Applied Economics 11 Module 3 PDF

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Applied Economics- Grade 12 Alternative Delivery Mode Quarter 2- Module 1: Industry and Environmental Analysis: Business Opportunities Identification First Edition, 2020Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the Philippines. However, p...

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Applied Economics- Grade 12 Alternative Delivery Mode Quarter 2- Module 1: Industry and Environmental Analysis: Business Opportunities Identification First Edition, 2020 Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the Philippines. However, prior approval of the government agency or office wherein the work is created shall be necessary to exploitation of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.) included in this book are owned by their respective copyright holders. Every effort has been exerted to locate and seek permission to use these materials from their respective copyright owners. The publisher and authors do not represent nor claim ownership over them.

Development Team of the Module: Authors: Evaluator: Illustrator:

Cristy D. Bombeo Janice B. Aranton Zalvy Jean P. Galindo Gwendylou E. Dableo Jay Michael A. Calipusan

Management Team: Chairperson: Co-Chairpersons:

Members:

Dr. Arturo B. Bayocot, CESO III Regional Director Dr. Victor G. De Gracia Jr., CESO V Asst. Regional Director Mala Epra B. Magnaong CES, CLMD Dr. Bienvenido U. Tagolimot, Jr. Regional ADM Coordinator Ray Butch M. Mahinay EPS-Designate- AP

Printed in the Philippines by: Department of Education – Regional Office 10 Office Address: Zone 1, Upper Balulang Cagayan de Oro City 9000 Telefax: (088) 880-7071, (088) 880-7072 E-mail Address: [email protected]

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12 Applied Economics Quarter 2 – Module 3: Industry and Environmental Analysis: Business Opportunities Identification

This instructional material was collaboratively developed and reviewed by educators from public and private schools, colleges and or/universities. We encourage teachers and other education stakeholders to email their feedback, comments, and recommendations to the Department of Education at [email protected]. We value your feedback and recommendations.

Department of Education • Republic of the Philippines

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TABLE OF CONTENTS

What I Need to Know ……………………………………………………………. 1 What I Know ………………………………………………………………………2 Lesson 1 – Identify and explain different principles,tools, and techniques in creating a business Lesson1 2 – Viability of Business and its Impact on the Community…………………………………………………13-18

What I Have Learned ………………………………………………………….24-25 Assessment …………………………………………………………………….26-28 Answer Key…………………………………………………………………………29 References ………………………………………………………………………...30

Answer Key Reference

20 22 Back Outside Cover

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WHAT I NEED TO KNOW

This module discusses the different principles,tools, and techniques used in business to identify commercial opportunities. It also discusses about the business industries operating in the Philippines .Moreover, this module will provide you with information on the nature and types of industry. I certainly hope that you will be inspired learning the topic. You are also expected to study further on how these industries operated and how these can influence you to be in the business industries in the upcoming years. Remember that having knowledge on different industries will give you more potentials to excel in the world of business.Read on and find out how you can identify the industries in your locality. This module has two lessons: ● LESSON 1- Industry and Environmental Analysis ● LESSON 2- Types of Industries When you are done with this module, you are expected to; 1.Identify and explain different principles, tools and techniques in creating a business. ABM_AE12-IIa-d-9 2.Distinguish the different services/products of business and industry in the locality.ABM_AE12-IIa-d-10

To achieve the objectives of this module, you have to do the following: 1. Read slowly and carefully. Do not proceed to the next page unless you are done with the previous one. 2. Before you begin working on the activities, take the pretest in the “What I know “section. 3. Remember of the skills that each activity is helping you develop. 4. When you are done in each activity, recheck your work to find out the items that you have missed. 5. Work on the Post-test in the “Assessment” section. 6. After you complete in the “Assessment”section, be now ready for a conference with your teacher. This is the moment when you should ask her/him about the difficulties, if there is any, and clarify your confusion. 7. At the end, you prepare all your outputs. You are expected to pass them to your teacher. This is usually a learning portfolio, containing all your activities done.

Good luck and enjoy while learning!

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WHAT I KNOW Multiple Choice: Encircle the letter that corresponds to the correct answer. 1. It is an analytical framework that can help a company meet its challenges and identify new markets. a. Buyer power b . Number of competitor c. Supplier d. SWOT 2..Buyers will switch to alternatives in case of price increases. a. Buyer power b . Possibility of Substitution c. Supplier power d. SWOT 3. It is.an assessment of how easy it is for suppliers to drive up prices. a. Buyer power b . Number of competitor c. Supplier power d. SWOT 4. It is a number and capability of competitors in the market will also impact on the attractiveness of the market. a. Buyer power b . Number of competitor c. Supplier d. SWOT 5.It is a group of companies that are related based on their primary business activities. a . Business b.Company c. Enterprise d. Industry 6.It refers to business sector encompassing farming and farming -related commercial activities. a. Agribusiness b. International trade c.Retail Industry d. Service 7. It is an industry that produces value which is primarily intangible such as customer service, management, advice, knowledge, design, data and experiences. a .Manufacturing b. Retail c. Service d. Wholesale 8.The exchange of goods and services between countries is called _____________. a. Agribusiness b. International trade c.Retail Industry d. Wholesale 9. It is the process of raw materials into finished goods through the use of tools and processes. a.Agribusiness b.Manufacturing c. Service d. Retai 10. Which of the following statements is correct. a .A product that is sold to global market is an import. b. Export is an international trade whereby the goods/services are brought Into one country from another. c..Import is an international trade whereby goods produced in one country are shipped to another country for future sale or trade. d .International trade gives countries the opportunity to be exposed to goods and services not available in their own countries. 11.The following are example of Service business except: a.Beauty Salon b. Car wash c.Printing Shop d. Sari-sari store 12. In which business industry does SM Mall belong to? a.Agribusiness b. Manufacturing c. Retail d. Service 13.Service industries offer the following except; a.Customer service b..Knowledge c.Management d. Retail goods 14.If you are on a plane and you bring like 3 bags of chocolates from your country to another, it is not exporting. a.This statement is correct .

c. This statement is both correct and incorrect. d. This statement does not make sense.

b. This statement is incorrect.

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15. The country that ordered the goods is the exporter and the country that supplied it is the importer. a.This statement is correct . c. This statement is both correct and incorrect. b. This statement is incorrect. d. This statement does not make sense.

LESSON 1: Principles, Tools and Techniques Learning Competency: Identify and explain different principles,tools, and techniques in creating a business

WHAT’S IN Have you tried to budget your money in order to buy what you want to eat or consume in your daily living? Have you tried to run out of water while you were taking a bath? Have you tried to limit the number of kilos of rice that you will buy for your daily consumption? Have you tried to equally divide the food for your pets? If you have answered yes to at least one of these questions, then you must be facing the trauma of not being able to have enough of what you wanted. Try to look around you. You might also have noticed the rising prices of rice, gasoline, soft drinks and even vegetables, fruits and all other basic needs. The prices continue to increase while we are still struggling with how we should increase our incomes. These situations are common among all of us. Luckily, if you get to read and understand the contents of this module you will be able to understand your frustrations. As you go along the contents, you will learn about the nature of economics and how it is applied in our lives. Applied Economics will help you understand why the prices of the basic needs are increasing and it will help you become a better decision-maker. You will find out that many of the economic problems in our country can actually be solved with a careful study of economics

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WHAT’S NEW Think of a business that you know in your locality. Evaluate and describe its nature in terms of ownership, and activities.

Business name Ex. Cora’s Sari-Sari store

Ownership Owned by one person

Activities Selling goods

Description >Location is accessible >Prices are cheap >Operating for 2 yrs now

WHAT IS IT Business Organization There are four ways to form a business: 1. Sole Proprietorship This is generally the simplest ways to set up a business. A sole proprietorship is owned by a single individual who is singly responsible for running the business and is accountable for all debts and obligations related to the business. Advantage of sole proprietorship is that the owner makes all the decisions like the location of the business, who to hire , what to sell and the owner is not bound to share the profits with anyone else. Disadvantage of sole proprietorship he shoulders all the losses and has unlimited liability which means payment of his loans will extend to his personal assets. And when he dies , the business will be terminate 2.Partnership A partnership is an agreement in which two or more persons put together their resources in a business for the purpose of making profit. The profits to be earned will divided among the partners according to the terms of agreement. Advantage of partnership is that each owner can help with financing, start-up costs., shared knowledge and experience. Disadvantage of partnership is the equal sharing of profits they put in to start the business. There are two types of partnership: 2.a The general partnership. Is a business arrangement by which two or more individuals agree to share in all assets, profits and financial and legal liabilities of the business.

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2.b The limited partnership is consisting of general partnership who manages the business and has unlimited liability for the debts and obligations of the business. 2. Corporations A corporation is a legal entity that is separate from its owners,which is called the shareholders. No stock holder is personally liable for the obligations and debts, or acts of the corporation. The legal entity of the corporation gives it and individual identity of its own. Corporations normally exist for a life of 50 years, which is renewable for another 50 years. Owners have limited liabilities. However, corporations are burdened by heavy taxes. 4.Cooperative A cooperative is an entity organized by people with similar interests and needs to provide themselves with services and goods or to jointly use available resources to uplift their financial status. Cooperative members have the same level of powers when it comes tothe decision- making with one vote per member regardless of number of shares held, there is voluntary and open membership and excess earning is returned to the members in accordance to the amount of their patronage.

Tools in Evaluating a Business THE SWOT ANALYSIS The SWOT Analysisis useful in scanning the business environment which can help in identifying economic opportunities. SWOT, which stands for Strengths, Weaknesses, Opportunities, and Threats is an analytical framework that can help a company meet its challenges and identify new markets. The framework can help identify the business’s risks and rewards. It is also associates with the internal and external forces that may affect the business. It is very helpful is assessing new ventures. The initiators, Learned, and Christensen, Andrews, and Book used a diagram as guide for identifying the company’s strengths (S), weaknesses (W), opportunities (O), and threats (T). S (strengths) and W (weaknesses) actually refer to the internal factors, and these are the resources and experiences readily available to the business proponent. Usually included as internal factors are: Financial resources such as money and sources of funds for investment; Physical resources, such as facilities,the company’s location,materials, machinery, and equipment; Human resources consisting of employees;Access to natural resources, trademarks, patents, and copyrights; andCurrent processes, such as , department hierarchies,such as employee programs and software systems, sales and distribution capabilities, marketing programs, etc. On the other hand, when we refer to external forces, these are those that affect a company, an organization, an individual, and those outside their control. These may include:

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Economic trends including local, national and international financial trends, developments in the country’s stock market, reforms in the banking system, growth of the Gross Domestic Product (GDP). Market trends, such as new products or technology or evolving buyers’ profiles, including changes in tastes and lifestyle behavior; National and local laws as well as environmental, political, , and economic regulations; Demographic characteristics of the target market such as the age, the gender, the culture of the customers; Relationships with suppliers and co- owners; and Competitive threats.

Strength

Weakness

S W O T Opportunity Threat Analysis Template STRENGTHS

WEAKNESSES

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Government incentives

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Difficulty of organization

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Low Capital requirements

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Costly set- up

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Market acceptance

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Possible pollution problems

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Experienced leaders

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Lack of training of workers

Opportunities

Threats

Project may replace imported good 

Will improve employee welfare

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Improved company reputation

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Entry of competitors

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Tie consuming production processes

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Opposition from residents in the community

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Porter’s Five Forces Of Competitive Position Analysis 1.Supplier power. It is essential to evaluate how much power the supplier is capable to drive up prices. A supplier benefits this power if there are few supplier of an essential input and they therefore control the supply of that input. The more unique the product, the easier it is for the supplier to drive up price. 2. Buyer power. An evaluation of how easy it is for buyers to direct prices down. This is directed by the: number of customers in the market; worth of each buyer to the organisation; and cost to the interchange from one supplier to another. If a business has just a less of powerful buyers, they are usually able to dictate terms. 3. Competitive rivalry. The major driver is the number and competitor’s capability in the market. A lot of competitors, offering common products and services, will reduce market attractiveness. 4. Threat of substitution. Where common products available in a market, it improves the livelihood of customers switching to alternatives in response to price increases. This lessen both the power of suppliers and the attractiveness of the market. 5. Threat of new entry. Profitable markets attract new entrants, which destroy profitability. Unless current have strong and long lasting barriers to entry, for example capital requirements or government policies and regulations, then profitability will slow down to a competitive rate. 1.Supplier Power- An evaluation of how easy it is for suppliers to drive up prices. •

Run by the suppliers of each input; unlikeness of their service or products; relative size and strength of the supplier; and cost of shifting from one supplier to another

2. Buyer Power- An evaluation of how easy it is for buyers to control prices down. •

regulated by the buyers in the market; relevance of each individual buyer to the organisation; and cost to the buyer of switching from one supplier to another,when a business has a few powerful buyers, they are usually able to dictate terms.

3. Number of Competitors- Number and capability of competitors in the market will also impact on the attractiveness of the market. •

If competitors are numerous and offer similar services and products, the market will be less attractive.

•

Small capability of competitors to meet the market's current needs will serve as an attractive opportunity for the firm.

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4. Possibility of Substitution- Buyers will switch to alternatives in case of price increases. •

The supplier will benifits less power to drive prices up and the market will be less attractive.

5. Possibility of New Entrants- Investors join the bandwagon when market is profitable and get a share of the profits. •

If a new investors penetrate a market, the share of the participants in the market will be divided among more individuals and will therefore decline, thus, lessen profits. But if a barriers to entry prevent new participants from entering the market, profits will be maintained among the existing participants.

INDUSTRY ANALYSIS The following important factors are included in the industry analysis in preparing project feasibility studies, and business development.: Competition- is the rivalry between sellers selling the similar products and services with the aim to win their customers, convince them to buy from you instead , and remain as loyal customers. . -Who are the major businesses in the industry? -Are there location close to your proposed business? -How long they exist or still new entrants? -What is the market share of these businesses? Customers – is an individual or groups that purchases goods and services. The target market must be identified. - To whom are you going to sell the products to? - Who exactly will buy your products? - What income groups? - What age brackets? - What gender? - What career group? - What type of people will you caterto, based on their preferences, lifestyles, and buying habits? Suppliers – is an entity that supplies goods and services in the market. - A business may need one or more suppliers. - A business owners can buy directly from the manufacturers. - A business owners may also consider buying from distributors. - Another source of goods for business is through imports. - It is important to maintain good relationships from one supplier to another.

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Substitutes- are goods that can be utilized in replace of other. - These are goods that may partly, satisfy the same needs of a customer such that the customer may use one instead of another. - The more differentiated the product is, the greater the edge of its manufacturer because this can convince the customers to buy their product instead of that of the competition.

WHAT’S MORE

A. MATCHING TYPE: Match Column A with Column B, write your answer

on the space provided for: COL...