Bicol University

POLANGUI CAMPUS
Polangui, Albay

TECHNOLOGY BASED
PROJECT
(SPECIAL TRACK 1) - Entrep 22
BS Entrepreneurship – Third Year
 :
Lesson 1 Economic Environment and Economic
Resources – Definition Importance & Factors

09/09/2021
Learning Outcomes:
1. Discuss the definition of economic environment and

SONNYLEN G. REQUILLAS, MBA

economic resources.
2. Cite some of the microeconomic and macroeconomic
factors affecting the economic business environment.
3. Discuss the positive and negative effects of
unemployment in a business enterprise.
4. Review the details about the law of supply and demand
and the way in which it affects businesses. 2
Economic Environment
• The term economic environment refers to all the external
economic factors that influence buying habits of consumers

09/09/2021
and businesses and therefore affect the performance of a
company.

SONNYLEN G. REQUILLAS, MBA

• The economic environment refers to all the economic factors
that affect commercial and consumer behaviour.

• Economic environment is the sum total of all individuals,

institutions and other forces that are outside the control of a
business enterprise but the business still depends upon them
as they affect the overall performance and sustainability of 3
the business.
4

SONNYLEN G. REQUILLAS, MBA 09/09/2021

• Microeconomic Environment
• Affects the business decision-
making such as individual actions of

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firms and consumers

SONNYLEN G. REQUILLAS, MBA

• Macroeconomic Environment
• Affects an entire economy and all its
participants.
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MACROECONOMIC AND MICROECONOMIC FACTORS OF ECONOMIC
ENVIRONMENT
MACRO

Employment/Unemployment

es
MICRO Tax rates

s rat
Market

09/09/2021
ng
Savi

Dem
n
utio
Income

an d
trib

SONNYLEN G. REQUILLAS, MBA

BUSINESS
es

ENTERPRISE
Dis
e rat

Inflation
g

Su
n

on
a

ti
h

pli

eti
y exc

p
e

m
rs

Co
c

Recession
en
Curr

Interest rates nce level

fide
m e rs con
Cons u
6
Role of Economic Environment
• The economic environment of a business will play a pivotal role
in determining the success or failure of a business.

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• MACROECONOMIC FACTORS
• interest rates are too high - the cost of borrowing may not permit a
business to expand.

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• unemployment rate is high - businesses can obtain labor at cheaper
costs
• unemployment is too high - may result in a recession and less
discretionary consumer spending resulting in insufficient sales to
keep the business going.
• Tax rates is high – additional expenses that will take a chunk of your
income
• currency exchange rates can either help or hurt the exporting of 7
your products to specific foreign markets.
Role of Economic Environment (cont’n.)
MICROECONOMIC FACTORS

• Market size - determine the viability of entering into a new market.

• market -too small - there may not be sufficient demand and profit potential.

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• Demand - market size leads us to the concept of demand and supply.

• If your product is in HIGH DEMAND but there is a LOW SUPPLY of it, you are going to make

SONNYLEN G. REQUILLAS, MBA

PROFIT.
• If your product is in LOW DEMAND and the MARKET IS FLOODED WITH SIMILAR PRODUCTS, you
may be facing BANKRUPTCY.

• The quality and quantity of your competition will affect how well you do in winning
customers in the marketplace.

• Suppliers - the arteries pumping vital supplies and resources to you for production.
Problems with suppliers can clog up those arteries and cause serious problems.
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• Distribution - the type of relationship you have with your distributors, such as retail
stores, may influence how quickly your products leave their shelves.
Economic resources
• Economic resources are the factors used in
producing goods or providing services. In other

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words, they are the inputs that are used to
create things or help you provide services.

SONNYLEN G. REQUILLAS, MBA

• Economic resources can be divided into:
• human resources - labor and management
• nonhuman resources - land, capital goods,
financial resources, and technology.
9
Economic Resources
• Economic resources are the inputs we use to
produce and distribute goods and services.

09/09/2021
• Economic resources is defined as a service
or assets used to produce goods and

SONNYLEN G. REQUILLAS, MBA

services that meet human needs and
wants.

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Categories of economic
resources
I. Human resources
a. labor

09/09/2021
b. management

SONNYLEN G. REQUILLAS, MBA

II. Nonhuman resources
a. Land
b. capital goods
c. financial resources
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d. technology
Importance of economic resources
• The precise proportion of each factor of
production will vary from product to product

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and from service to service, and the goal is to
make the most effective use of the resources

SONNYLEN G. REQUILLAS, MBA

that maximizes output at the least possible
cost.

• Misallocation or improper use of resources

may cause businesses, and even entire 12
economies, to fail.
 Let’s do this!
Answer the following questions:
1. The implementation of Train Law in Duterte’s administration

09/09/2021
is one of the major changes in taxes by the government.
How does this change affect the business? Explain.

SONNYLEN G. REQUILLAS, MBA

2. Economic environment presents threats as well as
opportunities for any business. Agree or Disagree? Justify
your answer.

3. Does entrepreneurship part of the economic resources?

Elaborate your answer.
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 Thank you!!!

SONNYLEN G. REQUILLAS, MBA 09/09/2021

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