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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
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 3
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 Php 1,140 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.
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YEAR 4
RICE
VARIETY
SELLING
PRICE /
SACK
NO. OF
SACKS TO
BE
PRODUCED
TOTAL
SALES
(x 12 months)
Laon Php1,600.00 Php
Angelika Php1,450.00 Php
Jasmine Php 1,140 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 5
RICE
VARIETY
SELLING
PRICE /
SACK
NO. OF
SACKS TO
BE
PRODUCED
TOTAL
SALES
(x 12 months)
Laon Php1,600.00 Php
Angelika Php1,450.00 Php
Jasmine Php 1,140 Php
Sinandomeng Php1,400.00 PhpFlood tolerant Php1,350.00 PhpSalt tolerant Php1,350.00 PhpDrought tolerant Php1,350.00 Php
TOTAL Php
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* Note: Discounts given will be deducted from total sales.
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?
CHOICES FREQUENCY PERCENTAGE
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?
CHOICES FREQUENCY PERCENTAGE
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?
CHOICES FREQUENCY PERCENTAGE
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?
CHOICES FREQUENCY PERCENTAGE
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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CHOICES FREQUENCY PERCENTAGE
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)
CHOICES FREQUENCY PERCENTAGE
Yes 22 75.86
No 7 24.14
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