Report on Enterprise Development

8/3/2019 Report on Enterprise Development

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A STUDY REPORT ON

CONDUCTING VOCATIONAL TRAININGS

UNDER FRANCHISING MODEL

SUBMITTED TO

KAILALI MULTIPLE CAMPUS, DHANGADHI

Internal assessment for the degree of Master of Business

Studies (MBS)

Submitted By:

RAM KUMAR CHAUDHARY

MBS SECOND YEAR

ROLL NO: - 25

REGD. NO:-

In the partial fulfillment of the requirement for the degree

of Masters in Business Studies.

Date: 2065/11/20


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KAILALI MULTIPLE CAMPUS

MANAGEMENT FACULTY

RECOMMENDATION

This is to certify that the field work report

Submitted By:

Ram Kumar Chaudhary

"A STUDY REPORT ON CONDUCTING VOCATIONAL

TRAININGS UNDER FRANCHISING MODEL

Has been prepared as approved by this campus in the prescribed

format of the Faculty of Management. This field work assignment

report is forwarded for examination.

Supervisor Name: Head of Department Name:

Signature: Signature:

Date: Date:

Campus Chief Signature:

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TABLE OF CONTENTS

1. Acknowledgement 4

2. Chapter 1

1.1 Introduction 5

1.2 Background of the field work 6

3. Chapter 2

2.1 Business Concept 6-7

2.2 Description of enterprise 7

2.3 Business Growth Potential 8

2.4 Market and Target Groups 8

2.5 Competitors and Competitors Analysis 9

2.6 Monitoring of the trainings 10-12

2.7 Training trends 13

2.8 Proposals 14

2.9 Payments under Franchising 15-16

2.10 Financial Plan 16-19

i. Opening Balance Sheet

ii. Projected Income Statement

iii. Projected Cash Budget Statement

iv. Projected Cash Flow Statement

4. References 20

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ACKNOWLEDGEMENT

I feel indebted to Professor Dr. Hem Raj Pant, Campus Chief of Kailali

Multiple Campus, Dhangadhi for providing valuable comments and suggestions

in writing the report. I also like to express thanks to Kailali Multiple Campus

family for providing reference documents for writing the report.

At last but not least, I would like to express lots of thanks to F-SKILL and

Devotee Trade Center for providing valuable data and field officer Mr. Khadak

Bahadur Dhami for his valuable comments and suggestions. In the same way Iwould like to thank to Mr Krishna Bahadur Mahara Chhetri, Mr Pramod Pathak,

Mr Chetman Khadka and Mr Sanjay Chaudhary for providing valuable data and

sharing experiences about working in the franchising model. I also like to thank

my friends Binaya Chaudhary, Hira Chaudhary and Suresh Chaudhary for

providing their valuable comments.

Ram Kumar Chaudhary

MBS Second Year

Kailali Multiple Campus

Dhangadhi, Kailali

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CHAPTER 1

1.1 INTRODUCTION

Concept of franchising

Meaning of franchise:

Formal permission given by a company to some body who wants to sell its goods and

services in a particular area or formal permission given by a government to some body

who wants to operate public services as a business is called Franchise.

Franchising: Agreement between Franchiser and Franchisee is called Franchising

Franchiser: A company or an organization who gives franchise to some body is called

Franchiser.

Franchisee: A person or a company and an organization that has given franchise are

called Franchisee.

Features of Franchising:

1. There are two parties in franchising.

a. Franchiserb. Franchisee

2. Business agreement between franchiser & franchisee.

3. Franchiser is familiar in the society & has earned goodwill for the product.4. Franchisee wants to collaborate with franchiser for product name, Brand

name, technology. Management & others.

5. Franchisee pays a certain amount to franchiser as a royalty.

Agreement

5

1. Familiar2. Goodwill

3. High coverage of

Market share

4. High profit

5. ConsumerSatisfaction

6. Qualitative Product

Franchiser

Brand Name

Technology

Skilled Manpower

Management

Royalty

Franchisee

Wanting

Franchising with

established

company

(Franchiser)


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1.2 Background of the studyThis is the day of economic achievement. The development of the nation depends

upon the economic activities conducted within the country and outside the country. Thebusiness activities also directly depend upon the manpower available for the efficient

operations of the business. As we see the population is increasing day by day and more

and more people are entering in the employment market. The development is not taking

as the pace of population thus creating unemployment problems. The traditionaleducation is also not sufficient for competing in the employment market. Thus, there is

need of technical education. In the developing countries like Nepal, most of the people

are under poverty line and unable to afford for the education. They have problem of handto mouth. In order to support these groups there is need of vocational trainings that can

directly link them with the employment market.

CHAPTER 22.1 Concept of Business

The conduction of mobile trainings based on the demand of employment market

under franchising model is a good business for earning high benefits. The trainings are

demand driven.

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Core competencies of Business

Demand Driven

Employment oriented

Mobile Trainings

Quality trainings

Business Focus

Built-in strong follow up support mechanism

Skill plus and training plus mechanism

2.2 Description of Enterprise

F-SKILL/Helvetas is very familiar in the society for mobile training package.Franchising Skill and Know How Imparted at Local Level (F-SKILL) by Helvetas havebeen involving in mobile skill training since 10 years; training package of skill Nepal

matched the market demand. Because of 10 years experience and learning in mobile

training F-Skill has goodwill in this sector. Mobile training is the product of F-SKILLL.F-SKILLL is franchiser that provides the brand name F-SKILL@ to franchisee.

Franchisee can use this brand name for conducting the training.

GainfulEmployme

7

F-SKILL

QualifiedFranchisees

Training andEmployment

YOUTH ATWork

CoreWorking

Principles

Training package developmentQuality Management

Regular updates on labor marketIntroduction of innovative new trades

F-SKILL Support:Selection of motivated trainees fromdisadvantaged groupsTraining modules compatible with OSSSkill testQuality managementMonitoringSkill and Training plusPost training monitoring and assessment

F-SKILL Support:Rapid Market AssessmentQualified trainersLinkage and networking with employmentmarket

Input Process Output


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Devotee Trade Center is a franchisee working with F-SKILL in conducting

mobile trainings. This organization was established in 2003 B.S. by registering in the

Chamber of Commerce and Industry, Kailali. This organization first commenced to workin Dhangadhi Municipality by piloting the basic electrical house wiring and brick molder

trainings. Today this organization has benefited more than 2000 graduates by delivering

skills and linking them in the employment markets.

Working Modality under Franchising of F-SKILL

1. Conduct Mobile training package.2. Support to franchisee (Financial, Trainers, Others)

3. Monitor and evaluation

i. Pre-training evaluation

ii. Mid-term evaluationiii. Post training evaluation

4. Emphasis on employment (Local skill requirement and employment

possibility survey)

5. Systematic cash provide methodi. 50% after training completion

ii. 15% after job placement (after 3 months)iii. 35% after job continue (6 months)

6. Provide information to franchisee about potentiality of employment sector

and training methodology (ToT)

2.3 Business Growth Potential

The franchising business is being popular day by day. We can say that there are

dual benefits both to the service takers or graduates taking trainings and to the franchisee

also by getting profits. As we see the population is increasing and the life style of people

is getting changed, there is need of high earning with respect to the economic

environment of the country. Most of the youths are uneducated and among them there are

high school dropouts. Also most of the youths are unskilled labor. The technology of

working has changed and the employers require skilled and semi-skilled workers for the

reliable works. So, there is more chance of business growth. The trained graduates can

not only get work with in the country but also in foreign countries. The construction work

is increasing day by day. People residing in villages and urban areas require housing and

bricks are utilized for those purpose. So, to produce the qualitative bricks and increase

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Sound economic status

Availability of sufficient resources

Good market linkages with the employers and stakeholders

Weaknesses of the Business The demand of employment market gets changed quickly.

Training courses needs to be updated as per the demand of the market

which is expensive requires more time.

Opportunities

The construction work is taking pace of development, so there is more

chance of conducting large number of trainings.

There is good possibility of intervention in new places.

Threats

The political situation of the country is not so stable.

Social environment may affect the trainings.

2.6 Monitoring of the trainings

The monitoring of the training is must for the proper conduction of trainings

and making the trainees qualified so that they can compete in the employment market.

The monitoring will be done by the field staffs and the coordinators. In the same way

time to time visit will be done by the management team and the F-SKILL staffs.

Checklist for Monitoring

S/No Task

Trainer

Trainee

Overall

1 Training Schedule

2 Course Information

3 Lesson Plan

4 Handouts (Reference Material) 5 Training Manual/ Skill

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2. Which items do you think are difficult till now?

3. Is the training as per your expectation or not? If not why?

4. Do know the name of organization/s providing the training? If yes,please write down name/s of the organizations.

1. _________________________________________________________

2. _________________________________________________________

3. _________________________________________________________

5. Do you have any grievance related with this training, pleasemention.

6. Please mention your suggestions, advices and comments formaking this training more effective.

POST TRAINING EVALUATION FORMS

Franchisee Name: ____________________________________________________

Training Venue: ______________________Trade Name: _____________________

Date: ______________________ No. of Trainees Present: ___________________

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1. Will the course help you to be employed or self-employed?

2. Do you think that the course you recently completed is useful inyour

present job? What do you think for future? Please mention.

2.1 If, foreign employment, which country do you plan to go?

2.2 Why do you wish to go for foreign employment?

3. What were the most useful subjects in the training?

4. What were the least useful topics of the training?

5. What subjects could have been included?

6. Would you recommend this course to others? If not, why?

Yes No. Not sure Total

No. % No. % No. % No. %

Employment Self

Employment

Foreign

Employment

Total

No. % No. % No. % No. %

Yes NO Total

Number % Number % Number %

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2.7 Training trends

Devotee Trade Center has done a good job in conducting the mobile brick

molder trainings. It has tried its best to achieve the targeted goals of the organization. The

trends of the trainings conducted are as follows:

Year No. of Trainings No. of Trainees

2005 14 280

2006 24 520

2007 30 660

2008 40 850

2.8 Proposals for training

Training Cost

Brick Molder Training

Number of Trainees: 25 Training duration: 45 days

Training Site:

Training Start Date:

Training Closing Date:

SN Particulars Amount Rs Remarks

1 Survey and promotion expenses 20,000.00

2 Trainees Selection and orientation 10,000.00

3 Coaching and Counseling 10,000.00

4 Training hall rent @ Rs 4000x2 months 8,000.00

5 Main Trainer salary Rs 400 X 60 days 24,000.00

6 Co-trainer salary Rs 250 X 60 days 15,000.00

7 Coordinator Salary Rs 4,000 X 2 months 8,000.00

8 Training material cost (perishable) 15,000.00

9 Training equipments (50% depreciation) 15,000.00

14

Training Trends

14

24

30

40

0

5

10

15

20

25

30

35

40

45

1 2 3 4

Year

NumberofTrainings


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10 Training tools (25% depreciation) 5,000.00

11 Machineries (contract or depreciation) 5,000.00

12 Snacks cost (25 X 60 X 35 days) 52,500.00

13 Stationery expenses 5,000.00

14 Transportation cost 5,000.00

15 Tools maintenance 2,500.0016 Photography cost 3,000.00

Total Cost 1,80,000.00

Per trainee cost 7,200.00

2.9 Payments under FranchisingUnder the franchising model of working with F-SKILL, the franchisee Devotee

Trade Center gets paid its amount in three installments. Initially the franchisee invests its

own capital for conducting trainings. The franchisee gets paid incentives in second and

third installments based on the outcome of trainees. The employment or self-employment

outcome must be at least 80% to get the full payment of capital invested. If the result isfound to be 80% or greater then the franchisee is provided incentive based on the

category of trainee enrolled in the trainings.

Systematic cash provide method

i. 50% after training completion

ii. 15% after job placement (after 3 months)

iii. 35% after job continue (6 months)

Franchisee Reimbursement Calculation

Calculation of Outcome and Payment

A B C D E F G H I

For

dropouts

Cate

gory

A=input B=input C=A+B D=0.25*

C

E=C-D F=0.75*B G=0.25

*F

H=E-(F-G) G=E

Training

Cost NRs

Incentive Outcome

payment

Royalty Net

Outcome

Payment

75% of

Total cost

Royalty Deduction

of

Dropouts

Paym

to

Fran

ee

A 10,500 12,000 22,505 5,626 16,879 7,879 1,970 10,970 5,909

B 10,500 9,900 20,405 5,101 15,304 7,879 1,970 9,395 5,909

C 10,500 7,600 18,105 4,526 13,579 7,879 1,970 7,670 5,909

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Category of Trainees

A B C

Number of trainees23 2 0

Total Outcomes

388,211

30,608 -

Outcome Pymt to be made for 100 % success

rate (over six months after training)

418,81

9

Franchisee's Investment for training

262,62

5

Profit

156,19

4

For 100% success rate

Installments ACTUAL

Deduction

for dropout

With

adjustments Month of Pymt

Installment I

209,4

09 50% 209,409

After trainingcompletion

Installment II

62,8

23 15% 62,823

After three monthsof training

completion

Installment III

146,5

87

depends on

success rate

After six monthsof training

completion

Total

418,8

19 272,232

2.10 Financial Plan

Financial plan is an important plan for an organization. Every business firms

needs finance for smooth operation of a business. Therefore business firms should make

financial plans for the operation of the business in systematic manner to achieve the

objectives.

i. Opening Balance Sheet

Opening Balance Sheet

As on 31st

December 2005

Profit margin (all groups) 0.59

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Capital & Liabilities Amount in

NRs

Assets Amount in

NRs

Owners Equity 48,94,000 Cash in Hand 1,00,000

11% Long term loan 40,00,000 Furniture 2,96,000

Machinery & Equipments 84,68,000

Preliminary Expenses 30,000

Total 88,94,000 Total 88,94,000

ii. Projected Income Statement

Projected Income Statement for the Year 2006, 2007 and 2008

ParticularsYear

2006 2007 2008

A. Revenue from trainings

Less: Operating Expenses

Salary

Depreciation

Advertisement

Office stationery

Interests

Preliminary Expenses Written Off

Electricity Expenses

Communication Expenses

Repair & Maintenance Expenses

House Rent

Fuel Expenses

Miscellaneous Expenses

B. Total Operating Expenses

Net Income Before Tax [A-B]

Less: 30% Tax

Net Income After Tax

5,65,20,000

1,05,07,500

18,61,000

50,000

10,000

4,40,000

10,000

1,00,000

20,000

30,000

3,60,000

12,000

20,000

1,34,20,500

4,30,99,500

1,29,29,850

3,01,69,650

6,21,72,000

1,15,58,250

18,61,000

45,000

11,000

2,86,000

10,000

1,10,000

22,000

33,000

3,96,000

13,200

22,000

1,43,67,450

4,78,04,550

1,43,41,365

3,34,63,185

6,83,89,000

1,27,14,075

18,61,000

40,500

12,100

1,32,000

10,000

1,21,000

24,200

36,300

4,35,600

14,520

24,200

1,54,25,495

5,29,63,505

1,58,89,052

3,70,74,454

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Return on Investment 30.169% 33.463% 37.074%

Notes:

1. It is assumed that there will be 10% increase in training revenues each year.

2. Depreciation is assumed as fixed.

3. Advertisement will be reduced in coming years by 10%.

4. Amount of loan will be paid in three installments amounting Rs 14 lakhs in 2006,

Rs 14 lakhs in 2007 and Rs 12 lakhs in 2008.

5. There will be 10% increase in salary and other operating expenses.

6. Preliminary expenses will be written off by equal amounts in each year.

iii. Projected Cash Budget Statement

Projected Cash Budget Statement

for the Year 2006, 2007 and 2008

2006 2007 2008

Opening Cash Balance 100,000 30,740,650 64,674,835

Add: Cash Receipts

Revenues from training 56,520,000 62,172,000 68,389,000

A) Total Cash Receipts 56,620,000 92,912,650 133,063,835

Less: Cash Payments

Salary 10,507,500 11,558,250 12,714,075

Advertisement 50,000 45,000 49,500

Office Stationeries 10,000 11,000 12,100Interests 440,000 286,000 132,000

Electricity Expenses 100,000 110,000 121,000

Communication Expenses 20,000 22,000 24,200

Repair and Maintenance 30,000 33,000 36,300

Fuel 12,000 13,200 14,520

House Rent 360,000 396,000 435,600

Tax paid 12,929,850 14,341,365 15,889,052

Miscellaneous 20,000 22,000 24,200

B) Total Cash Payments 24,479,350 26,837,815 29,452,547

Cash Balance [A-B] 32,140,650 66,074,835 103,611,288

Less: Paid bank loan 1,400,000 1,400,000 1,200,000

Ending Cash Balance 30,740,650 64,674,835 102,411,288

Particulars

Year

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iv. Projected Cash Flow Statement

Projected Cash Flow Statement

For the Year 2006, 2007 and 2008

Particulars

Year

2006 2007 2008

Cash available from operating activities

Cash receipts from trainings 56,520,000 62,172,000 68,389,000

A) Total cash receipts 56,520,000 62,172,000 68,389,000

Cash payment to employees, suppliers

and other expenses

Salary 10,507,500 11,558,250 12,714,075

House Rent 360,000 396,000 435,600

Office Stationeries 10,000 11,000 12,100

Advertisement 50,000 45,000 49,500

Electricity Expenses 100,000 110,000 121,000

Communication Expenses 20,000 22,000 24,200

Fuel 12,000 13,200 14,520

Repair and Maintenance 30,000 33,000 36,300

Miscellaneous 20,000 22,000 24,200

B) Total cash payment to employees,

suppliers and other expenses 11,109,500 12,210,450 13,431,495

Payment of Interests and Tax

Interests 440,000 286,000 132,000

Tax 12,929,850 14,341,365 15,889,052

C) Total Cash paid for interest & tax 13,369,850 14,627,365 16,021,052

I. Net Cash available from operating

activities [A-B-C] 32,040,650 35,334,185 38,936,453

Cash available from investing activities

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II. Net Cash available from investing

activities 0 0 0

Cash available from financing activities

Payment of bank loan

(1,400,000

)

(1,400,000

) (1,200,000)

III. Net Cash available from financing

activities

(1,400,000)

(1,400,000) (1,200,000)

Total cash available [I+II+III] 30,640,650 33,934,185 37,736,453

Add: Opening Cash Balance 100,000 30,740,650 64,674,835

Ending Cash Balance 30,740,650 64,674,835 102,411,288

3. References

i. F-SKILL, Annual Report 2006

ii. F-SKILL, Annual Report 2007

iii. Krishna Bahadur Mahara Chhetri, Annual Report of Devotee Trade Center

iv. Gyanumaya Bohara, A Feasibility Study Report of Nursing Home in

Dhangadhi

v.Ratnaman Dangol, Management Accounting

v. Shiva Prasad Munakarmi, Management Accounting

vi. S.S Khanna, Entrepreneurship Development

vii. www.google.com

viii. www.business.com

ix. www.fskill.org

x. Joshi Pushpa Raj, Fundamentals of Research

xi. Adhikari Rajkumar, Research methodology

xii. Elam Plus, Sub-sector Analysis Report in Brick Molder

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Report on Enterprise Development