Tenaw Enterprenuership ProjectIII

Feasibility Study On Production of LCD Projector Stand 2011 E.
Bahir Dar University
Bahir Dar Institute of Technology

Faculty of Mechanical and Industrial Engineering
Entrepreneurship Project
Feasibility Study on Production of LCD Projector Stand
Name of enterprise:
ABHAHT LCD projectors stand manufacturing enterprise
Section A ……………………………………………………..Peer Group - 4
Name ID
1. Aklilu Sibhat………………………………………………………………………….. 0701261
2. Biniyam Tariku……………………………………………………………………… 0701505
3. Habtamu Dessie……………………………………………………………………… 0701827
4. Haimanot Yeserah…………………………………………………………………. 0701871
5. Tenaw Degu……………………………………………………………………………. 0702360
Submitted to: Mss. Tsehay S.
Submission Date 21/05/2011 E.C.
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Feasibility Study On Production of LCD Projector Stand 2011 E.C
Declaration
We are declare that this paper presents of the business feasibility study on “Business feasibility
study on Production of LCD Projector Stand” is uniquely prepared by us for the production of
the Lcd Projector Stand using available material for the purpose starting new business within the
group their listed above. The LCD projector stand can hold the LCD projector and the other
component that auxiliary for the projection.
Name ID No. Signature Date
1. Aklilu Sibhat……………………………0701261 ------------------ ---------------

2. Biniyam Tariku…………………………0701505 ------------------- ----------------
3. Habtamu Dessie………………….…….0701827 ------------------- ---------------
4. Haimanot Yeserah…………………..….0701871 ------------------- ---------------
5. Tenaw Degu………………………..…..0702360 -------------------- ---------------
Approved by:
signature Date
1. Mss. Tsehay S. ---------------------- -----------------------
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Acknowledgement
First and foremost we would like to thank our almightily GOD to give us strength to finish this
project. Secondly we would like to express our deepest gratitude to Bahir Dar Institute of
Technology, for allowing us to do entrepreneurship project and teacher Ms. Tsehay S. for her
endless support and guidance during working of this task. Finally, we also grateful thank to all
our friends that they were involved directly or indirectly helping, and giving any relevant
information during our work.
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Abstract
This business feasibility study report is carried out on production of LCD projector stand. These
includes all about the business description, market feasibility (such as enterprise
competitiveness, market potential, and sale projection), technical feasibility (suitability of
production technology, availability and suitability of site, raw materials), financial feasibility
(total capital requirement of the business, means of getting the starting capital) and the
organizational structure of the business enterprise of crew member.
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Table of Contents
Declaration ....................................................................................................................................... I
Acknowledgement .......................................................................................................................... II
Abstract ......................................................................................................................................... III
CHAPTER – 1 ................................................................................................................................ 1
1. Introduction ............................................................................................................................. 1
1.1. Background ...................................................................................................................... 1
CHAPTER - 2 ................................................................................................................................. 3
2. Business Description ............................................................................................................... 3
2.1. How our business plan makes money? ............................................................................ 4
2.2. Definition of the project and alternative models .............................................................. 4
2.2.1. The type and quality of product ................................................................................ 4
2.2.2. Technical process of the industry ............................................................................. 5
2.2.3. Size, location and kind of input ................................................................................ 5
2.2.4. Work plan time horizon ............................................................................................ 5
2.3. Relationship to the surrounding geographical area .......................................................... 6
2.3.1. Economic and Social impacts to the community ...................................................... 6
2.3.2. Environmental impact to the surrounding area ......................................................... 6
2.4. Name of the enterprise ..................................................................................................... 7
2.5. Generation of ideas........................................................................................................... 7
CHAPTER - 3 ................................................................................................................................. 8
3. Market Feasibility ....................................................................................................................... 8
3.1. Enterprise description ........................................................................................................... 8
3.1.1. Size, scope and market of the industry .......................................................................... 8
3.1.2. Future direction of the industry ..................................................................................... 8
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2.1.4. Life cycle of the industry ............................................................................................... 9
3.2. Enterprise competitiveness ................................................................................................. 13
3.3. Market Potential ................................................................................................................. 13
3.4. Sales Projection .................................................................................................................. 13
3.5. Access to market outlets ..................................................................................................... 15
CHAPTER - 4 ............................................................................................................................... 17
4. Technical Feasibility ................................................................................................................. 17
4.1. Facility needs...................................................................................................................... 17
4.2. Suitability of production technology .................................................................................. 17
4.3. Availability and sustainability of site ................................................................................. 18
4.4. Raw materials ..................................................................................................................... 18
4.5. Other inputs ........................................................................................................................ 18
4.5.1. Availabilities of Labor and other Requirements.......................................................... 18
CHAPTER - 5 ............................................................................................................................... 21
5. Financial feasibility................................................................................................................... 21
5.1. Estimate the total capital requirements .............................................................................. 21
5.1.1. Land and building cost ................................................................................................ 21
5.1.2. Machines and equipment's cost ................................................................................... 22
5.1.3. Furniture and Office equipment .................................................................................. 22
5.1.4. Raw materials and labor cost ....................................................................................... 22
5.1.5. Total capital requirement cost ..................................................................................... 23
5.2. Estimate the Equity and Credit Needs................................................................................ 23
5.2.1. Sources of Equity Capital ............................................................................................ 24
5.2.2. Sources of Debt Capital ............................................................................................... 24
5.2.3. Debt to Equity Level.................................................................................................... 24
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5.3. Budget expected costs and returns of various alternatives ................................................. 25
5.3.1 Total revenue and profit ............................................................................................... 26
5.3.2. Calculating the break-even point ................................................................................. 27
5.3.3. Estimated sales/usage needed to break-even ............................................................... 27
5.3.7. Limitation of Economic analysis ................................................................................. 28
CHAPTER - 6 ............................................................................................................................... 29
6.1. Organizational (Managerial Feasibility) ................................................................................ 29
6.1. Business structure ............................................................................................................... 29
6.2. Business Founders .............................................................................................................. 30
CHAPTER – 7 .............................................................................................................................. 32
7. Conclusion and recommendation .............................................................................................. 32
7.1. Conclusion.......................................................................................................................... 32
7.2. Recommendation ............................................................................................................... 32
Reference ...................................................................................................................................... 33
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CHAPTER – 1
1. Introduction
1.1. Background
A projector or image projector is an optical device that projects an image (or moving images)
onto a surface, commonly a projection screen. Most projectors create an image by shining a light
through a small transparent lens, but some newer types of projectors can project the image
directly, by using lasers. A virtual retinal display, or retinal projector, is a projector that projects
an image directly on the retina instead of using an external projection screen.
The most common type of projector used today is called a video projector. Video projectors are
digital replacements for earlier types of projectors such as slide projectors and overhead
projectors. These earlier types of projectors were mostly replaced with digital video projectors
throughout the 1990s and early 2000s, but old analog projectors are still used at some places. The
newest types of projectors are handheld projectors that use lasers or LEDs to project images.
Their projections are hard to see if there is too much ambient light. Movie theaters used a type of
projector called a movie projector, nowadays mostly replaced with digital cinema video
projectors.
Projectors can be roughly divided into three categories, based on the type of input. Some of the
listed projectors were capable of projecting different types of input. For instance: video
projectors were basically developed for the projection of prerecorded moving images, but are
regularly used for still images in Power Point presentations and can easily be connected to a
video camera for real-time input.
So, from here, in order to get clear quality projection of images, videos, slides we need the
projector stand that erects the projector at the adjusted or specified height and inclination of the
stand. All mounts come with a projector interface. This projector interface is equipped with fine
tune adjustability for precise alignment of the projection surface. Once aligned, the projector
stays in position. Turning the unique friction ring (patent pending) will eliminate all play from
the interface connections, making the mount a solid and very stable solution.
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The height adjustable projector stand can be used when the height of the stand is not known or
when flexibility is wanted. These mounts come in some lengths offering variable height
adjustment. This range of projector ceiling mounts is suitable for mounting on flat and inclined
ceilings up to 90 degrees from the vertical axis.

CHAPTER - 2
2. Business Description
Generally speaking, the initial step in starting new business venture is to find out suitable
business model. Looking for different alternative situations and analyzing them systematically
from social, economic and environmental prospective is very important. Hence, we develop
some business model as alternative and finally select out the best business model, so that the
business venture becomes sustainable. Factors to be considered while selecting the appropriate
business model are:
 Legal and national policy of Ethiopia to manufacturing

 Ability to upgrade in economic and working ability
 Accessible of resource
 Future vision
 Market and competitors position
 Availability of potential customers
 Social, economic and environmental situation
 Technical and financial fittingness and so on.
Assuming all the above factors, analysis and evaluation of business have been made and finally
LCD Projector Stand product supplying enterprise is selected. The enterprise is to be located in
Burie, west Gojjam, which is 162 km from Bahir Dar. The size of this plant depends on the
number of employee and the processing capacity.
In the beginning, the enterprise has about 20 employees and the production capacity of about 5
LCD projector stand per day. So it can be called small business. In the future, the enterprise will
have the aim of being one of the largest LCD projector stand product supplying industries in our
country, Ethiopian, Even though in the world.

2.1. How our business plan makes money?

As we know in Ethiopia so many schools from primary to secondary and then she built also new
universities so due to this the increase the demand of getting the product of LCD projector
stands. Our business idea is about produce and distributes LCD projector stand for the users.
This business plan earns money by giving a product for:
 Universities
 schools
 Cinemas
 Individuals
2.2. Definition of the project and alternative models

LCD projector stand is easily manufactured by suitable lathe machine and using the combination
of other auxiliary machines. We are also use typical milling machines, welding, joining process
during the operation of product manufacturing. Steel is one of the most accessible natural
resources, and is a major basic raw material used by construction, and other industries. Despite
the low value of its basic products, LCD projector stand enterprise is a major contributor to and
an indicator of the economic well-being of a nation. The demand for the product is determined
mostly by the level of production activity, and, therefore, the demand for production materials.
2.2.1. The type and quality of product

The basic product of the business model is LCD projector stand in which it is used for projection
of different information that the projector will display. The resource of the enterprise is
economically available steel. The business will grow rapidly as long as there is no negative
impact. Using steel as a resource, the enterprise is going to produce LCD projector stand. The
business will make money through direct selling of the LCD projector stand to those educational
institutions and organization, cinemas, and also for individuals.
The product of the LCD projector stands different with types and sizes.

2.2.2. Technical process of the industry

We will follow the following technical processes throughout our manufacture process.
Identifying and Collection of Analyzing Evaluate
define the problem data collect data alternatives
Distribute to Apply solution

Production
customers
Figure 2.1 technical process of the industry
2.2.3. Size, location and kind of input

The size of this plant depends on the number of employee and the processing capacity. In the
beginning, the enterprise has about 20 employees and the production capacity of about 5 LCD
projector stand per day. So it can be called small business. In the future, the enterprise will have
the aim of being one of the largest LCD projector stand product supplying industries in our
country, Ethiopian, Even though in the world. The enterprise is to be located in Burie, west
Gojjam, which is 162 km from Bahir Dar. The size of this plant depends on the number of
employee and the processing capacity. The input for our company will be both materials and
financial. In our company we have twenty employees with two offices, one store, one work
station and two watchman house.
2.2.4. Work plan time horizon

We are doing the plan time horizon taken for starting the business as below shown in table 1.2.
Table 2.1 work plan time horizon
No. Activities Time left
1. Identify source of income 3 weeks
2. Getting money 1 month
3. Building houses, install the machine and construct 6 month

work shop Buying necessary equipment and tools
4. Buying necessary equipment and tools 2 weeks

5. Searching skilled man 3 weeks
6. Adjust the organizational structure 2 week
At the first month the conception and development, the enterprise will collect finance from our
friend, family and from commercial bank of Ethiopia. for the next six months we will be build up
the foundation of machine and office, store and other necessary house which is used for our
employees to be work in an interesting way, after this will be buying necessary equipment’s and
tools. Skilled man who is an employee of the company are searching for the next three weeks
after that by organized the business structure we will start our production process and the lcd
projector stand will be distributed to the market.
2.3. Relationship to the surrounding geographical area

The LCD projector stand product and supplying has much importance in terms economic, social
and educational sector. Since the machines are free from carbon emission it will be friendly with
the environment. The machine is very appropriate to the community. We are maintaining and
installing machines by using technology that has no any impact on the environment.
2.3.1. Economic and Social impacts to the community

The business does not have any negative impact to the community. It does not draw out
individuals from job; rather it creates opportunity to some jobless individuals. Thus, it is helpful
positively to the community and the country. The economic and social impact that LCD
projector stand and supplying address is:
 Income opportunities for the employers

 It creates job for many of individuals.
 Reduces the effort of the teachers in school and universities.
 It will cause the integration of the society as many of the individuals meet together as an
employee.
 It will facilitate and support education and film industry. Hence, it will result national
development
2.3.2. Environmental impact to the surrounding area

The project is an environmentally safe project. The machines are operated by mechanical power
and do not produce any toxic waste that would pollute the surrounding environment. Our

machines has produced a noise sound, it has sound pollution. But as much as possible we try to
install in area which is far apart from living house of the community. Since there is no emission
and wastage its degradation to the environment is less. It uses renewable energy. This will
eliminate environmental pollution and reforestation.
2.4. Name of the enterprise

Each founder of the enterprise release ideas what kind of name should be given to the company
by considering different perspectives like, function, place and share of the company. After we
have discussed the name that each member we agree to give the name taking the first letter from
our name then, we are called “ABHAHT LCD projector stand manufacturing enterprise.”
2.5. Generation of ideas

Analysis of the viability of generated idea through a disciplined and documented process of
thinking through the proposed idea starting from its logical beginning to its final is necessary to
see its feasibility. The following points are considered while generating new project ideas:
Shortage of service or product in the market area
Identification of unsatisfied demand
To fulfill customer’s interest, and so on.
Due to considering all the above source of project ideas, it is possible to generate different
alternatives and works within unplanned flow process. The following are the major analysis
which will considered next.
 Market feasibility analysis

 Technical feasibility analysis
 Financial feasibility analysis
 Organizational/Managerial feasibility analysis

CHAPTER - 3
3. Market Feasibility
3.1. Enterprise description
3.1.1. Size, scope and market of the industry
The size and scope of LCD projector stand manufacturing enterprise depends on the following
main points;
 The number of employees

 Demands of the customer
 Capital investment and
 Capacity of the production
Vision.
At the beginning, the enterprise is a small sized business, which has 20 permanent employees.
But, it will grow to large supplying firm when starting producing at its full capacity. Scope of the
enterprise ranges from crushed stone up to selling to great construction companies. The end
product also has different market segments to satisfy the demands of the customer and to get
acceptance at different level working condition. So, the possible market segments are:
Distribute produced LCD projector stand to different towns which has connection with our
enterprise.
Educational institution (universities, school, etc.)
3.1.2. Future direction of the industry

Almost, if there isn’t any an enterprise to work on such production in our region, to get the
statistics of growth of such business, there is a highly demand from customers, which is our
enterprise satisfy both in quality and quantity of these needs. Therefore, we can overcome these
unbalance between demand and supply, our enterprise is aimed at satisfying the demand of LCD
projector stand.
In the future, the enterprise intended to have the following industry direction and market
segment:
 Increasing the number of production machine

 Increasing number of employees

 Expand the team and make it a high developed enterprise
 Establish production and distribution centers in different parts of our country
 Participate in international market
 Changing size of enterprise from small to huge scale producing firm.
3.1.3. Nature of the industry
The interaction of our country to different industry is increasing in every year. These shows that
our county needs a suitable sustainable development of technology base venture. Thus, the
enterprise is going through constant and stable system in production and marketing. Since the
demand increase in different levels of standards; it can increase production capacity and market
segmentation to fulfill this request. On the other hand, the enterprise will rapidly change itself or
restructuring when different change takes place. This is will happens when a new high
technology is adapted to be competitive, productive and profitable. Problems that cause the
enterprise to change are:
 Working conditions,
 Competitiveness
 Government policy, and
 Modernization
2.1.4. Life cycle of the industry

The industry life cycle refers to the succession of stage an industry goes through. It is away to
trace the stages of product acceptance from its introduction up to it’s diminished (end or fall).
Identifying the life cycle helps the industry in the following ways:
 To identify competitors position from different angle.

 To know previous works.
 Predict what may happen in the future.
 To select the appropriate strategies to be followed.
Our business industry can involve in different stages of life cycle. This are;
 Development
 Introduction

 Growth stage
 Maturity stage
 Decline stage
Figure 3.1 production life cycle stages
The life cycle of the industry depends on the types and quality of products. The demand of the
products has continuous grow increasing way due to the following reasons:
 Number of educational organizations and film industry in our country increases.

 Number of people using this product is increase from time to time.
Therefore, the enterprise will have long life cycle, if other things like the management and
supply remaining stable. So, to determine life cycle of enterprise it is good especially to concern
introduction, growth and maturity stages.
1. Introduction stage
At introduction stage, the enterprise has the following characteristics:
 Sales of the product grows slowly

 High machine and other cost
 Selective distribution of the product until customer show acceptance of it
2. Growth stage
In growth stage the enterprise seeks to build product preference and increase market share. At
this stage the enterprise will have the following characteristics:
 Maintaining product quality and other additional features.

 Maintaining the price of the product with increasing demand.

 Have the power to widens the scope
 Add distribution channels
 Promote the product at broader audience.
3. Maturity stage
After the Introduction and Growth stages, a product passes into the Maturity stage. The third of
the product life cycle stages can be quite a challenging time for manufacturers. In the first two
stages companies try to establish a market and then grow sales of their product to achieve as
large a share of that market as possible. However, during the Maturity stage, the primary focus
for most companies will be maintaining their market share in the face of a number of different
challenges.
Sales Volumes Peak: After the steady increase in sales during the Growth stage, the market starts
to become saturated as there are fewer new customers. The majority of the consumers who are
ever going to purchase the product have already done so.
Decreasing Market Share: Another characteristic of the Maturity stage is the large volume of
manufacturers who are all competing for a share of the market. With this stage of the product life
cycle often seeing the highest levels of competition, it becomes increasingly challenging for
companies to maintain their market share.
Profits Start to Decrease: While this stage may be when the market as a whole makes the most
profit, it is often the part of the product life cycle where a lot of manufacturers can start to see
their profits decrease. Profits will have to be shared amongst all of the competitors in the market,
and with sales likely to peak during this stage, any manufacturer that loses market share, and
experiences a fall in sales, is likely to see a subsequent fall in profits. This decrease in profits
could be compounded by the falling prices that are often seen when the sheer number of
competitors forces some of them to try attracting more customers by competing on price.
Continued Reduction in Costs: Just as economies of scale in the Growth stage helped to reduce
costs, developments in production can lead to more efficient ways to manufacture high volumes
of a particular product, helping to lower costs even further.

Increased Market Share through Differentiation: While the market may reach saturation during
the Maturity stage, manufacturers might be able to grow their market share and increase profits
in other ways. Through the use of innovative marketing campaigns and by offering more diverse
product features, companies can actually improve their market share through differentiation and
there are plenty of product life cycle examples of businesses being able to achieve this.
4. Decline stage
The last of the product life cycle stages is the Decline stage, which as you might expect is often
the beginning of the end for a product. When you look at the classic product curve, the Decline
stage is very clearly demonstrated by the fall in both sales and profits.
Market in Decline: During this final phase of the product life cycle, the market for a product will
start to decline. Consumers will typically stop buying this product in favor of something newer
and better.
Falling Sales and Profits: As a result of the declining market, sales will start to fall, and the
overall profit that is available to the manufacturers in the market will start to decrease. One way
for companies to slow this fall in sales and profits is to try and increase their market share which,
while challenging enough during the Maturity stage of the cycle, can be even harder when a
market is in decline.
Product Withdrawal: Ultimately, for a lot of manufacturers it could get to a point where they are
no longer making a profit from their product. As there may be no way to reverse this decline, the
only option many business will have is to withdraw their product before it starts to lose them
money.
Cheaper Production: Even during the Decline stage, there may be opportunities for some
companies to continue selling their products at a profit, if they are able to reduce their costs. By
looking at alternative manufacturing options, using different techniques, or moving production to
another location, a business may be able to extend the profitable life of a product.
Cheaper Markets: another way to continue making a profit from a product during the Decline
stage may be to look to new, cheaper markets for sales. In the past, the profit potential from these
markets may not have justified the investment need to enter them, but companies often see things
differently when the only other alternative might be to withdraw a product altogether.

Generally, product or industry life cycle used to determine the life cycle of the production market
with respect to the business or commercial costs &sales measures. It helps research development
department manager of the industry to plan alternate marketing strategies to address the
challenge that their products are likely face.
3.2. Enterprise competitiveness

As per our information, in Ethiopia, there isn’t any small or micro enterprises, which produces
LCD projector stand mount that used to hold the projector and project what we want on it.
Therefore, the first time that we are star this business venture. The firm has monopol in market
and supplying the product. There are barriers which prevent or allow the development of the
enterprises to take parting the market.
Some barriers and ease which prevent the development of the enterprise or make difficult
situation to participate in the market are:
 Production capacity and Product quality

 Product variety and skill of production
 Market segmentation and afraid of risk taking
 Capital investments are major inhibiters.
3.3. Market Potential

Lcd projector stand or mount products with different size have highly increasing demand and
consumption or usage rate in the country. This demand of is never fulfilled as explained before
because of there is no company that is mainly concerned for this purpose. The usage and demand
trend projector stand products will rapidly changing from orderly developed by company’s stage
holders to large number customers in Ethiopia. We will exist good market monopoly in the
market. So the enterprise will have good market usage and market share after it starts producing
at its full capacity.
3.4. Sales Projection

The basic income of the enterprise is the price of projector stand. There are three types of stand.
These are:
 Wall mounted
 Floor stand

 Universal mounted
Based on increasing size of product respectively, the largest size of projector stand is the most
expensive. The demand for projector stand is getting increased. Thus, the expected income
through selling projector stand is accurate and reliable.
We will produce five any three types of projector stand per day. Then among the five, there are
three floor stands, and the other is wall and universal mounted projector stand. We have seven
days per week
Table 3.1. Types of projector stand and estimated sale of cost
Types of Amount of Product Price Sales of Item

projector stand (number of stand per (ETB per a stand) (ETB per week)
week)
Wall mounted 7 2700 18,900
Floor stand 21 3500 73,500
Universal stand 7 4650 32,550
Total 35 10,850 379,750
Working days per a month = 18 days (According to Ethiopian major citizens religion), so total
sale of lcd projector stand per a week, a month, a year and a decade is expressed as follows;
Table 3.2 total sales value of LCD projector stand specified time.

Total sale per a month Total sale per a year Total sale per a Total sale per a
(million ETB) (million ETB) decade quarter century
(million ETB) (million ETB)
2.2491 26.9892 269.892 674.73
Table 3.3 sale of projection of LCD projector stand for next five consecutive years
Year(G.C) Input Estimated Estimated Total cost Estimated sales

material processing cost machine part per month
cost per per month (50% cost per month (additional 25%
month of material cost) (5% of total of total cost)
machine cost)
2019 250,000 60,000 45,000 355000 443750
2020 300,000 110,000 45,000 455000 568750
2021 350,000 160,000 45,000 555000 693750
2022 400,000 160,000 45,000 605,000 756250
2023 450,000 210,000 45,000 705,000 881250
Average cost 668750

per month
The product’s sales will be changed under different conditions like
 Market weakening
 Unexpected competitor entrance to the market
 Shortage of raw material and machine failures
Workers status
3.5. Access to market outlets

The potential of buyers to buy the LCD projector stand is high, because there are many
individuals and Organizations who managed their money to. Due to the existence of this high

demand of projector stand, it is easy to estimate the market need. This and other related issues
raised the potential of buyers. The product can be distributed in two systems.
Firstly, transporting the LCD projector stand to the site of customers using the firm’s lorry.
Secondly, distribute the product and then selling the product at the site of production without the
need of transportation cost.

CHAPTER - 4
4. Technical Feasibility
4.1. Facility needs
The technical analysis of new enterprise is primarily concerned with analyzing the following
facility needs.
 Material input and utilities

 Location and site
 Manufacturing process or technology
 plant capacity
 machinery and equipment
 Manpower requirement and civil work are the majors.
For our company, we need different facility like power, raw materials (steel), network, and
others. To perform our task we will go to use the following tools, equipment, and machines.
 Lathe machine
 Grider machine
 Welding machine
 lorry
The foundation needed is just a concrete, with a good facility of the material and water. An
ordinary for store, machine setup, and watchman house area standard is enough (approximately
800m2) in area.
4.2. Suitability of production technology

The major technology provider in Amhara metal industry and machine technology enterprise to
our business firm. The other providers are simple and manual single men, Completely
automated, and Combination of the two . Technology required for manufacturing product/service
of two or more alternative technology is available. These include:
The most common type of technology is combination of the two and also, we select it from
producing its product due to the following reasons: -
 The plant capacity is medium,

 These technologies will allow us to use local man power;

 Gives the ability to compete with others.
 Easy way of production process
4.3. Availability and sustainability of site

Our working place must be a place where different access are founded like market, raw material,
transportation, qualified labor pool and production input. Since we need small land for our site
there is no carbon emission and deforestation. Due to this reason we expect that the community
will respect our business. From our business we also expect that high profit and it will increase
economical growth rate of the country. Factors that we have to consider while selecting the site
of enterprise
 Availability of costumers
 Access to raw material
 Suitability of working condition
 Accessibility to market
 Accessibility of labor
 Community receptiveness
 Suitability of land and easy accesses to transportation and so on.
4.4. Raw materials

Basic raw material to LCD projector stand product manufacturing enterprise is steel. For our
manufacturing company we need raw materials starting from early design up to the distribution
of projector stand. These raw materials are available in the present and future market. The raw
materials that we are going to use are locally available, therefore they have low cost.
4.5. Other inputs

4.5.1. Availabilities of Labor and other Requirements
Total of 20 man-powers can handle the operation of the enterprise easily. From those the
founders are five individuals. The staff can have certificate, diploma or degree to look after
specific tasks at plant except qualified on major staff, senior mechanic and managerial staff. It is
not complex to get labor cost in the community, because there are people who are redundant to
work.

The last thing to be considered here is the way of getting qualified management personnel. We
mentioned in the above for low skill profession, it is not difficult to get a good man. In high level
of profession, the best way is to give a guarantee to workers in salary and safe working
condition. Thus, simply showing the ability of the enterprise growth and increasing the wage rate
to the worker is the best way to get qualified management personnel. The salary of different skill
level labor workers are shown in below the table.
Table 4.1.Total cost of availability of labor, skill level and other requirement
No. Profession No. of Skill level Total Salary

worker month (ETB)
1 Manager 1 Degree in management 7,000
2 Office secretary 1 Diploma in computer 2,500
3 Operator 2 Diploma in machining 10,000

and 2 years’ experience
4 Assistant operator 2 Diploma with 0-year 8,000

experience
5 Watchman man 1 Who have been in 2,000

military service
6 Cleaner 2 Certificate in any 4,000

discipline
7 Chief mechanic 2 Diploma in machining 14,000

maintenance and 2 years’
experience
8 Mechanic 1 Diploma in 6,500

machining maintenance,
and above
9 Market and sell 3 Degree in marketing and 5,000

supervisor 1 years’ experience

10 Driver 1 5th level driving license 20,000
11 Store man 1 Complete 10+3 and 2,000

above
12 Labor for loading 3 Complete grade 10 and 9,500
& unloading raw above
materials
Total 20 80,500

CHAPTER - 5
5. Financial feasibility
5.1. Estimate the total capital requirements
It is the overall capital needs to start the project. This capital requirement for the enterprise
includes:
 Machines and equipment's

 Building and infrastructure
 Furniture and office equipment
 Raw material
The main thing to meet this need is to take loan from the central government and saving.
5.1.1. Land and building cost

The total land required for the enterprise is about 800 square meters for building and installation
place of the machine. But 450 square meters are used for machine setup and the others are listed
below
Table 5.1 Estimated cost of land, building and infrastructure
No Description Area (square meter) Construction cost(ETB)
1 Level place of foundation of the 450 35,000

machine
1 Office room 150 200,000
2 Watchman room 50 20,000
3 Shower and toilet Room 50 50,000
4 Store Room 100 80,000
5 Total 800 385,000

5.1.2. Machines and equipment's cost

Table 5.2 Estimated cost of machines and equipment's
No Machine name Quantity Cost of machine(ETB)
1 Basic machine for 500,000

production (lathe,
grinder, welding
such likes)
2 lorry (FSR) 1 1,500,000
3 Total 2,000,000
5.1.3. Furniture and Office equipment

Furniture and other office equipment required for the enterprise are:
 Shelf
 Table and chair
 Computer and writing materials etc.
Table 5.3 Estimated office equipment cost
No Item quantity Cost (ETB)
1 Shelf 2 10,000
2 Table and chair 5 10,000
3 Computer 3 35,000
4 Writing material ………….. 5,000
Total 60,000
This furniture and office equipment will account as about 60,000 birr.
5.1.4. Raw materials and labor cost

The cost of Raw materials, which is used for stone crusher machine and labor cost are listed
below;
Table 5.4 Estimated raw materials and labor cost

No. Cost type Amount of ETB
1. Steel material 10,000
3. Other accessories 10,000
4. labor 80,500
Total 100,500
5.1.5. Total capital requirement cost

Total capital requirement cost is the summation of the above listed items (land and building cost,
machines and equipment's cost , furniture and office equipment cost and the last one is raw
material and labor cost). They are expressed as the following;
Table 5.5 estimated total cost of requirement
No Item Total cost(ETB)
1 Land and building cost 385,000
2 Machines and equipment’s cost 2,000,000
3 Furniture and office equipment’s cost 60,000
4 Raw materials and Labor cost 100,500
Total 2,545,500
5.2. Estimate the Equity and Credit Needs

The personal investment of the owner or owners in a business is called equity capital and it is
sometimes called risk capital because these investors assume the primary risk of losing their
funds if the business fails. It requires no repayment unlike the form of debt.
Debt capital is the external financing that a small business owner has borrowed and must repay
with interest.
Credit capital is a form of debt capital in which the resource is bought by a price which will be
paid in the future.
Debt to equity levels is a long term solvency ratio that indicates the soundness of long term
financial policies of the company. It shows the relation between the portion of assets financed by
creditors and the portion of assets financed stockholders.

5.2.1. Sources of Equity Capital

Personal savings: The entrepreneurs, our self should take for startup money from our own
pockets or on our pool of personal savings. It is the least expensive source of funds available. If
the entrepreneur is not willing to risk his own money, potential investors are not likely to risk
their money in the business either. Hence, it is possible to get 15,000 birr from personal saving
of ourselves.
Friends and Relatives: After emptying our own pockets, entrepreneurs should turn to our friends
and relatives who might be willing to invest in the business venture. We can get 60,000 birr
from our friends and relatives.
Partners: Before entering into any partnership arrangement, we must consider the impact of
giving up some personal control over operations and of sharing profits with one or more partners.
We can get 50,000 birr from our partners.
5.2.2. Sources of Debt Capital

Commercial Bank of Ethiopia: Commercial bank of Ethiopia can give short-term loan (repayable
within a year or less) and medium term loan (above one year but less than five years) as a
working capital. It can also give a long term loans (maturing in more than five years). We can get
2 million birr as a short term loan from commercial bank of Ethiopia.
Credit Unions: nonprofit organizations but borrow for members. Amhara Credit and Saving
Institute (ACSI) is an example of credit union in the place where the project is going to be
installed. We can get one million birr from ACSI.
Trade credit: It is credit given by suppliers who sell goods on account. It must be paid in 10
months. Getting suppliers to extend credit in the form of delayed payments usually is much
easier for a small business than obtaining bank financing. The cost of raw stone shall be
extended for about 10 months. Hence, we can get half million birr in the form of trade credit.
Note; Ethiopian commercial bank borrows us with an interest rate of 10% per a year. And the
interest rate of the credit union, ACSI is 15% per a year.
5.2.3. Debt to Equity Level

We have planned to get an initial capital from different sources of debt capital and different
sources of equity capital.

Debt capital to be returned for Commercial Bank of Ethiopia within a year can be calculated as:
 Borrowed capital = 2 million birr

 Interest rate = 10%
 Debt capital to be returned for Commercial Bank of Ethiopia is;
 Borrowed capital(1+r)
 2 million(1+0.1)
 2.2 million birr
Debt capital to be returned for Amhara Credit and Saving Institute within a year can be
calculated as:
Borrowed capital = 1million birr
Interest rate = 15%
Debt capital to be returned for Amhara Credit and Saving Institute
Borrowed capital(1+r)
1million(1+0.15)
million birr
Total debt capital to be returned
Debt from bank + debt from credit union + debt from trade credit
(2.2 +1.15 + 0.5) million birr
3.4 million birr
equity capital from (personal saving + relatives+ partners)
(15,000 + 50,000 + 50,000) birr
115,000 birr
5.3. Budget expected costs and returns of various alternatives

In this portion we will try to analyze fixed cost, variable cost, profit, profit margin, sell return,
total cost and others.

Fixed costs: The fixed costs are the items of expenditure which remain more or less constant
irrespective of the volume of production. Some important items under fixed costs are
depreciation of plant and machinery and building, interest on capital, supervisory charges, cost of
lighting, heating and cleaning the works, operator charges, rent of building etc.
\Variable costs: Variable costs are those items of expenditure which vary with the capacity of the
production. Some important items under variable costs are direct material cost, cost of
power/fuel consumed, cost of tools used, cost of consumable stores, repair and maintenance
charges, storage charges, etc.
Table 5.6 Total expected cost
No. Cost type Amount of money in ETB
1. Fixed cost(raw material, land and building, (100,500+385,000+2,000,000)

machinery) = 2.4855 million
2. Variable cost (steel per kilogram, cost of labor to (50,000 + 80,500)

produce projector stand) = 130,500
= 0.1305 million
Total = 2.616 million
5.3.1 Total revenue and profit

Revenue is the money a business makes from sales. The total amount of money a business
receives from its sales is called total revenue. By calculating the total revenue a business can
then work out if they have made a profit or a loss.
Total revenue = quantity sold x selling price
It is known that based on our government the seller should pay 20% of the total sale.
Thus;
Profit =Total revenue – total cost

Of course, all businesses want to make a profit. However, if total costs are greater than total
revenue then the business will make a loss.
It is known that based on our government the seller should pay 20% of the total sale. Thus;
Total revenue per month = sale (1-0.2),
From sale projection (Table 3.3)
average sale = 668750ETB per month
Total revenue per month = 668750 (1-0.2) = 535,000 ETB
5.3.2. Calculating the break-even point

Break-even point occurs when the cost of producing commodity is equal to the total revenue of
the commodity. Thus, it is necessary to show the major economic analysis as follow.
Thus, it is necessary to show the major economic analysis as follow:
Cost Function = Variable cost + Fixed cost
= (130,500x+2,485,500) ETB
Revenue function = 535,000 X…………………………ETB
Where: X is number of months
Profit function = R(x) - TC(x)
P(x) = 535,000 X - (130,500X + 2,485,500)
P(x) =404,500X - 2,485,500
5.3.3. Estimated sales/usage needed to break-even

Now we are going to calculate the break-even point. It is the point in which profit function (total
cost and revenue (income) cost becomes zero.
404,500X - 2,485,500 = 0
404,500X = 2,485,500
X = 6.145 months
X = sales after 6.145 months.
These shows after 6.145 months from the start profit will be on to the company

Birr (million) Total income
Total cost
Breakeven point Variable cost
3.287
Fixed cost
6.145 Time (month)
Figure 5.2 Break-even point analysis of the business
Thus, Break-even provides a simple and easily understood representation of costs, revenue and
potential profit. Break-even is also useful as part of a business plan and can help when seeking a
loan. The amount of revenue at the break point calculated as below
Revenue (at break-even) = 535,000 X ETB
= 535,000 x6.145 ETB
=3,287,372 ETB
5.3.7. Limitation of Economic analysis

The following shows the limitation or the constraints that faced during economic analysis.
The estimation does not consider the future unexpected problems.
Calculated using reliable, accurate financial information (information reflects true cost picture)
Calculated consistently from period to period
Carefully interpreted in the proper context, considering there are many other important factors
and indicators involved in assessing performance etc

CHAPTER - 6
6.1. Organizational (Managerial Feasibility)

The final organizational structure of the proposed project depends on the management style and
control techniques of the partners in the business. Organizational setup, a structure for this
particular division is seems like as follows.
6.1. Business structure

Before start this business, we should get a licenses by apply this project to the government. This
business must be free from illegal activities it must be formal. The legal activities we should
apply are:-
 Paying tax
 Use qualified material
 Deliver in proper selling price
 Don’t cheat customers
 Selling quality product
In order to perform this business we should have a good agreement between each members or
founders. There are various forms of legal structure of organizations to organize a small
business. We evaluate each of these available forms of legal structure by considering the merit
and demerits of each structure. Then we select the one which is optimal for the establishments of
the enterprise. That is called partnership. As definition, partnership is the association of two or
more people to carry as co-owner of the business where the relation is based on agreement.
Establishment of our enterprise is due to the association of five peoples (our group), where the
relationship is based on an agreement. The partner decides to use the available asset of the
enterprise to cover the debt. The following are advantage of partnership forms of legal structure,
Which are critical for the enterprise:-
 Increased source of capital.

 Easy of startup
 Personal supervision and.
 Minimized risk.

In such way, we are selecting the appropriate forms of legal structure for the enterprise. The
decision making process is done mostly by general manager and in some case the owner of the
business that is us will involve in the decision making process. The organization structure of this
business is shown as follows
General Manager
Deputy
Chief
Auditor Manager
Accountant
General
Product and Human Resource Business and Quality Control

Technique Management Property and Customer
Department Department Management Service Officer
Manager m
Marketing and
Technical and
Input
Input Supply
Supply and
and
production section
Purchasing Sales
Head
head
Department Officer
Figure 6.1 Proposed legal structure of the business
6.2. Business Founders

Since we have the provision of leading the workshop and business is established by ourselves so
we participate actively. We are five members in founding the business.
2. Aklilu Sibhat................... Manager

3. Tenaw Degu .....................RDDD center
4. Biniyam Tariku ................secretary
5. Habtamu Dessie.................Operator
6. Hayimanot Yeserah............Market and supervisor

7. (For vacancy) .....................human resource manager
Since we are in the career of manufacturing and the almost the whole business is established by
ourselves. So, we will participate in some of a basic work station in the enterprise including
managerial activities, machine technician (maintenance and installation), operator, RDD center
(research, design and development center), marketing, financing and purchasing property and
other part of job division in the company. As you know, the workers will have the skill and
ability to do the project. To update our workers skill, we will also prepare skill and experience
type training or seminars.

CHAPTER – 7
7. Conclusion and recommendation

7.1. Conclusion
This feasibility study report has investigated the possibilities of installing LCD projector
manufacturing machine at Burie, west Gojjam. The study has assessed the marketing aspects,
the technological aspects, the resource requirements, the organization and management aspects
of the project, and the financial commitments of the project. The project has been evaluated in
terms of the return that it generates to the investor, the present value of the future cash flows of
the project expected throughout the project life and the number of years that the project takes to
pay back all the initial investment made on the project. The project is found acceptable by all of
the above evaluation criteria.
7.2. Recommendation
The future entrepreneurs whose will study about the feasibility this business we are
recommended to:
They can check the feasibility by collecting primary data from customers, like using questioner,
and interview and so on.
The government shall to invest in the project since the revenue generated from the business helps
the community to cover part of its expenses from its own sources

Reference
1. https://en.wikipedia.org/wiki/LCD projector mount
2. https://en.wikipedia.org/wiki/lLCD projector
3. Ms. Tsehay S. “lecture notes on entrepreneurship
4. www.wikipedia.com / feasibility study
5. Text book, product design and development, 2th edition.

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Feasibility Study On Production of LCD Projector Stand 2011 E.

Bahir Dar University

Bahir Dar Institute of Technology

Submitted to: Mss. Tsehay S.

Submission Date 21/05/2011 E.C.

Entrepreneurship for engineer Page i

Name ID No. Signature Date

1. Aklilu Sibhat……………………………0701261 ------------------ ---------------

1. Mss. Tsehay S. ---------------------- -----------------------

Entrepreneurship for engineer Page I

Entrepreneurship for engineer Page II

Entrepreneurship for engineer Page III

Abstract ......................................................................................................................................... III

1.1. Background ...................................................................................................................... 1

2. Business Description ............................................................................................................... 3

2.1. How our business plan makes money? ............................................................................ 4

2.2. Definition of the project and alternative models .............................................................. 4

2.2.1. The type and quality of product ................................................................................ 4

2.2.2. Technical process of the industry ............................................................................. 5

2.2.3. Size, location and kind of input ................................................................................ 5

2.2.4. Work plan time horizon ............................................................................................ 5

2.3. Relationship to the surrounding geographical area .......................................................... 6

2.3.1. Economic and Social impacts to the community ...................................................... 6

2.3.2. Environmental impact to the surrounding area ......................................................... 6

2.4. Name of the enterprise ..................................................................................................... 7

2.5. Generation of ideas........................................................................................................... 7

3. Market Feasibility ....................................................................................................................... 8

3.1. Enterprise description ........................................................................................................... 8

3.1.1. Size, scope and market of the industry .......................................................................... 8

3.1.2. Future direction of the industry ..................................................................................... 8

Entrepreneurship for engineer Page IV

2.1.4. Life cycle of the industry ............................................................................................... 9

3.2. Enterprise competitiveness ................................................................................................. 13

3.3. Market Potential ................................................................................................................. 13

3.4. Sales Projection .................................................................................................................. 13

3.5. Access to market outlets ..................................................................................................... 15

4. Technical Feasibility ................................................................................................................. 17

4.1. Facility needs...................................................................................................................... 17

4.2. Suitability of production technology .................................................................................. 17

4.3. Availability and sustainability of site ................................................................................. 18

4.4. Raw materials ..................................................................................................................... 18

4.5. Other inputs ........................................................................................................................ 18

4.5.1. Availabilities of Labor and other Requirements.......................................................... 18

5.1. Estimate the total capital requirements .............................................................................. 21

5.1.1. Land and building cost ................................................................................................ 21

5.1.2. Machines and equipment's cost ................................................................................... 22

5.1.3. Furniture and Office equipment .................................................................................. 22

5.1.4. Raw materials and labor cost ....................................................................................... 22

5.1.5. Total capital requirement cost ..................................................................................... 23

5.2. Estimate the Equity and Credit Needs................................................................................ 23

5.2.1. Sources of Equity Capital ............................................................................................ 24

5.2.2. Sources of Debt Capital ............................................................................................... 24

5.2.3. Debt to Equity Level.................................................................................................... 24

Entrepreneurship for engineer Page V

5.3. Budget expected costs and returns of various alternatives ................................................. 25

5.3.1 Total revenue and profit ............................................................................................... 26

5.3.2. Calculating the break-even point ................................................................................. 27

5.3.3. Estimated sales/usage needed to break-even ............................................................... 27

5.3.7. Limitation of Economic analysis ................................................................................. 28

6.1. Organizational (Managerial Feasibility) ................................................................................ 29

6.1. Business structure ............................................................................................................... 29

6.2. Business Founders .............................................................................................................. 30

7. Conclusion and recommendation .............................................................................................. 32

7.2. Recommendation ............................................................................................................... 32