WEEK 1 – (MODULE 7) – 4TH QUARTER

ABM/GAS • Applied Economics

Grade 12: Week 1: Module 1 (4TH QUARTER)
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Narciso A. Martin Jr., T-II

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

ATTY. Donato D. Balderas, Jr.

Schools Division Superintendent

Vivian Luz S. Pagatpatan, Ph.D

Assistant Schools Division Superintendent

German E. Flora, Ph.D, CID Chief

Virgilio C. Boado, Ph.D, EPS in Charge of LRMS

Lorna A. Gaspar, EPS in Charge of Accountancy Business and Management

Michael Jason D. Morales, PDO II

Claire P. Toluyen, Librarian II

ii
 Applied
Economics

Week 1: Module 1
 Target

After reading these learning materials, the learner must

analyze the different principles, tools, and techniques when putting up a business
of his choice.

Every individual or businessman must fully understand the prevailing

business principles, tools, and techniques as helpful instruments in the business
day-to-day economic activity.

This lesson will guide a businessman in managing and administering business

operational flexibilities and the different analytical business tools and techniques
used throughout the business cycle. Learners and business enthusiasts have the
chance to explore the most common business tools and techniques used such as
the Environmental Scanning, Business Prediction, Benchmarking, the Strength,
Weaknesses, Opportunities, and Threats (SWOT) Analysis, the TOWS Matrix
(inverted format of SWOT), the Political, Economic, Social and Technological factors
(PEST) Analysis, the importance of conducting first a Feasibility Study and Porter’s
Five Forces.

After going through this information sheet, the learner expects to

Analyze different principles, tools, and techniques in creating a business

(ABM_AE12-Ia-d-9)

Subtasks
1. To discuss the different business principles
2. To interpret the different business tools
3. To distinguish the different business techniques

4
Jumpstart
Pretest. Short Quiz.
Directions: Choose the best answer from the given choices. Use a separate sheet
for your answers. (5 points)

1. What business tool starts in analyzing the INTERNAL FACTORS affecting the
overall performance of the business?
A. Feasibility Study C. SWOT Analysis
B. Porter’s Five Forces D. TOWS Matrix

2. What business tool starts in analyzing the EXTERNAL FACTORS affecting

the overall performance of the business?
A. Feasibility Study C. SWOT Analysis
B. Porter’s Five Forces D. TOWS Matrix

3. What business tool uses BUSINESS RESEARCHES to support more objective

decision-making when creating a business?
A. Feasibility Study C. SWOT Analysis
B. Porter’s Five Forces D. TOWS Matrix

4. What business tool helps business owners to analyze the LEVEL OF

COMPETITION within industry lines?
A. Feasibility Study C. SWOT Analysis
B. Porter’s Five Forces D. TOWS Matrix

5. Procter and Gamble Philippines owned the product named “Tide” as a

detergent brand offered in the market. What element does the company give
importance to when it continuously innovates the Tide products in the
market through its “PACKAGING”?
A. external factor/s C. SWOT Analysis
B. internal factor/s D. TOWS Matrix
Activity 1: Business Dictionary.

Directions: Supply your answers in the appropriate boxes to discover the hidden
business keywords on each given clue. Use a separate sheet for your answers. (10
points)

5
 2

1 4

5 8

10

Clues
1. It is a collective effort of individuals to produce goods and services for their
target customers.

6
 2. They are the primary recipients of goods and services produced and offered
by all types of businesses.
3. It is characterized by similar companies that offer the same products and
services to win their target customers.
4. It refers to the availability of goods or services offered in the market.
5. It is a stable monetary unit in the Philippines.
6. It relates to the consumer desire to purchase products or avail of the
services offered at a given price.
7. It is considered the "gas and oil" of every business.
8. It is a state where market supply balances with market demands due to a
stable market price.
9. It is the science of dealing with scarce resources to satisfy societal needs,
choices, and wants.
10. The English translation of the Latin word "libra."

Discover

Discussing Business Principles

A successful business understands the critical factors that could potentially affect
the way how it should operate. Business people should also be ready to address
challenges it could bring into the whole organization in unprecedented business
crises. Identifying company strengths and weaknesses will give a clearer picture of
how to properly manage company resources and the accurate administration of the
people’s skills connected to it to maximize production capacity extent (i.e.,
manufacturing business) and income generation.
Around the world, successful businesses continue to innovate to give the
best products and services that their consumers deserve. Some of the fundamental
business principles considered in top management's decision-making process are
supply and demand law statistics that guide manufacturers on producing and
delivering goods to meet the market needs and wants. The use and spending of
money to generate more money and resources such as additional investments for
the firm like procurement of new machinery and equipment could improve business
operations with greater efficiency. The greater the risk, the higher the potential
return teaches businesses to explore possibilities such as the promising benefits of
using technologies in running out our business. Nowadays, social media platforms
use to market products and services all day long, which is becoming more
convenient over costly advertisements. Develop new strategies that will provide a
unique taste of excitements from the consumers, such as more appealing product
packaging and new improve flavors, thus bringing out creativities as an infinite
source of business knowledge. It costs five times as much to get a new customer as
it does to sell something to a previous one, which reminded business-minded
people to be more consumer-oriented when it comes to decision-making. Without
consumers, there is no successful business. Consumer service is “king.” It becomes

7
an excellent business success indicator, especially across service providers across
the globe, where consumers' delight, satisfaction, and loyalty are contributing
factors to win our skeptical consumers' hearts and minds successfully. They are
always wandering around to look for the best consumer service provision in the
town. Every industry worldwide has its set of “best practices” that differentiate it
from the rest. Now that stiff competition in the business world keeps evolving
seamlessly among rival firms, business owners must see that the business will
capture and protect their target markets by simply instilling their brand image,
identity, and market share. One notable example is the Apple Company, led by its
former CEO Steve Jobs, who developed the IOS for smartphones. The company
keeps on innovating to sustain its market share. Businesses with strong advisory
boards and a strong management team make wiser decisions. It follows good
governance with the end objective to help back the community, including all the
people connected to the company, to grow more professionally, and be with the
results-oriented team. Some subjects like Business Ethics, Organizational
Development, and Corporate Social Responsibility have taught all working
personnel to be more objective in corporate decisions. The expected result will
always favor the general welfare of both the business and its people. Good
governance means adherence to corporate policies and prevailing laws and
subsequent implementation, keeping accurate financial records of the company,
and paying taxes to sustain the nation's economic stability that somehow has a
potential return in the business chambers. Lastly, successful business owners
know their market and their competition to put firms at their most competitive edge
over their rivals in the market. We have seen successful businesses such as
corporations that stayed in the market not just years but decades of business
operational flexibilities. They have prioritized important business parameters,
developed tactics, and devised business strategies to continue surviving amidst
competition and challenging times.
The present health crisis that confronts the business world will attend on
each business preparedness and readiness (big or small) that operates around the
corner to continue to survive with all the challenges it could bring business into
tests. Understanding and applying some business principles will help business
owners and entrepreneurs manage their business operations to pursue continuous
survival as they also help sustain the nation’s economy.

Interpreting Business Tools

How can we say that a business is a successful one?
For example, a Sari-Sari Store that operates around the corner seemed
successful because we can observe a continuous income flow. Consumers keep
buying items from the store, and there is a constant product supply despite small
earnings.
In contrast, big companies worldwide must possess the minimum
requirements following business success indicators to continue to operate. For
example, for having a good management team, excellent IT infrastructure, service
oriented personnel, production capacity extent, favorable returns on investments
(ROI), and positive business performances (liquidity, solvency, maturity, and
stability). As the business expands, it helps the economy grow because there will be
employment opportunities, exchanges of goods and services among retailers and

8
merchants, and a continuous flow of trade and production of goods in the
countryside.
In helping achieve these organizational objectives, some essential business
tools can help the management team track each business’s progress.
First is the Feasibility Study, which is considered a powerful tool when
putting up a business. Usually, a feasibility study follows essential business
parameters that need to be planned before introducing any company in the target
market, such as Financial, Technical, Market, Operation, and the Organization.
The most common Feasibility Study has the following essential contents such as;

 An Executive Summary
 Description of Product or Service
 Technology Considerations
 Product or Service Marketplace
 Identification of Specific Market
 Marketing Strategy
 Organization Structure
 Schedule
 Financial Projections

Next is the SOAR (Strengths, Opportunities, Aspirations, and Results)

Analysis. Using this tool invites a positive mindset by combining the people’s ideas,
dreams, and interests to fuel an energizing vision to work. SOAR Analysis works for
all industries, all levels in an organization, existing and new businesses, companies
striving for breakthroughs, and individuals as part of their development plans. The
following table shows the SOAR Analysis sample proforma.

Strengths Opportunities

What does the organization do with its What situations lead the team to
assets, resources, capabilities, and success, profit, discoveries, and
challenges? breakthroughs?

Aspirations Results

What success indicators are the best

What do we want to achieve in the future? outcomes?
Table 1. The SOAR Analysis

Next is the SWOT (Strengths, Weaknesses, Opportunities, and Threats)

Analysis. This business tool will help the business identify internal factors as its
ultimate business strengths to maximize resources while gradually addressing its

9
 weaknesses. Suppose the company can detect weaknesses, both internal and
external factors. In that case, the business can focus its resources to obtain more
resources, improve its people skills, systems, methods, and even procedural
approaches.
The following table shows the SWOT Analysis sample proforma.

Strengths Weaknesses

Strengths are internal business factors Weaknesses are internal business

that could help generate more assets and factors that could challenge the
resources. achievements of business success.

Opportunities Threats

Opportunities are external business Threats are external business factors

factors that could contribute to business that could harm the whole business
success. organization.
Table 2. The SWOT Analysis

Next is the TOWS (Threats, Opportunities, Weaknesses, and Strengths)

Matrix. One of the main focuses of this tool, compared with SWOT Analysis, focuses
on strategy generation and selection (internal) while the former focused on
opportunities and threats (external). This tool generally matches internal to external
factors to streamline strategic options that an organization would have to take. The
following table shows the expanded TOWS Analysis sample proforma.

External Opportunities External Threats

Internal Strengths (S) SO - Maxi-Maxi Strategy ST - Maxi-Mini Strategy

Internal Weaknesses (W) WO - Mini-Maxi Strategy WT - Mini-Mini Strategy

Table 3. The Expanded TOWS Matrix
Next is the PEST (Political, Economic, Social, and Technological) Analysis,
which is also known for its expanded formats such as PESTLE, PESTEL,
PESTLIED, STEEPLE, SLEPT, and LONGPESTLE. The simplicity of PEST Analysis
helps businesses to understand the “big picture” of forces that potentially exposed
the whole business package that may bring changes, challenges, and opportunities.
The creator of PEST Analysis is Harvard Professor Francis Aguilar, who mentioned
in his 1967 book entitled “Scanning the Business Environment” the following
reasons for this tool such as;

1. It helps spot business or personal opportunities while giving an advanced

signal of significant threats.
2. It reveals the direction of change in the business environment.
3. It helps to avoid starting projects that are likely to fail.
4. It helps to develop an objective view of the new environment.

10
 The following table shows the PEST Analysis sample proforma.

P E S T

Political Economic Social Technological

The The The advent of

The success of
government purchasing technological
helps in power of business innovations
building a consumers economic could
progressive could change performances is improve
flow of the the demand highly business
economic and supply dependent on operational
system. models of the the flexibility.
economy.
demographic
profiles,
characteristics,
and lifestyles of
consumers.
Table 4. The Simple PEST Analysis

Next is Porter’s Five Forces, which derived its name from the proponent, Sir
Michael E. Porter. Porter’s Five Force’s ultimate goal allows the organization to
study the market’s movement while identifying its standing among competitors. It
tells the level of competition of the market that signals strategic intervention for
successful business survival.
The following figure shows Porter’s Five Forces sample proforma.

Threat of Figure 1.
New The
Entrants Porter’s
Five Forces
Porte
Bargaining
Intensity of
Power of r’s Five
Competitive Forces
Rivalry Buyers
PORTER’S gauges the
FIVE FORCES following
business
indicators,
Bargaining such as the
Threat of Power of threat of
Substitutes Suppliers new
entrants,
which

11
analyzes how it is easy to put up a new shop or how it is challenging to penetrate
the target market. It shall also understand the bargaining powers vested both for
the buyers (purchase/buy) and suppliers (deliver/sell). It also determines how likely
a customer chooses alternatives when they become available, including the
emerging numbers of competitors having the same offered products and services
that could intensify competition in the business environment.

Distinguishing Business Techniques

In maintaining the competitive business edge, the probable focus would be on the
effectiveness of business techniques (traditional or contemporary) to match the
demands of the ever-evolving world of the business economy.
Like Andrew Gotianun Sr. led the Filinvest Group that engages in real estate,
George S.K. Ty founded the Metrobank, and the late Henry Sy Sr. became well
known in managing Shoemart now Supermarket (SM), are just among the
prominent successful businessmen here and abroad.
But how they achieved these milestones?
For entrepreneurs or small business players in the market competition, essential
business parameters must carefully consider before creating any business type.
First is the use of environmental scanning, where it provides sorted data about the
business environment. Technically speaking, the business environment has
internal and external environments. When seeking data from the internal business
environment, the business must consider the availability of company resources,
production capacity extent (goods/services), procurements, and even the Research
and Development capability of the organization such as Corporations and
MultiNational Corporations. Data from the external business environment are the
elements that constitute economic situations outside the organization. For
instance, the impact of inflation into one’s economy, rates of interest, changes in
buying and selling stocks, political and social situations, demographic profiles,
technology advances, and even people’s spending could affect the demand and
supply models of the economy. Through careful analyses of the general business
environment, business owners can create realistic decisions crafted from analyzing
the business environments.
Another well-known business technique is employing business prediction or
business forecasting that taught us how to objectively predict variables in a
business environment that could contribute to future success. A basic example
when using this technique is hiring new employees if deemed necessary or, in some
cases, execute retrenchment if, upon careful review, it would potentially put the
business in its most advantageous position. Production of goods may also be
predicted, such as the Accounting data wherein sales get higher during peak
seasons. However, one obvious limitation of business forecasting is its level of
certainty that all predictions made will probably happen in the future.
The concept of benchmarking can alter economic situations such as when
manufacturing quality, affordable and innovative products could increase the
organization’s profitability. Pricing differentiation, product packaging, creating
consumer’s value, and business-identity through best practices could put our
business to its optimum level of competitive advantage among rival firms in the
industry lines. It becomes the reason sometimes; our personal experience taught us
to stick with the same brand or products because of trust and loyalty already seed

12
in the business. Benchmarking is an excellent business technique because even
how high the competition is, the company may still win sensitive consumers
because of the seed business confidence.

Explore

Activity 1:
Directions: Read and analyze the given cases brought by the prevailing health
crisis. Give and support your decisions using business tools for each case. Use a
separate sheet for your answers.
Case 1. Foreclose Property.
Before the coming of COVID-19 in Bauang, La Union, Mang Juan’s
agricultural land (sole property) has considered for bank foreclosure. BDU wants to
foreclose the property of Mang Juan now due to multiple extensions of
humanitarian considerations.
Use one business tool for BDU and Mang Juan and give your decisions.
What will be the BDU’s decisions? Mang Juan’s decisions?

Case 2. Business is a Gamble!

They say that our PESO currency’s value gets weaker every day because of
many factors that affect the Philippine economy, such as the unfavorable currency
exchanges, declining purchasing power, and the drastic effect of this worldwide
pandemic.
What business do you think is the best possible to put up at present using
your simple Feasibility Study?

Case 3. Deposit or Investment?

Compute your daily expenses of food on the table, i.e., how much is the cost of
your breakfast, morning snacks, lunch, afternoon snacks, dinner, including your
midnight snack.
Based on the actual expenses of food for the day, how much should you
invest in the bank, which offers you a 0.125% interest rate?
If you intend to put up a business to support your daily expenses, what
business is it?
A SWOT Analysis must support your chosen decision.

Deepen

13
Directions: SWOT Analysis. Think of a business you can create and operate inside
your house because of the prevailing business environment challenges. Present it
using the SWOT Analysis proforma. There is a rubric below for the point system.
Use a separate sheet for your answers. (20 points)

SWOT Analysis
Strengths Weaknesses

Opportunities Threats

Rubric
Indicators Outstanding Above-Average Average
(5) (3) (1)

Learner The learner is at The learner is of

demonstrates ease with minimum
full knowledge of expected selfesteem
the SWOT answers to all requirement in
Content (5 Analysis more SWOT Analysis executing the
points) than required by indicators. SWOT Analysis
answering all and can answer
questions with only rudimentary
further inputs. questions.

The learner The learner The teacher has

presents SWOT presents SWOT difficulty
Analysis Analysis following the
information in a information in a SWOT Analysis
Organization (5 logical, logical sequence presentation
points) impressive which the reader because the
sequence which can follow. learner jumps
the reader can around.
follow.

14
 Learners employ Learners employ Learners employ
originality, originality on the few finishing
uniqueness, and outputs touches on the
enhancements sometimes. outputs.
Creativity (5
on the expected
points)
outputs.

The learner's The learner's The learner's

presentation has presentation has presentation has
impressively delivered the delivered the
Over-all delivered the expected output. minimum
Impressions (5 expected output. expected output.
points)

Gauge

Posttest. Summative.
Directions: Choose the best answer. Use a separate sheet for your answer.

1. What is the business technique wherein the data came from analyzing
contrasting elements in the business environment?
A. Environmental Analysis
B. Environmental Scanning
C. External Business Environment
D. Internal Business Environment

2. What does “setting performance-standards” mean in the world of business?

A. Benchmarking
B. Business Prediction

15
 C. Demand equals Supply
D. Market Equilibrium

3. Which of the indicators of PEST Analysis gives importance to the Filipino

culture when affected by economic situations?
A. Economic
B. Political
C. Social
D. Technological

4. The idea of seeing and experiencing “touch screens” inside the banks fall
under which indicator?
A. Economic
B. Political
C. Social
D. Technological

5. What business tool is considered the inverted format of SWOT Analysis?

A. SOAR Analysis
B. SOAR Matrix
C. TOWS Analysis
D. TOWS Matrix

6. When employees from your competitors “spy” your product pricing

strategies, this situation is a case under which of the following?
A. Business Ethics
B. Business Finance
C. Business Mathematics
D. Monkey Business

7. What is the first thing that a businessman or entrepreneur should do when

creating a business?
A. Business Plan
B. Personality Analysis
C. SMART Analysis
D. SWOT Analysis

16
8. What business tool must also be included in researches?
A. Feasibility Study
B. Financial Report
C. Forecasting
D. Organizational Structure

9. What business indicator best explains the idea of scarcity?

A. Opportunities
B. Strengths
C. Threats
D. Weaknesses

10. The adage, “The customer is always right” falls under which column of the
PEST Analysis?
A. Economic
B. Political
C. Social
D. Technological

11. What information would you use to determine the employees’ level of
commitment to an organization?
A. Aspirations
B. Opportunities
C. Results
D. Strengths

12. Which is more critical for the business when achieving a competitive
advantage?
A. Always on top
B. Benchmarking
C. Product Quality
D. Service Quality

13. Can you design a competitive advantage out of a Feasibility Study?

A. Yes, because it is upon careful review of business technical aspects.
B. No, because it only complicates the business environment, especially
when you intend to create only a small business, e.g., such as a Sari
Sari store.
C. Either A or B

17
 D. There is a need for further review of related researches and studies
needed for decision-making.

14. What is suggested as the best possible way to achieve a good business
forecast?
A. 24/7 monitoring of business economic activities
B. Accepts that not all estimates could happen in the future
C. Compare and contrast previous and present business data
D. Regularly review of past business data

15. Which of the following shows best the present level of competition in the
economy?
A. Branch expansion, new products and services, new business methods
B. New shop, new products and services, new business methods
C. No expansion, improved products and services, improved business
methods
D. Old shop, improved products and services, improved business
methods

You’re done. Congratulations!

STUDENT’S WEEKLY HOME LEARNING PLAN:

MODULE 7/WEEK1
WHAT TO BE ANSWERED?

Explore Case 1 Foreclose Property Page

13
Deepen Activity: SWOT Please refer below for instructions
Analysis
Gauge Multiple Choice 15 items Page
16-18

LOCALIZATION:

Deepen: SWOT Analysis. Think of a business you can create and operate in your
community because of the prevailing business environment challenges. Present it
using the SWOT Analysis proforma. There is a rubric on pages 14-15 for the point
system. You may use a separate sheet for your answers if needed. (20 points)

SWOT Analysis

18
Strengths Weaknesses

Opportunities Threats

19
References
Books

Martin, Narciso Jr., A. (2012). The Quality of Service of Commercial Banks in The
City of Tarlac. Tarlac State University. College of Business and
Accountancy. University Archives - Library of Social Sciences. Pp 1-141.

Silbert, J. and Silbert, T. (2007). Soaring from SWOT” Four Lessons in Strategic
Planning Done Right. Accessed October 24, 2018.

Stavros, J.M. and Hinrichs, G. (2009). The Thin Book of SOAR: Building
StrengthsBased Strategy. Thin Book Publishing Company.

Websites

De Bruin, Lars. “Business-to-you (B2U).” June 18, 2018. Retrieved from

https://www.business-to-you.com/scanning-the-
environmentpestelanalysis/

GroupMap Technology Pty Ltd. (2019). Retrieved from

https://www.groupmap.com/map-templates/soar-analysis/

MindTools. Essential Skills for an Excellent Career. (2020). Retrieved from

https://www.mindtools.com/pages/main/newMN_STR.htm
22