Name: Jenylou Dapiton

Semi Finals Topic

LESSON 9: Various Socio-Economic Factors affecting Business and Industry

What are the socioeconomic factors and how these affect businesses and industry in general?

Business has to pass through various socioeconomic factors and has to be affected by such factors in its will of making
money or profit by producing or buying and selling products in the form goods and services.

Socio-economic factors include all transactions that the business has to interact with comprising land, labor, capital, and
technology. Business could not operate without a rented or owned real estate. It could not function without employing
laborers, and providing investment.

Socio-economic factors are considerations about how the business itself operates from within taking into account the
capital, capacity of business, the sources or suppliers, the product to be produced, and the services to be offered, among
others.

It also includes the practice of consumer in using new products and services. If households are experiencing poverty
alleviation due to employment opportunities adding more to their income, there is a great tendency for them to spend
more money in the market place demanding new products and services. Thus, businesses are doing well in the process
producing sustainable employment in return or even expansion of the same business or opening up another form of
business catering not just the basic needs but somehow luxurious wants of consumers.

The impact of the availability of raw materials or supply for business is another thing that affects business. It is
necessary to determine the investors’ needed capital and expected income. If raw materials needed for supply become
scarce there is a tendency for business to increase the price employing the law of demand and supply to insure returns
of investment.

Other factors affecting business may include the following:

a. Payment of Government Taxes

Barangay, Municipal, or City permits, and real estate taxes, are paid in local government units while value added tax,
import-export duties, income taxes are due to national government. Taxes paid by business enterprise are considered a
component of production cost because it is added to capital outlay of the business in the operation.

b. Mode of the International Trade

Some businesses especially the medium and large scale enterprises are usually affected by the dollar exchange rate in
the economic transactions, because it may directly affect the exports and imports cost of products which in turn may
directly or indirectly affect production cost and the setting of the selling price.

How are You Going to Determine the Socio-Economic Status of Consumers as a Factor Affecting Business or Industry?

1. Consumer’s Behavior and Its Significance on Business

The determination of the consumer’s behavior and their decisions on what to buy for consumptions is another factor.
Consumptions refer to the use of goods and services to satisfy the basic needs and wants of consumers. Different
socioeconomic classes will generally have different priorities, and this will affect how consumers spend their money.

As investors ready to use capital for business, you must be able to look for a secured or feasible consumers. The
consumers are the persons who buy the products business offers for sale. It is therefore imperative that we get to
please the consumer, so he/she will buy from you instead of from your competitors. Once satisfied the buyer would be
eventually become our ”suki” or regular customer.
2. Determining the Socio-Economic Status of Consumers and Its Effects on Industry

Wherever your small business or big business as an industry is located, there are going to be socioeconomic factors that
affect it, because social class, that is upper class, middle class, and lower class individual status are attributable to the
socioeconomic factors that determine the success and failure of every business. Be it being an industry (big business) or
a community investment (small or medium size business).

The following are the main parameters of socio-economic status of consumers or buyers:
1. Income- when income is scarce, customers tend to restrict their spending to essential items;
2. Education/Skills- A society that has it that a well-educated and skilled population flourishes because individuals are
employable in well- paying jobs; and
3. Occupation-refers to the type of jobs people perform by virtue of their skills, experiences or choice.

A person who may have education or skills has a greater tendency to land a job or may acquire permanent occupation
that generates income. It is therefore important to consider the implications of these socioeconomic factors on your
business decision-making. Your decisions should be sensitive to the prevailing economic conditions (ex. when pricing and
stocking your business). Consumers have the tendency to avoid expensive items during periods of economic failure.
Moreover, customers in the different social classes have different tastes and preferences. Be sure not to ignore the
consequences of these socioeconomic parameters in deciding what products you are going to produce or sell.

Exercise #1

Directions:

A. Recall any businesses you know which are operating in your

locality. Name at least 5 different kinds of these businesses and write them down on the table below and indicate what
particular product/s they are selling.

Name or Kind of Business Product Sold

1.Hair Salon Haircuts, hair styling, hair care products

2.Bookstore Books, magazines, stationery

3.Grocery Store Fresh produce, packaged food, household items

4.Coffee Shop Coffee, pastries, sandwiches

5. Pet store Pet food, toys, accessories, grooming supplies

B. Make you own evaluation how these businesses that you enumerated on the table above operate, considering the
following:
a. Production or supply capabilities of the businesses; and
 b. Socio-economic status of their customers.
Production or supply capabilities of the businesses
1. A variety of hair services, such as haircuts, hair styling,
and hair care treatments, can be offered by hair salons.
They usually have access to a wide range of hair care
products and talented hairstylists. The salon's relationships
with companies and suppliers may have an impact on the
supply of hair care products.
2. A large variety of books, magazines, and stationery can
be found in bookstores. They collaborate with distributors
and publishers to guarantee a wide range of reading
materials. Also, bookstores could offer extra services like
recommendations and book ordering.
3.A wide range of goods, such as packaged foods, fresh
vegetables, and household goods, can be found in grocery
stores. To guarantee a steady supply of products, they
collaborate with distributors and suppliers. For some
products, grocery stores may also have their own brands
or collaborations with regional producers.
4.Coffee shops are equipped to make and serve a range of
coffee drinks in addition to pastries and sandwiches. To
guarantee a consistent supply of premium coffee, they
could collaborate with suppliers of coffee beans. Coffee
shops also have the tools and know-how to provide their
customers with a comfortable environment.
5.A wide range of pet-related products, such as food, toys,
accessories, and grooming equipment, can be found in pet
stores. They collaborate with distributors, suppliers, and
manufacturers of pet food to make sure a range of choices
for various pet kinds. Grooming services may also be
provided by certain pet businesses.
Socio-economic status of their customers
Hair salons serve a wide range of customers including
people with greater financial resources who are ready to
pay more for advanced salon services as well as those with
lower incomes looking for inexpensive haircuts. The salon’s
services and price policy could attract clients from a variety
of socioeconomic backgrounds.
A wide range of socioeconomic origins are served by
bookstore patrons. Readers of all income levels browse
and buy books at bookstores. It is important to remember,
though, that prices for magazines and books could have an
impact on the purchasing power of clients from various
socioeconomic backgrounds.
Customers from a variety of socioeconomic backgrounds
are served by grocery stores. Grocery stores can cater to a
wide range of budgets and tastes by offering a variety of
price points and product alternatives. While higher-income
consumers may have more options and may emphasize
costly or organic products, lower-income customers might
concentrate more on affordable necessities.
Coffee shops attract customers from a variety of
socioeconomic backgrounds. Coffee shops can
accommodate customers of different budgets due to the
affordable cost of coffee and the variety of meal options
available. Coffee shops draw customers from a variety of
backgrounds and frequently act as gathering spots or
workplaces.
Pet owners from a range of socioeconomic backgrounds
are provided to the pet stores. The sort of pet and items
that customers buy may have an impact on their
socioeconomic standing. Customers with higher incomes
might be more likely to spend money on high-quality pet
food and accessories, while those with a smaller budget
might put basic necessities for pet care first.