APPLIED ECONOMICS

Quarter 2 -Module VII

ANALYZING DIFFERENT PRINCIPLES, TOOLS,
AND TECHNIQUES IN CREATING A BUSINESS

Applied Economics
– SHS
Quarter 2 – Module 7​:
Analyzing Different
Principles, Tools, and
Techniques in Creating a
Business
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Regional Director: Gilbert T. Sadsad

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Assistant Regional Director: Jessie L. Amin

ANALYZING DIFFERENT PRINCIPLES, TOOLS,

AND TECHNIQUES IN CREATING A BUSINESS

A ​business is any legal activity undertaken by a person or group of persons with the
intention to gain profit. Business involves the production and exchange of goods and
services. For instance, production of shoes, bags, cloths, etc. On the other hand, ​i​ndustry
is different business activities which works for the same line of undertaking ​to produce
goods. ​For example, farms, factories, mines, etc. The Marikina Shoe Exchange, for
example, is a business firm which is part of shoe industry.

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 Before setting up a business, it is important that an industry analysis be made
and identified. ​A popular way for business owners and managers to organize their
thoughts when it comes to long-term decision-making is the use of SWOT
(sometimes called TOWS) analysis and other techniques. ​SWOT analysis measures
the ​S​trengths, ​W​eaknesses, ​O​pportunities and ​T​hreats of a business. It is not mainly
used to assess business ventures rather it can also be used to measure almost
anything that is influenced by external and internal factors.

✔ Analyze different principles, tools, and techniques in creating a business.

● Business - is any legal activity undertaken by a person or group of persons for

the intention to gain profit​.
● Industry – ​is a specific line of business undertaking engaged in by many firms in
the production of goods and provision of services​.
● Sole Proprietorship - is the simplest form of business undertaking. It is
owned and operated by a single person.

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● Partnership – It is business undertaking formed by two or more persons who
combine their resources either in cash, equipment or service.
● Corporation – It is a business formed by at least 15 incorporators whose shares
of ownership are evidenced by stock certificates.
● Cooperative – is a duly registered entity organized by a minimum of 15 persons
with similar interest who voluntarily joined, making equitable contributions to the
capital, and accepting a fair share of risks and benefits of the undertaking in
accordance with universally accepted cooperative principle.
● SWOT Analysis - ​identifies the ​S​trengths, ​W​eaknesses, ​O​pportunities
and ​T​hreats of a business enterprise.
● PEST Analysis - assess the external environment factors such as Political,
Economic, Social and Technological that affect the business undertaking.
● MOST Analysis - ​stands for Mission, Objectives, Strategies, and Tactics. This
tool can be used in analyzing the internal environment to ensures that business
is well-aligned to four (4) attributes.
● Porter’s Five Forces - ​analyzes bargaining power of suppliers and buyers, the
threats to new entrants and products or service substitutes, and competitive
rivalry in the marketplace

Direction: ​Read carefully Case No.1. Use the blank template to help you analyze
the case and identify the Strengths, Weaknesses, Opportunities and Threats.

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CASE NO. 1
A manager of a large pet food division of a multinational company needs to
create a SWOT analysis for his firm. He identifies the following analysis for the firm.
The purpose of the analysis is for the firm’s decision and to anticipate important
developments that can have an impact on the firm. The manager identifies the
following:

✔ Because of improved economic conditions, pet ownership is increasing in

almost all segments of the population.

✔ Market leader in the dry pet food market.

✔ A large competitor has just announced that it will introduce a new premium

pet food line, backed by huge advertising and sales promotion blitz.
✔ Access to the group's leading world position in food technology.

✔ Low advertising and promotions budget.

✔ European Union legislation will force manufacturers to disclose the content

of their pet food.

✔ Excessive product range with several low-volume brands.

✔ In terms of technology, new forms of pet food that are low in fat and

calories, yet highly nutritious and tasty, will soon emerge.

There are ​four (4) main business organization​ categories, to wit:

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 1. SOLE PROPRIETORSHIP - It is the simplest form of business organization.
It is owned and operated by a single person. All income and losses are
shouldered by the owner. The sole proprietor has full control over the entire
business operation.

2. PARTNERSHIP – It is business undertaking formed by two or more persons

who combine their resources either in cash, equipment or service. Profits and
losses are divided among the partners according to the terms of the
partnership agreement.

3. CORPORATION – It is a business formed by at least 15 incorporators whose

shares of ownership are evidenced by stock certificates. A corporation is
considered a juridical person. Thus, it has rights and liabilities separate from
their stockholders. The stockholders or owners elect their officers otherwise
known as the owners of the corporation. Corporations have the same legal
rights of the individuals aside from the ability to vote and a few personal
rights. Decisions and execution of business operations via formal votes are
required through its shareholders, officers and directors​. ​Corporation
normally can exist for a life of 50 year and renewable for another 50 years.
Owners have limited liabilities and burdened by heavy taxes.

4. ​COOPERATIVE – is a duly registered entity organized by a minimum of 15

persons with similar interest who voluntarily joined, making equitable

contributions to the capital, and accepting a fair share of risks and benefits of
the undertaking in accordance with universally accepted cooperative principle.

SMALL, MEDIUM AND LARGE-SCALE BUSINESSES

In the Philippines, business classifies according to the size of business assets.
BUSINESS
TOTAL ASSETS
CLASSIFICATIONS
Micro Business Php 1,500,001.00 below
Small Business PhP1,500,001.00 to Php 15,000,000.00
Medium Business PhP15,000,001.00 to Php 60,000,000.00
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Large-Scale Business In excess of Php 60,000,000.00
 Businesses must be registered with the appropriate government agencies, in
accordance with their category. Sole proprietorships and partnerships’ which must
be 100% owned and capitalized by Filipinos, are registered with the Department of
Trade and Industry (DTI). On the other hand, corporations, at least 60% of the
outstanding capital stocks must be owned by Filipino citizens, are registered with the
Securities and Exchange Commission (SEC).

TOOLS IN EVALUATING A BUSINESS

Some key factors that must be considered in analyzing the industry according
to a guide developed by North Carolina’s Small Business and Technology
Development Center are the following:

1. The ​geographic area​ which your business will cater to.

- Is it limited to local areas? Or it will cover a region, the entire country, or
the international market?
2. The ​size and outlook​ of the industry. What trends can be identified?
3. The ​product​. Description of the product.
4. Identified the ​buyers​. Who will be your target customers?
5. The ​regulatory environment​. Identify local and national laws that will restrict
the business to the chosen industry.
6. The need to ​identify the leading businesses in the industry and provide
company information on the most successful businesses.
7. Factors that will affect the growth of the business.

There are many tools and techniques that can be used in business. The
challenge is that how to select the best approach, tools, and techniques in the
business. ​MOST, SWOT, PEST/PESTLE​, and ​Porter’s Five Forces ​were some of
the common analysis, tools, and techniques that can be used in the business.

MOST

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 MOST stands for Mission, Objectives, Strategy, and Tactics This tool can be
used in analyzing the internal environment to ensures that business is well-aligned
to four (4) attributes:

Mission​: Determines where your business intends to go, wants to do, what you can
do and what purpose it exists for.
Mission Examples
Suppose you have a coffee-roasting business in the city. In this case, you can
assume that the ​Mission is to become the best coffee roaster in the city and its
surroundings is much more tangible and specific. When most companies and
consumers come to your company for your roasted coffee, you know that the
mission has been achieved.

Objectives​: Decides what goals will help to attain the mission. ​It should be SMART
(being specific, measurable, attainable, realistic, and timely).
Objective Examples
Carrying on from the previous example as the business owner of a coffee
roaster, you should emphasize objectives that indicate how you can become the best
coffee roaster of the city and its surroundings. An ​objective could be to receive a
certain portion of the orders online, to increase revenue by 5% a month, or to attract
200 number of customers before the end of the year​.

Strategies: Plan of action of the company to help move forward. It is a long-term

plan designed to achieve a specific goal.
Strategy Examples
With the coffee-roasting business example, the business would need to attract
customers away from the competition. For example, the business could offer a sales
promotion by giving a discount coupon to purchase the product within a specified
period. New investments in marketing, such as online advertisements or radio
commercials, could also be a strategy for growing your company’s reach.

As for which strategy will work best depends solely on the market and the
group of people the business intends to sell its products and services. Make a list of
strategies that can be used to achieve goals. Strategies should be specific, helpful,
and most of all, achievable.
Tactics​: Actions of company on how the strategies will be implemented. ​These are
methods used within the organization to achieve objectives, strategically completing
tasks to realize the overall (SMART) business goals.

Tactics Examples
With the coffee roaster, a marketing tactic could mean, writing the script
for commercials, hiring a marketing specialist, etc. The goal of any company’s

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 tactics is to direct the daily activities for its employees to ensure that the
organization is led down the proper path towards the general Mission.

SWOT

SWOT (​Strengths, Weaknesses, Opportunities, and Threats). Strengths and

weaknesses analyze the internal environment of the business; opportunities

and threats evaluate external environment of the business.
▪ Strengths​: Identify what advantages your company has and find which area

your company performs best in.

▪ Weaknesses​: Identify areas which the company performs weakly and needs to

be improved.
▪ Opportunities​: Focus on the offerings/options what the company has. This is

often the area where competitors perform poorly.

▪ Threats​: This is about the obstacles your business is facing. Often, this is the

area where competitors are performing well.

(photo credit:
https://www.google.com/search?q=business+swot+analysis&tbm=isch&hl=en&sa=X&ved=2ahUKEwjQ7u2rgPTqAhU3xYsBHUJ0ABAQrNwCKAB6BQgBEIMC&biw=1349
&bih=625#imgrc=c4b8CoLAmbaV-M​)

CASE 2. Cathy’s Canteen

Cathy’s Canteen is in a well-known university in Metro Manila. She started
selling packed lunches to her co-employees in the 70s for additional income. At

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around 1978 to 1979, Cathy decided to resign and make the business her full-time
job. She continued selling the same packed lunches and snacks to faculty
members and employees of the school. She also ventured into a small catering
service within the vicinity.
She decided to expand. She began operating a canteen in high school
building, then later added another canteen inside the science building. She enjoyed
the monopoly of owning the only food service in both buildings.
Business was doing well until a new administration cancelled her contract in
the Science building, and instead gave her contract in the Medicine building. She
retained her contract in the high school building, as well.
The new administrators opened a commercial complex inside the school with
commercial slots open for lease. The rent is quite expensive and 10-month rent
must be paid in advance to get a slot. There are currently 2 floors with available
slots. Cathy opened a slot on the first floor, and business has been good so far.
Cathy is now thinking of getting another slot beside her existing one in the
commercial complex, but she is hesitating because of two reasons: (1) the new K to
12 curriculum will initially decrease her potential customers by 50%; and (2)
university rules state that concessionaires must halt operations when school is on
break but must continue paying rent during those months.

Cathy’s Canteen SWOT ANALYSIS

Point of view: ​ Owner – Cathy (decision-maker)
Time Context: ​2015 (when the case happened)
▪ Statement of the Problem: ​How do you maintain the number of clients from
2016 to 2018? (Present setback of the firm)
▪ Statement of Objective: Maintain the number of clients by having leverage
and competitive advantage (A statement that answers the problem)
▪ Areas of consideration
A. The Internal Environment is a description of what is happening in the
business.

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 Inside the university, the population of students will decrease by 25% in AY
2016-2017. After a year, it will experience an additional 25% decline. Hopefully,
this will change in 2020-2021.
Aside from a decline in potential buyers, a lot of food chains are applying to
get a slot inside the school because of the number of students patronizing different
brands. This will further saturate the supply of food.

B. The External Environment is a description of what is happening outside the

business.
Outside the school are different strategic locations where one can set up
shop – specifically along the school’s perimeter. Convenience stores, food chains,
and coffee shops are most common.

C. The Task Environment is the detailed discussion of the business’s

strengths, weaknesses, opportunities, and threats.

Strengths:
● Cathy’s Canteen is a home-cooked style restaurant with affordable
prices.
● It caters to the small and medium catering needs of different colleges.
● Cathy has already established goodwill with different customers inside
and outside the university.
● Cathy bought a place outside the school and turned it into an events
venue that serves as an extension of the canteen for private gatherings
like birthdays and other events.

Weaknesses:
● The number of potential customers will decrease in a few years with
the onset of the K-12 Curriculum.
● Expensive fixed cost
Opportunities:

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 ● Develop marketing strategies to maintain customers
● Open complementary businesses that will have synergy

Threats:
● School regulation on rent deposit, end of contract, and bidding

IV. Assumptions
The financial strength of the business is good because most of the
transactions are paid within 30 days. Cathy’s Canteen has loyal customers despite
the increase in the number of competitors.
The number of potential buyers will decline over the next 4 years, and its
environment remains uncertain.

V. Areas of Consideration
Course of Action 1 – ​Expand the business inside the university.
Course of Action 2 – ​Diversify products offered.
Course of Action 3 – ​Expand the business outside the​ ​university.

VI. Analysis (Explaining and identifying the advantages and disadvantages of

the different Courses of Action)
Course of Action 1 - ​Expand the business inside the university.
Advantage:
It will increase revenue in the short run.
Disadvantages:
The schools’ regulation may not be benefit stall owners over the next
few years.
Expansion is costly.
Course of Action 2 - ​Diversify products offered.
Advantages:
Offering diversified products means catering to specific tastes and
preferences of customers.

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 This will give existing customers new options and may attract new
potential customers.
Diversification will create “Loyal Customers”, thus having leverage
over other competitors.
Disadvantages:
Diversification of products might be costly.
Diversifying into new products can confuse your customers or might be
difficult to convince to buy your products.

Course of Action 3 - ​Expand the business outside the​ u

​ niversity.
Advantages:
K-12 problems have no effect outside the school.
Increase in number of customers.
Disadvantages:
It is very costly.
Proximity from school is a problem; students may not bother to visit
the place.

VII. Conclusion
A decision matrix is a table used to evaluate various options according to
certain criteria to make the best possible choice. ​Use the table as your decision
matrix to evaluate various options according to a certain criterion in order to make
the best possible choice. In the following decision matrix, grade the courses of
action on a scale of 1 to 3, with 3 being the highest according to their profitability,
regulations/restrictions, competitive advantages, and cost efficiency.

Criteria Course of Course of Course of

Action 1 Action 2 Action 3
Profitability 2 1 3
Regulations/Restrictions 1 2 3
Competitive Advantage 2 3 1
Cos Efficiency 2 3 1
Total 7 13 9 8
 Course of action no. 2 (diversification of products) seems to be the most
economical and logical choice in this situation, where future unforeseen problems
outweigh present results. Based on this decision matrix of profitability,
regulations/restrictions, competitive advantage, and cost efficiency, competitive
advantage, and cost efficiency post best for course of action 2.

PEST

PEST​: can be used to analyze the external environment factors such as

Political, Economic, Sociological and Technological that will affect the

organization. This is a great tool to use in tandem with SWOT for the
opportunities and threats of the business.

▪ Political​: This factor studies the current political situation. It also includes the

potential ​political influences​, government stability, corruption levels, trade

controls, import and export restrictions.
▪ Economic​: This factor is about the national and global impact on the economy.

Exchange rates, interest rates, income levels of population, wealth distribution

affects the business.
▪ Sociological​: This external factor focuses on the ways ​a society can affect

your company​. It also includes education levels, religious harmony, attitude

towards health, social welfare programs, etc.
▪ Technological​: This factor discusses the effect of emerging technology such

as internet penetration, access to basic infrastructure, software piracy, and

technology competency of workforce.

Link between SWOT and PEST ANALYSES

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 Some additional external factors that can affects the business are the legal
and environmental factors.

● Legal​ – Tax laws and regulations, labor laws and firing policies, copyright and
anti-piracy laws
● Environmental​ – Weather patterns, attitude towards recycling, attitude
towards organic and green products

Obviously, not all the factors apply to every business. For instance, if the
company is selling computers, then weather patterns might not include in the
evaluation/analysis but if the business are selling raincoats, the business might have
an interest on weather patterns.

PORTER’S FIVE FORCES

Porter’s Five Forces​: This model was developed by Michael E. Porter in
1979. It is a guide for assessing and evaluating the competitiveness and strength
positioning of a business organization. It analyzes bargaining power of suppliers and
buyers, the threats to new entrants and products or service substitutes, and
competitive rivalry in the marketplace. These five forces help in understanding and
identifying areas of potential profitability.

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 Porter’s Five Forces Model
(photo credit: ​https://www.business-to-you.com/porters-five-forces/​)

● Threat of New Entrants​. Entry of a new firm in a certain industry brings

threats, new capacity, and desire to gain market share. The higher the
barriers to entry, the smaller the threat for existing players. T​he need
for ​economies of scale​, high customer loyalty for existing brands, large capital
requirements (e.g. large investments in marketing or R&D), the need for
cumulative experience, government policies, and limited access to distribution
channels are some examples of barriers to entry.
● Bargaining Power of Suppliers. ​The bargaining power of suppliers is also
known as the market of inputs. This force assesses how much power the
supplier has potential to raise its prices or to reduce the quality of purchased
goods or services that would lower a firm’s profitability potential. Important
factors in determining supplier power are the concentration of suppliers and
the availability of substitute suppliers. The fewer the suppliers, the more
power to control the supply. Another source of power is the uniqueness or
differentiation of the product or service, switching costs of one supplier to
another, the existence of available substitutes, and the strength of their
distribution channels. If there are many suppliers, businesses are in a better
position.
● Bargaining power of buyers ​also known as market of outputs. This force
assesses how buyers can drive prices down. If a supplier has a power to
raise its prices, it is also possible that buyers can drive prices down to put a
company under pressure. When buyers have many alternatives to buy from,
the buyers have a lot of power and it should be easy for them to switch from
one supplier to another. Nowadays, buyers become more informed and
therefore more empowered because of the internet. They can easily compare
prices online, get information of the variety of products and get access to
offers from the suppliers instantly.

● Threat of substitute products​. The existence of substitute products

increases the tendency of buyers to switch and look for alternatives especially

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 in case of price increase. Every product that serves similar need should be
taken into account since it will affect the profitability of the business.

● Rivalry among existing competitors. This force assesses the extreme

current competition as to the number and capability of existing competitors in
the marketplace. Competition is considered high when there are numerous
competitors offering similar products and services and buyers can easily
switch to one offering a lesser price. The concentration ratio of an industry is
a sound indicator of competitive rivalry. A low ratio indicates increase rivalry.
When this happens, competitors tend to actively resort to advertising and
price wars, which consequently hurt a business’s bottom line. Moreover,
rivalry becomes more intense when barriers to exit are high, giving
competitors/companies no option but to stay put or remain in the industry
even if profit margins may be declining.

Porter’s Five Forces Analysis is an important tool for identifying and analyzing the
industry’s strengths and weaknesses. It also helps to form decision especially when
starting a new business, whether to enter in a new industry sector.

External Factors of SWOT Analysis (PEST/PESTEL and Porter’s Five Forces)

(Photo credit: ​https://www.business-to-you.com/swot-analysis/​)

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 The best way to examine the external factors is the use of PEST/PESTEL
analysis which looks at the political, economic, social, technological, environmental,
and legal trends in the macro-environment. On the other hand, Porter’s Five Forces
assesses the industry dynamic specifically at the current competition, suppliers’
powers, buyers’ power, potential new entrants and substitutes products or services.
Combining make up SWOT analysis.

On your paper, answer the following:

Identify what type of tools and techniques can a business use in the
following situations:

▪ If the owner of a business wants to conduct internal environment

analysis, which tool would the owner use?
▪ If the owner of a business wants to assess the external environmental
which analytical tool would the owner use?
▪ If the owner of a business wants to focus on the internal and external
factors, which tool would the owner use?
▪ If the owner of a business wants to analyze the level of competition
within a certain industry, which tool would the owner use?

What are the factors that should be considered in opening a business? How
do factors affect the business?

From the different tools and techniques discussed, which is the best
tool/technique that will help you assessing the most important factors that may affect
your business? Justify your answer.

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 Read and analyze the CNN News article below. In a matrix form, identify
Clarisonic’s strengths, weaknesses, opportunities, and threats.

“Clarisonic is shutting down. Its devoted fans are panicking”

By Parija Kavilanz, CNN Business
July 29, 2020

New York (CNN) – Clarisonic, the brand that invented vibrating skin cleansing
devices, stunned fans earlier this month when it announced that it was shutting down
for good.
The news came via an Instagram post on July 14 in which Clarisonic, owned
by L’Oreal (LRLCF), said the brand will shutter its operations on September 30 after
“more than a decade of game-changing innovation.”
Clarisonic fans responded with a mix of shock, denial and fear about how this
could forever upend their daily skin cleansing rituals.
One Twitter user even asked investors from the television show “Shark Tank”
to step in tweeting, “@ABCSharkTank can’t help out @Clarisonic??? We don’t want
this to be the end.”

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 Lawyer Jessica McElfresh tweeted at @LOrealParisUSA: “Do not do this!
Everyone knows Clarisonic is the best. You are making a massive mistake.”
McElfresh has used a Clarisonic device since college. She said the news
“just came out of nowhere” and confused her because she didn’t think there was any
problem with the device or any valid reason to discontinue the brand.
“Every aesthetician I’ve ever visited uses one,” she said. “The market has
more facial cleansing devices all the time, but I truly don’t believe any as good.”
Clarisonic said the decision to close the brand was made in an effort to help
L’Oreal “focus its attention on its other core business offerings.” L’Oreal did not
respond to requests for comment.
In recent years Clarisonic has been grappling with competition in an
increasingly crowded marketplace where other lower-priced alternatives have been
winning over consumers.
A more immediate problem for all Clarisonic users now, is how to get
replacement brushes since the device requires users to buy a new cleansing brush
even three months.
In a FAQ section on its website, Clarisonic said it won’t sell devices, brushes
or other attachments after September 30, and all of its subscription services for
replacement brushes will be inactive after July 31.

Growth slowed as competition intensified

L’Oreal acquired Clarisonic when it bought its parent company Pacific
Bioscience Laboratories in December 2011, seven years after the first Clarisonic
device hit the market. Bioscience was a market leader in the growing area of sonic
skin care devices.
The sonic device technology was a new way to cleanse the skin, using high
speed vibrations emitted through a round facial brush with nylon bristles to unclog
pores as an alternative to washing your face with your hands and a cleanser.
Pretty quickly, the $169 device, known for its bright, popsicle-like colors,
developed a cult-like following.
In 2018, Clarisonic owned 14% share of the U.S. market for skin cleansing
devices, according to market research firm Kline & Co.
As the market grew, it became fragmented with newer brands like Foreo and
NuSkin, which ate into Clarisonic’s share and following.
Clarisonic’s demise will leave t least two companies with spot to fill in the
skincare market. Michael Todd Beauty, a Florida-based skincare company that
makes devices with sonic technology, is gearing up to make replacement brushes to
fill the void created by Clarisonic.
Michael Todd Beauty plans to have the replacement brushes in stores by
November. It’s also offering a trade-in program for customers to turn in an old
Clarisonic device for $40 off on its Soniclear device.
Foreo, too, is offering a $39 credit to Clarisonic users to use on one of its LUNA
facial cleansing devices.

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 It remains to be seen if these options will help placate disappointed Clarisonic
users.
“I’ve tried other options before and just didn’t like them as much,” said
McELfresh. “They are not the same as a Clarisonic.”

2. Using the SWOT analysis for Clarisonic that you have prepared, would you
still shut it down if you were the owner? Why or Why not?

RUBRIC FOR SWOT ANALYSIS

16-20 points – a thorough SWOT analysis is provided, and reasoning for

each item in the Swot is provided and logical
11-15 points – SWOT analysis is provided, but there are some missing points
and reasoning for each item is not always thoroughly provided and/or logical
10 below – SWOT analysis is provided, but there are missing points and
there is no reasoning provided for items

VII – ASSIGNMENTS

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A. Pick a business in your barangay that has existed for 5 years now. Ask from
the owner and get the following information:
1. How did they come to choose to establish this kind of business or sell this kind
of product?
2. How did they choose the location?
3. What are some of the challenges they have faced over the years of their
business’ existence?
B. Make a ​SWOT​ analysis of the business using the template below:

BUSINESS NAME​:
Strengths​:
Weaknesses​:
Opportunities​:
Threats​:
Areas of Consideration:
Course of Action 1: ​(Identify and describe the Internal Environment of what is
happening in the business)
Course of Action 2: ​(Identify and describe the External Environment of what is
happening in the business)
Course of Action 3: ​(Detailed description of the business’s strengths,
weaknesses, opportunities, and threats)

Analysis: ​(Explaining and identifying the advantages and disadvantages of the

different Courses of Action)
Course of Action 1:
Advantages:
Disadvantages:
Course of Action 2:
Advantages:
Disadvantages:
Course of Action 3:
Advantages:

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 Disadvantages:

Conclusion: ​Use the table as your decision matrix to evaluate various options
according to certain criteria in order to make the best possible choice. In the
following decision matrix, grade the courses of action on a scale of 1 to 3, with 3
being the highest according to their profitability, regulations/restrictions,
competitive advantages, and cost efficiency.

Criteria Course of Course of Course of

Action 1 Action 2 Action 3

Profitability

Regulations/Restrictions

Competitive Advantage

Cos Efficiency

Total

ASSIGNMENT​ (Short Bond Paper)

Research on government programs and actions that address one of the
following issues:
1. Issues affecting OFWs
2. Unemployment
3. ”Brain drain”

Describe a specific issue related to your chosen topic, outline related problems
and issues, and discuss the government actions taken to address these. Make a
report detailing the results of your research.

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 KEY TO CORRECTION
Try This

You Can Do it #1
▪ MOST (Mission, Objective, Strategy, & Tactics)

▪ PEST Analysis

▪ SWOT Analysis

▪ Porter’s Five Forces

You Can Do it #2

There are important factors to be considered in opening the business.

Location/place, strategies/actions, competitors, technology, demographic,
environment, legal are some factors to be considered. These factors can affect the

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business operations and when identified and assessed properly, the business owner
can anticipate the problems and make possible solutions and take advantage with
the identified opportunities.

You Can Do it #3

Some tools and techniques that were discussed have different uses. For the
business to identify and assess the internal and external environment, the best
tool/technique that can help businesses to assess the most important factors is the
SWOT analysis. SWOT can be used to assess places, competitors, businesses to
help in decision making.

Check Your Understanding

SWOT Analysis: CLARISONIC

Why not?
If I were the owner of Clarisonic, I will not shutdown the brand. If I cannot
lower the price of my product, since a higher price is usually equated with better
quality, a established “name” or goodwill in the market, maybe I can offer a certain
percentage discount on the product’s replacement brushes, or maybe a “freebie” that

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is consistent with company policy, as a marketing strategy to win back customers who
were lured by lower-priced alternative products, and still stay competitive.

Why so?
If I were the owner of Clarisonic, I will shutdown the brand. If staying in an
overcrowded market is not financially-rewarding anymore, I can resort to other
product diversification where there is a ready-market or a potential market. The
mother company L’Oreal other core offerings, anyway, and tastes in beauty vary and
change fast. Also, having invented the sonic technology, Clarisonic is bound to hold
its patent and receive royalties for that, so it is still in that partiscular field of business.
Better be the first to leave and make a headstart somewhere else and be its leader
for a long time running.

REFERENCES

Textbooks:

Dinio, R.P. & Villasis, G.A. 2017. ​Applied Economics. ​Quezon City: Rex Book Store

Manapat, C.L. 2018. ​Applied Economics for Senior High School. Quezon City:
C&E Publishing Incorporated

Pagoso, C. M., Dinio, R.P., & Villasis, G.A. 2008. Principles of Economics. ​Quezon
City: Rex Book Store

Zarate, C. A., 2017., ​Principles of Marketing for Senior High School​. Quezon City:
C&E Publishing Incorporated

Kotler, Philip, et.al., 1999. ​Principles of Marketing​. New Jersey, USA: Prentice Hall
Inc.

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