11

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Department of Education
NATIONAL CAPITAL REGION
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UNIFIED SUPPLEMENTARY LEARNING MATERIALS

(USLeM)

APPLIED ECONOMICS
Quarter 4 – Week 7

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 UNIFIED SUPPLEMENTARY LEARNING MATERIALS
Grade 11 Applied Economics

Principles, Tools and Techniques Leading to the Identification of

Business Opportunities

EXPECTATIONS
This Supplementary Learning Material will help you to analyze different principles,
tools, and techniques in creating a business.

PRETEST

Directions: Write the letter of the correct answer on a sheet of paper.

1. Which of the following is the simplest form of business ownership, a business owned
and run by someone for their own benefit?
A. Corporation C. Cooperative
B. Sole Proprietorship D. Partnership

2. Which of the following is a business form created automatically when two or more
persons engage in a business enterprise for profit?
A. Sole Proprietorship C. Partnership
B. Cooperative D. Corporation

3. Which of the following explores these factors at a business product-line or

product level?
A. SWOT analysis C. Business Organization
B. Porter's Five Forces D. Mintzberg’s 5Ps of Strategy

4. Which of the following looks at "big picture" factors that might influence a
decision, a market, or a potential new business?
A. Mintzberg’s 5Ps of Strategy C. Porter's Five Forces
B. SWOT analysis D. Sole Proprietorship

5. Which of the following allows an organization to implement a more effective strategy

that aims at the future, concerns the long term and involves different facets of an
organization?
A. SWOT analysis C. Partnership
B. Porter's Five Forces D. Mintzberg’s 5Ps of Strategy

LOOKING BACK

Directions: Read carefully the following questions and write your answer on the
line provided.
_____ 1. What is this labor force that refers to the portion of the population?
_____ 2. What is the official count of the population of a certain local administrative unit
in the Philippines?
_____ 3. What is this that protects the workers through the imposition of
minimum wages.
_____ 4. Why do people need to pay taxes to the government?
_____ 5. What is this term that means “current” economic issues affecting the
Filipino businesses.

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BRIEF INTRODUCTION

Business organization - an entity formed for the purpose of carrying on

commercial enterprise.
1. Sole Proprietorship - owned by one person, usually the individual who has day-to-day
responsibility for running the business.
2. Partnership - two or more people share ownership of a single business. Two types of
partnership:
a. General Partnership - is one in which all of the partners have the ability to actively
manage or control the business.
b. Limited partnership - is one who does not have total responsibility for the debts of
the partnership.
3. Corporation - The shareholders elect a board of directors to oversee the major policies
and decisions.
4. Cooperative - is owned by the same people and it is designed to serve.

Tools in Evaluating a Business

1. SWOT Analysis (Albert Humphrey) is an analytical framework that can help a company
meet its challenges and identify new markets. It can help identify the business’s risks
and rewards.
• Strengths (S) and weaknesses (W) refer to internal factors, which are the
resources and experiences readily available to you. These are some commonly
considered internal factors:
a. Financial resources (funding, sources of income and investment opportunities)
b. Physical resources (location, facilities and equipment)
c. Human resources (employees, volunteers and target audiences)
d. Access to natural resources, trademarks, patents and copyrights
e. Current processes (employee programs, department hierarchies and software
systems)

• External forces influence and affect every company, organization and individual.
Whether these factors are connected directly or indirectly to an opportunity (O) or
threat (T), it is important to note and document each one.

External factors are typically things you or your company do not control, such as the
following:
a. Market trends (new products, technology advancements and shifts in audience
needs)
b. Economic trends (local, national and international financial trends)
c. Funding (donations, legislature and other sources)
d. Demographics
e. Relationships with suppliers and partners
f. Political, environmental and economic regulations
Examples of SWOT analysis include competitors, prices of raw materials,
and customer shopping trends.

2. Porter's Five Forces – (Michael E. Porter) is a framework for industry analysis that is
used as an input to a strategic plan. The five competitive forces that influence
profitability in any industry are:

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Grade 11 Applied Economics

a. Supplier Power- drive up the prices of your inputs.

b. Buyer Power - drive down your prices.
c. Competitive Rivalry - strength of competition in the industry.
d. Threat of Substitution - the extent to which different products and services can be
used in place of your own.
e. Threat of New Entry - the ease with which new competitors can enter the market if
they see that you are making good profits.

By thinking about how each force affects you, and by identifying the strength and
direction of each force, you can quickly assess the strength of your position and your
ability to make a sustained profit in the industry.
The Porter’s five forces are intense, example is an airline industry, almost no
company in the industry earns attractive returns on investments. If the forces are mild
examples in the soft drink industry, there is room for higher returns.

3. Mintzberg’s 5Ps of Strategy – (Henry Mintzberg in 1987). The 5Ps are – Plan, Ploy,
Pattern, Position and Perspective. By understanding each P, the organization and
taking advantage of its full capabilities and strengths.
a. Strategy as a Plan – is developed consciously and purposely for a future situation.
Example: In Airline A industry, Paolo plans to fly on short routes with XYZ aircraft to
tap the unexplored market routes to tier 3 cities.
b. Strategy as a Ploy – getting the better of competitors, by plotting to disrupt, dissuade,
discourage, or otherwise influence them, can be part of a strategy. Example:
Phoebe’s ploy to increase free offer beyond December 2022 to outwit competition
(took competition by surprise)
c. Strategy as a Pattern – we learn to appreciate that what was successful in the past
can lead to success in the future.
Example: Cuevas Airlines also had some inconsistent decision making, first
operating as a low-cost airline and later exiting the low-cost carrier business.
d. Strategy as a Position – is about how the organization relates to its competitive
environment, and what it can do to make its products unique in the marketplace.
Example: Paolo’s positioning as a low-cost no-frills airline (Competition: Cuevas
Airlines, Torres Airways, Lazo Airways)
e. Strategy as a Perspective – emphasizes the substantial influence that organizational
culture and collective thinking can have on strategic decisionmaking within a
company.
Example: Paul Austria’s perspective of looking for successful aviation personnel to
interview and ask some tips on how to deal with the aviation business industry
before he took over as CEO.

ACTIVITIES

Activity 7.1 – Think wise!

Directions: Identify the Mintzberg’s 5Ps of Strategy. Choose the right answer from the
box. Write your answer on a sheet of paper.

1. It is specific tactics to try and outsmart or disrupt what your competitors are doing.

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Grade 11 Applied Economics

2. This is how you decide to place yourself in the marketplace.

3. This is the default, automatic approach that we adopt – brainstorming options and
scheduling how to deliver them.
4. It looks internally and shapes the personality and culture of the organization.
5. It is about looking at what kind of behavior designs have worked for you in the past.

Activity 7.2 – Analyzing the given situations!

Directions: Identify the Porter's Five Forces according to the following conditions and
examine the following conditions of stock analysis firm Trefis, look at how Romcel’s
Garments fits into the athletic footwear and +apparel industry. Choose and write the letter
of the correct answer on the line provided.

A. Threat of New Entrants

B. Bargaining power of suppliers
C. Competitive rivalry
D. Threat of substitute products
E. Bargaining power of customers

_____ 1. Company A and Company B, which have considerably larger resources at their
disposal, are making a play within the performance apparel market to gain market share
in this up-and-coming product category. Romcel’s Garments does not hold any fabric or
process patents. Hence, its product portfolio could be copied in the future.

_____ 2. Large capital costs are required for branding, advertising and creating product
demand, which limits the entry of newer players in the sports apparel market. However,
existing companies in the sports apparel industry could enter the performance apparel
market in the future.

_____ 3. The demand for performance apparel, sports footwear and accessories is
expected to continue to grow. Therefore, this force does not threaten Romcel’s Garments
in the foreseeable future.

_____ 4. A diverse supplier base limits supplier bargaining power. Romcel’s Garments
products are produced by dozens of manufacturers based in multiple countries. This
provides an advantage to Romcel’s Garments by diminishing suppliers' leverage.

_____ 5. Romcel’s Garments customers include wholesale customers and end-user

customers. Wholesale customers, like Dick's Sporting Goods, hold a certain degree of
bargaining leverage, as they could substitute Romcel’s Garments products with those of
Romcel’s Garments competitors to gain higher margins. The bargaining power of enduser
customers is lower as Romcel’s Garments enjoys strong brand recognition.

Directions: Identify what kind of form of business organization is being stated in each
number. Write your answer on another sheet of paper.

1. Romeo is running a photocopying center on his own. He owns all the assets of the
business and the profits generated by it. He also assumes complete responsibility
for any of its liabilities or debts.

2. Christian and Christopher own an electrical shop. They both agreed to divide the
profits of the business among themselves.

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Grade 11 Applied Economics

3. This is an entity organized by people with similar needs and wherein membership
is voluntary.

4. The owners (stockholders) enjoy limited liability but have limited involvement in the
company's operations.

5. It is a business owned by only one person. It is easy to set up and is the least
costly among all forms of ownership.

REMEMBER

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 UNIFIED SUPPLEMENTARY LEARNING MATERIALS
Grade 11 Applied Economics

The following must be considered in analyzing the industry:

1. Geographic area
2. Size and outlook of the industry
3. Description of the product
4. Identification of buyers (target market)
5. Regulatory environment
6. Knowing the competition
7. Factors that will affect the growth of the business

CHECKING YOUR UNDERSTANDING

Directions: Answer each question correctly. Choose the letter of the correct answer.

1. Is it limited to local areas? Or it will cover a region, the entire country, or even the
international market?
A. Regulatory environment C. Geographic area
B. Description of the product D. Knowing the competition

2. Are there local, national laws that will restrict the business? One needs to
identify government regulations specific to the chosen industry.
A. Geographic area C. Knowing the competition
B. Description of the product D. Regulatory environment

3. Who is this man that developed the SWOT analysis.

A. Albert Humphrey C. Henry Mintzberg
B. Michael E. Porter D. Adam Smith

4. What is this that one of the commonly considered internal factors?

A. Economic trends C. Market Trends
B. Financial resources D. Demographics

5. What are these that are typically things you or your company do not control.
A. Internal Factors C. External Factors
B. Human Resources D. Current processes

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 UNIFIED SUPPLEMENTARY LEARNING MATERIALS
Grade 11 Applied Economics

POST TEST

Directions: Fill in the blanks with the correct answer.

1. What is it that refers to a comparative analysis strategy that analyzes competitive

market forces within an industry. _________________

2. What is it that looks at the strengths, weaknesses, opportunities, and threats of an

individual or organization to analyze its internal potential. ____________

3. What it is that examines both internal (strengths and weaknesses) and external
(opportunities and threats) forces. _________________

4. What it is that examines all external factors only. _________________

5. What it is that can develop a robust business strategy that takes full advantage of
your organization's strengths and capabilities. ______________ Answer Key

REFERENCES

Retrieved from: https://www.slideshare.net/saumyasingh7921/tools-and-techniques-of-

strategicmanagementsaumya
https://www.businessnewsdaily.com/4245-swot-analysis.html
https://www.mindtools.com/pages/article/mintzberg-5ps.htm
Dinio, Rosemary P. & Villasis, George A. 2016. Applied Economics Sampaloc,Manila.
Rex Book Store Inc.
Leano, Roman D. Jr., 2016. Applied Economics for Senior High School Intramuros
Manila. Mindshapers Co., Inc.

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