BAHIRDAR UNIVERSITY

INSTITUTE OF TECHNOLOGY

INTEGRATED INFORMATION
TECHNOLOGY CENTER PROPOSED FOR
BAHIR DAR TOWN

FEASIBLITY REPRT ON INTEGRATED INFORMATION

TECHNOLOGY CENTER
 Executive summary

This document contains the full feasibility study of a business model proposed on the title
“INTEGRATED INFORMATION TECHNOLOGY CENTER”. The study is proposed for Bahir
Dar town having considered the population number and the institutions which work on
information technology sector. The study mainly focuses on teenagers and youths even though it
encompass all kind of people.

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Table of Contents
Chapter one.................................................................................................................................................1
1. Background..........................................................................................................................................1
1.1 Objective..........................................................................................................................................2
Chapter two.................................................................................................................................................3
[Link] of the business......................................................................................................................3
2.1 Size and scope of the business..........................................................................................................3
2.2 Type and quality of the service....................................................................................................3
2.3 The social impact on the society........................................................................................................3
2.4 The environmental impact on the surrounding...........................................................................4
2.3 Relationship to the surrounding geographical area...........................................................................4
Chapter three...............................................................................................................................................5
3. Market feasibility.....................................................................................................................................5
3.1 Enterprise description.......................................................................................................................5
3.2 Enterprise competitiveness...............................................................................................................5
3.3. Market potential...............................................................................................................................6
3.4 Sales projection.................................................................................................................................6
3.5. Access to market outlet....................................................................................................................7
Chapter four.................................................................................................................................................7
4. Theoretical feasibility..............................................................................................................................7
4.1 Determine facility need.....................................................................................................................7
4. 2 Sustainability of production technology...........................................................................................9
4.3. Availability and sustainability of size..............................................................................................10
4.4 Raw materials..................................................................................................................................11
4.5. Other inputs....................................................................................................................................12
Chapter five...............................................................................................................................................13
5. Financial feasibility................................................................................................................................13
5.1 Estimate the total capital requirement............................................................................................13
5.2 Estimate the equity and credit need................................................................................................14

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 5.3 Budget expected costs and returns of various alternatives.............................................................15
Chapter six.................................................................................................................................................19
6. ORGANIZATIONAL (MANAGERIAL) FEASEBILTY.....................................................................19
6.1. Business structure..........................................................................................................................19
6.2 Business founder.............................................................................................................................20
CONCLUSION.............................................................................................................................................20

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Chapter one

1. Background
Information technology is the most vital tool to transform a country. Now a day’s most of our
lives are becoming connected to information technology intimately, so using this technology
enables us to make our lives easier. Even though that is the case the access to those technologies
is rare in our country especially in our town Bahir Dar. It is very important to improve this
situation by taking all the necessary steps.

Through our investigation we have noticed that there are only few ICT centers in our town in
which a limited services are granted, in addition to that the price required to get access is so high
since most of them are private business.

Bahir Dar is one of the fastest growing cities in Ethiopia in which the youths and younger
generation dominates the population growth. Those new generations need recreational,
educational and sport facilities more than ever. Unfortunately those facilities are rare in the town
specially the ICT related facility.

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 1.1 Objective

The Objectives of this feasibility study are:

 To analyze the feasibility of integrated ICT CENTER business model.

 To improve and satisfy the demand on information technology.
 Creating a community of information technology.

After the completion of this study, the goals of the enterprise are:

 To provide high quality internet service both in broadband and Wi-Fi

technology for Bahir Dar town.
 To be number one educational software developers and distributors.
 To build the best youth center in the town
 Improve the shortage of IT and youth centers in the town
 To develop economy of the country.

All in all, our goal is to give ICT related services in one center for Bahir Dar town.

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 Chapter two

2. Description of the business

2.1 Size and scope of the business

The size and scope of ICT CENTER depends up on the number of employees, demands of the
customer, initial capital investment, amount of land gained and other minor factors. The ICT
business even though it is recent business model it has been growing tremendously in current
market trend. At the beginning the enterprise will be a medium sized business which has at least
ten employees.

As the business grows and sustains it will expand its service centers and employs more
employees. So that the quality as well as the number of services will be increased.

2.2 Type and quality of the service

The main services provided by this enterprise will be supplying high speed broadband and WIFI
services, software gallery, small cafeteria, computer maintenance shop, recreational green area
and entertainments zone which will contain digital gaming zone, billiard ball(pool), table tennis,
and others .

The quality of the services should exceed expectation since it is new business model there must
be some sort of uniqueness in service standard as well as customer satisfaction. The enterprise
will provide from 6Mbps to 10Mbps high speed internet service to the customers which makes it
unique in the town by quality. The software gallery will also contain various software collections
like educational, engineering, games, tutorial videos and others. Which makes it easy for the
customers to get access to those services all in one center.

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2.3 The social impact on the society
The enterprise will provide numerous benefits to the society especially for teenagers and youths
since the enterprise will provide them the access to explore more ideas through the technology
and increase their knowledge all in one center at a lower price. in addition it creates a platform
for the younger generations to participate in IT and related fields. The enterprise will also create
new job opportunity for the society.

The enterprise will try to use the abundant and available resource wisely to fulfill the need of the
community by filling the gap in information technology, it also creates a new business venture
that provide income to the entrepreneurs as well as the employees.

2.4 The environmental impact on the surrounding

The enterprise totally agrees with green economy principle which means there is no
environmental concern at all rather it will contribute to the environment by creating clean and
green areas inside the ICT center. There will be also different kind of plantations for the sake of
shade and decoration to create attractive recreational area.

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Chapter three

3. Market feasibility

3.1 Enterprise description

 In our estimation from the beginning the enterprise will be medium level as discussed before
which means the number of services provided will grow through time.
 The futurity of the enterprise mostly depends on the local customers and availability of
suitable work area (land resource), therefore if we get those things there will be room for
creating branches in other location.
 The enterprise needs to update and develop itself in accordance with the customer needs and
technological advancements, in order to stay on market while making profit.

3.2 Enterprise competitiveness

The enterprise will have competitors which provide limited number of services like internet
cafes, game houses, computer maintenance shops and other related business. But these
enterprises operate at small scale with single or couple of services on the contrary our enterprise
will collect all those types services all at one center and provides them to the customer easily,
which enables the enterprise to overcome market trait posed by the above mentioned
competitors.

In addition most of the competitors are private that means they are cost inefficient, they also
provide less quality service with slightly expensive price on the contrary our enterprise will solve
these service quality and cost issues to be successful in the market and to get acceptance by the
customers.

3.3. Market potential

Entertainment as well as information technology has a great market potential in current market
trend, nearly most of our lives are becoming dependent on it so there will be a high demand of it
on the business on the future.

The main target customers of this enterprise will be the youth population , since we have a huge
number of youngsters it is possible to say that we have a great number of potential customers.

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3.4 Sales projection

Table 1. Service sales estimation

Types of service Estimated no price per Estimated usage time per Service sale(birr)
of customers minute(birr customer (minute)
per day )
Broad band 20 1 30 20*30=600
internet
Wi-Fi internet 50 0.25 50 50*12.5=625
Cafeteria 20 - - 20*15=300
Software gallery 10 - - 10*50=500
Computer
maintenance 5 - - 5*100=500
shop
Game house 12 0.5 90 25*45=540
Pool house 40 - - 40*4.00=160
Table tennis 20 - - 20*2=40
Total 3,265
Note: the working day per month is 30 days

Total quantity produced in a year

 The summation of all services per month in birr

 (600*30) + (625*30) + (300*30) + (500*30) + (500*30) + (540*30) + (160*30) +
(40*30) = 97,950 birr
 Annual service sale for broadband internet
 18000*12month = 216,000 birr
 Annual service sale for Wi-Fi internet
 18750*12month = 225,000 birr
 Annual service sale for café
 9000*12month = 108,000 birr

 Annual service sale for software gallery

 15000*12month = 180,000 birr
 Annual service sale for computer maintenance shop

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  15000*12month = 180,000 birr
 Annual service sale for game house
 16200*12month = 210,000 birr
 Annual service sale for pool house
 6000*12month = 57,600 birr
 Annual service sale for game house
 1200*12month = 14,400 birr
 annual total sale
 14,400 + 57,600 + 210,000 + 180,000 + 180,000 + 108,000 + 225,000 + 216,000
= 1,175,400 birr

Chapter four

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4. Theoretical feasibility

4.1 Determine facility need

 cable internet room

 cafe
 computer maintenance shop
 software gallery
 game house
 pool house
 recreational zone
 store
 guards room
Table: Space required for facility

Facility Area in m2 Quantity

cable internet room 100 1
Café 30 1
computer maintenance shop 3 1
Recreational zone 1000 1
Software gallery 4 1
Game house 5 1
Pool house 4 1
Store 5 1
Guards room 2 1
Total 1153

 Without having the above facilities the machine by itself will not be productive because in
order to have continuous production ;
 Warehouse must be available in order to keep the quality of the product from
different effects such as rain, sun, and different unexpected damages.
 Storing area of raw material must be available to store backup raw materials to
make sure the production is with the required amount per day.
 Maintenance room; maintenance room is very important specially in mechanized
industries to maintain and repair different damaged machine parts.

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  Quality test room; this area used for making sure the products are produced with
the required and quality and material property
 Show room; after all our recycled plastic carpet products are should get the
chance to see by the customer, so this area will play a great role.

4. 2 Sustainability of production technology

 Most of the time in our country technology and machines are imported from china because of
the price are relatively chip and wide choice are available or possible. Therefore we think the
machine will be imported from china and will be planted by our mechanic.
 It is difficult to know the type of technology and machine that is used in large plastic
manufacturing industry, because of they are not available in our country and are
 Secured and patented. But it is obvious that our manufacturing technology and machines are
latest and competitive. For example;
 Size reduction machine; used for cutting raw materials in to small pieces. As
wear and tear is major concern size reduction machine uses highest grade knives
and blades made from D2, or SKD11equivalent high carbon high chromium steel
 Washing and drying machine; as washing and drying machine are in frequent
contact with water, type 304 stainless steel is used to ensure the machines
resistance to rest oxidation and corrosion.

Comparing technology providers

Machineries China machine Brazil machine

Cost Size reduction machine 20,000birr 25,000birr
Washing and drying machine 25,000birr 27,000birr

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 Plastic separation machine 18,000birr 20,000birr
Plastic pelletizer machine 40,000birr 45,000birr
Reliability Size reduction machine High Moderate
Washing and drying machine Moderate high
Plastic separation machine High Moderate
Plastic pelletizer machine Moderate high
Life time Size reduction machine Medium long
Washing and drying machine Long Medium
Plastic separation machine Short long
Plastic pelletizer machine Long Medium
Maintainability Size reduction machine Easily maintain Easily maintain
Washing and drying machine Easily maintain Easily maintain
Plastic separation machine Easily maintain Easily maintain
Plastic pelletizer machine Easily maintain Easily maintain
Durability Size reduction machine Highly maintained Highly maintained
Washing and drying machine Highly maintained Highly maintained
Plastic separation machine Highly maintained Highly maintained
Plastic pelletizer machine Highly maintained Highly maintained
Upgradeability Size reduction machine Non upgradable upgradable
Washing and drying machine upgradable upgradable
Plastic separation machine upgradable Non upgradable
Plastic pelletizer machine upgradable upgradable

4.3. Availability and sustainability of size

Our plastic carpet manufacturing company is located in bahir dar which is same plastic product
importer center. So when we invest on this city we will have the following advantage

 availability of raw material

 availability of labor
 availability of transportation
 there is no plastic carpet manufacturer company in bahir dar

And we can attract the local buyer by designing especial types of plastic carpet

Access markets: bahir dar is one of the fastest growing cities in the country so these
developments create high opportunity for us and create the chance to access the market easily

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Access to raw material: bahir dar is the cleanest city in the country so the access to raw material
is high and minimizes the time and cost for collecting the waste plastic material from different
place because the city has its own wastage storing areas so simply collect the wastage plastic
from the store

Access to transportation: bahir dar city has a lot of standard road so this is the main advantage
when we invest on this city

Access to qualified labor pool: high amount of skilled labors are exist on the city even
graduated from different university so these skilled labor need only short period of impartation
about manufacturing way of the product then easily start the production

4.4 Raw materials

 In our carpet plastic industry the basic raw materials for manufacturing of carpets are waste
plastic. West plastic products are found everywhere and are not fore sale. There are many
type of plastic products which is used for our carpet industry as a raw material such as;

 Plastics which was used for water package

 Plastic of water tanker
 Waste plastic of electronic device
 Waste plastic of bulk material packages
 Wasted plastic chair, table, and other home service equipment’s
 Wasted plastics of different shoes
 Wasted plastic of home cleaning equipment
 Currently in our country waste plastics are every ware and they are creating pollution to the
environment that means collecting those waste plastics will used to reduce environment
pollution and also the availability is very high.
 In our estimation the futurity of raw material availability will be much greater than current
waste plastic availability, because of population of our country is increasing rapidly the users
of plastic products will also higher. That means availability of waste plastics will be high.
 As we know the main inputs are waste plastics there is no further quality is required because
there is going through process to make sure the inputs are with the required property. The
cost of the input per unit of Kg and it will be 10 Birr/Kg from the supplier.

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 4.5. Other inputs
Like most of African countries Ethiopia is one of African country in which cheap labor force is
widely available.

Required amount of man power

In the first 15 months of production, manufacturing of plastic carpet will be in small scale and
the labor force will be limited to 25-30worker

Required man power and wage rat

Amount Wage rate in month

Labor 30 900 birr
Skilled Operator 8 1900 birr
Mechanic 2 1500 birr
man power

Chapter five

5. Financial feasibility

5.1 Estimate the total capital requirement

Basically four types of machines are used to manufacture plastic carpet. This machine includes:

 Size reduction machine

 Washing and drying machine
 Plastic separation machine
 Plastic pelletizer machine

Capital requirement for these machines are

Size reduction machine = 20,000birr

Washing and drying machine = 25,000birr

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 Plastic separation machine = 18,000birr

Plastic pelletizer machine = 40,000birr

Other fixed costs

 Land cost for factory = 400,000birr

 Buildings and insurance cost for factory = 200,000birr
 Contingency capital need: technology may fail to function normally if they use improper
way. But we want use this machine improper work environment; so they don’t need
contingency capital.

Total capital

Total cost = (land for factory cost + building and insurance cost + equipment cost)

Equipment cost = (20,000 + 25,000 + 18,000 + 40,000) = 103,000birr

Therefore total capital cost = (103,000 + 400,000 + 200,000) = 703,000birr

5.2 Estimate the equity and credit need

The principal capitals required for the plastic carpet project are:

 Equity capital
 Working capital
 Asset finance

To meet these different types of capital requirements there are the following options of
financing.

• Debt financing

• Equity financing

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The enterprise is to be financed by these two financing system in ratio of 7.5 to2.5. That means
75% debt and 25% equity. Therefore from the total project cost the proportion of equity and debt
is as follows:

 Equity, 25%*703,000 = 175,750birr

 Debt, 75%*703,000 = 527,250birr

Debt financing

Debt financing requires to payback the amount of money borrowed and interest of this money. In
Ethiopia generally bank debt is at an interest rate of 9.9% per annual. Therefore, if need to pay
back the debt at the end of the first year,

452,250 + 0.099*527,250= 540,293.25birr

But, it is good to borrow this debt from Ethiopian development bank to pay back at a 3years term
and paying 1/3 of the borrowed money and interest of loan at the end of each year.

1/3*527,250= 175,750 birr for each year

Interest of money left unpaid at the end of each year can be listed by the following table

Year Debt Payment Amount left Interest

1st 527,250 175,750 351,500 52,197.75
2nd 351,500 175,750 175,750 34,798.5
3rd 175,750 175,750 0 17,399.25

5.3 Budget expected costs and returns of various alternatives

The total project cost that we discussed before is the cost of initially acquiring this business. But,
to operate this project there are costs to be paid monthly. This can be called production or
operation costs of the project. These costs consist of the following costs:

 Cost of labor
 Cost of raw material
 Electric cost

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Cost of labor

Man power quantity Salary/monthly

Manager 1 5000
Mechanic 2 2*1500 = 3000
Operator 8 8*1900 = 15200
Labor 30 30*900 = 27,000

Total cost = 50,200birr/month

Total cost per year = 602,400birr/year

Cost of raw material from supplier

As we mentioned before all raw material is supplied from outside suppliers. The average price of
raw material per kilogram is 10birr.

 Assuming in one year there is 365 days, out of this days 315 is our work days, the other left
days is we are not work because we need rest on Sunday and the other is holly day

Cost of buying raw material per day =100birr/day

Cost per year =100birr/day*315day = 315,000birr

Electric cost

We have four main machineries so the Power consumption per hour for each machine is

 Size reduction machine = 2kw/hr.

 Washing and drying machine = 3kw/hr.
 Plastic separation machine = 1.5kw/hr.
 Plastic pelletizer machine = 4kw/hr.

Total power consumption per hour = 2 + 3 + 1.5 + 4 = 10.5kw/hr.

Total power consumption per year = 10.5*315 = 3,307.5kw/year

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 Total cost of electric power = 3,307.5kw/year*0.4birr/kw = 1,323birr/year

Total production cost can be summarized as follows in table.

Expense Cost (birr/year)

Labor 602,400
Cost of raw material 315,000
Cost of Electric power 1,323
Total cost = 918,723 birr/year

Estimated sales revenue:

Profit = sales revenue – cost.

Product per year = product / days * work days.

Sales price per year = product / amount of m2 * estimate price.

Unit Production Year 1 Year 2 Year 3

Salon carpet 15,750 15,750 15,750
Capacity per year
Kitchen carpet 18,900 18,900 18,900
(m²) Outdoor carpet 22,050 22,050 22,050
Capacity utilization Salon carpet
of year Kitchen carpet 80% 85% 90%
Outdoor carpet
Production per year Salon carpet 12,600 13,387.5 14,175
Kitchen carpet 15,120 16,065 17,010
(m2)
Outdoor carpet 17,640 18,742.5 19,845

Sales price per unit Salon carpet 504,000 535,500 567,000

Kitchen carpet 453,600 481,950 510,300
in year(birr)
Outdoor carpet 617,400 655,987.5 694,575
Revenue 1,575,000 1,673,437.5 1,771,875

Breakeven analysis

Sales Mix and Break Even Analysis

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The term sale mix refers to the relative proportion in which enterprise’s products are sold. The
concept is to achieve the combination that will yield the greatest amount of profits.

Breakeven point occur when the cost of producing commodity is equal to the total revenue of the
[Link] also depend on the mix in which the various products are sold.

The level of operation utilized percentage of product capacity is computed when relatively
simple model of revenue & costs are equated.

To analyze or estimate profit or loss, it is often necessary to determine the quantity of product at
which revenue & costs will be equal. As unit price is increased the revenue curve becomes
steeper. Costs which are linear or nonlinear are composed of two components. These are:

1. Fixed cost which contains

 Land &Building cost

 Insurance cost
 Machineries &etc.

2. Variable cost which includes:

 Labor costs
 Materials& etc.

Fixed cost always exists even when no production is incurred.

Variable cost increase as production rate is increase. It is usually possible to decrease the
variable cost through better production design & manufacturing efficiency.

When the costs of producing each of the above items increase, the total revenue also increases &
at certain level they become equal.

The total cost needed to produce the product is the sum the variable cost & the fixed cost of the
product. Since our products i.e. salon, kitchen, & outdoor have certain cost in common, but
different measurements, it is very tedious to show them on the same graph.

Year 1

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Sales 1,575,000
Variable expense 918,723
Fixed cost 703,000

BEP = fixed cost / (sale – variable cost)

BEP = 703,000 / (1,575,000 – 703,000) = 758units

Chapter six

6. ORGANIZATIONAL (MANAGERIAL) FEASEBILTY

6.1. Business structure

Obviously known that there are various forms of legal structure of organization, to organize
small business. We evaluate each of these available forms of legal structure by considering the
merit and demerit 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 business where the relation is based on
agreement.

We think 10-15 months of production time an employed manager is not required because we will
going to manage the company. And then by giving some lesson practice we will charge a
manager from the worker of an industry.

It is very known that any business sector specially manufacturing industries need to have well
qualified, experienced, and professional consultant and service provider. So do we?

Why consultant and service provider is needed?

 When the industry gets down its profit

 When new competitor emerged in the market

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  When employees show luck of interest in the work place
 When employees suddenly leave the industry
 When sells is not with the required rate
 When upgrading the industry needed

Consultant and service provider includes

 Legal experts
 Accounting experts
 Industry experts and

Establishing good governance and authority mostly determines the future and life of the industry.
We decide to establish good way of governance, effective and efficient lines of authority and
decision making process. So that decision making process is done mostly by general manager
and in some case the owner of the industry that is us will involve in the decision making process.

6.2 Business founder

As described above the founder of this project (plastic carpet manufacturing from west plastic) is
us and we think that we will make it feasible and touchable, because we have enough skills and
the ability to complete the project.

Every individual who works in this company will play a great roll and they are the key person by
investing their skill knowledge.

In this industry who show a good work motivation and who has interest to work over time will
be rewarded.

CONCLUSION
Plastic carpet production is treated as a commercial commodity, as floor finishing material sales
generate regular cash income. Market-oriented floor finishing material production has many
related benefits for urban and country side communities. Plastic carpet factory has multi-purpose

19
benefit in terms of construction availability, regular cash income and more employment
opportunities. Estimated average annual production of plastic carpet is about 1,474,200m 2. As
we explained in the analysis, the demand for plastic carpet products are highly increasing and
supply rate of plastic carpet products also in increasing way in our country. Due to this it is
appropriate to develop and encourage plastic carpet factory in our country. According to the
feasibility study we have made the involvement of our industry with in the society enables them
to get job opportunities, quality product, highly protect the environment and etc. With ever
increasing awareness of the importance of plastic carpet products and so that, the demand of the
product with high quality will be rapidly increase. This brings about high production rate and
expansion of our industry which leads to its life cycle to be long duration.

REFERANCE

 [Link], on 01/5/2017 at 8:30pm

 [Link]/[Link] on 01/5/2017 at
6:15pm
 [Link]/sustainabilty/plastics and [Link] on 01/5/2017 at 8:30pm
 Entrepreneurship for engineers handout, oct.2012.(Poly, main library)
 Hailay B.G.(2007). Entrepreneurship and small business Management.(2ndEd)
 haymanote w.(2005). Instruction of business plan. Compiled

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