PRE-TEST

Multiple Choices: 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. Retail

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.
b. This statement is incorrect. d. This statement does not make sense.

APPLIED ECONOMICS
Page 1 of 7
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.

Module # 3: Industry and Environmental Analysis: Business Opportunities Identification

Learning Outcomes:

At the end of the lesson, the student should be able to:

 Identify and explain different principles, tools, and techniques in creating a business

LESSON 1: Principles, Tools and Techniques

Business Organization
There are four ways to form a business:

APPLIED ECONOMICS
Page 2 of 7
 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.
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.

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.

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.

3. Corporations. A corporation is a legal entity that is separate from its owners, which is
called the shareholders.
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.

 Tools in Evaluating a Business

THE SWOT ANALYSIS
The SWOT Analysis is 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.

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.

APPLIED ECONOMICS
Page 3 of 7
  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
organization; 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.
2. Buyer Power- An evaluation of how easy it is for buyers to control prices down.
3. Number of Competitors- Number and capability of competitors in the market will also
impact on the attractiveness of the market.
4. Possibility of Substitution- Buyers will switch to alternatives in case of price increases.
APPLIED ECONOMICS
Page 4 of 7
 5. Possibility of New Entrants - Investors join the bandwagon when market is profitable and
get a share of the profits.

 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.
 Customers – is an individual or groups that purchases goods and services. The target market
must be identified.
 Suppliers – is an entity that supplies goods and services in the market.
 Substitutes- are goods that can be utilized in replace or other.

LESSON 2: Types of Industry

Learning Competency:

 Distinguish the different services/products of business and industry in the locality.

LET US KNOW THE TYPES OF INDUSTRIES

 There are five types of industries. These are;

1. AGRIBUSINESS. Agriculture has been defined as the science and art of producing livestock
and cultivating plants and . The agricultural sector has been an important component of the
Philippine economy. It has been a major source of employment to millions of Filipino
workers and it contributed one third of the of the country’s Gross Domestic Product in
1970’s but it declined to 8.74% in 2016.Because of this, a number of initiatives have been
implemented to enhance the sector’s productivity. One of these is the development of the
production of food grains and crops like rice, banana, pineapple, coffee, camote, mongo,
corn, coconut and calamansi. The development of fish and animal production has been
implemented too. For animal production, there are two types that can be engaged to one
are livestock and the other is poultry. These two are commonly engaged by the small
entrepreneurs who provide livelihood that can provide income and employment
opportunities to poor households.
2. RETAIL. Retail includes the sale of merchandise from a one point of purchase directly to a
consumer who tends to utilize that product. The single purchase could be a brick and-mortar
retail store, a catalog, an internet shopping website, or even a mobile phone. The retail
activity is at the last point of the chain. Manufacturers sell huge quantities of goods to
retailers, and retailers tend to sell those same quantities of goods to customers.
3. SERVICE. A service industry is any industry that produces value that is primarily intangible
such as advice, consultation, customer service, knowledge, management, data and
experiences. Advanced economies are undergoing a long term shift whereby service
industries are turning into a larger component of economic output similar to other industries
such agriculture and manufacturing.

APPLIED ECONOMICS
Page 5 of 7
 4. MANUFACTURING. Manufacturing is the processing of raw materials into finished goods
through the use of equipment, tools and processes. Manufacturing is process that allows
enterprises to sell finished products at a price over the cost of the raw materials used.

Manufacturing, any industry that produces products from raw materials by the use of
human labor or machinery and that is normally carried out orderly with division of work. In
the common sense, manufacturing denotes the assembly of parts into finished products on
an equal large scale. Among the most essential manufacturing industries are those that
make aircraft, computers, chemicals, refined petroleum products, consumer electronic,
clothing, electrical equipment, furniture, heavy machinery, ships, steel, automobiles, and
tools and dies.
5. INTERNATIONAL TRADE. her. This type of trade gives opportunity to a world economy, in
which prices, or demand and supply, affect and are affected by global events. Trading
worldwide gives consumers and countries the chance to be exposed to goods and services
that cannot be found to their own countries. Most of the products that can be found on the
international market: food, water, stocks, clothes, spare parts, oil, jewelry, currencies, and
wine. Services are also traded like consulting, tourism, transportation and banking. A
product that is sold to the international market is an export, and a product that is bought
from the international market is an import.

What is an 'Import'?

An import is a good or service that brought from the other countries. The word "import" comes
from the word "port" since goods are often travelled via ships or boats to foreign countries.
Countries are often like to import goods that their local industries cannot produce as effectively
or at low price as the exporting country. Countries can also import raw materials that cannot be
found within its borders.

For instance, many countries import oil because they cannot produce it locally or insufficient to
meet demand. Free trade policy and tariff schedules often tell which goods and materials are
cheap to import.

What is an 'Export'?
APPLIED ECONOMICS
Page 6 of 7
 Exports are goods and services made in one country and sold to buyers in another. Exports are
important to modern economies, because they provide opportunities to people and firms many
channels of distribution for their goods. One of the major functions of diplomacy and foreign
policy between countries is to improve economic trade, encouraging imports and exports for the
advantage of all trading parties. It is a way of sending products to another country in return of
payment. If you are on a plane and you bring 3 bags of chocolates from your country to another,
it is not exporting. You are just taking goods with you.

For example, there may be places abroad that have a high demand for rice. But since their
locations are not ideal for planting, they have to ask another country to supply them with it.

REFERENCES:

https://www.investopedia.com/terms/e/export.asp https://ecomelites.com/export-definition-
what-is-exporting/ https://www.investopedia.com/terms/a/agribusiness.asp
http://industry.gov.ph/category/agribusiness/ https://www.thebalancesmb.com/what-is-retail-
2892238 https://www.thebalance.com/international-trade-pros-cons-effect-oneconomy-
3305579

APPLIED ECONOMICS
Page 7 of 7