MODULE 8|APPLIED ECONOMICS

Creating a Business (Principles, Tools, and Techniques)

Subject: Applied Economics

Teacher: Ruby B. Cocal
Year: Grade 12
Timeframe: Quarter 2|Week 1-2
Date of Submission: November 6, 2020

Introduction

In this module, you will learn more about business organizations and how the environment in which they
operate may either positively or negatively affect their operations. Suggestions on how to deal with environmental forces
are given here in order to apply later on with respect to business operations. This module introduces you to the various
types of business organizations, their characteristics, and the nature of their operations. The knowledge you gain here
could help you make business choices in the future.

Topic

Content: Creating a Business

Content Standard:
The learner demonstrates an understanding of industry analysis, its principles, tools, and techniques
leading to the identification of business opportunities
Performance Standard:
The learners shall be able to…
 apply tools and techniques for business opportunities like the SWOT/TOWS analysis
 conduct a survey of macro and micro environments affecting business in a locality
Learning Competencies:
 Analyze different principles, tools, and techniques in creating a business
 Apply business principles, tools, and techniques in participating in various types of industries in
the locality

Specific Objectives

At the end of the lesson the students are expected to:

1. Determine the types of business environment.
2. Describe the dimensions/elements in general environment.
3. Explain SWOT and PEST analysis.
4. Apply SWOT and PEST Analysis to certain business environments.

Learning Activities

I. Types of Business Environment.

Activity 1: Determine which business environment is being described.

External Environment Internal Environment

General Environment Task Environment

__________________________1. It refers to institutions, situations, activities, people and company values and culture,
business processes, and other events within the company that influence management choices and the way the firm is run.
__________________________2. It refers to the factors or elements that surround an organization which may threaten an
organization’s operations.
__________________________3. It refers to the different business sectors that closely interface with an organization. It
normally influence daily operations of an organization and are very likely to create impact on a company’s day-to-day
business activities.
__________________________4. It relates to the broad or uncertain aspects of the organization’s surroundings that may
have an impact on the organization’s activities, directly or indirectly, which may brought about by different economic
systems.
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S u ti
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T Dimensions/Elements of General Environment

Activity 2: Explain each dimension/element listed above.

1. Political-legal

2. Economic

3. Socio-cultural

4. Technological

5. International

III. SWOT VS. PEST

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Activity 3: Explain SWOT and PEST Analysis. Describe each and compare the two.

SWOT PEST

IV. Applying SWOT and PEST to various business environments.

Activity 4:
1. Choose one business establishment in Daet, Camarines Norte and apply SWOT Analysis.
2. Select one business establishment in our province and apply PEST Analysis.

Knowledge Check

1. What are the types of business environment? Explain each type.

2. Choose 2 dimension/element of general environment and explain its features.
3. What is SWOT Analysis?
4. Where is SWOT Analysis used or applied?
5. What is PEST Analysis?
6. When do we use PEST Analysis?
7. Given the list of fast-food services in the province, choose one and determine the possibilities of a well-
entrenched business plan for the company of your choice given the present environmental situation. Be able to
substantiate the positive and negative factors that help or deter its performance. Use SWOT and PEST Analysis.
A. Jollibee
B. McDonalds
C. Greenwich
D. Graceland

Supplementary Aid
The Business Environment
A. Types of Organizational Environments
1. External Environment – draws out the possible opportunities and threats that may conform an
organization.
 General Environment- affects organizations indirectly
Internal – includes events originating in foreign countries as well as opportunities for
local companies in the counties.
Technological – includes scientific and technological advancements in a specific
industry as well as in society at large.
Sociocultural – demographic characteristic as well as the norms, customs and values of
the general people.
Economic – represents the level of development of the country or region in which the
organization operates.
Legal-political – includes laws and regulations adopted by the country’s government.
 Task Environment- is closer to the organization and includes the sectors that conduct day-to-day
transaction with the organization and directly influence it basic operations and performance.
Competitors – organizations that produce goods and services that are similar and
comparable to a particular organization’s goods and services.
Suppliers – provide raw materials the organization uses to produce its output.
Customers – they purchase the goods or services an organization offers.
Labor Market- it represents people in the environment who can be hired to work for the
organization.
2. Internal Environment – consist of the trends and events within an organization that affect the
management, employees and organizational culture.
 ORGANIZATIONAL HEROES- People that are admired for their qualities and achievements
within the organization.

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III. SWOT AND PEST ANALYSIS

A. SWOT ANALYSIS – includes careful assessment of strengths, weaknesses, opportunities, and threats that
influence an organization’s competitive situation.
Sample:

B. PEST ANALYSIS – used in situational analysis where

study of the different elements in the external
environment is made to identify the negative or positive
forces that affect the business operations.
Sample:

Referrences

Tubera, B. Organization and Management. 2016.

Trinitas Publishing, Inc. Cubao, Quezon City. pp.
1-22
Mind Tools. Henry Fayol’s Principle of Management. 2019.
CFI. 2020. Management Skills. https://corporatefinanceinstitute.com/resources/careers/soft-skills/management-skills/.
(Date accessed 08/24/2020)
TOPPR. 2019. Managerial Roles. https://www.toppr.com/guides/business-management-and-entrepreneurship/nature-of-
management-and-its-process/managerial-roles/ (Date accessed 08/24/2020)

Next Topic:

The Firm and Its Environment

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