Business Principles, Tools And

Techniques In Participating In
Various Types Of Industries In
The Locality
(Part 1)
Business Environment

 Business Environment includes all

the internal and external factors that
affect how the company functions
including employees, customers,
management, supply and demand
and business regulations.
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 Environmental analysis is a
strategic tool. It is a process to
identify all the external and internal
elements, which can affect the
organization’s performance. The
analysis entails assessing the level
of threat or opportunity the factors
might present.
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 Micro Environment of the
organization consists of those
factors which are controllable by the
management.

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 Factors of Micro Environment

a. Competitors are the rivals against

another.
b. Organization includes the business
owners, board of directors,
stockholders, investors, and
employees.
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 Factors of Micro Environment

c. Suppliers are the ones who provide

inputs to the business like raw
materials, tools, equipment, and
other inputs needed in producing
goods.
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 Factors of Micro Environment

d. Market is a place where buyers and

sellers interact to facilitate
exchange of goods, services, or
instruments like consumer market,
labor market, and stock market.
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 Factors of Micro Environment

e. Intermediaries are the people who

help the company promote, sell,
and distribute it’s products to final
consumers like resellers, physical
distribution firms, marketing
services and financial
intermediaries.
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 Factors of Micro Environment

f. Customers are the one who

buys the goods or services
produced by another persons’ or
companies for their own
consumption.
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 Macro environment is also known
as external environment that greatly
influences the performance, decision
making and strategy of all business
enterprises.

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 Factors of Macro Environment

a. Population and Demographic. Top

management use this factor to identify
potential markets for specific goods or
services. Population based on
different factors such as age, gender,
education, income and employment.
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 Factors of Macro Environment

b. Economic environment can directly or

indirectly affect the business of the
company. The success or failure of
business organization depends on the
economic factors like purchasing power,
foreign exchange rates, consumer
income, inflation and unemployment rate.
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 Factors of Macro Environment

c. Socio-Cultural factors should be given

great consideration of the top
management because this influences the
decisions of consumers. Socio-cultural
factors include customs and traditions,
values, beliefs, religion and attitudes.
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 Factors of Macro Environment

d. Technological. The development of

new technology can change
business into a success or failure.
Technological change can reduce
the costs, increase profit and can
make business more competitive.
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 Factors of Macro Environment

e. Legal and Political. Government

laws, policies, rules and regulations
have significant influences in the
business operations of the company.
f. Environmental Factors include
weather condition and climate.
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WHAT IS A FIRM

A firm is a business organization,

such as corporation, limited liability
company or partnership that sells
goods or services to make a profit.

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What are the forms of business
organizations?

The forms of business organizations

include the following:
· Sole or Single Proprietorship
· Partnership
· Corporation
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Partnership
You can classify a business
partnership as either general or
limited. General partnerships allow
both partners to invest in a business
with 100% responsibility for any
business debts. They don't require a
formal agreement. 18
Partnership
In comparison, limited
partnerships require owners to file
paperwork with the state and
compose formal agreements that
describe all of the important details
of the partnership, such as who is
responsible for certain debts. 19
Some advantages of partnerships
include:

- Easy to establish
- Partners can combine expertise
- Distributed workload

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Some disadvantages to consider:

- Possibility for disagreements

- Difficulty in transferring ownership
- Full liability

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An example of a partnership is a
business set up between two or
more family members, friends or
colleagues in an industry that
supports their skill sets. The
partners of a business typically
divide the profits among themselves.
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Corporation

A corporation is a business
organization that acts as a unique
and separate entity from its
shareholders. A corporation pays its
own taxes before distributing profits
or dividends to shareholders. 23
Advantages of corporations include:

- Owners are not responsible for

business debts
- Tax exemptions
- Quick capital through stocks

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Disadvantages include:

- Double taxation for C-

corporations
- Annual record-keeping
requirements
- Owners are less involved than
managers 25
Common examples of corporations
include a business organization that
possesses a board of directors and
a large company that employs
hundreds of people. About half of all
corporations have at least 500
employees.
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Sole proprietorship
This popular form of business
structure is the easiest to set up.
Sole proprietorship have one owner
who makes all of the business
decisions, and there is no distinction
between the business and the
owner. 27
Advantages of a sole proprietorship
include:

- Total control of the business

- No public disclosure required
- Easy tax reporting
- Low start-up costs
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Disadvantages include:

- Unlimited liability
- Lack of structure
- Difficulty in raising funds

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Some typical examples of sole
proprietorship include the personal
businesses of freelancers, artists,
consultants and other self-employed
business owners who operate on a
solo basis.

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