Sample FEASIBILITY STUDY - Internet Cafe

INTRODUCTION

In the year 1960, RAND Corporation introduced the first computer network to the U.S military. They used command-and-control network where there was only one authority who can convey message which can b3e linked from city to city, state to state, and base to base. However, in spite of its ability to transmit the necessary messages to all concerned, its limitation with regards to its capacity to transmit was not to be denied

Four years later Paul Baran form the same company proposed in public the first public networks that have no central authority. It was designed to operate on a get-go transcend were all the nodes in the network would be equal in status to all the other nodes, each node with its own authority to originate, pass, and receive messages.

The national physical laboratory in Great Britain set up the first test network of this principal in 1968. Shortly afterward, the Pentagon’s Advanced Research projects Agency funded a larger and more ambitious network nodes were built in high-speed super computers.

In fall 1969 the first node was installed in UCLA by ARPANET which can transfer data on a high-speed transmission lines. By 1970 ARPARET grew and its structure expands easily because it can accommodate many different kinds of machine.

The original standard for communication was known as the “Network Control Protocol (NCP)”, but as time passed by and the technique advanced, the NCP was superseded by a much higher-level, and more sophisticated standard known as the “Transmission Control Protocol (TCP/IP)”. It converts messages into streams of packets form the source, then resembles them back into messages to the destination. “Internet Protocol” handles the addressing aspect while seeing to it that the packets are well routed across multiple nodes and even across multiple networks.

As the ‘70s and ‘80s advanced, many social groups found themselves in possession of powerful computers. The use of network became a public domain. Its basic technology was decentralized because networks fell into the digital which came to be known as the “Internet”.

The powerful and sophisticated access that it provides to specialized date and communication has speed up the pace of scientific research enormously. It made a great impact on society than in railways, electronic power and telephones. It is probably the most important scientific instrument of the late twentieth century.

In the Philippines, several individual and institution have pioneered in providing Internet services to people who have natural inclination to computers by the use of low-speed mode of transmission in the late ‘80s. It is after when the leading telecommunication and broadcasting companies step into the Internet Service Provides (ISP) business that Filipinos finally got the hand of getting wired in the world through the use of Internet.

The technology of ISP succeeded in keeping and pushing the boundaries that leads Filipinos into the next millennium which resulted to a dramatic change in the face of technology communication in the Philippines. Through the use of the World Wide Web, Students, Businessman and other of the same sort found an indispensable tool for research and laxation. Using the variety of websites mailing list, news groups, and chat room, the wired community was able to find new ways to do old things.

To date, it provides an excellent platform for experimenting with almost all types of on-line multimedia services that range form video phone applications to virtual reality environments where participants will interact with each other.

The researchers of this study decided to put up an Internet café to provide information and service to the pu8blic by adopting it in the continuing growth of our economy that can further boost the progress of our nation.

The Problem

This thesis-feasibility study entitled “Establishing an Internet Café” is primarily conducted to determine the profitability of engaging into an Internet Café business. Although, at present there are several and existing businesses engaged in similar activities, this paper is still necessary to be able to known if there will be a chance for those aspiring to establish the same establishment.

Statement of the Problem

The main thrust of these papers is to determine the viability of establishing an Internet Café.

Specifically, it sought to answer the following sub-problems:

Marketing Aspect:

What approach should the business ratify in order to compete with the existing Internet Rentals?

Management Aspect:

How would the business be manage successfully and maintain it?

Technical Aspect:

What latest computer technology should the business acquire in order to cope up with the continuing demand of existing computer user?

Financial Aspect:

How can the company maximize its profit and at the same time minimize its cost?

Socio-Economic Aspect:

What are the possible means in which the people as well as the government will benefit form the proposed business?

OBJECTIVES OF THE STUDY

Marketing Aspect:

To be able to determine the demand and supply of the proposed business in the market.

Management Aspect:

To be able to promote the most appropriate method for the management in operating the business.

Technical Aspect;

To be able to acquire the computer system that will meet the expectations and needs of the computer users.

Financial Aspect:

To be able to determine possible ways of maximizing the company’s profit while minimizing its cost.

Socio-Economic Aspect:

To be able to prove that the proposed business will provide benefits to people as well as to the government.

SIGNIFICANCE OF THE STUDY

Constructing a business is not an easy task to do. There are a lot of factors to be considered as well as the step to be followed. Therefore, this study will be a great help to the society specifically to those where interests lies in the computer area. Furthermore, this will serve as a reference for future studies for those students who wish to conduct a paper which is similar to such topic.

As we all know, our country is at the rising stage. This is mainly because of the numerous business establishments which are being put up, hence if we can just maintain this scenario in the investment aspect; it is very possible for us to achieve the concept of the Philippine 2000.

For the researchers, this paper can enlighten their thinking with regards to the reality of life especially as we walk towards the path of the business world. Also aside form being informative this research will encourage the readers to stay abreast to the various developments in the internet which is after all is considered as the world’s largest library of information on-line.

Assumptions

Before formally conducting the research, the following assumptions were established:

The initial capital is P 500,000.00.

The location of the business is in TarlacCity.

The adoption of Partnership as the most suitable form of business organization.

The projection of the established future earnings in the next five years.

SCOPE AND LIMITATIONS

This study aims to establish an Internet Café business. This study will be based in management, marketing, technically, socio-economic, and financial aspect of business.

Managers and owners will be covered as part of the respondents.

The scope of the study shall cover another type of respondent who will be the future target market. They are students of difference schools who are near the proposed location the schools that will be covered are Tarlac State University, Colege of the Holy Spirit, Ecumenical Christian College and other internet user within the vicinity.

Methods and Procedures

The research methodology used in conducting this thesis-feasibility study is the descriptive research method. This research method gives a comprehensive in-depth analysis of the service being studied. It serves as a fact-finding tool that permits adequate interpretation of the results of the survey made by the researchers. It is a kind of research method that provides information about the present situation particularly on the current trend of the service.

Sources of Data

The primary sources of date used in this study are the questionnaires and interviews form the customers and owners of Internet Café and Computer Rental Shops. These questions and interviews are essential in obtaining valid and accurate date which is often fraud not found in books, magazines, periodicals, and others.

The secondary sources of date used in this study include books specifically computer books, dictionaries, other feasibility studies relate to the topic and statistical date coming from various government agencies / departments.

Subjects of the Study

The researchers selected the students, employees and owners of different Internet Café and Computer Rentals as respondents of this study. This is because the proponents of this thesis-feasibility believes that those chosen respondents can give the most appropriate information’s answers about the proposed business in relation to the present condition of the business industry.

Sampling Technique Used

The sampling technique used by the researchers is the Stratified Random Sampling Technique. The said technique refers to the process of selecting random sample sizes form different strata of population used in the study. This is often times used when the population of the inquiry has class stratification or are grouped either horizontally or vertically.

The population of the selected schools were broken down into sub-population in order to get an accurate representative sample size.

Using the Storen’s formula and a margin of error of 5% the following were computed.

Storen’s Formula

n = N

______________

2

1 + n E

n = 1,170

______________

2

1 + 1,170 (.05)

n = 1,170

______________

1 + (1,170) (.0025)

n = 1,170

______________

3,925

n = 298.09 or 298

Total Sample Size = 300

Breakdown (according to schools)

1. Tarlac State University - 120 (40%)
2. College of the Holy Spirit - 90 (30%)
3. Ecumenical Christian College - 90 (30%)

Instruments Used

The research instruments used to gather necessary date include questionnaires, interviews and some library techniques.

The use of questionnaires serves as a written reference about the latest and actual information which are essential for the study. It is far by the most common instrument in collecting date. It consists of a set of questionnaires presented in a written form.

The structured questionnaires which serve as guide for the researchers were used in this thesis-feasibility study.

Other library techniques were also used to gather relevant information’s. This includes the use of related books, magazines and other feasibility studies found in libraries.

The actual interviews conducted provide the opportunity for the researchers to get first-hand information form persons who are in the position ton assess and the same time analyze the present situations.

The observations of some Internet Café and Computer Rentals were also used to gain a more in-depth information’s regarding the proposed business.

Review of Related Literature

Local Study

The Internet flourishes in libraries and achieves before the rest of the world noticed it. Limited facilities and computer access on local schools open a need for other ventures like cafes where students could use the Net for academic requirements.[1]

The Internet is an important tools in telecommunications, it is not so much a fad as a phenomenon. In due time, with increasing awareness of its capabilities, people will be using it with ease as they do it to their telephones, faxes and video camera.[2]

Internet cafes are nothing new. They are all over key cities Paris, London, even Bangkok and Singapore. Manila, which became familiar with Internet only three years ago.[3]

Foreign Study

These days Internet Technology, and access to it, is literally everywhere --- much so that if you can phone the country you can almost certainly communicate with it via the Internet.

Europe is one of the first areas to benefit from its trend because it is easily accessible with both an advanced technological infrastructure and a well educated work force. Microsoft, for example, recently announced plans to establish the Microsoft European Research Laboratory in Cambridge in the U.K. The lab will be something of a coup for the 13^th century university town.

Another technology giant, Xerox, has long recognized the advantages to be gained form the international exchange of ideas. As far back as 1986, Xerox had established a Cambridge offshoot of its respected Palo Alto Research Center ---- a Xerox facility that develops electronic and computer technology recently Centre in Grenoble.

And it is not in Europe that offers such advantages. One company that has established a broad presence in Asia is IBM. According to IBM, each of its research facilities specializes in advancing a different niche of technology. For example, the laboratories in Haifa focus on applied mathematics, computer Science and engineering, and the Tokyo facility breaks new ground in mobile computing technology, compilers, and semiconductors, to name a few.

CHAPTER II

MARKETING ASPECT

For the business to succeed, it should be given time and effort. The proponent of a computer business such as Internet café must possess th needed creativity so as to be able to provide quality service to its customers. The satisfaction of the needs and wants of its customers or target market must be the main objective of the proposed business.

In every project feasibility marketing aspect is considered the most important because it requires discreet analysis of he business total demand and supply. This chapter will discuss the demand analysis, supply analysis, demand and supply gap analysis, marketing program and projected sales.

DEMAND ANALYSIS

A total of 300 respondents took part on the survey conducted by the proponents of this business. After gathering and recording all the data, it shows that 81.67% of the respondents belong to the age bracket of 15-20 years old. The result also shows that 65% of the respondents are male while 35% are female. About 95% are single while the other 5% are married.

With regards to there monthly income, most f the respondents belongs to the income/allowance bracket of P1,000-3,000. This also indicates that most of them are students who comprise about 90% of the sample size. About 51.67% of the respondents are willing to spend up 10% of their income/allowance for computer rentals for hands-on use, wile 35.67% are willing to spend the same portion of their income/allowance for internet use. A total of 144 respondents (48.0%) are renting a computer on a once-a-week basis for hand-on use while 32.67 % are renting a computer on a once-a-week basis for internet use.

Among the services offered the use of the computer for hands-on and internet purpose have the highest percentage based on the survey results. Also the respondents consider the ambiance and the type of the computer hardware/software as the main factors in renting a computer.

About 39.67% of the respondents use the computer on hands-on basis for more than two hours while 42.33% are using computers for internet use for at least two hours.

With regards to their monthly income, most of the respondents belongs to the income/allowance bracket of 1,000-3,000 this also shows that most of our respondents were students who composes of about 90% of the total respondents. From the average income of the respondents 51.67% spends from 1-10% in renting a computer fro hands-on wile 26.67% of the total respondents spends from 1-10% in renting a computer unit for internet use. About 48% of the respondents are renting a computer once a week for hands-on use.

Among the services offered, hand-on Internet use has the highest percent preferred by he respondents. Also the respondents consider the ambiance and the computer hardware/software as their main factors in renting.

SUPPLY ANALYSIS

Based on the data gathered from the survey answered by owners of the computer Rentals and Internet Café, it shows that 46.15% of the respondents initial capital belongs to the P300,000-400,000 bracket. About 69.23% of hem stated that th total demand increase from 1-10% annually.

Most of the seller respondents give priority in providing quality service, affordable process and good advertising/production in order to stay competitive in the service market.

MARKET PROGRAM

The marketing program is basically a program consists of the following: Product, price, place and promotion or sometimes called “MARKETING MIX”.

1. OBJECTIVES

The Objectives of the business are the following:

1. To satisfy the needs of the customers by providing highly-quality service at a very reasonable price.
2. To promote the use of the Internet to students and as well as to non-student.
3. To determine the size of the potential target market in order to effectively meet the demand and supply gap of the market.
1. PRODUCT STRATEGY

The proposed business offers renting of computer for hands-on where you can do your office works ad school projects such as book report, thesis, assignments, and feasibility study. Internet use is also made available, so that the customers can do some research works, know different topics and articles, and even chat with other friends. Computer games and audio video are also offered.

3. PRICE STRATEGY

Pricing is considered to be the most critical factor which most often time affect the marketability of the service offered by the business. Pricing will be based o cost plus reasonable mark up. The terms of payments will be on cash basis only.

Rental fees are as follows:

Hands-on/Games/Internet use P 25.00/hr.

Printing Jobs

Colored P 20/page

Laser/Deskjet text only P 5.00

Photo P 75.00 size is 8.5”x11”

4. PLACE OF CHANNEL OF DISTRIBUTIN STRATEGY

The place of distribution will be at Romulo Boulevard, Tarlac City near Magic Star.

The manner of distribution will be from manufacturer to consumers.

5. PROMOTION STRATEGY

In promoting the business, the researcher intends to do the following:

Post billboards and streamers along the streets to announce the opening of the store weeks before the data of the opening.

The posting of signboards that state the services offered.

Discount cards will be given to the first 50 customers.

Fliers will be given outside the nearby school to attract possible customers.

Free 2 rental hours for the first 100 customers who will first accumulate 50 hours or rental.

DEMAND AND SUPLY QUANTUM

1. DEMAND

The population (No. of students =1,287)

1. Talac State University 579
2. Ecumenical Christian College 321
3. College of the Holy Spirit 387

Less: 10% ) portion of population on not included) 129

Net potential Market 1,158

Multiply: Ave. Annual Income/Allowance 2,999.50

Total Ave. Annual Income/Allowance of net

Potential Market 3,473,421

Multiply: Portion of Income/Allowance spent

On computer Rental, internet and other

Computer related services 5%

Total amount spent on computer rentals, internet

And other computer related services 173,671.05 Multiply: twelve (12) months 12

2,084,052.60

Divide: Average selling price 25

Total Demand: 173,671.05

2. SUPPLY

Ave. Annual Sales 7,200

Multiply: Number of Present owner 15

Total Ave. Annual sales 108,000

Divide: Ave. Selling Price 25

Total Qty. Supplied 4320

3. DEMAND AND SUPPLY GAP

Demand 173,671.05

Supply 4320

169,351.05

FORECASTING TECHNIQUE

Historical Demand for Computer Services Average Demand / yr.(5%)

2011 173,671.05

2010 164,987.49

2009 156,738.11

2008 148901.20

2007 141,456.14

Computations using Arithmetic Straight line method

Demand in 2007 173,671.05

Demand in 2011 141,456.14

Total Demand Gap (from 2011-2007) 32,214.91

Multiply: Rate of Increase in Demand 10%

Total Increase in Demand 3,221.491

Demand Projections

2007: 141,456.14 + 3,221.491 = 144,677.631

2008: 144,677.631 + 3,221.491 = 147,899.122

2009: 147,899.122 + 3,221.491 = 151,120.613

2010: 151,120.613 + 3,221.491 = 154,342.104

2011 154,342.104 + 3,221.491 = 157563.595

OBJECTIVE

To be able to know the number of workers that will be needed on the operation of the business.

To be able to determine the benefits and incentives that will be given to the workers/employee.

o determine the specific type of organization to be put up or established.

To determine the different function of each business partner.

To be able to determine the kinds of training that the management can give to the workers/employee

PRE-OPERATING PERIOD

Prior to the actual business operation, it is part of the process to fulfill the necessary pre-operating requirements and the responsibilities such as hiring and training of persons or workers, providing different equipment and materials needed in accomplishing documents. The form of organization is partnership. The total initial capital agreed upon by the partners is 5,000,000.00, where each partner will contribute P 250,000.00.

The following are the names of the partners and their capital contribution

Partners Contribution Amount

Mr. Y Cash P250,000.00

Mr. X Cash P250,000.00

PERSONS INVOLVED IN THE MANAGEMENT

With the proposed business, Mr. Glen Ico will act as the manager. His duties cover management function such as planning, organizing, staffing, directing and controlling. A bookkeeper/cashier will be in charge of the different accounting jobs. A computer assistant is in-charge of assisting the customer. A computer technician will be in-charge in maintaining the conditions of the computer.

PROJECT SCHEDULE

Business purpose or objectives are set to be accomplished. Realization of these objectives can be obtained through proper planning and scheduling of specific business activities to be undertaker. The proportion of a project schedule is very important. And the proponents to concretize the various process/sequences involved are a GANTT chart that will control and monitor the process.

Areas of consideration: Feasibility Study

Duration: From August – December 2007

The feasibility study will be completed within this period to which the researcher conducted a comprehensive study like interviews and surveys.

Areas of consideration: Putting up of equity

Duration: From January 1-15 2008

A collection of cash contribution from the proponents for the capitalization of the business will take place within this period.

Areas of consideration: Registration

Duration: From January 16-31 2008

Pre-operating Phase

Articles of the partnership was prepared and signed by all partners which reflects the following:

The partnership name

The business address

The partnership’s goal/objectives

The name and address of the partners

Duration on when partnership will exists

The amount of cash contributed by each partner

Each partner will secure a share of profits based on the contribution plus all other compensation by way of income

After agreeing with the terms and condition of the purpose, each of them needs to affix their signature in five(5) copies of the articles of partnership with the presence of the witness and the notary public.

Operating Phase

The procedure to be done in registering with some agencies who have regulatory power over the business:

For the registration of the business in the Security and exchange commission (SEC) certain procedures are to followed:

Fill out all the file copies of information sheet receives from the office

Verify the partnership names in the record section

Once the partnership is approved go to information section for filling and payments of registration fees.

Payment of filling fees to the cashier

Receiving of the articles of partnership is to be made in the receiving section together witht the changes in the name of the partnership. SEC General Information sheet and affidavit of marital consent (if married) in five copies.

Make a follow up as to when you will received the approved certificated of partnership

The steps in registering in the Department of Trade and Industry are as follows:

Get a DTI form for application of the business name from the DTI office and fill up the form.

Pay to the cashier

Fill out the form together with the certified copy of the approved articles of partnership from the Security and Exchange Commission

After a week, get the certificate of registration for the DTI. The card certificate entitles the firm to have their business for five years which, it is subject to renewal.

Certain procedures are to followed to the Bureau of Internal Revenue (BIR)

The steps are to followed when registering to the BIR

Get forms and fill-up then submit

Payment of the registration fee to the cashier

A privilege tax is to be paid. The applicant is required to pay the tax before ___ engaging in the business.

Secure BIR authorization for the printing of the invoice and official receipt for the partnership

Printing of the forms

Bring the printed receipt to the bureau of Internal Revenue office along with the authorization to print stamping of the official receipt and invoice booklets.

Secure the books of account such as receipts or cash disbursement book, minutes book, ledger or journal from any bookstore and register it to the BIR.

The procedure in getting the Mayor’s Permit is as follows:

Get an application for the city or municipal hall where the business is located and fill up the information

Get certificates form the municipal office stating that the business is new

Submit to the Mayor’s Office the application for comments and approval

A fee representing payments for the permit and license to the city treasury

Have a follow-up of the Mayors permit and the municipal license. Usually, permits and license expire after a year from the date of the issuance unless it is specified.

Members your business in Social Security System (SSS)

Register to the SSS your Social Security System (SSS) number

Be sure that your employees have their social security number

deduction of the employees share in the SSS and Medicare is to be made from their monthly salary and remit the deduction’s together with their employers share and the employees contribution to the SSS

After securing the forms, register your place of business to the Department of labor

Check with the Bureau of the standards for the rules and regulations if ever the partnership is engaged in manufacturing

Areas of consideration: Renovation

Duration: from February-March 2008

Romulo Blvd. Tarlac City is the best location for our business because university and other schools are near the place and it is very accessible to the public since it is the center for business and schools. The proponents will rent the place temporarily until the business is financial stable.

Areas of consideration: Equipment and Supplies

Duration: from March 1-30 2008

The partners will have to canvas the computer equipment, furniture and other supplies for the Internet business which aims to get the lowest price but with high quality. The one who will give the better offer is the first priority.

Areas of consideration: Orders and receipts of computer equipment and other supplies

Duration: March 1-30 2008

Orders of computer and other supplies should be listed for the purpose of monitoring. Receipts should be issued to determine the mode of payment.

Areas of consideration: Installation of computer equipment and other supplies

Duration: March 2008

Delivery and installation of the equipment to be used by the business for giving a quality service should be done during this period.

Areas of consideration: Hiring and training of personnel

Duration: April 2008

During this period, the partners will train its employees/workers for the different jobs assigned.

Areas of consideration: Start of the Operation

Duration: May 2008

The business will start during this period. Its goal is to give quality service at the most affordable price possible.

OPERATING PERIOD

FORMS OF BUSINES OWNERSHIP

The form of business is partnership. The name of the business firm is “GSI Computer System”. The proponents choose the form of partnership because of the following reasons.

Advantages:

As compared to a sole proprietorship, a greater amount of capital can be accumulated in a partnership because of the numbers of person involved.

Better management will result in a partnership because of the concerted efforts and abilities of the partners.

As compared to the corporation, a partnership is supplier and less expensive to organize, there being only few legal requirements.

The partnership’s unlimited liability will serve as protection for the partnership creditors thus the letter will not be discourage to extent financial assistance.

Disadvantages:

Any personal rifts, deaths, withdrawal or incapacity of a partner may dissolve the partnership

Equal profit sharing despite unequal attention of time given by partners.

Because of numbers of person involved, conflicts and disagreement may arise and may easily affect the operation and success of the business.

ORGANZATIONAL POLICIES

Working day and time

Monday to Sunday

7:00 an -10:00 pm

Payment of salaries/wages

Payment of salary/wages will be on the 8^th and 22^nd day of every month

INTERNAL ORGANIZATION

MANPOWER REQUIRMENT/JOB ANALYSIS

The success of the business depends on the performance and attitude of its personnel and employees. This part of management aspect will discuss the following job analysis for each organization’s personnel and employees with their corresponding qualification.

Job Title: General Manager

Job Description:

He shall implement good internal control of the business

He shall be responsible to direct and lead his subordinates

He shall assign his subordinates their respective tasks

He shall plan the personnel policies, activities and programs directed towards meeting the goals of the business organization.

Job Specification:

He must a degree holder of any business course or related.

He must be of a good character and must posses a good leadership skills

With or without working experience

He must be at least 23 years of age

He must posses good communication skills

Job Title: Bookkeeper/ Cashier

Job Description:

He/she shall maintain all accounting records

He/she shall maximize profit by the way of controlling asset, cost and expenses

He/she must have the ability to manage the company’s funds.

He/she will be in-charge of the cash register

He/she will be in-charge of supervising the profit of the company

Job Specification:

He/she must be a graduate of a degree course and has knowledge in accounting

He/she must have enthusiasm in work

With or without working experience

He must be a computer literate

Proficient in Microsoft Application or related software

Job Title: Customer Relation

Job Description:

He/she will be responsible in assuring good quality of service

He/she will be responsible in the development of the service that we rendered to the customer

Job Specification:

Male or female

He/she must have a good oral communication

Highly proficient in various computer software and familiar with Internet

Job Title: Computer Technician

Job Description:

He will be responsible in the maintenance of the computers and other equipment

He will be assisting the CRO and the cashier

Job Specification:

Male

He must be a graduate of any computer/technical course. Engineering graduate is an advantage

He must have at least 2 years experience in trouble shooting and maintenance of micro computer