomic, durable, and functional furniture to improve

employee productivity and well-being. A well-designed and visually appealing office space can

also leave a positive impression on clients and visitors. By carefully selecting appropriate

furniture and fixtures, businesses can create a conducive and efficient work environment.

TABLE 2.6 Office Furniture and Fixtures

DESCRIPTION SOURCE QTY UNIT COST TOTAL COST

Offi ce Table Sumaylo Furniture 1 pc 3,200 3200
Offi ce Chair Stylish Living Furniture 5 pc 2,400 12000
Filling Cabinet Stylish Living Furniture 3 pcs 4,000 12000
Table for lobby Sumaylo Furniture 1 pc 2,600 2600
Total Furniture and Fixtures Cost 29800
Estimated life 5
Annual Depreciation 5960
Office Equipment Requirements

The office equipment requirements can differ based on the unique needs of each

business or organization. However, certain standard pieces of equipment are typically essential

in most offices. These commonly include computers, printers, telephones, and reliable internet

connectivity. Furniture like desks, chairs, and filing cabinets are also fundamental. Depending

on the office's size and function, additional equipment and security systems may be necessary.

It is crucial to conduct a thorough assessment of the office's needs and invest in high-quality

equipment that enables employees to carry out their tasks efficiently and effectively.

TABLE 2.7 Office Equipment

Item Source Qty Unit Cost Total Cost

Calculator K3 Centerpoint 1 pc 900 900
Aircon Imperial Appliance 1 pc 5,000 5,000
Printer Biologic 1 pc 8,000 8,000
Bond Paper K3 Centerpoint 1 ream 210 210
Stapler K3 Centerpoint 1 pc 350 350
Computer Biologic 1 set 30,000 30,000
Telephone Biologic 1 pc 5,200 5,200
Total Office Equipment Cost 49,660
Estimated Life 5

Annual Depreciation 9,932.00

Office Supplies Requirements

 Office supplies requirements encompass a wide range of essential materials and items

necessary to support daily operations in an office setting. These supplies include basic

stationery such as pens, notepads, and paper clips, as well as print materials like printer paper

and envelopes. Calendars and planners aid in scheduling and organization, while technology

accessories like ink cartridges and USB drives facilitate efficient work. Communication tools like

business cards and letterhead paper are crucial for professional correspondence. Office

furniture, cleaning supplies, kitchen essentials, and personal protective equipment (PPE) further

contribute to a functional and safe workspace. Adequate administrative tools, including time

clocks and software for data management, aid in smooth business operations. Keeping a well-

stocked inventory of these supplies ensures a productive and well-organized office environment.

TABLE 2.8 Office Supplies

Item Source Qty Unit Cost Total Cost

Staple K3 Centerpoint 1 pc 100 100
Ballpen K3 Centerpoint 1 bx's 60 60
Pencil K3 Centerpoint 1 bx's 50 50
Stamp K3 Centerpoint 1 pc 150 150
Bond Paper K3 Centerpoint 1 ream 210 210
Folder K3 Centerpoint 10 pcs 5 50
Receipt Paper K3 Centerpoint 1 pad 80 80
Total Office Supplies Cost 700

TABLE 2.9 Projected Office Supplies

Year Office Supplies

2024 700
2025 735
2026 772
2027 810
 2028 851

Table 2.9 shows that the proponents assumed that every year the office supply will increased by

5%.