Applied Economics – Grade 12

STUDENT’S NAME: GRADE/SECTION:

____________________________ _______________
TEACHER: DATE SUBMITTED:
____________________________ _______________

I. LEARNING COMPETENCIES
 Apply business principles, tools, and techniques in engaging in various types of
industries in the locality.

II. INTRODUCTORY CONCEPT

Strategy analysis can be defined in a variety of ways, using a variety of tools and
techniques. Given the business problem or opportunity, the task is to choose the right method,
tools, and techniques to apply. Some of the common analytical tools/techniques used in a
business are the MOST, SWOT, PEST/PESTLE, and Porter's Five Forces, which were discussed
in the previous module.

Understanding the differences between your business and your industry competitors is the
key to surviving in this ever-changing business environment. There are three commonly used
types of industry research and important methods of performing industry analysis. These three
methods are: 1. Porter's Five Forces Model (Competitive Forces Model); 2. Analysis of Broad
Factors (PEST Analysis); and 3. Conduct a SWOT analysis.

Porter's Five Forces Model (Competitive Forces Model) which Michael Porter proposed,
in his 1980 book "Competitive Strategy: Techniques for Analyzing Industries and Competitors”, is
one of the most prominent models for industry analysis, known as Porter's 5 Forces" According
to Porter, analysis of the five forces gives an accurate impression of the industry and makes
analysis easier.

An industry is a specific group of businesses that operates in a comparable commercial

sphere. In essence, industries are formed by dividing sectors into more distinct groups. As a
result, these businesses are grouped into more specific groups than sectors. Each of the dozen
or more sectors will have a different number of industries, ranging from hundreds to thousands.
These industries can be further divided into more specific groups. The insurance sector, for
example, can be divided into various specialized divisions such as home, auto, life, malpractice,
and corporate insurance. Banks, asset management firms, life insurance firms, and brokerage
firms are among the various industries that make up the financial sector. On the other hand, a
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sector is one of the few broad economic areas into which a significant number of businesses can
be classified. A country's economy can be divided into around a dozen sectors, each of which
can describe practically all the country's business activity.

The terms industry and sector may seem the same but have different meanings.
Oftentimes, industry can be used interchangeably as sector, or vice versa, in describing group of
companies in the same segment of the economy or similar business type. These two terms are
sometimes reversed. There are dozens of sectors in the Philippines but thousands of industries.

There are different industry classifications and can be categorized according to similar
business activities in a more specific groups such as insurance industry, automaker industry, shoe
industry, etc. These industries can be grouped into larger categories called sector such as
primary sector, secondary sector, tertiary sector, and quaternary sector.

 PRIMARY SECTOR - Agriculture and mining are examples of primary industries that deal
with the exploitation and harvesting of natural resources.

 SECONDARY SECTOR - This sector is comprising industries that deal with the production
of finished goods from raw materials. Construction, manufacturing, and processing are all
part of the secondary sector.

 TERTIARY SECTOR - Retailers, entertainment, and financial firms make up the tertiary
sector. Consumer services are provided by these businesses.

 QUATERNARY SECTOR - Research and development (R&D), business, consulting

services, and education are all part of the quaternary sector, which deals with knowledge
or intellectual activities.

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INDUSTRY ANALYSIS. In a book published by the Development Academy of the Philippines,
How to Prepare Project Feasibility Studies, industry analysis includes the following important
factors:

a) Competition. Know your competitors as to who the major businesses in the

industry are; the locations close to your proposed business and how long the
businesses have existed or if there are still new entrants; and know the market
share of each of these businesses. The goal is to win customers and remain as
loyal customers.

b) Customers. Identify the target market to whom you will sell the products/services;
the level or bracket of income groups; age brackets; gender; career groups, the
type of people you want to cater, and their preferences, lifestyle and buying habits.

c) Suppliers. It is important to maintain good relationship with the suppliers to

ensure the availability of raw materials for prompt operations. A business needs
supplier to provide the needs to produce goods.

d) Substitutes are products that serves similar need and can satisfy the same needs
of a consumer instead of another. Example, Pepsi cola may be a substitute for
Coca Cola; margarine to butter; wheat bread to white bread, but not everybody will
be willing to switch to other brands.

A GUIDE TO INDUSTRY ANALYSIS

A guide developed by North Carolina’s Small Business and Technology Development

Center (SBTDC) can help in the analysis of one’s business industry. The following are the key
factors to be considered in analyzing and identifying your industry:

1. Geographic Area – identify whether for local, regional, nationwide, or international

2. Industry (as to size) – worth of assets and number of firms, trends, and developments and
future look.

3. Product – describe product as to physical attributes and characteristics, and its uses.

4. Buyers – identify target customers as to age, income group, sex, lifestyle, tastes,
preferences, etc.

5. Regulatory environment – include government laws and regulations that apply to the
business.

6. Company information – a description of firm’s history, services offered of a business.

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 7. A brief history of the industry – when it started and how it developed

8. Factors that affect growth of the industry such as migration of population from rural to
urban areas

9. Trends in sales over recent years that show the actual sales in the industry over the past
5 years.

10. Current operational/management trends within the industry, which are standard practices
prevalent among the firms.

11. The types of marketing strategies prevalent within the industry.

12. Competitor information – includes the location of competitors and how long have they
been in business and their market share.

ENVIRONMENTAL ANALYSIS evaluates the possible or probable effects of external forces and
conditions on the survival and growth of the business. It includes the following thorough study of:

1. ECONOMIC FORCES – includes income, target market, economic conditions such as

inflation, recession, prosperity, demand, and supply in the market.

2. PHYSICAL ENVIRONMENT – includes the population size, geographical location, land

distribution, and climate.

3. POLITICAL FACTORS – includes the political stability of the government, the leadership
style of those in the government.

4. CULTURES AND LIFESTYLES – include cultural practices such as fiestas, celebration

of the Christmas season and other celebrations, trends/patterns, and spending behavior.

5. COMPETITION – the degree of competition and strength of competition are vital in

determining the success or failure of one’s business.

In the previous modules, we learned the different tools/techniques that will help you in
assessing the most important factors that may affect your business. It can be in microeconomic
environment and macroeconomic environment. Microeconomic environment and
macroeconomic environment help in examining and addressing the economic issues, and thus,
interconnected with each other. For example, a high inflation rate affects an increase in the prices
of raw materials which in turn affect the final product offered to the consumers. Microeconomic
environment is more likely on the decisions made by the individual and business. The
microeconomic environment includes market structures, customers, suppliers, and competitors,
while macroeconomic environment includes the gross national product (GNP) and real income
growth, income distribution, expending patterns and trends in consumer spending, borrowing
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patterns and governmental legal restrictions, and other economic variables, like cost-of-living
interest rates and disposable income.
Let us investigate the case of PepsiCo. Read carefully and analyze the case below. Then
answer the questions thereunder.

PEPSICO

PepsiCo is the largest selling beverage the world over, of course after its archrival Coca
Cola. It accounts for a 37% share of the global beverage market, and therefore they need to
understand each country’s market to stay in line with their situations.

Pepsi is a big brand, currently holds the 23rd place in the Interbrand’s report of the World’s
Leading Brands. Their advertisements feature major celebrities and athletes like David Beckham,
Robbie Williams, Britney Spears, and Michael Jackson etc.

Their market reach is also diverse, as they are present in almost every country from the
US to New Zealand.

Pepsi is a non-alcoholic beverage and is therefore regulated by the FDA. So, they are
supposed to maintain a firm standard of the laws set out by the FDA with consistency. Also, many
different markets across the world have different set of regulations that are either relaxed or are
stringent. There is a competitive pricing by Pepsi’s competitors and that is one factor that Pepsi
must always keep in mind. The political scenario also matters greatly as there can be some civil
unrest in certain markets or due to inflation the sales of the product can fall. Most importantly,
cross border situations are starkly different therefore Pepsi must stay in line with all those policies
and changes so that they can adapt to all those changes accordingly.

As the recent economic downturn has plagued the economy, companies had to restructure
their sales and marketing campaigns greatly. Also, with diminishing profits they had to undergo
downsizing internally and re-think upon how to penetrate the market. Economic conditions have
the highest influence on a business, regardless of what trade it is in. The economic downturn that
started in 2008 resulted in increased sales of its beverages mainly as people were being laid off
from jobs, they were spending time with friends and family or at home, to Pepsi’s favor.

Social factors greatly impact Pepsi, since it is a non-alcoholic beverage and must remain
in line with the strict and stark differences of cultures the world over. Also, Pepsi must
communicate its image as a global brand so that the people can associate it with themselves as
something that connects the world together. Usually, the social implications are seen in marketing
campaigns for example certain countries have religious festivals, so Pepsi must keep in line with
all those festivals to understand the psyche of their market and how they can cash upon the
opportunity.

With the advent of the new age in technology, companies have completely integrated
themselves with all the recent changes that have taken place. To mention a recent trend that has
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greatly picked up and something that almost every business is turning toward is social media.
The social media explosion has allowed for increasingly interactive engagement with the
consumers with real time results so Pepsi must stay ahead of all the developments that take place
with keeping in view how the youth of today utilizes technology for their benefit and how can Pepsi
reach them to keep on increasing brand recall and brand engagement.

There can be many legal implications upon the beverage industry. To cite one very
famous incident that took place in India, where Pepsi was accused of using contaminated water,
given a lab test that was done upon the water flowing into the Pepsi factory that was located
nearby an industrial estate. A massive recall was issued for the products from shelves and then
the product was tested costing the company many billions of dollars upon the tests as India is a
very major market.

These factors can affect Pepsi, but not immensely alter its trade and profit generation as
these factors affect agri-businesses much more directly.

Based on the above case situation, the external factors that affects the operation of the
business are the following:

Based from the above analysis, PESTLE Analysis is the best tool to apply in the PepsiCo.

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III. ACTIVITIES

A. LET’S BEGIN! Read and analyze the CNN News article and answer the following
questions below.

CASE 1: HONDA CARS PH TO STOP AUTOMOBILE PRODUCTION IN MARCH

By CNN Philippines Staff
Published Feb 22, 2020 8:58:25 PM
*Updated Feb 23, 2020 12:46:00 PM

Metro Manila (CNN Philippines, February 22) — Automobile maker Honda announced
on Saturday that it will stop production operations in the country by next month.

Honda Cars Philippines, Inc. said the company will close its production plant in Sta. Rosa,
Laguna in March. The company is known to produce passenger cars and models such as the BR-
V and City.

HCPI said closing the plant was necessary to meet customer's needs through "efficient
allocation and distribution of resources."

"As such, after consideration of optimization efforts in the production operations in Asia
and Oceania region, Honda decided to close the manufacturing operations of HCPI," said HCPI
in a statement.

The company said it has around 650 employed associates in the country, but it did not
detail how many may be affected by the closure. However, it clarified that automobile sales and
after-sales services will continue.

Labor group Defend Jobs Philippines claimed that there are 387 people who will lose their
jobs over the closure of the plant. The group said workers from 60 other companies who supply
parts to HCPI will also be affected.

Defend Jobs Philippines said it has urged the Labor Secretary Silvestre Bello III to “directly
intervene, conduct impartial investigation and thoroughly look into” the reported closure.

"Our government must not just allow the announced closure of HCPI without undergoing
proper evaluation and assessment but rather consider the holistic benefits of Filipino workers,"
said Thadeus Ifurung, Defend Jobs Philippines spokesperson.

HCPI has a capital investment of ₱1.9 billion. It was first established in 1990 and it started
production in 1992.

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 Last month, Honda, along with fellow automaker Toyota, recalled millions of vehicles due
to safety issues. Honda recalled 2.7 million cars - of which 2.4 million are in the United States. On
the other hand, Toyota called back 3.4 million cars, 2.9 million of which are in the United States.

In February 2019, Honda also announced that it will shut down its only British factory on
2021, which employs 3,500 people. Honda said production would shift to Japan, North America,
and China. Christian Stadler, an auto expert and professor of strategic management at Warwick
Business School, said Brexit or the United Kingdom's departure from the European Union may
have been a factor in the automaker's decision, CNN reported. (cnn, n.d.)

Discussion Questions:

1. In which industry and sector does Honda Cars belong?

2. Read carefully the last paragraph of Honda Case. Write your comments regarding
Honda’s decision to shift its production to Japan, North America, and China, in relation to
other information stated in the case. Your answer should justify the decision vis-à-vis the
decision to close the manufacturing operations of HCPI (Honda Phils), with supporting
information.

B. Let’s DISCOVER! Read carefully and analyze the case below. Then answer the questions
thereunder.

KFC

KFC, also known as Kentucky Fried Chicken, is undoubtedly one of the most
dominant fast-food franchises all around the world. It has managed to establish its presence in
over 140 countries with more than 22,000 locations globally. Established by Colonel Sanders in
1952, it has seen a lot of ups and downs before taking its spot as one of the largest fast-food
restaurant chains. Known for its trademark secret ingredient of 11 herbs and spices, it is one of
the most popular choices for chicken lovers.

However, there are many critical external and macro-environmental factors that influence
and shape its growth and success.

One of the major political factors that influenced and shaped the fast-food franchise is its
association with unhealthy food laden with high-calorie diet. From Kentucky Fried Chicken, the
restaurant changed its name and identity to its abbreviation, KFC. This was done with the intent
of dropping fried chicken from its name without having to undergo any major internal changes.
Though this was a clever move from the franchisee, it has gone under fire by various nutritionists
and campaigners as it capitalizes on the psychological vulnerability of most people. Additionally,
there has been a gradual rise of health-conscious individuals and campaigns against many fast-
food chains and restaurants for promoting obesity and an unhealthy lifestyle.

Many fast-food restaurant chains are failing to generate sustainable profits. Again, one of
the key reasons behind this is their association with an unhealthy lifestyle and diet. KFC has a
menu mostly comprising of fried chicken which has a high calorie content and unhealthy fats.
They have recently diversified their menu to include more vegetarian and vegan options. Though
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this is a welcome change to promote a healthier approach to fast food, there is still a lot of work
to be done to overcome its reputation of being unhealthy.

KFC is also known for its budget menu where people get high value for their money. Paired
with a steadily declining customer base, this is a major economic factor that plagues KFC’s
growth.

KFC, along with other popular fast food brands struggle with many social issues and
problems. Paying employees, a minimum wage is one of the top issues that associate a negative
connotation to the brand. Despite being a global brand with a presence in over 140 countries,
employees in most outlets are paid minimum wage without any benefits or perks.

KFC is also under constant fire for using lucrative and suggestive advertisements to lure
children and masses to their restaurants while slickly hiding the obvious health issues and risks
that arise due to the consumption of fast food.

Additionally, KFC and other fast-food giants also evoke a negative reaction as they
endorse animal cruelty. The chicken in their facilities is loaded with hormones to retain more fat
and muscle. Additionally, farms mistreat animals by packing them in unhygienic environments
and facilities.

KFC has adopted many new technologies and changes to keep up with changing trends
and preferences of customers. Most outlets today have a click and carry option where you can
order your food before even reaching the outlet thus helping you save time in queues and lines.

Additionally, self-order kiosks, voice automated machines, and online platforms are some
of the changes they have adopted to increase profits and sales. KFC has also increased its digital
presence through better social media management and promotions.

Being a giant in the fast-food restaurant industry with over 22,000 locations, it is no
surprise that KFC is a major contributor to the environment. KFC’s paper supplier is linked in
many cases with deforestation, destruction of wildlife, and endangering the environment.

Again, an increasing number of health-conscious individuals opt to turn away from KFC
due to reasons like this. The restaurant needs to adopt more environmentally friendly practices to
reduce waste and consumption.

As KFC operates in over 140 countries, complying with the local laws and regulations is
one of the key factors in continuous success and operation. They must adhere to the food and
health quality guidelines and laws to avoid lawsuits and penalties.

There are numerous cases around the world where KFC has served low-quality or rotting
foods to the customers that have invited a lot of negative publicity. (Marketingtutor.net, 2019)

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DISCUSSION QUESTIONS:

1. What are the macroenvironmental factors that influence or affect KFC’s growth and
success in the future? Identify each factor.

2. What are the best tools/techniques applicable for KFC? Justify your answer.

3. What recommendations can you give based on your analysis?

C. YOU CAN DO IT!

Direction: Read carefully and analyze the case below. Then answer the questions thereunder.

PEPSICO AND OTHER PRODUCTS IN A WOOLWORTHS SUPERMARKET IN AUSTRALIA

PepsiCo’s current position as the second biggest firm in the global food and beverage
market is based on the company’s ability to wield its strengths to continue growing. The company
grows despite an increasing level of market saturation.

As a successful global company, PepsiCo has one of the strongest brands in the market.
This enables the firm to attract consumers to its new products. In addition, the broad product mix
represents PepsiCo’s increasing ability to reach various markets and segments, such as through
Frito-Lay products, Quaker products, and Pepsi products. PepsiCo’s extensive global production
and distribution networks support the company’s international growth and expansion strategies.

PepsiCo derives about 70% of its revenues from markets in North America and South
America. This weakness indicates that the company has not yet maximized potential revenues
outside the Americas. In addition, PepsiCo operates primarily in the food and beverage industry.
This is a weakness because it maximizes the company’s vulnerability to risks in the food-and-
beverage market. Also, PepsiCo fails to effectively market many of its products to health-
conscious consumers.

PepsiCo can diversify its businesses, such as by acquiring a complementary firm that is
not in the food and beverage industry. Another opportunity is for PepsiCo to increase its
penetration in developing countries to generate more revenues from markets outside the
Americas. In addition, PepsiCo can create alliances with complementary business to increase its
market presence.

Aggressive competition is a major threat against the company. The influence of the Coca-
Cola Company is especially significant against PepsiCo. In addition, the healthy lifestyles trend is
a threat against PepsiCo’s products, many of which are unhealthful because of their sugar, salt,
or fat content. Also, environmentalism threatens the company in how consumers negatively
respond to product waste and lifecycle issues. (Panmore Institute, 2017)
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Discussion Questions:

1. What are the most significant internal and external factors in PepsiCo to support and
continue its global growth strategy?

2. What are the major challenges in the areas of competition, changing consumer behaviors,
and product development that threaten and limit organizational development and must be
addressed through changes in its growth strategy?

3. Based on items no. 1 & 2, identify which tools/techniques can be best applied for PepsiCo?
Why? What recommendations can you give based on your analysis?

D. PERFORMANCE TASK!

Direction: Read and analyze the NIKE case below. Then answer the questions
thereunder.

NIKE

Nike is the largest apparel and footwear company that manufactures a wide range of
products mainly athletic footwear, apparel, and equipment. It was founded in 1964 as Blue-Ribbon
Sports by Phil Knight and Bill Bowerman with its headquarters in Beaverton, Oregon (Success
Story 2018). Nike currently operates over 1182 retail stores worldwide, according to Statista. In
2018, Nike had annual revenue of $36.40bn that was a 6% increase from its 2017 revenue with
a $1.93bn profit, a 54% decrease from its 2017 $4.20bn revenue according to its annual report
(Annual Report 2018). In the clothing and apparel industry, Nike accounts for a 2.8% market share
with major competitors Adidas, H&M, and Under Armor having 1.8%, 1.4%, 0.4% market shares
respectively (Statista 2018a).

President Trump’s executive order to pull the United States out of the Trans-pacific
partnership trade deal (TPP) threatens the profitability of Nike. The TPP being a trade agreement
between 12 countries including Australia, Vietnam, Mexico, Canada, New Zealand, among others
would lower tariffs for the twelve countries across the Pacific Rim and the US joining the TPP
would have reduced or eliminated tariffs for shoes imported from Vietnam and some other
countries into the US, reducing the built-in cost to outsource sneaker manufacturing overseas for
Nike and other manufacturers. According to Bloomberg, most of Nike’s footwear is made from
countries included in the TPP trade deal. For example, Nike imports 40% of its sneakers from
Vietnam and since tariffs for footwear are extremely high, ranging from 5% to 40% according to
the material used and 20% taxes for sneakers, US joining the TPP trade deal would boost its
profit margins. Therefore, Nike still faces high taxes which have affected its profitability (Business
Insider 2017).

In addition, the US-China trade war between President Trump and Xi Jinping threatens
the profitability of Nike as its cost of imports and exports to China could rise affecting its profit
margins. In this trade war, US and China exchanged worth $34billion on each other’s goods with
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Trump threatening additional tariffs of $200billion worth on Chinese goods if the trade war
escalates. Trump is considering to tax imports ranging from shoes, clothes and consumer
electronics that threatens the well-being of Chinese companies like Yue Yuen Industrial Holdings
Ltd and Li & Fung Ltd that supply goods worth $450billion to American companies like Nike and
Walmart every year. The trade war could also ruin Nike’s relationship with its suppliers causing a
ripple effect (Whitely and Wei 2018).

Low interest rates have for long supported growth in the athletic footwear industry as the
cost of borrowing funds is low. The high interest rates in the US affect the profitability of footwear
companies. The federal reserve increased prime rates and raised the benchmark rate between
1.5% and 1.75% which is a challenge for footwear companies that need loans to expand and
grow because it will cost them more to borrow. Even though interest rate increases have been
small, they increase the footwear producers’ cost of funds that affects the profitability of footwear
companies like Nike, Puma, Adidas, among others (McDonald 2017).

In addition, US have high economic growth which gives Nike an opportunity to improve its
profit margins. The 4.1% annual economic growth in the UK has brought many opportunities such
as decrease in unemployment rates and increase in consumer spending that grew at an annual
rate of 4% up from 0.4% in between January and March of 2018 (Rushe 2018). Also,
unemployment rates dropped to 3.9% gaining over 164,000 jobs in April according to report by
Department of Labor (Bayly 2018).

According to a new research by Mintel 2018, over 55% of Americans say they lived a
healthier lifestyle in 2017 compared to 2016, and 45 percent say they have made dramatic
changes to improve their health through healthy diet, getting enough sleep and regular exercises.
But while 74 percent of the people say regular exercise is part of a healthy lifestyle, just 53 percent
say they do so regularly. The number of Americans joining fitness clubs has steadily increased
over the years averaging to 57.25 million in 2016. The increasing number of people that are joining
fitness clubs and gyms influences demand for fitness products particularly exercise apparel,
shoes and equipment. Therefore, Nike can utilize this opportunity to improve its revenues by
targeting the growing population of health-conscious consumers that are joining fitness clubs
(Statista 2018).

Throughout the years, technology has influenced growth in the athletic footwear industry.
For example, it facilitated the development of smart shoes that have self-lacing capabilities.
Athletic footwear companies have since then incorporated technology in their production process
to provide unique products. For example, the new adidas digit sole smart shoe that can even
order dinner and display work of art (Mlot 2018).

According to Mintel 2017, Nike recently introduced augmented reality technology into its
Paris flagship store that enables customers to design their own customized sneakers using the
NikeiD booth. With this technology, customers can customize sneaker color details on the tablet
attached to video-mapping devices using the NikeID online service. SmartPixels connected the
video mapping with NikeID’s configurator so customers need only place an all-white sneaker in

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the device and they will see the colors projected on the sneaker, in real time, as they select them
on the tablet. This helps to increase customer satisfaction as the customer gets his/her desired
sneaker design; however, even though Nike’s customizing tool (NikeiD) is in usage, the number
of sneakers one can customize in augmented reality is limited as customers can only customize
in AirMax, Epic Low and Cortez sneaker models (Nelson Jr 2017).

In addition, Nike has invested in robotic technology to replace the expensive human labor
and increase productivity (Moore 2017) which threatens thousands of jobs especially the low-cost
workforce in Asia. However, automation can help Nike in two major ways that include increase in
profit margins due to decreased labor costs. For example, robots can offer a range of services
like laser cutting, automated gluing, among others, and enabling the company to deliver new
designs to fashion-conscious customers faster (Bissell-Linsk 2017).

The low corporation tax rate in UK gives Nike a chance to improve its profit margins. The
UK has the lowest corporate tax rates at 19% with the UK further proposing to cut it to 17% to
free up £5bn a year for other spending activities. Low corporate taxes can help many companies
like Nike to improve their profit margins due to decreased tax expenses (Pickard 2017).

On July 29, students and activists around the world organized by United Students Against
Sweatshops (USAS) protested against Nike, the students protested child labor and sweatshops
where it is believed that workers at a Nike contract factory in Hansae, Vietnam labored for hours
in temperatures over the legal limit of 90 degrees, to the point that they would collapse at their
sewing machines, suffered wage theft and verbal abuse. Also, Nike is accused of cutting jobs at
the Hansae factory and stopping production from a factory in Honduras with a strong union
presence that resulted in many workers losing their jobs. In addition, Nike denied the independent
monitoring group Worker Rights Consortium (WRC) access to inspect its contract factories which
could become a serious problem since it owns $4 billion retail market for university-logo products
mostly apparel. Most universities among WRC’s 190 university affiliates have parted ways with
Nike and allowed their contracts to expire. This not only affects the profitability of Nike but also its
reputation (Bain 2017).

According to the land disposal restrictions notification by the Environmental Protection

Agency in the US, waste must meet certain treatment standards under the LDR program and
must be treated to reduce the hazardous constituents to levels set by EPA or the waste must be
treated using a specified technology (RCRA in FOCUS 2002).

To reduce environmental pollution through dumping in landfills, Nike has incorporated

recyclable material in 75% of its products. Nike creates its products by transforming plastic bottles
and manufacturing scraps into new materials that can be reused to manufacture shoes through
Nike grind program. Besides reusing, Nike also manufactures some of its most products in a
sustainable way and air is one of Nike’s most sustainable innovations. This technology consists
of pressurized air (nitrogen) inside a flexible bag (called a Nike Air sole unit) that sits in the midsole
beneath the heel, forefoot, or both to provide the sensation of walking, or running on air. This
provides lighter and stronger shoes minimizing Nike’s usage of recycled materials (Nike 2018a).

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 In addition, Nike signed its second major wind contract with Avangrid Renewables as a
step forward to use 100% renewable energy across all its owned or operated facilities in North
America to promote sustainability (Nike 2018). (www.123writing.com, n.d.)

DISCUSSION QUESTIONS:

1. What are the macroenvironmental factors that influence or affect Nike’s growth and
success in the future? Identify each factor.

2. What are the best tools/techniques applicable for Nike? Present your justification.

3. What recommendations can you give based on your analysis?

IV. OPINION ESSAY RUBRIC

A. Let’s Begin! (No. 2-3)

C. You can do it!
CRITERIA 4 3 2 1
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provides a clear, provides a clear There is no paragraph
written, but the
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author’s opinion is
the author’s opinion author’s opinion on is not stated.
not clear.
on the topic. the topic.
All the Few
Most of the
reasons/explanations reasons/explanations Reasons/explanations
reasons/explanations
are specific and are specific and may are NOT relevant and
Support/Reasons relevant to strongly
are specific and
not be relevant to do not support the
relevant to support
support the author’s support the author’s author’s opinion.
the author’s opinion.
opinion. opinion.
There are no errors
There are some
or very few errors There are few errors There are many errors
errors with
with capitalization with capitalization with capitalization
capitalization usage,
usage, punctuation, usage, punctuation, usage, punctuation,
CUPS and spelling which and spelling which
punctuation, and
and spelling that
spelling which can
makes the paragraph makes the paragraph distracts the reader
distract the reader
exceptionally easy to easy to read. from the content.
from the content.
read.

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RO_APPLIED ECONOMICS_GRADE 12_Q2_LP 8
RUBRIC
B. Let’s Discover!
D. Performance Task!

Performance Score
Rating = 5 Rating = 3 Rating = 1
Criteria

Comprehensive and List is not comprehensive

Strengths
realistic list that states the
(Internal
basis for the company’s
Audit)
competitive edge.
Comprehensive and
realistic list that states
Weaknesses
areas in which the
(Internal
company struggles and
Audit)
provides a solution to
correct the weakness.
Comprehensive and
realistic list of well-
Opportunities thought-out opportunities
(External for profit and growth.
thought-out opportunities
Audit) Provides plan for
realizing the
opportunities.
Comprehensive and
realistic list that state the
threats that may affect
Threats
the company’s
(External
competitive edge.
Audit)
Provides solutions to
meet those threats
head-on.
Total
Clearly lacks effort in the
enough or it contains
development of the
strengths that are not
criteria.
realistic.
Comprehensive and
Clearly lacks effort in the
realistic list that states
development of the
areas in which the
criteria.
company struggles.
Comprehensive and
Clearly lacks effort in the
realistic list of well-
development of the
criteria.
for profit and growth.
Comprehensive and
realistic list that state Clearly lacks effort in
the threats that may the development of the
affect the company’s criteria.
competitive edge.

RUBRIC (PESTLE)
Score

Performance
Rating = 5 Rating = 3 Rating = 1
Criteria

Included some of the

Included all ELEMENTS
elements of the PESTLE Gave the elements but
of the PESTLE and
PESTLE and did not emphasize did not explain each one
emphasized how each
SCAN how each element affect or the impact they have
element affects the
the business on doing the business.
success of the business.
environment.
The presentation is free The presentation contains The presentation contains
Spelling,
from grammatical, few grammatical, many grammatical,
Grammar,
punctuation, and spelling punctuation, and spelling punctuation, and spelling
Punctuation
errors. errors. errors.
Total

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RO_APPLIED ECONOMICS_GRADE 12_Q2_LP 8
V. ANSWER KEY

A. Let’s Begin!

1. Industrial sector, manufacturing industry

2. Honda’s decision to shift its production to Japan is justified, considering that the company is a
Japanese brand and Japanese people are famously patriotic. Its labor force is technology-
adopting which could minimize if not completely eradicate safety issues with its products. The
shift to North America is also practical and financially sound. Basing 2.7 million cars due to safety
issues, 2.4 million of which are in the US. That means they have a big market in the US and
North America is an ideal location, lesser transportation expense and transport time. What is not
clear is why China was chosen over Philippines, while Chinese labor may be cheap, Filipinos are
considered more of asset because their labor ethics and ability to communicate in English. China
is also considered a political adversary by Japan. This “choice” could be the reason why Defend
Jobs Philippines has urged Labor Secretary Bello to investigate the closure.

B. Let’s DISCOVER!

DISCUSSION QUESTIONS:

1. Political, Economic, Social, Technological, Legal, and Environmental factors that influence
and plays a major role in KFC’s growth and success in the future.

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RO_APPLIED ECONOMICS_GRADE 12_Q2_LP 8
 2. PESTEL Analysis is the best tool/technique that can be applied because of the identified
external factors.
3. These factors play a crucial role in the development and growth of KFC along with current
trends.

C. YOU CAN DO IT!

1. INTERNAL FACTORS
a. Strong brand image
b. Broad product mix
c. Extensive global production network
d. Extensive global distribution network
EXTERNAL FACTORS
a. Business diversification
b. Market penetration in developing countries
c. Global alliances with complementary businesses

2. Major challenges in the areas of competition, changing consumer behaviors, and product
development that threaten and limit organizational development and must address
through changes in its growth strategy.
a. Low penetration outside the Americas
b. Limited business portfolio
c. Weak marketing health-conscious consumers
d. Aggressive competition
e. Healthy lifestyles trend
f. Environmentalism

3. In this case of PepsiCo, SWOT is the best tools/techniques that can be applied because
of the identified internal and external factors. For the recommendations, PepsiCo can use
its strengths to effectively respond to the issued identified in SWOT analysis, especially
those considered as threats. The realistic actions that PepsiCo could take to improve its
competitiveness and internal growth are as follows:
a. Diversify businesses to minimize market exposure
b. Further penetrate developing markets to grow revenues
c. Improve product healthfulness to attract more consumers
d. Enhance a recycling effort to address environmentalism (Panmore Institute, 2017)

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RO_APPLIED ECONOMICS_GRADE 12_Q2_LP 8
VI.. REFLECTION
Reflect on the activity you have completed. Write your answer on a separate sheet of
paper.
After doing the activities:
I Iearned ________________________________________________________
________________________________________________________________
________________________________________________________________

A question I have in mind is __________________________________________

_________________________________________________________________
_________________________________________________________________

I am not sure ______________________________________________________

_________________________________________________________________
_________________________________________________________________

VII. REFERENCES
Rodriguez, J. 2020. Self-Learning Module. Apply Different Principles, Tools, and
Techniques in Creating a Business.

Development Team of the Learner’s Packet

Writer: Jemima T. Rodriguez – Catanduanes National High School

Content Editors: Jezrahel T. Omadto - CID

Shinette T. Oliveros – Catanduanes National High School

Carol P. Gil – Catanduanes National High School

Language Editor: Anne Marionne A. Osila – Catanduanes National High School

Illustrator: Jemima T. Rodriguez

Lay-out Artists: Jhon Paulo M. Gianan – Catanduanes National High School

Javine M. Tolledo - Catanduanes National High School

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RO_APPLIED ECONOMICS_GRADE 12_Q2_LP 8