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A Feasibility Study of

Star Rice Miller and Dealer

A Feasibility Study presented to

The College of Business Administration

Lyceum of the Philippines University

Intramuros, Manila

In partial fulfillment of the requirements for the degree ofBachelor of Science in Business Administration

Major in Marketing Management

Submitted by:

Babaan, Alpha Dianne N.

Corona, Celina I.

Francisco, Claire Anne G.

Fulgencio, Christy Mae S.

San Pedro, Royce

Tapire, Jomar G.

Submitted to:

Mrs. Elvira A. Andal

Professor

October 2010


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1.1 Name of the Firm

The business name is Star Rice Miller and Dealer (SRMD). The

proponents have chosen the term star to emphasize the exceptional quality of

their business and products. The term also denotes the proponents urge to gain a

star or a reputable position the countrys rice industry. On the other hand, the

terms miller and dealer pertain to the main activities performed by the business

rice milling and dealing.

1.2 Location

Star Rice Miller and Dealer will be located at Inter City, Barangay Wawa,

Bocaue, Bulacan. The place is very suitable for the establishment of a rice

milling and dealing business because of its abundance in rice fields which ensures

continuous supply of raw materials necessary for production. In addition, the

value of the building a rice factory is cheaper as compared with other places.

Delivery of finished products will be convenient as the easiest and fastest mode of

transportation will be used (by land). Labor through manpower is also possible as

a large percentage of the residents work as farmers. Most importantly, the

proponents are confident that the location can provide maximum efficiency which

can be attained at the lowest possible cost.


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1.3 Brief Description of the Product

Star Rice Miller and Dealer will offer a wide variety of rice products

Laon, Angelika, Jasmine and Sinandomeng. It will also introduce three new rice

varieties flood tolerant, salt tolerant and drought tolerant (varieties were selected

from the survey conducted by the researchers;see Appendices Section). Workers

will be hired to perform the basic activities to come up with finished rice

products. The proponents in general, will be responsible for the overall

management of the business. Star Rice Miller and Dealer will also engage itself

on various socio-economic activities.

1.4 Project Highlights

The proponents of the business will concentrate on the following aspects

of their business: first, the products to be offered SRMD will produce and sell

high quality rice of different varieties at competitive prices. Rice quality will be

emphasized as the strongest factor that affects consumer purchase (this is based

from the survey conducted by the researchers; see Appendices). Second, the

differentiation of the business from competitors as a new entrant in the market,

SRMD will concentrate on advertising itself to gain customers and market

recognition. Third, the utilization of the by-products of production SRMD

Management will see to it that 80-90% of the said materials will be used

efficiently.


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1.5 Project Summary

1.5.1. Market Acceptability

SRMD will be easily accepted by the target market, considering

that rice is a staple food for most Filipinos.

CHOICES FREQUENCY PERCENTAGE

Once a day 0 0

Twice a day 0 0

Thrice a day 28 93.33

Four times & above 2 6.67* Survey Result for the question,How often do you eat rice?

The illustration above indicates that 93.93% of consumers eat rice

thrice a day. This is a concrete evidence of rice dependence exhibited by

the target market.

I.5.2 Management Availability

The business will develop a strong relationship between the

management and its workers. Tasks and responsibilities will be properly

designated. Employees will be empowered by encouraging them to

participate on various managerial concerns and the proponents will impose

a good management system.

1.5.3. Technical Viability


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The proponents will hire people to renovate an old business

establishment located along the roads of Inter City Wawa Bocaue,

Bulacan.

The fully-equipped factory of SRMD will serve as its main office

and at the same time, the venue for rice milling and storing of finished

goods ready for delivery.

1.5.4. Financial Profitability

High sales are expected due to the target markets high demand for

rice. Profits to be earned will then determine the possible stability of

SRMD in the market.

1.5.5. Socio-Economic Impact

SRMD will prioritize Bulaceos for their socio-economic

activities. It will hire knowledgeable farmers as its primary workers. In

addition, the management will give incentives which may either be

financial or non-financial. They will also conduct agricultural seminars to

provide updated farming techniques to Bulaceos on a quarterly basis.


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2.1. Brief Background of the Study

Rice is a staple food for most Filipinos. It is made available and accessible

to satisfy the markets continuous demand for the product. In relation to the

Philippines being an agricultural country, rice milling and dealing is a very

effective way to earn profit. It also contributes to the development of the

countrys labor force.

The proponents decided to conduct a study on one of the countrys largest

business sector agriculture

2.2. Objectives of the Study

The study aimed towards the attainment of the following objectives:

to acquire adequate knowledge about the rice milling and

dealing sector in the country.

to determine the various aspects of establishing a rice milling

and dealing business.

to apply the marketing management theories learned at school

in actual practice.

Aside from the above listed objectives, the group aims to build

cooperation, unity and trust among its members.


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2.3. Operational Definition of Terms

* drought tolerant rice (IR4371-54-1-1) a Philippine rice variety that can yield

up to 10% more than standard varieties in season with good rainfall

* flood-tolerant rice (IR64-Sub1) a Philippine rice variety that can tolerate

more than two weeks under water

* ipa a by-product of rice milling; rice covering

* milling producing or grinding in a mill

* rice an annual cereal grass cultivated in warm climates; a starchy food grain

* salt tolerant rice (IR63307-4B-4-3) - high-yielding Philippine rice variety

which can produce 2.5 to 3.5 tons of rice per hectare

[others to follow]

2.4. Scope and Limitation

The study covers all important aspects of establishing a rice milling and

dealing business marketing, technical, management, financial and socio-

economic. It also provides brief information on the background of study which is

clearly discussed on the Summary of the Project section. Moreover, business

permits and other important documents are also presented in the study.


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On the other hand, the study is limited to a five- year time frame for the

projections (sales, demand, supply, etc.) of the business. In addition, the

proponents focused in Bulacan where the rice plant will be located.


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3.1. Research Methodology

To be able to learn about the consumers rice preferences, the researchers

conducted a survey in Bulacan. They have distributed and collected

questionnaires regarding the subject of their study. They also had an interview

with rice millers and dealers to gain information on the basics of operating the

business. Library materials and the internet also provided additional knowledge to

the researchers.

Data gathered were then summarized and carefully compiled so as to

come up with a comprehensive feasibility study.

3.2. Demand

According to studies, Filipinos will consume 12.4 million tons of rice this

year. Its rice eating population is estimated to reach 92 million, a growth of 31.3

million from 1990. At this point, it produces only 90% of the rice demand and

imports the remaining quantity from neighboring countries.

3.3. Supply

According to research, the Philippines has approximately 4.8 million

hectares of rice lands and produce about 11.2 million metric tons of milled rice,

sufficient only for 90% of the population. Out of the 4.2 million hectares, only 1.2

million are irrigated and therefore, about 71% of it has the potential to double its

yield. Irrigating the lands is all that is needed to wipe out the present shortage.


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3.4. Demand and Supply Analysis

Based from the information on rice demand and supply, the industry is

expected to increase in terms of demand and supply for rice.

The increasing demand for rice is brought about by many factors such as

eating preference, price, quality, etc.; while the supply depends mainly on the

demand exhibited by consumers.

There is a significant difference between rice demand and supply. This

amount represents the unsatisfied demand for rice. Thus, SRMD will produce [ ]

sacks of rice per variety on a monthly basis to satisfy the market needs.

3.5. Competitive Position

The business will be able to compete with other rice millers and dealers

not only by selling but moreover, by engaging itself to socio-economic activities

which will create a good relationship with the stakeholders. It will also implement

strong and creative promotion and advertising.


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3.6.

3.6.1. Selling Price

The prices listed below vary for every type of rice being sold. They

are quoted per sack.

RICE VARIETY PRICE PER SACK

Laon Php 1,600.00

Angelika Php1,450.00

Jasmine Php 1,140.00Sinandomeng Php 1,400.00

Flood tolerant Php 1,350.00

Salt tolerant Php 1,350.00

Drought tolerant Php 1,350.00

* Note: A 5% discount will be given for bulk purchases.

SRMD will also sell ipa at Php 2.00 per kilo.

3.6.2. Competitiveness of the Product

SRMD will have an advantage over its identified competitors

(results are gathered from the survey conducted by the researchers; see

Appendices) in terms of product line aside from the traditional rice

products, SRMD will introduce three new rice varieties of high quality and

competitive prices. This will enable the business to be at par with what the

competitors offer.

3.6.3. Method of Transportation


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Land transportation will be used to deliver products to retail stores.

The proponents will purchase trucks for transport. This will make their

products available and accessible to customers.

3.7. Projected Sales

Assuming that SRMD will be producing [ ] sacks of rice per variety, the

following projected sales are expected to be met:

YEAR 1

RICE

VARIETY

SELLING

PRICE /SACK

NO. OF

SACKS TOBE

PRODUCED

TOTAL

SALES

(x 12 months)

Laon Php1,600.00 Php

Angelika Php1,450.00 Php

Jasmine Php1,140.00 Php

Sinandomeng Php1,400.00 PhpFlood tolerant Php1,350.00 PhpSalt tolerant Php1,350.00 PhpDrought tolerant Php1,350.00 Php

TOTALPhp


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* Note: Discounts given will be deducted from total sales.

YEAR 2

RICE

VARIETY

SELLING

PRICE /

SACK

NO. OF

SACKS TO

BE

PRODUCED

TOTAL

SALES

(x 12 months)

Laon Php1,600.00 PhpAngelika Php1,450.00 Php

Jasmine Php 1,140 Php


TOTALPhp


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YEAR 3

RICE

VARIETY

SELLING

PRICE /SACK

NO. OF

SACKS TOBE

PRODUCED

TOTAL

SALES

(x 12 months)





TOTALPhp


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YEAR 4

RICE

VARIETY

SELLING

PRICE /

SACK

NO. OF

SACKS TO

BE

PRODUCED

TOTAL

SALES

(x 12 months)





TOTALPhp


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YEAR 5

RICE

VARIETY

SELLING

PRICE /

SACK

NO. OF

SACKS TO

BE

PRODUCED

TOTAL

SALES

(x 12 months)





TOTAL Php


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3.8. Market Strategics Program

3.8.1. Brand

The brand will be known as Star Rice. Varieties to be produced

will be of high quality which is in line with what the customers need and

will be priced competitively. The packaging comes in a very attractive

plastic bag that is strong enough to accommodate kilos of rice per sack.

3.8.2 Place of Distribution

Star Rice products will be sold to selected retail stores within

Bulacan. This will make the products accessible to every consumer. They

will also accept and deliver orders from/to places near Bulacan.


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3.8.3. Pricing

The costings of rice per sack are as follows:

AMOUNT

Rice grains

Packaging

Labor

Mark-up

Others

TOTAL

3.8.4. Promotion/Advertising

As a new entrant in the industry, SRMD will distribute leaflets to

the members of its target market. They will contain brief information

about the products being offered and the business itself. Billboards will

also be given for free to selected retail stores within Bulacan. This will

contain the name of the store and SRMD logo on one portion. Business

address, contact person(s) and contact number(s) for direct or indirect

purchase and inquiries will be included on both the leaflets and billboards.

Another effective promotion to be used is word-of-mouth. Passing

along information about the business will contribute in increasing its

popularity in Bulacan.


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I. SURVEY QUESTIONNAIRE


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II. RESULTS OF THE SURVEY

1. How often do you eat rice?


Once a day 0 0

Twice a day 0 0

Thrice a day 28 93.33Four times & above 2 6.67

2. What factor do you consider in buying rice?


Price 3 9.38

Quality 28 87.50

Brand name 1 3.13

Accessibility 0 0

3. How much money do you allot for rice within a month?


499 and below 1 3.33

500-1,000 6 201,001-1,600 10 33.33

1,601 & above 13 43.33

4. What rice varieties do you consume?


Sinandomeng 5 16.67Jasmine 7 23.33

NFA 0 0

Angelika 8 26.67

Laon 9 30

Others 1 3.33

5. What rice milling and dealing business are familiar to you?


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Primavera 2 8

Ron 0 0

Fidels 0 0

Bles 0 0ASP 0 0

T&L 0 0

Maunlad 2 8

N3M 0 0

MCY CIE 0 0Michael Andrei 1 4

Dynasty 1 4

Mutya 0 0

EE&E 2 8

Others 17 68

6. Are you willing to try a new variety of rice? (e.g. flood tolerant, drought

tolerant, salt tolerant)


Yes 22 75.86

No 7 24.14


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