IOER INTERNATIONAL MULTIDISCIPLINARY RESEARCH JOURNAL, VOL. 5, NO. 3, SEPT.

2023

DTI DEVELOPMENT FRAMEWORK IN APPLICATION TO BUSINESS

OPERATIONS AMONG SELECTED MICRO SMALL MEDIUM ENTERPRISES
TOWARDS AN ENHANCED BUSINESS MODEL

DR. FRAULEIN M. HERRERA

[email protected] https://orcid.org/0000-0003-2038-4403
University of Perpetual Help Molino Campus,
Bacoor City, Philippines

DOI: https://doi.org/10.54476/ioer-imrj/223547

ABSTRACT

In the Philippines, 99% of establishments are Micro, Small, and Medium Enterprises (MSMEs), crucial for
fulfilling consumer needs. The Philippine Statistics Authority noted a decline in export trade and business
registration over the past five years. To address this, the Department of Trade and Industry (DTI)
introduced the 7Ms Development Framework. This study, involving 240 MSMEs, aimed to assess their
depiction of DTI’s business focus, the effectiveness of the 7Ms framework, prevalent challenges, gaps,
and propose a business model for enhanced competitiveness. Findings revealed that MSMEs considered
DTI's "access to the market" as the most visible focus, while technology and innovation were least visible.
More so, in terms of the 7Ms framework, participants perceived "money" as the most effective, and
"mastery" as the least. Challenges included licensing issues, high input costs, and finance access.
Identified gaps involved local government rule variations and high standards for MSME finance. Statistical
methods like weighted mean and standard deviation, using SPSS, aided the analysis. The study
recommends a business model for MSME sustainability and global competitiveness.

Keywords: Effectiveness, Development Framework, business focus area, business model, issues and
concerns, gaps

INTRODUCTION growth rates compared to larger firms. The

sustained operation of MSMEs aligns with the
government’s 10-point socio-economic agenda,
The Philippine micro, small, and medium aimed at enhancing the nation's economic
enterprises (MSMEs) play a vital role in meeting revenue and elevating the quality of life for
the needs and desires of consumers. Their numerous Filipinos.
presence not only fosters economic growth but One way to narrow the gap between the
also serves as a cornerstone for nations rich and the poor is through the establishment of
grappling with employment, income distribution, entrepreneurship, led by individuals popularly
and poverty challenges. President Rodrigo known as entrepreneurs. According to Go (2018),
Duterte has recognized MSMEs as the the traditional definition of an entrepreneur is "a
fundamental unit of the economy, attributing this person who, with considerable initiative and risk,
status to their higher contribution to employment organizes and manages any enterprise, especially

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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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IOER INTERNATIONAL MULTIDISCIPLINARY RESEARCH JOURNAL, VOL. 5, NO. 3, SEPT. 2023
a business." In contrast to an employee, an There are still common constraints identified
entrepreneur operates a business and is among all MSMEs, whether new or existing,
personally accountable for all of the risks and aside from the economic issues mentioned.
benefits associated with a certain business These are categorized as non- financial barriers
endeavor, concept, and products or services and financial barriers. Non-financial barriers
offered. According to Balita, Jones, Mitchelmore, include the number of requirements needed to
& Nikolopolous (2015), entrepreneurs are register an enterprise. At the same time,
frequently viewed as business leaders and financial barriers make aspiring entrepreneurs
innovators of new ideas and company processes. difficult to acquire funds as initial capital due to
The objective of establishing an enterprise is to overwhelming banking conditions and other loan
address the desire to augment one's income by institutions (Casaclang, 2018).
becoming self-employed rather than working as
In recognition of these barriers, the
an employee for someone else. This business
Department of Trade and Industry (DTI) has
endeavor simultaneously produces more jobs for
developed a strategy known as the 7Ms for
other people and brings in more tax income for the
MSME Development. It aims to help aspiring
government. Therefore, it is crucial to support
entrepreneurs start their businesses and the
entrepreneurs financially and technically, a task
same with the existing MSMEs for the growth
that the government manages with the help of the
and development of their enterprises. 7Ms
private sector. Nevertheless, there are always
include "Mind," "Mastery," and "Mentoring" to
business hazards present.
initially prepare business owners to have the
According to the Philippine Statistics
right entrepreneurial skills and attitude in
Authority's (PSA) 2017 List of Establishments,
operating a business. "Money" involves several
there were 924,721 businesses actively operating
financing programs that will aid MSMEs in
in the Philippines. Among them, MSMEs
establishing their business financially. "Machine"
accounted for 99.56% (920,677) of all
lets business owners enhance their technical
establishments, with microenterprises accounting
skills and be exposed to facilities and equipment
for 89.59% (828,436), small enterprises
services shared by local government units.
comprising 9.56%
"Market" allows MSMEs to tap other market
(88,412), and medium enterprises making up
segments by showcasing their products in
0.41% (3,829). The remaining 0.44% (4,044
different marketing events, and "Model" allows
establishments) were classified as large
aspiring and existing business owners to see
enterprises. Notably, these data indicate that
different marketing models that can adopt
MSMEs constitute the majority of jobs in the
according to their market needs.
Philippines (MSME Statistics, 2019). It is evident
that the government has recognized the The study intends to assess the efficacy
significance of empowering this sector by of the 7Ms Development framework by the
providing financial and technical support to Department of Trade and Industry (DTI) in its
sustain their endeavors. impact on the business operations of selected
Despite its significance in the growth and MSMEs in Cavite. Additionally, it identifies
development of the country, it was observed in the prevalent issues and challenges encountered by
latest report of the Philippine Statistics Authority selected MSMEs in coping with the development
that there was a decrease in the percentage of of the Department of Trade and Industry's 7Ms
exports of goods and services by 18% from the development framework. The 7Ms framework
year 2006 to 2016. The 2017 annual survey of aims to address these concerns and support the
Philippine Business and Industry also showed a growth of MSMEs. Assessing these factors
decrease of 4.3% growth rate exhibited in terms of abled the proponent to identify the gaps in
the number of establishments from 2016 to 2017. dealing with the framework and introduce a
business model or programs that will help the

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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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IOER INTERNATIONAL MULTIDISCIPLINARY RESEARCH JOURNAL, VOL. 5, NO. 3, SEPT. 2023
government, MSMEs, and other entities achieve can be devised to prepare the
their respective goals and objectives. MSMEs to attain strategic and global
competitiveness.
OBJECTIVES OF THE STUDY
METHODOLOGY
This study assesses the effectiveness
of the Department of Trade and Industry's 7Ms A descriptive research design, utilizing
Development Framework programs in shaping the quantitative techniques, was employed for this
business operations of designated MSMEs in study. The chosen descriptive research method
facilitates gathering information from MSMEs in
Cavite. Specifically, it seeks to address the
Cavite regarding their business operations in areas
following questions: such as market access, technology accessibility,
business climate, finance access, management,
1. Evaluate the assessed Micro, Small labor capacity, and innovation. This approach aims
and Medium Enterprises depict the to assess the effectiveness of the implemented
DTI’s business in relation to: 7Ms framework.
1.1 Improved Business Climate; A non-probability purposive sampling
1.2 Improved Access to Finance; method was used to select MSMEs situated in the
1.3 Enhanced Management & Labor central commercial districts of three cities in Cavite.
Capacity; The population consists of officially registered
1.4 Improved Access to Technology & MSMEs with DTI Cavite and BPLO in these
Innovation; and municipalities.
1.5 Improved Access to Market Utilizing Slovin's Formula, the researcher
2. Determine the assessment of the determined a target of 478 registered MSMEs from
selected Micro, Small, and Medium a total population of 902 establishments. However,
Enterprises, and the effectiveness are due to the pandemic, only 240 or 50% of the target
the following Department of Trade respondents participated.
and Industry's 7Ms development The respondents, business owners or
framework concerning their business managers, operated in the wholesale and retail
operations: trade industry, focusing on essential items such as
2.1 Mindset; groceries, bread and pastries, beverages, poultry
2.2 Mastery; products, clothing, and accessories. The study
2.3 Mentoring; excluded manufacturing, accommodation, financial
2.4 Money; and insurance activities, and the food service
2.5 Machine; industry.
2.6 Market; and The research site included Bacoor,
2.7. Models Dasmariñas, and Imus in Cavite, selected based
3. Analyze the prevalent issues and on their high population, a significant number of
challenges encountered by selected registered MSMEs, and proximity to the
MSMEs in coping with the researcher.
development of the Department of The primary data collection instrument was
Trade and Industry's 7Ms a questionnaire developed by the researcher and
development framework. validated by three experts in the field. The
4. Explain gaps identified by the questionnaire covered respondent profiles and
researcher in the 7Ms development assessments of the effectiveness of the DTI
framework based on the listed issues Development framework, addressing issues and
and challenges of the selected challenges faced by business operators. The
MSMEs? survey questionnaire was administered to selected
5. Determine the business model that MSMEs in the three cities, emphasizing
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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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collaboration and meticulous selection of standard deviation. The data suggests that the
participants willing to engage in the survey. Data DTI places significant importance on
collection was achieved through a self-structured strengthening connections within the value and
survey questionnaire.
supply chains. Additionally, they prioritize making
The study employed a research
questionnaire, which was distributed to MSME crucial resources such as information, analysis,
owners after obtaining permission through DTI learning, contacts, matching, and interaction
Cavite. With 240 responses out of the desired 478 available to MSMEs in both domestic and export
due to COVID-19 disruptions, the data was markets, with the aim of fostering their growth.
collected in late February and retrieved in March Amuroso (2015) emphasized the active
2020. The researcher processed the tabulated involvement of the SME Development Division of
data using SPSS, utilizing weighted mean and the Philippine Chamber of Commerce and
standard deviation for analysis. Industry in formulating and implementing policies
and programs at both the national and regional
RESULTS AND DISCUSSION levels. These initiatives aim to strengthen the
capabilities and competitiveness of MSMEs,
1. Description of DTI Focus Areas focusing on key aspects such as access to
markets, market opportunities, technology and
Table 1 information, and credit and financing.
DTI’s Business Focu Areas as Described by Selected Micro, Small
and Medium Enterprises
Focus Area Mean SD Interpretation
2. Assessment of Effectiveness of the DTI
7Ms Development Framework
Improved Business 2.7075 0.68574 Moderately
Climate Visible Table 2
Improved Access to Moderately Assessment of the Respondents as to Effectiveness of the DTIs
2.6733 0.73907
Finance Visible 7Ms Development Framework
Enhanced Moderately
Management and 2.7417 0.74466 Visible
Indicators Mean SD Interpretation
Labor Capacity
Improved Access to Moderately Moderately
Mindset 2.8878 0.70419
Technology and 2.6533 0.30366 Visible effective
Innovation Moderately
Mastery 2.8680 0.69730
Improved Access to Moderately effective
2.7781 0.71042
Market Visible Moderately
Mentoring 2.8904 0.73562
Overall Moderately effective
2.7107 0.55794 Moderately
Visible Money 2.9266 0.71518
effective
Moderately
Machine 2.9236 0.71608
effective
Table 1 presents the summary of business Moderately
Market 2.9015 0.66061
focus area of DTI based on the descriptions effective
Moderately
provided by selected micro, small, and medium Model 2.8778 0.68550
effective
enterprises. It is sighted that the "market access" Overall 2.8963 0.61878
Moderately
effective
indicator gained the highest mean value of 2.77
and was interpreted as "Moderately Visible" or
Table 2 displays The respondents'
adequately observed. In contrast, the lowest
assessment summary regarding the
mean value of 2.65 was given to the indicator effectiveness of the DTI 7Ms Development
"access to technology and innovation." The DTI's Framework. The data indicates that the
areas of business focus were outlined by chosen respondents rated the overall effectiveness as
MSMEs, leading to an average of 2.71 and 0.55 "Moderately Effective," suggesting that DTI's

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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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IOER INTERNATIONAL MULTIDISCIPLINARY RESEARCH JOURNAL, VOL. 5, NO. 3, SEPT. 2023
7Ms Development Framework is sufficiently Table 3 shows the selected MSMEs’
effective for businesses. issues and challenges in coping with DTI's 7Ms
development framework. Based on the results,
It is noted that among the seven
respondents assessed the issues and challenges
frameworks, the indicator "Money" has 2.93
confronted by selected MSMEs as "Sometimes
highest mean value while the indicator mastery
Confronted" or occasionally encountered by the
has 2.86 lowest mean value.
respondents, with a 2.79 overall mean value and
This means MSMEs consider money as 0.63 standard deviation. It is noted that the
the lifeline of any business, necessitating highest mean value of 2.91 was given to the
effective financial planning, particularly in indicator "Difficulties in business licensing and
enterprises where the flow of money is minimal. permit." The “safety and security" indicator has a
Observing the efficient utilization of limited lower mean value of 2.71.
resources to foster enterprise growth is equally
This indicates that among the common
important.
concerns and challenges encountered by
Notably, finance is often regarded as assessed MSMEs, difficulties in business
the sole key to success and progress in setting licensing and permits are the most regarded
up an enterprise. There are many bases for issue to deal with in their business operations.
capital raising; still, one should study all possible
resources before making any decision (Lamba &
Aggarwal, n.d.). 4. Identified Gaps in the 7Ms Development
Framework
3. MSMEs’ Issues and Challenges in Coping
with DTI's 7Ms Development Framework The following gaps were discovered in
the application of the 7Ms Development
Table 3 Framework: (1) LGU's non-uniformity of rules
Summary of Issues and Challenges Confronted by Selected MSMEs
in Coping with the DTIs 7Ms Development Framework
results in MSMEs needing help in business
licensing and permits; (2) the high cost of inputs
hampers MSMEs from expanding their
Common issues and MEAN STD Interpretation
challenges
businesses due to the high cost of raw materials,
parts, and services for machine maintenance;
Lack of management
2.7573 0.80859
Sometimes and high standards/qualifications set for MSMEs
skills confronted
High competition from Sometimes
to access finance cause trouble for MSMEs in
2.7624 0.82445 applying for loans and opening an account due
other businesses confronted
Difficulties in business Sometimes to some requirements and qualifications set by
2.9092 0.76508
licensing & permits confronted
Insufficient working Sometimes the banks and other financing companies.
2.8029 0.75264
capital confronted
Access or cost of Sometimes
2.8031 0.78395
finance confronted CONCLUSIONS
High cost of inputs Sometimes
2.9056 0.75718
confronted The selected MSME respondents
Lack of skilled Sometimes
workers
2.7920 0.82071
confronted
reported that the business focus areas of the DTI
Insufficient market Sometimes are moderately visible or adequately observed.
2.7293 0.83413
access confronted Furthermore, the 7Ms were assessed as
Restrictive laws Sometimes
2.7669 0.79187
confronted moderately effective and interpreted as
Safety and security
2.7104 0.86813
Sometimes adequately applicable to the business
confronted operations of MSMEs. Of the identified issues
Overall Sometimes
2.7943 0.63386
confronted and challenges, difficulties in business licensing
and permit processing are the most confronted
problems based on mean scores. The study

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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
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AUTHOR’S PROFILE

Fraulein M. Herrera, DBA, CHRA, is an

esteemed professional serving as the Program
Chair and Research Coordinator of the College of
Business Administration at the University of
Perpetual Help Molino. Additionally, she holds a
faculty position at the Graduate School of Lyceum
of the Philippines University Cavite. With an
impressive 23-year tenure in academia, Dr.
Herrera is a seasoned educator, specializing in
subjects such as Strategic Management, Business
Policy, Research, and Economics at both the
tertiary and graduate levels.
Recently, she achieved the Human
Resource Associate Certification from the Human
Resource Educators of the Philippines,
showcasing her commitment to staying abreast of
industry standards and enhancing her expertise.
Her dedication to excellence extends beyond the
classroom, as she has been appointed as a Project
Evaluator and Project Consultant by the
Department of Science and Technology (DOST)
for various project proposals, highlighting her
expertise in project assessment and consultation.

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HERRERA, F.M., DTI Development Framework in Application to Business Operations among Selected Micro Small
Medium Enterprises Towards an Enhanced Business Model, pp. 65 - 71
71