SMALL, MEDIUM, LARGE

SCALE BUSINESSES
It is also important to study the classification
of businesses as to the size based on the
worth of the business assets. In the
Philippines, total assets for micro business
are worth below 1,500,001. For the small
business, total assets are from 1,500,001
to 15,000,000. Medium business has total
assets are from 1,500,001 to 60,000,000.
Any business with assets in excess of
60,000,000 is considered large scale.
For any form of business
organization, the business must be
registered with the appropriate
government agencies. In the case
of sole proprietorship and
partnerships, 100% must be
owned and capitalized by Filipinos.
For corporation, at least 60% of
the outstanding stocks must be
owned by Filipino citizens.
Lesson 3.2 TOOLS IN
EVALUATING A
BUSINESS
According to a guide developed by North
Carolina’s Small Business and Technology
Development Center, the key factors that
must be considered in analyzing the
industry are the ff :
1. The geographic area which your
business will cater to. Is it limited to local
areas? Or will it cover a region, the entire
country, or even the internation market?

2. The size and outlook of the industry/

What trends can be identified?
4. The buyers have to identified. Who are
your target customers ?

5.The regularity environment. Are there local,

national laws that will restrict the business?
One needs to identify government
regulations specific to the chosen industry.

6. The need to identify the leading businesses

in the industry, and to provide company
information on the most successful
businesses that you will be up against.
7. Factors that will affect the growth of the
business.
 THE SWOT ANALYSIS

The SWOT Analysis was created in the 1960s by

business gurus, Edmund P, Learned, C Roland
Christensen, Kenneth Andrews, and William D. Book
in their book, Business Policy, Text and Cases (Irwin
1969).

SWOT which stands for Strengths, Weaknesses,

Opportunities, and Threads, is an analytical
framework that can help a company meet its
challenges and identify new markets. The
framework can help identify the businesses risk and
rewards. It is also a means of identifying the internal
and external forces that may affect the business. It
is very helpful in assessing new ventures.
Strenghts and Weaknesses actually refer to the internal
factors, and this the resources and experiences readily available
to the business proponent. Usuaaly includes internal factors are:

1. Financial resources such as money and sources of funds for

investments.

2. Physical resources such as the comapany’s location, facilities,

machinery and equipment.

3. Human resources consisting of employees.

4. Access to natural resources, trademarks, patents, and

copyrights.

5. Current processes such as employee programs, department

hierarchies and software systems, sales and distribution
capabilities, marketing programs etc.
When we speak external forces, these are those that affect a company,
an organization, an individual, and those outside their control. These
may include :

1. Economic trends including local, national, and international financial

trends, developments in the country’s stock market, reforms in the
banking system, growth of the Gross Domestic Product.

2. Market trends, such as new products or technology or evolving

buyer’s profiles, including changes in tastes and lifestyle behaviour.

3. National and local laws and statutes as well as political,

environment and economic regulations.

4. Demographic characteristics of the target market such as the age,

the gender, the culture of the customers.

5. Relationships with suppliers and co-owners.

6. Competitive threats.
S W

O T
When drafting SWOT analysis,
what is created is a table split
up into four columns to list
each element side by side, for
comparison. Most of the time,
the business strengths and
weaknesses will not match the
listed opportunities and
threats, and this is where the
 Strenghts WEAKNESS
ES
• Government • Difficulty of
incentives organization
• Low Capital • Costly set-up
Requirements •Possible population
• Market Acceptance problems
• Experienced Leader • Lack of training
workers
OPPORTUNIT THREATS
IES
•Project may replace • Entry of competitiors
imported good available in
 PORTER’S FIVE FORCES OF
COMPETITIVE POSITION
ANALYSIS

Another analytical tool that can

be used to assess a business is
Porter’s five Forces of
Competitive Position Analysis. It
was developed in 1979 by
Michael E. Porter of Harvard
Business School as a framework
 THREAT
OF NEW
ENTRAN
TS

BARGAI
RIVALRY BARGAI
NING
AMONG NING
POWER
EXISTING POWER
OF
COMPETITO OF
SUPPLIE
RS BUYERS
RS

THREAT
OF
SUBSTIT
UTE
PRODUC
TS OR
SERVICE
Under poter’s theory, he identifies five forces
that determine the competitiveness and
attractiveness of a market and which seek
to locate the power in a business situation,
its current competitive position, and the
strength of a position that has an
organization may enter into.

1. SUPPLIER POWER –It is important to assess

how much power the supplier has in his
ability to drive up prices. A supplier enjoys
this power if there are a few suppliers of an
essential input and they therefore control
the supply of that input.
2. BUYER POWER – If a supplier can enjoy the power
to drive pricers up, it is also possible for a buyer to
drive prices down. An assessment needs to be
made on of how easy it is for buyers to drive prices
down. The smaller the number of buyers in the
market, the greater is the power enjoyed by the
buyer.

3. Number of Competitors- The number and

capability of competitors in the market will also
impact on the attractiveness of the market. If
competitors are numerous and offer basically
similar products and services, the market will be
less attractive.
 
4. Possibility of Substitution- When it
easy to substitute products in a market,
it is expected that buyers will switch to
alternatives in case of price increases.

5. Possibility of new Entrants – When

investors see that a market is profitable,
they will desire to join the bandwagon
and get a share of the profits.