ZJRS Company

“VORTEX”
BUSINESS PROPOSAL

Prepared For:
ABC Corporation

Prepared By:
ENG13/A40 GROUP 7

Leader: Mondejar, Calvin Paulo

Members: Arbis, John Paul
Vidallo, Janina
Voluntad, Emmanuel
Zhuang, Raymond Junrong
Zhuang, Yangsi

JUNE 2017
 TABLE OF CONTENTS

I. EXECUTIVE SUMMARY
Rationale…………………………………………………………………………… 2
Product Description………………………………………………………………... 3
Audience Analysis………………………………………………………………..... 6
II. SALES AND MARKETING STRATEGY
Marketing Strategy………………………………………………………………… 8
Sales Strategy……………………………………………………………………... 14
III. MARKETING ANALYSIS
Market Research………………………………………………………………….. 15
IV. OPERATIONAL PLAN
Design and Development………………………………………………………..... 17
Product Standards………………………………………………………………… 17
Manufacturing Operations………………………………………………………... 18
Production Distribution………………………………………………………….... 22
Office, Physical Plant, and Warehouse Location/s…………………………..…… 23
Business Processes/Product Costing………………………………………..…….. 24
V. FINANCIAL PLAN
Investment/Funding Requirement………………………………………...………. 26
Key Assumptions…………………………………………………………………. 27
5-Year Financial Projections…………………………………………………….... 31
VI. SUMMARY
Business Viability and Attractiveness…………………………………………….. 34
Key Success Factors and Sustainability of the Business……………………….…. 34
Assessment of Risks…………………………………………………………….… 35

1
 I. Executive Summary

Rationale
Rainy season has just started and mosquitoes are looking to bite their next victims of their

diseases such as dengue and malaria. Dengue is the most common mosquito disease during rainy

season and the annual rate of suspected dengue cases by the Department of Health reported a

rapid increase of the number of dengue victims from 121,580 cases in 2014 to 200,415 cases in

2015. The increased number of dengue victims is alarming as the three regions that have the

most number of dengue victims every year are Central Luzon, CALABARZON, and National

Capital Region.

Mosquitoes have always been a problem since decades ago. Every decade, people invent

new solutions to kill mosquitoes such as the use of insecticides and mosquito lamp. But even

though these solutions can instantly kill mosquitoes, there are still negative effects of using those

mosquito killers. Insecticides such as “Baygon” can kill not only mosquitoes but also

cockroaches and other insects, but the negative side effect of using this product is that it can

harm the health of a person once inhaled as they contain chemicals that can harm the respiratory

system. On the other hand, a mosquito lamp is another mosquito killer that can kill mosquitoes

by the use of its light to attract and electrocute mosquitoes. But the negative effect of using this

solution is once it is not properly used, it could harm the safety of the people such as threat of

fire and other accidents.

To address the above-mentioned problems, the group innovated a product that can be an

environment and user-friendly to decrease the population of mosquitoes. It is an innovation of a

2
mosquito killer which doesn’t use chemicals to kill the mosquitoes. This product is called the

VORTEX. Get a lamp, air purifier, and mosquito killer all in one product.

Product Description

VORTEX is a 3-in-1 prototype used to attract mosquitoes through an LED light, to catch

the mosquitos in a vortex through a mini fan, and to provide a cleaner air through an air purifier.

The group named the prototype VORTEX because the word is a term made to describe a

swirling of water or air. So the group chose this word because the mosquitoes will be caught in a

vortex once they are near the prototype.

VORTEX is the new and the most effective solution for all the harmful effects the

mosquitoes bring. This prototype is for those people who are tired of using insecticides and

mosquito lamp that are not environment and user-friendly solutions.

To use VORTEX, simply HANG or SET the item on a flat even surface about 5 to 6 feet

above the ground and turn it ON.  Do not place the item near other light sources. VORTEX

should be placed away from the area you are trying to keep INSECT-FREE so the insect can be

attracted away from the desired location.

VORTEX works when it starts with a mosquito being attracted by the LED light. Once

the mosquito got nearer to the light, it will be sucked in the net through a mini fan. There is also

another net that prevents the mosquito to escape. The minifan also sucks the air that goes through

filtration through an air purifier, which converts smoke or polluted air into a cleaner air that goes

out through the holes of the customized container of the prototype.

3
VORTEX Features

(Figure 1: Product Parts)

 Prototype

 Height: 13 inch

 Width: 5 inch

 LED light: 1 watt (Blue)

 Customize Steel Container: (Cylinder): 6 inch 4.5 diameter

 Customize Steel Container: (Cone): 2 inch 4.5 diameter

 Filter: Flexible

 Mini-Fan: 4.5 diameter

4
VORTEX Advatages

 Mosquito is attracted by the vortex light

 Mosquito is sucked and trapped inside vortex

 Cleanses the air around

 Can be set up on a flat surface

 Can be hanged

VORTEX Benefits

 Prevents mosquito diseases like dengue and malaria

 Produces clean air in the environment

 No chemical poison used unlike insecticides

 Lessens mosquito population in a certain area

5
AUDIENCE ANALYSIS

Small to Big Engineering Businessmen/Government

Families Specialist Officials
(Non-Specialist) (Expert) (Technician)
Brief  A small or big  A student or any  With approximately 20
Background group of individual who is million dengue cases a year
individuals who capable in and 100 countries affected,
are identified significant the World Health
with each other. aptitudes and Organization considers
techniques in the dengue the most important
 Unlike the field of mosquito-borne viral
insecticides, engineering. disease. There are reports
mosquito coil that conventional ground
and other insect  The product and aerial application of
killers. The consists of body insecticides are not
Vortex is safer made of plastic, providing adequate control
because without light that will of the mosquitoes that
using of attract the transmit dengue.
artificial mosquito, and fan
chemical and that captures the
sort of electric fly.
shock that may
cause accident
 The mosquito trap
especially to the
kids. has a built-in fan
not only to trap
mosquito, but also
to produce a
cleanse air that
makes more
environment
friendly.

Needs and Needs Needs Needs

Interest  A brochure  A document  A brochure containing
having containing the details about the product
figures/pictures information on like the benefits it can give
demonstrating how the to the public most
every step of product has especially to the people in

6
 operating the been the remote areas, if the
product, the assembled, the product is good for the
FAQs, the materials used environment and the
troubleshoot for production effectiveness of the product
that will as well as the as well as the price range.
encounter and purpose in
how it will be designing the Interest
solved as well product  The benefit of the product it
as the price of can give to the people and
the product
environment and how
Interest helpful it is for lessening
 Interested to the the mosquito.
Interest
materials used
 Interested on
for production
how effective
and its
the product is
significance in
and if it is more
the
convenient than
development of
other mosquito
the product.
killer products.

Demographic  Ages from 10  Has an ability to  Businessmen/Governme

Characteristic and above. develop the nt officials who work in
s  Most likely scope for fields of advertising,
being place at enhancements management and
home. on a certain marketing.
product.  Provide services that
meet the needs of
consumers.

(Table 1: Audience Analysis)

7
 II. Sales and Marketing Strategy

A. Marketing Strategy

SWOT Analysis

STRENGTHS WEAKNESSES

 First to introduce multifunction  Brand awareness

Mosquito Trap  Light too bright for client
 Limited competitors
 Multiple features
 Environmental Friendly
 Low Risk of accident

OPPORTUNITIES THREATS

 Reasonable Price  Competitor

 New Product  Product Easily copied

(Table 2: SWOT)

8
POTENTIAL MARKET

Household- small and big families

Regions NCR (current plan), Region III, and IV-A (Future Plan)

Based on the DOH statistics reported as of January 1 to Dec 31 of 2015

9
10
11
(Table 3: Dengue Fever Cases and Dead per region Annual)

(Table 4: Dengue Fever Cases and Dead per region weekly)

12
(Table 5: Number of household Philippine and NCR)

The total number of household in Philippine is at 21,426,000 for the National Capital

Region, PSA estimated it to be at 2,917,000 households. NCR contributes 13.28% of the total

households.

(Table 6: Income Class of household Philippines and NCR)

13
Total Potential

Philippine  
No. Of Household Philippine 6,228,000
Income Classes of 250 above
Household
   10%
Target Market  
Income Classes of 250 above
Household 6,228,000
10% of Pyramid 10%
House hold Buyer 622,800
Survey  
Interest in Buying 60.50%
MOE 78.9%
1- MOE 21.1%
79,503.53
Target Market Share 4
(Table 7: Segmented Market Size)

PRODUCT PRICE
 Durable  Reasonable Price
 Portable
 Easy to use

Flexible
PLACE PROMOTION
 Ordered Online  Use of Social Media
 Distributed on specific stores  Online Advertisement
 Expo

(Figure 6: 4p’s)
VORTEX is a product that is portable durable use. With a switch on and off button, a

detachable base and a hock for the user to have a choice if he/she wants to hang the product

above or place it on the stand depend on the use of the use .

14
 VORTEX starts at a price of 5999 which is a reasonable price since an air purifier in the

market cost about 10000-25000. VORTEX will start selling it on Expo’s in a way to introduce

this product to the world then once the product it accepted we will start selling it online

distributed to stores all around Manila. Since now a days mobile phone is a part of our life so one

way to promote this is by using the power of social media and online advertisement.

Sales Strategy

Target Potential

Target Market  
House hold Buyer income of 250 above NCR 1,617,000
30% of Pyramid 485,100
Survey  
Interest in Buying 60.50%
MOE 78.90%
1-    MOE 21.10%
61925.44
Target Market Share
1
(Table 8: Target Market)

YEAR 2018 2019 2020 2021 2022

Target 61926 61926 61926 61926 61926
Penetration 4.80% 5.28% 5.81% 6.39% 7.03%
Demand 2972 3270 3597 3956 4352
6513.114 6838.7700 7180.7085
Projected Price 5999 6202.966
3 15 16
17,831,55 20,281,79 23,425,47
Projected Sales 27,056,419 31,250,164
4 3 1
(Table 9: 5 year Projection)

15
 III. Market Analysis
Market Research

Survey Questionnaire

Age *
Occupation (Specify if Student) *
Gender
Have you ever got Dengue Fever?
o Yes
o Never

How often do you get mosquito bite?

o Always
o Often
o Never

How often do you clean your room?

o Always
o Often
o Never

Do you get vaccine annually?

o Yes
o No

What product you use more frequent (Can choose more than 1)
o Bug Spray
o Mosquito Swatter
o Mosquito Lamp
o Mosquito Repeller
How much is your monthly income?
o PHP 15,000-35,000
o PHP 35,000-55,000
o PHP 55,000-100,000
o PHP 100,000- ABOVE
Are you interested to buy the “Vortex” mosquito trap with built in air purifier? For a price of
5999?

16
o Yes
o No

17
  TOTA
Age 20-25 26-30 31-35 36-40 41-50 51-55 56-60 L
  25 45 67 33 18 8 4 200

Percentage 12.50 22.50 33.50 16.50 9.00 4.00 2.00 100

Employe  TOTA
Occupation Education Computer e Management Unemployed L
  17 41 77 29 36 200

Percentage 8.5 20.5 38.5 14.5 18 100

Gender Male Female TOTAL

  79 121 200
Percentage 39.5 60.5 100
How often do you get mosquito bite? Always Often Never TOTAL
  109 89 2 200

Percentage 54.5 44.5 1 100

How often do you clean your
room? Always Often Never TOTAL
  113 61 26 200

Percentage 56.5 30.5 13 100

Do you get vaccine Annually? Yes No TOTAL

  138 62 200
Percentage 69 31 100
What product you use more frequent (Can choose more Mosquito Mosquito Mosquito
than 1) Bug Spray Swatter Lamp Repeller TOTAL
  166 78 55 120 419
Percentage 39.618138 18.61575179 13.1264916 28.63961814 100

16
 4 5
How much is your monthly income? 15k-35k 35k-55k 55k-100k 100k above TOTAL
  68 87 34 11 200
Percentage 34 43.5 17 5.5 100
Are you interested to buy the “Vortex” mosquito trap with
built in air purifier? For a price of 5999? Yes No Total

  121 79 200
Percentage 60.5 39.5 100
Result of Survey from 200 respondents (Table 10: Survey Result)

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 IV. Operational Plan
A. Design & Development

The idea of the product is to give the user a mosquito free and cleaner area to stay on,

with without any using any chemical or Electric shock with just one click of a button, The

“Vortex” is an innovation product which uses the concept of UV light and Fan which the UV

light attracts the mosquito then its suck by the fan with which is environment friendly and its

much safer for children at young ager for it does create electric that can cost accident or

chemical that are harmful plus an additional function of purifier , the purifier is weaker

compare to other purifier which are in the market , but still it is just an starting product in the

future the company would be upgrading it and make it better every single year, with its

unique design the buyer won’t have problem placing it in the living room or desk, which its

design is not only for function by also to increase the life style of the user

B. Product Standards
  Quantity Price Cost
Customize Plastic (Top) 1 300 400
Customize Plastic (Mid) 1 300 300
Customize Plastic (Bottom) 1 300 350
Customize Plastic (Platform) 1 200 200
Electric Plug 1 10 10
Extension Wire 4 10 40
Fan 1 250 250
Filter 1 400 400
Screw 8 1 8
Steel Container (Cylinder) 1 150 150
Steel Container (Cone) 1 100 100
  TOTAL 2208
(Table 11: Product Material)

C. Manufacturing Operations

The Manufacturing Operation of ZJRS Company Steps:

18
  Order the Customized Plastic

 Buy other Material (Local)

 Assemble

 Packaging

The Size and Shape of the Plastic will be given to the supplier so they can produce the right

Shape and Size of the product, then once the materials are gathered, it will be assembled by the

staffs working under Sir. Alex since he is the one in charge of this project “Vortex” and the first

to build a prototype of this.

19
 Start

Receive Raw
Buy other Raw
Material (Upper /
Material
Lower Body)

Checking for right

Testing of UV light
Measurement and
and Fan
Quality

Upper Body Storing Raw Lower Body END

Material

Sew the UV light to Place and Secure Distribute

the panel Filter inside

Sew the wire of Place the Cylinder

Fan to the panel Shape Wire inside Storing

Placing the UV light Place the Cone

on the Top and Shape above
Screw Fan at the Cylindrical Packaging
bottom with the Container
body Provided by
supplier
Stick label and
Insert Manual
Connect the button
and check if the Assemble
wire are all
connected Testing
properly

(Figure 7: Operation Process)

20
 Operatio Transportati Dela Inspectio Storag
Process n on y n e
Start          
Receive Material          
Checking          
Storing of Material          
Connecting of Wire          
Connecting of Fan          
Connecting of UV          
Placing of Filter          
Placing of Wire Cylinder          
Placing of Cone above
Cylinder          
Assemble          
Testing          
Packaging          
Storing          
Distributing          
(Figure 8: Production Activity Chart)

Figure shows the process of the company from receiving raw material to distribution of

the product.

Production Process

Upper

21
 Wiring Solder
Raw
Material 30 min 20 min

Assemble Test Package

Lower 20min 5min 5min

Placing

20 min

(Figure 9: Production Process)

Process divided in to 5 station and I take 1 hour and 20 minutes to produce 1 unit

Target of 2022 (4352)

Monthly forecasted demand (4352/12unit/20days)=18.13 round up 19 units

Time per unit 1.3333 hr

Unit per hour = 0.75

Needed Workers (19 unit /8hrs/0.75 units) = 3.1667 round up 4

2022 Production    

Forecast 4352

Monthly 362.66 363

Daily 18.13 19

Time Per unit 1.333 hours 1.33

Unit Per Hour 0.75 0.75

Working hours 8 hours

Worker Needed 3.16666667 4

(Table 12: Forecast of 2022 production)

Numbe
  Cost r Salary Annually
PHP PHP
Skilled Worker 600 2 18,000.00 432,000.00

22
 PHP PHP
Worker 500 2 15,000.00 360,000.00
Direct Labor Cost 1600 4  
Supervisor/Inspecto PHP PHP
r 700 1 21,000.00 252,000.00
PHP PHP
Accountant 700 1 21,000.00 252,000.00
Indirect Labor Cost 1400 2  
PHP PHP
TOTAL 2500 6 108,000.00 1,296,000.00
(Table 13: Classification and Salary of Worker)

D. Product Distribution

(Figure 10: Distribution Box)

The product would be place inside a brown box, with bubble raps and parts disassemble, to

avoid damage. In addition inside where the buyer will found its instruction manual and warranty.

Selling the product individual, the customer can get there product via Delivery with no

delivery charge if within Manila.

If selling the product as a whole which contain 6 units, the product would be ship by Sea

with charges that the buyer should pay and by truck which is free.

E. Office, Physical Plant and Warehouse Location/s

23
 The Company will be located at Banawe, Quezon City since a huge percent of high income

of people are there plus the place has the more mosquitoes compare to south. The company will

rent a space of 250 square meters in a building with a 7.2 million of total cost. If the company

expanded more, the owner doesn’t need to change location, the owner would just rent the upper

floor to increase the scale.

Particular Cost Quantity Total

Office Table 2,500 2 5,000
Office Chair 1,000 5 5,000
Computer 30,000 2 60,000
Tool box 20,000 4 80,000
Air condition 3,500 4 14,000
Comfort room 50,000 1 50,000
Lights 30,000 1 30,000
   
TOTAL     PHP 244,000
(Table 14: Office Requirement)

The table above shows the requirement for setting the office and warehouse

(Figure 11: Office Layout)

F. Business Processes/ Product Costing

24
   Quantity Price Cost
Customize Plastic (Top) 1 300 400
Customize Plastic (Mid) 1 300 300
Customize Plastic (Bottom) 1 300 350
Customize Plastic
1 200 200
(Platform)
Electric Plug 1 10 10
Extension Wire 4 10 40
Fan 1 250 250
Filter 1 400 400
Screw 8 1 8
Steel Container (Cylinder) 1 150 150
Steel Container (Cone) 1 100 100
  TOTAL 2208
(Table 15: Bill of Materials)

Since the demand forecast for the year of 2022 is projected at 4352 and a capacity

requirement is 14 units daily.

The direct material cost per unit is at PHP 2208

The direct labor cost per day is at PHP 2200/19 = 116 pesos / unit

The indirect labor cost per day is at PHP 2200/19 = 74 pesos

25
 2018 2019 2020 2021 2022
Demand /unit 2972 3270 3597 3956 4352
BOM PHP 2,208 PHP 2,208 PHP 2,208 PHP 2,208 PHP 2,208 PHP 2,208
Total Direct material Cost PHP 2,208 PHP 6,563,106 PHP 7,219,482 PHP 7,941,430 PHP 8,735,573 PHP 9,609,130
Total Direct Labor PHP 116 PHP 344,175 PHP 378,596 PHP 416,456 PHP 458,101 PHP 503,911
TOTAL DIRECT COST PHP 6,907,281 PHP 7,598,078 PHP 8,357,885 PHP 9,193,674 PHP 10,113,041
Total Indirect Labor PHP 74 PHP 219,021 PHP 240,925 PHP 265,017 PHP 291,519 PHP 320,671
Total Indirect material PHP 100,000 PHP 100,000 PHP 100,000 PHP 100,000 PHP 100,000
TOTAL INDIRECT COST PHP 319,021 PHP 340,925 PHP 365,017 PHP 391,519 PHP 420,671
Utilities PHP 50,000 PHP 55,000 PHP 60,500 PHP 66,550 PHP 73,205
TOTAL FACTORY OVERHEAD PHP 369,021 PHP 395,925 PHP 425,517 PHP 458,069 PHP 493,876
Over head/unit PHP 124.15 PHP 121.09 PHP 118.31 PHP 115.78 PHP 113.48
TOTAL MANUFACTURING COST PHP 7,276,301 PHP 7,994,002 PHP 8,783,403 PHP 9,651,743 PHP 10,606,917
Manufacturing cost/unit PHP 2,447.94 PHP 2,444.88 PHP 2,442.10 PHP 2,439.57 PHP 2,437.27

(Table 16: Product Costing)

26
 V. Financial Plan
A. Investment / Funding Requirement

i. Capital Expenditure

Capital Assets (Yearly)

Particulars Cost
7,2
Building/Warehouse/Office
00,000.00
1,0
Machineries & Equipment
10,000.00

Furniture & Fixtures 244,000.0

0
8,4
TOTAL
54,000.00
(Table 17: Capital Assets)

ii. Working Capital

Working Capital 6 months
Particulars Cost
3,6
COGS
13,150.74
1,0
General and Admin
26,500.00

5,000,000.
 Cash
00 

9,6
TOTAL
39,650.74
(Table 18: Working Capital for 6 months)

27
 iii. Pre Operation Expenses
Pre-Operating Expenses
Particulars Cost
₱
Licensing
30,000
₱
Registration
10,000
₱
Legal Requirements and facilitation
50,000
₱
Prototyping
4,000
₱
Permits
5,000
₱
Office / Warehouse Set up
350,000
₱
Advertising
500,000
₱
Promoting
200,000
₱
Training
150,000
1,299,0
TOTAL
00
(Table 19: Operating Expenses)

iv. Cash Requirement

With a total of PHP 14,392,650 plus a beginning cash on hand of 5 million gives a total

of 19,4392,650 pesos needed to start process of the business so witch that the entrepreneur is

thinking of loaning an amount of PHP 10 million form bank. Thus paying the loan with in a

long-term of 10 years and own 5 million pesos in cash.

B. Key Assumptions

Bank Loan

The central bank of Philippines kept its benchmark overnight borrowing rate unchanged

at 3 percent on November 10th 2016 as widely expected. The interest rates on short-term special

28
deposit accounts (SDA) and overnight repo rate were also kept steady at 2.5 percent and 3.5

percent, respectively. Policymakers said inflation continues to be manageable although upside

risks arise. As a result, inflation forecasts were raised to 1.8 percent from 1.7 percent for this

year. Estimates for 2017 were also increased by 10bps to 3 percent and by 30bps to 2.9 percent

in 2018. Interest Rate in Philippines averaged 9.28 percent from 1985 until 2016, reaching an all-

time high of 56.60 percent in December of 1990 and a record low of 3.00 percent in June of

2016.

Retrieved from www.tradingeconomics.com/philippines/interest-rate

Inflation

Philippines (Year-on-Year Inflation Rates, All Items)

The country’s annual headline inflation picked up by 2.7 percent at the beginning of the

year 2017. Inflation in December 2016 was recorded at 2.6 percent and in the same month of the

previous year, 1.3 percent. The indices of six of the eleven commodity groups posted higher

annual increments during the month:

Clothing and Footwear (2.8%)

Housing, Water, Electricity, Gas and other Fuels and other Fuels (1.8%)

Health (2.6%)

Transport (2.4%)

Recreation and Culture (1.9%)

Restaurant and Miscellaneous Goods and Services (2.2%)

29
 The rest of the commodity groups either had slower annual increases or retained their

previous month’s rate.

National Capital Region (NCR)

Annual inflation increased by 3.0 percent in January 2017. It went up by 2.7 percent in

December 2016 and 0.6 percent a year ago. This was primarily effected by the 6.2 percent annual

growth in the heavily-weighted food and non-alcoholic beverages index. Moreover, the index of

housing, water, electricity, gas and other fuels recorded 0.2 percent annual uptick from 0.3

percent decrease in the previous month. Higher annual mark-ups registered in the following

indices also contributed to the uptrend:

Clothing and Footwear (3.4%)

Health (1.7%)

Transport (3.4%)

Recreation and Culture (4.0%)

Restaurant and Miscellaneous Goods and Services (1.6%)

The other commodity groups either had slower annual increments or retained their previous

month’s rate. (Tables 6 and 8)

Areas outside NCR (AONCR)

Inflation in AONCR moved up by 2.7 percent in January 2017. In the previous month, it

was pegged at 2.6 percent and in January 2016, 1.5 percent. This was due to higher annual rates

observed in the indices of the following commodity groups:

30
Clothing and Footwear (2.5%)

Housing, Water, Electricity, Gas and Other Fuels (2.4%)

Transport (2.2%)

Restaurant and Miscellaneous Goods and Services (2.5%)

GDP

(Figure 12: GDP Growth rate)

The Philippines economy grew an annual 6.4 percent in the March quarter of 2017,

following a 6.6 percent expansion in the previous quarter and below market consensus of a 6.8

percent growth. It was the weakest expansion since the third quarter 2015, as private

consumption, investment, and government spending slowed while exports rose further.

In the three months to March, household consumption expanded 5.7 percent year-on-

year, compared to a 6.3 percent increase in the fourth quarter. Government expenditure edged up

0.2 percent, slower than a 4.0 percent growth in the December quarter, due to a decline in

maintenance and other operating expenditures of government agencies. Delays in the

31
implementation and procurement of various government programs and higher expenses recorded

during the election period in 2016 also contributed to a growth government spending.

Retrieved from https://tradingeconomics.com/philippines/gdp-growth-annual

C. 5-Year Financial Projections

Financial Projection

YEAR 2018 2019 2020 2021 2022

Target 61926 61926 61926 61926 61926
Penetration 4.80% 5.28% 5.81% 6.39% 7.03%
Demand 2972 3270 3597 3956 4352
6202.96 6513.11 6838.7700 7180.7085
Projected Price 5999
6 43 15 16
17,831,5 20,281,7 23,425,4 27,056,41 31,250,16
Projected Sales
54 93 71 9 4
(Table 20: 5 years Financial Projection)

Income Statement
ZRJS Inc.

INCOME STATEMENTS
2018 2019 2020 2021 2022
Unit 2972 3270 3597 3956 4352
Price Per Unit 5999 6203 6513 6839 7181
Total Sales ₱17,831,554.44 ₱20,281,793.27 ₱23,425,471.23 ₱27,056,419.27 ₱31,250,164.25

COGS
Direct Materials ₱2,208.00 ₱6,563,105.89 ₱7,219,481.70 ₱7,941,429.87 ₱8,735,572.86 ₱9,609,130.15
Direct Labor ₱116.00 ₱344,175.08 ₱378,596.01 ₱416,455.61 ₱458,101.17 ₱503,911.29
Manufacturing Overhead ₱369,020.51 ₱395,924.73 ₱425,517.21 ₱458,068.93 ₱493,875.82
Net COGS ₱2,324.00 ₱7,276,301.47 ₱7,994,002.44 ₱8,783,402.69 ₱9,651,742.96 ₱10,606,917.25
Gross Profit ₱10,555,252.97 ₱12,287,790.83 ₱14,642,068.54 ₱17,404,676.31 ₱20,643,247.00

Operatiing Expenses
Admin salaries ₱1,296,000.00 ₱1,360,800.00 ₱1,428,840.00 ₱1,500,282.00 ₱1,575,296.10
Employee Benefit ₱150,000.00 ₱157,500.00 ₱165,375.00 ₱173,643.75 ₱182,325.94
Depreciation ₱1,003,333.33 ₱1,003,333.33 ₱1,003,333.33 ₱922,000.00 ₱922,000.00
Utilities ₱960,000.00 ₱965,000.00 ₱970,000.00 ₱975,000.00 ₱980,000.00
Insurance & Property Tax ₱200,000.00 ₱214,000.00 ₱228,980.00 ₱245,008.60 ₱262,159.20
MRO ₱150,000.00 ₱150,000.00 ₱150,000.00 ₱150,000.00 ₱150,000.00
Security Serveces ₱180,000.00 ₱198,000.00 ₱217,800.00 ₱239,580.00 ₱263,538.00
Janitorial Services ₱120,000.00 ₱132,000.00 ₱145,200.00 ₱159,720.00 ₱175,692.00
Miscellaneous Expenses ₱100,000.00 ₱150,000.00 ₱200,000.00 ₱250,000.00 ₱300,000.00
Licensing ₱ 30,000.00 30,000 30,000 30,000 30,000
Registration ₱ 10,000.00 10,000 10,000 10,000 10,000
Legal Requirements and facilitation ₱ 50,000.00 50,000 50,000 50,000 50,000
Prototyping ₱ 4,000.00 4,000 4,000 4,000 4,000
Permits ₱ 5,000.00 5,000 5,000 5,000 5,000
Advertising ₱ 350,000.00 350,000 350,000 350,000 350,000
Promoting ₱ 500,000.00 500,000 500,000 500,000 500,000

Total Operating expenses ₱5,108,333.33 ₱5,279,633.33 ₱5,458,528.33 ₱5,564,234.35 ₱5,760,011.24

Net Income Before tax ₱5,446,919.64
32
₱7,008,157.49 ₱9,183,540.20 ₱11,840,441.96 ₱14,883,235.76
Tax (.32 percent) ₱1,743,014.28 ₱2,242,610.40 ₱2,938,732.87 ₱3,788,941.43 ₱4,762,635.44
Net Income ₱3,703,905.35 ₱4,765,547.09 ₱6,244,807.34 ₱8,051,500.53 ₱10,120,600.32
(Table 21: Income Statement)

Cash Flow

CASH FLOW
2018 2019 2020 2021 2022

Initial ₱ 8,507,238.69 ₱ 13,076,119.12 ₱ 19,124,259.79 ₱ 26,897,760.32

Cash In
Sale ₱ 17,831,554.44 ₱ 20,281,793.27 ₱ 23,425,471.23 ₱ 27,056,419.27 ₱ 31,250,164.25
Cash Loan ₱ 5,000,000.00
Owners Capital ₱ 10,000,000.00

Total ₱ 22,831,554.44 ₱ 28,789,031.96 ₱ 36,501,590.34 ₱ 46,180,679.05 ₱ 58,147,924.57

Cash Out
COGS ₱ 7,276,301.47 ₱ 7,994,002.44 ₱ 8,783,402.69 ₱ 9,651,742.96 ₱ 10,606,917.25
Admin salaries ₱ 1,296,000.00 ₱ 1,360,800.00 ₱ 1,428,840.00 ₱ 1,500,282.00 ₱ 1,575,296.10
Employee Benefit ₱ 150,000.00 ₱ 157,500.00 ₱ 165,375.00 ₱ 173,643.75 ₱ 182,325.94
Utilities ₱ 960,000.00 ₱ 965,000.00 ₱ 970,000.00 ₱ 975,000.00 ₱ 980,000.00
Insurance & Property Tax ₱ 200,000.00 ₱ 214,000.00 ₱ 228,980.00 ₱ 245,008.60 ₱ 262,159.20
MRO ₱ 150,000.00 ₱ 150,000.00 ₱ 150,000.00 ₱ 150,000.00 ₱ 150,000.00
Security Serveces ₱ 180,000.00 ₱ 198,000.00 ₱ 217,800.00 ₱ 239,580.00 ₱ 263,538.00
Janitorial Services ₱ 120,000.00 ₱ 132,000.00 ₱ 145,200.00 ₱ 159,720.00 ₱ 175,692.00
Miscellaneous Expenses ₱ 100,000.00 ₱ 150,000.00 ₱ 200,000.00 ₱ 250,000.00 ₱ 300,000.00
Licensing ₱ 30,000.00 ₱ 30,000.00 ₱ 30,000.00 ₱ 30,000.00 ₱ 30,000.00
Registration ₱ 10,000.00 ₱ 10,000.00 ₱ 10,000.00 ₱ 10,000.00 ₱ 10,000.00
Legal Requirements and facilitation ₱ 50,000.00 ₱ 50,000.00 ₱ 50,000.00 ₱ 50,000.00 ₱ 50,000.00
Prototyping ₱ 4,000.00 ₱ 4,000.00 ₱ 4,000.00 ₱ 4,000.00 ₱ 4,000.00
Permits ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00 ₱ 5,000.00
Advertising ₱ 350,000.00 ₱ 350,000.00 ₱ 350,000.00 ₱ 350,000.00 ₱ 350,000.00
Promoting ₱ 500,000.00 ₱ 500,000.00 ₱ 500,000.00 ₱ 500,000.00 ₱ 500,000.00
Tax (.32 percent) ₱ 1,743,014.28 ₱ 2,242,610.40 ₱ 2,938,732.87 ₱ 3,788,941.43 ₱ 4,762,635.44
Repayment of Loan ₱ 1,200,000.00 ₱ 1,200,000.00 ₱ 1,200,000.00 ₱ 1,200,000.00 ₱ 1,200,000.00

Total ₱ 14,324,315.76 ₱ 15,712,912.84 ₱ 17,377,330.55 ₱ 19,282,918.73 ₱ 21,407,563.94

Ending ₱ 8,507,238.69 ₱ 13,076,119.12 ₱ 19,124,259.79 ₱ 26,897,760.32 ₱ 36,740,360.64

(Table 22: Cash Flow)

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Balance Sheet

BALANCE SHEET $2,018.00 $2,019.00 $2,020.00 $2,021.00 $2,022.00

Current Assests
Cash Receive From Customers $8,507,238.69 $13,076,119.12 $19,124,259.79 $26,897,760.32 $36,740,360.64
Cash Loan $10,000,000.00
Total Current Assets $18,507,238.69 $13,076,119.12 $19,124,259.79 $26,897,760.32 $36,740,360.64
Fixed Assets
Land & Building $7,200,000.00 $7,200,000.00 $7,200,000.00 $7,200,000.00 $7,200,000.00
Accumulated Depreciation Building $720,000.00 $1,440,000.00 $2,160,000.00 $2,880,000.00 $3,600,000.00
Furniture & Fixtures $1,010,000.00 $1,010,000.00 $1,010,000.00 $1,010,000.00 $1,010,000.00
Accumulated Depreciation Furnitures & Fixtures $202,000.00 $404,000.00 $606,000.00 $808,000.00 $1,010,000.00
Machine & Equipment $244,000.00 $244,000.00 $244,000.00
Accumulated Depreciation Machine & Equipment $81,333.33 $162,666.67 $244,000.00

Total Fixed $7,450,666.67 $6,447,333.33 $5,444,000.00 $4,522,000.00 $3,600,000.00

Total Assests $25,957,905.35 $19,523,452.45 $24,568,259.79 $31,419,760.32 $40,340,360.64

Liabilities
Long Term Debts( Cash Loan) $1,200,000.00 $1,200,000.00 $1,200,000.00 $1,200,000.00 $1,200,000.00
Total Current Liabilities $1,200,000.00 $1,200,000.00 $1,200,000.00 $1,200,000.00 $1,200,000.00
Owners Equity
Owers Capital $5,000,000.00 $5,000,000.00 $5,000,000.00 $5,000,000.00 $5,000,000.00
Retained Earning $24,757,905.35 $18,323,452.45 $23,368,259.79 $30,219,760.32 $39,140,360.64
Total liabilities and Owner Equity $25,957,905.35 $19,523,452.45 $24,568,259.79 $31,419,760.32 $40,340,360.64

(Table 23: Balance Sheet)

Financial Ratio

2018 2019 2020 2021 2022

SALES ₱17,831,554.44 ₱20,281,793.27 ₱23,425,471.23 ₱27,056,419.27 ₱31,250,164.25
COGS ₱7,276,301.47 ₱7,994,002.44 ₱8,783,402.69 ₱9,651,742.96 ₱10,606,917.25
PROFIT 10,555,253 12,287,791 14,642,069 17,404,676 20,643,247

Gross Margin
Profit 10,555,253 12,287,791 14,642,069 17,404,676 20,643,247
Sales 17,831,554 20,281,793 23,425,471 27,056,419 31,250,164
59.19% 60.59% 62.50% 64.33% 66.06%
Net Margin
Net Profit Before Tax ₱5,225,610.67 ₱6,530,347.67 ₱8,146,674.37 ₱10,101,388.87 ₱12,372,058.35
Sales 17,831,554 20,281,793 23,425,471 27,056,419 31,250,164
29.31% 32.20% 34.78% 37.33% 39.59%
ROA
Net Profit Before Tax ₱5,225,610.67 ₱6,530,347.67 ₱8,146,674.37 ₱10,101,388.87 ₱12,372,058.35
Total Assest ₱25,957,905.35 ₱19,523,452.45 ₱24,568,259.79 ₱31,419,760.32 ₱40,340,360.64
20.13% 33.45% 33.16% 32.15% 30.67%

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(Table 24: Financial Ratio)

VI. SUMMARY
A. Business Viability & Attractiveness

The ZJRS is not only producing a product for the user but a lifestyle to the user, making

the product with a unique design to help improve the lifestyle of the user .

Based on the computations, we can see that the payback period is 2.28 years and the ROI

for the product is as high as 44% which for investor is quite attractive.

5 year Average Income PHP 6,577,272

Investment PHP 15,000,000
Payback Period 2.280580719
ROI 44%
(Figure 13: Business Viability)

B. Key success Factors and Sustainability of the Business

Price

First of all, what make this product stand out from others is that this is a brand new

product, having a function of trapping mosquito plus an air purifier. In the market, an air purifier

cost about 10-25k a unit , but not the “Vortex” with its price set at 5999 not only it’s an air

purifier but also a mosquito trapper.

Quality

The product is well made it can be used in any area using the material in the market to

make, and in addition a wonderful design. When people place it in the living room, it is like a

decoration.

Effectiveness
35
 The “Vortex” is user friendly and it is easy to use , to make it work just by pushing a

single button , to make it better the designer make it a dual function so that the user can use the

“Vortex” while in placing it in a Flat surface or hanging it above the ceiling.

C. Assessment of Risks

Branding

Customer might not recognize the brand, and might doubt about the effectiveness of it.

Pricing

Although the pricing of the product is slightly expensive but still majority of the

household don’t want to spend that much for a new product that is new to them they might stick

to insect killer or something cheaper.

Competition

The product is easily copied and may be other competition might make it better and

cheaper compare to the product produce by ZJRS.

WEAKNESS HOW TO MITIGATE?

Financial Find a good franchiser or find a partner

Continue promoting the product and let

Brand
people see the effectiveness of it

Price Find cheaper raw materials

Competition Create a better product every year
(Figure 14: Weaknesses of product and solutions)

36