Applied Economics

Quarter 2 – Module 8.2:

Business Principles, Tools, and Techniques
in Participating in Various Types of
Industries in the Locality (Week 9)
 What I Need to Know

This module was designed and written with you in mind. It is here to help you apply business
principles, tools and techniques in participating in various types of industries in the locality.
The scope of this module permits it to be used in many different learning situations. The
language used recognizes the diverse vocabulary level of students. The lessons are arranged to
follow the standard sequence of the course. But the order in which you read them can be
changed to correspond with the textbook you are now using.

The module is divided into two lessons, namely:

Lesson 1: Types of Industries
Lesson 2: Apply SWOT Analysis as a Tool in Evaluating a Business Opportunity

After going through this module, you are expected to:

 identify the different types of industries; and

 distinguish the different products and services of the business
industries.
 discuss industry and environmental analysis as a tool in evaluating business
opportunities;
 apply SWOT analysis as a tool in evaluating a business opportunity.
 select business opportunities appropriate in your locality.

What I Know
Choose the letter of the best answer. Write your answer on a separate sheet of paper.
1. Which statement is not true about environmental analysis?
A. It is a process by which organization monitor their relevant environment.
B. It helps identifies opportunities, plan and does not take action.
C. It identifies strengths and weaknesses of the business.
D. It is a careful study of various factors influencing the business.
2. This objective of environmental analysis puts importance that one must be aware of
existing environment and changes in various factors of environment like changes in
economic, technological political and so forth.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
3. This objective of environmental analysis means to select an alternate among the various
available alternates so that the best alternate is selected and decided.
A. To provide input for decision-making.
 B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
4. This objective of environmental analysis identifies opportunities and risks in the
environment.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
5. This objective of environmental analysis put relevance in the maximum utilization of the
company’s resources to make the business successful.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
6. According to _, “Environmental analysis surveys the business
landscapes to determine how external variables will affect its decision making.”
A. Adam Smith C. John Maynard Keynes
B. Alfred Marshall D. Robert Grant
7. Some authors credit SWOT to _ , who led a convention at the Stanford
Research Institute (now SRI International) in the 1960s and 1970s using data from
Fortune 500 companies.
A. Adam Smith C. John Maynard Keynes
B. Albert Humphrey D. Robert Grant
C.
8. The acronym for SWOT is _ .
A. Suppliers, Workers, Overtime, Tool
B. Staff, Workers, Operation, Time
C. Strengths, Weaknesses, Opportunity, Threats
D. Supreme, Weaknesses, Opportunity, Threats
9. Mang Ando business is lechon manok in their community. Aside from Mang Ando there
are other establishments that sell grilled chicken like Chicken Inasal, Pampanga Lechon,
Boy’s Manok Inihaw. Then Mang Ando’s business has _ in the business.
A. Opportunity C. Weakness
B. Strength D. Threat
10. When you encounter a high turnover of employers in your business, then your business
has _.
A. Opportunity C. Weakness
B. Strength D. Threat
11. In a bookstore business, which of the following can be classified as an opportunity?
A. Got the idea of using Price Bundling to increase sales.
B. E-books eliminates need for physical books
C. Customer are supportive
D. Difficulty in hiring due to low salary
12. In a bookstore business, which of the following can be classified as strength?
A. Invite authors for book signing event
B. E-books eliminates need for physical books
C. Customer are supportive
D. Difficulty in hiring due to low salary
13. In a bookstore business, which of the following can be classified as threats?
A. Got the idea of using Price Bundling to increase sales.
B. E-books eliminates need for physical books
C. Customer are supportive
 D. Difficulty in hiring due to low salary
14. This pertains to the characteristics of the business or project that gives advantage over
others.
A. Opportunity C. Weakness
B. Strength D. Threat
15. This pertains to the elements in the environment that could cause trouble for the business
or project.
A. Opportunity C. Weakness
B. Strength D. Threat

Lesson

2 Apply SWOT Analysis as a

Tool in Evaluating a
Business Opportunity
Businesses need to study various factors influencing the business. Internal and external
factors are needed to be considered to identify business opportunities and threats
affecting the business. As you go through lesson, you will learn about industry and
environmental analysis and apply one of the most widely used industry analysis- the SWOT
Analysis as a tool in evaluating a business opportunity.

What’s In

In the previous lesson, you have learned about different business industries that you see in
your community and write type of products and services they produced. Now, read and
answer the activity.
Activity: Pick three (3) businesses in your community and interview the business owners
about their business including the opportunity and challenges they encounter in starting up
their business. Use the format below.

Name of Products/ Opportunity that Challenges

Business influenced in starting encountered
Services
the business
Offered

1.

2.

3.
 Notes to the Teacher
The teacher should encourage the learners to read books in
Economics. This will help them to easily understand the lesson.

What’s New

Every student knows National Bookstore especially booklovers. But do you know the owner
of National Bookstore? She is Socorro Ramos, the woman behind National Bookstore. Now, I
want you to read her story and answer the questions below.

Socorro Ramos or Nanay Coring as they simply called her as a young girl helped her
grandmother sell fruits at the local market in their home province. Life was hard and her
mother decided to move to Manila to find better opportunities. She attended a public school
and took on many jobs during summer vacation – from wrapping bubble gum to sewing
buttons on shirts. After finishing high school, her family did not have enough money to send
her to college. She then worked as a salesgirl at a bookstore. It was there where she met her
would be husband, Jose.

They opened a stall shop in Escolta. They named it National Bookstore, after their cash
register. But things did not go uphill from there. In the 1940s, a strict censorship on books
was implemented. Nanay Coring had to put the books away and resort to selling soap, candies,
and slippers. After the war, the whole of Escolta was burned down. This did not dampen
Nanay Coring and Jose’s souls. They opened another small store. This time, they sold the
books they had previously put away and whisky.

Gathering their earnings, the couple bought more school supplies and books. They slowly
rebuilt National Bookstore. They ventured into postcards and greeting cards. They also
partnered with international publishing houses and reprinted books at lower prices. Aside
from selling products of well-known brands, National Bookstore also now manufactures its
own school supplies – Best Buy. Keeping up with the times, they have teamed up with Kobo, a
Canadian based e-book seller. National Bookstore is also visible on social media and
customers can even shop online via their website. Students, office workers, and everyone else
will find what they are looking for at National Bookstore. (Article by M. Tuvida)

Activity.

1.What are the problems/challenges encountered by Nanay Coring in her

business?

2. What alternatives did Nanay Coring take when the business encountered problem?

3. What were the business opportunities she selected?

 What is It

Industry and Environmental Analysis

In a book published by the Development Academy of the Philippines, how to prepare
project feasibility studies, it includes an industry analysis of the following important
factors:
Competition-Who are your competitors in the industry? What is the market share of these
businesses? It is very important that you know your competitors and be ready for them.
Customers-Who will you sell your product to? The target market must be identified. Who
exactly will buy your products?
Suppliers- Who are your suppliers, from whom one can source raw materials,
intermediate products, or even finished goods one intends to resell. A business may
need one or more suppliers. It is important to develop suppliers who are reliable in
terms of quality of what they supply and their dependability in coming up with your
orde.

In short, Industry Analysis is a tool that facilitates a company's understanding of its position
relative to other companies that produce similar products or services. Understanding the
forces at work in the overall industry is an important component of effective strategic
planning. Industry analysis enables small business owners to identify the threats and
opportunities facing their businesses, and to focus their resources on developing unique
capabilities that could lead to a competitive advantage.

Environmental Analysis

According to Robert Grant, author of “Contemporary Strategy Analysis” an

environmental analysis surveys the business landscapes to determine how
external variables will affect its decision making.
It is the careful study of various factors influencing the business. It is the
process by which organization monitor their relevant environment to identify
opportunities and threats affecting their business.
It helps to identify opportunities, to plan and to take appropriate actions.
It is the study of technological factor, political factors, global factor and so on.
By carefully analyzing the environment, the businessmen come to know the
opportunities provided and threat posed by environment. Keeping in view, its
strengths and weakness, it can avail benefits of available opportunities and
face threats.
Objectives of Environmental Analysis
1. To understand current and probable change in environment. It is
importance that one must be aware of existing environment and changes in
various factors of environment like changes in economic, technological,
political, global environment, and so forth.
2. To provide input for decision – making. Decision – making means to select
an alternate among the various available alternates. In this process, we
need information for analyzing various alternates, so that the best alternate
is selected. Environmental analysis provides such information to decision
maker.
3. To ensure optimum utilization of resources. The key of business success
lies in the most effective utilization of the company’s resources.
 Process of Environment Analysis
1. Monitoring- means to understand the various environment factors which affect
the business and to identify published or unpublished sources of information
which affect business. Eg. newspapers, magazines and journals
2. Searching and Scanning- needed to manage the timely availability of required
information by scanning and searching. Many organizations have management
information system for systematic gathering, processing, storing and providing
information.
3. Forecasting- an essential element in environment analysis. Forecasting is
concerned with estimation of direction and intensity of changes in environment
factors. Forecasts of important components of business environment help in
formulating plans and strategies.
4. Evaluation and Assessment- identify and evaluate as to how these
environmental
One of the most changes will affect
widely known ouranalysis
industry businessis so that 5appropriate
Porter’s Forces or counter
strategies
Competitive Forcescan be made
Model, well in time.
was introduced byAssessment provides
Michael Porter in hisus answer
1980 bookto the key
“Competitive Strategy: Techniques for Analyzing Industries and Competitors.”
issues presented by the environment and their impact on business
According to Porter, analysis of the five forces gives an accurate impression of
the
industry and makes analysis easier. The five forces are the following:
1. Intensity of industry rivalry
2. Threat of potential entrants
3. Bargaining power of suppliers
4. Bargaining power of buyers
5. Threat of substitute goods/services

The SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities, and threats. In short, SWOT
Analysis is a planning tool used to understand the strengths, weaknesses, opportunities,
and threats involved in a business or project.
A SWOT analysis can be carried out for a product, place, industry, or person. It involves
specifying the objective of the business venture or project and identifying internal and external
factors that are favorable and unfavorable to achieve that objective. Some authors credit SWOT
to Albert Humphrey (2005), who led a convention at the Stanford research institute (now SRI
International) in the 1960s and 1970s using data from Fortune 500 companies. However
Humphrey himself does not claim the creation of SWOT, and the origins remain obscure.
 1. Strengths – This pertains to the characteristics of the business or project that gives
advantage over others. The primary technique for identifying your business strengths
involves evaluating which operations actually make money.
2. Weaknesses – A characteristic that place the business or project at a disadvantage
relative to others. Identify weaknesses by finding parts of your operation that cost you
money.
3. Opportunities – These are the elements that the business or project could exploit to its
advantage. The technique for identifying opportunities encompasses finding markets,
partnerships, products or services that you actually can pursue.
4. Threats – These are the elements in the environment that could cause trouble for the
business or project. Owning a business means facing risk. Use the technique of
including only threats that have direct impact currently on your business or that
seem as if they will impact you and your business in the next five years.

Internal and External Factors of SWOT

The internal factors are the strengths or as weaknesses depending upon their effect on the
organization’s objectives. What may represent strengths with their respect to one objective
may be weaknesses (distractions, competition) for another objective. The factors may include
all of the 4Ps – price, product, promotion and place; as well as personnel, finance,
manufacturing capabilities and so on.
The external factors may include macroeconomic matters, technological change, legislation,
and socio-cultural changes, as well as changes in the market – place or in competitive
position. The results are often presented in the form of a matrix.
SWOT analysis may also be used in pre – crisis planning and preventive crisis management.
SWOT analysis may also be used in creating recommendations during a viability
study/survey.

How to Use SWOT Analysis as a Tool in Evaluating Business Opportunity

Learned it easy, use the SWOT Template.

HERE are TIPS that will help you in using the SWOT Template
STRENGTHS WEAKNESSES

Is the business in demand in your community? What could you

improve? Is the product new in your community? What should
you avoid?
Is it accessible to all? What factors would cause the
loss
Will your community patronize it? of your
sales?

OPPORTUNITIES THREATS
Where are the good opportunities facing you? What obstacles do you face?
What are the interesting trends you are aware of? What is your competitor doing that
you
What are the external factors that can increase should be worried
about?
profits? Could any of your weaknesses
threaten your business?
What’s More
 Activity: Identify the STRENGTH, WEAKNESSES, OPPORTUNITY and THREATS. Apply
SWOT Analysis by using the SWOT Template. Use the following listed words in the box.

a. Workers are well mannered, educated about books

b. Irrelevant location
c. E-books and e-readers eliminates needs for physical books
d. Manager has poor leadership skills
e. Visible on social media and customers can even shop online via
their website.
f. One stop shop for office and school supplies
g. Pandayan and Orchids Bookstore are their competitors
h. Competitors offer rewards points and discounts for students and
teachers
i. Partnership with international publishing house
j. Patronize by the booklovers and students

What I Have Learned

Directions: Unscramble the letter to come up with the correct word. Use the meaning
in the clue. Write your answer on the line.
_1. TSOW AANSISLY - A technique used to understand the
strengths, weaknesses, opportunities, and threats involved in a business or project.
2. ERTORP HAELCIM - He introduced Competitive Forces Model.
_3. NGTHREST - An internal factor of SWOT Analysis.
_4. SREATTH - An obstacles face by the business.
5. OTROPPUNIESTI - An external factor of SWOT Analysis that
can increase profitability.

What I Can Do
Performance Task. Choose a e-business or online business that you might like to do in the
future and make a SWOT Analysis to help you decide if your business is feasible. Make a
Powerpoint Presentation.
RUBRICS (50 pts.)
Excellent Good Fair Poor Very Poor

Introduction/purpose/company
background (20 pts.)

SWOT Analysis (20 pts.)

Presentation (10 pts.)

Brief Introduction of the Business:

Brief introduction of the business and company’s background. State the purpose of the
business

Strengths:
1. What does your business do well?
2. Is your business strong in its market? (do research and support with evidence)
3. Does your business have a strong sense of purpose and the culture to support that
purpose?
Weaknesses:
1. What does your business do poorly?
2. What problems could be avoided?
3. Are there any potential financial difficulties?

Opportunities:
1. Are industry trends moving upward? (support with evidence, provide sources)
2. Do new markets exist for your products or services? (do research, support with
evidence, provide sources)
3. Are there any new technologies you can exploit?
Threats:
1. Who are your competitors?
2. What are competitors doing well?
3. What obstacles do you face?
4. Are there troubling changes in your business environment such as technologies, laws,
and regulations? (do research, support with evidence, provide sources)

Assessment
Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.

1. This economist states that environmental analysis surveys the business landscapes to
determine how external variables will affect its decision making.
 A. Adam Smith C. John Maynard Keynes
B. Alfred Marshall D. Robert Grant
2. Which statement is not true about environmental analysis?
A. It is a process by which organization monitor their relevant environment.
B. It helps identifies opportunities, plan and does take action.
C. It identifies strengths and weaknesses of the business.
D. It does not study various factors affecting the business.
3. This objective of environmental analysis puts relevance that one must be aware of
existing environment specifically factors such as changes in economic,
technological political and so forth.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
4. This objective of environmental analysis means to choose an alternate among the
alternatives so that the best alternates is selected and decided.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
5. This objective of environmental analysis examines opportunities and threats in the
environment.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
6. This objective of environmental analysis puts outmost importance in the proper use of
the company’s resources to make the business successful.
A. To provide input for decision-making.
B. To ensure optimum utilization of resources
C. To identify the threats and opportunities of environment.
D. To understand current and probable change in environment.
7. Proponent of SWOT Analysis since he led a convention at the Stanford Research
Institute (now SRI International) in the 1960s and 1970s using data from Fortune 500
companies.
A. Adam Smith C. John Maynard Keynes
B. Albert Humphrey D. Robert Grant
8. SWOT analysis is a technique use to evaluate business or project. The acronym for
SWOT is .
A. Suppliers, Workers, Overtime, Tool
B. Staff, Workers, Operation, Time
C. Strengths, Weaknesses, Opportunity, Threats
D. Supreme, Weaknesses, Opportunity, Threats
9. If a business has a strong support in the market, then your business has _ .
A. Opportunity C. Weakness
B. Strength D. Threat
10.When you receive a proposal for new investor, then your business has .
A. Opportunity C. Weakness
B. Strengths D. Threat
11.In an online business, which of the following can be classified as an opportunity?
A. Well known blogger patronize your products.
B. Discover a new level of marketing that ca increase your sales
C. Customer are supportive
 D. Difficulty in distributing products to rural areas
12.Proponent of Forces Competitive Model
A. Adam Smith C. John Maynard Keynes
B. Albert Humphrey D. Michael Porter
13.In an online business, which of the following can be classified as threats in the
business?
A. Competitors have well known bloggers that patronize products
B. Free shipping fee to your valued clients
C. Customers have freebies
D. Financial difficulties
14.This pertains to the characteristics of the business or project that could endanger the
profitability of the business.
A. Opportunity C. Weakness
B. Strength D. Threat
15.In an online business, when your online site has thousand followers then your business
has _.
A. Opportunity C. Weakness
B. Strength D. Threat

Additional Activities
Entrance and Exit Slip. Fill in the table below.
ENTRANCE SLIP EXIT SLIP
What I know about SWOT What I learned about SWOT
Analysis Analysis

What I think about SWOT

Analysis