PASACAO ACADEMY, INC.

SENIOR HIGH SCHOOL DEPARTMENT

A/Y 2021-2022

APPLIED ECONOMICS (2nd Semester Quarter 2 -Module 1)

BUSINESS OPPORTUNITY IDENTIFICATION
A. MOST ESSENTIAL LEARNING COMPETENCY:
Analyze different principles, tools, and techniques in creating a business
OBJECTIVES:
At the end of this lesson, the students should be able to:
a. identify principles and tools in creating a business; and
b. apply SWOT analysis as a tool in evaluating a business opportunity
B. CONTENT/DISCUSSION

BUSINESS OPPORTUNITY IDENTIFICATION

A business is just a small portion of an industry. It is an undertaking by a person or a group of persons who are
partners,
or of stockholders who own a juridical entity known as corporation. An industry, is the aggregation of the
different
businesses engaged in the same line of undertaking, like for example a shoe company.

Forms of Business Organization

From a legal point of view, there are four ways to form a business:
1. Sole Proprietorship – It is owned by a single individual who is singly responsible for running the entire
business.
2. Partnership – An agreement in which two or more persons combine their resources in a business with a
view to making profit.
3. Corporation – A legal entity that is separate from its owners and shareholders.
4. Cooperative – An entity organized by people with similar needs to provide themselves with goods and
services.

Tools in Evaluating a Business

THE SWOT ANALYSIS

The SWOT analysis was created in the 1960s, which stand for Strengths (S), Weaknesses (W), Opportunities
(O),
and Threats (T). The framework help identify business’s risks and rewards. It is also means of identifying the
internal
and external forces that may affect the business. This can serve as guide to prepare for new venture, design
business
owner can anticipate problems, including possible solutions.
INTERNAL FORCES (tangible) EXTERNAL FORCES (intangible)
Includes resources and experiences readily available Those are affecting the firm or individuals that
(Strengths and Weaknesses) outside of their controls

Table 3.1 presents a SWOT analysis template that can be used as a guide to identify the strengths,
weaknesses, opportunities, and threats.

POSTER’S FIVE FORCES OF COMPETITIVE POSITION ANALYSIS

Another analytical tool that can be used to assess a business. It determines the competitiveness and
attractiveness of a market. These five forces help in identifying if new products or services are potentially
profitable.
5 Forces that need to be evaluated:
1. Supplier power – The more the uniqueness of such product, the supplier has the ability to drive up
prices.
2. Buyer power – The buyer’s cost of switching that determinant of the extent of buyer’s power.
3. Number of competitors – Numbers and capability of competitors in the market will impact of both
supplier and buyer.
4. Possibility of substitution – The suppliers will enjoy less power to drive prices up.
5. Possibility of new entrants – The barriers of entry and exit in the market.

IMPORTANCE OF PORTER’S FIVE FORCES ANALYSIS

It is a significant tool for organizations to understand the factors affecting profitability in a specific
industry. And can help to form decisions and formulates strategies.

Industry Analysis
It is a tool that many businesses use to assess the market. It is used by market analysts, as well as
by business owners, to figure out how the industry dynamics work for the specific industry studied.

It includes analysis of the following important factors.

COMPETITION – Who are the major businesses in the industry? Your aim is to win customers.
CUSTOMERS – Who will you sell your product to? The target market must be identified.
SUPPLIERS – Every retail business needs suppliers from whom one can source raw materials.
SUBSTITUTE – Substitutes are goods that can be used in place another.

The key factors that must be considered in analyzing the industry are the following:
1. Geographic Area 4. Buyers
2. Industry (as to size and outlook) 5. Regulatory environment
3. Product 6. Factors that affect the growth of the business

Reference

REX Book Store; APPLIED ECONOMICS, DepED LM-Teacher’s Guide

LEARNING ACTIVITY SHEET

PASACAO ACADEMY, INC.

SENIOR HIGH SCHOOL DEPARTMENT
A/Y 2021-2022

APPLIED ECONOMICS (2nd Semester Quarter 2 -Module 1)

BUSINESS OPPORTUNITY IDENTIFICATION
Name of Learner: ___________________ Grade Level: __________
Section: ___________________________ Date: ________________
C. ASSESSMENT
BUSINESS OPPORTUNITY IDENTIFICATION: Principles, Tools, and Techniques

A. IDENTIFICATION
Write SA, if the given definition is referring to SWOT Analysis and PFA if it is referring to Porter’s Five Analysis
using the given definition in each number.

________1. The smaller the number of buyers in the market, the greater is the power enjoyed by the buyer.
________2. A set of problems, or difficulties or shortcomings encountered by the business.
________3. Too many competitors in the market and raw material shortages.
________4. A supplier has a relatively bigger size and strength, enjoys the driving up prices.
________5. Negative factors that are beyond the control of the business.

B. FILL ME UP
Choose your business idea, the next step is to conduct a SWOT Analysis in order to determine Strengths,
Weaknesses, Opportunities and Threats of your potential business. The table below will help you differentiate
among these four features.

YOUR BUSINESS

Positive Negative
STRENGTHS WEAKNESSES
Controllable
Factors

OPPORTUNITIES THREATS

Uncontrollable
Factors