(Applied Econ.) Module 3. - Introduction To Applied Economics
(Applied Econ.) Module 3. - Introduction To Applied Economics
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
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
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
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
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.
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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.
Identify and explain different principles, tools, and techniques in creating a business
Business Organization
There are four ways to form a business:
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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.
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.
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.
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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
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.
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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.
Learning Competency:
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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'?
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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
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