Republic of the Philippines

Department of Education
Region I
SCHOOLS DIVISION OF ILOCOS NORTE

ORGANIZATION
AND MANAGEMENT
Quarter I Module 2:
The Role of Business
in the Environment

MELC: Analyze various forces/elements influencing

local and international business environment using
PEST and SWOT strategies (ABM_AOM11-Ic-d-4-5)
MELC: Analyze the forms and economic roles of
business organizations (ABM_AOM11-Ic-d-7)
MELC: Differentiate the phases of economic
development and its impact to business environment
(ABM_AOM11-Ic-d-8)

Prepared by:

JEFFERSON V. BALOALOA
SHS Teacher I
Lanao National High School
Organization and Management - Grade 11
Alternative Delivery Mode
Quarter 1 – Module 2: The Role of Business in the Environment
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall

subsist in any work of the Government of the Philippines. However, prior
approval of the government agency or office wherein the work is created shall
be necessary for exploitation of such work for profit. Such agency or office
may, among other things, impose as a condition the payment of royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand

names, trademarks, etc.) included in this module are owned by their
respective copyright holders. Every effort has been exerted to locate and seek
permission to use these materials from their respective copyright owners. The
publisher and authors do not represent nor claim ownership over them.

Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Author: Jefferson V. Baloaloa
Editors:
Reviewer: Magdalena Crisanta P. Agcaoili
Layout Artist/ Illustrator:
Management Team:
Joann A. Corpuz

Joye D. Madalipay

Arnel S. Bandiola

Jenetrix T. Tumaneng

Name of EPS In Charge: Archie Mateo Llaguno

Name of PSDS In Charge

Printed in the Philippines by: _____________________________________________

Schools Division of Ilocos Norte

Office Address: Brgy. 7B, Giron Street, Laoag City, Ilocos Norte
Telefax: (077) 771-0960
E-mail Address: ilocos.norte@deped.gov.ph
 11

ORGANIZATION
AND MANAGEMENT
Quarter I – Module 2:
The Role of Business
in the Environment

3
Introductory Message
For the facilitator:

Welcome to the Organization and Management 11 Alternative Delivery Mode

(ADM) Module on The Role of Business in the Environment!

This module was collaboratively designed, developed and reviewed by

educators both from public and private institutions to assist you, the teacher or
facilitator in helping the learners meet the standards set by the K to 12 Curriculum
while overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and
independent learning activities at their own pace and time. Furthermore, this also
aims to help learners acquire the needed 21st century skills while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Note to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

For the learner:

Welcome to the Organization and Management Alternative Delivery Mode

(ADM) Module on The Role of Business in the Environment!

The hand is one of the most symbolized parts of the human body. It is often
used to depict skill, action and purpose. Through our hands we may learn, create
and accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant competencies
and skills at your own pace and time. Your academic success lies in your own hands!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning resource while being an active
learner.

1
This module has the following parts with their corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correctly, you may decide to skip this module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the

lesson. This aims to help you discover and
understand new concepts and skills.

What’s More This comprises activities for independent

practice to strengthen your understanding
and skills of the topic. You may check the
answers in the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or open-ended

statements to be filled in to process what you
learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or skill
into real life situations.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of the
lesson learned. This also develops retention
of learned concepts.

Answer Key This contains answers to all activities in the

module.

2
At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1) Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2) Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3) Read the instruction carefully before doing each task.
4) Observe honesty and integrity in doing the tasks and checking your answers.
5) Finish the task at hand before proceeding to the next.
6) Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.
We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

3
 What I Need to Know

This module was designed and written with you in mind. It was
specifically developed and designed to provide you fun and meaningful
learning experience, with your own time and pace. This module shall serve to
give you a more in-depth knowledge about the role of business in the
environment, how the environment affects the firm and the important terms
that may be associated with it. The scope of this module permits it to be used
in many different learning situations. The lessons are arranged to follow the
standard sequence of the course.

The module is divided into 3 lessons, namely:

• Lesson 1 – Elements of Local and International Business Environment
• Lesson 2 – Forms and Economic Roles of Business Organizations
• Lesson 3 – Phases of Economic Development

After going through this module, you are expected to:

• Analyze various forces/elements influencing local and international
business environment using PEST and SWOT strategies (ABM_AOM11-
Ic-d-4-5)
• Analyze the forms and economic roles of business organizations
(ABM_AOM11-Ic-d-7)
• Differentiate the phases of economic development and its impact to
business environment (ABM_AOM11-Ic-d-8)

4
 Lesson Elements of Local
1 and International Business
Environment

What I Know

Direction: Give the meaning of the following word/phrase in each item. You
may use the internet to help you define the given word/phrase. Write your
answer in a sheet of paper.

1. Internal Business Environment: _____________________________________

2. External Business Environment: _____________________________________
3. Environmental Scanning: ___________________________________________
4. SWOT Analysis: _____________________________________________________
5. PEST Analysis: ______________________________________________________

What’s In

Understanding the local and international business environment of the

firm requires managers of the organizations to sharpen their cultural
intelligence. Cultural intelligence is an individual’s ability to favorably receive
and adjust to an unfamiliar way of doing things. This will enable them to
develop their ability to accept and adapt to different cultures, both local and
international, that may affect the organization to which they belong.

5
 What’s New

Directions: Interview someone you know who is now living in the other
country. Ask him/her to describe what the business world is like in the
country he/she lives in. Write a brief paper describing the result of your
interview.

What is It

Business environment refers to the factors or elements affecting a

business organization. It may be divided into external and internal business
environment. The external business environment includes the factors and
elements outside the organization which may affect its performance, either
positively or negatively while the internal business environment refers to the
factors or elements within the organization which may also affect its
performance, either positively or negatively.

Components of the External Business Environment: General and Specific

Systematic monitoring of the major external forces influencing

organizations is necessary to improve the management of companies. Failure
to consider the company’s general and specific business environments may
affect the strategies that management will make and use.

The general business environment must be considered as managers

plan, organize, staff, lead, and control their respective organizations. The
general business environment includes:

• Economic situations. Inflation, rates of interest, changing options in

stock markets, and people’s spending habits are some examples of
elements of economic situations. Economic situations may affect
management practices in organizations. For examples, companies may
postpone expansion plans if bank loan interests are too high.
• Sociocultural situations. It includes the customers’ changing values
and preferences; customers could also affect management practices in
companies. For example, Filipino customers are now conscious about
the importance of avoiding fatty foods, so many companies now make

6
 sure that the products they offer are cholesterol-free or rare low in
cholesterol. In doing so, they avoid losing their customers.
• Politico-legal situations. It refers to national or local laws,
international laws, and rules and regulations that influence
organizational management. For example, labor laws related to
preventing employers from firing their employees without due process
require the former to allow the latter to exercise their right to present
their position during disciplinary action before their employment can
be terminated.
• Demographic situations. Demographic situations such as gender, age,
education level, income, number of family members, geographic origin,
etc., may influence some managerial decisions in organizations. For
example, decisions regarding hiring of human resources may be
affected by an organization’s management policy that shows prejudice
to the hiring of married females who are in the child-bearing age
because they would like to minimize payment of maternity leave
benefits.
• Technological situations. The technological situations of companies
involve the use of varied types of electronic gadgets and advanced
technology such as computers, robotics, microprocessors, and others
that have revolutionized business management; e-commerce,
teleconferencing, and sophisticated information systems have rapidly
changed the ways that business is conducted in the 21st century.
• World and ecological situations. This is related to the increasing
number of global competitors and markets, as well as the nature and
conditions of the changing natural environment. Products produced by
companies, of course must cater to the changing needs of people in the
global community, while, at the same time, considering their impact on
the natural environment. For example, car manufacturing managers
must give the go signal for the development of vehicles that are
environmentally friendly instead of only being focused on the product’s
speed, fuel economy, and design.

Meanwhile, the specific business environment focuses on the following:

• Stakeholders. These are parties likely to be affected by the activities
of the organization.
• Customers. Those who patronize the organization’s products and
services. Increasing customer sophistication makes it necessary for
managers of organizations to make crucial decisions regarding the
development of products with higher value and improvement of their
services to meet their patrons’ increasing demands.
• Suppliers. Those who ensure the organization’s continuous flow of
needed and reasonably priced inputs or materials required for
producing their goods and rendering their services. Managers decide
what, where, and when to buy their supplies and which supplier to
favor with their organization’s supply orders.

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 • Pressure groups. These are special-interest groups that try to exert
influence on the organization’s decisions or actions. For instance,
pressure from the Food and Drug Administration on some
department stores and drug stores led them to stop selling beauty
products containing lead and to stop ordering or prompting such
products from their suppliers.
• Investors/owners. They provide the company with the financial
support it needs. The company, of course, cannot exist without
them; thus, they greatly influence organizational management. Top-
level, middle-level, and lower-level management decisions are all
influenced, in one way or another, by the investors or owners of
organizations.
• Employees. These are comprised of those who work for another or
for an employer in exchange of salaries/wages or other
considerations. Employees execute the company’s strategies and are
important for the maintenance of the company’s stability.

Components of the Internal Business Environment

An organization’s internal business environment is comprised of its
resources, research and development, production, procurement of supplies,
and the products and services it offers.
The organization’s internal environment must also be subjected to
internal analyses. Internal strengths and weaknesses, opportunities, and
threats (SWOT) which regards to its resources (financial, physical,
mechanical, technological, and human resources), research and development
endeavors, production of goods, procurement of supplies (materials, inputs,
and finance), and products and services must all be considered prior to
organizational planning.
The SWOT analysis is one of the most structured and used planning
method to evaluate a business venture.

Components of Environmental Scanning: Developing a Competitive

Mindset, Considering Future Business Scenarios, Business Prediction,
SWOT Analysis, and Benchmarking
Adapting to environmental uncertainties must start with developing a
competitive mindset. Ignorance of the present-day realities may cause
individuals or organizations to do certain things that they may regret in the
future; hence, environmental scanning is necessary.
By seeking and sorting through data about the environment, you may
be able to understand and predict the various changes, opportunities, and
threats that may affect organizations in the future. Knowing the present-day
competitors, the possible number of barriers to entering your chosen business

8
industry, the existence or nonexistence of substitutes to your planned
product or service, and possible dependence on powerful suppliers and
customers will be helpful in developing a competitive mindset.
You must also consider future business scenarios. By realistic
consideration of both worst-case scenario or unfavorable future conditions
and best-case scenario or favorable future conditions, as well as middle-
ground possible conditions, you will have an idea of what to do in the future.
Meanwhile, business predictions, also know as business forecasting is
a method of predicting how variable in the environment will alter the future
of business. It could be sued in making decisions regarding offshoring,
branching our locally, and expanding or downsizing the company. However,
the accuracy of such business predictions may not always be assured.
Benchmarking is defined as the process of measuring or comparing
one’s own products, services, and practices with those of the recognized
industry leaders in order to identify areas for improvement. Best practices of
said industry leaders are observed so that understanding their competitive
advantage would be easier. This is followed by gathering information about
the company’s own operations and those of the other company in order to
identify gaps; this in turn, could be used to find out the underlying reasons
for performances differences. From these said reasons, a set of best practices
in one’s own company will be listed down and that, ultimately, leads to the
company’s improved performance.

Managing in a Worldwide Environment: Cultural, Politico-legal, and

Economic Environments
The call for businesses to go global is hard to resist as this is the trend
prevailing in the 21st century. The economic and social benefits that come
with globalizations are said to be among the positive outcomes. Globalization
advocates, however, fail to realize the very serious challenges managers in
adjusting to the cultural differences among different countries where they
intend to do business.
Besides the cultural environment, the politico-legal and economic
environments must also be considered. Some countries have stable laws and
good political climate while others have opposite-unstable laws and risky
political climate. Awareness of the economic issues of countries where
organizations intent to establish business is also very important.

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SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats,

and so a SWOT Analysis is a technique for assessing these four aspects of the
business. You can use SWOT Analysis to make the most of what you've got,
to your organization's best advantage and you can reduce the chances of
failure, by understanding what you're lacking, and eliminating hazards that
would otherwise catch you unawares.

Better still, you can start to craft a strategy that distinguishes you from
your competitors, and so compete successfully in your market. First, draw up
a SWOT Analysis matrix. Figure 1 shows how a SWOT Analysis matrix would
look like.

Strengths Weaknesses
• What do you do well? • What could you improve?
• What unique resources can you draw • Where do you have fewer resources
on? than others?
• What do others see as your strengths? • What are others likely to see as
weaknesses?

Opportunities Threats
• What opportunities are open to you? What threats could harm you?
• What trends could your take What is your competition doing?
advantage of? What threats do your weaknesses expose to
• How can you turn your strengths into you?
opportunities?

Figure 1. A SWOT Analysis Matrix

To clarify which section an idea belongs to, it may be useful to think of

Strengths and Weaknesses as internal factors – that is, to do with the
organization, its assets, processes, and people. Think of Opportunities and
Threats as external factors, arising from your market, your competition, and
the wider economy.

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 Once you've examined all four aspects of SWOT, you'll likely be faced
with a long list of potential actions to take. You'll want to build on your
strengths, boost your weaker areas, head off any threats, and exploit every
opportunity. But, before you leap into action, look for potential connections
between the quadrants of your matrix. For example, could you use some of
your strengths to open up further opportunities? Would even more
opportunities become available by eliminating some of your weaknesses?

Now it's time to ruthlessly prune and prioritize your ideas, so that you
can focus time and money on the most significant ones. Refine each point to
make your comparisons clearer. Carry through the options you generate to
later stages in your strategy formation process and apply them at the right
level – for example, at a product or product-line level, rather than at the much
vaguer whole-company level.

PEST Analysis

PEST Analysis is a simple and widely used tool that helps you analyze
the Political, Economic, Socio-Cultural, and Technological changes in your
business environment. This helps you understand the "big picture" forces of
change that you're exposed to, and, from this, take advantage of the
opportunities that they present.

PEST Analysis is useful for four main reasons:

• It helps you to spot business or personal opportunities, and it gives you

advanced warning of significant threats.
• It reveals the direction of change within your business environment.
This helps you shape what you're doing, so that you work with change,
rather than against it.
• It helps you avoid starting projects that are likely to fail, for reasons
beyond your control.
• It can help you break free of unconscious assumptions when you enter
a new country, region, or market; because it helps you develop an
objective view of this new environment.

Follow these steps to analyze your business environment, and the

opportunities and threats that it presents.

Step 1: Brainstorm Factors

Political Factors to Consider

• When is the country's next local, state, or national election? How could
this change government or regional policy?
• Who are the most likely contenders for power? What are their views on
business policy, and on other policies that affect your organization?

11
 • Depending on the country, how well developed are property rights and
the rule of law, and how widespread are corruption and organized
crime? How are these situations likely to change, and how is this likely
to affect you?
• Could any pending legislation or taxation changes affect your business,
either positively or negatively?
• How will business regulation, along with any planned changes to it,
affect your business? And is there a trend towards regulation or
deregulation?
• How does government approach corporate policy, corporate social
responsibility, environmental issues, and customer protection
legislation? What impact does this have, and is it likely to change?
• What is the likely timescale of proposed legislative changes?
• Are there any other political factors that are likely to change?

Economic Factors to Consider

• How stable is the current economy? Is it growing, stagnating, or

declining?
• Are key exchange rates stable, or do they tend to vary significantly?
• Are customers' levels of disposable income rising or falling? How is this
likely to change in the next few years?
• What is the unemployment rate? Will it be easy to build a skilled
workforce? Or will it be expensive to hire skilled labor?
• Do consumers and businesses have easy access to credit? If not, how
will this affect your organization?
• How is globalization affecting the economic environment?
• Are there any other economic factors that you should consider?

Socio-Cultural Factors to Consider

• What is the population's growth rate and age profile? How is this likely
to change?
• Are generational shifts in attitude likely to affect what you're doing?
• What are your society's levels of health, education, and social mobility?
How are these changing, and what impact does this have?
• What employment patterns, job market trends, and attitudes toward
work can you observe? Are these different for different age groups?
• What social attitudes and social taboos could affect your business?
Have there been recent socio-cultural changes that might affect this?
• How do religious beliefs and lifestyle choices affect the population?
• Are any other socio-cultural factors likely to drive change for your
business?

12
Technological Factors to Consider

• Are there any new technologies that you could be using?

• Are there any new technologies on the horizon that could radically affect
your work or your industry?
• Do any of your competitors have access to new technologies that could
redefine their products?
• In which areas do governments and educational institutions focus their
research? Is there anything you can do to take advantage of this?
• How have infrastructure changes affected work patterns (for example,
levels of remote working)?
• Are there existing technological hubs that you could work with or learn
from?
• Are there any other technological factors that you should consider?

Step 2: Brainstorm Opportunities

Once you've identified the changes that are taking place in your
business environment, it's time to look at each change, and brainstorm the
opportunities that this could open up for you. For example, could it help you
develop new products, open up new markets, or help you make processes
more efficient?

Step 3: Brainstorm Threats

It's also important to think about how these changes could undermine
your business. If you understand this early enough, you may be able to avoid
these problems, or minimize their impact.

Step 4: Take Action

Where you have identified significant opportunities, build the actions

you'll take to exploit them into your Business Plan. Where you've identified
significant risks, take appropriate action to manage or eliminate them.

Note:

• PEST Analysis is often linked with SWOT Analysis, however, the two
tools have different areas of focus. PEST Analysis looks at "big picture"
factors that might influence a decision, a market, or a potential new
business. SWOT Analysis explores these factors at a business, product-
line or product level. These tools complement one another and are often
used together.

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 • There are variations of PEST Analysis that bring other factors into
consideration. Choose the version that best suits your situation.
o PESTLE/PESTEL: Political, Economic, Socio-Cultural,
Technological, Legal, Environmental.
o PESTLIED: Political, Economic, Socio-Cultural, Technological,
Legal, International, Environmental, Demographic.
o STEEPLE: Social/Demographic, Technological, Economic,
Environmental, Political, Legal, Ethical.
o SLEPT: Socio-Cultural, Legal, Economic, Political, Technological.
o LONGPESTLE: Local, National, and Global versions of PESTLE.
(These are best used for understanding change in multinational
organizations.)

What’s More

Direction: Complete the table by citing specific examples of each of the

general business environment elements that affects the operation of the
businesses in your community. Do it in a separate sheet of paper.

The General Business Environment in Our Community

1.
1. Economic Situations
2.

1.
2. Sociocultural situations
2.

1.
3. Politico-legal Situations
2.

1.
4. Demographic situations
2.

1.
5. Technological situations
2.

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 What I have learned

Direction: In a piece of paper, answer the question below.

Why is customer satisfaction important in all types of business?

What I can do

Direction: Read and understand the question below and do what is required.
Use the table as a guide and do it in a sheet of paper.

Who are the stakeholders of your school? Give specific examples and
state why they are important for the maintenance of your school’s stability as
a business organization.

The Stakeholders of Our School

Stakeholders Functions

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

Assessment

Direction: Practice benchmarking by comparing your school’s practices with

the best practices of a leading school in the Philippines. Are there performance
gaps? What are the underlying reasons for the identified performance

15
differences? List down your suggested best practices to improve the
performance of your school? Follow the format below.

Benchmarking of Best Practices

Practices of Our Practices of the Gaps and Suggested
School Leading School Reasons Practices
Continuous
intensification of
Global exposure
Ex. relationship-
of students in the
Implementation of International On- building with the
industry
Work Immersion the Job Training industry partners
Program for the Program of SHS and maintains
Requires large
Students in the students open
amount of
Locality communication
budget.
with the
parents/guardians
1.

2.

3.

4.

5.

Additional Activities

Directions: Now that we are experiencing COVID-19 pandemic, kindly write

at least three (3) information about your strengths, weaknesses, opportunities
and threats. Use the SWOT Analysis matrix and do it in a sheet of paper.

16
 Lesson
Forms and Economic Roles
2 of Business Organizations

What I Know

Direction: In a sheet of paper, answer the question below.

What is a business organization?

What’s In

The form of business organization may depend on its purpose, nature

of operations, and resources. However, a business organization’s form may
change with the changing times and the demands they present. Business
organization is a collection of people working to achieve a common purpose in
relation to their organization’s mission, vision, goals, and objectives, sharing
a common organizational culture.

What’s New

Direction: In a sheet of paper, give your own descriptions on the various

forms of business organizations in 3 to 5 sentences only.

Forms of Business Organization Description

1. Simple business organizations

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 2. Functional business organizations

3. Divisional business organizations

4. Profit business organizations

5. Nonprofit organizations

6. Open/flexible business
organizations

What is It

Changing Forms of Business Organizations

Change is constant and organizations continue to undergo various

changes to ensure effectiveness, efficiency, and relevance in the world of
business. Business organizations may be traditional such as: simple,
functional, divisional, profit or nonprofit) or open/flexible in form according
to Robbins and Coulter (2009).

Simple business organizations refer to business organizations with

few departments, centralized authority with a wide span of control, and with
few formal rules and regulations. These are easy to manage because of their
simple form. However, change of form follows as the company expands its
operations.

Functional business organizations pertain to business organizations

that group those with similar or related specialized duties that introduce the
concept of delegation and authority to functional managers like the personnel
manager, sales manager, of financial manager but allow CEOs to retain the
authority for strategic decisions.

Divisional business organizations are business organizations made

up of separate business units that are semi-autonomous or semi-
independent, with a division head responsible for his unit’s performance. In
other words, each division has its own functional organization and its own
general manager; however, the central headquarters management maintains
18
responsibility for the delineation of organizational goals for the individual
divisions.

Profit business organizations are business organizations designed for

the purpose of achieving their organizations’ mission, vision, goals and
objectives and maintain their organizational stability through income
generation and profit-making activities. Immediate revenues or cost factors
account for their success or failure.

Nonprofit organizations are organizations designed for the purpose of

achieving their organization’s mission, vision, goals and objectives, providing
service to clients without expecting monetary gains or financial benefits for
their endeavors. Their success or failure may be measured by the high or low
evaluation scores they obtain.

Open/flexible business organizations are formed to meet today’s

changing work environment.

Business organizations affect and are affected by the environment;

therefore, change becomes inevitable. Other basic forms of business that are
legal in the Philippines are: single proprietorship, partnership, corporation
and cooperative; these will be discussed on the upcoming lessons.

Different organizations have different preferences as to the business

form that is appropriate for their needs and the purpose of their existence.
Managers, therefore, must be creative in finding ways to structure or design
and organize work in their respective firms.

What’s More

Direction: Scan your community and identify five profit business

organizations and nonprofit organizations that are existing in your
community. Write your list in a sheet of paper using the table below.

Profit Organizations Nonprofit Organizations

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

19
 What I have learned

Direction: In a piece of pad paper, write three sentences to complete the

following:

1.
I learned that: 2.
3.

What I can do

Direction: In 5 to 8 sentences, discuss in a sheet paper how learning this

lesson can improve your relationship with the people around you, your
parents, guardians, or family. Ask an elder at home to comment on your
answers.

Assessment

Direction: Identify the following statements below. Write your answer in the
space provided before the number.

1. It consists of those factors that affect a business enterprise from outside

which includes shareholders, competitors, customers, society,
government laws and regulations, policies and technology.
2. It has various internal factors such as value system, mission and
objectives, organization structure, corporate culture, quality of human
resources, labor unions and physical resources and technological
capabilities.
3. The parties likely to be affected by the activities of the organization.
4. They patronize the organization’s products and services.

20
 5. It ensures the organization’s continuous flow of needed and reasonably
priced inputs or materials required for producing their goods and
rendering their services or materials required for producing their good
and rendering their services.
6. These are organizations with similar or related specialized duties that
introduce the concept of delegation and authority to functional
managers.
7. A collection of people working to achieve a common purpose in relation
to their organization’s mission, vision, goals, and objectives, sharing a
common organizational culture.
8. A simple and widely used tool that helps you analyze the Political,
Economic, Socio-Cultural, and Technological changes in your business
environment.
9. It is defined as the process of measuring or comparing one’s own
products, services, and practices with those of the recognized industry
leaders in order to identify areas for improvement.
10. Gender, age, education level, income, number of family members,
geographic origin are examples of ________________ situations.

Additional Activities

Directions: In a sheet of paper, write TRUE if the statement is CORRECT and

FALSE if the statement is INCORRECT.

1. The process of measuring or comparing one’s own products, services,

and practices with those of the recognized industry leaders in order to
identify areas for improvement is called Benchmarking.
2. SWOT analysis is a technique used to determine and define your skills,
weaknesses, opportunities and threats.
3. PEST analysis is a framework or tool used to analyze and monitor the
macro-environmental factors that may have a profound impact on an
organization’s performance.
4. A good indicator of competitive rivalry is the concentration ratio of an
industry.
5. The final element of SWOT is Strength.

21
 Lesson
Phases of Economic
3 Development

What I Know

Direction: Choose the CORRECT word/s from the table below and write your
answer in a sheet of paper.

Five Stages of Economic

Walt Whitman Rostow
Development
Seidel and Moichelle
Taxes Profit at any cost

1. It is a model that can have extremely negative implications down to road

if corners are cut and poor decision are made.
2. According to them, the small and large businesses drive economic
stability and growth by providing valuable services, products and tax
dollars that directly contribute to the health of the community.
3. It is used to maintain the infrastructure of a city, state or country- road,
bridges, tunnel, public transportation, libraries and other public
buildings and services.
4. One of his most prominent ideas was the five stages of economic
development.
5. It is a model on economic development developed by Rostow.

22
 What’s In

As we study and immerse ourselves in “Organization and Management”

in the process, it is necessary to discuss and differentiate the phases of
economic development. The lesson is subjected to discuss – The Phases of
Economic Development and Its Impact to Business Environment.

Economic development generally refers to the sustained, concerted

actions of policymakers and communities that promote the standard of living
and economic health of a specific area. Economic development can also be
referred to as the quantitative and qualitative changes in the economy
(www.abbreviations.com).

What’s New

Direction: In a sheet of paper, match column A to column B.

A B
1. Marked by an increase in productivity in a. Traditional Society
Europe during the 1700s and 1800s
2. The economy is able to reinvest 10-20%
b. Modern Society
of what it creates into more production.
3. A society or economy is able to export c. Precondition for Take-Off
production from other countries
4. Number of middle-class jobs are fewer
d. Take-Off
than the total number of people.

5. These societies relied heavily on e. Age of Mass Consumption

agricultural labor. f. Drive to Maturity

23
 What is It

Rostow's Five Stages of Economic Growth and Development

Walt Whitman Rostow, also known as W.W. Rostow, was an economist

in the Lyndon B. Johnson administration from 1966-1969. He also published
articles and developed models on economic development. One of his most
prominent ideas was the five stages of economic development. In this model,
he suggests that societies go through five stages of economic development as
they develop and grow.

Each of Rostow's five stages builds on the previous stage, becoming

more complex and integrated (refer to Figure 2). Depending on the economic
forces at play, the time it takes to move through each of Rostow’s stages
varies. We’ll begin by discussing each stage in detail, then we’ll talk about
how Rostow’s model has led to other ways of measuring development.

High Mass
Investment in Consumption
manufacturing exceeds 10
percent of national income;
Drive to
development of modern Maturity
social, economic and Development of
political institutions wider
industrial and Exploitation of
commercial comparative
base advantages in
Installation of physical international trade
infrastructure and Take-off
emergence of
social/political elite Development of
a
manufacturing
sector
Transition triggered by Preconditions
external influence, for Take-off
interests or markets Commercial
exploitation of
agricultural and
extractive
industry
Traditional
Society
Limited
technology;
static society

Figure 2. Rostow’s Stages of Economic Growth

24
The Five Stages:

Stage One: Traditional Society

The first stage of Rostow's model and the one in which societies begin,
is the traditional society. The traditional society stage was prevalent prior to
the 1700s, when most societies operated in a relatively stable state and
productivity didn't rise or fall dramatically. Trade existed, such as the spice
route between Asia and Europe, but it was timely, costly, and more of a luxury
than a necessity. Technology was very limited. Humans had access to little
more than handmade tools, transportation, and the printing press. That
meant that producing goods was very human capital intensive, which created
large gaps in income inequality. These societies also relied heavily on
agricultural labor because a tremendous amount of labor was required to
grow enough food to sustain the societies.

Stage Two: Preconditions for Take-Off

There is a period of transition between the traditional society and a

society that takes off, and for a certain time that society is establishing the
preconditions for take-off. These preconditions are mostly marked by an
increase in productivity, such as was found in Europe during the 1700s and
1800s. A number of factors came together to make productivity increase; for
example, population hit a critical mass that made agriculture take up such a
high percentage of labor, which provided opportunities for the establishment
of educational institutions, banks, and a market for luxury goods.

Stage Three: Take-Off

When the preconditions for take-off are met, a society can take off.
Educated individuals start inventing new processes and tools, and access to
capital through financial markets and banks make it possible to produce
goods and services on a larger scale. This requires a different type of skill set
from human laborers, so the economy shifts from agriculture to production.
This increases wages for everyone, taking the economic structure from a
structure of kings and servants to a wealthy class, middle class, and lower
class. A lower class still exists at this stage, either because of social norms
that discriminate against people or simply because the number of middle-
class jobs are fewer than the total number of people.

Stage Four: Drive to Maturity

The next of Rostow's five stages has a general length of time associated
with it, the drive to maturity. According to Rostow, the drive to maturity is
about a 60-year period between the take-off and the final stage, the age of
mass consumption. During this short period, an economy (the collective of all
consumers and producers) is able to reinvest 10-20% of what it creates into
more production. Processes are improved, quality of life is improved, and
technology and new ideas continue to become more central to society, while

25
the cost of producing the needs for survival (like food and shelter) becomes a
smaller part of the economy. More importantly, the middle class grows at the
quickest rate of any economic class. For the modern-day U.S., this stage really
took place from after WWI, from about 1915, until around 1980, when the
technology era began.

Stage Five: High Mass Consumption

After the drive to maturity, an economy reaches maturity and begins

the final stage, the age of mass consumption. Think of the United States,
much of Europe, and some of Asia today, and you can see this stage of
development at work. The quantity and quality of products and services
increase. A society or economy in this stage is able to export production,
bringing in money from other countries that helps the economy grow larger
beyond actual consumption.

According to Seidel, Moichelle (2019), small and large businesses drive

economic stability and growth by providing valuable services, products and
tax dollars that directly contribute to the health of the community. They also
provide jobs, strengthening the economic health of each community where a
business is based. Even if a business is headquartered elsewhere, employing
people at each local business contributes to the success of that region, as with
the wages they earn, people buy property, work, shop and otherwise invest in
where they live.

Taxes are used, among other things, to maintain the infrastructure of

a city, state or country – roads, bridges, tunnels, public transportation,
libraries and other public buildings and services, including police officers and
fire-fighters, all benefit from tax money collected from individuals and
businesses. These services are essential to the good health and positive
qualities of local and national citizens. In a capitalist society like that of the
United States, business growth and increased sales means collecting more
taxes, which can directly translate to better maintenance and offerings of local
infrastructure and services that benefit the community.

Note:

• The success of business as a whole directly affects the world’s economy.

At its core, businesses are designed to serve a particular need that
people have, and to provide trusted goods and services related to that
need. When consumer confidence or trust dips in business, it isn’t just
sales that are negatively affected. This mistrust has a ripple effect and
can result in a decline in a country’s general economy, weakening the
strength of its currency and buying power.
• As businesses focus more and more on providing value to shareholders
instead of directly to consumers, their interests and tactics may not
align with the best interests of the consumer. A “profit at any cost”
model can have extremely negative implications down the road if
corners are cut and poor decisions are made in the name of solely

26
 working to increase shareholder profit or are based purely on greed. No
matter how efficiently you make a product or how special the service is
that you deliver, if you lose consumer confidence as a result of your
business decisions, consumers won’t support you by purchasing your
goods and services, and then nobody benefits.
• Business is vital to a country’s economy. Success of businesses can
drive the success of an entire country, including through contributions
to the gross domestic product, or GDP, of a nation, which affects their
world standing. If a country supports businesses with goods and
services that are in demand, everyone in the country benefits. From job
creation that results in money being put back into the community to
taxes that help the government smoothly run and provide maintenance
and improvements to the country’s infrastructure, or in other ways that
are helpful for its citizens, there are dozens of ways business success
translates to economic development.
• In addition to providing products and services that citizens and
residents want, economic health can allow for exporting goods and
services to others who want those items, contribute to offering avenues
for education and training for citizens, create healthy business
competition and provide additional methods of strengthening economic
development for the country as a whole.
• The role of business in relation to the economy is a pivotal one. Small
businesses boost economic revenue on a smaller scale, but one that’s
of vital importance, directly and positively affecting the health, quality
of life and purchasing power of residents in the local community. But
small businesses don’t always stay small. Many nationally known
brands today got their start as very small businesses run out of
someone’s home or garage. Start-ups can become multinational
companies that can have a huge and positive impact on the global
economy, benefiting all of the company’s employees and the
communities in which those businesses thrive. Apple, Whole Foods,
Amazon and Starbucks were all ideas started on a small scale that have
had incredible, explosive positive impacts not just on the U.S. economy,
but on a global scale.

What’s More

Direction: Enumerate the Rostow’s Stages of Growth and give your idea
about its influence to the business environment. Give 2 influences in each
stage. Write your answer in a sheet of paper.

Influence to Business
Rostow’s Stages of Growth
Environment

27
1.
2.
3.
4.
5.

What I have learned

Direction: In a piece of pad paper, using the Graphic Organizer, give your
own idea about the five stage of economic development.

Five Stages of
Economic
Development

28
 What I can do

Direction: Give the different phases of economic development. How can it

change your point of view as a student particularly in the field of business?
Explain in 1 to 2 sentences only. Write your answer in a sheet of paper.

Phases of Economic Development Point of view

1.
2.
3.
4.
5.

Assessment

Multiple Choice: Choose the letter of the best answer. Write your answer in
a sheet of paper.

1. In which stage of economy reaches maturity and begins the final stage?
a. Take-Off
b. Traditional Society
c. Age of Mass Consumption
d. None of the above

2. Who developed and published articles of the Five Stage of Economic

Development?
a. Walt Whitman Rostow
b. Seidel Rostow
c. Moichelle Rostow
d. Seidel and Moichelle Rostow

3. Which stage had limited technology, and humans had access to little more
than handmade tools, transportation, and the printing press?
a. Take-Off
b. Traditional Society
c. Age of Mass Consumption
d. None of the above

29
4. Which stage is about the population hit a critical mass that made
agriculture take up, such as a high percentage of labor, which provides
opportunities for establishing an educational institution, banks, and a
market for luxury goods?
a. Dive to Maturity
b. Modern Society
c. Take-Off
d. Preconditions for Take-Off

5. Which stage is used to educate the individuals to start inventing new

processes and tools, and access to capital through financial markets and
bank make it possible to produce goods and services on a larger scale?
a. Dive to Maturity
b. Modern Society
c. Take-Off
d. Preconditions for Take-Off

6. Which of the following is used to maintain the infrastructure of a city, state

or country-roads, bridges, tunnels, public transportation, libraries and
other public building and services, including police officers and fire-
fighters?
a. Taxes
b. Income
c. Savings
d. None of the Above

7. Which of the following is a CORRECT arrangement of the Five Stages of

Economic Development?
a. Precondition for Take-off, Take-Off, Traditional Society, Age of Mass
Consumption, and Drive to Maturity
b. Traditional Society, Preconditions for Take-off, Take-off, Drive to
Maturity, and Age of Mass Consumption,
c. Traditional Society, Preconditions for Take-off, Age of Mass
Consumption, Drive to Maturity, and Take-Off
d. Age of Mass Consumption, Preconditions for Take-off, Traditional
Society, and

8. Which stage really took place after WWI from about 1915 until around
1980, when the technology era began?
a. Age of Mass Consumption
b. Drive to Maturity
c. Take-off
d. Traditional Society

9. Which of the following is NOT one of Rostow’s five stage of economic

development?
a. Age of Mass Consumption
b. Drive to Maturity
c. Take-off

30
 d. Technological Society

10. Which of the five stages of economic development takes place over
approximately 60 years?
a. Age of Mass Consumption
b. Drive to Maturity
c. Take-off
d. Traditional Society

Additional Activities

Directions: In a sheet of paper, write TRUE if the statement is CORRECT and

FALSE if the statement is INCORRECT.

1. Preconditions for take-off are the second stage of economic

development, whereas productivity increased found in Europe during
the 1700s and 1800s.
2. In the age of mass consumption, a society or economy is able to export
production, bringing in money from other countries that helps the
economy grow larger beyond actual consumption.
3. Success of businesses can drive the success of an entire country,
including through contributions to the gross domestic product, or GDP,
of a nation, which affects their world standing.
4. Traditional society stage was prevalent prior to 1900s, when most
societies operated in a relatively stable state and productivity didn’t rise
of fall dramatically.
5. Drive to maturity is about 80-year period between the take-off and the
final stage.

31
 Answer Key

LESSON 1
What I Know

This vary. A point will be given for every correct answer.

What’s New

Answers may vary. It will be checked but not recorded.

What’s More

This vary. A point will be given for every correct answer.

What I have Learned

Answers may vary. It will be checked but not recorded.

What I Can Do

Answers may vary. It will be checked but not recorded.

Assessment

This vary. A point will be given for every correct answer.

Additional Activities

This vary. A point will be given for every correct answer.

LESSON 2
What I Know

This vary. A point will be given for every correct answer.

What’s New

Answers may vary. It will be checked but not recorded.

What’s More

This vary. A point will be given for every correct answer.

What I have Learned

Answers may vary. It will be checked but not recorded.

What I Can Do

Answers may vary. It will be checked but not recorded.

32
 Assessment

1. External environment
2. Internal environment
3. Stakeholders.
4. Customers
5. Suppliers
6. Functional business organization
7. Business organizations
8. PEST Analysis
9. Benchmarking
10. Demographic situations

Additional Activities

1. True
2. False
3. True
4. True
5. False

LESSON 3
What I Know

1. Profit at any cost

2. Seidel and Moichelle
3. Taxes
4. Walt Whitman Rostow
5. Five stages of Economic Development

What’s New

1. C
2. F
3. E
4. D
5. A

What’s More

This vary. A point will be given for every correct answer.

What I have Learned

Answers may vary. It will be checked but not recorded.

What I Can Do

This vary. A point will be given for every correct answer.

Assessment

1. C
2. A

33
 3. B
4. D
5. C
6. A
7. B
8. B
9. D
10. C

Additional Activities

1. True
2. True
3. True
4. False
5. False

34
References:
Books

1. Cabrera, Helena M. F., Altarejos, A. & Benjamin, R. (2016).

Organization and Management. Quezon City, Philippines: Vibal Group,
Inc.

Other Sources:
1. K to 12 Senior High School ABM Specialized Subject – Organization and
Management December 2013
2. K to 12 Curriculum Implementation and Learning Management Matrix
3. Goneda, M. & Whiteside, J. (2020). Module 2 Organization and
Management. Alternative Delivery Mode
4. Goneda, M. & Whiteside, J., Tallud, F. (2020). Module 3 Organization
and Management. Alternative Delivery Mode
5. Goneda, M. & Whiteside, J., Tallud, F. (2020). Module 4 Organization
and Management. Alternative Delivery Mode
6. Darr, K. (2013). Introduction to Management and Leadership Concepts,
Principles and Practices, Jones and Bartlett Learning,
https://www.google.com.et.
7. Mintzberg, H. (1989). Mintzberg on Management, Reprinted by Free
Press, Division of Simon & Schuster, Inc.
8. Robbins, S. et.al. (2012). Management — 11th ed. Pearson. Retrieved
from: www.pearsonhighered.com

Internet

1. Jacobs, J. (2020). International Development Patterns, Strategies,

Theories & Explanations. Retrieved from: https://www.e-
education.psu.edu/geog128/node/719.
2. Mind Tools (2020). SWOT Analysis. Retrieved from:
https://www.mindtools.com/pages/article/newTMC_05.htm.
3. Mind Tools (2020). PEST Analysis. Retrieved from:
https://www.mindtools.com/pages/article/newTMC_09.htm.

35
For inquiries or feedback, please write or call:

Schools Division of Ilocos Norte – Curriculum Implementation Division

Learning Resource Management Section (SDOIN-CID LRMS)

Office Address: Brgy. 7B, Giron Street, Laoag City, Ilocos Norte
Telefax: (077) 771-0960
Telephone No.: (077) 770-5963, (077) 600-2605
E-mail Address: ilocos.norte@deped.gov.ph

36