Republic of the Philippines

Department of Education
Regional Office IX, Zamboanga Peninsula

11 Zest for Progress

Z Peal of artnership

Applied Economics
Second Quarter- Module 12:
Viability and Impacts of Business on the
Community

Name of Learner: ___________________________

Grade & Section: ___________________________
Name of School: ___________________________
 Development Team of the Module
Writer/s: Ma. Anavie E. Adrias
Editor: Florence S. Gallemit
Evaluators: Perga A. Cadiente
Florence S. Gallemit
Dr. Jephone Yorong
Illustrator: Name of illustrator/Photographer
Layout Artist: Peter Alavanza, Name of layout artist
Management Team: Dr. Isabelita M. Borres, CESO III
Dr. Eugenio B. Penales
Sonia D. Gonzales
Dr. Ella Grace M. Tagupa
Dr. Jephone P. Yorong
Florence S. Gallemit
 Target
Good day students! Welcome to our new lesson in Applied Economics.
This module is prepared for you to help you understand economics as an applied
science and its utility in addressing economic problem of the country.
After going through this module, you are expected to:
1. Evaluate the viability and impacts of business on the community.

Review
Last topic, we discussed about the effects of the various socio-economic factors
affecting business and industry. Now, let us check what you have learned in this
previous lesson by answering a short quiz below.
Direction: Read and understand the sentence carefully. Write the word True if the
statement is correct and False if the statement is incorrect. Write the letter of
the correct answer in your activity notebook in Applied Economics.
____________ 1. Small businesses are just as unique and individual as their
owners, and cover a variety of industries.
____________ 2. Small businesses also allow people the opportunity to achieve
financial independence, create employment opportunities and encourage
innovation.
____________ 3. Small businesses’ impact on community can be ignored.
____________ 4. Not only do local businesses help members of the community
with more job opportunities, small businesses support other small businesses
too.
____________ 5. Small business owners participate in local organizations by
sponsoring teams, participating in community events and donating to local non-
profits.
____________ 6. Viability is tricky to define and create, but there are some key
factors to making a business viable.
____________ 7. Having a unique selling proposition (usually called a USP) is a
first critical factor in having a viable business.
____________ 8. Stable customer base in not having a unique product and service.
____________ 9. Even if your product is unique, and you know who you are selling
to, you must always consider the competition.
____________10. In business, getting to cash stability isn't going to come
overnight.
____________11. Having a viable business means always being able to know
where your business is financially.
____________12. A business is solvent when it has enough assets to cover its
liabilities.
____________13. A business should have a current ratio of 2:2 to be solvent and
cover liabilities, which means that it has twice as many current assets as it has
current liabilities.
____________14. Liquidity is more of a short-term measure.
____________15. If your business needs money, you may have to sell assets.
 Discover

Lesson Viability and Impacts of Business on the

12 Community

How Important are Small Businesses to Local Economies?

The importance of small business to local communities is emotionally rooted in

buying and selling with friends and neighbors. The importance of small firms
in rural areas and big cities also is seen in the economic benefits of shopping
locally. In some towns and villages, a small business is the only type that can
survive while serving a reduced population. In a big city, small businesses often
offer a more diverse inventory or specialize in providing unique or personalized
customer experiences.

Employing Local Workers

Small businesses contribute to local economies by bringing growth and

innovation to the community in which the business is established. Small
businesses also help stimulate economic growth by providing employment
opportunities to people who may not be employable by larger corporations.
Small businesses tend to attract talent who invent new products or implement
new solutions for existing ideas. Larger businesses also often benefit from small
businesses within the same local community, as many large corporations
depend on small businesses for the completion of various business functions
through outsourcing.

• The Advantages and Disadvantages of Hiring Locals over Expats

We are all aware that we live in a global community and that is a reality. For
many HR professionals, it is becoming common to not only focus on a local
workforce, but also a global one.

Many HR network contributors have also shared their views about hiring
international co-workers to help grow business and train new employees in a
foreign country. In this article, let’s look at the other side of the coin: hiring locals
over expats.

According to the Financial Times an employee who is sent to live abroad for a set
time period is called an expatriate employee. An expatriate is expected to relocate
abroad, with or without family, for as short a period as six months to a year;
typical expat assignments, usually, range from two to five years.

Advantages of Hiring Locals

1. Knowledge of the local culture and business practices

 Local candidates understand the culture in which they live. That means
they can navigate potential problems with greater ease. That usually
translates to higher productivity and a decrease in financial loss, if any.

2. Locals are fluent in the language and can manage workers using local
resources

Often, HR professionals and those doing the hiring get stuck on whether
the employee speaks the language which is native to the company. For
example, an American company may favor an English-speaking expat over
a local… even if the local candidate is ahead of the other candidate. Don’t
let the language keep you from hiring the best person for the job.

3. Cost much less

Hiring an expat can cost up to two-three times more than hiring a local
candidate. Costs include everything from the expats normal salary to
relocation costs, and language and cultural training. Those costs by the
way aren’t just for the expat, but also the expat’s family.

4. Encourages Diversity

Hiring at locals means diversifying the workforce. It also gives a company

a better chance growing business abroad and in different ways.

Disadvantages of Hiring Locals

1. People with the necessary job skills could be limited

Depending upon the product, your choice of candidates may be limited.

That doesn’t mean a company can’t hire local and then train the new
workforce. It just means more money and time spent bringing the local
workforce up to the expected skill level.

2. Locals may not understand the companies values and local practices

Depending upon where a particular company was founded, it’s fair to say
it derives some of its values and common practices from its country of
origin. Transplanting those to another country and another culture can be
problematic.

Hiring local over expatriates or vice versa is a big decision. Here are some
things to consider.

Make sure to focus decisions on the local culture. Is the foreign culture
similar enough to the one where the company is already located? Are there
ways to learn from the foreign culture and work some of its best qualities
into the business model?

Think of the big picture. If the company is opening an office branch in a

foreign country, what are the future plans? Will the company continue to
grow into other countries? If so, try to plan for that eventuality. Construct
a global plan and pick places that make sense based on where the company
is already located.
Economic Impact Analysis

An economic impact analysis (EIA) examines the effect of an event on

the economy in a specified area, ranging from a single neighborhood to the entire
globe. It usually measures changes in business revenue, business profits,
personal wages, and/or jobs. The economic event analyzed can include
implementation of a new policy or project, or may simply be the presence of a
business or organization. An economic impact analysis is commonly conducted
when there is public concern about the potential impacts of a proposed project
or policy.

An economic impact analysis attempts to measure or estimate the change in

economic activity in a specified region, caused by a specific business,
organization, policy, program, project, activity, or other economic event. The
study region can be a neighborhood, town, city, county, statistical area, state,
country, continent or the entire globe.

Types of Economic Impacts

Economic impact analyses often estimate multiple types of impacts. An output
impact is the total increase in business sales revenue. In turn, local businesses
use some of this new revenue to pay for goods and services outside of the study
region, so the output impact is not synonymous with local business profits. A
more conservative measure of economic activity is the value added impact, which
estimates the increase in the study region’s gross regional product. The gross
regional product (GRP) is very similar to the nation’s gross domestic
product (GDP), and represents the total size of the local economy. This impact
estimates the increase in local employee wages plus local business profits (not
total revenue, like the output impact). However, the value added impact may
overstate local profits when they are transferred overseas (such as in the form of
dividends or investments in foreign facilities).[2]
An even more conservative measure is the labour income impact, which
represents the increase in total money paid to local employees in the form of
salaries and wages. The increases in income may come in the form of raises
and/or increased hours for existing employees, or new jobs for the unemployed.
This is a measure of the economic impact on just personal incomes, not business
revenues or profits. A similar measure is the employment impact, which
measures the increase in the number of total employees in the local region.
Instead of measuring the economic impact in terms of money, this measure
presents the impact on the number of jobs in the region.
Another measure of economic impact is the property value impact, measuring the
increase in total property values, and is a reflection of generated income and
wealth, both personal and business.

Sources of Economic Impacts

In addition to the types of impacts, economic impact analyses often estimate the
sources of the impacts. Each impact can be decomposed into different
components, depending on the effect that caused the impact. Direct effects are
the results of the money initially spent in the study region by the business or
organization being studied. This includes money spent to pay for salaries,
supplies, raw materials, and operating expenses.
The direct effects from the initial spending creates additional activity in the local
economy. Indirect effects are the results of business-to-business transactions
indirectly caused by the direct effects. Businesses initially benefiting from the
direct effects will subsequently increase spending at other local businesses. The
indirect effect is a measure of this increase in business-to-business activity (not
including the initial round of spending, which is included in the direct effects).
Induced effects are the results of increased personal income caused by the direct
and indirect effects. Businesses experiencing increased revenue from the direct
and indirect effects will subsequently increase payroll expenditures (by hiring
more employees, increasing payroll hours, raising salaries, etc.). Households
will, in turn, increase spending at local businesses. The induced effect is a
measure of this increase in household-to-business activity. Finally, dynamic
effects are caused by geographic shifts over time in populations and businesses.

Business and Government Relations: How Do Government and Business

Interact?

Since businesses are strongly affected by public policies, it is in their best

interest to stay informed about public policies and to try to influence
governmental decision making and public policy. There are different general
ways that businesses view and act on their relationship with government. One
perspective is for businesses to consider business and government on “two sides”
and in opposition to each other. Some have argued that this was the prevailing
dominant mainstream business view in the aftermath of the Great Recession at
the end of the first decade of the twenty-first century. It has been characterized
as the “antiregulatory” or “limited government” view, and it has been associated
with those who believe that free markets with a minimal government role is best
for the workings of the economy. This perspective most often focuses businesses’
interactions with government on efforts to minimize government and reduce the
costs and burdens on private business and the general economy associated with
government taxes, regulations, and policies.

Another business perspective on government is that government should favor

businesses and incentivize business performance and investment because
businesses are the main source of jobs, innovation, and societal economic well-
being, and therefore government should support businesses with grants, tax
credits, and subsidies.

A third general view of businesses and government relations is with business in

partnership with government in addressing societal matters. This is in contrast
to government being the regulator to ensure businesses act in a socially
responsible manner.

These views are not mutually exclusive. For example, the same solar business
can use some of its interaction with government to try to maximize the benefits,
such as favorable tax credits, it receives from government and at the same time
work in partnership with government to achieve a social purpose, such as
reducing carbon emissions, and then try to minimize its tax obligations

Sustainable businesses focus on their responsibility to the environment and

societal impact and also tend to recognize that government policies and
programs are often necessary to help them achieve their objectives and therefore
are inclined to try to work with and even partner with government to achieve
desired ends. It is always important for sustainable businesses to understand
how their efforts to achieve profits and to serve a social purpose are both strongly
influenced by government policies, and it is always important for sustainable
businesses to manage their relationships with government (local, state, national,
and international) effectively.
Viability of Business Enterprise

The viability of a business is measured by its long-term survival and its ability
to sustain profits over a period of time. A business is able to survive when
it's viable because it continues to make a profit year after year. The longer
a company can stay profitable, the better it's viability.

The Roles of Business Organization in the Economic Development

The role of business in social and economic development cannot be overstated.

Business plays a vital role in the economic development and wealth of a
country. Success in business translates to the economic well-being of a
company and its residents through job creation and offering improved quality
of life for the country’s citizens. Here, we delve into several aspects that relate
to the importance of business in today’s economic environment and society.

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.
Why Business Matters

Business is directly related to the economic health and well-being of the citizens
of the city, region, state or country in which those businesses are active.
Profitable businesses drive economic health, which translates to a better
quality of life for the citizens.

The economic health of a region and its ability to sustain businesses –

particularly small businesses – can offer tremendous opportunities for diversity
in business ownership that might not otherwise exist. Communities and states
that foster new business development and assist with business creation derive
benefits for their citizens and residents through the products and services
businesses provide, and allow for opportunities for women and/or minorities
to start and run businesses.

Corporate Responsibility and Economic Health

As businesses and corporations grow, their role in corporate responsibility and

social development can become as important as that of their contributions to
economic health. It’s thought that a business shouldn’t just serve as an
economic machine, but also have stewardship in issues that affect society as a
whole, such as environmental concerns, human and worker rights, support of
local and national charities, schools, and a variety of non-profit organizations
that offer benefits to the community and make the quality of life higher for its
members.

As a business grows and develops, these matters should be evaluated as the

company may eventually be viewed not just as a way to make money for
employees, owners and the community, but as an important part of the
community or country, whose profits in part serve the greater good through
environmentally friendly business practices or supporting groups that help
strengthen communities like charities.

Role of Business in Development

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. Startups 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.

Analyze
Read the information very well then comprehend what you have read. Choose
the letter of the best answer among the given choices.

1. What is the difference between the term “customer” and the term
“consumer”?
a. There is no difference.
b. The term consumer refers only to people who buy food and drink
products.
c. Customers buy products but it is consumers who use them.
d. Customers make organisational rather than personal purchases.
2. In what ways does an organization’s strategic orientation affect the way it
operates?
a. It guides the organisation’s marketing activities and strategy.
b. It dictates appropriate sources of funding.
c. It assists the government in classifying the organisation.
d. It affects shareholders’ decisions about how the organisation should be
run.
3. Why is marketing important in a demand-driven economy?
a. Consumers have lots of choice.
b. There is competition for customers.
c. Supply often exceeds demand.
d. All of the above.
4. The global lovability index has been released by _____________.
a. World Health Organization (WHO)
b. International Monetary Fund (IMF)
c. World Economic Forum (WEF)
d. Economist Intelligence Unit (EIU)
5. Which of the following tax is not included in goods and services tax (GST)?
a. Excise duty
b. Custom duty
c. Value Added Tax
d. Service Tax
6. Despite being a high saving economy, capital formation may not result in
significant increase in output due to ___________.
a. Weak administrative machinery
b. Illiteracy
c. High population density
 d. High capital-output ratio
7. Increase is absolute and per capital real GNP does not connote a higher
level of economic development if ____________.
a. Industrial output fails to keep face with agricultural output.
b. Agricultural output fails to keep pace with industrial output.
c. Poverty and unemployment increase.
d. Imports grow faster than exports.
8. If a commodity is provided free to the public by the government, then
________.
a. The opportunity cost is zero
b. The opportunity cost id ignored
c. The opportunity cost is transferred from the consumers of the product
to the tax-paying public.
d. The opportunity cost is transferred from the consumers of the product
to the government.
9. The economic survey is complied by ___________.
a. Office of the economic advisor
b. Central Statistical Office (CSO)
c. National Sample Survey organization (NSSO)
d. Department of economic affairs
10. A “closed economy” is an economy in which ____________.
a. The money supply is fully controlled
b. Deficit financing takes place
c. Only exports take place
d. Neither exports nor imports take place

Enrichment
Read the Information very well then comprehend what you have read.
Activity 1:
Review some of the commercials on television or print media and write a letter
to the company whose product or service has adverse effects on the youth and
your community.

________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
Activity 2:

List some of the advantages and disadvantages of hiring local employees in a

company.

Advantages Disadvantages
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
6. 6.
7. 7.
8. 8.
9. 9.
10. 10.

Activity
Read again the statement below and do the activity.

Activity 1

Enumerate instances when the environment is affected by the production and

distributive activities of a firm. What are the positive contributions of the firm
in paying the correct amount of taxes due to the government?

Remember

Directions: Answer the given question below. Write your answer on a separate
sheet of paper.

1. What is the significance of considering the socioeconomic impact of a firm

in evaluating its business viability?

Evaluation
Direction: TRUE or FALSE. Write the word true if the statement is correct and
false if the statement is incorrect.

__________ 1. Advertising and marketing are the same thing.

__________ 2. A company which invests most of its budget into sales training and
support of their sales teams, is likely to have a market orientation.
__________3.Transactional marketing is more concerned with making the
immediate sale than with building relationships.
__________ 4. Economic impact analyses often estimate multiple types of impacts.
__________ 5. Hiring at locals means diversifying the workforce.
__________ 6. 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.
__________ 7. General view of businesses and government relations is with
business in partnership with government in addressing societal matters.
__________ 8. The role of business in social and economic development can be
overstated.
__________ 9. In a capitalist society, 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.
__________ 10. Business is directly related to the economic health and well-
being of the citizens of the city, region, state or country in which those
businesses are active.

Additional Work
Explain why sourcing of raw materials from abroad have limited impact on the
domestic economy?

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
 Pages 129 - 156
Tereso S. Tullao Jr., PhD
Applied Economics For A Progressive Philippine
Pages 89 – 100
First Edition by Rosemary P. Dinio, PhD and George A. Villasis
Applied Economics
References:
Review
1. True
Evaluation Analyze 2. True
3. False
1. False 1. C 4. True
2. False 2. A 5. True
3. False 3. D 6. True
4. True 4. D 7. True
5. True 5. B 8. False
6. True 6. D 9. True
7. True 7. C 10.True
8. False 8. C 11. True
9. True 9. D 12. True
10.True 10.D 13. False
14. True
15. True
Answers Key
 Region IX: Zamboanga Peninsula Hymn – Our Eden Land

Here the trees and flowers bloom
Here the breezes gently Blow,
Here the birds sing Merrily,
The liberty forever Stays,
Here the Badjaos roam the seas
Here the Samals live in peace
Here the Tausogs thrive so free
With the Yakans in unity
Gallant men And Ladies fair
Linger with love and care
Golden beams of sunrise and sunset
Are visions you’ll never forget
Oh! That’s Region IX
Hardworking people Abound,
Every valleys and Dale
Zamboangueños, Tagalogs, Bicolanos,
Cebuanos, Ilocanos, Subanons, Boholanos,
Ilongos,
All of them are proud and true
Region IX our Eden Land
Region IX
Our..
Eden...
Land...

The Footprints Prayer Trees by Joyce Kilmer

One night I had a dream. I dreamed I think that I shall never see
that I was walking along the beach A poem lovely as a tree.
with the LORD.
A tree whose hungry mouth is prest
In the beach, there were two (2) sets Against the earth’s sweet flowing
of footprints – one belong to me and breast;
the other to the LORD.
A tree that looks at God all day,
Then, later, after a long walk, I And lifts her leafy arms to pray;
noticed only one set of footprints.
A tree that may in Summer wear
“And I ask the LORD. Why? Why?
A nest of robins in her hair;
Why did you leave me when I am sad
and helpless?”
Upon whose bosom snow has lain;
And the LORD replied “My son, My Who intimately lives with rain.
son, I have never left you. There was
only one (1) set of footprints in the Poems are made by fools like me,
sand, because it was then that I But only God can make a tree.
CARRIED YOU!