SENIOR HIGH SCHOOL

Applied E c o n o m i c s
Viability a n d Im p a cts of
B u s i n e s s o n th e C o m m u n i t y
T h e m o d u l e h a s o n e lesson, n a m e l y:
L e s s o n 1: Eval uat e the Viability a n d Im pac t s o f Busi ne ss o n the C o m m u n i t y

After goi ng through this m o d u l e , y o u are expected to:

identify and explain the effects of the various socio-e conom i c factors affecting
business a nd industry; and
identify a n d eval uat e t he viability a n d i m pacts of business in the c o m m u n i t y.

PRE ASSESSMENT
Choose the letter of the best answer. Write the chosen letter on a separate sheet of paper.

1. T h e a m o u n t of m o n e y individuals earn f r o m their daily e c o n om i c activities,

b e it e m p l o y m e n t , b us i n e s s o r i nves t m e nt s:
a. I n c o m e c. Wage
b. S a l a r y d. All of the above
2. T h i s is the goal of m o s t enterprise w h i c h is to b e e nvi ronm ent a l l y s o u n d a n d
socially responsible
a. Flexibility c. Sustainability
b. Profitability d. Viability
3. It is defined a s the ability t o survive w h i c h linked to financial per form ance .
a. Flexibility c. Stability
b. Durability d. Viability
4. This relates to changes in government influence means _______________.
a. E c o n o m i c C h a n g e c. Envi ronm e nt a l C h a n g e
b. Political C h a n g e d. Go v e r nm e n t
5. T h e y are t he k e y contributor t o i nnova t i on a n d p r o du c t d e v e l op m e nt .
a. E n t r e p r e n e u r s c. Importer
b. E x p o r t e r d. Suppl i e r
6. T h i s includes g e o g r a ph i c a l location, t he climate, we a t h e r a n d other factors
that affect i n d us t r y.
a. E n v i r o n m e n t a l Fa c t o r c. Go v e r nm e n t
b. Political C h a n g e d. Cha nge s in Technology
7. A viable business h a s great effects t o the c om m u ni t y; wh i c h of the following
s t a t e m e n t is n o t t r u e ?
a. It provi des j obs t o the c o m m u n i t y
b. It p r o du c e s t axabl e i n c o m e
c. It d o e s n ot p r o vi de opportunities f o r t he p e o p l e i n se rv ices s u c h a s
social welfare
d. It improves c om m u ni t y life
8. T h e creation o f n e w t echnol ogy i n t e rm s of databases a n d electronic
c o m m u n i c a t i o n s a l l o w e d vas t quantities o f i nform at i on t o b e s h a r e d a n d
quickly distributed e na b l e d t he c o m p a n y t o re duc e c os t a n d i m p rove service,
this is t he effects o n b us i n e s s in t e r m s of:
a. E n v i r o n m e n t a l Fa c t o r c. Go v e r nm e n t
b. Political C h a n g e d. Cha nge s in Technology
9. Ac r o s s t he gl obe, busi nesse s e xp e c t c o m p a n i e s t o m a i n t a i n st r ong
_________________.
a. E t h i c a l S t a n d a r d s c. N o r m s a n d Rul e s
b. M o d e of Conduct d. Regulations
10.T h i s factors affecting industry i ncl udes social relate to pattern o f behavior,
tastes a n d lifestyles.
a. E n v i r o n m e n t a l Fa c t o r c. Go v e r nm e n t
b. E c o n o m i c C h a n g e s d. Social E n v i r o nm e nt
11.T h e fol l owi ng are m a j o r contributions of business a n d industry to society.
W h i c h of the following statements is not true?
a. It provi des j o b s in the c o m m u n i t y
b. It p r o du c e s taxable i n c o m e to for the c o m m u n i t y
c. It d oe s not helps i n the i m p r o v e m e n t o f c o m m u n i t y life
d. It d oe s n ot suppor t l o n g t e r m social d e v e l o p m e n t
12. Viability is def i ned a s t he ability t o survive. I n t he bus i nes s se nse ,
that
ability to survive is not linked to financial p e r f o r m a n c e a n d position.
a. B o t h s t a t e m e n t s a r e Tr u e .
b. B o t h s t a t e m e n t a r e F a l s e .
c. T h e first s t a t e m e n t is Tr u e ; t h e s e c o n d s t a t e m e n t is Fal se .
d. T h e first s t a t e m e n t i s Fal se ; t h e s e c o n d s t a t e m e n t is Tr u e
13. Refers to the type of jobs people per form b y virtue of their skills,
experiences
a. B l u e Collar c. Oc c up a t i on
a n db.choices.
Whi t e Collar d. Profession
14.T h e s e are characteristics t h a t define t he quality o f life i n a society.
a. G o v e r n m e n t Fa c t o r c. Political Factors
b. E c o n o m i c Fact ors d. Socioeconomic Factors
1 5. B u s i n e s s a n d industries a r e a ff ec t ed t h r o u g h re gul a t i ons a n d policies se t b y
______________.
a. C o n s u m e r c. Supplier
b. G o v e r n m e n t d. Ho u s e h ol d s
 L e s son Eval uate the Viability a n d
1 Impacts of Business on
the
Community
B u s i n e s s p l a y s a h u g e r o l e i n t h e s o c i e t y. I t n o t o n l y t a k e s u p t h e m o s t
a m o u n t o f t i m e i n p e o p l e l i v e s b u t it a l s o h e l p c r e a t e i n n o v a t i o n s a n d
m a k e important technological advancements. It m a k e s forward thinkers
a n d d r e a m e r s turn visions into reality. M a k i n g p e o p l e lives easier.
On l y w h e n com pani es are profitable c a n they contribute effectively t o
s o c i e t y b y c r e a t i n g j o b s a n d e c o n o m i c d e v e l o p m e n t . It c a n n o t b e a s s u m e
that com pani es adopt a responsible business conduct. However,
corporate social responsibility can contribute to the success of business
a n d bet t e rm ent o f society.
A s y o u g o t h r o u g h t h e l e s s o n y o u w ill l e arn h o w b us i n e s s a ff ec t s society.
In turn, e val uat e b us i n e s s viability a n d its effect o n the c o m m u n i t y.

Thi s part of the m o d u l e is the lesson proper. N o w, I wa n t y o u to b e re ady a nd w e

will n o w begin the lesson:
S o c i o e c o n o m i c F a c t o r s Af fecti ng B u s i n e s s a n d I n d u s t r y

S o c i o e c o n o m i c f a c t o r s a r e characteristics t h a t d e f i n e t h e qua l i t y o f life in a

s o c i e t y. T h e y i n f l u e n c e t h e b e h a v i o u rs , a t t i t u d e s , t r e n d s , t a s t e s a n d l i f e s t y l e s o f
individuals. I n fact, t he different class s e g m e n t s o f t he soci et y – that is, u p p e r
class, m i ddl e class, lower class, - are attributable to the socioeconom ic factors.
E d u c a t i o n, i n c o m e a n d o c c u pa t i o n a r e t he m a i n p a r a m e t e r s o f s o c i o e c o n o m i c
status, according to the American Psychological Association.
Inc ome
I n c o m e is t h e a m o u n t o f m o n e y i n d i vi d u a l s e a r n f r o m their d a i l y
e c o n o m i c activities, b e it e m p l o y m e n t , b us i n e s s or investments. T h e availability o f
di sposa bl e i n c o m e (net i n c o m e a fter tax) influences s p e nd i n g habits. Yo u r
c us t o m e r s are likely t o p u r c h a s e e x p e n s i v e o r l u x u r i o u s i t e m s w h e n e v e r t h e r e i s
a n i n c r e a s e i n t h e i r d i s p o s a b l e i n c o m e s . H o w e v e r, w h e n i n c o m e i s s c a r c e ,
c u s t o m e r s t e n d t o rest r i ct their s p e n d i n g t o essential i t e m s.
Education

E d u c a t i o n e qu i p s m e m b e r s o f the society wi t h t he skills a n d

k n o w l e d g e t h e y r e q u i r e t o b e e m p l o y e d i n d i ff e r e n t j o b s a n d p r o f e s s i o n s .
T h e s t a n d a r d s o f educat i on in y ou r society d e p e n d o n the availability a n d
accessibility of educational am eni t i es . A soc i et y that h a s a we l l – e d u c a t e d
p op u l a t i on fl ouri shes b e c a u s e i n d i vi d u a l s a r e e m p l o y a b l e i n w e l l – p a y i n g j o b s .
E d u c a t i o n f u r t h e r d e t e r m i n e s t h e availability of skilled workforce w h e n seeking
e m pl oyee s for your small business.
Oc c u p a t i on

Oc c upa t i on refers to the type of jobs people p e r f o r m b y virtue of their skills,

e x p e r i e n c e s o r c ho i c e s . Yo u m a y b e self– e m p l o y e d o r w o r k a s a n e m p l o y e e o f a n
i n d i v i d u a l o r o rg a n i z a t i o n a l e n t i t y. T h e d i ff e r e n t t y p e s o f o c c u p a t i o n d i c t a t e t h e
in c o m e e a r n e d b y p e o p l e i n t h e s o c i e t y. H i g h s a l a r i e d i n d i v i d u a l s a r e n o r m a l l y
a s s o c i a t e d w i t h s k i l l e d o c c u p a t i o n s s u c h as, d oc t o r s , e n g i n e e r s , l a w y e r s a n d
accountants. Self – employed individuals o w n i n g successful businesses also
g e n e r a t e h u g e a m o u n t s o f in c o m e . U n s k i l l e d o c c u p a t i o n s s u c h a s m e n i a l l a b o r d o
n o t p a y m u c h . T h e r e f o r e , t h e abi l i t y o f c u s t o m e r s t o a ff o r d t h e d i ff e r e n t p r o d u c t s
y o u offer in y ou r busi ness d e p e n d s o n t ypes of their occupation.
N o t e : It is i m por t ant t o consi der t he implications o f th e s e s o c i o e c o n o m i c factors o n
y o u r s m a l l busi ness. Yo u r deci si ons s h o u l d b e sensitive to the pre va i l i ng e c o n o m i c
c ondi t i ons w h e n pri ci ng a n d sto c k i n g y o u r bus i nes s.

O t h e r Fact ors Af fecti ng Busi ness a n d In d u s t r y

As i d e f r o m t he different factors m e n t i o n e d a b o v e h e r e u n d e r a r e ot her factors

a ff ec t i ng b us i n e s s e s a n d i ndust ry.

1. E c o n o m i c Conditions - Before creating business plans or w h e n evaluating

existing o n e s it is i m p or t a n t t o ‘s ca n’ t he external e n v i r o n m e n t . Is t he
environment conductive to business y o u are going to establish or there are
s o m e p r o b l e m s t o b e e n c o u n t e r e d i n t he fut ure ?
2. S o c i a l E n v i r o n m e n t - S o c i a l f a c t o r s re l at e t o p a t t e r n o f b e h a v i o r, tastes, a n d
lifestyles. A m a j o r c o m p o n e n t o f this is a c h a n g e i n c o n s u m e r b e h a v i o r
resulting f r o m c h a n g e s in fashions a n d styles. T h e a g e structure o f the
population also alters o ve r t i m e (currently w e h a v e a n a ge i ng population). A n
understanding of social change gives business a better feel for the future
m a r k e t si t uat i on.
3. G o v e r n m e n t - Th i s is continually u pd a t i n g l a ws in a w i d e r a n ge of areas,
such as c o n s u m e r protection legislation, environmental legislation, health
a n d s a f e t y a n d e m p l o y m e n t l a w, e t c . b u s i n e s s e s n e e d t o t a k e a p r o a c t i v e
approach and be ahead of these changes, rather than hurriedly m aking
alteratio n s t o p r o du c t s a n d p r o c e s s e s i n a reactive w a y.
4. E c o n o m i c C h a n g e s - T h e s e a r e c l o s e l y r e l a t e d t o s o c i a l o n e s . T h e e c o n o m y
goes through a series of fluctuations associated with general b o o m s a nd
s l u m p s i n e c o n o m i c act i vi t y. I n a b o o m n e a r l y c h a n g e s t h a t a ff e c t b u s i n e s s
i n c l u d e c h a n g e s i n t h e interest rate, w a g e rates, a n d t h e ra t e o f i nfl a t i on (i.e
g e n e r a l l e v e l o f i n c r e a s e i n pri c es ). B u s i n e s s e s wi l l b e m o r e e n c o u r a g e d t o
e x p a n d a n d t a k e ri sks w h e n e c o n o m i c c o n d i t i o n s a r e right, e.g. l o w interest
ra t es a n d ri s i ng d e m a n d .
5. Political C h a n g e s - T h e s e relate to c ha n ge s in g o v e r n m e n t influence. In recent
years these changes have been particularly significant because as m e m b e r s
of the European U n i o n w e have to adopt directives a n d regulations created
 b y t h e E U w h i c h t h e n b e c o m e p a r t o f t h e U K l a w. P o l i t i c a l c h a n g e s a r e
closely tied u p with legal changes.
6. C h a n g e s i n t e c h n o l o g y - T h e s e h a v e a l s o b e c o m e p a r t i c u l a r l y s i g n i f i c a n t i n
the post – m i l l e n n i u m worl d. Th i s is particularly true in t e r m s of m o d e r n
communication technologies. T h e creation of databases a n d electronic
c om m uni c a t i ons have enabled vast quantities of information to be shared
a n d q u i c k l y di st r i but ed i n a m o d e r n c o m p a n y e n a b l i n g v a s t c os t re duc t i ons,
a nd often i m p r o ve m e n t s i n service.
7. E n v i r o n m e n t a l F a c t o r s - T h e l o c a t i o n s o f c o u n t r i e s i n f l u e n c e s o n t h e t r a d e s
t hat b u s i n e s s e s d o . A d d i n g t o that, m a n y c l i m a t i c c h a n g e s alter t h e t r a d e o f
industries a n d the w a y c o n s u m e r s react t o w a r d s a certain offering that is
l a un c he d in the m ar ket . T h e e n vi ronm e nt al factors i ncl ude geogra phi cal
l ocat i on, t h e c l i m a t e , w e a t h e r a n d o t h e r s u c h fa ct ors t h a t a r e n o t just
limited to climatic conditions.

Bu s i n e s s Vi abi l i ty a n d Its I m p a c t s o n t h e C o m m u n i t y

T h e goal of c om m u ni t y sustainability is to establish local economies that are

e c o n om i c a l l y viable, e nv i r o n m e n t a l l y s o u n d a n d socially re spons i ve. Ac h i e v i n g
this g oa l requires participation f r o m all sectors o f the c o m m u n i t y, b ot h to
d e t e r m i n e c o m m u n i t y n e e d s a n d to identify a n d i m p l e m e n t i nnova t i ve a n d
appropriate solutions. Business sustainability is a goal for m o s t enterprises.
S ustainability in business generally addresses t w o m a i n categories wh i c h are
th e e ff e c t b u s i n e s s h a s o n t h e e n v i r o n m e n t a n d th e e ff e c t b u s i n e s s h a s o n
society. Sustainability focuses o n meeting the needs of the present without
c o m p r o m i s i n g t h e ability of future g e n e r a t i on s to m e e t their nee ds. T h e c o n c e p t
of sustainability i s c o m p o s e d o f three pillars: e c o n o m i c , e nv i r o n m e n t a l , a n d
social— also k n o w n informally as profits, planet, a nd people.

A s a m i c r o b u s i n e s s o w n e r, m a k i n g t h e c a s e f o r a s u s t a i n a b l e b u s i n e s s i s
s i m p l e . A n e n v i r o n m e n t a l l y f r i e n d l y b u s i n e s s c a n b e a p r o f i t a b l e o n e . It c a n
easily d o n e b y attracting g r e e n c o n s c i o u s c o n s u m e r s a n d publicity, c r e a t e v a l u e
for employees, customers and public, reduce energy use and improve public
health.
Vi a bi l i t y is d e f i ne d a s t he ability t o survi ve. I n a b us i n e s s s e n s e , that ability
to survive is ultimately linked t o financial p e r f o r m a n c e a n d position.

A b u s i n e s s is v i a b l e w h e r e e i t he r: it is re t ur n i n g a profi t t hat is suffi c i ent t o

p r o v i d e a r e t u r n t o t h e b u s i n e s s o w n e r w h i l e a l s o m e e t i n g its c o m m i t m e n t s t o
b u s i n e s s c r e d i t o r s ; i t h a s s u ff i c i e n t c a s h r e s o u r c e s t o s u s t a i n i t s e l f t h r o u g h a
per i od w h e n it is not returning a profit.
A viable busi ness h a s great effects to the c o m m u n i t y. S o m e of this are:
1. It p r o vi de s c o m m u n i t y j obs i n t he bus i nes s sector;
2. It p r o d u c e s t a xa b l e i n c o m e for t h e c o m m u n i t y f r o m b o t h t h e
business establishment and the workers,
 3. G o v e r n m e n t c o n t i n u o u s l y m a k e s i m p r o v e m e n t i n t h e c o m m u n i t y
i nfrast r uct ures s u c h a s b r i d g e s , r o a d s , s e w e r s , w a t e r o r e l ec t ri c t o
entice o t h e r b us i n e s s to invest i n t he c o m m u n i t y ;
4. It h e l p s i n t h e e s t a b l i s h m e n t o f b e t t e r s c h o o l s , m o r e b u s i n e s s a n d
even m o r e jobs for its citizens.
5. It leads t o i m p r o v e d bus i nes s services t o the c o m m u n i t y ;
6. It improves c o m m u n i t y life.

T h e e c o n o m i c cont ri but i ons to the societies i n w h i c h bus i nes s ope rat e

a r e si gni fi cant . T h e s e i n c l u d e p a y m e n t s t o h o s t g o v e r n m e n t s i n t h e f o r m o f
t a x e s a n d royal t i es, w h i c h i n t u r n di re ct l y s u p p o r t l o n g – t e r m r e g i o n a l a n d
national d e v e l o p m e n t , i n c l u d i n g p ub l i c se rvi c es a n d infrastructure. B u s i n e s s
p r o v i d e s b r o a d e r e c o n o m i c c o n t r i b u t i o n s t o s o c i e t y t h r o u g h salaries,
procurement and community investment.
Across the globe, businesses expect resource companies to maintain
s t r o n g e t hi c a l s t a n d a r d s . T h i s i n c l u d e s s t r o n g a nt i – c o r r u p t i o n m e a s u r e s , a s
well as transparent disclosure around interactions with governments,
including l o b by i n g a n d the p a y m e n t of taxes a n d royalties.
T h e r e a r e a l s o s t r o n g s o c ietal e x p e c t a t i o n s a r o u n d t h e n e e d f o r
b u s i n e s s t o r e s p e c t h u m a n rights. T h i s r e c o g n i z e s t hat m a n y c o m p a n i e s a r e
in a position to potentially u nd e r m i n e or support the h u m a n rights of their
c o m m u n i t y o f interest. I n this c ont e xt , c o m p a n i e s a r e e x p e c t e d t o c a r r y o u t
h u m a n rights d u e diligence in order to better understand a n d m a n a g e their
pot ent i al a n d a c t u a l n e g a t i v e h u m a n ri ght s i m p a c t s .
I m p a c t of Entrepreneurs a n d C o m m u n i t y D e v e l o p m e n t

B u s i n e s s e n t r e p r e n e u r s p l a y a critical r o l e i n t h e d e v e l o p m e n t
o f t h e e c o n o m y a s this is t h e k e y c o n t r i b u t o r t o i n n o v a t i v e n e s s a n d
product i m provem ent . It is o ne of the important ingredients to the creation
of n e w employments and in the building of communities in wa y s of
o ff e r i n g t h e m j o b s . B y c o n t r i b u t i n g t o l o c a l c ha r i t i e s , t a k i n g p a r t i n
l o c a l b u s i n e s s , i n v e s t i ng i n p r o j e c t s i n c o m m u n i t i e s a n d c r e a t i n g a n d
p a r t i c i p a t i ng i n d i ff e r e n t n e t w o r k s i n e n t r e p r e n e u r s h i p , t h e y b u i l d u p
robust c o m m u n i t i e s which contribute to the com m uni t y development.
G o v e r n m e n t s s h o u l d d e v e l o p pol i ci e s w h i c h wi l l e n h a n c e e n t r e p r e n e u r s h i p
b y u n d e r s t a n d i n g t h e critical difference existing bet wee n small
b u s i n e s s owner s and
entrepreneurship. At the sa m e time, a misconception about
entrepreneurs a n d w h e r e entrepreneurs c a n b e f o u n d c a n also help the
l o c a l p e o p l e t o creat e t h e right p i c t u r e o f e nt r e p r e ne u r s h i p a n d t h u s
b e c o m e a g g r e s s i v e a n d contribute t o e c o n om i c deve l opm e nt .
Recom m endat i ons in Maximizing Positive Impact to Co m m un i t y
M o s t b u s i n e s s e s i n t h e c o u n t r y h a v e responsibilities t o o u r
c o m m u n i t y. It is their social obligations to hel p t he c o m m u n i t y through:
1. Divert a proportion of re venues to g o o d a n d wo r t h y c ause s for
community
d e v e l o p m e n t a n d out reach p r o g r a m s ;
 2 . F i n d c r e a t i v e w a y s t o i m p r o v e t h e life o f t h e f i r m s ’ e m p l o y e e s a n d t h e
c o m m u ni t y;
3. E s t a b l i s h m e n t o f l i n k a g e b e t w e e n b u s i n e s s a n d c o m m u n i t y t o t h r e s h o u t
s o m e problems regarding social a nd environmental issues and
c onsul t a t i o ns;
4. Establishment of scholarship grants to poor but deserving students in
the c o m m u n i t y ;
5 . H e l p b u i l d c u s t o m e r a t t r a c t i o n , s a t i s f a c t i o n a n d l o y a l t y, a t a t i m e w h e n
cust om ers a r e increasingly exercising their right to c hoose ;
6. R e d u c e risks of negative publicity, boyc ot t s a n d tarnished public i m a g e ,
7. I m p r o v e p r o d u c t i m a g e , b r a n d n a m e a n d reputation.
Minimizing the Negative Im pac t o n Business
Th e r e are m a n y factors that will influence t he holistic perceptions o f a
negative i m pact a nd will influence the customer t owa r d or a w a y f r o m a
p u r c h a s e o r e n g a g e m e n t . F o r m o s t bus i nes se s, a spi ri ng f o r a perfect s c o r e is
s i m p l y a u t o p i a n d r e a m , a n d e v e n if it is p os s i b l e it m a y n o t b e d e s i r a bl e a s
havi ng a perfect score.

B u t if a b us i n e s s bel i e ves its p r o d u c t or se rvi c e is suffe ri ng t he

c o n s e q u e n c e s o f n e g a t i v e o nl i ne r e v i e w s , a n d c o n s u m e r f e e d b a c k , t h e r e a r e
several actions that will help m inimize the impact a nd correct a trend of
r e d u c e d sales o r c u s t o m e r e n g a g e m e n t s .
HERFINDAHL – HIRSCHMAN INDEX (HHI)

A s a final not e to hel p g ui de t he p r o po n e n t s of a bus i nes s propos al i n c ho o s i n g

w h a t t ype of i ndust ry t o enter, t h e u s e o f t he He r f i n d a hl – H i r s c h m a n I n d e x – H H I w o u l d
b e use ful s i n c e it h e l p s t h e p r o p o n e n t i d e n t i f y m a r k e t s a r e h i g h l y c o m p e t i t i v e a n d
s a t u r a t e d a n d t h o s e m a r k e t s w i t h h i g h m a r k e t c onc ent ra t i on.
T h e H H I is a c o m m o n l y a cc ept e d m e a s u r e of m a r ke t concentration. It is calculate d
b y s q u a r i ng t h e m a r k e t s h a r e o f e a c h f i r m c o m p e t i n g i n a m a r ke t , a n d t h e n s u m m i n g t h e
resulting num be r s. M a r k e t share is equal to the R e v e n u e of the Fi r m / Re venue of the
I n d u s t r y a n d is a c t u a l l y a p e r c e n t a g e . H o w e v e r, t h e w h o l e n u m b e r s o f t h e m a r k e t s h a r e
are u s e d to c o m p u t e t he H H I .
T h e H H I n u m b e r c a n range f r o m close to zero to 10,000. T h e H H I is expressed as
H H I = M S ² of Firm 1 + M S ² of Fi r m 2 + M S ² of Firm 3….. + M S ² of Firm n.

T h e cl oser a m a r k e t is to b e i n g a m o n o p o l y, t h e h i g he r t he m a r ke t ’s c o n c entration
( a n d t h e l o w e r its c o m p e t i t i o n ) . If, f o r e x a m p l e , t h e r e w a s o n l y o n e f i r m i n a n i n d us t r y,
that f i r m w o u l d h a v e 1 0 0 % m a r k e t share, a n d t he H H I w o u l d e qu a l 1 0, 0 00 (100²), nearl y
0 % market share, and the H H I would be close to zero, indicating nearly perfect
competition. Th i s m e a n s the m a r ke t is highly com peti tive a n d is characterized b y the
existence of n u m e r o u s competitors.
Results of the H H I woul d indicate the following:

• HHI bel ow 1 0 0 indicates a highly competitive market.

• HHI b e l o w 1 0 0 0 indicates a n u nc o n c e nt r a t e d m ar ke t .
• HHI b e t w e e n 1 0 0 0 to 1 8 0 0 indicates m o d e r a t e m a r k e t concentration.
• HHI greater t h a n 1 8 0 0 indicates h i g h m a r k e t c onc ent ra t i on.

T h e busi ness p r o p o n e n t s h o u l d therefore s e e k t o enter a n i ndus t ry w h e r e H H I

is greater than 1 8 0 0 since the m a r ke t is not characterized b y too m a n y firms.
(Investopedia, L L C 2015)
Activity 1: M a t c h i n g Ty p e

Directions: C h o o s e the letter of the correct a n s we r f r o m the list of wo r d s in

the b o x a n d write it in b l a n k s p a c e provi de d.

a. HHI f. Socioeconomic Factors

b. Income g. Technology
c. Viability h. Taxe s
d. Education i. Entrepreneurs
e. Economic j. S u s t a i na b l e

_ __ _ _ __ 1 . C h a n g e s in interest rates, w a g e rate a n d inflation rates are e xa m pl e

of _____________ changes.
_______2. Smart phone is an example of _________________.
_______3. Business is _________________ when it is economically viable,
envi ronm ent al l y s o u n d a n d socially responsible.
_______4. Business contributes to government by paying __________.
_______5. Business ______________ are innovators.
_ _ _ _ _ _ _ 6 . T h e s e influence t h e behaviours, attitudes, trends, tastes a n d
lifestyles of individuals.
_______7. It equips m em ber s of society with knowledge, skills to be
e m pl oyed in different jobs.
_______8. It is defined as the ability to survive whi c h linked to financial
position.

_______9. T h e a m o u n t of m o n e y individuals e arn from their work, business

or i n v e s t m e n t s
_______10. C o m m o n l y accept ed m e a s u r e of m a r ke t concentration

Ac t i v i t y 2. E s s a y Q u e s t i o n s . ( 1 5 pts/ 5 p oi nt s e a c h )

Rubrics: ( Fo c u s -3 pts; organization-2pts.)

Explain the effects of business a n d industry o n the following soc i oec onom i c
factors?
1. E d u c a t i o n -

2. I n c o m e -

3. O c c u p a t i o n -
PERFORMANCE TASK

Since this is y o u last m o d u l e o n Appl i e d E c on o m i c s , y o u are give a task to

a pp l y w h a t y o u h a v e learned. Pl eas e r e a d t he instructions carefully.
A P P L I C AT I O N . Research on business opportunities. L o o k for a business whe re the
industry is not yet saturated wi t h s o m a n y firms. Yo u c a n a pp l y the H e r f i n d a h l –
H i r s c h m a n I n d e x di scuss e d in the chapter. O n c e y o u h a v e identified a business,
pre pa re a s i m p l e Bus i ne s s P ro p o s a l .
The BUSINESS PRO PO SAL should include the following:
a. Introduction/Company background
b. Vi s i o n St a t e m e nt s
c. A description of the g oo d or service to be offered;
d. Target m a r k e t o f y ou r p r o du c t
e. P r o p o s e d location a n d reason for the c hoi c e of this location;
f. L o n g – term objectives of the business;
g. E s t i m a t e d capi t al r e q u i r e m e n t s ;
h. S o u r c e s of t he capital;
i. F o r m of busi ness organization: S o l e proprietorship, Par t ners hi p, or
Corp oration
j. Suggest ed pricing for the product o r service;
k. M o d e of prom ot i on or advertising used;
l. Technical requirements: Ma chi nes , Building, Too l s nee ded; a nd
m. Socio economic Impact: Positive Effects of the Project and Negative Effects of
the Project.

RUBRIC FOR SCORING

Excellent- Very Good 4-3 Good Poor
5 2 1-0
Introductory El e m e n t s
Vision
S t a t e m e n t s / Ob j e c t i v e s
Busi ne ss Description
P r o d u c t s / Se r vi c e s
Marketing
Industry Analysis
Technical
Re qui re m ent
Socio E c on o m i c I m p act

Writing Skills
POST ASSESSMENT

C h o o s e t he letter o f the best a ns we r. Wr i t e t he c h o s e n letter o n a separate s h e e t of

p a p e r.

1. M a n y cl i m at i c c h a n g e s c a n alter t he t ra de o f industries a n d h o w c u s t o m e r s
react towards a certain product and this is related to ________________________.
a. E n v i r o n m e n t a l Fa c t o r c. Go v e r nm e n t
b. Political C h a n g e d. Cha nge s in Technology
2. A viable business h a s great effects to the c om m u ni t y; wh i c h of the following
statements is not true?
a. It provi des j o b s to the c o m m u n i t y
b. It p r o du c e s t a xa b l e i n c o m e
c. It d o e s provi de opportunities for t he p e o p l e in services s u c h a s social
welfare
d. It d o e s not s u p p or t g o v e r n m e n t b y p a y i n g taxes.
3. Te c h no l o g i c a l a d v a n c e m e n t s e n a b l e d b us i n e s s to lessen cost a n d
improve
business
a. E nsystems
v i r o n m eand
n t a lthis
Fa cis
t o an
r example of ____________
c. Go v e r nm e n t
b. Political C h a n g e d. Cha nge s in Technology
4. Businesses all over the world are expected to maintain strong _________________.
a. Ethical Standards c. N o r m s a n d Ru l e s
b. M o d e of Conduct d. Regulations
5. T h e a m o u n t o f m o n e y a per son re ce i ved f r o m their wo r k , business o r
i nve s t m e nt s:
a. I n c o m e c. Wage
b. S a l a r y d. All of the above
6. Thi s is the goal of the business , a dvoca t e o f positive c h a n g e in the society.
a. Flexibility c . Sustainability
b. Profitability d. Viability
7. It is d e f i n e d a s t h e ability o f t h e b us i n e s s t o s u r v i v e a n d s t a n d p r e s s u r e
which
linked to financial position.
a. Flexibility c. Stability
b. Durability d. Viability
8. This relates to changes in government influence means _______________.
a. E c o n o m i c C h a n g e c. Envi ronm e nt a l C h a n g e
b. Political C h a n g e d. Go v e r nm e n t
9. T h e y a re the p r o po n e n t o f i nnova t i on a n d produc t d e v e l op m e nt .
a. Entrepr eneurs c. Importer
b. E x p o r t e r d. Suppl i e r
10. T h i s factors aff ect i ng i ndust ry i ncl udes social factors s u c h a s pattern o f
behavior, tastes a n d lifestyles.
a. E n v i r o n m e n t a l Fa c t o r c. Go v e r nm e n t
b. E c o n o m i c C h a n g e s d. Social E n v i r o nm e nt
11.T h e fol l owi ng are m a j o r contributions of business a n d industry to society.
W h i c h of the following state m e n t s is not true?
a. It provi des j o b s in the c o m m u n i t y
 b. It e va d e s p a y m e n t of taxes for the c o m m u n i t y
c. It d oe s not helps in the i m p r o v e m e n t o f c o m m u n i t y life
d. It d oe s suppor t l ong t e r m social d e v e l o p m e n t
12. Viability i s def i ned a s the ability t o survive. I n the bus i nes s se nse , that
ability
to survive is linked t o financial p e r f o r m a n c e a n d position.
a. B o t h s t a t e m e n t s a r e Tr u e .
b. B o t h s t a t e m e n t a r e Fal se .
c. T h e first s t a t e m e n t is Tr u e ; t h e s e c o n d s t a t e m e n t is Fal se .
d. T h e first s t a t e m e n t is Tr u e ; t h e s e c o n d s t a t e m e n t is F a l s e
13. Refers to a regular activity per form b y virtue of their skills,
experiences
a. B l uaen dCollar c. Oc c up a t i on
choices.
b. Whi t e Collar d. Profession
14.T h e s e are characteristics t h a t define t he quality o f life in a society.
a. G o v e r n m e n t Fa c t o r c. Political Factors
b. E c o n o m i c Fact ors d. Socioeconomic Factors
15. B u s i n e s s a n d industries s h o u l d b e flexible e n o u g h t o wi t hs t a n d t h e c h a n g i n g
rules and policies regulations and policies set by the ______________.
a. C o n s u m e r c. Supplier
b. G o v e r n m e n t d. Ho u s e h ol d s
 Assessment: What's More What I Know
1. A 1. E 1. A
2. C
2. G
3. J 2. D
3. D 4. H
3.D
5. I
4. B
6. F 4.A
5. A 7. D
5.A
8. C
6. A
9. B 6.C
7. C 10.A 7.D
8. D
8.B
9. A
9.A
1 0 .D
10.D
11. D
11 .B
12. C
12.A
13. C
1 3 .C
14. D
14.D
15. B
15.B

R ef er en c es :
Di n i o a n d Villasis 2 0 1 7 : A p p l i ed E c o n o m i c s . R e x B ook store, First
E d it ion.
L ean o, R o m a n D . 2016: Ap p li ed E c o n o m i c s for Senior H i g h School.
Mindshapers Co., Inc.
h t t p s : / / e n . wi k i p ed i a . o r g / w i k i / A s i n _ ( b a n d )