20944696-ac-computer-shop-feasibility-studies.docx

St. Peters College Sabayle Street, Poblacion, Iligan city

In Partial Fulfillment Of the Subject in Engineering Management

FESEABILITY STUDY OF COMPUTER SHOP BUSSINESS

Submitted to: Prof. Bernabe Q. Sanchez, Ph.D. Mechanical Engineering

Submitted by: Jecris M. Velarde

Chapter 1 Project Summary Introduction Computer shop business is one of the most in demand businesses here in Iligan. Nowadays, internet cafes are really in demand because of the fast-changing technology that the people embraced just like here in the Philippines. Some have their own laptops and bring it to coffee shops so that they could relax and at the same time prepare their assignments and paper works. The people today are very busy and would want to do their jobs in a beautiful and innovative environment that could satisfy their needs and lessen their stress due to busy schedule. Name of the Firm The proposed name of the firm is “JC INTERNET CAFE”. The owner will register the firm with the Department of Trade and Industry (DTI) and Local Government Unit (LGU) concerned. The firm will be registered as single proprietorship. The business is about computer shop. Location The business will be renting a space along Hi-way near to Government Office, and schools. The target consumers are students, teachers, office workers, and nearby neighborhood especially those people whose relatives or loved ones are abroad. The two hundred (200) meter radius requirements as provided in the existing zoning code and other applicable rules and regulations wherein computer shops and other similar establishments and places of amusements should be put up or constructed at least two hundred (200) meters away from the church, schools, hospitals and other government offices shall be strictly complied with. Long Range Objectives of the Project The JC Internet Cafe looks forward to be the most competitive shop in Sabayle and nearby towns of Iligan. The proponent dreams of making profit and staying long in the business. For operating and establishing “JC INTERNET CAFE”, I am having some objectives. 1. 2. 3. 4.

To earn profit at less investments. To satisfy our customers providing best quality service at effective price. Providing the service at low cost by providing the best quality at affordable price. To know a fair return on the capital invested by the owner.

Feasibility Criteria The following are the most important criteria by which almost every subject is being measured: 1.

Raising Funds or Capital – this is the number one need of a business man in putting up a business. Whether he will produce the money by his own pocket, or he will have a business loan in a bank. 2. Recognize profit from the business – the main reason of a person for going into business is profit. People tend to enter this kind of business because of their expectation to earn money or have an income. 3. It helps the economic growth of the area – this company will give a job opportunity to the resident of Iligan. 4. Enhance the availability of the company – the company will become stable if it can compete to his competitor and ability to continue operations yet there is expected risks in a business. Market Strategies To penetrate the target market, different marketing strategies and promotions will be considered. Leaflets will be distributed and handed out to various business establishments, offices, schools, bus and jeepney stations, friends, and relatives. Games and services offered will be displayed on the store window. I will offer promos to attract the consumer like cheaper rate for computer rental, and membership card. I will put a tarpaulin on the place itself where my shop is standing, promoting the opening of my computer shop also one month before the opening. To let the people, know that there will be a new Computer Shop on the vicinity. Lastly, I will keep developing my skills by attending seminars to improve my knowledge and to be updated in this business.

Chapter 2 Market Study As the popularity of the Internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life. “JC Internet Cafe” provides communities with the ability to access the Internet and share Internet experiences in a comfortable environment. People of all ages and backgrounds will come to enjoy the unique, up to date, and innovative environment that “JC Internet Cafe” provides. Service Description JC Internet Cafe will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to JC Internet Cafe are listed below:  Surf the web at warp speed!  Chat online using Instant Messenger, Yahoo, Facebook or Pal Talk.  Have a video conference with a business associate, family member or friend. Experience hot Internet games like World of Warcraft, Warcraft III, CounterStrike, Battle Realms and Dance Audition and auto jam (50Mbps downstream and upstream) with outrageous ping times.  Hook up your laptop to our Internet connection via Ethernet cable. You can even send a print job from your laptop to our network color laser printer.  Rent JC Internet Cafe for your late-night or all-night gaming party.  Send and receive email using your home or business account, or set up a free email account using Yahoo, Hotmail or any other web-based service.  Create your own greeting cards, flyers, school reports or presentations using Print Shop, Microsoft PowerPoint or Microsoft Publisher and print them in color.  Download shareware programs in the blink of an eye and copy them to a USB. Scan a picture using one of our self-service photo scanners and send via email.  Plan your next vacation or print out driving directions.  Listen to music clips and watch videos from your favorite performers with iTunes, Yahoo  Music or Real Video/RealAudio.  Type resumes, letters and term papers with Microsoft Word.  Send and receive faxes on JC Internet Cafe’s color fax machine. Find that dream job using CareerBuilder or Monster Jobs.  Check out continuously updated news, sports highlights, weather, and stock quotes.  Enjoy quiet online board games from Yahoo. You can even join a Yahoo league! JC Internet Cafe will also accept computer repair.

You'll appreciate surfing and gaming at JC Internet Cafe. It has super-fast Internet connection; you'll be visiting all your favorite sites in record time. Multi-player gaming is quicker and more exciting when you and your friends can do battle with no lag and plenty of bonding for everyone. My friendly staff is ready to help with your computer needs. Guidelines of Business    

All malicious sites are blocked. We’re not allowing inserting flash drive or any storage device without the consent of the shop staff. Eating and drinking in the gaming and typing area is not allowed, they are only allowed to eat and drink in the waiting area. One person for one unit to maintain orderliness.

Ambiance  

Not too dark and bright because we want the shop more encouraging to work and play. Our computer tables have a board between users for privacy purposes. All furniture is fully furnished, and labor included.

Price Study It is one of the considerations of the customer that enhance them to rent computers. If the price is lower, they will rent. The following services are: Amount Internet/Games Php. 15.00 / hour Printing black& white(short) 1.00 (Long) 1.00 Colored (logo size) 5.00 Photocopying (short) 1.00 (Long) 1.00 Scanning 2.00 Copy Games 35.00 Other services: Computer Repair (labor) 250.00

Factors Affecting the Market Factors that I consider while putting up my own Computer Shop:     

Location – picking a good spot is an advantage for me. Competition – most business – minded people think of competition as a race to charge the lower prices in order to win the customers. Software Licensing – it’s important to have an original operating system, because pirated OS can eventually damage the system. Expected ROI – investing money in a business is a risk in my case the well tabulated if financial statement is my major concern.

Internet Connection The major cost of a computer shop is the internet connection. For providing better service, the proposed project will use a high band width connection for better speed as the project is going on to provide service of video chat. It is recommended that the internet connection should be taken from the best internet service provider.

Recommended Connection If the project is set up in area, where Fiber Internet connection is available, it is recommended to use Fiber Internet connection instead of any other Internet connection. This will improve the speed of internet, which will improve the performance of video chat and will also reduce the telephone expense.

Marketing Program JC Internet Cafe has three main strategies. The first strategy focuses on attracting novice Internet users, by providing a novice friendly environment, JC Internet Cafe hopes to educate and train a loyal customer base. The second, and most important, strategy focuses on pulling in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves an important function at JC Internet Cafe. Power users have knowledge and web-browsing experience that novice Internet users find attractive and exciting. The third strategy focuses on building a social environment for JC Internet Cafe customers. A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at JC Internet Cafe, these customers that came for the more standard entertainment offerings will realize the potential entertainment value the Internet can provide.

Attract Power Internet Users JC Internet Cafe’s second strategy will be focused on attracting power Internet users. Power Internet users provide an important function. JC Internet Cafe plans on attracting this type of customer by: Providing the latest in computing technology. Providing scanning and printing services. Providing access to powerful software applications

The large student and nearby neighborhood population will become an important part of the JC Internet Cafe customer base. The student population continues to grow with the success of the educational institutes. Access to the internet, entertainment, and the upscale ambiance will attract the students. Business community is growing rapidly with the addition of new companies’ day by day. JC Internet Cafe will provide an opportunity to local and traveling professionals to check their e-mails communications; this will be an attracting entity for the middle-income group and for the residents of Sabayle as they do not have access to the internet at their living places. Market Growth The market for the services JC Internet Cafe will offer is growing rapidly. The computer shop hasn't come to this area yet, but similar services are growing rapidly on a global scale. Large cities that cater to large numbers of traveling business people have been saturated with businesses offering the services JC Internet Cafe will offer. Business people use the Internet services to catch up on email and communications with their family. My area supports a population that has many of the same needs and interests of this larger group. The student population continues to grow as the University grows in popularity with high-school graduates from out of state. These students tend to have money and an interest in up-scale social centers. JC Internet Cafe will target these groups with the use of fliers and tarpaulin.

SWOT Analysis The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses JC Internet Cafe must address. It also allows us to examine the opportunities presented to JC Internet Cafe as well as potential threats. JC Internet Cafe has a useful inventory of strengths that will help it succeed. These strengths include: a knowledgeable and friendly staff, modern computer hardware, and a clear vision of the market need. Strengths are valuable, but it is also important to realize the weaknesses JC Internet Cafe must address. These weaknesses include: a dependence on quickly changing technology and the cost factor associated with keeping modern computer hardware. JC Internet Cafe’s strengths will help it capitalize on rising opportunities. These opportunities include, but are not limited to, a growing population of daily Internet users, and the growing social bonds fostered by the new Internet communities. Threats that JC Internet Cafe should be aware of include, the rapidly falling cost of Internet access, and rising local competitors. Strengths 1. Knowledgeable and friendly staff – I’ve gone to great lengths at JC Internet Cafe to find people with a passion for teaching and sharing their Internet experiences. My staff is both knowledgeable and eager to please. 2. Modern equipment – Part of the JC Internet Cafe experience includes access to modern computer equipment. My customers enjoy beautiful and convenient units’ displays, fast machines, and high-quality printers. 3. Up-scale ambiance – When you walk into JC Internet Cafe or even sit at my waiting area, you'll feel the technology. Great sound background, nice lighting that sets the mood and the whole area was clean. 4. Clear the vision of the market need – JC Internet Cafe knows what it takes to build an upscale computer shop. I and my staff know the customers, the technology, and how to build the service that will bring the two together. Weaknesses 1. A dependence on quickly changing technology – JC Internet Cafe is a place for people to experience the technology of the Internet. The technology that is the Internet changes rapidly. Product lifecycles are measured in weeks, not months. JC Internet Cafe needs to keep up with the technology because a lot of the JC Internet Cafe experience is technology. 2. Cost factor associated with keeping state-of-the-art hardware – Keeping up with the technology of the Internet is an expensive undertaking. JC Internet Cafe needs to balance technology needs with the other needs of the business. One aspect of the business can't be sacrificed for the other. Opportunities 1. Growing population of daily Internet users – The importance of the Internet almost equals that of the telephone. As the population of daily Internet users increases, so will the need for the services JC Internet Cafe offers. 2. Social bonds fostered by the new Internet communities – The Internet is bringing people from across the world together unlike any other communication

medium. JC Internet Cafe will capitalize on this social trend by providing a place for smaller and local Internet communities to meet in person. JC Internet Cafe will grow some of these communities on its own by establishing chat areas and community programs. These programs will be designed to build customer loyalty Threats 1. Rapidly falling cost of Internet access – The cost of access to the Internet for home users is dropping rapidly. Internet access may become so cheap and affordable that nobody will be willing to pay for access to it. JC Internet Cafe is aware of this threat and will closely monitor pricing. 2. Rising local competitors – Currently, JC Internet Cafe is enjoying a first- mover advantage in the local computer shop market. However, additional competitors are on the horizon, and I need to be prepared for their entry into the market. Many of my programs will be designed to build customer loyalty, and it is my hope that my quality service and up-scale ambiance won’t be easily duplicated. Market Needs As the popularity of internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life. Public wants access to the methods of communication and volumes of information now available on the internet, and access at a cost they can afford and in such a way that they are not socially, economically, and politically isolated. Market Trends More than ninety percent of my customers are youngsters and their only objective to get to these is to get enjoyment. Marketing Strategies I create some advertising strategies like I will print a thousand of fliers printed with the total cost of Php. 908.00 (500 pieces on small fliers that cost Php. 220.50, while the second fliers are also 500 pieces with the cost of Php. 687.50), a month before the opening me and my staff will distribute the fliers. I will also put tarpaulin on the place itself where my shop is standing a month before the opening. It will promote the services offered and the opening of my Computer Shop. To let the people, know that there will be a new Computer Shop on the vicinity. The tarpaulin size is 64” x 100”and amounting Php. 497.75. Management Strategies Maintain a focus on quality products with bottom-line growth through cost reduction and optimal performance. I also focus on technology and innovation to make sure our employee’s skills are up to standard with today’s mode of production.

Demand Demand in Internet Services for the last ten years: Table 1.1 Year 2004

Quantity Demand 38,720

2005

70,400

2006

82,800

2007

112,250

2008

175,110

As you can see there is 8.08 percent of demand in internet service in year 2004 and increase of 6.6 percent on the next year. In 2006 there is 17.28 percent of demand in internet service and increase of 6.14 percent in year 2007 and in the year 2008 there’s a demand of 36.54 percent in internet services. I will use the “Arithmetic Straight Line” method in projecting the demand for the next five years. Yc = a + Yi - 1

Yc = initial value Yn = final value Yi – 1 = value for past years

where: a = Yn – Yc N-1 Computation: a = 175,110 – 38,720 = 34,098 5–1 2014 = 34,098 + 175,110 = Php. 209,208.00 2015 = 34,098 + 209,208 = Php. 243,306.00 2016 = 34,098 + 243,360 = Php. 277,404.00

2017 = 34,098 + 277,404 = Php. 311,502.00 2018 = 34,098 + 311,502 = Php. 345,600.00

Projected Demand for five years: Figure 1.2 Table 1.2 Year

Quantity Demand (in peso)

2014 2015 2016

209,208 243,306 277,404

Supply Supply in the Internet Services for the last ten years: Table 2.1 Year

Figure 2.1

Quantity Supply in peso

2004

21,120

2005

35,200

2006

41,400

2007

51,800

2008

107,770

As you can see there is 8.21 percent of supply in internet service in year 2004 and increase of 5.47 percent on the next year. In 2006 there is 16.09 percent of supply in internet service and increase of 5.05 percent in year 2007 and in the year 2008 there’s a supply of 41.87 percent in internet services. I will use the “Arithmetic Straight Line” method in projecting the supply for the next five years. Yc = a + Yi - 1

Yd = initial value Yn = final value Yi – 1 = value for past years

where: a = Yn – Yc N-1

Computation: a = 107,770 – 21,120 = 21,663 5–1 2014 = 21,663 + 107,770= Php. 129,433.00 2015 = 21,663 +129,433 = Php. 151,096.00 2016 = 21,663 + 151,096= Php. 172,759.00

2017 = 21,663 + 172,759= Php. 194,422.00 2018 = 21,663 + 194,422= Php. 216,085.00

Projected Supply for five years: Table 2.2 Year

Quantity Supplied (in peso)

2014 2015 2016 2017 2018

129,433 151,096 172,759 194,422 216,085

Figure 2.2

Demand and Supply Analysis The table and figure below will show the projected demand and supply of JC Computer Shop for the next five years in percentage. Table 3 Year

2014 2015 2016 2017 2018

Percentage of Quantity Demand 15.08 17.54 20 22.46 24.92 100%

Percentage of Quantity Supplied 14.98 17.49 20 22.51 25.02 100%

Figure 3 The figure 3 shows the projected demand and supply of JC Internet Cafe for the next five years. In year 2014 there is a 15.08% of demand on internet services, that’s why JC Internet Cafe needs a 14.98% to supply the demand. In 2015 there is 17.54% in demand and 17.49% in supply, while in 2016 it has a 20% both in demand and in supply. And in 2017 there is 22.46% in demand and 22.51 & in supply. For the fifth year 2018 it has a 24.92% in demand and 25.02% of supply. In totality, every year JC Internet Cafe will increase of 2.46% in demand and 2.51% in supply.

Chapter 3 Technical Feasibility Study In this chapter, I will discuss the product, the manufacturing process of my business including the plant size and production schedule. I will also discuss the machinery and equipment and the other computer application that I will use in the business For me to lessen my expenses, I purchase equipment in packages. I focus much in the hardware and software. I research on how much the hardware and software will cost me, through net surfing. The Services The following services of JC Internet Cafe are listed below Gaming Computer repair Typing Browsing Printing Scanning For gaming I will install popular online games like Warcraft, Counter strike, Battle Realms, Dance Audition, and Auto jam. In typing I will install original Operating System of MS Office Professional 2007 like MS Word, Excel, Power point, Access, Desktop Publishing. I will have printer, Scanner, Photocopier, and Fax Machine for the Printing, Photo copying, and faxing. JC Internet Cafe will also offer other services like DVD/CD burning, Pay phone, and Computer Repair. Manufacturing Process This is the JC Internet Cafe’s manufacturing process.

The “JC Internet Cafe” will provide the product and services to the customers, and then the customer will give income or profit to JC Internet Cafe in return. The income or profit that the customer gave in return will used to provide the product and services.

Plant Size and Production Schedule The “JC Internet Cafe” will operate seven days a week. JC Internet Cafe opens at 8:00 am ahead to the other competitors. This will lead my shop of being known. My goal is to give the needs of the students and others in early manner of time

JC Internet Café Schedule : Opening Monday Tuesday Wednesday Thursday Friday Saturday Sunday

8:00 AM 8:00 AM 8:00 AM 8:00 AM 8:00 AM 8:00 AM

8:00 AM Total Operating Hours per week

Closing 11:00 PM 11:00 PM 11:00 PM 11:00 PM 11:00 PM 11:00 PM 11:00 PM

Operating Hours 15 15 15 15 15 15 15 105

Machinery and Equipment The proposed project is going to be of 10 units of computer systems and the details of the equipment required for the project is given below: List of Hardware: PC Package

Modem Fiber Computer Application Software: OS MS Office 2007 Anti-virus and Anti spy ware Game Software: Warcraft (dota) Counter Strike Battle Realms Dance Audition Auto jam Total Machinery and Equipment Cost

Brand name Core u5

PLDT

Description 10 units of PC w/ Complete accessories

AmountPackage PC’s 15,000 1388.00

4,999.00 7,200.00 1,450.00 350.00 720.00 1,968.00 1,968.00 Php. 45,943.00

Furniture and Fixtures The project is based on Core i5 computer systems. Second hand systems are also available in the market at much lower prices. The reason for using the latest system is the new software coming in the market that requires more powerful systems which will provide better service to the customer. The price of computer systems varies with the introduction of new technology in the market. Description Quantity Unit Price Total Price Computer Cabinet Table for waiting area Air Conditioner Mono block chair chair for server Cabinet for the supplies Pad Lock Total Furniture and Fixtures Cost

10 1 1 10 1 1 2

250 400 6,500 230.5 745.75 950 750

Php. 2,500.00 400.00 6,500.00 2,305.00 office 745.75 950.00 1,500.00 Php. 14,900.75

Business Layout

“JC Internet Cafe”

Building and Facilities Description Rent (2,500*12) Construction of the Shop Total Building and facility Cost

Amount Php. 30000.00 3,000.00 Php. 33,000.00

Raw Material and Supplies The material needed for the operation of the business: Description

Price

Bond Paper Ball pen Stapler Staple wire HP 96 Black Ink HP 97 Tri-Color Record Book Fire Extinguisher 10 lbs.

Php 150.00 ( 500pcs. /rim) 48.00 /box (12pcs) 100.00 30.00 800.00 850.00 25.00 3,950.00

Total Raw Materials and Supplies Cost

Php 5,966.00

Utilities Description Electricity Water Total Utility Cost

Monthly Cost

Total Amount (year)

Php. 5,000.00 117.50

Php. 60,000.00 1,410.00 Php. 61,410.00

Waste Disposal JC Internet Cafe can manage the waste disposal properly, because every Monday, Wednesday, Friday and Sunday are the schedule in collecting all the garbage in barangay Sabayle. Cleaning Materials

Price

Broom & Dust Pan Php. 105.00 – replace every 5 months Trash Can 100.00 Feather Dust 60.00 – 2pcs. Good for 3 months Mop 250.00 – replace every 5 months Powder Soap 60.00 – 6pcs. Good for 2 months Air Freshener 175.00 – replace every 2 months Total Waste Disposal Cost

Php. 750.00

Legal Requirements    

Registration with BIR (Bureau of Internal Revenue) Registration of Business Name with DTI (Department of Trade and Industry) Barangay Clearance and Business Permit Mayors Permit

Legal requirements Cost Barangay Clearance

Php 150.00

Mayor’s Permit Business Tax Business Plate Sanitary Permit Occupational Tax Inspection Fee Filing

4,000.00 950.00 100.00 250.00 400.00. 500.00 100.00

Processing Zoning Electrical Inspection Fire Inspection BIR DTI Total Legal Requirement Cost

120.00 350.00 250.00 350.00 300.00 5,750.00 Php 13,570.00

Production Cost The details of production cost for the project are given below: Labor Requirements Estimated Annual Cost for Salaries and Wages Description Manager

Employee

Monthly Salary

Annual Salary

Php. 8,000.00 Php. 96,000.00 4,500.00 54,000.00

Total Salaries and Wages Cost

Php. 150,000.00

* Additional fee to my employee for computer repair (labor) Php 250.00 Requirement on Hiring an Applicant Applicant must be 20 years old, residence of Sabayle Resume Two valid I.D. Birth Certificate (NSO) N.B.I Clearance SSS number Vocational Graduate (Computer Technician)