APPLIED ECONOMICS
UNIT I – Economics and Real-world Challenges
Module 1: Overview of Applied Economics
Economics – the efficient allocation of available resources
Applied Economics – the application of economic theories
and models in real life
Basic Economic Concepts
1. People have unlimited needs and wants, and these
needs and wants drive consumption.
2. The concept of scarcity which means resources is
limited.
3. Scarcity, needs, and wants leads to the allocation of
available resources in the most efficient way
possible.
Opportunity Cost – the benefit you give up because you
choose to take one action in favor of another.
Absolute Advantage – having the ability or capacity to
produce more output compared to another entity.
Comparative Advantage – having a lower opportunity cost
Basic Economic Problems
1. What to produce?
2. How much to produce?
3. For whom to produce?
“Goods” and “services” are used extensively in economic
discussion that these are sometimes referred to as economic
goods. To distinguish from other uses of the word, economic
goods cover goods, services, products, and the like that have
a price and are sold in a market.
Factors of Production
1. Land
2. Labor
3. Capital
4. Entrepreneurship
Production Possibility Frontier (PPF) – is an application of the
concept of allocation of resources and factors of production.
Methods Used in Economic Analyses
1. Qualitative Approach – often used interchangeably
with descriptive analysis
2. Quantitative Approach – involves mathematical and
statistical analysis of economic data
Econometrics – the mathematical and statistical
analysis of economic data
Economic Theories – are statements or observations on the
relationship of variables
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Economic Models – the representations of economic and
social phenomena analyzed using research, observations, and
testing.
Time-series – data are collected for particular element(s) for
several time periods
Cross-sectional Data – include different variables for a single
time period
Normative Economics – evaluates economic decisions,
policies, or outcomes as good or bad. It is based on opinions
and is subjective
Positive Economics – evaluates economic scenarios and
policies based on qualitative and quantitative analysis. This
makes positive economics factual and objective.
Main Branches of Economics
Microeconomics – deals with consumer and producer
decisions
Macroeconomics – points to national level actions that
impact the economy
Microeconomic Concepts
Utility – the value or satisfaction derived from the
consumption of a good
Marginal Utility – the additional utility or satisfaction from
the consumption of an additional unit of good, keeping other
things constant
Law of Diminishing Marginal Utility – for every additional
consumption, the marginal utility or level of satisfaction is
declining
Total Utility – As the consumption of a good increases, the
total utility goes up. But the increase in total utility is at a
decreasing rate
Indifference Curve – the consumer behavior of not being
affected by the quantity consumed of a good in favor of
another. A consumer is indifferent to combinations
represented by any point along the indifference curve.
Indifference Map – shows a group of indifference curves.
While points along the same curve offer a consumer the same
utility, a different indifference curve means a different level
of satisfaction
Budget Line – represents the income constraint of consumers
Equilibrium Position – represented by tangency point of the
budget line with the highest indifference curve. Note that
tangent means “touching” rather than passing through.
Budget – is a broad term used to illustrate income constraints
Disposable Income – the income after taxes has been
deducted
Discretionary Income – the income left from disposable
income after all the nontax expenses have been deducted
Macroeconomic Concepts
Gross Domestic Product (GDP) – the total value of “final”
goods and services consumed during a given period. Typically
expressed in Philippine peso
GDP Growth – or the rate of increase in GDP value from one
period to another, which is expressed in percentage
“Final” – these goods and services are the products
bought or consumed by end consumers
Intermediary Goods – goods that are used for
further processing or production
Module 2: The Philippine Economy and Its 21st Century Socioeconomic Challenges
Economic Systems – the different ways of managing a
nation’s available resources to answer the three economic
questions
1. Free Market Economy – is a system characterized by
competition and a high level of private ownership.
Prices are set by market mechanisms or by the
interaction of buyers and sellers in the market
Ex. Laissez Faire System – the economy is a self-
regulating system and that any form of regulation
disrupts the natural interaction of market forces
2. Centralized Economy – characterized by the heavy
involvement of the government in managing the
economy
3. Mixed Economy – the system that combines the
features of free market and centralized systems
4. Traditional Economy – characterized by customs and
habits
Ex. Barter – a mechanism where goods are
exchanged for another good
Market Failures – problems arising from inefficiencies in the
allocation of resources
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Nominal GDP – derived when the value of goods is expressed
in current prices
Real GDP – adjusted for inflation and is expressed at constant
or base year prices
Inflation – the persistent rise in price levels of goods and
services
Consumer Price Index (CPI) – measures the purchasing power
of the peso through regular survey of the price level of
consumer goods and services that are included in a virtual
“basket of goods”.
Hyperinflation – a case of extremely high and
accelerating inflation rate
Interest Rate – the income for capital
Nominal Interest – the rate in bonds or the rate typically
quoted by banks and lending institutions
Real Interest Rate – the rate adjusted for inflation
Economic Growth – typically measured through GDP
Business Cycle – characterized by the upward and downward
trend of the GDP observed over a period of time, usually
years. An increase in GDP signifies growth or expansion, while
a decline signifies contraction.
Recession – a period of economic downturn characterized by
high or increased unemployment, slow business, and a
decline in consumer purchases, among others.
Expansion – features low or decreased unemployment,
increased production, and a rise in consumer spending driven
by higher income
Depression – a prolonged period of recession
Full Employment – ideally taken to mean zero unemployment
or technically defined as having zero cyclical unemployment
Cyclical Unemployment – the unemployment as a result of
the business cycle
Price Stability – is formally the absence of prolonged inflation
and deflation
Deflation – the continuous decline in prices is not a good
thing because it contracts the money supply and limits
liquidity
The State of Philippine Economy
Economic Performance
Table 2.1 Gross National Income and Gross Domestic Product by Expenditure Shares [At constant prices (2000), in million pesos]
2015 2016
Type of Expenditure
Q1 Q2 Q3 Q4 Q1 Q2
1. Household Final
Consumption 1, 231, 928 1, 291, 318 1, 241, 881 1, 499, 010 1, 318, 432 1, 386, 006
Expenditure
2. Government Final
Consumption 185, 519 224, 704 195, 352 179, 771 207, 461 254, 930
Expenditure
3. Capital Formation 416, 956 401, 895 438, 731 548, 058 527, 612 512, 845
4. Exports 898, 070 941, 672 1, 034, 252 807, 172 963, 737 1, 004, 125
5. Less: Imports 963, 339 909, 069 1, 090, 388 979, 368 1, 146, 194 1, 099, 305
6. Statistical
-2, 417 -7, 293 3, 269 6, 501 16, 092 20, 020
Discrepancy
Gross Domestic
1, 766, 358 1, 943, 228 1, 823, 097 2, 061, 146 1, 887, 141 2, 078, 621
Product
Year-on-year Growth
5.0% 5.9% 6.2% 6.5% 6.8% 7.0%
in GDP
Net Primary Income 372, 543 372, 131 380, 082 416, 155 409,451 395, 163
Gross National Income 2, 138, 900 2, 315, 359 2, 203, 179 2, 477, 300 2, 296, 592 2, 473, 783

Table 2.2 Philippine Consumer Price Index Table 2.3 Average Monthly Inflation Rate: 2015-2016
2015 2016 2015 2016
(2006 = 100) Mar Apr May Mar Apr May Inflation Rate Mar Apr May Mar Apr May
Consumer 2.4 2.2 1.6 1.1 1.1 1.6
141 141.3 141.2 142.6 142.9 143.4
Price Index
Table 2.4 Gross National Income and Gross Domestic Product by Sector (At current prices, in million pesos)
2015 2016
Industry
Q1 Q2 Q3 Q4 Q1 Q2
1. Agriculture.
Hunting, Forestry, and 340, 112 307, 215 302, 348 416, 388 334, 004 311, 350
Fishing
2. Industry Sector 952, 825 1, 009, 249 907, 461 1, 225, 334 1, 018, 024 1, 076, 499
3. Service Sector 1, 744, 195 2, 001, 144 1, 974, 575 2, 126, 511 1, 917, 960 2, 217, 823
Gross Domestic
3, 037, 132 3, 317, 608 3, 184, 384 3, 768, 233 3, 269, 988 3, 605, 672
Product
Net Primary Income 663, 562 681, 098 698, 369 746, 618 717, 282 721, 648
Gross National Income 3, 700, 694 3, 998, 706 3, 882, 753 4, 514, 852 3, 987, 270 4, 327, 319

Table 2.5 Philippine Employment Data

2015 2016
Jan Apr Jul Oct ρ Jan ρ
Working Age Population 64, 591 64, 802 65, 116 65, 248 67, 153
Labor Force 41, 164 41, 840 41, 024 41, 345 42, 515
Employed 38, 461 39, 158 38, 344 39, 000 40, 047
Underemployed 6, 883 6, 983 7, 989 6, 866 7, 879
Unemployed 2, 703 2, 681 2, 680 2, 345 2, 469
Labor Force Participation Rate % 63.7 64.6 63 63.4 63.3
Employment Rate % 93.4 93.6 93.5 94.3 94.2
Underemployment Rate % 17.9 17.8 20.8 17.6 19.7
Unemployment Rate % 6.6 6.4 6.5 5.7 5.8
Table 2.6 Average Monthly Exchange Rate
Exchange 2015 2016
Rate (1Php Mar Apr May Mar Apr May
per USD) 44.4457 44.4136 44.6106 46.724 46.2845 46.8023

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Outlook for the Philippine Economy
Outlooks on the country’s economic performance
allow policymakers, business organizations, and individuals to
make informed decisions.
The Philippines’ 21st Century Socioeconomic Challenges
Global Challenges
1. War and Terrorism in the Middle East – Terrorist
attacks and continued security threats bring with
them enormous costs to the global economy. There
Module 3: The Law of Demand and Supply and the Market Equilibrium
Prices of Basic Commodities
Commodity – a homogenous good that commands a price. It
is characterized by its uniformity across the market and often
used as a raw materials or inputs to produce another good
(secondary products)
3 Main Reasons Why Producers Import
1. The good is not available locally
2. The cost of importing is cheaper than procuring the
same good locally
3. The quality of the imported good is better than a
similar good sold locally
Demand
The Law of Demand – states that as the price of a good goes
up, the quantity demanded of that good goes down, all other
things remain constant (ceteris paribus)
Consumer Utility – a person’s willingness and ability to
consume a good in reaction to price changes.
Demand Curve – illustrates the linear attribute of the law of
demand
Demand Schedule – a table of price and quantity values. It
enables to construct and calculate a demand curve and
calculate its slope
Determinants of Demand
1. Income
Income Effect – as consumers’ income rises, quantity
demanded of goods (normal goods) also increases
Engel Curve – graphing consumer income and
quantity demanded
Engel’s Law – states that food expenditure as
part of household income decreases as income
rises
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is loss from disruptions in business activities and
damage to properties.
2. Political Instability in Europe – Britain’s exit (Brexit)
from European Union (EU)is seen as a setback due to
its implications on trade
Domestic Issues
1. Territorial Dispute with China
2. The Ongoing War in Mindanao – Bangsamoro Basic
Law (BBL)
Ernst Engel – German statistician from the 19th
century
Inferior Goods – goods that exhibit a decline in quantity
demanded as consumer income rises
Income Elasticity – relates to the change in quantity
demanded in response to an adjustment in income
Luxury Goods – exhibit an increase in demand more than
the proportionate increase in income
Necessity Goods – show an increase in demand that is
less than the proportionate increase in income
Veblen Effect – the propensity of a good
Veblen Good – to increase in demand when its price
soars to the point of being extremely overpriced
Thorstein Veblen – an American economist
2. Substitutes – goods that meet the same requirements or
fulfill the same needs as another good
Substitution Effect – when a good becomes more
expensive, its alternatives become relatively cheaper and
generally more appealing
Complementary Goods – generally consumed or used
together
3. Consumer Expectations – when consumers anticipate the
price of a particular product to rise, they will tend to buy
more of that product now before the perceived or
scheduled price increase
4. Taste and Preference
Movement along the Demand Curve
versus
Shift of the Demand Curve
The Law of Supply – states that an increase in price causes an
increase in quantity supplied. Conversely, a fall in price
causes a drop in quantity supplied.
Supply Curve – illustrates the linear characteristics of the law
of supply
Determinants of Supply
1. Technology – tends to improve productivity, which in
turn increases output or quantity supplied
2. Input Prices – an increase in input prices drives up costs.
Higher costs lead to a decrease in quantity supplied
3. Prices of Other Goods
4. Producer Expectations – producers who anticipate a
surge in factor prices tend to increase production before
the higher input prices become in effect
5. Government Policy
Excise tax – imposed on manufactured good. It increases
input prices and cost of production, which ultimately
leads to a decrease in output or quantity supplied.
Subsidy – monetary assistance by the government in
support of target industries or sectors of the
economy.
Module 4: Applications of Supply and Demand
The Philippine Product Market
Product market – characterized by exchange of goods and
services
The Different Market Structures
Classifications:
Degree of competition – driven by number of competing
firms in the industry
Number of firms – the actual number of competitors in
the market
Bargaining power of consumers – the ability of
consumers to influence market prices
Barrier to entry – the ease with which new firms can
penetrate the industry
1. Perfect Competition – characterized by many firms
selling homogenous or identical goods and many buyers
who have access to the good (ideal market structure)
2. Monopolistic Competition – features many sellers but
the sellers typically have less capability and are smaller in
size (what occurs in reality)
3. Oligopoly – characterized by having only a few players in
the industry
4. Monopoly – has a single player that controls the market
Economic Growth as a Macroeconomic Goal
The Philippine Labor Market
Labor Supply and Population Growth
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Import quota – a limit to the volume that local
producers can bring into the country
Movement along the Supply Curve
versus Shift of the Supply Curve
Market Equilibrium – the point where consumer and supplier
expectations meet
Market – a meeting place for buyers and sellers where the
buyer can purchase goods from a seller for a price that is
agreeable to both
Market Price – the price agreed by both buyer and seller
Shortage – happens in the market when there is excess
demand
Surplus – excess supply
Consumer Protection
Prevailing market price – the price consumers pay
Suggested retail price – consumer purchase guides made by
the government (DTI) to regularly monitor commodity prices
and evaluate production process
Labor force – the total number of people identified as
employed and unemployed
Population growth – the increase in the total number of
human beings in the country
Census – the official collection of population information
Labor force participation rate – approximates the percentage
of the population that is actually part of the labor pool
Unemployment and Wages
Unemployment rate – measures the percentage of
individuals in the labor force who do not have a job
1. Frictional unemployment – temporary unemployment
that is a result of people being in between jobs or being
in transition
2. Structural unemployment – results from technology
changes and upgrades that require specialized skills
3. Cyclical unemployment – caused by the upturn and
downturn in the business cycle
4. Seasonal unemployment – happens in industries with
peak and lean seasons
Factor income – what factors of production is called
Wage – what a worker gets as compensation for hours of
labor
Salary – the aggregate amount received
Minimum wage – the least possible amount firms must pay
their employees as mandated by the country’s labor laws
Labor Migration and Overseas Filipino Workers (OFWs)
Labor migration – choosing to work in a foreign country
The Philippine Financial Market
Financial market – a marketplace for the exchange of
financial securities such as stocks and bonds
Stocks – represent ownership in a company
Bonds – represent debts and these are largely traded over-
the-counter or privately through investment brokers
Money Supply and the Central Bank
Functions of Money
1. Medium of exchange
2. Unit of account
3. Store of value
Liquidity – the ease of use of an asset to pay for transactions
Price and Interest Rate
1. Bank rate – this is the central bank’s lending rate to
commercial banks.
2. Open market operations – the buying and selling of
bonds by the central bank in order to manage the
supply of money in the economy
3. Reserve requirement ratio – Philippine commercial
banks are required to maintain minimum cash
Module 5: Contemporary Economic Issues Facing the Filipino Entrepreneur
Entrepreneurship – is a characteristic which largely entails
putting up a business and assuming all risks
Attributes of an Entrepreneur
1. Innovator
2. Visionaries
3. Risk takers
Innovation Strategies of Entrepreneurs
1. creation of a new product or service
2. improvement of an existing product
3. process improvement
Disruptive Innovation – a process that “disrupts” or changes
the structure of an existing market
The Filipino Entrepreneur
Governance and Support
Department of Trade and Industry (DTI)
Republic Act No. 10679 – Youth Entrepreneurship Act
Types of Business Structures
1. Sole Proprietorship – a business having a single owner
2. Partnership – a business having more than one owner
3. Corporation – a business type where the owner and the
business are considered as separate entities
New Business Registration
1 DTI Register business name
2 Barangay Secure barangay clearance
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reserve with the central bank, which may not be
used for lending and regular bank operations
The Philippine Peso and Foreign Exchange
Foreign Exchange Market – the market for the exchange of
foreign currencies. Often referred to as forex or FX.
Exchange rate – the price of a currency in terms of another
currency
Floating forex regime – the system of letting market forces
determine the exchange rate
Fixed forex regime – when the value of the local currency is
pegged to another, usually more stable, currency such as the
US dollar
Currency depreciation – happens when the currency loses
value relative to another currency
Currency appreciation – occurs when the currency becomes
more valuable relative to another currency
Price stability as a Macroeconomic Goal
Inflation – the increase in prices over time
The Philippine Real Estate Market
Rent and Price Structure
3 Municipality Get a business permit
4 Apply for tax identification number
BIR (TIN); secure authority to print receipts;
have ledgers and invoices stamped
5 SSS Apply as self-employed owner
Issues and Challenges Facing the Filipino Entrepreneur
Investments, Interest, and Financing
a. Grants and loans
b. use one’s own fund
c. external financing
d. crowd sourcing
Rent – driven by several factors such as ever-increasing rent
estate price, location, foot traffic, etc.
Minimum Wage – it is essential to abide by the country’s
minimum wage laws
Taxes – (local and national taxes)
Percentage Tax – paid by entities that are exempt from
VAT
VAT – a tax on sale, lease, and importation of goods and
services
Capital gains tax – imposed on the sale of capital assets
such as real estate properties and stocks
Income tax – most common tax filed by employed and
self-employed individuals or those who derive their
income from business or professional practices
 APPLIED ECONOMICS
UNIT II – Business Opportunities and Challenges
Module 6: Macroenvironment Analysis
Macroenvironment Analysis – deals with factors that may
affect several or all industries in the economy, while industry
analysis deals with factors that may impact only the industry
under study.
Macroenvironment Factors
Political
Economic
Social
Technological Legal
Environmental factors
Political Factor – pertains to government laws, and fiscal
policy changes that influence an industry or organization
Tax reforms – refer to revisions on the implementation
and collection of taxes
Sin tax – an excise tax imposed on goods considered as
vices
Sin Tax Reform Law (RA No. 10351)
Government Spending – as part of fiscal policy, the
government monitors its expenditure to ensure it
remains within the budget
Political Stability – strength and effectiveness of the
government in upholding its sovereignty and
implementing the rule of law
New Government Regulations – to streamline
procedures in all government agencies and improve
the ease of doing business
Economic Factor – economic policies that aim to promote
overall growth open up opportunities in the business sector
Gross Domestic Product Growth – GDP equivalent to
total output is a measure of a country’s economic
performance
Inflation – the lost in value of money
Interest Rate – the level of interest rate is largely the
responsibility of the central bank
Foreign Exchange – Philippines has a floating exchange
rate
Social Factor – examines the importance of culture,
population, and other social determinants to the business
environment
Module 7: Industry Analysis and Competition
Industry factors – affect multiple businesses in the industry
Sectors of the Economy and Related Industries
Businesses are grouped into industries
Industries are grouped into sectors
Economic sectors – based on the production process
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Demography – is formally the study of the population
and its attributes
Lifestyle and Trends – there is a growing trend for
consumers to lead a fit and healthy lifestyle
Religion – drives demand through consumer preferences
Technological Factor – present opportunities for business
Innovations – largely driven by continuous technology
development and research
Research and Development – the backbone of
innovation
Technology-related Legislation – the importance of
technology in staying competitive is acknowledged in
governance
Department of Information and Communications
Technology (RA No. 10844)
Legal Factor – covers new regulations and government
mandates that influence operations of business
New Regulations – regarding the welfare of employees
Employment Trends – the growing importance of
promoting gender equality in the form of equal
employment opportunities
Environmental Factor – strategic analysis of a business is not
complete until evaluation of natural resources is conducted
Resource Constraints – natural inputs of production are
generally fixed
Environmental Regulations – the DENR is the
government agency tasked to look after the natural
resources of the country
Clean Air Act (RA No. 8749)
Clean Water Act (RA No. 9275)
Climate Change Act (RA No. 9729)
Climate Change – one of the most pressing
environmental issues at this time across the world
Greenhouse Effect – greenhouse gas emissions
contribute to global warming
Renewable Energy – energy derived from the sun, wind,
flowing water, and other naturally renewable sources
Primary sector – includes industries in the business of
extracting raw materials from natural resources
Secondary sector – groups industries that process raw
materials into goods through manufacturing and
construction
 Tertiary sector – covers the marketing and selling of raw
and manufactured products
(Fourth sector – human and technological development)
A. Agriculture and Fishing – primary sector
1. Agriculture, hunting, and forestry
2. Fishing
B. Industry Sector – secondary sector
1. Mining and quarrying
2. Manufacturing
3. Construction
4. Electricity, gas, and water supply
C. Service Sector – tertiary sector
1. Transport, storage, and communication
2. Trade and repair of motor vehicles, motorcycles, and
personal and household goods
3. Financial intermediations
4. Real estate, renting, and business activities
5. Public administration, defense, and compulsory social
security
Employment Structure of the Economy – refers to the
concentration of labor in the main sectors of the economy
Public Sector versus Private Sector
Private sector – institutions that are privately owned
Porter’s Five Forces Model
-centered on competition in business and industry
Michael Porter – economist and business strategist from
Harvard University
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Public sector – composed of government-owned
enterprises
Private goods – driven by profit
Rivalry – a good consumed by an individual cannot
be consumed by another individual or household
Excludability or exclusiveness – paying for a good or
service prevents access by others who have not paid
for the good
Public goods – sometimes referred to as social or
collective goods
Nonexcludability – consumption or use of a public
good does not prevent other individuals from
consuming or using the same good regardless if they
paid for it or not
Nonrivalry – consumption or use does not reduce
the quantity of the good available for others
Club goods – public goods with restriction on the use
or access
Common goods (free goods) – it is difficult to prevent
other people from consuming the same good, but the
use or consumption somehow reduces the quantity
available from others
The Free Rider Problem – market failure due to the
availability of public goods to everyone
Externalities – when consumption of a good affects
another party
Positive externalities – leads to benefits to third
parties
Negative externalities – lead to harmful effects
Merit goods – have positive externalities but the
benefits are often underestimated
Demerit goods – have negative externalities and
consumption of which causes harm to society
Industry Classifications
Global Industry Classification Standard (GICS) – a standard
industry classification developed and primarily used in the
financial market
International Standard Industrial Classification (ISIC) –
primarily used to measure and compare economic activities
across nations
Standard Industrial Classification (SIC) and North American
Industry Classification (NAIC) – were established to have
standard for industry comparisons
Philippine Standard Industrial Classification (PSIC) – the
country’s guide to industry classifications based on business
productions
Industry Principles, Tools, and Techniques
in Identifying Business Opportunities
1. Threat of New Entrants – evaluated through barriers to
entry.
a. economy of scale – high volume of production to achieve a
certain level of revenue
b. product differentiation – the more unique a product or
service is, the less is the threat of new entrants
c. capital intensive – require a large initial investment
d. government policies
e. resource exclusivity
f. industry growth rate – high growth rate (profit) attracts
more new entrants
2. Bargaining Power of Suppliers – influence in input and
product prices
a. supplier concentration – refers to the number of suppliers
in the industry
b. availability of substitute inputs – when buyers have no
choice but to use raw materials provided by suppliers
c. supplier product differentiation
d. buyer’s switching cost to other inputs – influences supplier
power
e. process integration – impacts supplier power
forward integration – a supplier takes on the
production process of the buyer it is supplying to
backward integration – a buyer takes on the
procurement process or input production to displace
the need for suppliers
5. Rivalry of Competition – determines the intensity of
competition among industry players
a. number of competitors
b. relative size of competitors – the less number of firms
holding a majority of the market, the less is the
competition
c. industry growth rate – fast growth means low intensity of
rivalry
3. Bargaining Power of Buyers – influence of consumers on
product prices in the industry
a. number of buyers relative to sellers – more buyers means
less bargaining power
b. product differentiation – more specialized products means
less bargaining power for buyers
c. switching cost – low switching cost gives greater bargaining
power
d. backward integration by buyer – consumer decides to
create the product that reduces the potential for
profit
e. buyer’s volume – higher demand means greater bargaining
power
4. Threat of Substitutes
a. relative price of substitute products – cheaper alternatives
increases threat
b. relative quality of substitutes
c. switching cost to buyers – unique and highly specialized
products have low threat
d. fixed cost – increases the intensity of rivalry
e. product differentiation – directly determines an industry’s
market structure
f. strategic diversity – leads to more intense rivalry
g. exit barriers – discourages players from leaving the
industry thus create more intense rivalry

SWOT MATRIX
Strengths Opportunities
1. There are factors that are within the control of the firm 1. There are factors that are outside the control of the firm
2. There are factors that the firm can capitalize on 2. There are factors the firm has to look beyond its
Weaknesses operations.
1. There are factors that are within the control of the firm Threats
2. There are factors that the firm should strive to eliminate 1. There are factors that are outside the control of the firm
2. There are factors that are harmful to the firm

Module 8: Socioeconomic Impact Study

Sustainable Development – development that meets the needs of the present without compromising the ability of
future generations to meet their own needs.
a. The concept of needs
b. The idea of limitations

3 Pillars of Sustainable Development

1. Social Pillar – refers to the community and everyone in it (people pillar)
2. Environmental Pillar – refers to the environment and natural resources (planet pillar)
3. Economic Pillar – refers to the effective management of organizations in order to continue operations (profit pillar)

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