A FEASIBILITY STUDY OF

VULCANIZING AND REPAIR SHOP IN

GAPAN CITY

Mark Josehp Anthony D. Laus

Bautista
HRDM 4B

Dr. Melinda

STATEMENT OF THE PROBLEM:

It is the intention of the researcher to determine and analyze the

Feasibility of Establishing a Vulcanizing and Repair Shop in Gapan City.
This study seeks to answer the following questions:
1 What

is

the

type

of

business

organization

suited

for

the

project/business?
2 What are the marketing programs to be used in the business? Is there
a demand for the proposed project?
3 What are the technical requirements needed in the operation of the
proposed business?
4 How much capital needed for the project? Is the proposed business
profitable?
5 What is the social significance of the project?
6 What are the potential problems to be encountered by the business?
RESEARCH METHOD USED

The researcher employed the descriptive method in this study.

According to Good and Scates, a descriptive research is a fact finding survey
with adequate interpretation, description, and analysis of the prevailing
condition. Descriptive research describes units, occurrence or phenomena.
The feasibility study describes, interprets, and analyzes the
marketability of putting up business and operating a Vulcanizing and Repair
Shop in Gapan City. This study describes the technicalities, the market
condition that regards with supply and demand analysis and the current
trend of the business in the area related with serving.
TECHNIQUES USED IN DATA GATHERING
In pursuing data collection, the researcher employed questionnaires,
interview and documentation of reviewed literature and studies about the
proposed project.

1. Interview. The researcher employed the interview as the means of data

collection. They conducted an interview to Mr. Aldrin Tuazon, owner of
Vulcanizing Shop. An interview is a verbal communication in which
there are existing guidelines or formal questions.
2. Observation. They observed that it is necessary to organize the
business in the form of a single proprietorship because it allows the
proprietor to have different control over the business. They also
observed that many customers rendered their services.
3. Library Techniques. This technique in data gathering procedure is also
employed. Documentation of written information about the subject is
taken place.
FINDINGS OF THE STUDY
It has been found out that there is feasibility and viability in the
establishment of Vulcanizing and Repair Shop in Gapan City. It is such a
potential and lucrative business.
The management aspect showed that single proprietorship is the best
organizational set-up to be used in this kind of project. The project can easily
be established under the control of one man. Line type of organization is
used in project because it has a direct flow of authority from the top position
down to the subordinate level.
The business will be offered in the proper town of Gapan City and the
business will focus on Vulcanizing and Repair Services.
The technical procedure in operating the business is very simple. The
proponent need to construct the building shop and makes a proper design of
the work place in order to operate the business properly.
Financial study showed that the project requires enough capital to start
the business. Financial analysis showed that the project is moderately
profitable and that the total investment could be recovered within 2 years
and 8 months.
The proposed project is also socially and economically desirable.

CONCLUSION
Based on presented information regarding the establishment of
Vulcanizing and Repair Shop in Gapan City, it can be concluded that this
venture is feasible because of the following:
1. That the organization best suited is single proprietorship.
2. That there is a demand for the proposed project.
3. That there is more profit to be derived from the business.
4. That the maintenance of this project is very simple.
5. That the business is very feasible.

6. That the business is socially desirable and gives benefit not only to the
owner, customers but also to the government.

RECOMMENDATION
1.
2.
3.
4.
5.

In the light of conclusion, the following are recommended:

Individuals who are interested in Establishing a Vulcanizing and Repair
Shop should find good location such as cities and urban areas because
that is the place where most costumers/buyers come.
They should hire of qualified and skilled workers in the business so that
they can carry out business more effectively.
Different marketing strategies should be applied in this business in
order to make the products and services more attractive.
Capitalization requirements should balance the procurement of
materials and equipment in the operation of the said business.
Systematic financial procedures and control system be given more
emphasis.

ACKNOWLEDGEMENT
The researchers wish to express his sincerest appreciation and gratitude to
Wesleyan University Philippines, for his valuable and guidance, without this
study it would not been made possible.
We would like also to express our sincerest thanks/gratitude to all my
love who patiently guide us towards financially, morally, and spiritual
support.
Finally, the writers are dedicating this study to their parents who gave
their spiritual and moral support encouragement.
Above all, thanks to God who gave them healthy minds to finish this
humble work.
THE RESEARCHERS

TABLE OF CONTENTS
Page
TITLE
PAGE

THESIS
ABSTRACT
..

II

APPROVAL
SHEET

GRADING
SHEET
..
ACKNOWLEDGEMENT
.

VI

DEDICATION
..
TABLE

VII
OF

CONTENTS
..

VIII

CHAPTER
I.

THE PROBLEM

Introduction
..

Statement

of

the

Problem.
Significance

of

the

Study.
Scope

and

Delimitation

Study.

of

the

Definition

of

Terms..
5
II.

REVIEW OF RELATED LITERATURE AND STUDIES

Foreign

Literature..
7
Local
Literature
.

10
Justification

of

Study..
III.

the
11

RESEARCH METHODOLY AND SOURCES OF DATA

Research

and

Used.

Method
12

Techniques
Used..
12
Treatment

of

Data..
13

the

Payback
Period
13
IV.

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

Organization

and

Aspect..

Management
15

Marketing
Aspect..
13
Technical
Aspect.
21
Financial
Aspect..
25
Financial
Analysis..
35
V.

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Summary
..

39

Conclusion
..

41

Recommendation
.

42

BIBLIOGRAPHY
.

43

CURRICULUM
VITAE

44

LIST OF FIGURES
Figure
Page
1

Organizational Chart

17
2

Vulcanizing Process Chart

23
3

Repair and Wheel Balancing

24
4

Location Map

Shop Layout

LIST OF TABLES
Table

Page

1
2
3
4
5

Total Project Cost

Schedule Revenue
Computation of Income Tax
Schedule of Depreciation
Schedule of Operating Expenses

30
Schedule of Salaries and Wages

7
8

31
Projected Income Statement
Cash of Flow Statement

33
Projected Balance Sheet

26
27
28
29

32

34

CHAPTER 1
PROBLEM AND ITS SETTING
INTRODUCTION
Although the government claimed for an upsurge of our economy for
the last two years, it cannot be denied that the employment is still the
pressing problem of society. Majority of the graduates in colleges and
universities fail to have a good paying job. Many sought refuge in other
countries were graduates of prestigious courses, such as engineering,
commerce, education, and others, land as laborers, and domestic helpers. In
the local labor market, many graduates enter in the fields different from the
courses they pursued in college such as accountants employed as cashiers
working as casuals in government offices and others. The introduction of
labor contracting even added to the woes of these graduates. The system
terminated the chance of the graduates to get a job with benefits and
security of tenure. They are employed only for a period of five to six months
and are terminated and replaced by another batch of five to six months
contract labor. This difficulty to get a job had led others who have the means
to venture in business of their own.

Venturing in a small or medium scale business would not be as simple

as registering the business, securing the necessary permit and licenses, and
start the business operation, in this concept, many tried and failed due to
lack of proper analysis and preparation, most of all no feasibility study has
been conducted.
At present the most simple and easily managed business is Vulcanizing
and Repair Shop. This business has become the most lucrative and these are
small time businessmen who want to engage into this kind of business but
they do not have enough knowledge in running the business.
In Gapan City, there are more than thousands of tricycle units passing
the streets in Gapan City and increased the doubly in a five year period from
3,600 units in 1992, in the year 2003 based on the legalized volume of
tricycles from the record of Gapan City Tricycle Franchising and Legalization
Department this figure becomes 4,200 units of tricycle registered in the City.
From the above statistics, considering only the legalized volume of
tricycle units in Gapan City, there are 21,900 tricycles tires rolling the streets
every day. The average life span of a brand new tire is six (6) months such
that for the whole year, from the 7,300 units, there are 43,800 tires
consumed annually where a brand new tire cost an average of P320.00 per
piece.
This statistics provided an idea for the researcher to conduct a
feasibility study on a business that would help the tricycle operators
minimize their growing operational expenses as brought by the increasing
prices of gasoline, oil and spare parts. The researcher conducted some
surveys on tricycle using recapped tires they are using are from a sole tire
recapping in Gapan City, Nueva Ecija. No one among the fourteen (14) stores
selling motorcycles spare parts and tires within Gapan City, Nueva Ecija that
has been interviewed by the researcher carry vulcanized tires.
A comparative computation was conducted by the researchers in order
to get a birds eye view on the economic difference between a vulcanized tire
and a brand new tire. If the average lifespan of a vulcanized tire is 4.5
months at P180.00 per tire, its expenses per month is P53.00. If the average
lifespan of a recapped tire is 4.5 months at P180.00 per tire, its expenses per
monthwould be P40.00. The difference between the two is P13.00 per month
or a 24.5 percent difference making the vulcanized tire more economical to
use.
Although a motorcycle vulcanizing shop is already in operation in
Gapan City, Nueva Ecija, the business is not yet fully tapped since the
existing one cater only to tricycle drivers who bring their carcass in the
establishment for vulcanizing. No actual carcass collection system or
marketing strategy is undertaken.
From the above statistics, the researcher came out for this study. A
Feasibility Study of Establishing a Vulcanizing and Repair Shop in Gapan City,
Nueva Ecija.

STATEMENT OF THE PROBLEM

It is the intention of the research to determine and analyze the
Feasibility of Establishing a Vulcanizing and Repair Shop in Gapan City.
This study seeks to answer the following questions:
1. What is the type of business organization suited for the
project/business?
2. What are the marketing programs to be used in the business? Is there
a demand for the proposed project?
3. What are the technical requirements needed in the operation of the
proposed business?
4. How much capital needed for the project? Is the proposed business
profitable?
5. What is the social significance of the project?
6. What are the potential problems to be encountered by the business?
SIGNIFICANCE OF THE STUDY
This study entitled Feasibility of Establishing a Vulcanizing and Repair
Shop in Gapan City, could be of help to the following:
The Researchers. They will be familiar with the needed information that
is essential in handling the business.
The Future Researchers. The result of this study would be a source of
information to the future researchers who will be involved in this kind of
business.
The Prospective Investors. This study will be a guide to a future
investors and for them to realize that putting up business like this is very
feasible.

SCOPE AND DELIMITATION OF THE STUDY

This study is limited only the vulcanization of motorcycle tires, and
repair of the tire like the tire rim (rayos), where statistics used were based on
the franchised and legalized 7,300 tricycle units in Gapan City. Single motor
services were not included and others. Financial analysis is limited to the

cost of equipment, tools, and materials used, as well as the process of

production expenses, target markets, and projected market grab (share) with
the financial analysis on profit statement and Rate of Return of Investment
(RROI).
To organizational aspect, this study justifies the type of business
organizational it intends to put up. This aspect will also define the duties and
responsibilities of the required personnel and their compensation.
The production aspect, shall limits its discussion with emphasis to the
location of the working shop, shop facilities, shop size and the services
offered.
As to financial aspect, the possible sources of financing the profit will
be shown as well as the organized presentation of financial tools and analysis
to justify the viability and feasibility of the project.

DEFINITION OF TERMS
The following are define in order to guide the readers in understanding this study.

AIR COMPRESSOR. A device used to accumulate air with pressure greater than
atmospheric pressure used to power a mechanical device or provide a portable supply of air,
or oxygen.
CARCASS. As used in the study, this term refers to the exterior tire where the outer
upper layer has already been consumed.
ELECTRIC GRINDER. The term refers to a grindstone electrically operated, used to
grind, polish or sharpen tools.
EXTERIOR. The term refers to the outer part of rubber tire.
INTERIOR. The term refers to the inner part of rubber tire made up of a thin tubular
circular rubber which is air inflated.
MARKETING STRATEGY. The term refers to the techniques employed in order to
penetrate a certain product into the market which is in this particular study, the recapped
tire.
HEATING PLATE. This term refers to equipment used in hearing the rubber strip in
order to cover the damaged part of the tire.
WHEEL BALANCING EQUIPMENT. Refers to a simple machine used to repair the river
of the tire when the latter is not already circular in nature (oblong).
MECHANICAL TOOL SET. These terms refers to equipment used to fixed and loosen
the metal screw of the tire.
REPAIR. To restore, to sound or a good condition after damage.
SHOP. A place for making or repairing any article, a business subject for conversation.

CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents review of some studies and available literature

which are in a way related to the proposed study.

FOREIGN LITERATURE
The history of rubber tires began in 1839 when Charles Goodyear discovered
the secret of vulcanization. Although the first air-inflated tire was not built until
1845. A young Scottish engineer, Robert W. Thompson, filled rubber tubes with air,
encased them in leather and put them on carriage wheels. Thompsons tire where
not strong enough to last long or wear well. In 1888, John Dunlop, an Irish
veterinarian built a pneumatic tire for his sons bicycles. This was successful and
Dunlop entered the business of making bicycles tires. At the beginning of 20 th
century, tires were made of single tub bolted to the wheel through crescent
shaped rims.
George W. Rium described how tires are manufactured. According to him,
rubber, natural or synthetic, is compounded in a mill between two (2) revolving
smooth, hollow steel rolls. Carbon, black sulfur, pigments (such as zinc oxide) and
accelerators are included to give the rubber an added strength and wear, heat and
aging resistance. A Banbury mixer which contains rotating knives is a rapid and
efficient means of mixing these ingredients. When all ingredients have been
uniformly needed into the rubber, the mixture is removed from the roll mill in a long
thin sheet. Tetile fiber, and for special uses thin steel wires are used to give the tire
body strength and resilience. Reylon, nylon, and cotton are most often sued and all
new artificial fibers are being tested. Square woven fabrics are combined with the
thin sheets of rubber on a 3-roll colander unto a single sheet, which is out to shape
or place in rolls for the various steps in tire making. The rubberized fabrics are cut
on the bias into diagonal strips.
A tire is made up two (2) main parts, the carcass and the tread. The tread is
producted by feeding the rubber into an extruding machine, which forms it to shape
and size. The sidewall rubber can be made as part of the same piece or extruded
separately. High tensile steel wire is then coated with rubber and formed into sheets
to form the head. The tire builder lays several plies of rubberized fabrics on
revolving cylinder shaped like a drum. After (2) plies are placed around the drum,
the bead are placed on top and additional plies are added to the drum. The tread
and sidewall are wrapped around the drum over the rubberized fabric. The drum is
collapsed and the heavy rubber-fabric body removed. It is then ready for shaping
and curing.
The tire is place in pneumatic press where hydraulic pressure compress the
heavy casing into shape. A specially contoured tube, called a curing bag, is placed
inside the curing die and inflated. These forces softened rubber against the design
of the mold to give the sharply outlined design of the treat surface. High pressure
steam is sued to cure the tire at a temperature of about 300 0F for about 45 minutes.

New types of tire molds have the air bag on air bladder, built into the machine
rather than as a separate piece of equipment.
Richard A. Riley, a chairman of the Firestone Tire and Rubber Company
stressed the need to shape the tread of the tire in accordance to the terrain as a tire
safety measures. He said that conventional tires provide good traction under most
conditions perform relatively poorly on smooth surface all season tires have wide
grooves and tread patterns designed to penetrate snow and provide good traction.
To reduce skidding, some tires are provided with studs embedded on the tread.
Studded tires are, however illegal because they tend to damaged paved
roads. Worn thread do not grip the road well and increases possibilities of skids.
Tires should be replaced when their tread had worn down 1/16 inch (1.6mm) this
depth is indicated by a built in wear bars that show up as smooth horizontal bands
across the tread. This depth is also an ideal wear for possible recapping.
Since recapping is in itself a method of recycling used tires, it is worthy to
note the words of Akiyama Tadasuke. He said that recycling can refer to variety of
ways of refusing resource and products, from the recycling of home garbage to the
systematic recovery and reuse of products of other materials and processing of
industrial waste by government or industry.
With regard to used tires, the researcher has been trying
methods of disposing of the millions of worned tires scrapped
these tires are ground up, and the rubber is reclaimed for
products. Some are used as artificial reefs on ocean bottoms, to
fish. Still, others are ground up and used in asphalt for paving.

to develop practical
each year. Some of
use in new rubber
provide heavens for

Another method of disposing the tires is to use them as a source of energy.

By burning them in a specially designed pollution free incinerators, old tires could
become valuable energy resource. But this method is extremely costly (a synthetic
rubber fuel containing an oxygen-rich chemical is used in rockets).
Aside from studies and literature about tires and recycling, some studies
about marketing or business venture is important to note in this study.
On entrepreneurship, to enter into a new venture necessities environmental
assessment, the economic environmental plays a vital role in the success or failure
of any new venture. Too often, it becomes obvious that a little effort was made to
determine whether the economic environment was friendly or hostile to a specific
venture. Kuratco recommended the following to assess economic environment in
order to avoid pitfalls:

1.
2.
3.
4.
5.

How many firms are in this venture?

Do the firms vary or are they similar?
Are they in one area or widely spread?
Do the firms serve only to the domestic market?
What is the competitive nature of this business?

Answer to these question provide an overall picture of the business

eliminate within which a new ventures must realize that certain attitudes and
perceptions from prospective clienteles are needed for proper assessment of
the environment.

Michael E. Porter recommends other useful steps that can assist an

entrepreneur in examining any
new venture:
1. Adequate definition of the industry for the new venture.
2. Analyze the competition.
3. Determine the strength and characteristics of suppliers.
4. Establish the value added measure of the new venture.
5. Project the market size for the particular industry.

LOCAL LITERATURE
The role, tasks, and responsibilities of management do not actually
vary, to a significant extent, among organizations, instead, it is the manager
with his own unique sets of attitudes and norms and the kind of
subordinates he handles that differ widely in all organizations. Andres
discourses on the Filipino values and management practices in the
Philippines as he believes that the Filipino entrepreneur has its unique style
of management according to Andres, the Filipino manager needs from his
subordinates.
JUSTIFICATION OF THIS STUDY
The researcher found out that the project is feasible and viable and
assure that this study is not duplicated or copied from other studies thus this
study is original and it is the product of combined effort or the researchers.
The scope of this study has similarity and differences to other studies.
It is similar in term of techniques used in data gathering and also in
treatment of data, but differs in term of explanation and meaning. It also
differs in the content of the study, and also its location and capitalization.

CHAPTER III
RESEARCH METHODOLOGY AND SOURCES OF DATA
This chapter presents the research method utilized by the researchers,
the manner of gathering data, their sources and procedures used to test the
viability of the project.
RESEARCH METHOD USED

In this study the descriptive method of research was utilized by the

writer with documentary analysis as the main technique for data gathering.
Description research was utilized to describe the ways and methods of
producing vulcanizing and repair shop business.
Reports and other written documents from private and government
agencies such as Department of Trade and Industries, Private Business
Publications and other institutions were utilized by the researchers.
Interviews with people in vulcanizing business were also undertaken.
TECHNIQUES USED IN DATA GATHERING
1. Interview needed facts were obtained through interview and it gives
the researchers the much more assurance to the accuracy of the
results.
2. Observation they observed that it is necessary to organize the
business in the form of a single proprietorship because it allows the
proprietor to have different control over the business.
3. Library Technique was also conducted by the researchers in order to
furnish all the needed data that will be a big help to the study.
Published books, magazines, journals and internet in personal
computer were used in this study, in this study, in order to find out the
difficult problems involved in this research study.

TREATMENT OF THE DATA

The following financial methods of evaluating the feasibility of a

certain project were utilized by the researchers.

1. RETURN ON INVESTMENT
Foremost among investors is the rate that these would give. This significance
rate of return promise by investment project when investors consider the
time value of the investment.
ROI = Annual Net Income
Total Investment
2. PAYBACK PERIOD
Measures the length of time required to recover the amount of initial
investment it is the time interval between the time of initial outlay and the
full recovery of the investment.
Payback

= Net Investment
Annual Cash Return

3. PRESENT VALUE ANALYSIS

It is the excess of the present of the cash inflows generated by the project
over the amount of the initial investment. It is the discounted cash flows
approach to investment.
It was a required discount rate to find the present value of the project
cash flows. If, after deducting the original investment from the sum of equal
to or greater than zero, then the study is acceptable.

CHAPTER IV
PRESENTATION, ANALYSIS AND INTERPRATATION OF DATA
This chapter consist the entire content of the study organization and
management, technical, marketing, and financial aspects of the project.
Special mention is made concerning potential problems, and social
desirability of the proposed study.
A.

Organization and Management Aspect

This business will start on a small case basis. This is a single

proprietorship business which will supply the operate as vulcanizing and
repair shop.
It is usual in this kind of business that the manager will directly
supervise the workers.
PERSONNEL WORKERS
The organizational structure of the business will be composed of
the following personnel and workers:
1.
Manager / Owner
2.
Secretary / Bookkeeper / Cashier
3.
Vulcanizers
4.
Wheel / Tire Repairmen
5.
Shopkeeper / Helper
ORGANIZATIONAL STRUCTURE
It is usual for this kind of organization to use the line type
of organizational structure from where there is a direct flow of authority from
the top position to its subordinates. A characteristics of this this type is the

superior subordinate relationship wherein a superior delegates authority to

a subordinate who in turn delegates authority to another subordinate thus
forming a line from the very top of the lowest level of the organizational
structure.
Line type of organization is the simplest form of organization types,
hence it is easily understood by its members. Every person knows from
whom he receives his order and to whom to report. A person with line
authority knows what he is expected from him and he is responsible for the
unit to which he is expected or assigned to function for the attainment of the
goals of the enterprise.
The proposed project, being on a small scale will have simple
organizational structure.

FIGURE 1
ORGANIZATIONAL CHART
OWNER OR MANAGER

SECRETARY/
BOOKKEEPER/CASHIER

VULCANIZERS

WHEEL/ TIRE
REPAIR MEN
SHOPKEEPER/
HELPER

JOB DESCRIPTION AND SPECIFICATION

The following are the responsibilities of the employees/ personnel.
General Manager/Owner. He is responsible in dealing different kind
of persons like tricycle drivers, customers and other persons in the business.
He should make an effective plan in the management of the business. He
should make an effective plan in the management of the business and create
a good marketing strategies. He should be knowledgeable in the whole
operation of the business.
Secretary. Her primary function is to issue receipts and pay bills of
the company. She should have a thorough understanding on different
proceedings of the business and very well knowledgeable in proper recording
of transaction made by the business.
Vulcanizers. They are responsible in dealing with their needs and
problems of the customers. Their duties are the main important jobs in the
shop and they are also the responsible persons in the repair and
maintenance needed by the customers and tricycle drivers.
Shop Keeper or Helper. He is responsible in repairing the broken
wheel / tire support (rayos). After changing the broken tire support, the
repairman makes the necessary balancing the wheel/tire of the tricycle on
order to maintain the wheel circular in nature.
Salary Distribution
Job
Title
Salary/Wages per month
Manager / Owner
12, 500
Secretary
8,000

3 Vulcanizers/Workers (P4,000.00) each

12,000
2 wheel Repairmen (P4,000.00) each
1 Helper or Shop Keeper

8,000
3,000

MARKETING ASPECT
A business organization such as that of an vulcanizing and repair
shop operates on a very competitive organization. Business uses the limited
resources available to them as well as for the limited markets of their
services. In such situation a project must have a clear idea of the role which
it plays in society. It should always aim to offer better quality services that of
its competitors for this is the only deciding factor in which a consumer could
decide because the prices of the services in this company does not vary with
each other. Also the best suited marketing strategy as well as the proper
advertisement procedures was revealed in this part.

MARKET STUDY
In Gapan City, there are only few vulcanizing and repair shops offering
a business which is something big and unique. The business is different from
the vulcanizing shops shown in pathways of the mainroads (Bangketa). The
minimum number of vulcanizing stand is five (5) sets and two (2) sets of
wheel balancing equipment are available in the shop, with the rate of
increase tricycles in the city, there is a need to install a vulcanizing shop,
which is big and has enough space to accommodate at least five customers
at a time. According to Land Transportation Office there are at least 5,200

tricycles registered in Gapan City alone aside from the tricycle

moving/operating in the adjacent town of Gapan like San Isidro, San
Leonardo, and Penaranda. In this situation, the researchers believed that
there is a big market.
MARKET OF THE PRODUCT
The primary market place of the business of San Vicente, Gapan City
other nearby places also the target market. The manager himself will
transact with the tricycle drivers in Gapan and in other nearby places like
San Leonardo, San Isidro, and Penaranda, Nueva Ecija wherein there are
many existing tricycle driving in the streets of Gapan for the vulcanizing
service and repair.
Marketing Strategies
On the store site the business will simply place a billboards and the
numerous poster and banners will be located in different places.
The main marketing strategy to be used is by informing the tricycle
drivers about the shop and offering lower prices of the products. There is no
need for the proponent to advertise the shop eagerly because there is a big
demand in vulcanizing and repair business in the City.

Supple and Demand Analysis

Market Demand. The proponent considers the analysis of supply and
demand of the project. As per survey, the demand for vulcanizing and repair
shop is one of the great demands the tricycle in the city. In this connection
there will be no problem as far as the demand for the services offered by the
shop is concerned. According to the present vulcanizing shop owners (small
time) this project is still blooming, thereby allowing a bigger demand for the
future and still giving an opportunity for earning for those who are interested
in getting into this kind of business.
Market Supply. Supply and materials to be used in the operation of
the business are not considered a problem because there are many
equipment and materials available for purchase nearest the project,
therefore, there is no limitation on the source of supply in operating the said
business. Gapan City, being one of the business centers in the province have
enough of supplies and materials for vulcanizing and repair shop where
materials for the project can easily be secured.

TECHNICAL ASPECT
This part of the study was consisted of the necessities in handling the
product and it also discuss the store site and the renovation of the shop
building.

LOCATION
The location of the shop should be in that can reach by many people.
The place should have a small workplace to accommodate customers and
other tricycle drivers.

The store site will be located at San Vicente, Gapan City where anybody in
the area could access the shops. The vicinity map of the store was presented
in Figure 4.
BUILDING RENOVATION
It is estimated that the shop to be renovated will cost P6,000.00 pesos
that means this amount was necessary in the renovation of the building
shop.
The shop site will be renovated in the description appropriate for the
vulcanizing and repair services, 5 working places for the vulcanizing and 2
sets for wheel balancing and repair shop. The office of the manager was
build inside the shop and the cashier windows as well. The store area should
be at least 8 meters wide.
Source of the Products
The main source of the products are the leading suppliers of
vulcanizing materials in Metro Manila that offers a low wholesale price which
means lower cost of the products.
Machineries and Equipment
The following are the equipment needed by the project
1. Air Compressor. It is necessary in providing air for the tire when it is
already vulcanized.
2. Calculators / Adding Machine. It is usually used by the cashiers and
sales clerk for the computation of the sold items.

3. Healing plate (stall). This equipment is important/necessary in heating

the rubber strip in order to cover the damaged part of the tire.
4. Lighter / Matches. These items are also needed in lightning the heating
plate with diesel.
5. Wheel Balancing Equipment. This in needed in repairing the rim of the
tire when the tire is not already circular in nature (oblong tire).
6. Drum. This is necessary in locating the damaged part of the tire
(butas).
7. Mechanical Tool Set. This is very important in loosing and fixing the
metal screw of the tire.
8. Rubber Strip (Adhesive). This is the main material used in covering the
broken interior of the tire.

FINANCIAL ASPECT
The total capital requirements for the project will amount to about
P75,000.00. the equity shall be the owners investment without borrowing
money from any financial institutions. Since the business is only a small scale
industry, the proponent decided not to borrow money from the bank. The
proponents capital is enough to operate a small business like a vulcanizing
shop. The following table shows the detail of the total capital requirement of
the proposed business.

FIGURE 2
VULCANIZING PROCESS CHART

TIRE REMOVING

AIR FILLING THE TIRE

(INTERIOR)

LOCATING THE DAMAGED

PART OF THE TIRE

HEATING THE INTERIOR PART

OF THE TIRE WITH RUBBER
STRIP

REMOVING FROM THE

HEATING PLATE

AIR REFILLING THE INTERIOR

TIRE

FIXING THE TIRE

FIGURE 3
REPAIR AND WHEEL BALANCING

TIRE REMOVING

LOOSEN ALL THE BROKEN

RIM SUPPORT (RAYOS)

PLACE THE WHEEL/TIRE RIM

IN THE WHEEL BALANCING
EQUIPMENT

BALANCING THE RIM

SUPPORT (RAYOS) TO
REPLACE THE BROKEN

REMOVING FROM THE TIRE

BALANCING EQUIPMENT

FIXING THE RIM TO THE TIRE

WITH BALANCED SUPPORT

FIX THE WHEEL/TIRE TO THE

TRICYCLE

Table 1
TOTAL PROJECT COST

PARTICULARS

AMOUNT

Building / Shop Renovations

Advanced Deposit for Rentals

P6,000.00

(2 months P3,500 per month)

P7,000.00
Machineries and Equipmet

Air Compressor
Heating Plates (5pcs)
Wheel Balancing Eqpt. (2pcs)
Mechanical Tool Set
Drums (2pcs)

P20,000.00
2,500.00
4,000.00
5,000.00
500.00

32,000,00

Working Capital
Total Project Cost

Table 2
SCHEDULE OF REVENUE
(SERVICE FEE COLLECTED)

30,000.00
P75,000.00

PARTICULARS
Vulcanzizing Fees
Wheel/Tire Repair

DAILY
P750.00
P800.00

MOTHLY
P22,500.00
24,000.00

ANNUALLY
P270,000.00
P288,00.00

Fees
Total Revenues

P1,550.00

46,500.00

P558,000.00

Sample Computation:
Vulcanizing
50 pcs x P15.00

P750.50/day

P800.00/day

Wheel Tire Repair

10 pcs x P80.00

Table 3
COMPUTATION OF INCOME TAX
SUBJECT FOR INCOME TAX
TAX
1st year
P31,400 30,00
= P1,400 x 15% + P 2,500.00
P2,710.00
2nd year
P35,300 30,000
P3,295.00

= P5,300 x 15% + P2,500.00

INCOME
=

3rd year
P39,590 30,000
P3,939.00

= P9,590 x 15% + P2,500.00

4th year
P46,309 30,000
P4,946.00

= P 16,309 x 15% + P 2,500.00

5th year
P49,500 30,00
P5,425.00

= P19,500 x 15% + P2,500.00

Table 4
SCHEDULE OF DEPRECIATION
PARTICULARS
COST
Shop
Space P6.000.00
(Renovation)
Machineries
and P32,000.00
Equipment
Total

USEFUL LIFE
5 years

DEPRECIATION
P1,200.00

5 years

P6,400.00
P7,600.00

Table 5
SCHEDULE OF OPERATION EXPENSES
PARTICULARS
SALARIES/Wa

YEAR
1
P456,000

YEAR
2
P501,600

YEAR
3
P551,700

YEAR
4
P606,936

YEAR
5
P667,630

ges
Rent
Light & Water
Supplies

12,000
6,000
12,000

46,200
6,600
13,200

50,820
7,260
14,500

55,902
7,986
15,972

61,492
8,785
17,569

Depreciation
Repair
&
Maint.
License
Permit
Total

and

7,6000
1,000

7,600
1,100

7,600
1,210

7,600
1,331

7,600
1,464

2,000

2,200

2,420

2,662

2,928

P526,000

P578,500

P635,590

P698,389

P767,468

Table 6
SCHEDULE OF SALARIES AND WAGES
1 Manager / Onwer

P9,000.00

1 Secretary

6,000.00

3 Vulcanizers P4,000.00 each

8,000.00

2 Wheel Repair Men P4,000.00 each

8,000.00

1 Helper

3,000.00

Total Salaries and Wages

P 38,000.00/month

387,000.00 x 12 months
P456,000.00/year

Table 7
PROJECTED INCOME STATEMENT
PARTICULAR YEAR
YEAR
1
2
S
Vulcanizing
P270,000
P297,000
Wheel / Tire 288,000
316,800
Repair
Gross
558,000
613,8000
Revenue
Less:
526,6000
578,500
Operating
Expensing
Income
31,400
35,300

YEAR
3

YEAR
4

YEAR
5

P326,700
348,480

P359,370
388,328

P395,307
421,661

675,180

742,698

816,968

635,590

698,389

767,468

39,590

46,309

49,500

before tax
Less: Prov.
For Income
Tax
Net Income
Tax

2,710

3,295

3,939

4,946

5,425

P28,690

P32,005

P35,651

P41,363

P44,075

Average Income = P36,367.00

=48%
75,000.00

Table 8
YEAR 1
Net Income After P28,690.00
tax
Add: Non cash
Items
Amortization and
Depreciation
Increase in tax
liability
Total
Add: Cash bal.
Beg
Cash end

YEAR 2
P32,005.00

YEAR 3
P35,651.00

YEAR 4
P41,363.00

YEAR 5
44,075.00

7,600.00

7,600.00

7,600.00

7,600.00

7,600.00

2,710.00

585.00

644.00

1,007.00

479.00

P39,000.00
P30,000.00

P40,190.00
P6,900.00

P43,895.00
P10,919.00

P49,970.00
P15,309.00

P52,154.00
P20,306.00

P69,000.00

P109,190.0

P153,085.00

P203,055.00

P255,209.00

CASH FLOW STATEMENT

Table 9
PROJECT BALANCE SHEET

Cash

YEAR 1
P69,000.00

YEAR 2
P109,190.0

YEAR 3
P153,085.0

YEAR 4
P203,055.0

YEAR 5
P255,209.0

Advance deposit
Bldg. Renovation
Less:
Accum

7,00.0
6,000.00
(1,200.00

0
7,000.00
6,000.00
(2,400.00)

0
7,000.00
6,000.00
(3,600.00)

0
7,000.00
6,000.00
(4,800.00)

0
7,000.00
6,000.00
(6,000.00)

Depreciation
Machineries
Less:
Accum
Depreciation

Taxes Payable
Owners beg. Cap
Add: Net Income
Total
Operating
Expenses
Total Liab. And
Owners Equity

32,000.00
(6,400.00)

32,000.00
(12,800.00)

32,000.00
(19,200.00)

32,000.00
(25,600.00)

32,000.00
(32,000.00)

P106,400.0

P138,990.0

P175,285.0

P217,655.0

P262,209.0

0
2,710.00
75,000.00

0
3,295.00
P103,690.0

0
3,939.00
P135,695.0

0
4,946.00
P171,346.0

0
5,425.00
P212,709.0

28,690.00
P103,690.0

0
32,005.00
P135,695.0

0
35,651.00
P171,346.0

0
41,363.00
P212,709.0

0
44,075.00
P246,784.0

0
P106,400.0

0
P138,990.0

0
P175,285.0

0
P217,655.0

0
P262,209.0

FINANCIAL ANALYSIS
The following are the barometrics/indicators used in the study in order
to test the profitability of the proposed project/business. Average rate of
return cash payback period and the present value analysis.
1. Average Rate of Return = Average/Annual Income
Total Investment
= P36, 367
75,000
ARR = 48%

2. Payback Period

Payback period indicates the number of years required to fully

recovered the initial investment. This figure shows in the following
computations.
CPP

Total Project Cost____

Net Income + Depreciation

= ____P75,000______
P28,690 + 7,660.00
= 75,000
36,290
= 2.067 x 12 months
CPP

= 2 years and 8 months

3. PRESENT VALUE ANALYSIS

YEAR
CASH INFLOWS
1
P 36,290.00
2
36,605.00
3
43,251.00
4
48,963.00
5
51,675.00
Total Present Value of Cash Inflow
Less: Total Project Cost
Net Present Value

PV of P1 At 12%
0.893
0.797
0.712
0.636
0.587

PRESENT VALUE
P32,406.97
31,565.19
30,794.47
31,140.47
30,333.23
P156,240.57
75,000.00
P81,240.57

SOCIAL DESIRABILITY OF THE PROJECT

In this study, the proposed viability is not all that is considered when
investing in business is concern. The project socio-economic contributions to
the country should likewise solicit an equal degree of consideration. The
project is expected to be a contributors, as well as a helping hand for the
upliftment of the social and economic living in the city. The following areas
are also considered.
Employment Generation. A developed vulcanizing industry and those
indirectly involved in the project providing them employment during the
renovation of the shop as well as during its actual operation.
Income Generation. Considering employment opportunities, this
project could contribute income to those who work in the business not only
the employees but also the investors who will go into this kind of business.
Generating Funds for the Government. By means of licenses and taxes
fees to be paid by the business, it can generate funds for the government
which will eventually be of assistance in uplifting the socio-economic life in
the country.

POTENTIAL PROBLEMS
The potential problems as envisioned by the proponent in the actual
operation project are as follows:
1. Due to the city ordinances considering the non-franchising of tricycles
in the city could affect the operation of the business.
2. There is a tendency that through the development of the city, allowing
taxi and multi cab to operate business in the city. Through this change
in the system and policies, the project will also be affected.

CHAPTER V
SUMMARY, CONCLUSIONS, ANF RECOMMENDATIONS
This chapter deals with the summary of findings, the conclusions and
the recommendations for the successful management of the business.

SUMMARY
This study wants to find out the feasibility study of vulcanizing and
repair shop in Gapan City. This study deals with the four aspects of
management.
Management Aspect
This business will be formed as a single proprietorship. This type of
management was adopted because it is easy to start and terminate, profit
belongs entirely to the owner and the ownership is vested only to one
person. The type of organization used in this project is the line type where

there is a direct flow of authority from the top position to the subordinate
levels.
Marketing Aspect
The best suited marketing strategy as well as the proper
advertisement procedure was revealed in this part.
In Gapan City, there are only few vulcanizing and repair shops
offering a business which is something big and unique. This business is
different from the vulcanizing shops shown in pathways of the main roads
(Bangketa). The minimum number of vulcanizing stand is five (5) sets and
two (2) sets of wheel balancing equipment are available in the shop, with the
rate of increase tricycles in the city, there is a need to install a vulcanizing
shop, which is big and has enough space to accommodate at least five
customers at a time. According to Land Transportation Office there are at
least 5,200 tricycles registered in Gapan City alone aside from the tricycle
moving/operating in the adjacent town of Gapan like San Isidro, San
Leonardo, and Penaranda. In this situation, the researchers believed that
there is a big market.
The primary market place of the business of San Vicente, Gapan City
other nearby places also the target market. The manager himself will
transact with the tricycle drivers in Gapan and in other nearby places like
San Leonardo, San Isidro, and Penaranda, Nueva Ecija wherein there are
many existing tricycle driving in the streets of Gapan for the vulcanizing
service and repair.
On the store site the business will simply place a billboards and the
numerous poster and banners will be located in different places.
The main marketing strategy to be used is by informing the tricycle
drivers about the shop and offering lower prices of the products. There is no
need for the proponent to advertise the shop eagerly because there is a big
demand in vulcanizing and repair business in the City.
CONCLUSION

Based on presented information regarding the establishment of

Vulcanizing and Repair Shop in Gapan City, it can be concluded that is
venture is feasible because of the following:
1. That the organization best suited is single proprietorship.
2. That there is a demand for the proposed project.
3. That there is more profit to be derived from the business.

4. That the maintenance of this project is very simple.

5. That the business is very feasible.
6. That the business is socially desirable and gives benefit not only to the
owner, consumers, but also to the government.

RECOMMENDATIONS
In the light of conclusion, the following are recommended:
1. Individuals who are interested in Establishing a Vulcanizing and Repair
Shop should find good
location such as cities and urban areas because that is the place where
most consumers/buyers come.
2. They should hire qualified and skilled workers in the business so that
they can carry out business in order to make the products and services
more attractive.
3. Different marketing strategies should be applied in this business in
order to make the products and services more attractive
4. Capitalization requirements should balance the procurement of
materials and equipment in the operation of the said business.
5. Systematic financial procedures and control system be given more
emphasis.

BIBLIOGRAPHY
Aquino, Gaudencio V. Fundamentals of Research and Thesis Writing
(Quezon City: Phoenix Publishing House, 1978)
Brandt, Steven C. Entrepreneurship in Established Companies: Managing
Toward the Year 2000

(Homewood, Illinois Dow Jones-Irwin, 1986)

Comptons Interactive Encyclopedia, 1997 Edition
Corter V. Good and Douglas Scates, Method of Research
(New York McGraw Hill book Co., Inc. 1972)
Medina, Roberto G. Entrepreneurship and Small Business Management
(Manila REX Printing Co.1996)
Patac, Juan. A Large Scale Business, The Economic Journal Vol. 18, No. 10
January 1989
Webster Dictionary, Student Ed.
(Springfield G. Merriam Book, Co., 1975).

OPEN SHED WORKING AREA

FIGURE 5
SHOP LAYOUT

STOCK ROOM
AND
UTILITY OFFICE
OFFICE

4m
6m 10

10