Module in

FM 18
(Special Topics in Financial
Management)

College of Business and Management

(CoBAM)
1
 La Carlota City College
La Carlota City
La Carlota City College
City of La Carlota
-o0o-
COLLEGE OF BUSINESS AND MANAGEMENT (COBAM)
DEPARTMENT

MODULE IN FM 18
(Special Topics in Financial Management)

MICHELLE L. BORROMEO, LPT, MBA

Contact# : 09661965964.
Email Add: [email protected]
Facebook Account: Michelle Solomon Lobaton Borromeo

I. COURSE TITLE : FM 18 (Special Topics in Financial

Management)

II.NUMBER OF UNITS : 3 units

III. COURSE DESCRIPTION : It provides an overview of tools,
techniques, and frameworks commonly used as part of market and
industry assessments, on engagements involving substantial
operational and organizational analysis. It highlights the
principle financial analytical tools used to conduct strategic
analysis and indicates the link between corporate strategy and
performance through measurement frameworks used frequently to
provide decision making information to management.

IV. COURSE OUTCOMES :

At the end of the semester, the students can:
1. identified common market channels;
2. defined the common market channels;
3. set market channel baseline;
4. applied the concepts in writing a competitor analysis;
5. applied the concepts in completing a Porter’s Diamond
analysis;
6. applied the concepts in writing an Environmental Scanning;
7. applied the concepts in writing a Buyer analysis;
8. defined the different assessment tools;
9. classified assessment tools based on Industry;
10. familiarized with the steps on performing a Product
Concept Testing;

2
11. reported output in class;
12. Critiqued peer’s output

Dear Students:

Welcome to FM 18 (Special Topics in Financial

Management). Praise God for his sustaining grace. In this
difficult phase of adjustment, when we had to let go of almost
everything familiar and convenient for us, He has given us the
patience and courage to endure. He constantly checks our ways
especially our values of hard work coupled with honesty.

This module has been carefully designed and created to

provide you with ample learning materials and activities in
order to equip you with knowledge and competencies in this
course. It will also give you the opportunity of managing your
time in studying and checking your progress at your
convenience. Inside, you will find:
 Information Sheets – This contains the reading materials
on each topic. It may include links to other online
resources such as videos or articles to reinforce or
provide additional examples
 Learning Outcomes - These are the knowledge and skills
you are expected to demonstrate after each module.
 Assessment of Learning – These are activities that will
check your level of understanding.

I wish you an even enjoyable and fruitful self-paced

learning adventure this semester.

Yours,
MLB

V. COURSE OUTLINE :
A. Prelim and Midterm Period
Modules 1-2: Analytical Market and Industry Assessment
Tools
1. Overview and Definition of Tools
2. Value Chain Tools
3. Competitor Analysis

B. Semi-Final Period
Module 3: Private Sector Business Tools

3
 1. Buyer Analysis
2. Environmental Scanning
3. Porter’s Diamond Analysis

C. Final Period
Module 4: Private Sector Consumer Tools
1. Trade Shows
2. Market Test

VI. COURSE DISCUSSION

In a Glimpse:
What are the Topics in Financial Management?
The topics covered in this course include strategic
financing decisions such as capital structure and dividend
policy decisions; tactical financing decisions such as initial
public offerings, financial restructuring, and lease
financing; short-term financial management such as cash,
inventory, and receivables.

Financial Management: What is it and why is it important?

Financial management is one of the most important aspects
of a business. To start and run a successful business, you
will need excellent knowledge of financial management.

What is Financial Management?

Financial management is strategic planning, organizing,
directing, and controlling of financial undertakings in an
organization or an institute. It also includes applying
management principles to the financial assets of an
organization, while also playing an important part in fiscal
management.

The objectives involved in financial management include:

 Maintaining enough supply of funds for the organization;
 Ensuring shareholders get good returns on their
investment;
 Optimum and efficient utilization of funds;
 Creating real and safe investment opportunities.

The Role of the Financial Manager

The financial management department of any company is
handled by a financial manager.

This department has numerous functions, such as:

4
  Calculating the capital required. The financial manager
has to calculate the amount of capital an organization
requires. This depends on the policies of the company
with regards to expected expenses and profits. The amount
required has to be estimated in such a way that the
earnings in the company increase.

 Formation of capital structure. Once the amount of

capital has been estimated, a capital structure needs to
be formed. This involves a debt-equity analysis, both
short-term and long-term. The outlook of the structure
depends on the amount of capital the company owns, and
the amount that needs to be raised via external sources.

 Investing the capital. Every organization or company

needs to invest money in order to raise more capital and
gain regular returns. This means the financial manager
needs to invest funds in safe and profitable ventures.

 Allocation of profits. Once the organization has a solid

net profit, it is the financial manager’s duty to
efficiently allocate it. This could involve keeping a
part of the net profit for contingency, innovation, or
expansion purposes, while another part of the profit can
be used to provide dividends to the shareholders.

 Effective management of money. The financial manager is

also responsible for effectively managing the company’s
money. Money is required for various purposes in the
company such as payment of salaries and bills,
maintaining stock, meeting liabilities, and the purchase
of any materials and/or equipment.

 Financial control. Not only does the financial manager

have to plan, organize, and obtain funds, but he/she also
has to control and analyze the company’s finances. This
can be done using tools such as financial forecasting,
ratio analysis, risk management, and profit and cost
control.

Why is Financial Management Important?

This form of management is important for various reasons.
 Helps organizations in financial planning and acquisition
of funds;
 Aids organizations to effectively utilize and allocate
the funds received or acquired;

5
  Supports organizations in making critical financial
decisions;
 Helps in improving the profitability of organizations;
 Increases the overall value of organizations;
 Provides economic stability.

What is Financial Management's Importance?

One of the most crucial components of business is
financial management. You will need outstanding financial
management knowledge to establish or perhaps operate a
successful business. So, what is this management style and why
is it important?

What is the definition of financial management?

The term "financial management" relates to the management of
money.

Financial endeavours in an organization or institute are

strategically planned, organized, directed, and controlled.
It also entails applying management principles to an
organization's financial assets, as well as playing a
significant role in fiscal management.

Take a look at the following goals:

- ensuring that the organization has a sufficient source of
funds;
- providing assurance to the company's shareholders
ensuring that the organization’s shareholders obtain a
good return on their investment;
- optimal and efficient use of resources; and
- creating genuine and secure investment possibilities.

Certain aspects of financial management are also present.

These are some of them:
Financial planning is the act of calculating the amount of
money that an organization
requires and then allocating those resources. A financial
plan should incorporate the following main objectives:
figuring out how much money you'll need;
 Organizing and structuring the capital; defining the
financial policies ad laws of the organization.
 Financial control is one of the most important aspects
of financial management. Its primary function is to
determine whether or not an organization is fulfilling
its objectives.

6
  The following questions are answered by financial
control:
- Are the assets of the company being used effectively?
- Are the assets of the company safe?
- Is management operating in the organizations and key
stakeholders’ best financial interest?
- Financial decision-making: This refers to the
organization’s investment and funding.

A financial manager is in charge of a company's financial

management department. This department performs a variety of
tasks, including:

Calculating the required capital: The finance manager must

determine the amount of capital that an organization requires.
This is determined by the firm's policy regarding expected
expenses and profits. The required amount must be calculated
in such a way that organization's profit potential improves.

Forming a capital structure: Once the amount of capital

required by the company has been determined a capital
structure must be created. This includes both short- and long-
term debt equity analyses. This is dependent on the amount
of cash the company already has and the amount that has to be
raised from outside sources.

Investing capital: In order to raise more capital and earn

consistent returns, every organization or firm must invest
money. As a result, the financial manager must invest the
company's capital in safe and successful businesses.

Profit allocation: Once the company has made a significant

amount of net profit, the finance manager's job is to
efficiently distribute it. This could entail preserving a
portion of the net profit for contingencies, innovation, or
expansion, while paying dividends to shareholders with the
rest.

Money management: This department is also in charge of

successfully managing the firm's funds. Money is needed for a
variety of reasons in the business, including paying employees
and invoices, keeping stock, satisfying liabilities, and
purchasing any goods or equipment.

Financial control: The financial manager is responsible for

not only planning, organizing, and obtaining cash, but also
7
for controlling and analysing the firm's finances in the
short and long term. Financial instruments like as financial
forecasting, ratio analysis, risk management, and profit and
cost control can be used to do this.

What is the significance of financial management?

This type of management is crucial for a variety of reasons.
Take a look at a few of the reasons for this:
 Aids in the financial planning of organizations;
 Aids in the planning and procurement of money for
organizations;
 Aids organizations in making the best use of and
allocating cash obtained or gained;
 Aids businesses in making important financial decisions;
 Aids in increasing the profitability of businesses;
 Increases the firm’s organization’s total value;
 Ensures economic security; and
 Employees are encouraged to save money, which aids in
personal financial planning.

 • Aids in the financial planning of organizations;

 • Aids in the planning and procurement of money for
organizations;
 • Aids organizations in making the best use of
and allocating cash obtained or
What are the benefits of studying financial management?
Financial management can lead to a variety of careers: It
could be in either the public or private sector. Investment
banking, entrepreneurship, financial analysis, financial and
managerial accounting, and strategic financial management are
some of the job opportunities. It's also useful for folks who
want to establish their own business. Taking a financial
management course or earning a finance degree can help
people advance in their careers as accountants.

Improve interpersonal skills: Taking a course in this sector

can help you improve your communication and teamwork
abilities by allowing you to form relationships with your
co-workers.

Personality development: Taking a course in this sector might

also help you improve your soft skills. This is because
people who want to work in this industry must be extroverts
who can talk about money for hours on end. This aids in the
development of their personality, knowledge, and communication
skills.

8
Greater work opportunities: According to the Bureau of Labor
Statistics (BLS) in the United States, demand for finance
manager jobs has increased due to an "increasing range of
financial products and the need for in-depth knowledge
geographic region expertise.”

Special Topics in Financial Management

 Strategic planning decisions such as:
- Capital structure
- Dividend policy decisions
 Tactical financing decisions such as:
- Initial public offerings
- Financial restructuring
- Lease financing
 Short-term financial management such as:
- cash
- inventory
- receivables

What is capital structure and its types?

The meaning of Capital structure can be described as the
arrangement of capital by using different sources of long-term
funds which consists of two broad types, equity and debt. The
different types of funds that are raised by a firm include
preference shares, equity shares, retained earnings, long-term
loans etc.

What is capital structure with example?

This mix of debts and equities make up the finances used for a
business's operations and growth. For example, the capital
structure of a company might be 40% long-term debt (bonds),
10% preferred stock, and 50% common stock.

What is Capital Structure

The most crucial component of starting a business is capital.
It acts as the foundation of the company. Debt and Equity are
the two primary types of capital sources for a business.
Capital structure is defined as the combination of equity and
debt that is put into use by a company in order to finance the
overall operations of the company and for its growth.

9
Types of Capital Structure
The meaning of Capital structure can be described as the
arrangement of capital by using different sources of long-term
funds which consists of two broad types, equity and debt. The
different types of funds that are raised by a firm include
preference shares, equity shares, retained earnings, long-term
loans etc. These funds are raised for running the business.

Equity Capital
Equity capital is the money owned by the shareholders or
owners. It consists of two different types
a) Retained earnings: Retained earnings are part of the profit
that has been kept separately by the organization and which
will help in strengthening the business.
b) Contributed Capital: Contributed capital is the amount of
money which the company owners have invested at the time of
opening the company or received from shareholders as a price
for ownership of the company.

Debt Capital
Debt capital is referred to as the borrowed money that is
utilized in business. There are different forms of debt
capital.

1. Long Term Bonds: These types of bonds are considered the

safest of the debts as they have an extended repayment
period, and only interest needs to be repaid while the
principal needs to be paid at maturity.
2. Short Term Commercial Paper: This is a type of short-term
debt instrument that is used by companies to raise
capital for a short period of time

Optimal Capital Structure

Optimal capital structure is referred to as the perfect mix of
debt and equity financing that helps in maximizing the value
of a company in the market while at the same time minimizes
its cost of capital.
Capital structure varies across industries. For a company
involved in mining or petroleum and oil extraction, a high
debt ratio is not suitable, but some industries like insurance
10
or banking have a high amount of debt as part of their capital
structure.

Financial Leverage
Financial leverage is defined as the proportion of debt that
is part of the total capital of the firm. It is also known as
capital gearing. A firm having a high level of debt is called
a highly levered firm while a firm having a lower ratio of
debt is known as a low levered firm.

Importance of Capital Structure

Capital structure is vital for a firm as it determines the
overall stability of a firm. Here are some of the other
factors that highlight the importance of capital structure

1. A firm having a sound capital structure has a higher

chance of increasing the market price of the shares and
securities that it possesses. It will lead to a higher
valuation in the market.
2. A good capital structure ensures that the available funds
are used effectively. It prevents over or under
capitalization.
3. It helps the company in increasing its profits in the
form of higher returns to stakeholders.
4. A proper capital structure helps in maximizing
shareholder’s capital while minimizing the overall cost
of the capital.
5. A good capital structure provides firms with the
flexibility of increasing or decreasing the debt capital
as per the situation.

Factors Determining Capital Structure

Following are the factors that play an important role in
determining the capital structure:

1. Costs of capital: It is the cost that is incurred in

raising capital from different fund sources. A firm or a
business should generate sufficient revenue so that the
cost of capital can be met and growth can be financed.
2. Degree of Control: The equity shareholders have more
rights in a company than the preference shareholders or
the debenture shareholders. The capital structure of a
firm will be determined by the type of shareholders and
the limit of their voting rights.

11
 3. Trading on Equity: For a firm which uses more equity as a
source of finance to borrow new funds to increase
returns. Trading on equity is said to occur when the rate
of return on total capital is more than the rate of
interest paid on debentures or rate of interest on the
new debt borrowed.
4. Government Policies: The capital structure is also
impacted by the rules and policies set by the government.
Changes in monetary and fiscal policies result in
bringing about

MODULE 1
ANALYTICAL MARKET AND INDUSTRY ASSESSMENT TOOLS

-------------------------------------------------------------
Learning Outcomes: By the end of the module, the students will
have
1. defined the different assessment tools
2. classified assessment tools based on Industry.
-------------------------------------------------------------

Lesson Proper :
Industry analysis is a market assessment tool used by
businesses and analysts to understand the competitive dynamics
of an industry. Industry assessment helps to understand
the demand in the market, and the state of competition. This
knowledge is necessary to determine whether an existing
business is competitive in the current market or if it’s
feasible to start a new business.

Below is a list of market assessment tools was prepared

by Development Alternatives, Inc. (DAI) in 2003 as an internal
working document to support the design and implementation of
the Accelerated Microenterprise Advancement Project (AMAP):

1. Value Chain Tools e. Value Chain

a. Market Channel Upgrading Analysis
Baseline Analysis f. Competitor Analysis
b. Value Chain Mapping g. Competitor Position
c. Governance of Value Analysis
Chains h. Market Window
d. Product Segments and Analysis
Critical Success
Factors
12
 i. An Analysis of e. The Market Build-Up
Bargaining Power in Method
Value Chains f. The Multiple Factor
j. A Buyer Analysis Index Method
g. Product Concept
2. Sub-sector Tools Testing
a. Sub-sector Selection h. Price Sensitivity
b. Sub-sector Analysis Analysis
c. Participatory Rapid i. A Survey of Buyers
Appraisal (PRA) Intention
d. Subsector j. Market Testing
Stakeholder Workshops k. Trade Shows

3. Private Sector Business 5. BDS Market Assessment

Tools (9) Tools
a. Environmental a. Market Overview
Scanning b. Multi-Service Usage
b. Porter’s Diamond Attitude Image (UAI)
Analysis Market Study
c. Porter’s Five Forces c. Single-Service Usage
d. Segmentation Attitude Image (UAI)
Analysis Market Study
e. Key Success Factors d. Qualitative Consumer
f. Analysis of Analysis
Innovation and e. Supplier Diagnostics
Innovative Capacity f. Quantitative Supply
g. Resource and Analysis
Capability Mapping
h. A Gap Analysis 6. Other Tools
i. Organizational and a. Investor Road
Systems Analysis Mapping
4. Private Sector Consumer b. Macro-economic Tools
Research Tools (11) c. Participatory
a. Market Segmentation Appraisal of
b. Usage Attitude Image Competitive Advantage
(UAI) Study d. World Trade
c. Analysis of Organization (WTO
Behavioral Data Standards)
d. Past Sales Analysis

AMAP K & P – Existing Analytical Market Assessment Tools

– Definitions (see Annex)
--------------------------------------------------------------
Assessment of Learning
--------------------------------------------------------------
Instruction: Choose your answer from the box below.

13
 Market Test Trade Show
Gap Analysis Porter’s Diamond Analysis
Environmental Scanning Competitor Analysis

____________ 1. What Value Chain Tool aims to forecast

competitors' future strategies and decisions, or predict
competitors' likely reactions to a firm's strategic
initiatives?

____________ 2. What Private Sector Consumer Research Tool is

defined as a short-term geographical area or demographic
grouping used to evaluate the profitability of a particular
product or service in a specific market before a broad scale
roll-out?

____________ 3. What Private Sector Business Tool is closely

related to a S.W.O.T. analysis?

____________ 4. What Private Sector Business Tool analyzes

Firm Strategy and Rivalry, Demand Conditions, Related and
Supporting Industries, and Factor Input Conditions.

____________ 5. What Private Sector Consumer Research

Toolsisan exhibition organized to provide companies in a
specific industry the opportunity to showcase and demonstrate
their latest product or service, meet with industry partners
and customers, study activities of rivals, and examine recent
market trends and breaks?

14
 MODULE 2
VALUE CHAIN TOOLS

Module 2a: Market Channel Baseline Analysis

-------------------------------------------------------------
Learning Outcomes : By the end of the module, the students
will have
1. Identified common market channels
2. Defined the common market channels
3. set market channel baseline
------------------------------------------------------------
Lesson Proper:

Marketing A marketing channel refers to any

Channel method or platform that’s used to
market a product or service to
consumers. The primary goal is to
Digital Print turn over ownership of the
product or service from
production to consumption. Broadly, they are classified into
two.

Activity 2.1 What are examples of marketing channels?

_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________

Activity 2.2 There is a long list of options, however, the

following channels are generally considered to be most
effective by a number of companies:

________________ This is an advertising channel

where marketers don’t pay outright for ad
placement. Payment is made for when their ad is
clicked by an online user.

________________ This is considered as the second

largest search engine. Why? It’s often easier to
watch a video to learn how to perform a task, than
to read an extensive piece of content on the same
topic.

15
________________ This technology was created in the 1970’s. It
was first used in the promotion campaign to sell computers.
400 customers were reached which led to a $ 13M sales back in
1978.
________________ It is the process of improving your site to
increase its visibility or website traffic to a website or a
web page with the use of appropriate tags or keywords in the
content.
________________ It basically contains the information about
the company and the product or service it offers by creating
and sharing online content such as blog posts, videos, and
infographics.
________________ This refers to any social media activity
without a paid promotion. It uses free social media tools to
build and engage with an online following

One of the best ways to start using marketing analytics

is to get a baseline on the company’s current performance. A
marketing metric is a quantifiable variable that can be
measured to track performance or to know exactly what impact
marketing has on the organization.

Social Media Marketing Metrics

Activity 2.3: Can you guess what applies to our favorite

platforms like Facebook or Instagram? Let’s try completing the
table below
Metrics Definitions
Likes The number of clicks on post Like buttons.
Comments The number of comments on your posts.
Shares The number of times a post has been shared.
Also called
on Twitter or on
Pinterest.
Engagement Measures the level of interaction happening
Rate between a social media profile and its
audience.
Follower How quickly a profile is gaining new
Growth Rate followers.
New Followers The number of new fans or followers earned
over a given period of time.
Social Media Website or blog traffic driven by social
Traffic media platforms.
Social Media Website or blog conversions from social
Conversions media referral traffic.
Page A breakdown of demographic data based on a
16
 Demographics profile’s followers, based on age, sex,
location, occupation, etc.
Sentiment Measures how social media audiences feel
about your brand

The metrics from previous may be related to the general

metrics below:
1. Generated market qualified lead (MQL)
2. Conversion Rate of MQL to SAL (Sales Accepted Lead)
3. Revenue Source
4. Marketing Program Influence
5. Improved Deal Velocity

How to Set Baseline?

Goal: Influence 70% of Revenue with Digital Marketing

Campaigns
Campaign Type Revenue % Contribution
Trade Shows Php 15,163,225
Telemarketing 318,505
Social Media 3,018,526
Web 4,241,859
Printed Ad 960,236
Total 23,702,351

Discussion Questions:
1. In this report, what is the total revenue influenced by
digital marketing? ___________.
2. What the total revenue of the company for the period?
___________
3. What part of the total revenue is influenced by digital
marketing? ___________
4. If the goal is 70%, would you say that the digital campaign
is effective? ___________

17
 Module 2b: Competitor Analysis

-------------------------------------------------------------
Learning Outcome : By the end of the module, the
students will have applied the concepts in writing a
competitor analysis
-------------------------------------------------------------
Lesson Proper

A Competitor Analysis aims to understand competitors in

order to forecast competitors' future strategies and
decisions, predict competitors' likely reactions to a firm's
strategic initiatives and determine how competitors' behavior
can be influenced to make it more favorable.

How to perform a Competitor Analysis

1. Identify Consumer Target Group. Make the description
as specific as possible. If the target group consists of
businesses, mention the industry, size, or their
offering. If the target group consist of consumers
mention the age, goals, gender, education level or
interests.
2. Identify the top three competitors. To generate this
list, think of where your customers would go if the
product or service, they want are not available in your
store.
3. Determine the Competitors’ Strengths and Weakness.
List the reasons why customers would consider what the
competitor has to offer. Also, consider why the customers
would not go to the competitor. Write at least three
items for each competitor.
4.Describe the key findings. Consider the following
questions:
 What stands out?
 What patterns can you discover from your
competitors?

 Which opportunities can you come up with?

 What are the aspects that your competitors don’t do

well?

 How could you avoid making the same mistakes?

18
  What should you do to serve your customers in such a
way that you differentiate from your competitors in
a positive way?

Illustration:

Competitors’ Analysis: Breads Made Fresh by Aunty and Sunny

Target: All bread consumers who prefer fresh bread made only
of natural ingredients and does not contain any enhancers or
preservatives.

Competitors Findings
Bread Talk Park and Go Bread Box
Soft breads
Strengths

Made fresh
everyday
Wide variety of
breads to
choose from
Expensive
Weaknesse

Only available
in Bacolod
No delivery
option
s

Assessment of Learning

19
 Module 2c: Buyer Analysis
-------------------------------------------------------------
Learning Outcome : By the end of the module, the
students will have applied the concepts in writing a Buyer
analysis
-------------------------------------------------------------
Lesson Proper

A customer analysis is also referred to as the customer

profile. It combines qualitative and quantitative research
methods with the goal of better understanding of the business’
customer base. Target customers are identified, their needs
ascertained, and how the product satisfies these needs are
determined.

How to conduct a Buyer or Customer Analysis

1. Customer Profiling
A customer profile is a simple tool that can help business
better understand current and potential customers, so they
can increase sales and grow their business. Customer
profiles are a collection of information about customers
that help determine why people buy or don't buy a product.
Customer profiles can also help develop targeted marketing
plans and help ensure that products meet the needs of their
intended audience. Customers may be classified into the
following categories:

 Demographic: Age (range), gender, income

 Geographic: Location-specific
 Psychographic: Values, beliefs, interests, personality
 Technographic: Based on the device/platform a customer is
using, i.e., desktop vs. mobile
 Behavioral: Behavioral segmentation methods , habits,
frequent actions
 Needs-based: Specific needs for a product/service
 Industry: For B2B, what industry the customer belongs to.
 Business size: Also, for B2B, the number of employees or
the revenue size.
 Value-based: Value to the company, typically measured by
Customer Lifetime Value (CLV). This the amount of profit
your company is expected to generate from a single customer
over the whole period of their relationship with you.

2. Discovering and understanding customer needs

This involves reaching out, through surveys, face-to-face
interviews with focus groups and usability studies. This

20
 setting allows the customer to share what drives them to
make a purchase. It is important to ask the right questions
which may be aided by employing the Five Whys technique.

3. Grouping customers according to similar traits and

behaviors.

4. Creating a profile of your ideal customer(s).

After classifying the customers, use all the insights gathered
to create customer personas of the target customer(s).

5. Creating a customer journey map

An example of creating a Customer Journey Map can be found

in the link below:
Customer Analysis – 7 Steps to Customer Understanding
(userlike.com)

Illustration:
If you are selling bread, your market can be categorized
by how consumers want them: white, enriched, or multigrain.
Each of these categories will have different requirements and
may vary in price.

By understanding the needs of the target customer, the

company’s marketing mix may be tailored to their preference.

--------------------------------------------------------------
Assessment of Learning
--------------------------------------------------------------

21
 MODULE 3

PRIVATE SECTOR BUSINESS TOOLS

Module 3a. Environmental Scanning

-------------------------------------------------------------
Learning Outcome : By the end of the module, the
students will have applied the concepts in writing an
Environmental Scanning
-------------------------------------------------------------
Environmental scanning is a process that systematically
surveys and interprets relevant data that could influence
future decisions. It is closely related to a S.W.O.T. analysis
Effective environmental scanning can help companies take
advantage of opportunities before competitors, address threats
before they become significant problems, and align the
company’s strategy to meet changing demand in the marketplace.

How to Conduct Environmental Scanning

1. Identify what external factors are most impactful to make

the environmental scan a useful tool.
 Trends. What product or services are currently popular
with the customers?
Schools - distance learning using
printed materials
Supermarkets - online shopping
Restaurants - pick up only
Business Process Offices - work from home
 Competition. What is the competition’s strategy that
gives them the upper hand?
Schools - multimodality
Supermarkets - free shipping/delivery
 Technology. What technologies can make your business more
efficient?
Cashless payment - GCash
Contactless tracking - BacTrac
 Customers. How is the customer base evolving? What will
aid you in providing excellent customer service?
 Economy. What is the status of the economy that could
affect the business in the long run?
Availability of transportation
 Labor. Is there access to the skilled workers in the
vicinity of the operations?

22
  Legislation. Is there a law that will impact the business
operations?
Physical distancing (30% capacity of business areas)
Skeletal workforce
Safety Potocols

2. Conduct an internal scan of the organization by reviewing

the company's vision, mission and strategic plan. Examine
the organization's strengths and weaknesses. Consider where
the company stands now and where it plans to be in five or
10 years by interviewing the leaders of the company or
organization

3. Develop strategies to respond to impacts when the need

arises.

Illustration: https://www.edrawmax.com/article/pepsico-swot-
analysis.html
--------------------------------------------------------------
Assessment of Learning = 15 POINTS
--------------------------------------------------------------
1. Choose a product (brand)
2. Perform SWOT Analysis

Perform
ance
Rating = 5 Rating = 3 Rating = 1
Criteri
a

Comprehensive and List is not Clearly lacks

Strengt
realistic list comprehensive effort in the
hs
that states the enough or it development of
(Intern
basis for the contains the criteria.
al
company’s strengths that
Audit)
competitive edge. are not
realistic.

Comprehensive and Comprehensive and Clearly lacks

realistic list realistic list effort in the
Weaknes
that states areas that states areas development of
ses
in which the in which the the criteria.
(Intern
company struggles company
al
and provides a struggles.
Audit)
solution to
correct the
weakness.

23
Perform
ance
Rating = 5 Rating = 3 Rating = 1
Criteri
a

Opportu Clearly lacks Comprehensive and Clearly lacks

nities effort in the realistic list of effort in the
(Extern development of well-thought-out development of
al the criteria. opportunities for the criteria.
Audit) profit and
growth.

Comprehensive Comprehensive and Clearly lacks

and realistic realistic list effort in the
list that state that state the development
Threats the threats that threats that may of the
(Extern may affect the affect the criteria.
al company’s company’s
Audit) competitive competitive edge.
edge. Provides
solutions to
meet those
threats head-on.

24
 Module 3b. Porter’s Diamond Analysis
-------------------------------------------------------------
Learning
Outcome : By the end of the module, the students will
have applied the concepts in completing a
Porter’s Diamond Analysis.
-------------------------------------------------------------
Lesson Proper:

Porter’s Diamond is an economic model developed by

Michael Porter in his book The Competitive Advantage of
Nations. The tool is often used to analyze the external
competitive environment or marketplace, which helps companies
to determine the relative strength and explain why certain
industries have become competitive or possess regional
advantages.

In this model, the regional advantages can be assessed by

four factors, which includes:

1. Firm Strategy and Rivalry

2. Demand Conditions
3. Related and Supporting
Industries
4. Factor Input Conditions.

What do the four

factors/attributes mean?

Firm Strategy and Rivalry studies the competition in the

home market that drives innovation and quality. When there’s
lots of competition and lots of rivalry, this keeps companies
on their toes, and so
they try to out-compete each other by continually developing
more innovative and quality products and or services. It
answers:
 the average Corporate Philosophy in a certain country
(How companies Innovate, What Strategies do they follow,
their Vision etc.
 How Companies Compete with each other (Do they Merge
frequently? Do they collaborate? Do they compete
“aggressively”?)

25
Factor/Demand Condition refers to domestic behavior, market
preference, what clients’ value, strength of demand
 The Internal Market of a Country (How Strong is the
internal Demand, how seasonal it is, etc.)
 Customer Behavior within a Country. (What Clients Value
most, Their Preferences, how much they Spend, etc.)

Related and Supporting Industries

 How many Companies are there in a Country (And in which
Sector are they Specialized)
 How Strong the different Economic Sectors are. (If there
are lots of Suppliers, related Businesses, etc.)

Factor Input Conditions are the factors of production that

includes things like skilled labor, education, capital,
climate, national stability and culture, and
infrastructure.
 The Natural Resources that a Country has. (If there is
oil, gas, a fertile land, the climate, the geographical
location, etc.)
 The Human Resources of a Country. (The Mentality of its
population, the Education of its citizens, Corruptions,
etc.)

Application of Porter’s Diamond Model Analysis

Porter Diamond Model Analysis of the American Fast Food Market:

Firm Strategy, Structure and Rivalry:

1. Fast food consumption is widespread in the United States.
(Only Companies with an aggressive Strategy and a versatile Structure
Survive)
Demand Conditions:
1. The internal Demand is Large and Competitive
(American are beef burgers and potato fries’ eaters)
Related and Supporting Industries:
1. There is a huge primary sector in the US.
(There are lot of Wheat, Corn, Cattle, potatoes farmers in the US)
Factor Conditions:
1. The internal Market of the US is enormous.
(US have huge area of arable land which provides a source of cheap raw
materials)
All of these factors have contributed to McDonald’s, Wendy’s and Burger
King’s success around the world.

26
 Porter Diamond Model Analysis of the Swiss Food Company

Firm Strategy, Structure and Rivalry:

Switzerland is a Country that is famous for its precision (watches)
Demand Conditions:
Switzerland is a Country with a Strong Demand for Dairy products (Nestlé
started as a Company specialized in Milk-based products)
Related and Supporting Industries:
There is a Strong and varied Dairy Industry in Switzerland (Lindt, Milka,
Toblerone)
Factor Conditions:
Switzerland is in the Heart of Europe. (It has access to a Huge Market, with
reduced Logistics Costs)

All of these factors contributed to Nestlé becoming the Large and successful
food Company it is today. After being successful with dairy products, they
diversified their products

--------------------------------------------------------------
Assessment of Learning
--------------------------------------------------------------
Use the Porter Diamond Model to analyze the different Business
Company/ Sector in the Phils:
1. Tourism
2. Universal Robina Corporation
3. San Miguel Brewery
4. Jollibee
5. Potato Corner
6. Your Choice

27
 Module 3c. PEST ANALYSIS

-------------------------------------------------------------
Learning Outcome : By the end of the module, the
students will have applied the concepts in completing a
Porter’s Diamond Analysis.
-------------------------------------------------------------
Lesson Proper:

Read “How to Do a PEST Analysis in 5 Easy Steps” by

Kiesha Frue at https://pestleanalysis.com/how-to-do-a-pest-
analysis/

--------------------------------------------------------------
Activity : Create an Infographic on
--------------------------------------------------------------
1. Factors Considered in conducting a PEST analysis- 10 pts
2. The Steps on conducting a PEST Analysis - 10 pts

Rubrics :

The Factors Considered in conducting a PEST analysis

Description Weight
Factors complete, described clearly, 10
correctly represented, neat and legible,
submits on time
One or two missing criteria 8
Three or more missing criteria 6
Did not submit 0

The Steps on conducting a PEST Analysis

Description Weight
Steps complete, described clearly, correctly 10
represented, neat and legible, submits on
time
One or two missing criteria 8
Three or more missing criteria 6
Did not submit 0

28
 Module 3d: A Business Gap Analysis

--------------------------------------------------------------
Learning Outcome : By the end of the module, the students
will have
1. familiarized with the steps on performing a Gap
Analysis
2. Critique a published gap analysis
--------------------------------------------------------------
Lesson Proper :

Gap analysis is a technique that can be used to assess if

an enterprise can meet its needs using its present
capabilities. The capabilities that may be examined for
improvement include staff competencies, facilities,
applications, technical infrastructure, processes, lines of
business, to mention a few.

Activity : Read The complete guide to Gap Analysis

Reference : https://thebusinessanalystjobdescription.com
/The-complete-guide-to-gap-analysis/
(https://www.businessanalystlearnings.com/)

--------------------------------------------------------------
Assessment of
Understanding :
--------------------------------------------------------------

Instructions: Provide the term/s that will correctly complete

each statement

1. What are the steps in performing a Gap Analysis?

a) __________________________
b) __________________________
c) __________________________
d) __________________________
2. What are the common tools that are used in a Gap Analysis?
a) __________________________
b) __________________________
c) __________________________
d) __________________________
e) __________________________

3. When should a company conduct a Gap Analysis?

a) __________________________
b) __________________________

29
 c) __________________________
d) __________________________
e) __________________________

4. What are the other names for a Gap Analysis?

a) __________________________
b) __________________________
c) __________________________

5. Give four (4) domains where a Gap Analysis is applicable?

a) __________________________
b) __________________________
c) __________________________
d) __________________________

6. Write a Gap Analysis. Just copy an example online and make

sure to cite your reference.
Step 1:
Step 2:
Step 3:
Step 4:

*Write your COMPLETE NAME on your Answer Sheets

*Late submissions will not be recorded

30
 MODULE 4

PRIVATE SECTOR CONSUMER TOOLS

Module 4a. Product Concept Testing

--------------------------------------------------------------
Learning Outcome : By the end of the module, the students
will have
1. familiarized with the steps on performing a Product
Concept Testing
2. reported output in class
3. Critiqued peer’s output
--------------------------------------------------------------
Lesson Proper:

Did you know that….

In 1985, Coca -cola was losing out to its competition and
tried to create a product that tastes like Pepsi?
In 1992, Pepsi created a clear cola and reintroduced it in
2016?

Can you think of products from famous brands that were

taken out of the market shortly after they have been
introduced?

For a product or service to be successful in a niche or

target market, it is important to understand whether the
clientele will accept it or not.

Concept testing is the process of evaluating the

customer’s possible response to a product or service idea
before it is introduced into the market. With product Concept
testing, you can compare metrics like purchase intent,
quality, and value to find out which product concepts
customers like best.

Steps in Performing an Effective Concept Testing

1. Pick a product/service concept or idea to test
2. Select a metric you want to test (features)
 Uniqueness *Appeal * Purchase intent
 Likability *Believability *Expected
price
 Relevancy *Product demand *Value
 Most-liked attribute *Least-liked attributes
*Quality

31
3. Choose a test Methodology
This is accomplished through the use of a product concept
testing survey which may be of the following format:

a) Single Concept Evaluation (Monadic) — Respondents

complete a full evaluation of a single concept.
b) Multiple Concept Evaluation (Sequential Monadic)
— Respondents complete full evaluations for multiple
concepts.
c) Concept Selection (Comparative) — Respondents choose
which concept they like best.
d) Concept Selection and Evaluation (Comparative
Monadic) — Respondents choose which concept they
like best and complete a full evaluation.

Survey should start with the presentation of an image

and text that describe the concept and ask the respondents
about their initial reaction.

Three (3) Qualitative Concept Testing Case Studies &

Methods (remesh.ai)

4. Send survey to target market

5. Analyze the result and identify the most promising
product concept

Illustration

Cakes (The Effect of Packaging on the Behavior of Consumers)

1. Pick a product/service concept or idea to test

Possible Concepts: Packaging

2. Select a metric you want to test (features)

*Appeal * Purchase intent
*Most-liked attribute * Least-liked attributes
3. Choose a test Methodology

32
 This is accomplished through the use of a product concept
testing survey which may be of the following format:
*Monadic *Sequential Monadic
*Comparative *Comparative Monadic

Sample Survey questions:

1. What type of packaging do you prefer most for small

cakes?
[ ] styro box [ ] cardboard box
[ ] foil container [ ] tin box

2. What is your basis for your preferred packaging?

[ ] Appearance [ ] Cost
[ ] Reusability [ ] Biodegradability
[ ] Others, please specify __________

3. How important is the packaging design for cakes?

[ ] Most important [ ] Important
[ ] Just Okay [ ] Less important
[ ] Not important at all

4. Are you willing to pay an extra amount for good

packaging?
[ ] Certainly [ ] Probably
[ ] Not sure [ ] Probably not
[ ] Never

------------------------------------------------------------
Assessment of Learning
------------------------------------------------------------
Product Concept Testing Rubrics
1. Select a Product to Work on 1
point
2. Select one concept to test 2
points
3. Select 4 metrics to test 4
points
3. What Methodology are you going to use and why? 3
points
4. Compose 5 survey questions which answers will
correspond to the metrics that you want to test
10

Total Score 20 pts

33
 Module 4b. Trade Shows

--------------------------------------------------------------
Learning
Outcome : By the end of the module, the students will
have
1. defined trade show
2. Presented a checklist of items for an exhibit booth
in a trade show
--------------------------------------------------------------
Lesson Proper :

https://marketbusinessnews.com/financial-glossary/trade-show-
definition/

What is a trade show?

A trade show, trade fair,
or exposition is an
exhibition organized to provide
companies in a specific industry the
opportunity to showcase and demonstrate
their latest product or service, meet
with industry partners and customers,
study activities of rivals, and examine
recent market trends and breaks
Trade Show Kiosk: Most trade shows focus on a particular
Greater industry, such as education (see photo
Opportunities [GO] on the left), agriculture, gadgets,
Education, K-12 automotive, and many more.
Roadshow. Feb 9- Trade fairs are usually held in large
10, 2013. Mall of halls such as conference/convention
center or other indoor venue in which
Asia Music Hall.
members of a specific industry
FILIMAGiNEERS as a demonstrate, display, and talk about
DepEd Partner. what they aim to sell with visitors.
Photo: Juan Carlos Not all of them are indoors, tough.
G. Ayeng Garden Shows are usually held in an
open space where participants can
customize their own kiosks.

Benefits of attending a trade show

Besides giving businesses credibility and visibility, trade

shows offer many other benefits for different sized companies.
 Learn more about your sector

34
In a trade fair, company representatives have the opportunity
to find out what is going on in their industry. They can
get up to date with latest developments, technologies,
trends, etc.

It is also a place where you can get a good look at what your
competitors are doing regarding new products and marketing
strategies which work or no longer work.
If you are in the food business, you might want to know what
food products sell or what packaging works best.
 Lead
They are great places for generating new leads. Leads refer
to potential customers. People visit trade shows to find out
more about the goods or services that are available in the
market.
 Enhance your brand
A brand is the personality of a company or product. It is one
of the most important aspects of a business. Customers,
prospects, and other consumers see in your brand what you
and your company stand for, and what standards of quality,
customer service, etc., they expect to receive.

Your brand will receive a significant boost if you attend an

exposition. It is a great way of informing people in your
market that you are a serious, reliable, and quality
player.
 Cost effective
Paying for your stand, flight, accommodation, and meals away
may sound expensive. However, several studies have
effective for gaining leads and customers than most other
sales and marketing strategies.
“Though you might have a larger initial investment to showcase
your business at a trade show than other advertising or
networking methods, the cost to convert a prospect into a
sale is often much lower than other alternatives.”
“With proper research and planning, trade shows are one of the
most cost- effective sources of leads and sales possible.”
 Boost customer loyalty
Customer loyalty is all about keeping your existing client
base and getting them to keep coming back for more. In a
trade show, you can visit your existing clients face-to-
face. In today’s business world where emails and Skype calls
dominate, companies that don’t see their existing customers
face- to-face can lose out if their competitors do.
According to an Oxford Economics study, face-to-face meetings
are the best way to enhance customer-supplier relationships.

35
https://www.business.qld.gov.au/running-business/marketing-
sales/marketing-promotion/show-exhibition/benefits

Risks of Attending a Trade Show

It is also important to ensure that you have thoroughly
researched attending a trade show or exhibition, and if you
have a business adviser, discuss it with them.

36
There are risks involved and you need to be aware of those
risks in the planning stages, including:
 Trade shows require at least a day and probably more of
your time.
 Travelling to trade shows can be costly.
 Displaying at a trade show can also be costly.
 There will probably be quite a bit of competition at all
shows.

Choosing the wrong trade show to exhibit your business's

products or services can result in displaying to the wrong
audience. Poor promotion can mean the costs of attending the
trade show outweigh any revenue you gain.

37
 Module 4c. Market Testing

--------------------------------------------------------------
Learning
Outcomes : By the end of the module, the students will
have
1. defined the different assessment tools
2. classified assessment tools based on Industry.
--------------------------------------------------------------
Lesson Proper :

https://www.thekeepitsimple.com/markettest/

A market test can be defined as a short-term geographical

area or demographic grouping used to evaluate the
profitability of a particular product or service in a specific
market before a broad scale roll-out. It generally is made of
trials of research that aim to answer questions around how the
market will react to the product launch.

It enables businesses to plan their:

1. pricing
2. marketing strategy
3. advertisements
Therefore, before launching a new product or service that may
have a high chance of success in a particular market segment
but may fail to attract the target customers when introduced
in a broader market.

Objectives of a Market Test (in the context of selling

washable masks)

1. Understanding demand.
Knowing what the market needs helps the company plan for
production capacity requirements. This is important as not
meeting demands in the long run results in the loss of
customers to other vendors.

2. Product Distribution
This involves understanding the demographics and quantity to
execute an effective channel of product distribution.

3. Lower the Risk

Knowing the product or service potential in the market helps
in the assessment of risk involved in investment.

38
4. Changes in Product
Market test helps in gathering customer feedback about their
preferences which can result to creating new features of
product in services.
e.g., Masks – customers may prefer specific textile, color or
print that are not yet in the product structure

5. Acceptable Price
Helps analyze the prices that are acceptable to the customers.

TYPES OF MARKET TESTS

Consumer Goods Test Industrial Goods Test Marketing

Marketing

Standard Alpha Beta

Controlle
Test Testing Testing
d Test
Marketin Marketin
g g

Simulate
dTest
Marketin
g

Consumer Goods Test Marketing

Consumer Goods Test Marketing aims to test four (4)
variables: Trial Customers, First Repeat, Adoption and
Purchase Frequency.
Trial customers will try the product once. Usually the
use/take the product during free testing/ tasting in stores.
First repeat can happen right after the trial. This means a
customer buys a product after testing it or watching a product
demo. Adoption means consumer acceptance of a product. It may
mean replacing a favorite brand with the new one. Purchase
Frequency tells how many times a customer purchases the
product at a given period of time.

39
1. Controlled Test Marketing – is used mostly for goods like
soap or shampoos where a new or free sample is strategically
displayed to catch the customers’ attention.
2. Standard Test Marketing – uses a list of predefined
customers to select from a range of different products.
Standard Test Marketing – is conducted in a few cities that
represents the national market. Then the products are
distributed to retailers or wholesalers using every marketing
mix that works
Industrial Goods Test Marketing
1. Alpha Testing – is usually executed within the
organization.
2. Beta Testing is executed outside the organization. For
example, in mobile game development, the game is usually made
available through free downloads and it prompts the user to
report bugs or issues encountered during download or while
playing the game.

Market Test Process

1. Set the Objectives
What is the product potential?
What is the acceptable price?
What are the risks involved?
Is there a demand for the product?

2. Select Type of Tests

Consumer Goods Test Marketing – Controlled, Standard or
Simulated
Industrial Goods Test Marketing- Alpha and Beta

3. Setting the Budget

Different types of tests execute on different
scales- financially. usually this is taken from the
Marketing Budget. It includes all promotional costs
like advertising and public relations, employing staff,
office costs and other expenses included for marketing.

4. Develop the Plan

This includes the production of the product,
distribution process, targeted places, targeted
customers, promotion plans, financial aids. Moreover, the
plan also includes the follow or a backup plan as well.
40
 4. Finalize the Markets
This data can be taken from a Consumer Analysis data.

6. execute the test marketing from manufacturing the product

to shipping to right places/ stores and right promotion
to encourage people for making purchase and repurchase.

7. The last step of the process is to analyze the results and

to analyze the entire process of test market and to
interpret the results and comparing the standards from
the actual performance and to analyze the results and
benefits.
--------------------------------------------------------------
Assessment of Learning

ASSESSMENT
Assignment/ Output 10%
Attendance 10
Quizzes 20
Periodical Exam 60
Total 100%

REFERENCES:

Analysis Ultimate Guide: Definition, Template, Examples.

Retrieved 28 January2021, from
https://pestleanalysis.com/pest- analysis/SWOT
analysis

APQC. (2010). Measurement Frameworks [Ebook] (pp. 1-5).

Retrievedfromhttps://www.apqc.org/sites/default/files/fil
es/Measur ement%20Frameworks.pdf

Clarke, A. (2021). Environmental Scanning in Marketing - What

is it? See Examples. Retrieved 18 April 2021, from
https://groundfloorpartners.com/environmental-scanning/

Competitor Analysis | Service engineering platform. (2021).

Retrieved 18 April 2021, from https://serviceengineering
lab.len/tools/concurrentieanalyse

D’Aveni, R. (2007). Mapping Your Competitive Position. Harvard

Business Review. Retrieved from
https://hbr.org/2007/11/mapping-your-competitive-position

41
Frue, K. (2021). PEST Industry Analysis - Top 3 Methods to
Assess and Analyze an Industry. Retrieved 28 January
2021, from
https://corporatefinanceinstitute.com/resources
knowledge/strategy/industry-analysis-methods/

Principles of Management. (2021). Retrieved 28 January 2021,

fromhttps://opentextbc.ca/principlesofmanagementopenstax/
chapter/measuring-and-evaluating-strategic-performance/

42