SDO MALABON CITY 12

Self-Learning Modules in Applied

Economics
Second Quarter
APPLIED ECONOMICS SHS 2ND QUARTER

G12 SLEM # 1 – WEEK 1 – 2nd QUARTER

INDUSTRY ANALYSIS, ITS PRINCIPLES, TOOLS AND

TECHNIQUES LEADING TO THE
IDENTIFICATION OF BUSINESS OPPORTUNITIES

EXPECTATION
LEARNING COMPETENCY: Analyze different principles, tools, and
techniques in creating a business

OBJECTIVE/S:
At the end of this module, the students must be able to:
1. analyze different principles, tools, and techniques in creating a
business;
2. exhibit knowledge of understanding regarding the different
principles, tools, and techniques in creating a business; and
3. construct a new product to be introduced into the market.

PRETEST

Read the sentences carefully. Choose the letter of the correct answer.
1. What scale of business that has total asset of Php 1,500,001 to Php 15,
000,000?
A. Large C. Micro
B. Medium D. Small

2. Which is an entity organized by people with similar needs and is operated

for their mutual benefit and to provide themselves with goods or services
to improve their income?
A. Business C. Corporation
B. Cooperative D. Industry

3. Which is the simplest way to setup a business?

A. Cooperative C. Partnership
B. Corporation D. Sole Proprietorship

4. What do you call a framework that helps to assess new venture and can
help identify the business’s risks and rewards?
A. PEST Analysis C. SEST Analysis
B. Porter’s Five Forces D. SWOT Analysis

5. What is the aggregation of the different businesses engaged in the same

line of undertaking?
A. Business C. Negotiation
B. Industry D. Venture
APPLIED ECONOMICS SHS 2ND QUARTER

LOOKING BACK

Complete the following effects of contemporary economic issues

affecting the Filipino entrepreneur.

1. Philippine Wage
It is a monetary compensation (or renumeration, personnel expenses,
labor) paid by an ______________________ to an
______________________ in exchange for work done.

2. _____________________________This occurs when workers who want

to work are unable to find jobs, which means lower economic output, while
still requiring subsistence.

3. Real Estate
It is the ______________________, land, buildings, air rights above
the land and ___________________________________ below the land.
4. Savings
Saving and investments are necessary to build the
_______________________.

5. ____________________________is defined as building up the

_________________________ for more future production and
consumption. It is the purchase of goods that are not consumed today but
are used in the future to create wealth.

BRIEF INTRODUCTION
Different Principles, Tools, and Techniques in Creating
Lesson 1
A Business

Definition of terms:
▪ Business – It is an undertaking by a person or a group of persons.
▪ Industry – It is the
aggregation of the different
businesses engaged in the
same line of undertaking
Business Organizations
1. Sole Proprietorship – It is
owned by a single
individual. This is the
simplest way to set up a
business. It 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.
Examples: Sari-sari Store, Bakery
APPLIED ECONOMICS SHS 2ND QUARTER

2. Partnership – It is an
agreement in which two or
more persons combine their
resources in a business with
view to making profit.

- General partnership – All

owners share the
management of the business
and each is personally
responsible for and must
assume the consequences of
the actions of the other partners.

- Limited partnership – Some members are general partners who

control and manage the business and may be entitled to a greater
share of the profit while other partners are limited and contribute only
capital.

Examples: clinics, law firms, accounting firms

3. Corporation – It is a legal entity that is separated from its owners, the

shareholders. No shareholder is personally liable for the debts,
obligations, or acts of the corporation. Directors and officers can bear
liability for their involvement with the corporation.

Examples: Microsoft, Apple, Amazon, J.P. Morgan Chase, Google

4. Cooperative – It is an entity organized by people with similar needs

and is operated for their mutual benefit and to provide themselves with
goods or services to improve their income.

Examples: agricultural cooperative, electric cooperative, housing

cooperatives, credit unions, teachers’ cooperative

Micro, Small, Medium, and Large-scale businesses

A business is also classified according to its size based on the worth

of the business assets.
✓ Micro – The total assets are worth below Php 1,500,001.
✓ Small – The total assets are from Php 1,500,001 to Php 15,000,000.
✓ Medium – The total assets are from Php 15,000,001 to Php
60,000,000.
✓ Large – It refers to any business with assets in excess of Php
60,000,000.
APPLIED ECONOMICS SHS 2ND QUARTER

Tools in Evaluating a Business

The following must be considered in analyzing the industry:
1. geographic area,
2. size and outlook,
3. description of the product,
4. identification of buyers (target market),
5. regulatory environment,
6. knowing the competition, and
7. factors that will affect the growth of the business.
SWOT Analysis

▪ It was created in the 1960s by business gurus, Edmund P. Learned, C.

Roland Christensen, Kenneth Andrews, and William D. Book in their
book, Business Policy, Text and Cases (Irwin, 1969).
▪ It 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 a means of identifying the internal and external forces that
may affect the business.
▪ It is very helpful in assessing new ventures.

The Internal Factors: (S) Strengths (W) Weaknesses

Internal Environment consists of

factors that exist within the premises of
the business, thus most of it are
controllable. And, because it existed
within, it can directly affect the business
performance.

1. Financial resources such as money

2. Physical resources such as the
company’s location, facilities,
machinery, and equipment
3. Human resources consisting of employees
4. Access to natural resources, trademarks, patents, and copyrights; and
5. Current processes, such as employee programs, department
hierarchies, etc.
APPLIED ECONOMICS SHS 2ND QUARTER

The External Factors: (O) Opportunities (T) Threats

These are those that affect a company, an organization, an individual,

and those outside their control.
▪ Economic trends including
local, national, and international
financial trends, reforms in the
banking system, and growth of
the GDP
▪ Market trends, such as new
products or technology or
evolving buyer’s profiles,
including changes in tastes
▪ National and local laws as well as political, environmental, 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
Another example of SWOT Analysis
(S) Strengths (W) Weaknesses
Government incentives Difficulty of organization
Low capital requirement Costly set-up
Market acceptance Possible pollution
Experienced leaders problems
Lack of training of
workers
(O) Opportunities (T) Threats
Project may replace Entry of competitors
imported good available in Time consuming
the market production processes
Will improve employee Opposition from residents
welfare in the community
Improved company
reputation
APPLIED ECONOMICS SHS 2ND QUARTER

Porter’s Five Forces of Competitive Position Analysis

It was developed in 1979 by Michael E. Porter of Harvard Business

School as a framework or a guide for assessing and evaluating the
competitive strength and position of a business organization.

It is especially useful when starting a new business or when entering a

new industry sector. This will help determine the following:

▪ competitiveness and attractiveness of a market;

▪ seek to locate the power in a business situation;
▪ its current position; and
▪ the strength of a position that an organization may enter into.
Once the idea is identified, then:

▪ Areas of strength can be pinpointed and exploited;

▪ Solutions to weaknesses may be proposed; and
▪ Possible mistakes be avoided.
APPLIED ECONOMICS SHS 2ND QUARTER

Michael Porter’s Five Forces of Competitive Position Analysis

✓ Threat of New Entrants - New entrants in an industry bring new

capacity and the desire to gain market share. The seriousness of the
threat depends on the barriers to enter a certain industry. The higher
these barriers to entry, the smaller the threat for existing players.
✓ Bargaining Power of Buyer - This force analyzes how much power
and control a company’s supplier has over the potential to raise its
prices or to reduce the quality of purchased goods or services, which
in turn would lower an industry’s profitability potential. The
concentration of suppliers and the availability of substitute suppliers
are important factors in determining supplier power.
✓ Bargaining Power of Suppliers - This force analyzes to what extent
the customers are able to put the company under pressure, which also
affects the customer’s sensitivity to price changes.
✓ Bargaining Power of Suppliers - The customers have a lot of power
when there are not many of them and when the customers have many
alternatives to buy from. Moreover, it should be easy for them to switch
from one company to another.
✓ Threat of Substitute Products/Service - The existence of products
outside of the realm of the common product boundaries increases the
propensity of customers to switch to alternatives. In order to discover
these alternatives, one should look beyond similar products that are
branded differently by competitors. Instead, every product that serves
a similar need for customers should be taken into account.
✓ Rivalry Among Existing Competitors - This last force of the Porter’s
Five Forces examines how intense the current competition is in the
marketplace, which is determined by the number of existing
competitors and what each competitor is capable of doing. Rivalry is
high when there are a lot of competitors that are roughly equal in size
and power, when the industry is growing slowly and when consumers
can easily switch to competitors offering little cost.
Characteristics of Each Michael Porter’s Five Forces of Competitive
Analysis

Threat of New Bargaining Bargaining Threat of Rivalry Among

Entrants Power of Power of Substitute Existing
Suppliers Buyers Products or Competitors
Services
Brand Loyalty Number of Number of Number of Number of
Suppliers customers substitute competitors
products
available
APPLIED ECONOMICS SHS 2ND QUARTER

Capital Uniqueness Size of each Relative price Diversity of

Requirements of each customer performance of competitors
supplier’s order substitute
product or
service
Government Size of Differences Perceived level Brand loyalty
Policies suppliers between of product
competitors differentiation
Access to Focal Buyer’s Switching cost Industry
distribution company’s ability to concentratio
channels ability to substitute n
substitute
Switching Switching Switching Industry
costs costs costs growth

ACTIVITIES
ACTIVITY 1 ENRICHING THE MIND

Directions: Answer what is being asked by the following.

A. Types of Business Organization

Directions: Identify the types of business organization indicated in the
following:

1. An Art Studio
2. Jeepney Transportation Services
3. A Local Grocery Store
4. Salon or Spa
5. Amazon and American Express
6. School Canteen
7. Co-branding Campaign Of Starbucks and Spotify
8. Computer Repair Services
9. Pharmaceutical Company
10. Lending Company
APPLIED ECONOMICS SHS 2ND QUARTER

B. Types of Scale in Businesses

Directions: Complete the table by providing the types of scale in business
total asset.

SCALE IN BUSINESS TOTAL ASSET

Micro Business

Small Business

Medium Business

Large Scale Business

REMEMBER

Porter’s Five Forces of Competitive Position Analysis

It was developed in 1979 by Michael E. Porter of Harvard Business
School as a framework or a guide for assessing and evaluating the
especially useful when starting a new business or when entering a new
industry sector.

Michael Porter’s Five Forces of Competitive Position Analysis

1) Threat of New Entrants
2) Threat of Substitute Product/Service
3) Bargaining Power of Buyer
4) Rivalry Among Competitors
5) Bargaining Power of Supplier

Business – It is an undertaking by a person or a group of persons.

Industry – It is the aggregation of the different businesses engaged in the
same line of undertaking.

Business organizations are composed of sole proprietorship,

partnership, cooperative, and corporation.

A business is also classified according to its size based on the worth of

the business assets.
✓ Micro – The total assets are worth below Php 1,500,001.
✓ Small – The total assets are from Php 1,500,001 to
Php 15,000,000.
✓ Medium – The total assets are from Php 15,000,001 to
Php 60,000,000,
✓ Large – It refers to any business with assets in excess of
Php 60,000,000.
 APPLIED ECONOMICS SHS 2ND QUARTER

SWOT Analysis
It was created in the 1960s by business gurus, Edmund P. Learned,
C. Roland Christensen, Kenneth Andrews, and William D. Book in their
book, Business Policy, Text and Cases (Irwin, 1969). It is an analytical
framework that can help a company meet its challenges and identify new
markets. SWOT analysis is the representation of strengths (S),
weaknesses (W), opportunities (O), and threats (T).

CHECK YOUR UNDERSTANDING

I. Read the following statements carefully. Identify what is being

described in the statement and write your answer on the space
provided before the number.

1. The existence of products outside of the realm of the common product

boundaries increases the propensity of customers to switch to
alternatives.

2. It is especially useful when starting a new business or when entering a

new industry sector.

3. These are those that affect a company, an organization, an individual, and

those outside their control.

4. It is a legal entity separate from its owners, the shareholders.

5. This force analyzes to what extent the customers are able to put the
company under pressure, which also affects the customer’s sensitivity to
price changes.
APPLIED ECONOMICS SHS 2ND QUARTER

II. In this portion, another activity will be given to you to enrich your
knowledge or skill of the lesson learned. Draw the proposed product
you would like to introduce in the market. The description of the product
must be visible. Make use of a separate sheet for this activity.

Criteria to be used:
Clarity of the Drawing - 40%
Uniqueness of the
Product - 40%
Neatness of the Drawing -20%
100%

POSTTEST
Read the sentences carefully. Choose the letter of the correct
answer.

1. What scale of business that has total asset of Php 1,500,001 to Php
15,000,000?
A. Large C. Micro
B. Medium D. Small

2. Which is NOT a characteristic of Porter’s five forces of competitive

position analysis under “threat of new entrants”?
A. Access distribution to channels C. Government Policies
B. Brand loyalty D. Number of customers

3. Which is an entity organized by people with similar needs and is operated

for their mutual benefit and to provide themselves with goods or services
to improve their income?
A. Business C. Corporation
B. Cooperative D. Industry

4. Which is the simplest way to setup a business?

A. Cooperative C. Partnership
B. Corporation D. Sole Proprietorship

5. What is the range of total asset for a medium scale of business?

A. Below Php 1,500,001
B. From Php 15,000,001 to Php 60,000,000
C. Excess of Php 60,000,000
D. From Php 1,500,001 to Php 15,000,000
6. What do you call a framework that helps to assess new venture and can
help identify the business’s risks and rewards?
A. PEST Analysis C. SEST Analysis
B. Porter’s Five Forces D. SWOT Analysis
APPLIED ECONOMICS SHS 2ND QUARTER

7. Which is a characteristic of ‘bargaining power of supplier’?

A. Capital Requirements
B. Number of competitors
C. Focal company’s ability to substitute
D. Number of customers

8. What is the aggregation of the different businesses engaged in the same

line of undertaking?
A. Business C. Negotiation
B. Industry D. Venture

9. How Porter’s five force of competitive position analysis helped in the

business?
A. By serving as a guide for assessing and evaluating the competitive
strength and position of a business organization
B. By serving as a roadmap of a good future of the business organization
C. By providing necessary information in opening a business in an
industry full of competitive entrepreneurs
D. By providing services to business owners who would like to assure a
positive outcome of business

10. Which is an example of a sole proprietorship business organization?

A. Alejo’s Dental Clinic
B. Sari-sari Store ni Mang Manny
C. Microsoft
D. Tinajeros National High School Cooperative
APPLIED ECONOMICS SHS 2ND QUARTER

G12 SLEM # 2 – WEEK 2 & 3 – 2nd QUARTER

INDUSTRY ANALYSIS, ITS PRINCIPLES, TOOLS AND TECHNIQUES

LEADING TO THEIDENTIFICATION OF BUSINESS OPPORTUNITIES
EXPECTATIONS

EXPECTATION
LEARNING COMPETENCY: Apply business principles, tools, and
techniques in participating in various types of industries in the locality

OBJECTIVE/S:
At the end of this module, the students must be able to:
1. apply business principles, tools, and techniques in participating in
various types of industries in the locality for the product;
2. carefully select tools and techniques of business opportunities for
the product suitable in the locality; and
3. prepare for an environmental and industrial analysis of the
proposed product.

PRETEST
Read the sentences carefully. Choose the letter of the correct
answer.

1. What is a business function completed by business owners and other

individuals to assess the current business environment?
A. Environmental Analysis C. Product Analysis
B. Industry Analysis D. Social Analysis

2. Which involves a look at economic factors such as income of the people,

economic conditions such as inflation, demand, and supply in the
market?
A. Culture and Lifestyles C. Physical Environment
B. Economic Force D. Political Factor

3. What are the goods that can be used in place of another?

A. Complementary C. Substitute
B. Original D. Supplementary
APPLIED ECONOMICS SHS 2ND QUARTER

4. What degree of competition in the market and the extent and strength of
competition are all very vital in determining the success or failure of a
business?
A. Circular Flow Model C. Culture and Lifestyles
B. Competition D. Economic Forces

5. Which is a guide to industry analysis?

A. Businesses C. Product Market
B. Factor Market D. Regulatory Environment

LOOKING BACK
Directions: Highlight the word/s being asked.

Bargaining Power
Business Corporation
Industry Proprietorship
Rivalry
Cooperative
New Entrants
Substitute

BRIEF INTRODUCTION

Business Principles, Tools, and Techniques in

Lesson 2 Participating in Various Types of Industries in The
Locality

Industry Analysis
▪ It is a business function completed by business owners and other
individuals to assess the current business environment.
▪ This analysis helps businesses understand various economic pieces
of the marketplace and how these various pieces may be used to gain
competitive advantage. This includes the following:

Competition
1) Who are the major businesses in the country?
2) Are there locations close to your proposed business?
3) Have they been long existing or still new entrants?
4) What is the market share of each of these businesses?
APPLIED ECONOMICS SHS 2ND QUARTER

Customers
1) Who will sell your product to?
2) Who exactly will buy your products?
3) What income groups do they categorize?
4) What age brackets do they range?
5) What gender do they belong?
6) What type of people will you cater to?

Suppliers
▪ A business may need one or more suppliers.
▪ A business owner can buy directly from the manufacturers.
▪ Another alternative is to buy from distributors.
▪ Another source of goods is through imports.
Substitutes
▪ These are goods that can be used in place of another.
▪ These are goods that may even if partly, satisfy the same needs of a
consumer such that the consumer may use one instead of another.

A Guide to Industry Analysis

1) Geographic Area – local, regional

2) Industry (as to size)
3) Product
4) Buyers
5) Regulatory Environment
6) Company Information
7) History of the industry
8) Factors that affect growth of the industry such as migration
9) Trends in sales over recent years
10) Current operational/management trends within the industry
11) The types of marketing strategies prevalent within the
industry
12) Competitor Information

Environment Analysis

It is an analysis of the environment in which the business will operate.

This means an evaluation of the possible or probable effects of external
forces and conditions on the survival and growth of the business.

It includes the following:

✓ Economic Forces – This involves a look at economic factors such as

income of the people, specifically the target market, economic
conditions such as inflation, recession, prosperity, demand, and supply
in the market.
APPLIED ECONOMICS SHS 2ND QUARTER

✓ Physical Environment – This includes a look at the population size,

the geography of the place where business will be located, land
distribution, climate, and in today’s global warming situation, whether
or not the area is prone to flood or earthquake.
✓ Political Factors – The type of government, the stability and strength
of the government, and good leadership are factors that can be an
advantage to a business.
✓ Cultures and Lifestyles – It is important to study cultural practices
such as fiestas, celebration of the Christmas season, trends in
consumption patterns, as a means to identify the goods and services
that will fit into these celebrations and spending behavior.
✓ Competition – This is something that needs to be studied. The degree
of competition in the market and the extent and strength of competition
are all very vital in determining the success or failure of a business.
Circular Flow of Economic Activity

✓ Circular Flow – it is defined as the flow of activities of household and

firms in a circular direction.

A Closer Look

Among the firms, there is also the product flow up the production
stages, that is, from the raw material to the intermediate good and on to the
final good stage for consumption (Figure 2). Opposite the product flow is the
money payment flow in exchange for product delivery down the production
APPLIED ECONOMICS SHS 2ND QUARTER

stages from the consumer, that is, to the final then to the intermediate and
on to the raw material stage (broken arrows, Figure 2).

✓ Raw materials – These are unprocessed goods like raw minerals,

logs, and wheat, which are extracted from their sources and do not
undergo any process of production.

✓ Intermediate goods – These are semi-processed goods that are not

ready for final use by the consumer, such as leather, cloth, and steel,
which have undergone some processing but need to go through
additional processing before they can be actually used. These are
supplied to final good firms for conversion into goods in their finished
stage.

✓ Final goods – These are goods that are ready for direct consumption
such as refrigerators, dresses, or pants. These final goods are then
sold to customers for their use.

Figure 2 magnifies the production side of the circular flow diagram in

Figure 1. Goods flow up the production stages to the consumers in return for
payments trickling down the production stages in return for the inter-stage
product flows.
Another form of physical flow is the flow of resources from the
households to the business firms (solid arrows, Figure 3). The household is
the source of resources used by the raw material firm, intermediate good
firm, and final good firm. In the flow, it can be seen that the household
provides resources to the raw material, intermediate good, and the final good
firms for use in the production goods. In return for the use of resources, the
three types of producing units make money payments to households (broken
arrows). This is now a financial flow since it involves the payment of money
to the resource owners. The various firms now pay money to the households
as payment for the resources they provide.

Figure 3 magnifies the flows of resources and payments in exchange

between households and the producers in the circular flow diagram in Figure
1.

Government Sector and Global Economy

✓ Government
– It is important because it makes purchases of economic resources
from the household and makes money payments to the resource
owners for the use of their resource.
APPLIED ECONOMICS SHS 2ND QUARTER

– The government also buys goods and services from the producing
units for which it makes money payments.

✓ Global Economy
The significance of the global economy cannot be overemphasized in
today’s times. An economy buys goods from other countries; these are called
imports. An economy sells goods to other countries; these are called exports.
A country pays for the goods imported and earns income from exports.

ACTIVITIES
ACTIVITY 1 ENRICHING THE MIND

Illustrate the following flow without looking into the discussion portion;
your honesty is greatly appreciated. You may use the space provided or a
separate sheet.

A. Circular Flow B. Intra-Production Payment Flow

C. Resource-Production Payment Flow

ACTIVITY 2 APPLYING WHAT YOU HAVE LEARNED

Prepare for an industrial and environment analysis of the proposed

product created in Activity 1.2 of Lesson 1. You may follow the format given
in this module. Please use a separate sheet, if needed.
APPLIED ECONOMICS SHS 2ND QUARTER

Suggested industrial and environmental analysis of a proposed

product:
1. SWOT Analysis
2. Porter’s Five Forces of Competitive Position Analysis

Criteria to be used:

Accuracy of the Information - 35%

Uniformity and Coherence
of the Idea - 35%
Neatness of Work - 30%
100%

REMEMBER
Industry Analysis
▪ It is a business function completed by business owners and other
individuals to assess the current business environment.

▪ This analysis helps businesses understand various economic

pieces of the marketplace and how these various pieces may be
used to gain competitive advantage. This includes the following:
1) Competition,
2) Customers,
3) Suppliers, and
4) Substitutes.

A Guide to Industry Analysis Environment Analysis

1) Geographic Area – local, 1. Economic Forces
regional 2. Physical Environment
2) Industry (as to size) 3. Political Factors
3) Product 4. Cultures and Lifestyles
4) Buyers 5. Competition
5) Regulatory Environment
6) Company Information Kinds of Goods
7) History of the industry • Raw material
8) Factors that affect growth of • Intermediate goods
the industry such as migration • Final goods
9) Trends in sales over recent
years
10) Current
operational/management
trends within the industry
11) The types of marketing
strategies prevalent within the
industry
12) Competitor Information
APPLIED ECONOMICS SHS 2ND QUARTER

CHECK YOUR UNDERSTANDING

I. Read the following statements carefully. Write TRUE if the statement

is correct and write the correct answer if the statement is incorrect.

1. Cultures and lifestyles are important to study cultural practices such as

fiestas, trends in consumption patterns, as a means to identify the goods
and services that will fit into these celebrations and spending behavior.

2. Industry analysis helps businesses understand various business

opportunities of the marketplace and how these various pieces may be
used to gain competitive advantage.

3. The degree of competition in the market and the extent and strength of
competition are all very vital in determining the success or failure of a
business.

4. Circular flow is defined as the flow of activities of household and firms in

a circular direction.

5. The government also buys goods and services from the manufacturing
units for which it makes money payments.

6. Physical environment involves a look at economic factors such as income

of the people, specifically the target market, economic conditions such as
inflation, recession, demand, and supply in the market.

7. The degree of competition in the market and the extent and strength of
competition are all very vital in determining only the success of a
business.

8. Environmental analysis is an evaluation of the effects of external forces

and conditions on the survival and growth of the business.

9. Industry analysis is a business function completed by business owners

and other individuals to determine the current business environment.
APPLIED ECONOMICS SHS 2ND QUARTER

10. Political factors are the type of government; the stability and strength of
the government, and good leadership are factors that can be an
advantage to a business.

II. LET’S DO THE CHALLENGE!

Make a graphic organizer regarding the difference of industrial

analysis and environmental analysis.

Criteria to be used:
Clarity of the Idea -
40%
Originality - 40%
Neatness - 20%
100%

POSTTEST
Read the sentences carefully. Choose the letter of the correct answer.

1. What is a business function completed by business owners and other

individuals to assess the current business environment?
A. Environmental Analysis C. Product Analysis
B. Industry Analysis D. Social Analysis

2. Which involves a look at economic factors such as income of the people,

economic conditions such as inflation, demand, and supply in the
market?
A. Culture and Lifestyles C. Physical Environment
B. Economic Force D. Political Factor

3. How industry analysis helped businesses?

A. By understanding various economic pieces of the marketplace and
how these various pieces may be used to gain competitive
advantage.
B. By clarifying the dos and don’ts of a business enterprise in a
community.
C. By providing sufficient information in putting up a business to gain an
advantage to other competitors.
D. By promoting the business to the industry.
APPLIED ECONOMICS SHS 2ND QUARTER

4. Which is NOT a guide in analyzing an industry?

A. Buyer C. Industry
B. Company Information D. Market Loss

5. What are the goods that can be used in place of another?

A. Complementary C. Substitute
B. Original D. Supplementary

6. What degree of competition in the market and the extent and strength of
competition are all very vital in determining the success or failure of a
business?
A. Circular Flow Model C. Culture and Lifestyles
B. Competition D. Economic Forces

7. How environment analysis helps a business?

A. It ensures the safety of the business for bankruptcy.
B. It supplies the need of the business in case of emergency.
C. It helps in the evaluation of the possible or probable effects of
external forces and conditions on the survival and growth of the
business.
D. It fulfills the need and want of the business in order to survive
in an industry full of competitors.

8. Which is a guide to industry analysis?

A. Businesses C. Product Market
B. Factor Market D. Regulatory Environment

9. When does the government earn money aside from taxes?

A. Economic Resource C. Households
B. Exports D. Imports

10. Which determines the type of government, the stability and strength of
the government, and good leadership are factors that can be an
advantage to a business?
A. Competition C. Economic Factor
B. Culture and Lifestyle D. Political Factor
APPLIED ECONOMICS SHS 2ND QUARTER

G12 SLEM # 3 – WEEK 4 – 2nd QUARTER

VARIOUS SOCIOECONOMIC IMPACTS OF BUSINESS ON

THE FOLLOWING SECTORS: CONSUMER, SUPPLIER AND
INVESTORS, GOVERNMENT, HOUSEHOLDS, AND
INTERNATIONAL TRADE

EXPECTATION
LEARNING COMPETENCY: Explain the effects of the various socio-
economic factors affecting business and industry

OBJECTIVE/S:
At the end of this module, the students must be able to:
1. explain the effects of the various socio-economic factors affecting
business and industry;
2. carefully investigate the effects of various socio-economic factors
affecting business and industry in your locality;
3. make a table on the effects of socio-economic factors affecting
business and industry in your locality in relation to the proposed
product; and
4. conduct a survey of socioeconomic factors (macro and
microenvironments) affecting business in a locality.

PRETEST
Read the sentences carefully. Choose the letter of the correct
answer.
1. What are the factors relate to and influence one another?
A. Economic Factors C. Socio-economic Factors
B. Market Factors D. Social Factors

2. Which socio-economic factor influences your decision to venture into

certain businesses with a specific target at consumers?

A. Economic Growth C. Income Capacity

B. Education Level D. Occupation

3. Which determines how much they can spend on certain products?

A. Demand C. Purchasing Power
B. Income Capacity D. Want
APPLIED ECONOMICS SHS 2ND QUARTER

4. How do socio-economic factors affect businesses?

A. It will help you make better decisions about the future and direction
of your business.
B. It affects the business decide the future of the country’s economy.
C. It analyzes the socioeconomic factors in deciding what business to
establish for the future.
D. It supports business owners to venture into small-medium scale
businesses, which are in demand today.

5. What influences the type of occupation a person can get and ultimately
their income level?
A. Economic Growth C. Income Capacity
B. Education Level D. Occupation

LOOKING BACK

Make a flowchart of the basic principles, tools, and/or techniques in

participating in various types of industries in the locality, specifically industry
analysis and environmental analysis. Use a separate sheet for this
undertaking.

Criteria to be used:
Clarity - 10
pts.
Presentation of the Idea - 5 pts.
Neatness - 5 pts.
20 pts.

BRIEF INTRODUCTION
Lesson 3 Effects of the Various Socio-economic
Factors Affecting Business and Industry

The first step to understanding what socio-economic factors are is to

understand social economics. This is a specialized branch of economics
that concerns itself with studying the intimate relationship between
economics and social behavior. Such things as ethics, social norms and
different social philosophies have an impact on how consumers behave in
an economy and the eventual shape that economy will take. The study of
social economics seeks to predict what kind of results to expect when the
society has been changed. It does this by studying politics, history and other
social sciences.
APPLIED ECONOMICS SHS 2ND QUARTER

Socio-economic Factors
o These refer to society related economic factors. These factors relate
to and influence one another. For example, your employment will
dictate your income. Your income level often correlates to your level
of education and your level of education helps to dictate your
employment.

Socio-economic factors are important characteristics, which mostly

influence consumers. These factors are associated with the quality of life and
determine the behaviors, tastes, preferences, attitudes and lifestyles of people
living within a society.

Socio economic factors have a high impact on businesses, whether big

or small. This is because the consumers are often at the heart of businesses
and tend to affect growth of all ventures. There are many socio-economic
factors that businesspersons need to look out for in order to excel and compete
effectively in an ever-changing market.

These are the following:

❖ Income capacity

Income capacity of consumers determines how much they can spend

on certain products. If citizens in a country have access to high incomes from
employment and personal business ventures, then they are more likely to
spend on luxurious products. This is because they can easily afford the
products and also have a taste for good things. On the other hand, low-
income earners may not be able to afford basic commodities, let alone the
luxurious products. The struggle to meet their basic needs may blind these
consumers from purchasing luxurious products.

It is thus essential for a businessperson to consider the income capacities

of the consumers before setting up the business. This factor should affect
where the entrepreneur sets up shop and the target clients he chooses. For
high end products, an entrepreneur should look for a shop in an up-market area
with access to high-income earners. For basic commodities, an entrepreneur
should look for cheap suppliers and set up shop near the low-income earners.

❖ Occupation

The occupation of consumers is largely related to the income they earn.

Low skilled laborers who work in menial jobs cannot earn the same as
corporate managers. The differences in occupations more often than not
determine the income gaps of the consumers.

As an entrepreneur you must carry out research on the occupations of

your consumers. This should influence your decision to venture into certain
APPLIED ECONOMICS SHS 2ND QUARTER

businesses with a specific target at consumers who have good occupations or

lowly jobs.

❖ Education Levels

Education levels influence the type of occupation a person can get and
ultimately their income level. Consumers with higher education tend to be
skilled and also have better jobs and incomes as compared to those without
education. Education is determined by the opportunities presented to the
consumers and can influence how much a consumer can afford.

In addition to this, the educated consumers have different tastes for

products as compared to the uneducated ones. The educated consumers are
not only more conscious about the contents of products but may also come off
as demanding as compared to the less educated ones. An entrepreneur may
have to work harder to fulfill the demands of these consumers as compared to
when dealing with less educated folk who are less demanding.

❖ Economic Growth

Economic growth and development of a country can also have an impact

on the social status of its citizens. Emerging economies such as China and
India have proved that if a country experiences high economic growth then the
citizens may have better access to incomes and also the middle class and
upper class may grow. This may also attract more investors into the country
and increase employment rates. Inevitably positive economic growth rates will
increase spending and help businesses to grow.
How Do Socio-economic Factors Affect Businesses?

Understand the socio-economic factors affecting business will help

you make better decisions about the future and direction of your business.
To have an intimate understanding, however, you will have to understand
both external and environmental factors, as well as how their interplay
affects your business.

ACTIVITIES

ACTIVITY 1 ENRICHING THE MIND

This comprises activities for independent practice to solidify your
understanding and skills of the topic. Guided questions will be provided as
your reference. You may use a separate sheet, if needed.

Guided questions:
1. What are the socio-economic factors affecting business and industry?
2. How these factors affect business and industry in a locality?
APPLIED ECONOMICS SHS 2ND QUARTER

Criteria to be used:
Clarity of the Idea - 40%
Originality - 40%
Neatness - 20%
100%

REMEMBER

Socio-economic Factors
▪ Refers to society related economic factors. These factors relate to
and influence one another.

Socio-economic factors are important characteristics, which mostly

influence consumers. These factors are associated with the quality of life and
determine the behaviors, tastes, preferences, attitudes and lifestyles of
people living within a society. These are the following:

✓ Income Capacity
✓ Occupation
✓ Education Levels
✓ Economic Growth

Understanding the socio-economic factors affecting business will

help you make better decisions about the future and direction of your
business. To have an intimate understanding, however, you will have to
understand both external and environmental factors, as well as how their
interplay affects your business.

CHECK YOUR UNDERSTANDING

I. This is a task that aims to evaluate your level of mastery in achieving

the learning competency. Read the following statements carefully.
Write TRUE if the statement is correct and write the correct answer if
the statement is incorrect.

1. All consumers are not only more conscious about the contents of products
but may also come off as demanding as compared to the less educated
ones.

2. Consumers with higher education tend to be skilled and also have better
jobs and incomes as compared to those without education.
APPLIED ECONOMICS SHS 2ND QUARTER

3. To have an intimate understanding, however, you will have to

understand both external and environmental factors, as well as how
their interplay affects your business.

4. If citizens in a country have access to high and low incomes from

employment and personal business ventures, then they are more likely
to spend on luxurious products.

5. Socio-economic factors have normal impact on businesses, whether big or

small.

6. Occupation is determined by the opportunities presented to the consumers

and can influence how much a consumer can afford.

7. Low skilled laborers who work in menial jobs cannot earn the same as
corporate managers.

8. As an entrepreneur you must carry out research on the educational

background of your consumers.

9. The study of social-economics seeks to predict what kind of results to

expect when the society has been changed. It does this by studying
politics, history and other social sciences.

10. For basic commodities, an entrepreneur should look for more expensive
and quality supplies and set up shop near the low-income earners.

II. LET’S DO THE CHALLENGE!

In this portion, another activity will be given to you to enrich your

knowledge or skill of the lesson learned. Assume that your proposed product
has been accepted and patronized by the consumers, how are you going to
maintain the level of acceptance of consumers to your product. Make a
diagram showing the strategic plan of your product to survive from the
market. Put your answer on a separate sheet of paper, if needed.
APPLIED ECONOMICS SHS 2ND QUARTER

Criteria to be used:

Relevance of the Idea - 35%

Uniqueness of the Idea - 35%
Completeness of the Work - 30%
100%

POSTTEST
Read the sentences carefully. Choose the letter of the correct
answer.

1. What are the factors relate to and influence one another?

A. Economic Factors C. Socio-economic Factors
B. Market Factors D. Social Factors

2. How positive economic growth rate helps the citizens of a country?

A. It will increase spending of the people and help businesses to grow.
B. It motivates entrepreneurs to build new business ventures.
C. It supplies all the needs of the people in a country.
D. It ensures the safety of the people in times of crisis.

3. Which socio-economic factor influences your decision to venture into

certain businesses with a specific target at consumers?
A. Economic Growth C. Income Capacity
B. Education Level D. Occupation

4. How income capacity affects the decision of a consumer in buying

products?
A. If their income is low, they may not afford to buy basic
commodities; however, if the income is high, they are more likely
to buy luxurious products.
B. The consumer’s ability to purchase products depends on his or her
status in life.
C. The income predicts the financial status of a consumer in
purchasing a product.
D. When the consumer’s income is low, he can only afford basic
commodities.

5. Which is NOT associated with socio economic factors?

A. Attitude C. Community Involvement
B. Behavior D. Lifestyle
APPLIED ECONOMICS SHS 2ND QUARTER

6. Which determines how much they can spend on certain products?

A. Demand C. Purchasing Power
B. Income Capacity D. Want

7. How do socio-economic factors affect businesses?

A. It will help you make better decisions about the future and direction
of your business.
B. It affects the business decide the future of the country’s economy.
C. It analyzes the socioeconomic factors in deciding what business to
establish for the future.
D. It supports business owners to venture into small-medium scale
businesses, which are in demand today.

8. How an educated consumer affects his buying behavior?

A. They are more demanding compared to uneducated consumers.
B. They are very particular with details of the goods to buy.
C. They are very strict when it comes to the price and quality of the goods
and services.
D. They are not only more conscious about the contents of products but
may also come off as demanding as compared to the less educated
ones.

9. Why study socio-economic factors?

A. To understand the intimate relationship between economics and
social behavior that will impact on how consumers behave in an
economy and the eventual shape that economy will take.
B. To predict the level of understanding of a consumer in purchasing
goods and services.
C. To seek awareness
D. To know the intimate relationship between economics and social
behavior.

10. What influences the type of occupation a person can get and ultimately
their income level?
A. Economic Growth C. Income Capacity
B. Education Level D. Occupation
APPLIED ECONOMICS SHS 2ND QUARTER

G12 SLEM # 4 – WEEK 5-8 – 2nd QUARTER

SOCIOECONOMIC IMPACTS OF BUSINESS ON THE

FOLLOWINGSECTORS: CONSUMER, SUPPLIER AND
INVESTORS, GOVERNMENT, HOUSEHOLDS, AND
INTERNATIONAL TRADE

EXPECTATIONS

LEARNING COMPETENCY: Evaluate the viability and impacts of

business on the community.

OBJECTIVE/S:
At the end of this module, the students must be able to:
1. explain the viability and impacts of business on the consumers,
suppliers and investors, government, households, and community;
2. carefully investigate the socio-economic impact of business on the
consumers, suppliers and investors, government, households, and
community; and
3. conduct a socio-economic impact study of business on the
community.

PRETEST
Read the sentences carefully. Choose the letter of the correct
answer.
1. What are the factors that have negative influence on an individuals’
economic activity?
A. Economic Factors C. Socio-economic Issues
B. Social Factors D. Technological Influence

2. What do you call a socioeconomic impact assessment weighs the

socioeconomic cost against the socio-economic benefit?
A. Economic Investigation
B. Social Issues Research Report
C. Product Proposal
D. Socio-economic Impact Study
APPLIED ECONOMICS SHS 2ND QUARTER

3. Why measure socioeconomic impact of business?

A. It can help companies understand the needs, aspirations,
resources, and incentives of their customers to develop winning
new products and services and improve existing offerings.
B. It can help companies understand the needs, resources, and
incentives of their customers.
C. It can assess the wellbeing of the country’s economy to improve
products and services.
D. It can maximize company opportunities to develop new products
and services and improve existing offerings.

4. How business impacts consumers?

A. When the consumers can feel safety and security to the product.
B. As long as business can provide new goods ad services, better
quality of goods and more options, the consumer can benefit from
it.
C. When the consumers are willing to buy the product regardless of
the price.
D. As long as a new business can provide new goods ad services,
better quality of goods and more options, the consumer can
benefit from it.

5. What important thing does government can get from businesses?

A. Budget Proposal C. Value-added Tax
B. Business Venture D. Tax Revenues

LOOKING BACK
Make a graphic organizer summarizing the lesson learned in MIMs #3.
You may use a separate sheet of paper, if needed.

Criteria to be used:

Clarity - 10 pts.
Presentation of the Idea - 5 pts.
Neatness - 5 pts.
20 pts.
APPLIED ECONOMICS SHS 2ND QUARTER

BRIEF INTRODUCTION

Lesson 4 Evaluate the Viability and Impacts of Business

on the Community

Socio-economic Impact Study

- It a socio-economic impact assessment weighs the socio-economic

cost against the socioeconomic benefit. As far as possible, the analysis
includes the consequences for all participants in society and all kinds
of impacts, for example: social impacts (e.g. health) and economic
impacts (can include effects on employment).

Socio-economic Issues

- These are factors that have negative influence on an individuals’

economic activity including: lack of education, cultural and religious
discrimination, overpopulation, unemployment and corruption.

Importance of a Socio-economic Impact Study in Planning a Business

Measuring socio-economic impact can help companies understand the

needs, aspirations, resources, and incentives of their customers – enabling
them to develop winning new products and services and improve existing
offerings. It can help companies answer questions like: Why haven’t our
sales grown as expected?

Viability of a Business
The viability of a business is measured by its long-term survival and its
ability to sustain profits over a period of time. A business is able to
survive when it's viable because it continues to make a profit year after year.
The longer a company can stay profitable, the better it's viability.

Impact of Business on Consumers

A successful business influences the behavior of consumers to

encourage them to buy its products. The business does this by studying
consumer needs and adopting strategies to persuade as many consumers
as possible that the products have value. Furthermore, a new business,
especially one that is innovative and focused on bringing some new product
or service to the market, is always welcome to the consumer who is looking
value for his money. As long as a new business can provide new goods ad
services, better quality of goods and more options, the consumer can benefit
from it. But if a business comes up with a low quality good and does not
APPLIED ECONOMICS SHS 2ND QUARTER

provide the consumer value for his money, then this business will have a
negative impact on the market.

Impact of Business on Suppliers and Investors

A new business will also provide opportunities for suppliers and
investors. For example, if a new construction company is set up, then this
opens up opportunities for the other businesses that will supply them their
needs, tools, wood, cement, steel, paints, nails, screws, and decorators.
Many suppliers will now get a chance to sell to the newly established
business, which means income for them.

Demand for the goods provided by the suppliers will increase. These
suppliers will now need to produce more of them and they will need to hire
more workers who will earn wages from being employed. More capital will
be needed to invest in the production of these tools and materials, generating
again income for the economy. Investors get to earn returns on their
investments, with capital plowed back into more investments and generating
more income for the economy, thus leading to economic growth.

Impact of Business on Government

The government will also benefit from the establishment of new
businesses, through revenues earned on fees collected from them and on
taxes imposed on the incomes of the businesses.
Before a business can be set up, it has to meet requirements to start
operating. First, the business owner has to apply to start its business.
Licenses have to be obtained. Organizational fees have to be paid. On the
municipal level, the local government earns revenue from these fees and
licenses. This means money added to their local budget to provide social
services to the community, for the development of the company, to pay
salaries of local officials and workers, to maintain peace and order and to
subsidize public schools.

On the national level, the government gets to impose taxes on the

incomes earned by the businesses. Employees hired by these businesses
also have to pay personal income taxes to the Bureau of Internal Revenue
(BIR). For employed workers, these taxes are regularly withheld by their
employees and remitted to the BIR.

These tax revenues fuel development because they are used by the
government for national activities and for budget allocations for its programs.
The national government has revenues to finance its projects, to pay
government officials, to build schools, to improve the military, to promote
APPLIED ECONOMICS SHS 2ND QUARTER

peace and order all over the country, to build housing for the poor, and to
provide health services and improved welfare programs for the people.

Impact of Business on Households

New businesses mean employment opportunities for the Filipinos.
Those who have jobs but are earning low-wages may find better paying jobs
with the new companies. Unemployed workers looking for work may have
the chance of being employed by these companies. The pool of unemployed
workers will definitely decrease. Being employed will enable them to buy their
basic needs and even some luxuries. This means that their quality of life and
their standard of living will improve.

Impact of Business on the Community

Corporate Social Responsibility (CSR) has become a growing trend
among businesses today. As a result of this, corporations and even small
businesses have increased their focus on projects that provide scholarships
to poor but deserving students, allocating budgets for housing for low-income
families such as participation in programs like the Gawad Kalinga,
environmental protection including tree planting, elimination of pollution, and
other environmental related programs.
Communities benefit from business-sponsored activities that include
sports fests and wellness programs, livelihood projects, micro financing, and
even medical and dental missions.

ACTIVITIES

ACTIVITY 1 ENRICHING THE MIND

In this portion, you will be making an independent practice to solidify

your understanding and skills of the topic. Look for a successful small
business in your neighborhood. Please follow the guided
instructions/questions provided. Please use a separate sheet for this activity.

✓ Interview the owner; find out the reasons for putting up the business.
✓ What are the problems encountered?
✓ What are the reasons for its success?

Criteria to be used:

Clarity of the Details - 40%

Presentation of the Idea - 40%
Completeness of Work - 20%
100%
APPLIED ECONOMICS SHS 2ND QUARTER

REMEMBER

Socio-economic Impact Study

• A socio-economic impact assessment weighs the socio-economic
cost against the socioeconomic benefit.

Socio-economic Issues
• These are factors that have negative influence on an individuals’
economic activity including: lack of education, cultural and religious
discrimination, overpopulation, unemployment and corruption.

Importance of a Socioeconomic Impact Study in Planning a Business

Measuring socio-economic impact can help companies understand

the needs, aspirations, resources, and incentives of their customers –
enabling them to develop winning new products and services and improve
existing offerings.

Impact of Business on Consumers

• A successful business influences the behavior of consumers to
encourage them to buy its products.

Impact of Business on Suppliers and Investors

• A new business will also provide opportunities for suppliers and
investors.

Impact of Business on the Government

• The government will also benefit from the establishment of new
businesses, through revenues earned on fees collected from them
and on taxes imposed on the incomes of the businesses.

Impact of Business on Households

• New businesses mean employment opportunities for the Filipinos.
Those who have jobs but are earning low-wages may find better
paying jobs with the new companies.

Impact of Business on Community

• Corporate Social Responsibility (CSR) has become a growing trend
among businesses today. As a result of this, corporations and even
small businesses have increased their focus on projects that provide
scholarships to poor but deserving students, allocating budgets for
housing for low-income families such as participation in programs
like the Gawad Kalinga.
APPLIED ECONOMICS SHS 2ND QUARTER

CHECK YOUR UNDERSTANDING

I. Answer the following given questions. Use a separate sheet, if
needed.

1. How socio-economic impact study helps in the future of a

business?

2. Why do we need to study the socio-economic impact of business

to consumers, the government, suppliers and investors, the
households, and the community?
3. When do we need to study the socio-economic impact of the
business to consumers, the government, suppliers and
investors, the households, and the community?
4. How socio-economic impact study helps in the economy of the
Philippines?

II. LET’S DO THE CHALLENGE!

In this portion, another activity will be given to you to enrich your

knowledge or skill of the lesson learned. Make a banner on how you feel
about the socioeconomic impact of the COVID-19 pandemic in the
Philippines’ economy. You may use the space provided or a separate sheet
of bond paper.

Criteria to be used:
Relevance to the Topic - 40%
Presentation of the Idea- 40%
Neatness of Work 20%

100%
APPLIED ECONOMICS SHS 2ND QUARTER

POSTTEST
Read the sentences carefully. Choose the letter of the correct
answer.

1. How did consumers cope with the behavior of the consumers?

A. By studying consumer needs and adopting strategies to persuade
as many consumers as possible that the products have value.
B. By asking the consumers of what they want that could make them
happy.
C. By doing a market research regarding the current trends in the
market.
D. By doing a survey to prospective consumers of the product.

2. What are the factors that have negative influence on an individuals’

economic activity?
A. Economic Factors C. Socio-economic Issues
B. Social Factors D. Technological Influence

3. How does local government earn revenue?

A. Through the money of the people C. Through employment
B. Through fees and licenses D. Through business venture

4. How business impacts the community?

A. By providing new jobs to the people of the community.
B. By giving away goods and services at an affordable price.
C. Corporations and even small businesses provide assistance such
as scholarships to poor but deserving students and allocating
budgets for housing for low-income families.
D. Businesses assure that needs and wants of the community are
being met.

5. What do you call a socioeconomic impact assessment that weighs the

socio-economic cost against the socio-economic benefit?
E. Economic Investigation C. Social Issues Research Report
F. Product Proposal D. Socio-economic Impact Study

6. Where does tax revenues of the national government go?

A. They are used for budget allocations of programs and projects.
B. They are used to buy machineries and equipment for production
C. They are used for national activities and for budget allocations for
its programs.
D. They are used to pay the national debts of the country.
APPLIED ECONOMICS SHS 2ND QUARTER

7. Why measure socioeconomic impact of business?

A. It can help companies understand the needs, aspirations,
resources, and incentives of their customers to develop winning
new products and services and improve existing offerings.
B. It can help companies understand the needs, resources, and
incentives of their customers.
C. It can assess the wellbeing of the country’s economy to improve
products and services.
D. It can maximize company opportunities to develop new products
and services and improve existing offerings.

8. How business impacts consumers?

A. When the consumers can feel safety and security to the product.
B. As long as business can provide new goods and services, better
quality of goods and more options, the consumer can benefit from
it.
C. When the consumers are willing to buy the product regardless of
the price.
D. As long as a new business can provide new goods and services,
better quality of goods and more options, the consumer can benefit
from it.

9. How does investors help in economic growth of the country?

A. Investors provide opportunities to job seekers for a possible
employment.
B. Investors get to earn returns on their investments, with capital
plowed back into more investments and generating more income for
the economy.
C. Investors make business more prosperous that means more jobs
to be offered.
D. Investors seek to promote camaraderie among neighboring
countries for a better deal of partnerships.

10. What important thing does government can get from businesses?
A. Budget Proposal C. Value-added Tax
B. BUSINESS VENTURE D. TAX REVENUES