Management Study on feasibility

1. Feasibility Study

2.  Management study is a major component of a
project feasibility study that sequential and
procedural implication to the whole process.
 Management study is presented after the
financial study.
 The term management in this section refers
to the scientific and procedural contributions
of human resources towards the
accomplishment of the of the proposed
business envadors.

3.  The raw materials and overhead provisions
including the infrastructure requirements of
the project have been critically evaluated and
determined in the technical study.
 This group of individuals must be formed
into a business organization which is a
juridical entity or an artificial being created
by the operation of the law.

4.  The validity of the market study is tested
by determining whether there is an existing
demand for the product. The feasibility of the
technical aspect is tested by determining
wheter the cash generated from the propose
project will provide higher rate of return on
investment against the minimum required
rate of return
 Basically the management study aims to
determine the appropriate type of business
organization ,

5.  In terms of formation ans structure that will
effectively accomplish the objectives of the
business. Therefore , the proponet should
categorically include in the conclusion a
recommendation as what type of busines
organization should be established.
 The proponent should work clisely with a
human resource specialist who has varied and in
depth work experience and exposure in
organizational design , oraganizational
development,compensation structures and
human behaivior.

6. 1. Selecting the kind of business organization
2. Designing the internal structure
3. Staffing for the internal structure
4. Computibg total salaries, conpensation, and
fringe benefits
5. Preparing a time table.

7. This is the first section of the
management study which aims to answer the
fundamental questions;
What type of business organization must be
formed to carry out effectively the objectives of
the proposed project?
There are 3 types of business organization;
1. Sole proprietorship
2. Partnership; and
3. Corporation.

8. Several factors affect the choice of busines
organization that is best fitted to proposed
project;
1. Capital requirement
2. Liability of owner or owners
3. Managerial skills needed
4. Ease of formation
5. Taxation implication
6. Government intervention
7. Nature of business 8. External financing

9. The capital requirements to start the
business may come directly from fresh cash
infusion of the owners, or may be sourced from
creditors, particularly financial institutions. The
amount of capital needed should be enough to
cover the infrastructure requirements and the
scale of operation.
The capital requirement of a sole
proprietorship and partnership is usually less
compared to that of a corporation. Corporate is
a huge capital base is required.

10. The liability of the owner or owners may either
be limited or unlimited. Limited liability means
that the owner is liable only to the extrnt of his
capital contributions ; while unlimited aliability
implies that creditors may run after the personal
properties of the owner in case the business
cannot fully settle its financial obligations..
The underlying element in liability is the
degree of risk exposure. In case the business
operation involves more risk like banks and other
financial intermediaries,a corporate form of
business oragnization is suited to be established.

11. Since sole propritorship and partnership
need only small capital requirements, the
operation is usually simple. In most instances,
one person with managerial skillsbis employed
to handlebthe daily operating activities of the
business.
If the operation of yhe business is highly
complicated and covers a wider market, there is
a neef to hire several managers to run the day-
to-day operation of various departments. This
also requires the creation of a corporation.

12. Sole proprietorship and partnershipare easily
formed, and do not require the preparation of
documentary papers. These business type are
not usually registered with the Securities and
Exchange Commission (SEC).
The formation of a corporate entity, requires
the services of a legal councel and a certified
public accountant. The legal personality after
complyong with all the legal requirements and
formaities.

13. The tas liability of a sole proprietorship os
computed using the scheduledbtax rates, and
the amount is usually lower compared to that of
a partnership and a corporation. The owner of
the businesd includes the income realized from
the business in the computation of his or her
gross income.
The partnership and corporations are
presently taxed at yhe rate of 30 (%)percent
based on the computed net taxable income or
at two percent of the gross income, which is
higher.

14. The government usually imposes greater
and wider control on corporations. Varios
government agencies closely monitor the
operations of corporations and they impose
more stringent measures to be complied with.
Sole proprietorship usually comply with
the local government reportorial and legal
requirements. Less intervention is impise by
the national government.

15. Merchandising and service entities usually
do not have complicated operations. They carry
routine activities all throughout the years. Sole
proprietorship and partnerahip are highly
advisable for these kind of business.
Ex. A convenience department store and a
manufacturing business.

16. Financial institution like banks usually favor
the granting of credit to corporations rather
than to sole proprietorship and partnership.
Corporate entities can easily seek external
funding from outside source should they need
additional working capital, as against sole
proprietorship and partnership.

17. Internal structure of the business usually
follows once the type of business organization
has been chosen. The internal oraganizational
structure of the business cannot be defined
unless the type of organization has been
chosen.
This section answer the basic question.
What is the best intetnal organizational
structure to be adopted to achieved the goals
and objectives of the organization?

18. The internal organizational structure serves
as the framework that outlines the
communication procedd between employees
and departments, and defines the
responsibilities and functions of each employee
invthe organization.
The primary factor affecting the design of
the internal organizational structure isbthe size
of the business. The type of product that the
business sells may also influence the design of
the internal organizational stricture.
The onternal organizational structure may
either be a;

19.  Flat structure
 Department-focused structure; or
 Product-focused structure
FLAT STRUCTURE
Highly advisable for sole proprietorship
and partnerships where there are only a few
personnel. Usually, there are only two or three
levels of reporting in this configuration of
employees. The simple structure is
advantageous because it hastens the decision
making process by empowering the
employees to formulate decisions.

20. A department-focused structure is
applicable to corporte entities where the work
to accomplish the product is broken down
into different functions. The ptevalent
function areas of the business are operation,
marketibg,finance andhuman resources. Thos
type of internal structure is highly advisable
to be adopted by a corporation that values
teamwork in the attainment of its
objecticeand goals.

21. A product-focused structure gives
importance to the product that the quality
business offers. All efforts are joined together
to deliver quality products or services to the
customers. Enhancement of product quality is
the primary concern of a product-focused
structure.
A product -focused structure is often
adoptrd by huge retqil corporate stores in
corporate form witj very strong leadership
teams across several functions areas.

22.  An organizational chart is a diagram of the
structure of the organization which shows the
position, ranks, and relationship of the
employees in the organization. Organization
structure should depict the formal relationship
among employees. It is presently considered as
the best formal arrangement of employees that
would meet the objectives of the organization. It
is restructured in response to the changing
conditions and opportunities both in the local
and international markets.

23. The staffing of the structure is a
management function that usually involves.
1. Determining the appropriate number of
employees required by the organization;
2. Recruiting employees who qualify for the
position based on education, knowledge,
training, experience, skills, and abilities; and
3. Deploying and retaining employees.
Based on the proposed internal structure of
the business that defined the different position,
the proponent next determines the required
number of employees and defines the minimum
qualification standards for the positions.