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CHAPTER 1

PROBLEM AND ITS BACKGROUND

1.1 Rationale

Sometimes called a small business, a small-scale enterprise is a business that

employs a small number of workers and does not have a high volume of sales. Such

enterprises are generally privately owned and operated sole proprietorships, corporations

or partnerships. The legal definition of a small-scale enterprise varies by industry and

country (Gustafson, 2017).

A merchandising business is one of the most common types of businesses we

interact with daily. It is a business that purchases finished product and resells them to

consumers. According to the American Marketing Association, merchandising is a wide

term that encompasses promotional activities run by the manufacturer in the form of

special presentations that take place within establishments, as well as initiatives run by

the retailer to make the product stand out. In any case, merchandising refers to

commercial actions at the point of sale aimed to stimulate customerś purchases as soon as

they enter the establishment. Traditionally, it was conceived as a way to motivate the

purchase with the highest benefit-cost ratio (Buttle, 1984).

Nowadays, Point of Sale (POS) systems are popular in developing countries

because they provide fast and convenient ways of transactions for business. These

systems contain vital tasks such as online transactions, ecommerce facilities,

security, taxes, various management reports and many more (Davis and Wang, 2015).

Therefore, with large volume of customers in supermarkets and the growing competitive

business environment in developing countries, ensuring the software quality becomes

very important for them.

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Janes (2011) stated that computers are extremely reliable device and very

powerful calculators with some great accessories applications like word processing

problem for all of business activities, regardless of size, computers have three advantages

over other type of office equipment that process information because computer are faster,

more accurate more economical. Reyes (2005) stated that a task would be time

consuming to accomplish manually and more practical with the aid of computers field in

cabinet.

Also known as the point of service or POS, the point of sale is the exact point in a

transaction when goods or services are provided to the customer and payment is rendered

for those products. While the specifics of a point of sale system will vary somewhat from

one situation to another, the final outcome is always the same (Tatum, 2010).

Point of sales (POS) software is a type of software that retail store use to calculate

their sales and operate the cash drawer; it is a computerized cash drawer. Point of sales

add up the sales total and calculate the change. When customer buy items from retail

store, point of sales will minus or debit the amount of item sold in the inventory system.

At minimum, POS should be able to handle sales and manage your inventory database

(Harmon, 2010).

POS system is the core for business analytics by providing management with

access to comprehensive historic sales information. POS software helps to identify "not

only daily and weekly POS performance, but also inventory levels by location, order

status, warehouse and store out of stocks and in stock percentage (in-stock in a store as a

percentage of shelf capacity) (Shapiro, 2008).

Thus, the study aims to know the usability of point of sale system between small

scale businesses.
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1.2 Statement of the Problem
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This study will be conducted to determine the difference on the usability of Point

of Sale System between small scale businesses.

Specifically, the research aims to answers to the following questions:

1. How in terms of:

a) Profitability

b) Productivity

c) Sales

2. Is there a significant difference on the usability of point of sale system between

small scale businesses?

1.3 Statement of the Null Hypothesis

3. 1. There is no significant difference on the usability of point of sale system

between small scale businesses.

1.4 Conceptual Framework

Input Process Output

3
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Fig. 1 Paradigm

The figure above shows the input-process-output flow of the study. The

researchers will identify the difference on the effectiveness of using point of sale and

inventory management system in selected merchandising businesses between

Bayombong, Nueva Vizcaya and Solano, Nueva Vizcaya. The researchers will gather

data through evaluation surveys. It is expected that there will be a significant difference

on the effectiveness of using point of sale and inventory management system in selected

merchandising businesses between Bayombong, Nueva Vizcaya and Solano, Nueva

Vizcaya.

1.5 Scope and Delimitation

The researcher will focus only on the difference on the effectiveness of using

Point of Sale and Inventory Management System in selected merchandising businesses

between Bayombong, Nueva Vizcaya and Solano, Nueva Vizcaya. A survey with the

owners or employees will be done by the researchers.

1.6 Significance of the Study

The researcher will conduct this research to determine the difference on the

usability of point of sale system in selected small scale businesses in Solano, Nueva

Vizcaya, which may serve as baseline information for the following:

Everyone, for them to know the significant difference on the usability of point of

sale system in selected small scale businesses.

Business Owners, for they will have an idea about the usability of point of sale

system in selected small scale businesses.

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The people who plan to start a business, for them to know some points to

consider in starting a business whether it is service or merchandising business and

usability of point of sale system in selected small scale businesses.

The people who plan to buy point of sale system or inventory system, for them

to know some points to consider in choosing the right point of sale system based on users

and professionals and if it will be effective in their business and to know the usability of

point of sale system in selected small scale businesses.

The producer, for them to know the standards of the user in purchasing point of

sale system system, to know what they are lacking and to gain ideas regarding the making

of point of sale system to add up some useful features and to know if it is effective or not

and to make adjustments on negative effects that the product might bring.

Definition of Terms

Merchandise – products that are meant to be sold.

Respondents - Business owners and staffs in Nueva Vizcaya that use Point of Sale or

Inventory System.

Productivity - effectiveness of productive effort.

Profitability - earning power of the business.

Sales - activity of selling goods of the business.

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CHAPTER 2

REVIEW OF RELATED LITERATURE

This section contains literature and studies on small scale business, merchandising

business, point of sales system. These materials were gathered from journals and other

periodicals, theses and dissertations, online sources, and other unpublished materials.

These material provided the researchers with an exhaustive review of the topic and the

essential background knowledge to pursue this study.

2.1 Related Literature

Small scale businesses (SSBs) are sources for economic growth and development

for every country, because as they grow, their economy grows too. In this era

industrialization, where the development index of nations are measured basically on their

achievement in terms of provision of welfare to their populace, small scale business play

a role as employment provider in a way that ensures equitable income distribution

(Kuratko, 2005). Thus, Ayanda and Laraba (2011) described small businesses as "mighty

mirrors”, which functionalize market economies and remove or minimize imperfection

factors impede adaptation to change.

Sometimes called a small business, a small-scale enterprise is a business that

employs a small number of workers and does not have a high volume of sales. Such

enterprises are generally privately owned and operated sole proprietorships, corporations
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or partnerships. The legal definition of a small-scale enterprise varies by industry and

country (Gustafson, 2017).

A merchandising business is one of the most common types of businesses we

interact with daily. It is a business that purchases finished product and resells them to

consumers. According to the American Marketing Association, merchandising is a wide

term that encompasses promotional activities run by the manufacturer in the form of

special presentations that take place within establishments, as well as initiatives run by

the retailer to make the product stand out. In any case, merchandising refers to

commercial actions at the point of sale aimed to stimulate customerś purchases as soon as

they enter the establishment. Traditionally, it was conceived as a way to motivate the

purchase with the highest benefit-cost ratio (Buttle, 1984).

Nowadays, Point of Sale (POS) systems are popular in developing countries

because they provide fast and convenient ways of transactions for business. These

systems contain vital tasks such as online transactions, ecommerce facilities,

security, taxes, various management reports and many more (Davis and Wang, 2015).

Therefore, with large volume of customers in supermarkets and the growing competitive

business environment in developing countries, ensuring the software quality becomes

very important for them.

Janes (2011) stated that computers are extremely reliable device and very

powerful calculators with some great accessories applications like word processing

problem for all of business activities, regardless of size, computers have three advantages

over other type of office equipment that process information because computer are faster,

more accurate more economical. Reyes (2005) stated that a task would be time

consuming to accomplish manually and more practical with the aid of computers field in)
 Saint Mary’s University 8
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cabinet.

Also known as the point of service or POS, the point of sale is the exact point in a

transaction when goods or services are provided to the customer and payment is rendered

for those products. While the specifics of a point of sale system will vary somewhat from

one situation to another, the final outcome is always the same (Malcolm Tatum, 2010).

Point of sales (POS) software is a type of software that retail store use to calculate

their sales and operate the cash drawer; it is a computerized cash drawer. Point of sales

add up the sales total and calculate the change. When customer buy items from retail

store, point of sales will minus or debit the amount of item sold in the inventory system.

At minimum, POS should be able to handle sales and manage your inventory database

(Harmon, 2010).

A POS system is a means to aggregate and collect sales data automatically, which

can be used to produce a variety of sales reports including: six week history reports, top

selling categories, daily report with historical data, top selling items, and sales by time of

day (Polanz, 2011).

2.2 Related Studies

Weber (1999), “System, method and article of manufacture for remote virtual

point of sale processing utilizing a multichannel, extensible, flexible architecture”, server

that communicates with a client over a first communication link, over which service

requests flow to the server for one or more merchants and/or consumers is disclosed is

provided by an architecture. Service requests are associated with a particular merchant

that is based on storefront visited by a consumer or credentials presented by a merchant.

It result in merchant specific transactions that are transmitted to the gateway for further
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processing on existing host applications. The merchant could utilize any other computer

attached to the Internet utilizing a SSL or SET protocol to query the server remotely and

obtain capture information, payment administration information, inventory control

information, audit information and process customer satisfaction information are

presented by the appropriate credentials.

Bishop, and Saunders (2009), “Systems for Locating a Payment System Utilizing

a Point of Sale Device”. The researchers concluded that a point of sale (POS) device may

be configured to locate a payment system and transmit a payment authorization request

from a remote location to a payment system, through directly, or via a payment system

directory and/or a SSL Gateway. The invention also includes inserting third party account

information into an encrypted portion of the payment request. So that the payment

request appears as a normal request to the issuing bank. But the third party may use

account information to bill the customer. The payment system directory is further

configured to determine one or more payment processors to direct a payment

authorization request, such that a single transaction may be allocated among multiple

payment processors for authorization. The payment system directory is able to format

alternative payment methods into a format that is able to be processed over existing

payment networks.

Dion (2003), “The Effects of POS Implementation and Retail Technology on

Sales and Profitability for Small to Mid-Sized Retailers”. Based on the data examined,

the deployment of technology leads to sales increases and expense reductions which

positively impact profitability. But how does technology accomplish all this? Technology

by itself does not cause sales increases or expense reductions, but rather the way the

information that technology provides is used causes the increased sales and reductions in
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expenses. The researcher also concluded that, not every retailer experiences sales

increases or cost savings on all the factors. Many are dependent on how the individual

retailer uses the technology. For example, a pure fashion retailer may not get relevant

benefits from automatic replenishment as fashion changes so often that most purchases

are not replenishment of existing product but rather new product. This hypothetical

fashion retailer however, would reap extensive benefits from fast/slow seller reporting as

well as a suggested item feature in the POS systems. The researcher also noted that in the

area of expense reductions, for some, the first six months expenses may actually increase.

Even though it is not universal. It is caused by the extra time required to learn the new

systems and to integrate them into the store. Often during this period, extra staff and

hours are used to fully implement the technology, but after six months most retailers find

that they are able to reduce at least one if not two full time clerical people and often they

reassign these hours to the sales floor.

Rosenblum (2004), “Achieving Business Benefits from Point-of-Sale Systems”.

The researcher’s report analyzes the benefits gained by small retailers that choose

computerized point-of-sale (POS) and inventory management systems versus traditional

electronic cash register (ECR) systems. In the study, primary reasons cited by small

retailers for using POS systems versus less expensive ECRs were inventory, customer

service, and cash management. It is important to understand that the term point of sale in

this context refers to more than just ringing up sales. It embraces the entire set of

applications used for merchandise, cashier, cash, and customer relationship management.

Allowing their POS systems to keep track of inventory-, customer-, and cashier-related

information frees small business owners to focus on their key differentiator which are the

personalized service and attention to customer’s needs.

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Anichebe and Agu (2013) examined the effect of inventory management on

organizational effectiveness in selected organizations in Enugu Nigeria. Using a

descriptive research and a sample size of two hundred and forty eight (248)

respondents, they established that there is significant relationship between good inventory

management and organizational effectiveness. Inventory management was found to have

a significant effect on organizational productivity. There was a high positive correlation

between good inventory management and organizational profitability. They concluded

that Inventory Management is very vital to the success and growth of organizations. The

entire profitability of an organization is tied to the volume of products sold which has a

direct relationship with the quality of the product.

2.3 Synthesis

Researchers on the related literature presents that a small-scale enterprise is a

business that employs a small number of workers and does not have a high volume of

sales. A merchandising business is a business that resells a product to the consumers

while a service business is a business that delivers work or aid to the benefits of their

customers. The authors defined the Point of Sales system as a computerized cash drawer

while they defined the Inventory Management system as an active control management

system that manages the business’ inventories. The authors defined productivity as a

fairly specific concept which can be divided into two factors which are performance and

financial productivity, it was also said that it is most simply output divided by input, and

is seen typically in terms of profit or sales. The authors also defined profitability as the

ability to make profit or to get sufficient returns on the capital and employees used in the

operation and an index of efficiency. Also, the authors stated that profitability differs to
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the term efficiency. The author defined sales as the team whose job it is to sell the stocks.

Researchers on related studies presents that the point of sale system’s information

can be shared and transmitted to other computers. They also observed that it can also

locate a transaction. The researchers also found of that using a point of sale system has an

effect on the business’ sales, profitability, and productivity. The researchers also did an

analysis on the benefits gained by small retailers that choose computerized point-of-sale

(POS) and inventory management systems versus traditional electronic cash register

(ECR) systems and recommended that businesses that do not own a POS system should

consider on having one. The researchers also examined the effect of inventory

management on organizational effectiveness in selected organizations and established

that there is significant relationship between good inventory management and

organizational effectiveness.

As a student enrolled in Accountancy and Business Management, the importance

of this research results are the information it can contribute to this particular discipline, it

can also be an inspiration to innovate the system in order to improve it and to cater more

needs of the owner or user of the system in the future, lastly, it can be a basis for us to

have whenever we encounter the system.

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CHAPTER 3

RESEARCH METHODOLOGY

3.1 Research Design

The study is a comparative type of research. The study will be documented and

will gather answers through surveys. Also the study intends to know the significant

difference on the usability of point of sale system between small scale businesses in

Solano, Nueva Vizcaya.

3.2 Research Environment

The study will be conducted in Solano, Nueva Vizcaya. Solano is the main

commercial and financial centre of Nueva Vizcaya. Solano, being the premier town in

Nueva Vizcaya and the fastest-growing municipality in the region, is slated to become

Cagayan Valley Region’s fifth city after Tuguegarao, Santiago, Cauayan, and Ilagan. The

study will take place in Solano, Nueva Vizcaya. The site selection will be accounted to

the assumption that it has more merchandising business owners and point of sale and

inventory management system users because of being a first class in income class.

Fig. 2. Site selection of the study

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Figure 2 describes the map of Solano, Nueva Vizcaya which is located in

Northern Luzon.

Subjects of the Study

Criterion sampling will be used in this study. Selected businesspersons will be

asked to participate in the survey. These key informants will be selected with the

following established qualifications:

1. A business owner or staff that is currently managing a merchandising

business;

2. A business owner or staff that is using point of sale system or inventory

system;

3. Currently residing in Bayombong, Nueva Vizcaya or Solano, Nueva Vizcaya;

4. Have used the point of sale system or inventory system in more than 3 months

in the business establishment; and

5. Managing a merchandising business for more than 3 months.

The researchers will be selecting ten business establishments with five

respondents to be asked through surveys. Five from Bayombong, Nueva Vizcaya and

another five from Solano, Nueva Vizcaya. The respondents are the business owners and

staffs in Bayombong, Nueva Vizcaya and Solano, Nueva Vizcaya that will be proven

qualified based on the criteria above. The respondents will serve as a primary source.

3.4 Research Instruments

Evaluation survey will be conducted by constructing a matrix of items and

answers for the sake of streamlining the survey that the respondents will answer. The

questionnaire will consists of items that will evaluate the effects of using point of sale
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system and inventory management system in terms of profitability, productivity, and

sales. It will consist of fifteen statements to be evaluated by the respondents per terms, in

order to know whether the information is unbiased and valid.

3.5 Data Gathering Procedure

Evaluation survey will be conducted by constructing a matrix of items and

answers for the sake of streamlining the survey that the respondents answered. Criterion

sampling will be used in selecting respondents. The respondents can be the business

owners and staffs of merchandising business in Bayombong, Nueva Vizcaya and Solano,

Nueva Vizcaya.

They will be asked vital information to evaluate the effectiveness of using point

of sale and inventory system in service and merchandising business.

3.6 Data Analysis

The collected data will be sorted to classify the small scale business type. The

data will then be entered into the computer and analyzed by the use of Statistical Package

for Social Scientists (SPSS) program that will be used to develop frequency tables,

graphs and pie charts. Independent samples t-test will be used to determine the significant

differences of the usability of Point of sale system between small scale businesses in

Solano, Nueva Vizcaya.

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