SENIOR HIGH SCHOOL

Applied Economics
Quarter 4, Module 10

Viability and Impacts of

Business on the Community
 What I Need to Know

This module was designed for you to be able to learn how to evaluate the viability
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 has one lesson, namely:

Lesson 1: Evaluate the Viability and Impacts of Business on the Community

After going through this module, you are expected to:

identify and explain the effects of the various socio-economic factors affecting business
and industry and
identify and evaluate the viability and impacts of business in the community.

What I Know

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

1. The amount of money individuals earn from their daily economic activities, be it
employment, business or investments:
a. Income c. Wage
b. Salary d. All of the above
2. This is the goal of most enterprise which is to be environmentally sound and socially
responsible
a. Flexibility c. Sustainability
b. Profitability d. Viability
3. It is defined as the ability to survive which linked to financial performance.
a. Flexibility c. Stability
b. Durability d. Viability
4. This relates to changes in government influence means _______________.
a. Economic Change c. Environmental Change
b. Political Change d. Government
5. They are the key contributor to innovation and product development.
a. Entrepreneurs c. Importer
b. Exporter d. Supplier
6. This includes geographical location, the climate, weather and other factors that affect
industry.
a. Environmental Factor c. Government
 b. Political Change d. Changes in Technology
7. A viable business has great effects to the community; which of the following
statement is not true?
a. It provides jobs to the community
b. It produces taxable income
c. It does not provide opportunities for the people in services such as social
welfare
d. It improves community life
8. The creation of new technology in terms of databases and electronic
communications allowed vast quantities of information to be shared and quickly
distributed enabled the company to reduce cost and improve service, this is the
effects on business in terms of:
a. Environmental Factor c. Government
b. Political Change d. Changes in Technology
9. Across the globe, businesses expect companies to maintain strong
_________________.
a. Ethical Standards c. Norms and Rules
b. Mode of Conduct d. Regulations
10. This factors affecting industry includes social relate to pattern of behavior, tastes and
lifestyles.
a. Environmental Factor c. Government
b. Economic Changes d. Social Environment
11. The following are major contributions of business and industry to society. Which of
the following statements is not true?
a. It provides jobs in the community
b. It produces taxable income to for the community
c. It does not helps in the improvement of community life
d. It does not support long term social development
12. Viability is defined as the ability to survive. In the business sense, that ability to
survive is not linked to financial performance and position.
a. Both statements are True.
b. Both statement are False.
c. The first statement is True; the second statement is False.
d. The first statement is False; the second statement is True
13. Refers to the type of jobs people perform by virtue of their skills, experiences and
choices.
a. Blue Collar c. Occupation
b. White Collar d. Profession
14. These are characteristics that define the quality of life in a society.
a. Government Factor c. Political Factors
b. Economic Factors d. Socioeconomic Factors
15. Business and industries are affected through regulations and policies set by
______________.
a. Consumer c. Supplier
b. Government d. Households
 Lesson Evaluate the Viability and
1 Impacts of Business on the
Community
Business plays a huge role in the society. It not only takes up the most amount of time in
people lives but it also help create innovations and make important technological
advancements. It makes forward thinkers and dreamers turn visions into reality. Making
people lives easier.
Only when companies are profitable can they contribute effectively to society by creating
jobs and economic development. It cannot be assume that companies adopt a responsible
business conduct. However, corporate social responsibility can contribute to the success
of business and betterment of society.
As you go through the lesson you will learn how business affects society. In turn, evaluate
business viability and its effect on the community.

What’s In

In the previous lesson, you have learned about how business and industry affect
various socioeconomic factors. As you start a new lesson about evaluate the viability of
the business and impacts of business in the community, I want you to do an activity.
Complete the Concept Map below by writing the words Viable Business and write the
qualities of a viable business
 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
Now, to understand the lesson about other socio economic factors affecting
business and industry and lastly, business viability and its effect in the community,
let us read the lyrics of the famous song of Asin, legendary Pinoy Rock Band in 1970
entitled “ Masdan Mo ang Kapaligiran “.

Wala ka bang napapansin

Sa iyong mga kapaligiran?
Kay dumi na ng hangin
Pati na ang mga ilog natin

Hindi na masama ang pag-unlad

At malayu-layo na rin ang ating narating
Ngunit masdan mo ang tubig sa dagat
Dati'y kulay asul ngayo'y naging itim

Ang mga duming ating ikinalat sa hangin

Sa langit huwag na nating paabutin
Upang kung tayo'y pumanaw man
Sariwang hangin sa langit natin matitikman

Activity. Think Beyond. Answer the following questions.

1. What is the message of the song?
________________________________________________________________
________________________________________________________________
________________________________________________________________
2. If you are the owner of a business industry, what can you recommend about
the environmental problem because of industry?
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
 What is It

This part of the module is the lesson proper. Now, I want you to be ready and we
will now begin the lesson:

Socioeconomic Factors Affecting Business and Industry

Socioeconomic factors are characteristics that define the quality of life in a

society. They influence the behaviours, attitudes, trends, tastes and lifestyles of
individuals. In fact, the different class segments of the society – that is, upper class,
middle class, lower class, - are attributable to the socioeconomic factors. Education,
income and occupation are the main parameters of socioeconomic status, according
to the American Psychological Association.

Income
Income is the amount of money individuals earn from their daily economic
activities, be it employment, business or investments. The availability of disposable
income (net income after tax) influences spending habits. Your customers are likely
to purchase expensive or luxurious items whenever there is an increase in their
disposable incomes. However, when income is scarce, customers tend to restrict
their spending to essential items.

Education
Education equips members of the society with the skills and knowledge they
require to be employed in different jobs and professions. The standards of education
in your society depend on the availability and accessibility of educational amenities.
A society that has a well– educated population flourishes because individuals are
employable in well–paying jobs. Education further determines the availability of
skilled workforce when seeking employees for your small business.

Occupation
Occupation refers to the type of jobs people perform by virtue of their skills,
experiences or choices. You may be self–employed or work as an employee of an
individual or organizational entity. The different types of occupation dictate the
income earned by people in the society. High salaried individuals are normally
associated with skilled occupations such as, doctors, engineers, lawyers and
accountants. Self – employed individuals owning successful businesses also
generate huge amounts of income. Unskilled occupations such as menial labor does
not pay much. Therefore, the ability of customers to afford the different products you
offer in your business depends on types of their occupation.

Note: It is important to consider the implications of these socioeconomic factors on

your small business. Your decisions should be sensitive to the prevailing economic
conditions when pricing and stocking your business.
Other Factors Affecting Business and Industry
Aside from the different factors mentioned above here under are other factors
affecting businesses and industry.
1. Economic Conditions- Before creating business plans or when evaluating
existing ones, it is important to ‘scan’ the external environment. Is the
environment conductive to business you are going to establish or there are
some problems to be encountered in the future?
2. Social Environment- Social factors relate to pattern of behavior, tastes, and
lifestyles. A major component of this is a change in consumer behavior
resulting from changes in fashions and styles. The age structure of the
population also alters over time (currently we have an ageing population). An
understanding of social change gives business a better feel for the future
market situation.
3. Government- This is continually updating laws in a wide range of areas, such
as consumer protection legislation, environmental legislation, health and
safety and employment law, etc. businesses need to take a proactive
approach and be ahead of these changes, rather than hurriedly making
alterations to products and processes in a reactive way.
4. Economic Changes- These are closely related to social ones. The economy
goes through a series of fluctuations associated with general booms and
slumps in economic activity. In a boom nearly changes that affect business
include changes in the interest rate, wage rates, and the rate of inflation (i.e
general level of increase in prices). Businesses will be more encouraged to
expand and take risks when economic conditions are right, e.g. low interest
rates and rising demand.
5. Political Changes- These relate to changes in government influence. In recent
years these changes have been particularly significant because as members
of the European Union we have to adopt directives and regulations created by
the EU which then become part of the UK law. Political changes are closely
tied up with legal changes.
6. Changes in technology- These have also become particularly significant in the
post – millennium world. This is particularly true in terms of modern
communication technologies. The creation of databases and electronic
communications have enabled vast quantities of information to be shared and
quickly distributed in a modern company enabling vast cost reductions, and
often improvements in service.
7. Environmental Factors- The locations of countries influence on the trades that
businesses do. Adding to that, many climatic changes alter the trade of
industries and the way consumers react towards a certain offering that is
launched in the market. The environmental factors include geographical
location, the climate, weather and other such factors that are not just limited to
climatic conditions.
Business Viability and Its Impacts on the Community
The goal of community sustainability is to establish local economies that are
economically viable, environmentally sound and socially responsive. Achieving
this goal requires participation from all sectors of the community, both to
determine community needs and to identify and implement innovative and
appropriate solutions. Business sustainability is a goal for most enterprises.
Sustainability in business generally addresses two main categories which are the
effect business has on the environment and the effect business has on society.
Sustainability focuses on meeting the needs of the present without compromising
the ability of future generations to meet their needs. The concept
of sustainability is composed of three pillars: economic, environmental, and
social—also known informally as profits, planet, and people.
As a micro business owner, making the case for a sustainable business is
simple. An environmentally friendly business can be a profitable one. It can easily
done by attracting green conscious consumers and publicity, create value for
employees, customers and public, reduce energy use and improve public health.
Viability is defined as the ability to survive. In a business sense, that ability to
survive is ultimately linked to financial performance and position.
A business is viable where either: it is returning a profit that is sufficient to
provide a return to the business owner while also meeting its commitments to
business creditors; it has sufficient cash resources to sustain itself through a
period when it is not returning a profit.
A viable business has great effects to the community. Some of this are:
1. It provides community jobs in the business sector;
2. It produces taxable income for the community from both the
business establishment and the workers,
3. Government continuously makes improvement in the community
infrastructures such as bridges, roads, sewers, water or electric to
entice other business to invest in the community;
4. It helps in the establishment of better schools, more business and
even more jobs for its citizens.
5. It leads to improved business services to the community;
6. It improves community life.
The economic contributions to the societies in which business operate
are significant. These include payments to host governments in the form of
taxes and royalties, which in turn directly support long – term regional and
national development, including public services and infrastructure. Business
provides broader economic contributions to society through salaries,
procurement and community investment.
Across the globe, businesses expect resource companies to maintain
strong ethical standards. This includes strong anti–corruption measures, as
well as transparent disclosure around interactions with governments, including
lobbying and the payment of taxes and royalties.
There are also strong societal expectations around the need for
business to respect human rights. This recognizes that many companies are
in a position to potentially undermine or support the human rights of their
community of interest. In this context, companies are expected to carry out
human rights due diligence in order to better understand and manage their
potential and actual negative human rights impacts.
Impact of Entrepreneurs and Community Development
 Business entrepreneurs play a critical role in the development of the economy
as this is the key contributor to innovativeness and product improvement. It is
one of the important ingredients to the creation of new employments and in
the building of communities in ways of offering them jobs. By contributing to
local charities, taking part in local business, investing in projects in
communities and creating and participating in different networks in
entrepreneurship, they buildup robust communities which contribute to the
community development. Governments should develop policies which will
enhance entrepreneurship by understanding the critical difference existing
between small business owners and entrepreneurship. At the same time, a
misconception about entrepreneurs and where entrepreneurs can be found
can also help the local people to create the right picture of entrepreneurship
and thus become aggressive and contribute to economic development.
Recommendations in Maximizing Positive Impact to Community
Most businesses in the country have responsibilities to our community. It is
their social obligations to help the community through:
1. Divert a proportion of revenues to good and worthy causes for community
development and outreach programs;
2. Find creative ways to improve the life of the firms’ employees and the
community;
3. Establishment of linkage between business and community to thresh out
some problems regarding social and environmental issues and
consultations;
4. Establishment of scholarship grants to poor but deserving students in the
community;
5. Help build customer attraction, satisfaction and loyalty, at a time when
customers are increasingly exercising their right to choose;
6. Reduce risks of negative publicity, boycotts and tarnished public image,
7. Improve product image, brand name and reputation.
Minimizing the Negative Impact on Business
There are many factors that will influence the holistic perceptions of a
negative impact and will influence the customer toward or away from a
purchase or engagement. For most businesses, aspiring for a perfect score is
simply a utopian dream, and even if it is possible it may not be desirable as
having a perfect score.
But if a business believes its product or service is suffering the
consequences of negative online reviews, and consumer feedback, there are
several actions that will help minimize the impact and correct a trend of
reduced sales or customer engagements.

HERFINDAHL – HIRSCHMAN INDEX (HHI)

As a final note to help guide the proponents of a business proposal in
choosing what type of industry to enter, the use of the Herfindahl – Hirschman Index
– HHI would be useful since it helps the proponent identify markets are highly
competitive and saturated and those markets with high market concentration.
The HHI is a commonly accepted measure of market concentration. It is
calculated by squaring the market share of each firm competing in a market, and
then summing the resulting numbers. Market share is equal to the Revenue of the
Firm/Revenue of the Industry and is actually a percentage. However, the whole
numbers of the market share are used to compute the HHI.
 The HHI number can range from close to zero to 10,000. The HHI is
expressed as
HHI = MS² of Firm 1 + MS² of Firm 2 + MS² of Firm 3….. + MS² of Firm n.
The closer a market is to being a monopoly, the higher the market’s
concentration (and the lower its competition). If, for example, there was only one firm
in an industry, that firm would have 100% market share, and the HHI would equal
10,000 (100²), nearly 0% market share, and the HHI would be close to zero,
indicating nearly perfect competition. This means the market is highly competitive
and is characterized by the existence of numerous competitors.
Results of the HHI would indicate the following:
• HHI below 100 indicates a highly competitive market.
• HHI below 1000 indicates an unconcentrated market.
• HHI between 1000 to 1800 indicates moderate market concentration.
• HHI greater than 1800 indicates high market concentration.
The business proponent should therefore seek to enter an industry where HHI is
greater than 1800 since the market is not characterized by too many firms.
(Investopedia, LLC 2015).

What’s More

To gain better understanding about the lesson, l want you to answer the activities
below:

Activity 1: Matching Type

Directions: Choose the letter of the correct answer from the list of words in
the box and write it in blank space provided.

a. HHI f. Socioeconomic Factors

b. Income g. Technology
c. Viability h. Taxes
d. Education i. Entrepreneurs
e. Economic j. Sustainable

_______1. Changes in interest rates, wage rate and inflation rates are
example of _____________ changes.
_______2. Smart phone is an example of _________________.
_______3. Business is _________________ when it is economically viable,
environmentally sound and socially responsible.
_______4. Business contributes to government by paying __________.
_______5. Business ______________ are innovators.
_______6. These influence the behaviours, attitudes, trends, tastes and
lifestyles of individuals.
_______7. It equips members of society with knowledge, skills to be
employed in different jobs.
_______8. It is defined as the ability to survive which linked to financial position.

_______9. The amount of money individuals earn from their work, business
or investments
_______10. Commonly accepted measure of market concentration
Activity 2. Essay Questions. (15 pts/ 5 points each)

Rubrics: (Focus-3 pts; organization-2pts.)

Explain the effects of business and industry on the following socioeconomic factors?
1. Education-

2. Income-

3. Occupation-

What I Have Learned

Now, after discussing the lesson. I want you to answer the make a Reflection Paper
to test your in depth understanding about the lesson.
Rubric: 12 pts. Reflective Thinking (4-1pt.);Analysis (4-1 pt.); Making Connections
(4-1pt.)

Business Viability and its Impact on the Community

 What I Can Do

Since this is you last module on Applied Economics, you are given a task to apply
what you have learned. Please read the instructions carefully.
APPLICATION. Research on business opportunities. Look for a business where the
industry is not yet saturated with so many firms. You can apply the Herfindahl –
Hirschman Index discussed in the chapter. Once you have identified a business,
prepare a simple Business Proposal.
The BUSINESS PROPOSAL should include the following:
a. Introduction/Company background
b. Vision Statements
c. A description of the good or service to be offered;
d. Target market of your product
e. Proposed location and reason for the choice of this location;
f. Long – term objectives of the business;
g. Estimated capital requirements;
h. Sources of the capital;
i. Form of business organization: Sole proprietorship, Partnership, or
Corporation
j. Suggested pricing for the product or service;
k. Mode of promotion or advertising used;
l. Technical requirements: Machines, Building, Tools needed; and
m. Socio economic Impact: Positive Effects of the Project and Negative Effects of
the Project.

RUBRIC FOR SCORING

Excellent- Very Good Good Poor
5 4-3 2 1-0
Introductory Elements
Vision
Statements/Objectives
Business Description
Products/Services
Marketing
Industry Analysis
Technical
Requirement
Socio Economic
Impact
Writing Skills
 Assessment

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

1. Many climatic changes can alter the trade of industries and how customers
react towards a certain product and this is related to
________________________.
a. Environmental Factor c. Government
b. Political Change d. Changes in Technology
2. A viable business has great effects to the community; which of the
following statements is not true?
a. It provides jobs to the community
b. It produces taxable income
c. It does provide opportunities for the people in services such as
social welfare
d. It does not support government by paying taxes.
3. Technological advancements enabled business to lessen cost and
improve business systems and this is an example of ____________
a. Environmental Factor c. Government
b. Political Change d. Changes in Technology
4. Businesses all over the world are expected to maintain strong
_________________.
a. Ethical Standards c. Norms and Rules
b. Mode of Conduct d. Regulations
5. The amount of money a person received from their work, business or
investments:
a. Income c. Wage
b. Salary d. All of the above
6. This is the goal of the business, advocate of positive change in the society.
a. Flexibility c. Sustainability
b. Profitability d. Viability
7. It is defined as the ability of the business to survive and stand pressure
which linked to financial position.
a. Flexibility c. Stability
b. Durability d. Viability
8. This relates to changes in government influence means
_______________.
a. Economic Change c. Environmental Change
b. Political Change d. Government
9. They are the proponent of innovation and product development.
 a. Entrepreneurs c. Importer
b. Exporter d. Supplier
10. This factors affecting industry includes social factors such as pattern of
behavior, tastes and lifestyles.
a. Environmental Factor c. Government
b. Economic Changes d. Social Environment
11. The following are major contributions of business and industry to society.
Which of the following statements is not true?
a. It provides jobs in the community
b. It evades payment of taxes for the community
c. It does not helps in the improvement of community life
d. It does support long term social development
12. Viability is defined as the ability to survive. In the business sense, that
ability to survive is linked to financial performance and position.
a. Both statements are True.
b. Both statement are False.
c. The first statement is True; the second statement is False.
d. The first statement is True; the second statement is False
13. Refers to a regular activity perform by virtue of their skills, experiences
and choices.
a. Blue Collar c. Occupation
b. White Collar d. Profession
14. These are characteristics that define the quality of life in a society.
a. Government Factor c. Political Factors
b. Economic Factors d. Socioeconomic Factors
15. Business and industries should be flexible enough to withstand the
changing rules and policies regulations and policies set by the
______________.
a. Consumer c. Supplier
b. Government d. Households
 Additional Activities

You are now on the last part of the module. Congratulations! You only have
one task left in finishing the module: enrichment activity. You can start now!
COMMUNITY ICONS
Directions. Choose an entrepreneur who is well known for his/her
advocacies and write a report in a short bond paper. Below are guide
questions for your reference.
GUIDE QUESTIONS
1. Tell me about yourself?
2. How did the idea of your business came about?
3. How do build a successful business?
4. What is your advocacy? Why is this important?
5. What do you consider your most noteworthy accomplishments?

RUBRIC 20 pts

Excellent (5) Very Good Good (2) Poor(1-0)

(4-3)
Completeness
Knowledge
Analysis
Writing Skill
 Answer Key

Assessment: What's More What I Know

1. A 1. E 1. A
2. C
2. G
2. D
3. J
3. D 4. H 3.D
4. B
5. I
4.A
6. F
5. A 7. D 5.A
6. A
8. C
6.C
9. B
7. C 10. A 7.D
8. D 8.B
9. A 9.A
10.D 10.D
11. D 11.B
12. C 12.A
13. C 13.C
14. D 14.D
15. B 15.B

References:
Dinio and Villasis 2017: Applied Economics. Rex Bookstore, First Edition.

Leano, Roman D. 2016: Applied Economics for Senior High School.

Mindshapers Co., Inc.https://en.wikipedia.org/wiki/Asin_(band)