CHAPTER 1

INTRODUCTION

Proposed M.A.M’s 3 in 1 Rice Coffee is a kind of coffee made out of roasted rice grains

as the main ingredient for the coffee together with muscovado sugar and powdered milk. It has

distinct aromatic and sweetness characteristics. A unique deeply roasted, refreshingly bitter

aroma and the flavor is well complemented by the release of the rice's natural, subtle sweetness.

Another important characteristic of Rice Coffee is that it is caffeine-free. It may be called

'coffee', but as it is made from only rice, it is totally caffeine-free. Caffeine is useful to some

degree as a stimulant and for its diuretic effect, however, excessive consumption can cause

stomach pains and autonomic nervous system problems, not to mention sleep issues and it can be

safely enjoyed before bed, and even by children.

In line with this, the researchers suggested the use of roasted rice as the main ingredient

with the right combination of muscovado sugar and powdered milk under the process of right

amount of ingredients. With this innovation in the industry of coffee, people can have another

alternative but healthy and cheaper coffee.

A. NAME OF THE ENTERPRISE

Plate 1. Business Logo

 M.A. M’S 3 in 1 Rice Coffee Manufacturing is an enterprise that will produce coffee

made with rice. The name provides the easier and convenient way to make rice coffee. The firm

is also looking forward for the potential of having new quality product by using less expensive

and unseasonal alternative raw materials. It aims to create a product of coffee, which is cheaper

and could give the best taste, which the commercial one could give through rice coffee. The

purpose of the company is to produce 3 in 1 rice coffee, which is affordable and delicious.

M.A.M’s 3 in 1 Rice Coffee as a primary name, M.A.M, means Malolos, Alviz, Migo

who are the owners of the company.

The name itself indicates that the proponent’s product is a 3 in 1 rice coffee.

B. LOCATION

The office and plant site of M.A.M’s 3 in 1 Rice Coffee Manufacturing Enterprise will be

located at Brgy. Poblacion, Malvar, Batangas covering an area of 500 square meters. The

location was chosen due to the following factors:

 The location of the company is accessible for the suppliers to deliver the raw materials

needed by the company.

 The company location is near to its target market for them to deliver their product to their

consumer.

 The area is permitted by the local municipality to be used as industrial site.

C. DESCRIPTIVE DEFINITION OF THE PRODUCT

The business produces 3 in 1 coffee made of rice, muscovado sugar and powdered milk.

Rice Coffee is brown rice that has been deeply roasted to draw out a unique coffee flavor.

Muscovado sugar is unrefined cane sugar that contains natural molasses. It has a rich brown

color, moist texture, and toffee-like taste. Powdered milk or dried milk is a manufactured dairy

product made by evaporating milk to dryness. Rice coffee is use as a substitute for coffee beans.

Rice coffee does not have the caffeine that actual coffee has but people who tried rice coffee

swear that it helps treat an upset stomach. Rice coffee does not cause acid reflux that is why it is

pleasant to the stomach, is gluten-free and has a very low-calorie hit. Though rice coffee does not

provide you the pleasure that you can get from your regular coffee beans, but it can be a

substitute if you ran out of coffee.

M.A.M’s 3 in 1 Rice Coffee Manufacturing also ensures that the product are made

available and accessible to the market and are back up by a continuous market research and

improvement and overall process excellence. Through this proponents believed that the project is

worth establishing and based on the facts that we have gathered, our customers do not have a

well-established rapport to most of our competitors that could be an opportunity for us to

differentiated and take position of the proponents to give the customer a quality product and

service against competitors.

D. HIGHLIGHTS OF THE PROJECT

NATURE OF INDUSTRY

The business will be established in line with manufacturing of 3 in 1 rice coffee.

M.A.M’s 3 in 1 Rice Coffee Manufacturing will produce coffee made from rice, muscovado

sugar and powdered milk. Unlike the common coffee that has caffeine, rice coffee is healthy and

safe for children.

The establishment of manufacturing plant would benefit not only the business partners

but also the workers and small entrepreneurs within the area. The company will produce a

quality and delicious product.

 CHAPTER 2

MARKET STUDY

Market study is a study that analyzes market demand for a particular product or service. It

analyses the activities in a market about such influences as location, demand, and competition,

which may or may not affect the value of property. It aims to know the products’ market

accessibility, compatibility and availability. It also discusses the description of the product

together with the study of demand and supply and the potential distributors along with the

marketing program and considering the limitations that can affect the market.

A. PRODUCT DESCRIPTION

THE PRODUCT
 The Business was named MAM’s 3 in 1 Rice Coffee to represent the nature and of

purpose of the company. The main purpose of the business is to serve delicious and healthy

coffee. The proponents selected rice because it has a sufficient supply all year round. Rice coffee

procedure in line with this, the proponents will not have a hard time in searching for a raw

material of the product that proponent will introduce.

The proponent come up with the idea of introducing a substitute for coffee with the use of

rice.

As most industries do, the proponents took into account of the different significant factors

vital in pursuing the establishment of the business. These factors are the preference of the

customer, their needs to buy and proposition of value to them.

In line with this, the proponents will have sufficient supply if raw materials for the

product to be introduced.
B. DEMAND AND SUPPLY

The demand and supply analysis demonstrates the level of gap between the demand and

supply. For this reason, the proponents analyzed and made a careful study in order to determine

the percentage of dissatisfaction of the market gap that needs to be filled. On the contrary, a

lower rate of dissatisfaction would mean a great risk in pursuing the project.

Based on the historical and projection of demand and supply of coffee, the proponents

found out that there is a continuous increase in gap for the coffee. Using statistical line method of

projection, the proponents proved that it is possible to engage in 3in1 rice coffee because of

increasing gap.

One of the major factors affecting the market may disrupt the equilibrium causing

demand to grow faster than the supply is the continuous increase in the population. With an

increasing population, the demand for the product also increases.

Table 1. Historical Demand and Supply Analysis of Coffee

Year Demand Supply Gap

2014
2015
2016
2017
2018

Table 1. shows the demand and supply gap of coffee. The table illustrates the continuous

gap between the demand and supply of coffee from year 2014 to 2018.
C. PRICE STUDY

Price of a product is composed through summing up all the cost of direct materials and

indirect materials. Manufacturing overhead and the 12% value added tax (Vat). Change in

demand for a product greatly affects the pricing strategy of a manufacturing firm. The mark up

equivalent to 50% to achieve our target market share, we considered to set up a price not higher

than the prevailing market price. Since the company is new in the industry and we will be using a

lesser cost of other raw materials. Most of the in demand size of the product in line with 3 in 1

rice coffee is preferred to be in a small sachet with the amount of Php12.00. The price will be set

to retrieve the cost & expenses that will be utilized in producing & introducing the product.

Government policies for price fixing purchasing power of the buyer, availability of the product

and current market price of the similar products are considered.

Table 2. Illustrates the computation of the selling price of MAM's 3 in 1 Rice Coffee

manufacturing enterprise. Mark-up price of MAM's 3 in 1 Rice Coffee manufacturing enterprise

is Php 1.73, which is 40% of the selling price inclusive 12% VAT. A 12 % vat is always

included because it mandated by law.

Table 2. Product Price for 3in1 Rice Coffee

Particulars Cost Production Price

Direct Materials

Indirect Materials

Manufacturing Overhead

Total

Add VAT (12%)

 Mark Up (40%)

Selling Price/Pack

D. MARKETING PROGRAM

This section is a coordinated thoughtfully designed set of activities that help you achieve

your marketing objectives. In order to build a strong customer relationship and minimize your

sales, you need to put every possible marketing tool to work for you. Marketing is a broad field,

encompassing elements as diverse as advertising brand and logo design, sales brochures,

packaging and so on, the more tools, the better. However, the variety and complexity of choices

makes being organized and focused hard.

PEOPLE

One crucial point to the success of the business is the labor employed for the business.

Right people assures the engagement with the company’s vision exhibiting excellence to the

customers inside and outside the company.

PRICE

The proponents used cost plus strategy in order to set the price of the coffee. The

computation would be:

Purchased Cost + Operating Cost + Mark Up = Selling Cost

The proponents added all relative cost per piece like the purchase cost, cost related to the

raw materials needed to produce the product, the operating cost, this includes machine operating

cost, lighting and other fixtures and the markup which is 40% to compute for the selling price.

The prices, which will be allotted for the product, will be very reasonable to make it more
affordable to the customers. This price will be based on the provisions about the price regulation

which has been set by the government. Aside from that, it will be identified in relation to the cost

of production.

PROMOTION

Several promotional activities will greatly influence the rate of demand for the product.

Good promotions will create an impact on the public’s interest preference and desirability to

purchase our product.

Extensive promotion is done through distribution of flyers, brochures, posters to the

public, advertisement on local newspaper and sponsoring signage to chosen establishments and

trade fair in distributing our product.

PLACE

The refers to where the product/service of the business is seen, made, sold or distributed.

In essence, place decisions are associated with distribution channels and ways of getting the

product or target key customers. The proponents will use FIFO system in managing the

warehouse operation. The proponents chose this kind of distribution network because it enables

the M.A.M’s 3in1 Rice Coffee Manufacturing Enterprise to ship the product to their respective

retail outlet.

PRODUCT
 The name of the product already signifies its main output that is to produce a commercial

3 in 1 coffee made of rice, muscovado sugar and milk powder. The name of the product is easily

recognizable and remarkable among customers.

CHAPTER 3
 Introductory Paragraph

A. THE PROJECT

The proposed business, M.A.M’s 3 in 1 Rice Coffee is primarily designed as the healthy

alternative for the coffee that have caffeine. Plate (?) shows the example of packaging of the

finished product.

B. MANUFACTURING PROCESS

ROASTING

GRINDING

MIXING

PACKING
Figure1. Manufacturing Process

1. Roasting.
 2. Grinding

3.

C. PLANT SIZE AND PRODUCTION SCHEDULE

The plant size will be based on estimated demand, size of machineries, storage, and the

facilities involved in the entire manufacturing area. The minimum capacity of M.A.M’s 3 in 1

Rice Coffee Manufacturing that is able to produce is 1200 packs a day and 267,600 packs a year.

The production worker and other employees are given five operating days, from

Mondays to Fridays. The manufacturing operation will have 8 working hours from 8am to 5pm.

Table 3. shows the cost of the land per square and the required plant size of M.A.M’s 3 in 1 Rice

Coffee Manufacturing Enterprise. A square meter cost Php200 having a total land size of 500

square meters including 300 square meter building so that the total rent cost will be Php

160,000.00.

Table 3. Plant Size of M.A.M’s 3 in 1 Rice Coffee Land

Plant Size Size of the Land Area Cost/ Rent Sq.m (Php)
Land Area 800 sqm Php 200
Total Land Cost Php 160,000.00
The production schedule M.A.M’s 3 in 1 Rice Coffee Manufacturing is presented on

Table 3. this was identified after deducting Saturdays, Sundays, holidays and days of

maintenance of machineries from the total number of days allotted for operations of the

company. The efficiency rates that are assigned is increasing because the result and performance

of the production is getting better due to higher level of expertise as it gets along the industry.

The result of the production schedule are computed by deducting the total number of Saturdays
and Sundays and holidays in a year. The efficiency rate that the proponents assign are through

increasing, it is new in the industry, it is still specifying during the level of expertise of the

production.
 D. MACHINERY AND

EQUIPMENT

Machineries and equipment will

be purchased from Changzhou

Machinery Co., through their

respective distribution in the

Philippines. The acquisition cost

of machineries and pieces of

equipment includes
PRODUCTION SCHEDULE: M.A.M’s 3in1 RICE COFFEE MANUFACTURING freight,
ENTERPRISE

insurance and import charges.

a. Large Frying Pan

Plate Large Frying Pan

 Heavy-duty pan is used for roasting the rice grains. It has a dimension of having 12

inches in diameter. It costs 3,000.

b. Grinding Machine

Plate Grinding Machine

After roasting the rice grains, the next machine to use is grinding machine, which has the

main purpose of grinding the roasted rice grains to become crushed in form. These machine costs
70,000 having an electrical consumption of 2.23kW per hour and a dimension of 120mm by

150mm and can provide a daily output of 120 kilograms of crushed rice grains per day.

c. Mixing Machine

Plate Mixing Machine

Mixing machine is used to mix the grounded rice, muscovado sugar and powdered milk.

The capacity of the machine can process an average of 480 milliliters with average of one hour

per batch and has a kilowatt per hour. It costs 24,000 and electrical consumption of 2.1 kW per

hour.

d. Generator
 Plate Generator

Every manufacturing need a generator in case of power interruption in the location.

Generator energy is an element in an abstract circuit providing a source of electricity. This will

be used for unexpected consequence like electricity shortage that can interrupt the regular

production. It cost 250,000.

e. Stove

This stove is used for roasting rice grains. Industry-standard stoves are 36 inches wide for

gas versions and the height is 37.25 inches. It costs Php 20,000.

Table 4. shows the price of machineries and equipment in M.A.M’s 3in1 Rice Coffee

Manufacturing Enterprise. The total amount for machineries and equipment is Php 367, 000

where the proponents gathered information from www.alibaba.com through their respective

distribution in the Philippines.

 Table 4. Production Machineries and Cost

Machine Quantity Total Cost

Large Frying Pan 1 Php 3,000
Grinding Machine 1 Php 70,000
Mixing Machine 1 Php 24,000
Generator 1 Php 250,000
Stove 1 Php 20,000
Total Php 367,000
Source: YIUZHING

Table 5. shows the list of price for the other fixed assets needed in the production of 3in1

Rice Coffee, which will be bought in Savemore Supermarket in Tanauan, Batangas. The total

fixed assets is Php 1,280.00

Table 5. Other Fixed Assets

Product Quantity Unit Cost (Php) Total Cost (Php)

Gloves 16 15 240
Apron 20 35 700
Ladle 4 85 340
Total Php 1,280.00
Source: Savemore, Tanauan, Batangas

E. PLANT LOCATION
 Plate 2. Plant Location

Plate 2. Shows the chosen plant location of the manufacturing firm in Poblacion, Malvar,

Batangas. The total area will be 500 sq. meter has been preferred because of its accessibility to

all suppliers, costumers, resources, & all surrounding towns of Malvar. Also due to lower

transportation cost and quick delivery of materials & finished goods.

Furthermore, moderately priced utilities such as electric power & water are available in the

area of dispersion.

Availability of both skilled & semi-skilled laborers that will be hired by company possess

no problem. In addition, the environmental factors w/c may affect the company's operation are

also given consideration.

 Plate 3. Plant Location of M.A.M’s 3 in 1 Rice Coffee

F. PLANT LAYOUT

The plant layout of the company includes areas agreed for the total building and facilities.

The selection of planned layout is also considered for efficient space utilization and even work

flow all the way through the plant.

The company's layout has total land area of 500 square meters. This will crap the areas for

different facilities & the company's parking area. It has a flexible working area for workers &

has a safe environment in the vicinity of the plant.

Plate 4. Shows the layout of MAM's 3 in 1 Rice Coffee manufacturing Enterprise. This

contains the type of facilities required. This only a two story building thas has offices, a

production area, & locker rooms, warehouse for raw materials and finished product's and
comfort rooms. The flexibility of different facilities is being considered to have a productive &

efficient utilization of resources.

Plate 4. Plant Layout

G. BUILDING AND FACILITIES

Building facilities must be calculated upon constructing a plant. Types of facilities are great

implication in which its strength and durability were including the quality of the construction to

be used.

RECEIVING AREA/ LOBBY

It is a hall, foyer or waiting room at or near the entrance of the building. The company

used these facilities in the firm for their costumer or visitors that may visit the company for the

business purposes. It serve as a waiting area for those who had business meetings with the

management and staff of the enterprise.

OFFICE

Office serves as the area for management team, which are the accountant and human

resource staff. This is the area where all business transaction are made and verified.

RESTROOM

Comfort room are essentials in every business it helps to prolong the humanity of every

individual.

WASHING AREA

Washing area is a place for cleaning raw materials, tools, hands of the workers before it

undergo to different processes to remove dirt and other foreign objects.

PRODUCTION AREA

Production area is a place where all process in production take place.

STORAGE AREA OF THE RAW MATERIAL

Storage area is place allotted for the raw materials, which is near to the production area
for the case of movement of raw material.

STORAGE ROOM

Warehouse is a place where all finished product are stored and ready for delivery. The

warehouse is also near to the production area.

LOCKER ROOM

Locker room is a place containing lockers for the storage of personal belongings of the

workers.

EQUIPMENT STORAGE

 Equipment storage is a place used for recording and retrieval of data connected to

physical and logical storage resources, including storage elements, storage devices, appliances,

virtual devices, disk volumes and file resources.

I. UTILITIES

The establishment of M.A.M's 3-in1 Rice Coffee will be composed of different basic

utilities such as electricity, water, telecommunication, and gasoline. These utilities will be

provided by the local institution of (place) where the electricity supply will be provided by

batelec 2, the water supply will be self-supplying the globe will be responsible for the

telecommunications. Gasoline for delivery consumptions will be provided by different gasoline

stations below it illustrates the total consumption of the company within a month, which is Php

21,500.
 Table 6. Utilities

PATICULARS COST
Power Consumption Php 7,000
Telephone & Internet Php 2,500
Water Consumption Php 4,000
Gasoline Expense Php 8,000
Total Php 21,500
Source: Respective companies and agencies mentioned above.

I. RAW MATERIALS AND SUPPLIES

The main raw materials needed in manufacturing of M.A.M’s 3im1 Coffee include rice,

muscovado sugar and powdered milk. All of the raw materials are from the country.

Table shows the direct raw materials to be used in the production of M.A.M’s 3im1

Coffee and the price list of each raw material.

Table 7. Raw Materials

Raw Materials Price (Php)

Rice 50.00/ kilo
Muscovado Sugar 220.00/ kilo
Powdered Milk 150.00/ kilo
Source: Supplier

Suppliers of Raw Materials

 Rice – Market (Tanauan, Batangas)

 Muscovado Sugar - Puregold (Sto. Tomas)

 Powdered Milk - Market (Tanauan, Batangas)

Table shows the list of indirect materials for packaging. Each coffee shall be labelled and

marked with the name of the product. It will be marked with the standard brand logo of the

company for M.A.M’s 3in1 Coffee.

 Table 8. Indirect Materials

Particulars Price (Php)

Box/ piece 20.00
Resealable pouch/ piece 38.00
Packaging Tape/ piece 25.00
Source: Supplier

Table 9. Demonstrates the summary of office and equipment. It will be mainly used for

the administration building to provide ease for the employees and as a safety standard. The

unit cost was based on Abenson Appliance Center. A total amount is Php 94,534.00. Table

demonstrates the summary of office machinery and equipment. The unit cost was based on

Abenson Appliance Center.

Table 9. Office Machineries and Equipment

Item Quantity Unit Cost (Php) Total Cost (Php)

Aircondition Unit 1 7,700.00 15,400.00
Computer 3 8,500.00 25,500.00
Printer 3 3,500.00 10,500.00
Water Dispenser 2 3,000.00 6,000.00
File Cabinet 1 490.00 490.00
Office Chair 3 1,999.00 5,997.00
Office Table 3 4,999.00 14,997.00
Center Table 1 3,000.00 3,000.00
Wall Clock 2 100.00 200.00
Lamp 3 150.00 450.00
Computer Table 3 4,000.00 12,000.00
Total 94,534.00
Source: Abenson Appliance Center

Table 10. shows the prices of office supplies that are used in the operation of business. The

derived total amount of Php 3,930.00 at National Bookstore at Tanauan.

Table 10. Office Supplies

Item Quantity Unit Cost Total Cost (Php)

 (Php)
Ballpen 10 10.00 100.00
Bond paper (L) 2 150.00 300.00
Bond paper (S) 2 130.00 260.00
Correction 5 25.00 125.00

Fluid
Computer Ink 5 240.00 1,200.00
Envelop (S) 2 130.00 260.00
Envelop (L) 2 135.00 270.00
Eraser 5 20.00 100.00
Folder (S) 2 105.00 210.00
Folder (L) 2 125.00 250.00
Packaging Tape 3 35.00 105.00
Pencil 10 10.00 100.00
Pentel Pen 10 25.00 250.00
Receipt 2 50.00 100.00
Staple Wire 2 30.00 60.00
Logbook 1 240.00 240.00
Total 3,930.00
Source: National Bookstore At Tanauan

Table shows the list of miscellaneous supplies which will be bought from Savemore

Supermarket Tanauan relative to company’s operation. The total amount will be Php 1,280.00

Table 11. Miscellaneous Supplies

Product Quantity Unit Cost (Php) Total Cost (Php)

Gloves 16 15 240
Apron 20 35 700
Ladle 4 85 340
Total Php 1,280.00

J. CHANNEL OF DISTRIBUTION
 Channel of distribution describes how the proponents will reach the costumer. It is the

path by which all goods and services must travel to arrive to the intended consumer. Conversely,

it also used to describe the pathway that payment make from the end consumer to the original

vendor. Distribution channel can be short or long, and depends on the amount of intermediaries

required to deliver a product or service.

The proponents of business contain only one intermediary where the producer sells

directly to the retailer, who then sells the producer's product to the end consumer.

3in1 Rice Coffee Retailer Consumer

Figure 1. Channel of Distribution