Reviewer in Economics
P15,000,001 to P60,000,000
SWOT analysis - commonly used for industry
analysis which lists the strengths, weaknesses,
opportunitues and threats that he business
faces.
Business Organization
1. Sole proprietorship - owned by one person.
2. Partenrship - owned by 2 or more persons
which combine their resources with a view to
making profit.
 General Partnership - all owners are
involved in management of business
and each is personally responsible for
the consequences of the actions of the
other partners.
 Limited Partnership - some members
are general partners who control and
manage the business whs other
partners are limited and contribute only
capital.
3. Corporation - legal entity that is separate
from its owners. No shareholder is personally
liable for the debts, obligations, or acts of the
corporation. This kind of business organization
can exist for a life of 50 years which is
renewable for another 50 years.
4. Cooperative - entity organized by people with
similar needs to provide themselves with goods
or services or to jointly use available resources
to improve their income.
Small, Medium, and Large Scale Businesses
- total assets for micro business are worth
below P1,500,001.
- for small business total assets are form
P1,500,001 to 15,000,000
- for medium business total assets are from
- any business with assets exceeds P60,000,000
are considered large scale.
- sole proprietorship and partnerships 100%
must be owned and capitalized by Filipinos.
- in corporations atleast 60% of the outstanding
capital stocks must be owned by Filipino
citizens.
Tools in Evaluating Business
1. Geographic area which your business will
cater to.
2. Size and outlook of the industry.
3. Description of the product.
4. Buyers have to be identified.
5. Regulatory environment.
6. Need to identify the leading businesses in the
industry.
7. Factors that will affect the growth of the
business.
The SWOT Analysis - created in the 1960's by
business gurus, Edmund P. Learned, C. Roland
Christensen, Kenneth Andrews and William D.
Book in their book of Business Policy, Text and
Cases.
- actually refer to the internal factors and these
are the resources and experiences readily
available to the business proponent.
- a tool that can help a proponent by enabling
him/her to identify and assess the internal and
external forces that can affect the business.
Porter's Five Forces of Competitive Position
Analysis
- tool that can be used to assess business.
- developed in 1979 by Michael E. Porter.
- framework or a guide for assessing and
evaluating the competitive strength and
position of a business organization.
- porter identifies five forces that determine the
competitiveness and attractiveness of a market
and which seek to locate the power in a
business situation.
 Supplier Power - important to assess
how mucb power the supplier has in his
ability to drive up prices.
 Buyer Power - supplier can enjoy the
power to drive prices up, it is also
possible for buyer to drive prices down.
 Number of competitors - number and
capability of competitors in the market
will also impact on the attractiveness of
the market.
 Possibility of substitution - when it is
easy to substitute products in a market,
it is expected that buyers will switch to
alternatives in case of price increases.
 Possibility of new entrants - when
investors see that a market is profitable
they will desire to join the bandwagon
and get a share of the profits.
Industry Analysis
 Competition - it is very important to
know your competitors and be ready for
them. Your aim is to wim their
customers and make then your loyal
customers.
 Customers - what type of people will
you cater to, based on their
preferences, lifestyles and buying habit?
 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 the
things you order from them.
 Substitutes - goods that can be used in
place of another.
A Guide to Industry Analysis
1. Geographic Area - identify the area whether
local, regional, nationwide or international.
2. Industry (size) - pesos and number of firms,
trends, and developments and future outlook.
3. Product - describe the product as to physical
attributes and characteristics.
4. Buyers - describe target customers as to age,
income group, geographical location and
occupations.
5. Regulatory Environment - include
government laws and regulations that apply to
the business.
6. Company Information - list of the most
succesful businesses in the industry.
7. A brief history of the industry - started and
how it developed.
8. Factors that affect growth of the industry -
migration of population form rural to urban
areas.
9. Trends in sales over the recent years - actual
sales in the industry over the past 5 years.
10. Current operational/management trends
within the industry - standard practices
prevalent among the firms.
11. Types of marketing strategies prevalent
within the industry.
12. Competitor Information - location of
competitors and how long have they been in
business and their market share.
Environmental Analysis
 Economic Forces - economic factors that
will affect the business such as inflation,
recession and etc.
 Physical Environment - geography of the
place where your business are and if
that place is safe for placing your
business there.
 Political Factors - the stability and
streght of the government can also
affect the business.
 Cultures and Lifestyles - it is important
to study the culture and lifestyle of the
place where your business would be so
you'll know what are the best services
that is fit to provide.
 Competition - you need to study your
competition because the strength of
your competition can determine the
failure and succes of a business.
Circular Flow of Economic Activity
Simple flow of goods and services - for as long
as households are willing to consume,
producers continue to produce goods and
services for the households using the resources
provided by the latter. As the physical flow
continues so is the money payment flow in
exchange for products and resources.
Intra-Production Payment Flows - Raw materials
are the unprocessed goods, Intermediate goods
are semi-processed goods that are not yet ready
for final use, Final goods are the goods that are
ready for direct consumption. These final goods
are then sold to customers for their use.
Resource Production Payment Flow - in return
for the use of resources, the three types of
producing units make money payments to
households. Money is now paid by the various
firms to the households as payment for the
resources they provide.
Government Sector and the Global Economy -
government is important because it makes
purchases of economic resources from the
household and makes money payments to the
resource owners for the use of their resources.
- an economy sells goods to otber countries;
these are called exports. An economy buys
goods from other countries that is called
imports.
Economy's Producing Sectors
 Agriculture, Fishery, and Forestry - reaps
the fruits of natural resources like the
soil, water, and forests.
 Industrial Sector - processes raw
materials from agriculture, fishery and
forestry into intermediate products that
are further processed into final
products.
 Service Sector - produces the tangibles
supporting and complementing
production in the other sectors as well
as among its own industries.
Competitiveness and Efficiency - according to
said competitiveness report, prominent among
the problematic factors doing business i the
Philippines are inadequate infrastructure,
corruption, inefficient government bureaucracy,
policy instability, crime rate, tax rate, and
restrictive labor regulations.
Agriculture and Fishery - inadequate socio-
economic and public infrastractures coupled
woth liberalized trade smother agricultural
efficiency of the know how, resources, and
competitive environment to at least meet local
consumption.
Manufacturing - lacking government support to
deepen technology and productio, the fewer
enterprises of much larger scale are into the
final production stages of electronics
machineries, chemicals, petroleum and
garments.
Trade and Transport - in spite of being the top
grosser of the biggest sector that is service , the
trade industry supported by the transport
industry is also handicapped by the limited size
of its establishments.
International Trade - assembled electronics top
the country's exports dominated by
manufactures reflective of the country's waning
agricultural sector.
Tourism - an emerging industry as expenditures
of foreign tourists on related services such as
hotels and restaurants, transport and
entertainment grew.
Small Business Opportunities
- small farmers and fishermen can tap urban
consumer markets amd distribution centers
with cooperative efforts to minimize limitations
of size and inadequate farm to market facilities.
- they can also gaing direct and faster access to
market networks to command higher product
prices as well as cheaper production input.
- they can access credit for expansion on
collective credibility.
- more government provisions of farm to market
infrastructure like concrete road network can
boost the efficiency of cooperative market
activities even of farmers and fishermen in the
hinterland.
- country's growing population also affords
cooperating micro enterprises in the
manufacturing, trade and transport of new
consumer markets for growth and expansion.
- complementary and support industries are
already gravitating toward these growing
centers, let alone the concentration of
government infrastructure and services
promoting market efficiency.
- in tourism industry micro businesses can help
to maximize tourists arrivals and destinations
with timely support and substitute services for
big establishments strengthened by cooperative
efforts.
- for the mean time, tourism and related
services can concentrate operation in major
tourist destinations such as Metro Manila and
Western and Eastern Visayas.
- better road networks can pave the way for the
development of other tourists destinations and
services which include transport.
Theory of Consumer Behavior - describes how
consumers make decisions ob what to buy.
Consumption - refers to the use of goods and
services to satisfy human wants directly.
Utility Function - matter of satisfaction.
- aims to maximize satisfaction he/she derives
fron the use of a good or a service.
- shows the relationship between utility and
consumption.
Total Utility - the combined utility derived from
consuming certain units of good.

Marginal Utility - the additional utility derived

from consuming an additional unit of the good.

Utility - is the term used for satisfaction. It is

something intangible.

Quantifiable goods - are subject ti

measurement, they can be expressed in
numerical values.

Util - one unit of satisfaction.