Republic of the Philippines

Department of Education
REGION IV-A
SCHOOLS DIVISION OFFICE OF CAVITE PROVINCE
TANZA NATIONAL COMPREHENSIVE HIGH SCHOOL
SENIOR HIGH SCHOOL
DAANG AMAYA II, TANZA, CAVITE

Grade 11
Applied Economics
Learner’s Packet

First Semester
3rd Quarter, 2020-2021

TANZA NATIONAL COMPREHENSIVE HIGH SCHOOL 1

Address: Daang Amaya II, Tanza, Cavite 4108
Telephone No.: (046) 450-0253 / (046) 454-5532 (Senior High School)
E-mail: tnchstanza@gmail.com / tnchsshs@gmail.com
 WEEK 5: MARKET STRUCTURE

Here are the following learning competencies expected to be covered at the end of the unit:

The learner demonstrates an understanding of… economics as an

Content Standards applied science and its utility in addressing the economic problems
of the country

The learners shall be able to analyse and propose solution/s to the

Performance Standards
economic problems using the principles of applied economics.

The learners illustrate Express

1. Differentiate various market structures in terms of:

Most Essential
Learning Competencies a. number of sellers
(MELC’s) b. types of products
c. entry/exit to market
d. pricing power

After going through the learners packet, you are expected to:
2. Apply economics as social and as an applied science in real life
situations.
1. Differentiate various market structures in terms of:
Specific Learning
Outcomes
a. number of sellers
b. types of products
c. entry/exit to market
d. pricing power

Content Market Structure

Learner’s Materials
Pages

Textbook Pages Sison, Simon L., et.al, 2018 Applied Economics. p.5; p.13. Quezon City,
Philippines. Phoenix Publishing House.

Learning Resources N/A

2
 INTRODUCTION

A market is one of the numerous infrastructures, systems, institutions, social relations, and
procedures, wherein buyers and sellers usually interact with each other to exchange goods and
services. In relation to that, this lesson will enlighten you of the different market structures that

distinguish an economy.

DEVELOPMENT
Market structures are the key points in evaluating business‟ economic environments. It
deals with strategic decision making and focuses on both economics and marketing, making
professional entrepreneurs precisely judge industry, policy changes, and market news. The
significant operational definition of market structure is a concern to both economists and
marketers since they have different methodological approaches in this, and each of them has
their strengths and weaknesses.

Moreover, these are the most notable characteristics of market structures:

• The relationship between a seller to another seller, a seller to his/her buyer, and many
more.
• The product that has been sold and the extent of product differentiation, which affects
cross-price elasticity of demand.
• The number of companies or corporations, including the scale and range of
international competition, in the market.

3
 • The concerns in entering and exiting the market. • The dissemination of market shares
for the largest firms
. • The number of buyers and how they behave to mandate a product‟s price and
quantity.
• The turnover of customers which can be affected by the extent of consumer or brand
loyalty and the influence of persuasive advertising and marketing.

The interactions and variations in these aspects provided the existence of different market
structures, which are the following:
• Monopoly. Herein, there is a single merchant of a product for which there is no close
alternative.
• Monopolistic Competition in which differentiated product has many vendors.
• Perfect Competition, wherein, a similar product has many sellers.
• Oligopoly, whereupon, there are few sellers of a standardized or a differentiated product.
These market structures will further be discussed in the subsequent lessons.

MONOPOLY
A monopoly pertains to a situation wherein there is only a single company that produces
a certain product in the entire market. Because of that, they have the power or the authority to
manipulate their products, such as minimizing their outputs to put higher prices in it and to gain
more profit. In this situation, consumers have a lesser benefit, especially when the product is
essential to them, making them buy it despite being expensive.
Monopolies commonly emerge because there is a high barrier to entry and exit in a particular
market.
The three main factors that can become the reason for it are the following.
• Ownership of a fundamental resource - If the key resource is solely owned by a firm, the firm
can limit the access to this source, therefore creating a monopoly.
• Economies of scale – In some sectors, a single firm can sustain products or goods at a lower
price than two or more firms could, resulting in a natural monopoly, which arises even without
the intervention of the government.
• Government Regulation – To suffice the interest of the public, the government usually restricts
market entries in a legal way, which is through copyright laws and patents.

Frankly said, monopolies are usually unwelcomed to society because it can cause deadweight
loss by producing lesser outputs than the competitive ones, yet still, have higher prices.
However, the government can react to these by demanding price regulations, establishing
competition laws, nationalizing the monopolies, or by not doing anything at all.

4
MONOPOLISTIC COMPETITION
When there is a numerous quantity of small firms competing against each other, it is
called a Monopolistic Competition. However, in this type of market structure, several companies
sell the same product but they have their differences. Those differences give them market
power which lets them charge higher prices for a product, but is within a certain range. These
key factors can include style, brand name, location, packaging, advertisement, and pricing
strategies, which became every firm‟s basis in marketing.

You can assume the following when discussing the monopolistic competition:
• Every firm is a price setter and can maximize their profit.
• They sell similar yet slightly different products.
• The consumers can favor a product more than the other one.
• There are easy entrances and exit in this market.

This type of market structure can be observed in reality.

Some of the common examples are:
• Cap‟n Crunch, Lucky Charms, Froot Loops, and Apple Jacks, which are all companies that
sell breakfast cereals with small differences.
• McDonald and Burger King, which both sell slightly different burgers
• Nike and Adidas, which both sell running shoes, but are different in some ways.

PERFECT COMPETITION

Perfect competition is a type of market structure where many products are similar and
may substitute each other since they have the same features, price and, quality. There are
many sellers and consumers in this type of market with almost the same products. Moreover, a
perfectly competitive market requires few barriers to enter and it is easy for producers to quit
whenever they want. They also have uniform prices that depend on the demand and supply
which means that the market has full control over implying prices.

Perfectly competitive markets show these characteristics:

• Both the producers and consumers have perfect knowledge without information failures. The
details and information in this market are easily accessible to all participants. Thus, risk-taking is
not necessarily important and the power of an entrepreneur is limited.
• Producers and consumers are making coherent decisions for their benefit. For instance,
producers make decisions to maximize their profits, and consumers make decisions to
maximize their utility.
• There are no hindrances to enter nor exit from this type of market.
• Companies manufacture identical products that are not branded.
• Producers don‟t have the power to influence the market price nor the condition. .

OLIGOPOLY

An oligopoly is a type of market structure where firms dominate the market by supplying
either similar or differentiated products. There are only a few companies in this structure and
they have control over price implying. It is also difficult to enter this market since there are a lot
of barriers. Moreover, participants in oligopolies are price setters rather than takers. Some
examples of oligopoly companies are the automobile industry, the steel industry, aircraft
manufacturing industry, etc.

5
Oligopoly markets show these characteristics:
• Entrepreneurs maximize profits.
• Oligopolies set prices rather than take price.
• There are a lot of barriers. It includes government licenses, economies of scale, patents, and
access to expensive and complex technology. Also, some government policies are favoring the
current companies in the industry so it is hard to enter for beginners.
• Interdependent. Like for example, if one firm changes and decreases its price, it will
significantly affect the other firms.
• Rampant advertising since most companies use national media to promote their products.

ENGAGEMENT

Activity 1

6
 Activity 2

APPLICATION

Category Excellent Very Satisfactory Satisfactory Needs

Improvement

Content- 100% of the solutions 80 -99% of the 60-79% of the Below 60% of the
Accuracy (20) are correct. (20) solutions are solutions are solutions are
correct (17) correct (14) correct (11)

7
Presentation of Output is Output is attractive Output is Output is
Output exceptionally in terms of design, acceptably distractingly messy
attractive in terms of layout and attractive though it and not attractive
(15) design, layout and neatness (13) may be a bit messy (9)
neatness (15) (11)

Mathematical Complete Substantial Partial Limited

Content/ understanding of the understanding of understanding of understanding of
Reasoning (15 mathematical the mathematical the mathematical the mathematical
concepts is evident in concepts is concepts is concepts is
the presentation. (15 applied. (13) applied. (11) applied. (9)

ASSESSMENT

Assessment 1

Directions: Choose the answer from the box. Write the letter of the correct one on the space
provided before each number.

8
Assessment 2
Directions: Identify whether the example companies are oligopolies or not. Write YES if it is and
NO if not.
_____ 1. Automobile industry _____ 9. Poultry shop
_____ 2. Bubble tea shop _____ 10. Aluminum and steel company
_____ 3. Snack house _____ 11. Computer company
_____ 4. Mass media company _____ 12. Airlines
9
_____ 5. Oil and gas industry _____13. Sari-sari store
_____ 6. Cellular phones company _____14. Network providers
_____ 7. Taco stall _____15. Aircraft manufacturing industry
_____ 8. Pharmaceuticals company

WEEK 6: Contemporary Economic Issues of a Filipino

Entrepreneur

Here are the following learning competencies expected to be covered at the end of the unit:

The learner demonstrates an understanding of… economics as an

Content Standards applied science and its utility in addressing the economic problems
of the country

The learners shall be able to analyse and propose solution/s to the

Performance Standards
economic problems using the principles of applied economics.

Most Essential The learners illustrate Express

Learning Competencies Analyze the effects of contemporary economic issues affecting the Filipino
(MELC’s) entrepreneur

After going through the learners packet, you are expected to:
Specific Learning Analyze the effects of contemporary economic issues affecting the Filipino
Outcomes entrepreneur

Content

Learner’s Materials
Pages

Textbook Pages Sison, Simon L., et.al, 2018 Applied Economics. p.5; p.13. Quezon City,
Philippines. Phoenix Publishing House.

Learning Resources N/A

INTRODUCTION

10
 What exactly does the entrepreneur do? Entrepreneurs operate within the market. They
devise ways to increase trade. In other words, entrepreneurs are those who promote trade.
Since May of 2019, there are 1.42 million registered businesses from 900, 000 in 2017 in the
Philippines and 99.56% are MSMEs (Micro, Small and Medium Enterprises). Based on the data,
what sustains the economy last year is because of the MSMEs.
In this time of pandemic, most of those MSMEs collapsed because entrepreneurs live with
some degree of uncertainties. No one knows what the future holds. In a competitive market, the
landscape is littered with entrepreneurs who have tried, succeeded and failed

DEVELOPMENT

How can an entrepreneur increase trade?

1. To produce a good or service that satisfies unmet demand.

Example: Steve Jobs, the co-founder of Apple Inc., was instrumental in the development of such
products such as IPads, IPhones and IPods.
2. To reduce the transaction costs of making trades.
Example: Online buying and selling

Economic Issues of Filipino Entrepreneur

I. INVESTMENT

In Economics, investment is an economic activity that forgoes consumption today with an

eye to increasing output in the future. In finance terms, investment is denoting a purchase of a
security such as stocks or bonds.
Classification of investment: 1. Long term 2. Short term
Long term investments are investments that a firm is willing to hold for a long period of more
than a year or 30 years at most. Being in a long term investment, investors are willing to accept
the risk in the pursuit of higher rewards.
Example:
11
1. Stocks –these are paper investment, which means it‟s not like a property to manage.
Investing in stocks is investing in the economy.
Categories of stocks:
a. Growth stocks – often pay no dividends at all, primarily reinvest profits in growth
b. High dividend stocks – have the prospect of capital appreciation
8
2. Bonds – are interest bearing certificates with terms greater than 10, 20 or 30 years. Not only
provide interest income but also capital appreciation
Note: mutual funds and exchange traded funds are function as portfolios of large number of
different stocks and bonds

12
3. Real Estate – an alternative to stocks and as the best long term investment
Two ways to make money investing in rental real estate:
a. Rental income
b. Capital appreciation

4. Tax Sheltered Retirement Plans – aren‟t actual investments but get important tax benefits

13
5. Annuities – are solid investments and more of an investment contract
10 Best Philippine Stocks for Long Term Investment:

1. Ayala Corp
2. Ayala Land Inc.
3. Aboitiz Power Corp.
4. Banco de Oro
5. Bank of the Philippine Islands
6. DMCI Holdings Inc.
7. First Metro Philippine Equity
8. GT Capital Holdings
9. International Container Terminal Services
10. Jollibee Foods Corp.
Short term investments are highly liquid, and by liquid would mean easy to turn asset into
cash. Tend to be lower risk, meaning sacrificing a potentially higher return for the safety of
having money.
Examples:
1. Savings Account – are highly liquid, you can add money to the account and it is insured
under the PDIC or Philippine Deposit Insurance Corporation
2. Corporate Bond Funds – typically considered safe and pay interest. However, it is not insured
by the government so it can lose money
3. Government Bond Funds – just like corporate bonds except that it is issued by the
government. It is not insured under PDIC but it promises to repay money
4. Money Market Accounts – another kind of bank deposit and usually pay a higher interest rate
than savings account. It is protected by PDIC. It is highly liquid.
5. Certificates of Deposit – it is referred as the time deposit
II. TAXATION

The Philippine tax law system was based on the 1987 Philippine Constitution and sets its
limitations on the exercise of the power to tax in the following articles:
a. Article 6, sections 28-29
1. Requirement of uniformity and equity in taxation (Article VI, section 28, Legislative
Department)
2. Prohibition against taxation of religious, charitable and educational entities(Religious and
charitable institutions exempt from property taxes) (Article VI, section 28, Legislative
Department)
14
3. Prohibition against taxation appropriation for religious purposes (Article VI, section 28,
Legislative Department)
b. Article 16, section 4 Prohibition against taxation of non-stock , non-profit educational
institutions and proprietary educational institutions (exempt from property and income taxes as
well as customs duties except income derived from business activity not related to its
educational purpose) The latest revision of the tax law is the National Internal Revenue Code
of 1997.
Taxes are the lifeblood of government. These are used to finance the basic services such as
health care and education as well as infrastructure.
In 2017 Doing Business Report of World Bank, the Philippines ranked 99th out of 190
economies in terms of filing of taxes. It takes 185.6 hours or 28 times each year to file taxes.
Main objectives of taxes:
1. Revenue raising to provide public good
2. Redistribution of income and wealth
3. Economic regulator to promote social and economic welfare
4. Harmonization among other states

Classification of Taxes:
1. By tax base – is a convenient classification for economic analysis, for example, in examining
who exactly bears the burden of a tax known as incidence of taxation
2. Indirect/direct – a direct tax is one levied directly on the person who is intended to pay the tax
whereas the indirect tax is borne by a person other than the one from whom the tax is collected
3. Unit/ad valorem – a unit or specific tax is levied on the volume of what is being taxed whereas
an ad valorem tax is levied on the value of the tax base
4. Distribution of the tax burden – the way in which burden of tax is distributed among the
taxpaying community
a. Progressive taxes take an increasing portion as the value of the tax base rises and
depends on the marginal rate of tax
b. Proportional taxes take a constant portion of the value of the tax base and depends
on the marginal and average rates of tax being equal
c. Regressive taxes take a declining portion as the value of the tax base rises and
depends on the average rate of tax being greater than the marginal rate of tax

15
 In the Philippines, the government adopted the progressive taxation scheme in the
collection of income tax in order to allocate the burden of tax fairly between members of the
community. Under the progressive taxation, the rate of tax would increase as the level of
income increased. This implies that the system should be used to correct income inequalities.
The following are the arguments in favor of progressive taxation:
a. Vertical equity – tax rates should be progressive in order to promote equality of sacrifice like
the loss of a one peso of a rich person is less a burden compared to the loss of a one peso to a
poor person.
b. Redistribution of income – socially aware governments seeking reduce poverty and promote
social welfare can use progressive taxation to achieve a greater degree of redistribution
c. Benefit theory – may be justified on the grounds that wealthier individuals receive more
benefit from public services such as defense and law and order as they have more to lose than
poorer individuals with few possessions
d. Achieve equity in the tax system as a whole – can compensate for regressive taxes in the tax
system so that the total burden of taxation from all taxes is proportional
The following are arguments against a progressive taxation
a. Simplicity – it is argued that steeply progressive rates of income tax make it more
complicated increasing the incentive to avoid and evade the tax
b. Political objection – the fact that a government is voted in by the majority of the electorate but
the highest progressive rates of tax would only apply to a minority may be politically
unacceptable, as in effect the majority would be allowed to determine rates of tax that would fall
exclusively on the minority.
c. Economic efficiency – highly progressive rates of income tax are likely to reduce savings and
the creation of capital making society as a whole worse off
Ambisyon Natin 2040 paved the way of passing the major laws. The Tax Reform for
Acceleration and Inclusion or the well-known TRAIN bill, tax amnesty legislation and Republic
Act No. 11032 of 2018 which aims to fast track measures of cutting red tape and make the
process of setting up and maintaining a business easier and efficient. The Tax Reform for
Attracting Better and High-Quality Opportunities or the TRABAHO bill is the second component
16
of the tax reform package which is to make corporate tax rates in the Philippines competitive
with those of its regional neighbors and to enhance fiscal incentives regime.
1. TRAIN bill was implemented in January 2018 to increase government earnings to fund higher
public expenditure which are better infrastructure, health, education, jobs and social protection.
A simplified income tax system was also developed for small businesses introducing the
possibility of being taxed at a flat rate of their gross sales on receipts provided that this does not
exceed an annual threshold of 3 million.
2. TRABAHO bill proposes an income tax holiday incentive be granted for a period not
exceeding three years and other incentives for businesses.
3. Green Jobs Act of 2016 referring to employment that contributes to the preservation and
restoration of the environment
4. Tax Amnesty Act of 2018 or RA 11213 with taxpayers benefitting from two types of tax
amnesties:
a. Estate Tax Amnesty
b. Tax Amnesty on Delinquencies

Ease of Doing Business Act

Republic Act No. 11032 of 2018 or otherwise known as the Ease of Doing Business and
Efficient Government Service Delivery Act provides for an adoption of simplified requirements
and procedures that will reduce bureaucratic requirements and expedite both business and non-
business related transactions with the government.
The law provides a zero contact policy wherein government employees are prohibited
from having any contact of any type with any transacting applicant except on the following
cases: a. During preliminary assessment of the request b. While evaluating the sufficiency of
submitted requirements
The present administration took the initiative so that entrepreneurs can do business at ease.

III. WAGE
Employment is like any other market exchange which obviously can be explained using the
supply and demand in a market equilibrium setting. Wage is the price of labor and is usually in
monetary compensation paid by an employer to an employee in exchange of a work done. What
drives the higher supply of labor is the wage even if there is low demand for it. Higher wage
means higher supply of labor.
Wage rate in the Philippines is at 13, 487.30 pesos since 2018 compared to the 12, 646
pesos in 2017. For small businesses to acquire and convince individuals to offer their skills,
expertise and time is to make compensation be competitive in the labor market. Attractive
benefits and other perks entice a skilled individual to be part of your growing business.
The minimum wage law is determined by the regional wage boards every year. The
determination is based on the following factors:
17
1. Needs of workers and their families
2. Capacity to pay
3. Comparable wages and incomes
4. Requirements of economic and social development
The data from the Philippine Statistics Authority and from the National Economic Development
Authority will be used in determining each factor.

IV. RENT
In the Philippines, a law intended to protect millions of Filipino renters across the country
which took effect in 2009, the Rent Control Act of 2009. In 2018, the Philippine Statistics Office
recorded at least 1.5 million renters and 97% of these renters are renting with rates costing 10,
000 pesos per month. For entrepreneurs and owning a business in the Philippines, one major
concern is the property. It is important for business owners or entrepreneurs to be
knowledgeable about the property law.

ENGAGEMENT

18
 ACTIVITY B

APPLICATION
.

Give at least 5 suggested economic policies and solutions to address the economic
issues of Filipino entrepreneurs in this time of pandemic. Refer to the following guide questions
for your suggested policies:

a. If you are the breadwinner of the family, what could you have done for the Filipino
entrepreneurs in this time of pandemic? b. If you are the Filipino entrepreneur, what could you
have done for your business in this time of pandemic?

Answer the question on a separate sheet of paper.

1. As a Filipino citizen and one of the many affected by the pandemic, do you think you are
entitled of a share from the taxes collected by our government? Explain in 5 sentences.

2. What is your opinion about those who have not paid taxes or the free riders as they are
called, are they entitled to a share in the community? Explain in 5 sentences.

Category Excellent Very Satisfactory Satisfactory Needs

19
 Improvement

Content- 100% of the solutions 80 -99% of the 60-79% of the Below 60% of the
Accuracy (20) are correct. (20) solutions are solutions are solutions are
correct (17) correct (14) correct (11)

Presentation of Output is Output is attractive Output is Output is

Output exceptionally in terms of design, acceptably distractingly messy
attractive in terms of layout and attractive though it and not attractive
(15) design, layout and neatness (13) may be a bit messy (9)
neatness (15) (11)

Mathematical Complete Substantial Partial Limited

Content/ understanding of the understanding of understanding of understanding of
Reasoning (15 mathematical the mathematical the mathematical the mathematical
concepts is evident in concepts is concepts is concepts is
the presentation. (15 applied. (13) applied. (11) applied. (9)

ASSESSMENT

20
WEEK 7: Analyze Different Principles, Tools, and
Techniques in Creating a Business Techniques in Creating
a Business

21
Here are the following learning competencies expected to be covered at the end of the unit:

The learner demonstrates an understanding of economics as an

applied science and its utility in addressing the economic problems
Content Standards
of the country the law of supply and demand, and factors affecting
the economic situation

Performance Standards Conduct a survey of current economic situations within the vicinity

Most Essential The learners illustrate Express

Learning Competencies  Analyze different principles, tools, and techniques in creating a business
(MELC’s)

After going through the learners packet, you are expected to:

 Analyze different principles, tools, and techniques in creating a business

Specific Learning
Outcomes

Analyze Different Principles, Tools, and Techniques

in Creating a Business Techniques in Creating a
Content
Business

Learner’s Materials
Pages

Textbook Pages Sison, Simon L., et.al, 2018 Applied Economics. p.5; p.13. Quezon City,
Philippines. Phoenix Publishing House.

Learning Resources N/A

INTRODUCTION

Business entities are important to country‟s economic growth. It enables to create goods
and services, provide jobs for individuals to generate income and accumulate wealth and
22
generate revenue for the government which enables to provide basic social services. Moreover,
it produces goods and services that individuals needs and wants. Business to thrive and grow
need to used tools and techniques to continuously exist thus best practices and techniques
need to be employed

DEVELOPMENT

Principles, Tools, and Techniques in Creating a Business

In planning a business, a thorough study needs to be made from the creation of business.
Understanding how the business will operate and co-exists in the business world thus one
needs to study principle, tools and techniques in creating business
The principles of a business are the driving forces that make it successful. They are the
backbone for the organization. In my mind, there are ten such principles that underlie the
creation of the most successful small business in the world.
1. Scalability
A business must be scalable for it to be successful. A small business built rightly can grow
10,000 times its current size.
2. Big Ideas
A small business is no more effective than the idea upon which it is built. The entrepreneur's
vision is more important to the life of the business than anything else.
3. Systems
You must recognize that a small business is a System in which all parts contribute to the
success or failure of the whole. In this system, everything must work together: from employee to
president; from equipment to resources.
4. Sustainability
A business must be dynamic--able to thrive through all economic conditions, in all markets,
providing meaningful, highly differentiated results to all of its customers. Such differentiation is
key to survival.
5. Growth
All businesses need internal growth. A small business is a School in which its employees are
students, with the intention, will, and determination to grow.
6. Vision
A small business must manifest the Higher Purpose upon which it was seeded, the vision it was
meant to exemplify, the mission it was intended to fulfill.
7. Purpose
A small business is the fruit of a Higher Aim in the mind of the person who conceived it.
8. Autonomy
A business is not part of the owner's life, but is, in fact, its own entity. A small business
possesses a life of its own, in the service of God, in whom it finds reason.
9. Profitability
A small business is an economic entity, driving an economic reality, creating an economic
certainty for the communities in which it thrives.

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10. Standards
A small business creates a Standard against which all small businesses are measured as either
successful, or not. All small businesses should aim to thrive beyond the standards that formerly
existed.
So, there you have it, the ten principles upon which to conceive, grow, and expand your
business. Each business needs a shape and structure, and these principles will give your
company an outline, which is necessary for it to thrive.

Business experts have a number of tools at hand to analyze company performance.

Here are six frameworks that consultants and business analysts use, and that you might
consider adding to your own set of tools.

SWOT
Assumes that strengths and weaknesses are frequently internal, while opportunities and threats are
more commonly external. The name is an acronym for the four parameters the technique examines:

 Strengths: characteristics of the business or project that give it an advantage over others.
 Weaknesses: characteristics that place the business or project at a disadvantage relative to
others.
 Opportunities: elements in the environment that the business or project could exploit to its
advantage.
 Threats: elements in the environment that could cause trouble for the business or project.

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PEST ANALYSIS
PEST analysis (political, economic, socio-cultural and technological) describes a framework of
macro-environmental factors used in the environmental scanning component of strategic
management. It is part of an external analysis when conducting a strategic analysis or doing
market research, and gives an overview of the different macro-environmental factors to be taken
into consideration. It is a strategic tool for understanding market growth or decline, business
position, potential and direction for operations.

The basic PEST analysis includes four factors:

Political factors
Relate to how the government intervenes in the economy. Specifically, political factors have
areas including tax policy, labour law, environmental law, trade restrictions, tariffs, and political
stability. Political factors may also include goods and services which the government aims to
provide or be provided (merit goods) and those that the government does not want to be
provided (demerit goods or merit bads). Furthermore, governments have a high impact on the
health, education, and infrastructure of a nation.
Economic factors

25
 Include economic growth, exchange rates, inflation rate, and interest rates. These factors can
drastically effect how a business operates. For example, interest rates affect a firm's cost of
capital and therefore to what extent a business grows and expands.
Social factors
Include the cultural aspects and health consciousness, population growth rate, age distribution,
career attitudes and emphasis on safety. High trends in social factors affect the demand for a
company's products and how that company operates. For example, the ageing population may
imply a smaller and less-willing workforce (thus increasing the cost of labour). Furthermore,
companies may change various management strategies to adapt to social trends caused from
this (such as recruiting older workers).
Technological factors
Include technological aspects like R&D activity, automation, technology incentives and the rate
of technological change. These can determine barriers to entry, minimum efficient production
level and influence the outsourcing decisions. Furthermore, technological shifts would affect
costs, quality, and lead to innovation.
Expanding the analysis to PESTLE or PESTEL adds:

Legal factors include discrimination law, consumer law, antitrust law, employment law, and
health and safety law. These factors can affect how a company operates, its costs, and the
demand for its products.
Environmental factors
Include ecological and environmental aspects such as weather, climate, and climate change,
which may especially affect industries such as tourism, farming, and insurance. Furthermore,
growing awareness of the potential impacts of climate change is affecting how companies
operate and the products they offer, both creating new markets and diminishing or destroying
existing ones.

26
Porter's Five Forces
The tool was created by Harvard Business School professor Michael Porter, to analyze an
industry's attractiveness and likely profitability. Since its publication in 1979, it has become one
of the most popular and highly regarded business strategy tools.
Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged
them to look beyond the actions of their competitors and examine what other factors could
impact the business environment. He identified five forces that make up the competitive
environment, and which can erode your profitability. These are:

Competitive Rivalry- This looks at the number and strength of your competitors. How many
rivals do you have? Who are they, and how does the quality of their products and services
compare with yours.Where rivalry is intense, companies can attract customers with aggressive
price cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your
suppliers and buyers can go elsewhere if they feel that they're not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do,
then you'll likely have tremendous strength and healthy profits.

27
Supplier Power.- This is determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have? How unique is the product or service that they
provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper alternative. But
the fewer suppliers there are, and the more you need their help, the stronger their position and
their ability to charge you more. That can impact your profit.

Buyer Power- Here, you ask yourself how easy it is for buyers to drive your prices down. How
many buyers are there, and how big are their orders? How much would it cost them to switch
from your products and services to those of a rival? Are your buyers strong enough to dictate
terms to you?
When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers.

Threat of Substitution.- This refers to the likelihood of your customers finding a different way
of doing what you do. For example, if you supply a unique software product that automates an
important process, people may substitute it by doing the process manually or by outsourcing it.
A substitution that is easy and cheap to make can weaken your position and threaten your
profitability.
Threat of New Entry.- Your position can be affected by people's ability to enter your market.
So, think about how easily this could be done. How easy is it to get a foothold in your industry or
market? How much would it cost, and how tightly is your sector regulated?
If it takes little money and effort to enter your market and compete effectively, or if you have little
protection for your key technologies, then rivals can quickly enter your market and weaken your
position. If you have strong and durable barriers to entry, then you can preserve a favorable
position and take fair advantage of it.

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5. The BCG Growth-Share Matrix
This quadrant matrix, developed by Boston Consulting Group (BCG), is a tool companies use to
assess the relative strength of product lines within their portfolios.

Product lines are assigned to one of four quadrants:

Cash cows
Stars
Question marks
Dogs

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Understanding a BCG Growth-Share Matrix
The BCG growth-share matrix breaks down products into four categories, known heuristically as
"dogs," "cash cows," "stars," and “question marks.” Each category quadrant has its own set of
unique characteristics.2

Dogs (or Pets)

If a company‟s product has a low market share and is at a low rate of growth, it is considered a
“dog” and should be sold, liquidated, or repositioned. Dogs, found in the lower right quadrant of
the grid, don't generate much cash for the company since they have low market share and little
to no growth. Because of this, dogs can turn out to be cash traps, tying up company funds for
long periods of time. For this reason, they are prime candidates for divestiture.2

Cash Cows
Products that are in low-growth areas but for which the company has a relatively large market
share are considered “cash cows,” and the company should thus milk the cash cow for as long
as it can. Cash cows, seen in the lower left quadrant, are typically leading products in markets
that are mature.

Generally, these products generate returns that are higher than the market's growth rate and
sustain itself from a cash flow perspective. These products should be taken advantage of for as
long as possible. The value of cash cows can be easily calculated since their cash flow patterns
are highly predictable. In effect, low-growth, high-share cash cows should be milked for cash to
reinvest in high-growth, high-share “stars” with high future potential.
Stars
Products that are in high growth markets and that make up a sizable portion of that market are
considered “stars” and should be invested in more. In the upper left quadrant are stars, which
generate high income but also consume large amounts of company cash. If a star can remain a
market leader, it eventually becomes a cash cow when the market's overall growth rate
declines.2

Question Marks
Questionable opportunities are those in high growth rate markets but in which the company
does not maintain a large market share. Question marks are in the upper right portion of the
grid. They typically grow fast but consume large amounts of company resources. Products in
this quadrant should be analyzed frequently and closely to see if they are worth maintaining.

30
31
 ENGAGEMENT

APPLICATION

Essay
.As a student of economics, what business can you recommends in this pandemic crisis Covid
2019 and why?
Category Excellent Very Satisfactory Satisfactory Needs
Improvement

32
 Content- 100% of the solutions 80 -99% of the 60-79% of the Below 60% of the
Accuracy (20) are correct. (20) solutions are solutions are solutions are
correct (17) correct (14) correct (11)

Presentation of Output is Output is attractive Output is Output is

Output exceptionally in terms of design, acceptably distractingly messy
attractive in terms of layout and attractive though it and not attractive
(15) design, layout and neatness (13) may be a bit messy (9)
neatness (15) (11)

Mathematical Complete Substantial Partial Limited

Content/ understanding of the understanding of understanding of understanding of
Reasoning (15 mathematical the mathematical the mathematical the mathematical
concepts is evident in concepts is concepts is concepts is
the presentation. (15 applied. (13) applied. (11) applied. (9)

33
 ASSESSMENT

Think of a product/service business that is needed in your locality. List down your competitors,
competitive advantage customers and suppliers.
Use the figure below.(10pts)
Competitors

Customers
Competitive
PRODUCT
advantage

Suppliers

WEEK 8: Applying Business Principles,

Tools, and Techniques in Participating in
Various Types of Industries in the Locality
Here are the following learning competencies expected to be covered at the end of the unit:

34
 The learner demonstrates an understanding of economics as an
applied science and its utility in addressing the economic problems
Content Standards
of the country the law of supply and demand, and factors affecting
the economic situation

Performance Standards Conduct a survey of current economic situations within the vicinity

The learners illustrate Express

After going through this module, you are expected to:

Most Essential
Learning Competencies 1. Select the best tools that suitable to the various types of industry in the
(MELC’s) locality;

2. Apply the selected principle, tools and techniques in various types of

industry in the community.

After going through the learners packet, you are expected to:

1. Select the best tools that suitable to the various types of industry in the
Specific Learning
locality;
Outcomes
2. Apply the selected principle, tools and techniques in various types of
industry in the community.

Applying Business Principles, Tools, and Techniques in Participating in

Content
Various Types of Industries in the Locality

Learner’s Materials
Pages

Textbook Pages Sison, Simon L., et.al, 2018 Applied Economics. p.5; p.13. Quezon City,
Philippines. Phoenix Publishing House.

Learning Resources N/A

INTRODUCTION

You already learned some principles, tools and techniques in creating a business. You can
apply the learning you have in Module 7 in applying those skills in creating your own business in
your locality. Selecting the best tools and techniques requires thorough planning and studying.

35
 DEVELOPMENT

The Covid-19 outbreak is affecting the economy not only in our country but as a whole.
As this global economic crisis continues, some are thinking that the business will not resume to
its normal operation in the coming months and years. Even the behaviour of the consumer will
shift because of adjustment in their lifestyle. This is a challenge to your knowledge about the
different principles, tools and techniques in creating business should be apply in this trying times
of pandemic.
In your previous lessons different principles, tools and techniques are being discuss like
SWOT Analysis, PESTLE Analysis and a lot more.
Here are some suggestions for you to start with your own business. Remember this is only
your guide when creating a business. The best idea is that, make sure the idea you have is
suitable within in your locality where in your business would be successful considering this
pandemic.
Consider some example that may help create your own business in your locality.
Set up your online/offline tutoring class – a lot of learners have been affected by this pandemic,
look at your neighbourhood wherein you can approach them to teach their children both online
and offline. Make a demonstration to your target customer wherein your talents in teaching their
children are needed.
Online tutors now a days is in demand especially in time like this, since there is no face to face
classes, parents are force to teach their children at home. In this you can develop an online
/offline tutoring class. Make use of your knowledge in crafting your tools in creating a business.
Set up your own online delivery business
The online delivery business is at a high boom. At this moment because of the pandemic people
oft to buy online, and the mode will be carried on even after COVID-19. Many of the existing
online food delivery companies are in the market. They are doing good for themselves. But few
of the online delivery businesses focus on the miscellaneous commodities deliveries. This could
be a turning point for starting your own online delivery business.
Here are some online delivery that you want to start with in your locality. Remember this is only
a suggestion to help you:
• Grocery delivery • Food delivery • Daily needs essentials delivery

The online delivery business need only small capital that could bring with a high income and
Return of Investment (ROI). If you are delivering services to your customer see to it that the
price goes to its quality so that your customer will patronize your product being delivered.
In generating business idea, you should first identify what type of business is suited to
community/locality. You should analyze and scan the potential environment, study the
marketing practices and strategies of your competitors, analyze the strengths, weaknesses,

36
opportunities, and the threats in your environment to ensure that the products or services you
are planning to offer will be patronized within the easy reach by your target consumers.
Bear in mind these simple rules for successful SWOT Analysis:
Be realistic about the strengths and weaknesses of your business when conducting SWOT
Analysis.
SWOT Analysis should distinguish between where your business is today, and where it could
be in the future.
SWOT Analysis should always be specific. Avoid any grey area.
Always apply SWOT Analysis in relation to your competition„ i.e. better than or worse than your
competitions.
Keep your SWOT Analysis short and simple. Avoid complexity and over analysis. SWOT
Analysis is subjective.

ENGAGEMENT

37
APPLICATION

ASSESSMENT

38
39