Quarter II: Chapter 3

Industry and environmental analysis:

Business Opportunity Identification
Industry – is an aggregation of the different businesses engaged
in the same kind of undertaking.
Business – is an undertaking by a person or a group of persons
who are partners, or of stockholders who own a juridical entity
known as a corporation whose main objective is to earn profit for
the owners.
Business is just a small portion of an industry.
• For a person to put up a business, it is essential that an
industry analysis first be made. Commonly used is a system
known as the SWOT analysis, which lists the strengths,
weaknesses, opportunities, and threats that the business
faces.
 BUSINESS ORGANIZATION
1. SOLE PROPRIETORSHIP
- generally the simplest way to set up a business.
- owned by a single individual who is singly responsible for
running the business and is accountable for all debts and
obligations related to business.
- the sole proprietor enjoys exclusive control and decision-
making as well as gets all profits earned but also shoulders
all losses and has unlimited liability which means payment
of his loans will extend to his personal assets.
2. PARTNERSHIP
- an agreement in which two or more persons combine
their resources in a business with a view to making profit.
- partnership agreement is drawn up and profits are divided
among the partners according to the terms of agreement.
 TWO KINDS OF PARTNERSHIP
1. THE GENERAL PARTNERSHIP
- all owners share the management of the business and
each is personally responsible for and must assume the
consequences of the actions of the other partners.
- all general partners have unlimited liability which means
loan payments will extend to their personal property.
2. THE LIMITED PARTNERSHIP
- some members are general partners who control and
manage the business and may be entitled to a greater share of
the profit while other partners are limited and contribute only
capital, take no part in control or management, and are liable for
debts to a specific extent only.
 KINDS OF PARTNERS
According to liability for partnership obligations:
1. General Partner – one who, if the partnership assets are not
sufficient to pay the partnership obligations, his other
properties not invested in the business are answerable.
2. Limited Partner – one whose liability for partnership
obligations is only to the extent of his investment in the
partnership.
• According to Nature of Contributions to the Partnership
1. Capitalist Partner – one who contributes money or property
to the partnership
2. Industrial Partner - one who contributes industry or personal
services to the partnership.
3. CORPORATION
- is a legal entity that is separate from its owners, the
shareholders. No shareholder is personally liable for the debts,
obligations, or acts of the corporation. Directors and officers can
bear liability for their involvement with the corporation. The
legal entity of the corporation gives it an individual identity of its
own.
- normally can exist for a life of 50 years, which is
renewable for another 50 years. Owners have limited liabilities.
However, corporations are burdened by heavy taxes.
4. COOPERATIVE
- is an entity organized by people with similar needs to
provide themselves with goods or services or to jointly use
available resources to improve their income.
-cooperative members have an equal say in decision-
making with one vote per member regardless of number of
shares held, there is open and voluntary membership and
surplus earning is returned to the members according to the
amount of their patronage.
 TOOLS IN EVALUATING A BUSINESS
The key factors that must be considered in analyzing the industry
are the following:
1. The geographic area which your business will cater.
2. The size and outlook of the industry. What trends can be
identified?
3. Description of the product.
4. The buyers have to be identified. Who are your target
customers?
5. The regulatory environment. Are there local, national laws that
will restrict the business? One needs to identify government
regulations specific to the chosen industry.
6. The need to identify the leading businesses in the industry,
and to provide company information on the most successful
businesses that you will be up against.
7. Factors that will affect the growth of the business.
The SWOT Analysis
The SWOT analysis was created in the 1960s by business gurus, Edmund P
Learned, C. Roland Christensen, Kenneth Andrews and William D. Book in their
book, Business, Policy, Text and Cases.
SWOT, which stands for STRENGTHS, WEAKNESSES, OPPORTUNITIES AND
THREATS, is an analytical framework that can help a company meet its challenges
and identify new markets. The framework can help identify the business’s risk and
rewards. It is also a means of identifying the internal and external forces that may
affect the business.

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT
Strengths and Weaknesses – refer to the internal factors, and
these are the resources and experiences readily available to the
business proponent.
STRENGTHS -Government incentives
-low capital requirements
-market acceptance
-experienced leaders

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT

WEAKNESSES -difficulty of organization
-costly set-up
-possible pollution problems
-lack of training of workers

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT

OPPORTUNITIES AND THREATS – refer to the external forces,
these are those that affect a company, an organization, an
individual and those outside their control.
OPPORTUNITIES -project may replace imported good
available in the market
-will improve employees welfare
-improved company reputation
-new technology

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT

THREATS -entry of competitors
-time consuming production processes
-opposition from residents in the community
-natural phenomena

DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT