Development Study (Save on Surplus)

7/28/2019 Development Study (Save on Surplus)

1/59

EXECUTIVE SUMMARY

A. MANAGEMENT ASPECT

Save on Surplus (S.O.S), Dumaguete City is a franchised store under

Dumaguete St. Louis Trading Enterprises which is a sole proprietorship owned by Mrs.

Linda A. Monterola.

The business establishment has four (4) regular employees always present

during the daily business operations: one (1) manager who also acts as the cashier and

bookkeeper, one (1) sales person who is also the officer in-charge of the product

inventory, one (1) technician who handles the repairs of computers and other electronic

products, and one (1) security guard who is outsourced from an agency. The business

also avails the services of an accountant and a management consultant at certain times

of the year.

B. MARKETING ASPECT

Here in Dumaguete, the identified direct competitors of Save on Surplus are

RMJ Store located at corner V. Locsin St. & Real St., and Alymae Surplus with two

stores located at Pulantubig and Perdices St. Indirect competitors of the business

include Octagon. CDr King, DGtech, POS marketing and Appliance Centrum.

Save on Surplus has adopted various marketing strategies that help attract its

customers and somehow counter the threat of the competitors. It makes use of radio

advertisements, tarpaulins, posters and flyers. Also, with its satisfying service and

trusted high quality products, SOS got loyal customers and had spread through word-of-

mouth.


2/59

2

C. TECHNICAL ASPECT

Save on Surplus (S.O.S) is located at Dr. #7 Plaza Milagros Bldg., Sta. Rosa St.,

Dumaguete City, across Dumaguete Cathedral Credit Cooperative (DCCCO), operating

nine (9) hours from Monday to Saturday. The products sold at Save On Surplus include

kitchenware, electronic gadgets, steel and wooden cabinets and drawers, and computer

set, spare parts and accessories which are mostly coming from Australia delivered to

Save On Surplus, Main branch and then distributed to the other outlets/ franchises. It is

a favorable location for retail business because it is just a walking distance from the

public market making it very accessible to the public. It also has its parking area for

their customers vehicles.

The retail store area of Save on Surplus is 90m2

or 6m x 15m. It is big enough to

accommodate all the products displayed and keep other stocks.

D. FINANCIAL ASPECT

The initial investment needed to start this business venture was Php 1,000,000

which was the personal money/ savings of Mrs. Linda Avenido-Monterola. And it only

took her a year from the start of operations to recover the amount she had invested.

The revenue of the business comes from the sales of their product and from the

service fees they charge on the repairs.

E. LEGAL ASPECT

To avoid legal conflicts and protect the interests of the business, its employees

and of its customers, the establishment submits to the conditions and provisions


3/59

3

mandated by law. Save On Surplus has complied all requirements from the very start of

the business and has regularly secured and renewed all the necessary permits and

clearances needed to continue its business operations.

F. SOCIO-ECONOMIC ASPECT

The City of Dumaguete continually enjoys benefits from this establishment.

Aside from tax, Save On Surplus has given people the opportunity to work for them

thus minimizing the unemployment rate of the city. Thus, giving the workers the chance

to earn and improve their livelihood. Its business transactions also fuels economic

activities which leads to economic growth and development for individuals and the

society as a whole.


4/59

4

INTRODUCTION

The City of Dumaguete is the capital, the seat of government and the economic hub of

the Philippine province of Negros Oriental. Located on the plains of the south-eastern coast of

Negros Island, the city has a relatively small land area with a total of only 34.26 km2

divided

into thirty (30) barangays. It is one of the most populated areas in the province as it is popularly

known as a City of Gentle People and a University town. Serving as a natural border to the

neighboring provinces of Cebu, Bohol and Siquijor, the city continues to attract a considerable

number of people particularly students, local and foreign tourists, and businessmen. Access and

transportation of goods and services from nearby provinces is also made convenient through

the citys own airport and several piers. With these people from neighboring provinces flooding

the city, entrepreneurs have put up businesses to cater to the publics needs and wants. Thus,

work opportunities and employment have also accelerated due to the existence of these

business establishments.

With the advancement of technology in different areas of human life such as health,

work, communication and others, electronic gadgets and computers have become indispensable

tools of peoples daily activities and work. Todays technology also does not only offer us

easy to use equipment but with low cost as well. Thus, Save on Surplus, Inc. has become one

of Philippines leading franchisor for retail stores for imported surplus products from the

U.S.A. and Australia, with 34 outlets nationwide and growing offering a wide variety of

products at affordable prices.

Here in Dumaguete City, there are only few surplus retail stores that sell imported

products. Considering the demand for this wide variety of products by diversified market, the

conduct of this development study will help Save On Surplus, Dumaguete improve and gain a


5/59

5

competitive advantage among its rivals or competitors through encouraging effectiveness and

efficiency in the carrying out of its operations and the management as a whole.

OBJECTIVES

This development study on Save on Surplus aims:

1. To develop and further enhance the business operation and activities of the business,

emphasizing on its different important aspects such as the management, marketing,

technical and financial aspects;

2. To evaluate and assess the establishments socio-economic influence as well as look over

the compliance and completeness of its legal requirements;

3. To address the establishments existing problems through well-thought remedies and

solutions; and

4. To determine and recommend other alternative courses of actions necessary for the progress

of the business establishment.

SCOPE AND LIMITATION OF THE STUDY

The scope of this development study on Save On Surplus covers the different key

aspects --- management, marketing, financial, technical, socio-economic and legal aspects of

the business establishment. This study is also limited only to the information disclosed to us by

the manager of Save On Surplus, Dumaguete and the observations on daily operations gathered

by the members of the group during certain hours of the day. All major, relevant, and

confidential information gathered and provided for by the manager are used solely for the

purpose of this development study.


6/59

6

SIGNIFICANCE OF THE STUDY

The primary purpose of conducting this development study on Save On Surplus, with

almost ten (10) years of operation, is to improve its usual course of business undertakings and

to ensure effective and efficient use of the opportunities that the establishment has. It will also

increase the rate of success of the business by giving recommendations of the necessary aspect

of the business that needs to be improved and developed.

METHODOLOGY

a. Description of the Sources of Data

The sources of data used for the study include information directly given or asked from

the manager and the employees, and those information gathered from the groups observations.

During operational hours when the employees and the manager are not busy and there are no

customers yet to be entertained, some members of the group would ask random questions about

the business. There were also times when the group would respectfully inquire about certain

and confidential things about the operation of the business. The rest of the information is just

based on the observations gathered by the group from its daily duty in the store.

b. Data Gathering Procedure

Important data needed in the study such as the history of the business, the nature of the

operation, its policies, and some information of its financial, technical, and legal aspects were

acquired from the manager. Others were gathered through random interviews of the employees.

While, some data were just acquired by merely observing the daily operations of Save On

Surplus.


7/59

7

PROJECT SUMMARY

Name of Establishment: Save on Surplus (S.O.S)/ Dumaguete St. Louis Trading

Enterprises

Location: Dr. #7 Plaza Milagros Bldg., Sta. Rosa St., Dumaguete City

Owner: Mrs. Linda A. Monterola

Manager: Miss Jennifer Q. Sayson

Store Hours: Monday-Saturday:10:00AM7:00PM

A. NAME OF THE ESTABLISHMENT

The business establishment chosen by the group for a development study is Save

On Surplus, Dumaguete which is a franchise business of Dumaguete St. Louis Trading

Enterprises. The business name already connotes that it is into selling affordable surplus

products particularly computer parts, accessories and other electronic and home

appliances.

B. NAME OF THE PROPRIETOR

The proprietor of Dumaguete St. Louis Trading Enterprises owning Save On

Surplus (S.O.S), Dumaguete is Mrs. Linda Avenido Monterola.

C. LOCATION

Save On Surplus (S.O.S) is located at Dr. #7 Plaza Milagros Bldg., Sta. Rosa St.

across Dumaguete Cathedral Credit Cooperative. The business establishment is very

accessible to the public and also has parking spaces available for its customers.


8/59

8

D. DESCRIPTIVE DEFINITION OF THE ESTABLISHMENT

Save on Surplus, Inc. is the Philippines leading franchisor for retail stores for

imported surplus products from the U.S.A. and Australia, with 34 outlets nationwide

and growing. Save On Surplus has been the countrys neighborhood imported surplus

retailer for the last 11 years. Here in Dumaguete, Save on Surplus (S.O.S) is a

franchised business under the sole proprietorship Dumaguete St. Louis Trading

Enterprises.

E. HIGHLIGHTS OF THE ESTABLISHMENT

HISTORY OF THE BUSINESS

Seeing the potential and profitability of the retailing industry, Mrs. Linda A.

Monterola decided to franchise Save On Surplus (S.O.S) on June 2003. She is married

and shes from Bohol. But she is currently working for SPC Power Corporation in

Cebu. She started with Php 1,000,000 as her initial investment. The operations turned

very well that she was able to recover her initial investment after just a year. Currently,

SOS is operating at a sustainable level.

NATURE OF THE INDUSTRY

Retailing industry plays a very significant role and contribution towards the

development of the Philippine economy. With the Philippines growing population of

nearly 100 million and expanding middle class, and consumer-driven market, it presents

significant opportunities for retailing of products and services. The Philippines is also

one of the worlds largest English speaking markets, heightening the ease of marketing


9/59

9

and doing business. Its culture somehow influenced by the West makes the market open

to imported brands and concepts. Thus, Surplus retail stores of computers, electronics,

home appliances, furniture, power tools and other general merchandise is a profitable

business venture.

I. MANAGEMENT ASPECT

A. PLANNING

Planning is a preliminary step and a systematic activity which determines when,

how and who is going to perform a specific job. It is a detailed program regarding future

courses of action that take into consideration available & prospective human and physical

resources of the organization so as to get effective coordination, contribution & perfect

adjustment. It is the basic management function involving formulation of one or more

detailed plans to achieve optimum balance of needs or demands with the available

resources.

Upon the start of the business, Save On Surplus, Dumaguete has set its long-term

as well as its short-term objectives.

Short-term objectives

To attract new customers and increase sales

To find additional new suppliers who are reliable and who offer a wide variety of

new products

To reduce if not eliminate stock out of products and increase customer satisfaction


10/59

10

Long-term objectives

To gain profit and sustain the business operations

To increase loyal customers who patronize their products and services

To be the leading surplus retail store in Dumaguete City providing affordable

quality products from abroad.

B. ORGANIZING

a. Employee Hiring

Save On Surplus (S.O.S)/ Dumaguete St. Louis Trading Enterprise adopts the

usual way of hiring its employees. Applicants are required to submit to the manager

their application letter, resume, SSS, and police clearance. When there are more

applicants vying for just one job, the manager also takes time to interview the applicants

and chooses the best one.

b. Organizational Chart

The organizational chart of Dumaguete St. Louis Trading Enterprises owning

Save On Surplus (S.O.S), Dumaguete consists of the owner, the manager, with two

Owner

Management Consultant

Salesperson/ Inventory Officer Technician

Manager/Cashier/Bookkeeper

Accountant

Security Guard


11/59

11

regular employees --- salesperson who also acts as the inventory officer-in-charge, and

the technician and an outsourced security guard. The business also avails the services of

a management consultant and an accountant at certain points of its operational term.

c. Employees Profile and Job Description

Manager/Cashier/Bookkeeper: Miss Jennifer Q. Sayson

The manager is the one who handles the operations of the business and is the

person responsible for supervising and managing the business. She can also make

decisions regarding certain aspects in the business under the conditions and terms and

upon approval of the owner. As a manager, she also does the filing of documents for the

BIR, SSS, PhilHealth and utility bills. She does the recording of employees daily time

record, absenteeism, and the payroll. As a cashier, she receives payments and hands out

change upon the sale of a product. She also decides on the last prices of the stores

products based on certain price limits set by the owner. She also does the monthly

financial statement of the business. She also reports business matters and affairs to the

management consultant on a periodic basis.

Technician: Mr. Ponchio K. Elnar

The technician is responsible in handling desktop repair, Central Processing

Units (CPUs), printers and other electronic products may it be a unit under warranty or

any other products not originally bought from the store.


12/59

12

Salesperson/ Inventory Officer-in-Charge: Mr. Hermelito C. Avenido

The salesperson is in-charge of selling out units and does the checking of the

incoming and outgoing units. He checks the inventory and reports it to the manager. He

is also the one who opens and closes the store. Aside from that, he also maintains the

cleanliness of the business establishment.

Security Guard:

The security guard is responsible in keeping the business establishment, its

contents, employees and the customers safe and secure from harmful elements. He also

keeps daily time records of the employees to back up the records of the manager. He

also assists some customers and helps the salesperson in assembling and carrying heavy

products.

Management Consultant: Mrs. Olympia A. Serna

The management consultant of Save On Surplus is also the sister of the owner.

She visits the business establishment every other month and stays for a day or two to be

able to check on the records and important documents. She looks over the operations to

see whether the business is doing well or not.

Accountant: Mr. Elmar C. Caluscusan

The accountant of Save On Surplus is the one who prepares the annual financial

statements and reports. He is also the one who prepares the documents necessary for


13/59

13

filing and paying the taxes of the business. His services are only availed usually at the

end of the year.

d. Cashiering System

Since the manager also acts as the cashier, she receives payments and hands out

change upon the sale of a product. She also decides on the last/ discounted prices of the

stores products based on certain price limits set by the owner. However, the researchers

observed that there are times when customers are made to wait for the manager for them

to pay for their chosen product. There were also a few instances when the salesperson

was the one who receives the money/ payment of customers when the manager/cashier

has not arrived at the workplace yet.

e. Purchasing/Ordering System

As soon as customers walk inside the store, displayed products welcome them.

Some goes directly to the product they are looking for while some roams around

checking on other products that interests them. The salesperson assists them and

answers their questions and inquiries about the product. The customers may also request

some products to be tested. When the customer decides on what to buy, the customer

gets the product and pays to the manager/cashier. The salesperson prepares/wraps the

product sold and hands it out to the customer.

Customers also walk in the store directly asking the salesperson for the

availability of certain products. The salesperson then leads them to the products they are


14/59

14

looking for. However, there are instances when the products they are looking for are out

of stock.

For service customers, they go directly to the repair station of the technician

bringing with them the unit or product they wanted to be fixed. They have the option to

leave the product or wait until it is fixed. Since there are no enough chairs to

accommodate all those who choose to wait for their unit to be repaired, some customers

look around the store checking on other products.

f. Employee Schedule

NAME MondaySaturday

Sayson, Jennifer Q. Manager 10:00 AM - 7:00 PM

Avenido, Hermelito C. Salesperson 9:00 AM - 7:00 PM

Elnar, Ponchio K. Technician 10:00 AM - 7:00 PM

Anecito Security guard 9:00 AM - 7:00 PM

Since the salesperson, Mr. Avenido, is the one who opens and closes the store

everyday, he reports to work at 9:00AM to open and clean the store. The security guard

also reports at 9:00AM. The manager and the technician come to work at 10:00AM.

However, the researchers observed that sometimes, customers come before 10:00 AM

to buy some products or to have some units repaired. And since the technician and the

manager report at 10:00AM, the customers are made to wait.


15/59

15

C. STAFFING

The managerial function of staffing involves manning the organization structure

through proper and effective selection, appraisal and development of the personnel to

fill the roles assigned to them. It pertains to recruitment, selection, development and

compensation of the right people for the right job.

Save On Surplus, Dumaguete adopts the usual way of hiring employees.

Applicants were required to submit their application letter, resume, SSS, and police

clearance. When there are more applicants vying for just one job, the manager also

takes time to interview the applicants and chooses the best one. The employees are well

compensated based on their job performance and attendance. Aside from their monthly

salaries, employees also receive benefits such as PhilHealth, SSS, and Pag-ibig.

Employees also receive their 13th

month pay. These motivate the employees of Save On

Surplus to really do their job well. Aside from these, the friendly and light environment

of the workplace creates an atmosphere favorable to the employees enabling them to

work productively with ease. However, more improvements in the establishments

layout could also be done for greater efficiency in work.

D. DIRECTING

Directing refers to the process in which the managers instruct, guide and oversee

the performance of the workers to achieve predetermined goals. It initiates action and is

said to be consisting of human factors. It basically includes all those activities which are

designed to encourage the subordinates to work effectively and efficiently. Directing is


16/59

16

the function of guiding, inspiring, overseeing and instructing people towards

accomplishment of organizational goals.

In Save On Surplus, its short and long-term objectives serve as guide for the

employees to perform their jobs accordingly. Policies and regulations are also imposed

to direct employee behavior positively towards these objectives.

Here are the rules and policies of Save on Surplus (S.O.S)/ Dumaguete St. Louis

Trading Enterprises:

1. The business establishment closes at 7pm.

2. No work, no pay policy (benefits such as SSS, PhilHealth, 13

th

month pay and

Pag-Ibig are granted)

3. The business is close on holidays.

4. Cleanliness and orderliness should be observed always

5. Employees should come on time

6. Lost and Defective units must be reported to the manager

7. Checking and reporting monthly inventory is a must

E. CONTROLLING

Controlling is a systematic exercise that ensures effective and efficient

utilization of organizational resources so as to achieve the planned goals. It is a process

of checking actual performance against the standards or plans with a view to ensure

adequate progress and also recording such experience as is gained as a contribution to

possible future needs. It measures deviation of actual from standard performance,

discovers the causes of such deviations and helps in taking corrective actions.


17/59

17

Employees actions and activities of Save on Surplus are restricted to certain

limitations by their rules and policies. These enable the management to control and give

reinforcements for the employees behavior. Since the manager has only three

employees to supervise, control over the business isnt a burden.

II. MARKETING ASPECT

A. Marketing Research Evaluation

Save on Surplus does not conduct a marketing research. Nevertheless, this is how the

group sizes-up the store in the marketing research aspect.

Strengths

The enterprise is strategically located near the Public Market where a lot of prospective

buyers come and go.

The store offers variety of office machineries, kitchen equipment and accessories

affordable prices.

Through almost ten years of existence, it has loyal customers that avail their products

and services.

The business has received awards and recognitions from institutions and organizations.

Weaknesses

Does not ask customers to assess the stores performance.

There is indefinite restocking schedules and opportunity losses due to stock out of some

products

Poor visual merchandising


18/59

18

The firewall covers the business establishment from one side/ view making it less

visible for the customers.

Opportunities

Increasing market due to the existence of schools, business establishments, and other

institutions

Peoples increasing interest in buying imported surplus products due to affordable

prices

Threats

Price wars with competitors

Existing and New competitors in home market

Fast advancement of technology

B. MARKET FACTOR

Market Description

Save On Surplus caters to customers from all walks of life who are in need or are

looking for cheaper imported surplus products. It customers is mostly composed of

professionals, and students, and married couples or housewives.

Product and Service Description

Though the word surplus is often associated with reconditioned, second-hand

products, Save on Surplus also sells brand new products such as those computer spare parts,


19/59

19

and home and kitchen appliances, which are actually excess or the difference when supply

is greater than demand. It is also the thought that these products, although surplus, are

imported from USA and Australia that attracts customers to buy and patronize. The

products sold at Save On Surplus include surplus computers, computer parts and

accessories, electronics, home appliances, furniture, power tools and other general

merchandise imported from USA and Australia.

The services offered by the establishment are repairs of desktops, CPUs, printers,

and other electronic home appliances. Some of these repairs are charged under the

products warranty while other service customers also have products, not originally bought

from the store, fixed. The minimum service charge of the Save On Surplus is P350 per

product or unit fixed.

Demand-Supply Analysis

Supply and demand is one of the most fundamental concepts of economics and

backbone of a market economy. And as Dumaguete City becomes one of the fast growing

cities in the country, people must keep up with its fast progress. Technology addresses the

needs and wants of people and eases their way of life through efficiency of work.

Considering the fact that there are only a few retailing stores here in Dumaguete City that

offer surplus products from Australia and USA at very affordable prices, Save On Surplus

is really a profitable business venture.


20/59

20

Competitors

Save On Surplus, Dumaguete has identified its direct and indirect competitors in the

city. Direct competitors include RMJ and Alymae Surplus while indirect competitors

identified were Octagon. CDr King, DGtech, Unitop, POS marketing and Appliance

Centrum.

Direct Competitors:

RMJ

RMJ is a surplus retail store that specializes in selling surplus televisions. It has

two branches located at Corner V. Locsin and the other at Real St., Dumaguete City.

One competitive advantage of Save On Surplus over RMJ is that, SOS grants discounts

while prices at RMJ are fixed.

Alymae Surplus

Another surplus retail store identified as a direct competitor of Save On Surplus

is Alymae Surplus. It also sells different surplus items from abroad and has two

branches here in Dumaguete: Pulantubig and Perdices branches. The strategic location

of Save On Surplus is its major competitive advantage over Alymae.

Indirect Competitors:

Octagon

Octagon is a chain of retail stores in the Philippines selling IT products. Its

branch here in Dumaguete is located at Plaza Milagros Building, Sta. Rosa St.


21/59

21

Cdr king

Cdr King is one of the top media & technology providers in the Philippines. It

has several branches one of which is located at Level 2, Robinsons Dumaguete.

Other indirect competitors of Save on Surplus identified include Dgtech, Pos

Marketing, Unitop and Appliance Centrum which are situated in the downtown area.

C. PRODUCT PRICING

In every business, in order to gain profit, there must be a pricing strategy. Its up to the

management if how many percent would be raised in the cost of the product. Price, another key

component of the marketing mix, refers to the amount of money charged for a product or

service. The selected price, if too high or even too low will affect how well the product sells.

Save On Surplus has also a pricing strategy: The Unit cost added by the minimum marked up

rate of 3 % of its unit cost is equivalent to the minimum selling price of the product.

There is also another strategy more favorable to the customers. Aside from having a

very affordable price, the management offers LAY AWAY promos on selected trusted

customers good for three months. In this, a loyal consumer can make reservation to whatever

product he/ she would like to avail soon; the store accepts payments in instalment and if fully

paid, that particular loyal customers can have and enjoy the product.

D. SALES MANAGEMENT

SOS Dumaguete has only 3 regular employees: the manager, the salesman and the

technician. Aside from these people, the store has also a security guard outsourced from a


22/59

22

certain agency. Since the owner is in Bohol, the trusted manager is the one in charge in the

everyday operation of the store. The customer upon entering the door is free to roam around the

room to look at the display products then the salesman would directly approach him/her. But if

there are many of them, the technician and the guard can entertain their questions. This type of

service aims to give the customers freedom to compare prices and quality of goods sold.

However, majority of their products do not bear price tags. In addition, their products price

tags are not that durable and can hardly be seen. The manager, in her table, is the one who

receives and issues the receipts. The manager can also give discounts to loyal customers. The

manager being the cashier and the bookkeeper at the same time is in breach of internal control.

Standard protocol calls for two individuals acting as a cashier and another as the bookkeeper to

maintain check and balance and to avoid future conflicts and financial problems/ discrepancies.

E. PRODUCT MANAGEMENT

Marketing is everything sellers do to place their product or service in the hands of

potential customers. When marketing a product or service, the 4 Ps are the things that need to

be considered. However, marketing isnt just about promoting the service, it is also about

creating, communicating and delivering value to customers and managing customer

relationships.

Products & Services

A product is what the company has to offer, whether it is something tangible, or a

service. It is anything that can be offered to satisfy a market's want or need. It is about

designing the product concept to fit with the customers needs and desires. Save on Surplus


23/59

23

(S.O.S) offers an extensive range of imported surplus products such as computers, computer

parts and accessories, audio/video electronics, household appliances, furniture and novelty

items at a very affordable price.

Price

In every business, in order to gain profit, there must be a pricing strategy. Its up to the

management if how many percent would be raised in the cost of the product. Price, another key

component of the marketing mix, refers to the amount of money charged for a product or

service. The selected price, if too high or even too low will affect how well the product sells.

Save On Surplus has also a pricing strategy: The Unit cost added by the minimum mark up rate

of 3 % of the unit cost is equivalent to the cheapest selling price of the product.

Place

Place refers to how a product gets to the people who will buy it. It is often called the

distribution strategy and this basically talks about distribution. Save n Surplus is located at

Door #7 Plaza Milagros Building, Sta. Rosa St., Dumaguete City. It is a strategic location

especially that it is located just a walking distance from the public market area. It also promotes

convenience to customers who own vehicles because the business establishment has parking

spaces available.

Product and Name Promotion

Promotion represents all of the ways a company communicates with a customer. The

important thing with promotion is to be communicating the benefits of the restaurant to the


24/59

24

right people. Just like any other business establishments, Save on Surplus Dumaguete branch

market their products with the use of radio advertisements, tarpaulins, posters, flyers, and word

of mouth.

Radio Advertisements

Save On Surplus has a contract with Energy FM 96.7 to air their advertisement.

Their advertisement includes the playing of the Save On Surplus jingle.

Tarpaulins

Tarpaulins also Save on Surplus makes use of tarpaulins that are posted in the front

glass of their store. They usually have their tarpaulins printed at Ziplink with the size 2ft x

4ft for more or less P250.

Posters

With the use of its own office computer, printer, and resources, SOS uses

construction papers printed with their promos for the season. this cost them more or less

P25.

Flyers

Flyers are also given to anyone who enters the store or disseminated at the

downtown area by the employees themselves. Some flyers are supplied by SOS Manila

branch. Posters, flyers & tarpaulins are made seasonal like Christmas time, Graduation and

etc. Their budget for marketing their products depends.

Word-of-mouth


25/59

25

The most effective way of promoting products is through the so called word-of-

mouth. For how many years, SOS got loyal customers that are satisfied and considered their

products trusted and tested with high quality.

E. MARKETING STRATEGIES

Aside from having imported surplus products at very affordable prices and credit terms/

lay away that is appealing to the customers, Save on Surplus Dumaguete also uses promotion

as a vital marketing strategy. The business promotes and advertises their products in different

ways through the use of radio advertisements, tarpaulins, posters, flyers, and word of mouth. It

even has its own jingle that attracts and encourages people to patronize their products and

services. Save On Surplus also makes sure that the quality of the products and services they

provide meets and satisfies customer expectations. Another strategy used by Save On Surplus is

advertising in radio through a jingle.

III. TECHNICAL ASPECT

A. PRODUCT/SERVICE

Products sold at Save On Surplus include branded surplus computers, computer

parts and accessories, electronics, home appliances, furniture, power tools and other general

merchandise imported from USA and Australia. The most saleable products of the store are

computer sets, home and electronic appliances. They also sell gardening and farming tools.

Though the word surplus is often associated with reconditioned, second-hand

products, Save on Surplus also sells brand new products such as those computer spare parts,

and home and kitchen appliances, which are actually excess or the difference when supply


26/59

26

is greater than demand. It is also the thought that these products, although surplus, are

imported from USA and Australia that attracts customers to buy and patronize.

The services offered by the establishment are repairs of desktops, CPUs,

printers, and other electronic home appliances. Some of these repairs are charged under the

products warranty while other service customers also have products, not originally bought

from the store, fixed. The minimum service charge of the Save On Surplus is P350 per

product or unit fixed depending on the degree of the damage of the product.

Suppliers

Save On Surplus Dumaguete has four suppliers namely HMR Philippines Inc., PC

Park Inc., Empyrean Computers and Star Apple.

HMR Philippines Inc.

HMR Philippines is one Philippines leading provider of surplus items including

computers, audio visual, hardware, furniture, household and office appliances and more. It

has five retail branches: Mandaluyong, Araneta Center, East Service Road, Novaliches and

Sta. Rosa, Laguna with each showroom carrying a wide array of novelty items and

dependable technical services for computers and other electronic equipment.

PC Park Inc.

PC PARK has its humble beginnings as wholesaler of second hand computers such

as desktops, laptops, computer components and peripherals since 2004. After complying the

Optical Media Board requirements for importing, the company started its importation which


27/59

27

meant continuous supply of its main products and now trying to add items from other

country mainly from Japan for its printer, TVs and LCDs. The Company has been known

for its longer warranty, good quality of products and service, and will continue to bring

items from abroad both information technology and electronic products.

Empyrean Computer Center

The Company is the Philippine distributor of quality tested products such as Intex

Technologies, KTC Panel Displays, Datace CD/DVD-Rs, PQI, Planet Networking and

Communication, Zebex POS, Kingston Technologies, Huawei Mobile WiFi, AFOX

Graphics Cards and Tommade Case.

Empyrean Computer Center aims to forge strong business partnerships with Dealers

and Distributors nationwide to provide Filipinos with the latest technologies for business

and entertainment. We recognize that growth in our Dealer partners business equals growth

for our business as well.

Star Apple Computer Corporation

Star Apple Computer Corporation is another provider of surplus and retail computer

and electronic products. It is located at U3B Makati Cinema Square, Pasong Tamo, Makati,

Metro Manila.

Currently, Save On Surplus is still looking for more reliable suppliers who can

address all their needs immediately and who would supply them on a regular basis. This is

because of the growing customer demand of certain items and units.


28/59

28

B. STORE LOCATION AND LAYOUT

The retail store of Save on Surplus is situated in Dumaguete City, Negros

Oriental. It is a favorable location for retail business because it is just a walking distance

from the public market making it very accessible to the public. It also has its parking

area for their customers vehicles.

The retail store area of Save on Surplus is 90m2

or 6m x 15m. It is big enough to

accommodate all the products displayed and keep other stocks. However, changes in the

stores layout would increase and maximize the use of space making it more appealing

to the customers.

This is the exterior front view of Save On Surplus Dumaguete:


29/59

29

This is the current floor plan of Save On Surplus, Dumaguete.


30/59

30

Other pictures of the interior and exterior view of the store and picture of its

contents shall be attached at the appendices section of this paper.

C. UTILITIES, STORAGE AND COMFORT ROOMS

For Save On Surplus to be able to operate well daily, electricity, clean water

supply and telephone/ landline connection is really necessary. The retail store also has

four (4) storage rooms where other stocks of the displayed products are kept, and

maintained to avoid damages. A comfort room is also available for the use of the

employees and customers. But the only thing is that, the customers have to pass through

the storage area before they reach the CR, and since the building somehow needs

repainting and a little renovation, the stock room could be eyesore to the customers.

Air-conditioning units are also placed near the entrance and another at the other end

near the table of the manager. These keep the temperature favourable for customers.

These are stockroom pictures of Save On Surplus:


31/59

31

These are the stock rooms of Save On Surplus.

This is the path to the stockrooms and the comfort room. It is not covered so it is eye

sore to the customers.

D. CLEANLINESS AND WASTE DISPOSAL

A successful retailing business requires that a distinct and consistent image be

created in the customers mind that permeates all product and service offerings. Visual

merchandising can help create that positive customer image that leads to successful sales. It

not only communicates the stores image, but also reinforces the stores advertising efforts

and encourages impulse buying by the customer.

Visual merchandising is a major factor often overlooked in the success or failure

of a retail store. It is second only to effective customer relations. Visual merchandising can

be defined as everything the customer sees, both exterior and interior, that creates a positive

image of a business and results in attention, interest, desire and action on the part of the


32/59

32

customer. A story can be told that communicates to the prospective customer what the store

is all about. It includes the dramatic presentation of merchandise as well as other important,

subtle features that create the stores overall atmosphere.

Eighty percent (80%) of our impressions are created by sight; that is why one

picture is worth a thousand words. Each customer has a mental image of a store and its

merchandise. A store should have an inviting appearance that makes the customer feel

comfortable and yet eager to buy.

Some businesses maintain a minimum number of staff to reduce costs, which

means it is even more important for the merchandise to sell itself. Greater effort must be

spent on merchandise displays that make it easier for the customer to find and purchase the

items they want or need. The basic objective for visual merchandising is a desire to attract

customers to a place of business in order to sell the merchandise. Visual merchandising is

offered to the customer through exterior and interior presentation. Each should be

coordinated with the other using the stores overall theme. Creating and maintaining a

stores visual merchandising plan, however, is not a simple task. It is necessary to

continually determine what the customer sees. This evaluation from the customers

perspective should start on the exterior and work completely through the interior of the

store.

The salesperson of Save On Surplus maintains the cleanliness of the retail store.

As soon as he opens the store everyday at 9:00 in the morning, he then starts sweeping and

mopping the floor. He arranges the displayed products and wipes off dust on them. He

sweeps the floor when necessary. But on rainy days, we observed that the floors easily get


33/59

33

dirty because there are no rags placed for the customers to wipe off the mud on their

footwears. So the salesperson gets to clean the floor more often on rainy days.

Trash bins are placed in the stores to observe cleanliness and orderliness of the

business establishment. But, there is no proper segregation of waste. They throw their

garbage whenever the garbage collector comes in the afternoon around 6 pm.

IV. FINANCIAL ASPECT

A. MODE OF FINANCING

Mrs. Linda Avenido-Monterola started the franchised retail business of Save On

Surplus on June 2003 with a total initial investment of 1,000,000.00. Included in this is

the franchise fee, the working capital and other expenses incurred in starting the

business. The entire amount of 1,000,000.00 was solely from the personal savings of

the owner.

B. CASH FLOW MANAGEMENT

The cash inflow of Save on Surplus comes from its daily operations. Its daily

revenue comes from the sales of its product and a portion comes from its repair

services. Based on their income statement for the year ended December 31, 2011 and

2010, Save On Surplus has average monthly sales of 192,640 and 188,626

respectively. The usual expenses in the operation of the retail business include the

employees salaries and wages, the stores rent to the building space, royalty fee,

electricity and water, meals and transportation, telephone, SSS and PhilHealth, Pag-

Ibig, marketing levy, licence fee agreement, repairs and maintenance, professional


34/59

34

services, supplies, taxes and licences, 13th

month pay of the employees, insurance and

miscellaneous expenses. Deducting the costs of goods sold and their operating

expenses, the business had a total net income from operations of 66,541.87 and

41,626.40 at the end of the respective years.

C. INVENTORY

Inventory refers to the raw materials, work-in-process goods and completely

finished goods that are considered to be the portion of a business's assets that are ready

or will be ready for sale. Inventory represents one of the most important assets that most

businesses possess, because the turnover of inventory represents one of the primary

sources of revenue generation and subsequent earnings for the company's

shareholders/owners.

Inventory control plays a very important role in the business. Possessing a high

amount of inventory for long periods of time is not usually good for

a business because of carrying costs: inventory storage, obsolescence and spoilage

costs. However, possessing too little inventory isn't good either, because of the stock-

out cost losing out on potential sales and potential market share as well.

In Save On Surplus, First In- First Out (FIFO) is the valuation technique used by

Save On Surplus. The first products that were received were the first to be displayed

and disposed/ sold to customers while those received later were stocked and kept. This

implies that at the end of a certain period, the ending inventory is composed of those

products with a higher value.


35/59

35

Inventory management is one of the problems observed by the group. Save On

Surplus has a lot of out of stock products that customers often look out for. While some

of the products which are not so saleable have a lot of stock. This results in high stock-

out cost, opportunity loss, and high carrying cost of those stocked products.

Here is the categorized list of products/ inventory of Save on Surplus:

Categorized Product List of Save on Surplus

Brand new Secondhand & reconditionedAdaptors Juicer Battery

Air compressors Kettle Boards

Antenna Knife Body board

Blank CD Lamp Cabinet

Blender Measuring tape Cards

Bread maker Memory cards Chopper

Cables Microwave oven Con-air

Casing Oven CPUs

Chairs Pancake maker DVD ROM

Cleaners Pie makers Hard diskConnectors Pizza makers Keyboards

Converters Players Ladder

Cords Rice cooker Laminator

Deep fryer Salt and pepper mills Laptop

Diskettes Speakers Modem

Fairy floss makers Sprayer Monitors

Fan Steam cleaner Mouse

Fan guard Steam press Power supply

Food maker Study tables Starting pulley

Food processor Toaster TableFood steamer Vacuum cleaner Television

Garden light Vault

Garden tools Webcam

Headset Wire

Ink


36/59

36

D. COMPENSATION OF THE EMPLOYEES

In determining the wages and salaries of the employees, the business must

comply with necessary requirements given by the Department of Labor and

Employment (DOLE). The Labor Code of the Philippines also discusses on the proper

treatment of employees. Part of the business policy of Save On Surplus is No work, no

pay. Aside from each employees monthly salary, each also receives the standard

benefits set by law such as the PhilHealth, SSS, Pag-Ibig, and 13th

month pay.

PhilHealth Benefits

It is a health care insurance program wherein members regularly contribute to

the program and can later make use of his/her contributions if he/she might be in need

of a financial assistance regarding health issues. This program covers the following:

1.) Employed Members those who are employed in the government and private

sector.

2.) Individually paying Memberare those who are self-employed, overseas Filipino

workers, professionals in private practice.

3.) Non- paying Members Retirees and pensioners of the GSIS and SSS; members

who have reached the retirement age and have paid at least 120 monthly contributions.

Optional Retirees are not yet entitled to lifetime coverage until they reach the age of

retirement which is 60 years old.

4.) Indigent Membersunder the indigent component of the NHIP


37/59

37

The Social Security Program

The social security program provides a package of benefits in the event of death,

disability, sickness, maternity and old age as long as he/she has paid at least three

monthly contributions within 12-month period immediately before the semester of

sickness. Basically, the Social Security System (SSS) provides for a replacement of

income lost on account of the aforementioned contingencies.

Service Incentive Leave (SIL)

If the employees have been working in the business for at least one (1) year,

whether service is continuous or broken, the employer needs to pay them Service

Incentive Leave (SIL) equivalent to five days. The SIL may be used for sick and

vacation leave purposes. If the SIL is not used up within the year, the employer may

commute or pay its money equivalent at the end of the year. If the employees are

already enjoying these benefit like when they are already given a vacation leave of at

least five days, the employer need not to grant SIL to its employees. The managerial

employees and field personnel also do not need to acquire SIL and if the employees of

an organization has less than ten employees.

13th

Month Pay

All employers are required to pay their rank and file employees regardless of the

nature of their employment and irrespective of the method by which their wages are

paid, provided that they worked for at least one (1) month during a calendar year. The


38/59

38

first one half (1/2) of the required 13th

month pay may be made before the opening of

the regular school year and the other half not later than December 24 of every year.

The "basic salary" includes all remunerations or earnings paid for services

rendered. It does not include allowances and monetary benefits which are not

considered part of the regular or basic salary, such as the cash equivalent of unused

vacation and sick leave credits, overtime, premium, night differential and holiday pay,

and cost-of-living allowances.

According to the manager of Save On Surplus, its employees only receive SSS,

PhilHealth, Pag-Ibig and 13

th

Month pay as benefits aside from their monthly salary.

E. MAJOR EXPENSES

The major expenses in the operation of the retail business include the

employees salaries and wages, the stores rent to the building space, royalty fee,

electricity and water, meals and transportation, telephone, SSS and PhilHealth, Pag-

Ibig, marketing levy, licence fee agreement, repairs and maintenance, professional

services, supplies, taxes and licences, 13th

month pay of the employees, insurance and

miscellaneous expenses.

Average Monthly Expenditure

For the Years 2010 and 2011

Operating Expenses Average Monthly Expense2011 2010

Salaries and Wages 22,128.61 12,520.83

Rent 20,089.29 19,642.86

Royalty Fee - 892.86

Electricity and Water 5,094.28 3,058.75

Meals and Transportation 2,101.65 1,423.62


39/59

39

Telephone 1,060.45 1,052.82

SSS and PhilHealth 1,595.20 1,354.17

Pag-ibig 380.00 410.00

Marketing Levy - 223.22

License Fee Agreement 1,488.10 -

Repairs and Maintenance 83.33 415.18

Professional Services Fees 420.83 250.00Supplies 275.00 -

Taxes and Licenses 3,613.83 4,627.92

13th Month Pay 1,527.39 1,552.37

Insurance 435.61 388.94

Miscellaneous Expense 107.50 127.00

Average Monthly Total Expense 60,401.06 47,940.53

Looking at the breakdown of the average monthly expenditure for the years

2010 and 2011, it is evident that Rent, Salaries and Wages comprise the largest portion

of the expenses. The items with the least average expense are supplies, miscellaneous,

repairs and maintenance.

F. FINANCIAL ANALYSIS

The Income Statements for the year ended December 31, 2010 and 2011 is shown

as follows:

2011 2010

SALES 2,311,683.15 2,263,522.30

Less: Cost of Goods Sold

Inventory, Beginning 629,063.50 766,407.11

Net Purchases 1,421,702.89 1,398,702.53

Freight In 125,178.65 110,563.45

Total Goods available for Sale 2,175,945.04 2,275,673.09

Less: Inventory, Ending 655,616.47 629,063.50Cost of Sales 1,520,328.57 1,646,609.59

GROSS PROFIT 791,354.58 616,912.71

OPERATING EXPENSES

Salaries and Wages 265,543.30 150,250.00

Rent 241,071.42 235,714.32


40/59

40

Royalty Fee - 10,714.28

Electricity and Water 61,131.36 36,705.00

Meals and Transportation 25,219.81 17,083.48

Telephone 12,725.39 12,633.80

SSS and PhilHealth 19,142.40 16,250.00

Pag-ibig 4,560.00 4,920.00

Marketing Levy - 2,678.58License Fee Agreement 17,857.14 -

Repairs and Maintenance 1,000.00 4,982.14

Professional Services Fees 5,050.00 3,000.00

Supplies 3,300.00 -

Taxes and Licenses 43,365.92 55,535.00

13th Month Pay 18,328.62 18,628.43

Insurance 5,227.35 4,667.28

Miscellaneous Expense 1,290.00 1,524.00

Total Operating Expenses 724,812.71 575,286.31

NET INCOME FROM OPERATIONS 66,541.87 41,626.40

Annual sales of the Save On Surplus for the year 2010 and 2011 reached

P2,263,522.30 and P2,311,683.15. This is composed of the revenue from the sale of the

products and service charge from fixing and repairing computer and electronic units.

Revenue from the charges of the services offered by the business is only 4% of the total

revenue, according to the manager.

Comparing the Income Statements for the year ended December 31, 2010 and

2011, the researchers could say that the net income from operations has increased by

37.44% from the previous year. Although this is enough to sustain the business operations,

greater net income could be achieved through efficiency in work and some other

improvements in the different aspects of the business.

According to the manager, during the earlier years, they used to reach a daily

quota of P40,000. But due to often stock outs of some products, daily sales have

dramatically decreased. If this problem on stock outs could be addressed well, then it would

result to increased sales and customer satisfaction.


41/59

41

A complete set of financial statements and reports for the years 2010 and 2011 are

attached to the appendices section of this paper.

Financial Statement Analysis

Liquidity Ratios

Liquidity refers to managements ability to satisfy its short -term liabilities and

obligations as they come due. It reflects the ability of the business to meet its short-term

obligation using assets that are most readily convertible to cash. The more liquid the

business, the more likely it will be able to pay its employees, suppliers, and holders of its

short-term loans payable.

The current ratio is one of the most commonly cited financial ratios, which

measures the liquidity of a business calculated by dividing the firms current assets by its

current liabilities.

Current Ratio =

Current Assets

Current Liabilities

Increased in current ratio indicates that the establishment has greater capability to

satisfy its current obligation every year. The quick ratio is similar to the current ratio except

that it excludes inventory, which is the least liquid current asset. It only includes those

assets that are cash or near cash (called quick assets). Thus, quick ratio is a more

conservative measurement of liquidity than the current ratio. Quick ratio is calculated by

dividing a firms current assets minus inventory by its current liabilities.


42/59

42

Quick Ratio =

Current Assets - Inventory

Current Liabilities

Solvency Ratios

Solvency refers to managements ability to pay all its debts, current and non-

current. Both the management and the long-term creditors are interested in the solvency

status of a business.

Debt to assets ratio shows the percentage of total assets financed by using

external or debt funds. It is expressed as:

Debt to Assets Ratio =

Total Liabilities

Total Assets

Equity ratio measures the portion of equity in a business capital structure using the

following formula:

Equity Ratio =

Equity

Total Assets

Profitability Ratio

Return on assets (or ROA for short) tells an investor how much profit the project

generated for each Php 1 in assets. Throughout the years ROA ratio will be positive.

Return on Equity (ROE) is a measure of the operating efficiency, computed using

the formula:

ROE =

Net Profit

Total Equity

Net Profit Margin

A ratio of profitability calculated as net income divided by revenues, or net


43/59

43

profits divided by sales. It measures how much out of every Peso of sales a company

actually keeps in earnings.

A higher profit margin indicates a more profitable entity that has better control

over its costs compared to its competitors.

Financial Ratios

2011 2010

TEST ON PROFITABILITY

RETURN ON INVESTMENT

Income 66,541.87 41,626.40Investment 1,000,000.00 1,000,000.00

0.07 0.04

RETURN ON SALES

Income 66,541.87 41,626.40

Net Sales 2,311,683.15 2,263,522.30

0.03 0.02

GROSS PROFIT RATIO

Gross Profit 791,354.58 616,912.71Net Sales 2,311,683.15 2,263,522.30

0.34 0.27

RETURN ON EQUITY

Net Income 66,541.87 41,626.40

Average Equity 288,308.35 255,037.42

0.23 0.16

TEST ON LIQUIDITY

CURRENT RATIO:

Current Assets 920,268.02 809,313.50

Current Liabilities 499,805.06 455,392.00

1.84 1.78

QUICK RATIO:

Quick Assets 920,268.02 809,313.50


44/59

44

Current Liabilities 499,805.06 455,392.00

1.84 1.78

INVENTORY TURNOVER:

Cost of Goods Sold 1,520,328.57 1,646,609.59

Average Inventory 288,308.35 255,037.42

TEST ON SOLVENCY

EQUITY RATIO

Owners' Equity 576,616.70 510,074.83

Total Assets 1,076,421.76 965,467.24

0.54 0.53

V. LEGAL ASPECT

A. UPON THE START OF THE BUSINESS

1. Mayors Permit

The proprietor filed and application form that she acquired from the City

Administrators Office located at the Dumaguete City Hall. She also submitted certain

documents and other certificates first before the permit was issued.

2. DTI

The proprietor was required to register the business and product name under the

terms and conditions of the Department of Trade and Industries. Certain fees were paid

necessary during the registration process.

3. Barangay Clearance


45/59

45

A clearance from the barangay on which the retail center is situated was

required. This was given upon request from the owner of the establishment in

connection with her application for Mayors Permit.

4. Tax Clearance

During the acquisition of the tax clearance, the proprietor paid for its

verification. Community Tax Certificate was then issued after the payment and approval

of the application and Tax clearance was provided.

5. Pest Control Clearance

Pest Control Clearance ensuring that the establishment is free of any pest or

vermin threatening the daily operations and its quality of the establishment was

necessary. This was issued by the City Health Office.

6. PhilHealth

This is a mandate by the government requiring all employers to register their

employees to the said insurance company. This is to ensure sustainable health assistance

and accessibility of quality health will be assigned a PhilHealth number. The employee

were also required to pass certain documents to support their application and for further

updating of their profile.


46/59

46

7. Zoning Permit

The Zoning Office located at the City Hall issued the clearance by stamping and

affixing a signature at the back of the Business Permit. But prior to this, the office

required a sketch of the business location/layout.

8. Social Security System (SSS)

As mandated by the government, employers of the private sectors are required to

register as well as their employees. The same with PhilHealth, the proprietor provided

the necessary documents to support their application and further updating of its profile.

9. Fire Department Certificate

To acquire this certificate, certain requisites such as the Application for Business

Permit, receipts of payment made in the City Treasurers Office, City Health Office,

ENRO, Zoning Office, annual inspection from the City Engineers Office are necessary

for completion. After all requirements are processed and approved this certificate will

be issued at the Fire Department Office.

Anocular inspection was conducted by the City Fire Marshal under a mission

order which will also require a payment for the fire code. Total fees were computed by

the City Finance office and the City Fire Marshall affixed its signature and the

certification was released.

After having complied all the necessary permits and documents as mandated for

Mayors Permit, a Certificate was issued by the City Administration Office in the

Permit Section.


47/59

47

10.Insurance

Insurance, in its essence, is a contract of indemnity or replacement. By this, it

means that insurance provides compensation or reimbursement for actual damage

sustained by the insured. The Principle of Indemnity is that principle by which an

insured is compensated for losses sustained and is placed, as much as possible, in the

same financial position as he had immediately before the misfortune.

In the final analysis, indemnity can be viewed as security against loss. However,

in case of loss against which the policy has been made, the insured shall be indemnified,

but shall never be fully indemnified, i.e., recover more than the amount of his pecuniary

loss.

Save on Surplus availed a standard insurance against fire and lightning of the

store and its contents.

B. FOR THE CONTINUATION OF THE BUSINESS

Annually, Save On Surplus complies and submits to Dumaguete City

governments conditions and renews the necessary permits, certificates and documents

required by law necessary to continue its business operations.

VI. SOCIO-ECONOMIC ASPECT

In general, establishing a business benefits not only the proprietor by gaining

profit but also the socio-economic aspects of individuals and the society by employment

and others. It is expected to improve the standard living of the owner and its workers.


48/59

48

Providing employment will alleviate the living condition of these individuals, as well as the

economic condition of the society.

Social Benefit of the Project

The most important benefit that Save On Surplus provides the society is a

practical way of spending and managing ones finance. The proposed business venture

promotes practicality of general public in terms of investing their money on affordable and

reliable products. The business also addresses the increasing need and demand of affordable

and imported surplus products of the public.

Economic Benefit of the Project

Dumaguete City having a fast growing economy, encourages a lot of economic

activities.

Save on Surplus has positive effects to the economy of the local government

through collection of taxes and fees. This generates employment and job opportunities to

residents who are currently looking for jobs. Employment equated to workers receiving

their income spurs spending for more goods and services. This translates to more revenues

for the local government in terms of fees and taxes. More revenues will mean more funds to

finance the development programs and projects of the city that can benefit its citizens.

Certainly, Save On Surplus has a positive contribution to the citys economic

development. It benefits the local government and the residents in general.


49/59

49

SUMMARY OF SALIENT FINDINGS

Management Aspect

A security guard from another store comes and charges his cellphone there.

The security guard leaves his post and also assists and entertains customers.

Whenever the manager is not around, the other employees just leave the store.

The salesman and the technician are free to open the cash box whenever there are sales

made if the manager is not around.

Non-SOS customers sometimes use the parking spaces for SOS customers.

Whenever new stocks are delivered, the first thing the manager do is recheck and make

a physical count while the other employees, including the security guard, remove the

prices on in it and assemble the product, if necessary.

Employees do not store their food well. One time the smell of food diffused inside the

store. It was like customers are in a carenderia than an appliance-gadget store.

Personal things of employees are placed anywhere like the water jug, sunglasses,

tweezers and cellphone on the display area.

The manager came in late for 45 minutes. According to one of the employees that she is

always late during Saturdays.

They do not keep Petty cash. The manager brings the money.

When making receipts, they write the item code then the amount in numbers.

Afterward, they stamp 'PAID' on it and signs it, and then he or she then lets the

customer sign.

The security guard sometimes sleeps on duty. He pretends that he is awake by wearing

his sunglasses on.


50/59

50

The group found out that the security guard makes use of the cabinets that are for sale to

keep his belongings. This is wrong because oftentimes, customers would open the

drawers and see his things.

The establishment does not have enough chairs for the customers and the employees.

They make use of a CPU as one of the chairs.

The security guard also sits on the monitors. One time the members on duty heard some

cracking sound. Most likely, some of those monitors are destroyed already.

There is an improvement on the way the employees greet and treat the customers.

Before, they don't really mind and just let them roam around the store but now, they

greet them politely and attend to their needs immediately.

One employee charges his phone in an area where it is visible for customers.

In their 9 years, they indeed have a number of loyal customers already and one of it is

the owner of the Amigo Subdivision.

The employees are free to use either the television or the radio if they want to.

Whenever there are no customers, the security guard and the other employees leave

their posts and stay outside.

During business hours, the technician takes a nap.

One problem is they do not have a substitute technician whenever the technician is not

around. Just like one instance when one customer brought him to Mabinay for the

installation of the LCD TV that he bought in the store. It was good thing that no

customer came for repair.

Inside the establishment is kept clean while outside of it, there are biscuit wrappers

scattered.


51/59

51

The technician indeed provides good services since one client who is a foreigner came

and said that his friend recommended the establishment.

Vehicles are not properly parked. Some of those vehicles are not even owned by SOS

clients.

Whenever customers come in the store, the salesman and the security guard entertain

them instantly unlike in the previous weeks.

Only the salesman has a uniform

Marketing Aspect

They made new price tags but it was still not visually appealing.

Despite the fact that parked vehicles cover the establishment, at least its signage is large

and visible enough for passers-by.

Customers and employees are free to try on the products.

The technician indeed provides good services since one client who is a foreigner came

and said that his friend recommended the establishment.

In their 9 years, they indeed have a number of loyal customers already and one of it is

the owner of the Amigo Subdivision.

Technical Aspect

Whenever, big vehicles are parked, the establishment signage cannot be seen.

Some products do not have price tags. While those with price tags were presented in a

way that do not catch the attention of the customers.

There is blood on the parking area since the parking boy had an attack of his epilepsy.

They didnt even rinse it with water.


52/59

52

The place is not well-arranged. Hence, it is not visually-appealing for customers.

The temperature inside the establishment is good. However, when the manager turns the

air-conditioning units off, there is a foul odor inside which is bad for customers.

When the extension wire is not in use, it is not kept well organized.

A water jug was placed on one of the display shelves for three weeks.

There is a blade on one of the display shelves and this could be dangerous for customers

who bring their children with them.

Some products do not have price tags.

Things like nail-cutter, coins are scattered on one of the dividers of the display shelf.

There is a rat in the stock room.

The personal things of the security guard are scattered like his water jug on the display

shelf and his bag inside the for sale cabinets.

Inside the establishment is kept clean and organized already. Also, prices are already on

the products.

Motorcycles are not properly parked. Customers sometimes have a hard time parking

their vehicles.

Financial Aspect

According to the sales journal that the manager showed, they have an average sale per

month of Php 100,000.00. She said that this is lower than the previous years.

Legal Aspect

The establishment complied with the No Smoking Policy as they placed its poster

outside.

Save On Surplus has complied and submitted to the requirements set by the law in


53/59

53

operating a business

.

CONCLUSION

Though Save On Surplus, Dumaguete still is able to generate a substantial income

enough to sustain its business operations, the researchers believe that by improving certain

points in the different aspects of the business, Save On Surplus would be able to double or even

triple their profit just like during its earlier years. Nevertheless, this retail business is really of

very profitable since the market for retail surplus products is really big and demand for

imported surplus products is increasing. The accessibility of the location, affordability of the

products and services offered by the business establishment also serve as its competitive

advantage over the competitors.

However, there is still a big need for them to develop and improve the cleanliness,

layout and product organization of the establishment. Inventory management also needs

immediate and deliberate attention for it greatly affects the performance and profits of the

business. Also, the policies should be strictly implemented by the management that the

employees should follow. Disciplinary actions such as the practice of negative reinforcements

must also be determined in case of policy deviation by any employee.


54/59

54

RECOMMENDATIONS

With the information and observations gathered, presented, and problems identified the

researchers would like to present the following recommendations for the development of Save

On Surplus, Dumaguete City.

MANAGEMENT ASPECT

The researchers recommended alternative courses of actions for the management

aspect are categorized for the long-term and short-term run of the business and should be

addressed immediately for the benefit of the business.

The policies and rules should be STRICTLY implemented, and enforced by the

management.

Although the relationship of the owner and the manager is built on mutual trust, the

researchers see the need to hire a cashier/bookkeeper for security and control purposes.

The researchers also recommend that both the technician and the salesman should wear a

uniform and a nametag to be easily identified by the customers.

Employees should strictly observe punctuality and measures on tardiness should be made to

enforce and correct employee behaviour.

Non-employees or outsiders should be strictly prohibited from entering and making use of

the establishments amenities which are intended for customers and employees only.

Employees should never leave their post without permission or valid reason.

Employees should be very observant ofthe establishments cleanliness and orderliness.

Employees personal things should be kept in a place like a locker.


55/59

55

Employees should act in accordance with their job description. Only the cashier should

receive the payments from product sales and service charges and should be the only person

who is authorized to handle cash and guard the cashbox.

Eating meals or snacks should be done only on one section or place of the business

establishment to avoid damages to products and maintain order.

MARKETING ASPECT

Aside from playing the Save On Surplus jingle on the radio, the researchers suggest that the

advertisement should also mention very briefly the products and services that the business

establishment offers and also the current promos, if there are any.

TECHNICAL ASPECT

STORE LAYOUT

The store should be renovated and repainted in order to improve its interior and

exterior structure applying the principles of visual merchandising.


56/59

56

This is the suggested exterior view of the business establishment. It is quite simple but

pleasing to the eyes of the public. It is attractive and it encourages customers to enter and look

at the stores products. Only two colors of paints are to be used: orange and violet.

Switch to a more effective and energy-saving lighting system

Using modern energy-saving lighting system is a great way to revolutionize the

commercial establishment without compromising the quality of the light it disperses efficiently

on different areas.


57/59

57

Provide lockers for employeespersonal things

Providing lockers is necessary for the employees to

keep their personal things rather than be seen scattered

anywhere the establishment being eyesores to the

customers. The more the personal things, the bigger

lockers are needed.

Make use of sturdy rolling shelves and platforms for easy rearrangement of product

displays

The current shelves of Save on Surplus are not sturdy and dont have wheels

making it hard for the employees to rearrange. These suggested rolling shelves have

rubber stoppers attached to the wheels to maintain stability and safety. These

stoppers are just adjusted when the shelves need to be rolled or moved.


58/59

58

Provide nametags and sets of uniform for the technician, salesman, and the cashier

for identification.

Place a doormat/s on the doorstep to maintain store cleanliness especially on rainy days.

NAMETechnician

NAMESalesperson

NAME

Cashier


59/59

59

Maximize store space through a new store layout. Provide a section or place solely intended for

employees to take their meals and snacks.

Development Study (Save on Surplus)

Documents

Transcript of Development Study (Save on Surplus)