WEEK 1-5 (02/10-03/09/2025) TOPIC

DISCUSSION
Definition and Importance of Strategy in Business

Strategy in business refers to a comprehensive plan that outlines how an

organization will achieve its long-term goals, maintain a competitive
advantage, and navigate challenges in a dynamic environment. It involves
analyzing internal and external factors, setting objectives, and
allocating resources effectively.

The importance of strategy in business includes:

 Competitive Advantage: Helps organizations differentiate

themselves from competitors.

 Long-term Vision: Provides a clear roadmap for achieving business

goals.

 Efficient Resource Allocation: Ensures optimal use of financial,

human, and technological resources.

 Adaptability: Helps businesses respond to changes in market

conditions, customer preferences, and technological advancements.

The Strategic Management Process

Strategic management is a continuous and systematic approach to

planning and executing business strategies. It typically consists of the
following steps:

1. Environmental Scanning: Analyzing internal strengths and

weaknesses (SWOT analysis) and external opportunities and threats
(PESTLE analysis).

2. Strategy Formulation: Developing long-term plans based on

organizational goals and market conditions.

3. Strategy Implementation: Executing the planned strategies through

leadership, resource allocation, and operational execution.

4. Strategy Evaluation and Control: Monitoring performance,

assessing outcomes, and making necessary adjustments to stay
aligned with objectives.

Role of Accountants in Strategic Decision-Making

Accountants play a crucial role in strategic management by providing
financial insights that guide business decisions. Their contributions include:

 Financial Analysis & Budgeting: Helping businesses allocate

resources efficiently and assess financial viability.

 Cost Management & Profitability Analysis: Identifying cost-saving

opportunities and optimizing profitability.

 Risk Assessment & Compliance: Ensuring regulatory compliance

and identifying financial risks.

 Performance Measurement: Using financial data to track progress

toward strategic goals.

 Investment & Growth Planning: Advising on mergers, acquisitions,

and long-term financial sustainability.

By integrating financial expertise with strategic planning, accountants

contribute significantly to a company’s success and long-term sustainability.

ACTIVITY: CASE STUDY: The strategic plan of Big

Companies in the Philippines in terms of Human Resource
and Daily Operation
External and Internal Environment Analysis

1. PESTEL Analysis and Its Impact on Financial Strategy

PESTEL analysis examines external macro-environmental factors that can

influence a business. These factors impact financial strategy by determining
risk exposure, investment priorities, and revenue projections.

 Political: Government policies, taxation, trade regulations, and political

stability can impact financial planning and market expansion.

 Economic: Interest rates, inflation, economic growth, and exchange

rates affect pricing strategies, profitability, and capital structure.

 Social: Demographic trends, consumer behavior, and lifestyle changes

influence market demand and product positioning.

 Technological: Innovation, automation, and R&D investments impact

cost efficiency, production capabilities, and competitive differentiation.
  Environmental: Sustainability regulations, climate change, and
environmental policies can affect operational costs and brand
reputation.

 Legal: Labor laws, industry regulations, and compliance costs shape

financial risk and corporate governance.

Impact on Financial Strategy:

 Helps in risk assessment and contingency planning.

 Guides capital allocation and investment decisions.

 Supports pricing and market expansion strategies.

2. SWOT Analysis for Business Evaluation

SWOT analysis is used to assess internal and external factors that affect
business performance.

 Strengths: Internal capabilities, resources, brand equity, unique selling

points (USPs).

 Weaknesses: Operational inefficiencies, skill gaps, financial limitations.

 Opportunities: Market expansion, technological advancements,

changing consumer preferences.

 Threats: Competition, economic downturns, regulatory changes.

Impact on Business Strategy:

 Aligns business resources with market opportunities.

 Helps in risk mitigation and financial stability.

 Guides strategic decision-making for growth and expansion.

3. Porter’s Five Forces and Competitive Advantage

Porter’s Five Forces framework evaluates industry competitiveness

and profitability.

1. Threat of New Entrants: High entry barriers (capital investment,

regulations) reduce competition, influencing financial planning.

2. Bargaining Power of Suppliers: Strong supplier control can increase

costs, affecting pricing and profitability.
 3. Bargaining Power of Buyers: Informed consumers demand better
pricing and quality, impacting revenue strategies.

4. Threat of Substitutes: Alternative products can reduce market share,

requiring product differentiation.

5. Industry Rivalry: Intense competition influences pricing strategies, cost

control, and financial sustainability.

Impact on Competitive Advantage:

 Helps firms position themselves strategically against competitors.

 Guides cost leadership, differentiation, or focus strategies.

 Aids in financial planning for market penetration and product

innovation.

ACTIVITY: PICTURE OF FUTURE: Group activity that will focus on using the
framework and approaches to project the future market position of the
company (clothing line business, food industry, Ecommerce).

Relationship of SWOT Analysis, PESTEL Analysis, and Porter’s Five

Forces in Strategic Management

These three strategic analysis tools—SWOT, PESTEL, and Porter’s Five

Forces—are interconnected and help organizations assess their internal and
external environments for effective strategic planning.

1. How These Tools Relate to Each Other

(A) PESTEL Analysis (External Macro-Environment)

 Purpose: Identifies external factors that influence business

operations on a broad scale.

 Focus Areas: Political, Economic, Social, Technological,

Environmental, and Legal factors.

 Output: Helps businesses understand external opportunities and

threats.

(B) Porter’s Five Forces (Industry-Level Competitive Analysis)

 Purpose: Examines industry competition and profitability potential.

 Focus Areas: Threat of New Entrants, Bargaining Power of Suppliers,

Bargaining Power of Buyers, Threat of Substitutes, and Industry Rivalry.
  Output: Helps businesses identify competitive pressures and strategic
positioning.

(C) SWOT Analysis (Comprehensive Business Assessment)

 Purpose: Evaluates internal strengths and weaknesses alongside

external opportunities and threats to guide decision-making.

 Focus Areas:

o Strengths & Weaknesses (Internal Factors)

o Opportunities & Threats (External Factors from PESTEL & Five

Forces)

 Output: Develops strategies to leverage strengths, address

weaknesses, exploit opportunities, and mitigate threats.

2. How They Work Together in Strategic Planning

Step 1: Conduct PESTEL Analysis (Macro-Environment)

 Identifies broad external trends affecting the business (e.g., economic

downturn, changing regulations, technology shifts).

 Helps in recognizing opportunities and threats that should be

included in SWOT.

Step 2: Perform Porter’s Five Forces Analysis (Industry-Level)

 Examines competitive forces in the industry, such as high supplier

power or the threat of substitutes.

 Further refines opportunities and threats for SWOT analysis.

Step 3: SWOT Analysis (Integrating Internal & External Factors)

 Strengths & Weaknesses come from internal capabilities

(financial resources, brand reputation, operational efficiency).

 Opportunities & Threats are identified using PESTEL (macro

factors) and Porter’s Five Forces (industry forces).

 Leads to strategy formulation (growth, cost leadership,

differentiation, etc.).

3. Example: Strategic Planning for a Tech Startup

Analysis
Findings Impact on Strategy
Tool

Invest in AI-driven
AI adoption increasing (Technological),
PESTEL products, ensure legal
data privacy laws tightening (Legal),
Analysis compliance, focus on cost
recession fears (Economic)
efficiency

Porter’s Differentiate through

High industry rivalry, moderate
Five superior customer service
supplier power, low barriers to entry
Forces and unique features

Strength: Strong R&D team; Weakness: Focus on branding &

SWOT Limited brand recognition; Opportunity: partnerships, develop
Analysis Growing AI adoption; Threat: Data privacy-compliant AI
privacy regulations solutions

4. Key Takeaways

 PESTEL → Helps identify external macro trends affecting the

industry.

 Porter’s Five Forces → Assesses industry competitiveness and

profitability.

 SWOT → Combines external (PESTEL & Five Forces) and

internal factors to form strategic decisions.

Strategic Formulation and Business Models

1. Corporate, Business, and Functional-Level Strategies

Strategic management operates at different levels, each with a

unique focus and impact on financial planning.

Corporate-Level Strategy (Top-Level Decision-Making)

 Focus: Overall scope and direction of the organization.

 Key Strategies:

o Growth Strategies: Expansion, mergers & acquisitions (M&A),

diversification.
 o Stability Strategies: Maintaining current market position.

o Retrenchment Strategies: Downsizing, divestiture, restructuring.

 Impact on Financial Strategy:

o Determines capital allocation across business units.

o Guides investment in new markets or technologies.

o Affects risk management and shareholder value.

Business-Level Strategy (Competitive Positioning)

 Focus: How a business competes in a specific market.

 Key Strategies (Porter’s Generic Strategies):

o Cost Leadership: Minimizing costs to offer competitive pricing

(e.g., Walmart).

o Differentiation: Unique products/services to justify premium

pricing (e.g., Apple).

o Focus/Niche Strategy: Targeting specific market segments (e.g.,

Rolex).

 Impact on Financial Strategy:

o Influences pricing, cost structure, and profitability.

o Determines budget allocations for marketing, R&D, and

operations.

Functional-Level Strategy (Departmental Operations)

 Focus: Execution of business-level strategies within specific

functions (Finance, Marketing, HR, Operations).

 Examples:

o Financial Strategy: Budgeting, capital structure, cost controls.

o Marketing Strategy: Brand positioning, advertising spend.

o Operations Strategy: Supply chain optimization, production

efficiency.

 Impact on Financial Management:

o Directly affects cost efficiency and financial performance.

 o Aligns department-specific goals with broader business
objectives.

2. Business Models in Financial Management

A business model defines how a company creates, delivers, and

captures value. Different models impact financial planning, revenue
generation, and risk exposure.

Common Business Models & Their Financial Implications:

1. Product-Based Model: Selling physical goods (e.g., Apple,

Tesla).

o Requires high initial investment and inventory management.

o Revenue depends on sales volume and production costs.

2. Subscription Model: Recurring revenue through memberships

(e.g., Netflix, SaaS).

o Ensures steady cash flow and predictable revenue.

o High customer retention is key to profitability.

3. Freemium Model: Free basic service with paid premium

features (e.g., Spotify, LinkedIn).

o Requires strong conversion rates to sustain profitability.

o Financial risk in high acquisition costs vs. low-paying

users.

4. Marketplace Model: Connecting buyers and sellers (e.g.,

Amazon, Uber).

o Revenue from commissions or transaction fees.

o Financial focus on scaling platform growth and network

effects.

5. Franchise Model: Licensing brand and business processes (e.g.,

McDonald’s).

o Revenue from franchise fees and royalties.

o Lower operational risks but requires strong brand

control.
 6. Ad-Based Model: Earning revenue from advertisements (e.g.,
Google, Facebook).

o Revenue depends on user engagement and ad pricing.

o Data privacy regulations can impact financial stability.

3. Strategic Financial Planning

Strategic financial planning ensures that financial resources align

with long-term corporate objectives.

Key Components:

1. Capital Budgeting: Evaluating investment projects (NPV, IRR

analysis).

2. Financial Forecasting: Revenue, expenses, and profitability

projections.

3. Risk Management: Hedging, diversification, and contingency

planning.

4. Cost Optimization: Reducing operational expenses while

maintaining quality.

5. Funding Strategies: Equity financing, debt financing, or

reinvestment of profits.

6. Performance Metrics: ROI, ROE, EBITDA, and financial KPIs.

Impact on Business Success:

 Ensures financial sustainability and liquidity management.

 Supports growth initiatives and competitive positioning.

 Balances risk and return in investment decisions.

Definition and Scope of the Voluntary Sector

The voluntary sector, also known as the third sector or nonprofit

sector, comprises organizations that operate independently of the
government and private businesses. These organizations aim to serve the
public good rather than generate profit. They include charities,
community groups, foundations, cooperatives, and non-
governmental organizations (NGOs).

The scope of the voluntary sector is broad and includes:

 Social Services: Providing aid for vulnerable populations, such as the

homeless, elderly, and persons with disabilities.

 Education and Research: Running schools, scholarship programs,

and research institutions.

 Healthcare and Well-being: Operating hospitals, clinics, and mental

health support services.

 Environmental Protection: Advocating for sustainability and

conservation efforts.
  Advocacy and Human Rights: Promoting policy changes and
supporting marginalized groups.

Difference Between Public, Private, and Voluntary Organizations

Feature Public Sector Private Sector Voluntary Sector

Provide public Serve social,

services (e.g., Generate profit for charitable, or
Purpose
education, owners/shareholders community-based
healthcare) causes

Taxes and Donations, grants,

Sales, investments,
Funding government membership fees,
and shareholders
revenues fundraising

Managed by
Privately owned by
Government- trustees, boards, or
Ownership individuals or
controlled community
corporations
members

Public Market-driven and Accountable to

Accountabil
accountability and accountable to donors, members,
ity
legal regulations investors and beneficiaries

The Role of Volunteerism in Public Administration

Volunteerism plays a crucial role in public administration by enhancing

service delivery, strengthening community engagement, and supplementing
government efforts. Key contributions include:

 Providing Essential Services: Volunteers support public welfare

programs, disaster relief, and education initiatives.

 Reducing Government Burden: They help bridge gaps where public

resources are limited, such as in healthcare and social services.

 Strengthening Civic Engagement: Volunteerism fosters social

responsibility and encourages citizen participation in governance.

 Enhancing Policy Implementation: Many government policies rely

on nonprofit organizations to implement social and environmental
initiatives effectively.
By working alongside government agencies and private enterprises, the
voluntary sector plays a vital role in creating a more inclusive and
sustainable society.

 ACTIVITY: Case studies: Gawad Kalinga, Red

Cross, Habitat for Humanity

The three pillars of Sustainable Development Goals (SDGs) in the

Philippines are:

1. Economic Development

2. Social Development

3. Environmental Protection

These pillars align with Voluntary Sector Management in the following

ways:

1. Economic Development → Capacity Building & Resource

Mobilization

o The voluntary sector contributes by supporting microfinance

initiatives, job creation, and skills training for marginalized
communities.

o NGOs and social enterprises help drive inclusive economic

growth by promoting financial literacy and entrepreneurship.

2. Social Development → Community Engagement & Advocacy

 o Civil society organizations (CSOs) and non-profits play a key role
in health, education, and social welfare programs.

o Volunteer groups engage in policy advocacy, ensuring that

vulnerable groups have access to social services and human
rights protection.

3. Environmental Protection → Sustainable Practices & Disaster

Response

o Many voluntary organizations focus on climate action,

conservation, and disaster preparedness programs.

o Volunteers support tree planting, waste management, and

sustainable agriculture to promote ecological sustainability.

The three pillars of Sustainable Development Goals (SDGs) in the

Philippines, economic development, social development, and
environmental protection closely align with voluntary sector management
in various ways.

Economic development connects with the voluntary sector through capacity

building and resource mobilization, where non-profit organizations and social
enterprises support financial literacy, job creation, and skills training to uplift
marginalized communities.

Social development is reflected in the voluntary sector's active role in

community engagement and advocacy, ensuring access to health,
education, and social welfare while empowering vulnerable groups through
policy reforms and grassroots initiatives.

Lastly, environmental protection aligns with the voluntary sector's

commitment to sustainability and disaster response, with volunteers leading
efforts in climate action, conservation, waste management, and disaster
preparedness programs.
 Through these alignments, the voluntary sector in the Philippines plays a
crucial role in advancing the SDGs, fostering inclusive growth, social equity,
and environmental sustainability

• Republic Act 9418 (Volunteer Act of 2007) • Other relevant laws: Local
Government Code (RA 7160), Social Welfare Act • International frameworks
(United Nations Sustainable Development Goals) • Government agencies
supporting volunteerism (PNVSCA, DSWD, NYC)

Legal and Policy Framework for Volunteerism in the Philippines

Volunteerism plays a crucial role in nation-building, community development,

and social welfare in the Philippines. Several laws and policies support and
regulate volunteer activities, both at the national and international levels.

1. Republic Act 9418 (Volunteer Act of 2007)

Republic Act 9418, or the Volunteer Act of 2007, institutionalizes

volunteerism as a strategy for national development and international
cooperation. It promotes partnerships between the government, private
sector, non-governmental organizations (NGOs), and volunteer organizations.

Key Provisions of RA 9418:

 Recognition of Volunteers: Encourages individuals, organizations,

and businesses to engage in volunteer activities.

 Integration of Volunteerism in Development Plans: Government

agencies must include volunteerism in their programs.

 Role of the Philippine National Volunteer Service Coordinating

Agency (PNVSCA): PNVSCA is the lead agency in promoting and
coordinating volunteer efforts.

 Incentives for Volunteers: Provides support mechanisms for

volunteers, including training and recognition programs.

Impact of RA 9418:

 Strengthened coordination among government agencies, NGOs, and

local communities.

 Increased participation of youth, professionals, and retirees in

volunteer programs.

 Enhanced disaster response and community welfare programs through

volunteer efforts.

2. Other Relevant Laws Supporting Volunteerism

A. Local Government Code (RA 7160)

 Empowers Local Government Units (LGUs) to mobilize volunteers

for community-based programs.
  LGUs can create volunteer councils to assist in social welfare,
disaster relief, and public health.

 Encourages partnerships between local governments and civic

organizations.

B. Social Welfare Act

 Strengthens the role of the Department of Social Welfare and

Development (DSWD) in coordinating volunteer-based initiatives for
marginalized communities.

 Provides guidelines for NGOs and private groups engaged in poverty

reduction, education, and disaster relief.

C. Disaster Risk Reduction and Management Act (RA 10121)

 Recognizes volunteers as key responders in disaster preparedness,

response, and rehabilitation.

 Encourages volunteer participation in rescue operations, relief

distribution, and risk assessment.

3. International Frameworks: United Nations Sustainable

Development Goals (SDGs)

The United Nations Sustainable Development Goals (SDGs) highlight

volunteerism as a crucial tool for achieving global development targets.

Relevant SDGs for Volunteerism:

 SDG 1 (No Poverty): Volunteers support poverty alleviation

programs.

 SDG 3 (Good Health & Well-being): Health volunteers provide

medical missions, immunization, and public health education.

 SDG 4 (Quality Education): Volunteers assist in literacy programs

and school-based initiatives.

 SDG 11 (Sustainable Cities and Communities): Promotes

environmental and community-based volunteerism.

 SDG 13 (Climate Action): Volunteers participate in reforestation,

clean-up drives, and disaster response.
How the Philippines Aligns with SDGs:

 The Philippine government integrates volunteerism into its national

development plans.

 NGOs and volunteer organizations implement community projects

aligned with SDG targets.

 Corporate Social Responsibility (CSR) programs contribute to social

development through employee volunteerism.

4. Government Agencies Supporting Volunteerism

A. Philippine National Volunteer Service Coordinating Agency

(PNVSCA)

 The lead government agency promoting volunteerism.

 Coordinates local and international volunteer programs.

 Works with the United Nations Volunteers (UNV) program for global
engagement.

B. Department of Social Welfare and Development (DSWD)

 Mobilizes volunteers for social welfare services (e.g., feeding

programs, disaster relief, rehabilitation centers).

 Partners with NGOs and private organizations for livelihood and

community outreach programs.

C. National Youth Commission (NYC)

 Encourages youth participation in community service and

leadership programs.

 Implements the Youth Volunteer Program (YVP) to engage young

Filipinos in nation-building.

 Works with educational institutions to promote student

volunteerism.

Conclusion

Volunteerism in the Philippines is supported by RA 9418, other relevant

laws, and international frameworks like the SDGs. Government
agencies such as PNVSCA, DSWD, and NYC play a crucial role in
mobilizing volunteers for social development, disaster response, and poverty
alleviation. By fostering a strong culture of volunteerism, the country
enhances community resilience, social inclusion, and sustainable
development.

Organizational and Strategic Management in the Voluntary Sector

The voluntary sector, which includes nonprofits, charities, and

community organizations, requires effective governance, strategic
planning, and performance measurement to maximize its social impact.
Strategic management ensures these organizations remain mission-driven,
financially sustainable, and responsive to community needs.

1. Governance Structures in the Voluntary Sector

Nonprofit and voluntary organizations rely on structured governance to

ensure accountability, transparency, and efficient decision-making. Key
governance bodies include:

A. Board of Directors

The Board of Directors provides oversight and strategic direction. Their

key roles include:

 Setting organizational policies and ensuring legal compliance.

 Approving budgets and financial plans to maintain sustainability.

 Fundraising and donor engagement to secure resources.

 Hiring and evaluating executive leadership.

B. Executive Leadership (CEO/Executive Director)

The Executive Director or CEO leads the organization’s daily operations.

Responsibilities include:

 Implementing board-approved strategies and policies.

 Managing staff and volunteers.

 Overseeing fundraising, program delivery, and financial

management.

C. Advisory Committees
Some organizations form advisory boards or expert committees to
provide specialized guidance on legal, financial, or programmatic matters.

 These committees help in risk assessment, strategic planning,

and stakeholder engagement.

 They do not have formal decision-making power but offer expert

insights.

Best Practices in Governance:

 Clear roles and responsibilities to avoid conflicts.

 Regular board evaluations to ensure effectiveness.

 Transparent reporting and stakeholder engagement.

2. Strategic Planning for Nonprofit Organizations

Strategic planning helps nonprofits define their mission, set priorities, and
allocate resources effectively. It involves:

A. Vision, Mission, and Core Values

 Vision Statement: Describes the long-term impact the organization

aims to achieve.

 Mission Statement: Outlines the organization’s purpose and primary

activities.

 Core Values: Define ethical principles and operational culture.

B. Strategic Planning Process

A nonprofit’s strategic plan typically follows these steps:

Step Description

Conduct SWOT (Strengths, Weaknesses,

Situation Analysis Opportunities, Threats) analysis to assess internal
and external factors.

Setting Goals & Define SMART (Specific, Measurable, Achievable,

Objectives Relevant, Time-bound) goals.

Identify fundraising strategies, program

Developing
expansion, advocacy efforts, and volunteer
Strategies
engagement initiatives.
Step Description

Resource
Plan budget, human resources, and technology needs.
Allocation

Implementation & Assign responsibilities, track progress, and adjust

Monitoring strategies as needed.

C. Sustainability and Fundraising Strategies

 Diversified funding sources (grants, donations, corporate

partnerships).

 Social enterprises (nonprofits running businesses to fund programs).

 Government partnerships for policy advocacy and funding support.

Key Success Factors:

✅ Strong leadership and stakeholder engagement

✅ Data-driven decision-making
✅ Adaptive and flexible strategies

3. Measuring Performance and Impact Assessment

To ensure accountability and effectiveness, voluntary organizations must

measure their performance and assess their impact on the
communities they serve.

A. Key Performance Indicators (KPIs) for Nonprofits

KPIs help track operational efficiency and program effectiveness.

Category KPIs

Financial Fundraising efficiency, percentage of funds allocated

Performance to programs vs. admin costs.

Program Number of beneficiaries served, success rates of

Effectiveness programs.

Volunteer & Donor

Volunteer retention rate, donor satisfaction surveys.
Engagement

Long-term changes in education, health, or poverty

Community Impact
reduction.

B. Social Impact Assessment Tools

  Social Return on Investment (SROI): Measures the social and
economic value created by programs.

 Logic Model Framework: Maps inputs, activities, outputs, and

outcomes.

 Beneficiary Feedback Surveys: Gathers insights from communities

served.

C. Continuous Improvement

 Regular impact evaluations ensure resources are used effectively.

 Stakeholder engagement (donors, volunteers, beneficiaries)

enhances program development.

 Transparency and reporting build trust with funders and the public.

Conclusion

Effective governance, strategic planning, and performance

measurement are crucial for nonprofit organizations in the voluntary sector.
Strong leadership structures, clear strategic direction, and impact-
driven approaches enable these organizations to fulfill their missions and
create lasting social change.
Definition, History, and Significance of Cooperatives

A cooperative is a member-owned and member-controlled

organization formed to meet common economic, social, or cultural needs. It
operates based on democratic principles, where decisions are made
collectively, and profits are shared among members. Cooperatives promote
self-help, equity, and community development, distinguishing them
from traditional businesses that prioritize profit maximization.

History of Cooperatives:

 The first modern cooperative was the Rochdale Society of

Equitable Pioneers in 1844 in England, which established
cooperative principles still in use today.

 In the Philippines, cooperatives gained prominence with the passing

of the Cooperative Code of the Philippines (RA 6938) in 1990,
later revised under RA 9520 (2008) to strengthen their role in
economic development.

 Today, cooperatives exist globally, playing a vital role in improving

livelihoods and promoting sustainable development.

Significance of Cooperatives:

 Economic Empowerment: Provides members with financial security

and opportunities.

 Social Development: Encourages cooperation, self-reliance, and

equitable wealth distribution.
  Sustainability: Promotes ethical business practices, fair trade, and
local economic resilience.

Types of Cooperatives

1. Credit Cooperatives

o Purpose: Provide financial services such as loans, savings, and

investment opportunities to members.

o Example: Rural banks, microfinance cooperatives.

2. Producer Cooperatives

o Purpose: Help farmers, fishermen, and artisans process and

market their goods collectively.

o Example: Agricultural cooperatives selling crops and dairy

products.

3. Consumer Cooperatives

o Purpose: Allow members to purchase goods at fair prices by

collectively owning retail businesses.

o Example: Cooperative supermarkets and wholesale clubs.

4. Worker Cooperatives

o Purpose: Employees jointly own and manage businesses,

ensuring fair wages and job security.

o Example: Small manufacturing companies, service providers.

5. Multipurpose Cooperatives

o Purpose: Offer multiple services, such as financial aid, retail,

and production support.

o Example: Community-based cooperatives offering both savings

and consumer goods.

Role of Cooperatives in Economic Development

Cooperatives contribute significantly to economic development by:

 Job Creation: Generating employment opportunities, particularly in

rural and marginalized areas.
  Financial Inclusion: Providing access to credit and financial services
to low-income individuals.

 Market Access: Helping small-scale producers and farmers connect

with larger markets.

 Community Development: Promoting education, social services, and

environmental sustainability.

 Resilience in Economic Crises: Offering stability during economic

downturns through collective support.

Through these contributions, cooperatives serve as a powerful tool for

poverty reduction and sustainable development.

Republic Act No. 9520, also known as The Philippine Cooperative Code of
2008, governs the establishment, operation, and regulation of cooperatives
in the Philippines. It aims to promote the viability and growth of cooperatives
as instruments for social justice and economic development.

Republic Act 9520 – The Philippine Cooperative Code of 2008

Republic Act No. 9520, also known as the Philippine Cooperative Code of
2008, is the law that governs the registration, operation, and regulation of
cooperatives in the Philippines. It amends and strengthens the previous
cooperative laws, ensuring that cooperatives contribute to economic
development, social equity, and self-reliance.

Key Provisions of RA 9520

1. Definition and Principles of Cooperatives

 A cooperative is an autonomous and duly registered association of

persons with a common goal to promote economic and social benefits.

 It operates based on cooperative values such as self-help, democracy,

equality, and solidarity.

2. Types of Cooperatives

RA 9520 classifies cooperatives into different types based on their

purpose:

1. Credit Cooperative – Provides savings and loan services to members.

2. Consumer Cooperative – Sells consumer goods to members and the

community.
 3. Producers Cooperative – Engages in agriculture, production, or
manufacturing.

4. Marketing Cooperative – Markets and distributes products of members.

5. Service Cooperative – Provides services such as healthcare, water, and

electricity.

6. Multipurpose Cooperative – Engages in two or more types of

cooperative activities.

7. Advocacy Cooperative – Promotes and advocates for specific causes

like education and the environment.

8. Workers Cooperative – Provides jobs to members and manages the

business collectively.

9. Transport Cooperative – Engages in transport services such as

jeepneys and tricycles.

10. Housing Cooperative – Helps members acquire housing units.

3. Cooperative Formation and Registration

 A cooperative must have at least 15 members who are Filipino citizens.

 Members must submit the Articles of Cooperation, By-laws, Economic

Survey, and Treasurer’s Affidavit to the Cooperative Development
Authority (CDA).

 The CDA is the government agency responsible for registering,

regulating, and assisting cooperatives.

4. Membership and Rights of Members

 Membership is voluntary and open to all qualified individuals.

 Members have rights such as:

o Voting on important matters.

o Receiving dividends and patronage refunds.

o Being elected as officers or committee members.

 Membership can be terminated voluntarily (resignation) or involuntarily

(violation of rules).

5. Governance Structure of Cooperatives

Cooperatives have a democratic structure, where:

 The General Assembly (GA) is the highest decision-making body.

 The Board of Directors (BOD) is elected by members to oversee

policies.

 The cooperative must also have:

o A Chairperson and Vice-Chairperson.

o A Treasurer and Secretary.

o Committees for audit, mediation, election, ethics, and education.

6. Capitalization and Financial Management

 Cooperatives generate capital from:

o Member contributions (share capital).

o Loans and borrowings.

o Retained earnings and donations.

 At least 10% of net surplus must be allocated to a statutory reserve

fund to ensure stability.

 Dividends and patronage refunds must be distributed fairly among

members.

7. Tax Exemptions and Incentives

RA 9520 grants several tax benefits to cooperatives:

 Exemption from income tax (if the cooperative is fully compliant with
the law).

 Exemption from value-added tax (VAT) and customs duties on imported

goods.

 Documentary stamp tax exemption on certain transactions.

However, cooperatives must comply with CDA regulations to enjoy

these exemptions.

8. Auditing and Reporting Requirements

 Cooperatives must submit annual reports to the CDA,

including:
 o Financial statements.

o Social impact assessments.

o Business performance reports.

 Regular audits ensure transparency and accountability.

9. Dissolution and Liquidation of Cooperatives

 A cooperative can be dissolved voluntarily (through a General

Assembly decision) or involuntarily (due to violations or insolvency).

 Upon dissolution, assets are first used to settle debts before being
distributed among members.

 The CDA oversees the liquidation process.

10. Penalties and Compliance

 Cooperatives that fail to comply with RA 9520 may face:

o Fines and penalties.

o Suspension or cancellation of registration.

o Legal action for fraudulent activities.

 The CDA has the authority to conduct inspections and enforce

rules.

Conclusion

RA 9520 strengthens the legal framework for cooperatives in the Philippines,

ensuring their sustainability and contribution to the economy. By promoting
self-help, community development, and economic empowerment, the law
supports cooperatives in improving the lives of their members.

Cooperative Development Authority (CDA) Regulations

The CDA is the government agency responsible for:

 Registering and regulating cooperatives.

 Implementing policies for cooperative growth.

 Conducting training programs and technical assistance.

 Monitoring compliance with RA 9520.

The Cooperative Development Authority (CDA) is the primary government
agency in the Philippines responsible for promoting the growth and
development of cooperatives. Established under Republic Act No. 6939 in
1990, the CDA has undergone significant changes to enhance its
effectiveness, most notably through Republic Act No. 11364, known as the
"Cooperative Development Authority Charter of 2019."

Key Regulations and Developments:

1. Republic Act No. 11364 (CDA Charter of 2019):

o Strengthening and Reorganization: This Act restructured the
CDA to better serve the cooperative sector. It expanded the
Authority's powers and functions from 15 to 37, encompassing
developmental, regulatory, and quasi-judicial roles.
o Board Composition: The governance structure was revised to
include a Board of Directors comprising a chairperson and six
members. Each member represents specific clusters of
cooperatives, such as credit and financial services, consumers
and marketing, human services, education and advocacy,
agriculture, and public utilities.
o Attachment to DTI: The CDA is now an attached agency of the
Department of Trade and Industry (DTI) for policy and program
coordination.
o Implementation: The Implementing Rules and Regulations
(IRR) for this Act were published on October 12, 2020, and
became effective on October 28, 2020.

cda.gov.ph

2. Republic Act No. 6939 (Original CDA Charter):

o Establishment: Enacted in 1990, this Act created the CDA to
promote the viability and growth of cooperatives as instruments
of social justice and economic development.
o Governing Body: Initially, the CDA was governed by a Board of
Administrators consisting of a chairman and six members
appointed by the President, with representation from Luzon,
Visayas, and Mindanao.

cda.gov.ph

3. Executive Order No. 96 (1993):

o Local Government Involvement: This order outlines the roles
of local government units (LGUs) in cooperative promotion,
organization, development, and supervision.
o Collaboration with CDA: LGUs are tasked with assisting the
CDA in evaluating proposed cooperatives, collecting annual
 reports, mediating disputes, and implementing cooperative
development programs within their jurisdictions.

cda.gov.ph

These regulations collectively aim to create a supportive environment for

cooperatives in the Philippines, recognizing their role in achieving inclusive
growth and social equity.

Rights and Responsibilities of Cooperative Members

Rights:
✔️Participate in the election of officers.
✔️Receive fair distribution of surplus and benefits.
✔️Access cooperative services and programs.
✔️Inspect financial and operational records.

Responsibilities:
✔️Pay the required capital contribution and membership fees.
✔️Attend meetings and participate in decision-making.
✔️Follow the cooperative's rules and regulations.
✔️Support the cooperative’s sustainability and development

 ACTIVITY: Case Study: The success of cooperative

businesses in the Philippines

The three pillars of Sustainable Development Goals (SDGs) in the Philippines

—economic development, social development, and environmental protection
—align closely with cooperative management by fostering inclusive growth,
social responsibility, and sustainability.

Economic development is supported through cooperatives that promote

entrepreneurship, financial literacy, and livelihood opportunities, enabling
members to achieve financial stability while contributing to local economies.

Social development is reflected in cooperatives' commitment to social

equity, ensuring that members have access to fair wages, education,
healthcare, and community-driven initiatives that empower marginalized
groups.

Environmental protection aligns with cooperative management through

sustainable business practices, resource conservation, and disaster resilience
programs, as many cooperatives engage in eco-friendly enterprises such as
organic farming, renewable energy, and waste reduction.

By integrating these pillars, cooperatives in the Philippines serve as vital

agents of sustainable development, enhancing economic empowerment,
social well-being, and environmental stewardship.

Cooperative Governance and Leadership

Cooperative governance and leadership are critical to ensuring the success,

sustainability, and ethical operation of cooperatives. Unlike traditional
businesses, cooperatives follow democratic principles where members
actively participate in decision-making and leadership selection. The
governance framework ensures accountability, efficiency, and alignment with
cooperative values.
Cooperative Governance and Leadership

Cooperatives operate with a democratic governance structure, ensuring that

members actively participate in decision-making. Governance and leadership
in cooperatives focus on transparency, accountability, and fairness to protect
members’ interests while promoting business sustainability.

1. Governance Structure in a Cooperative

A cooperative's governance framework consists of three key

components:
a. General Assembly (GA) – The Highest Governing Body

The General Assembly is composed of all cooperative members and has the
ultimate authority over cooperative affairs.

Roles and Responsibilities:

 Electing the Board of Directors (BOD) and other officers.

 Approving or amending the cooperative's by-laws and policies.

 Reviewing and approving financial reports and operational plans.

 Declaring dividends and patronage refunds for members.

 Deciding on major investments, mergers, or dissolution.

Meetings:

 The Annual General Assembly (AGA) must be held at least once a year.

 Special meetings may be called as needed for urgent matters.

b. Board of Directors (BOD) – Policymaking and Oversight

The Board of Directors (elected by the General Assembly) acts as the policy-
making body and is responsible for the cooperative’s strategic direction.

Roles and Responsibilities:

 Formulating policies, rules, and strategies for cooperative operations.

 Appointing and overseeing the Management Staff.

 Ensuring compliance with laws and regulations (e.g., Cooperative

Development Authority - CDA requirements).

 Approving major financial transactions and budgets.

 Evaluating the cooperative’s performance and risks.

Composition:

 The number of board members varies depending on the size of the

cooperative (typically 5 to 15 members).

 Directors serve for a fixed term, as specified in the cooperative's by-

laws.

c. Management Staff – Day-to-Day Operations

The Management Staff, led by the General Manager or CEO, is responsible for
the cooperative’s daily operations.

Roles and Responsibilities:

 Implementing the policies and decisions set by the Board of Directors.

 Managing the cooperative’s financial, administrative, and operational

activities.

 Hiring and supervising employees.

 Preparing financial reports and business performance assessments.

 Ensuring excellent member services and customer satisfaction.

Key Positions in Management:

 General Manager / CEO – Leads and manages the cooperative’s overall

operations.

 Treasurer – Handles financial transactions and fund management.

 Secretary – Maintains records and documents.

 Department Heads – Lead different business units (e.g., finance,

marketing, HR).

2. The Relationship Between Governance Bodies

 The General Assembly provides overall direction and elects the Board
of Directors.

 The Board of Directors makes policies and supervises the Management

Staff.

 The Management Staff implements policies and reports progress to the

Board of Directors.

This system ensures transparency, accountability, and active

participation of cooperative members.

Leadership Styles and Decision-Making in Cooperatives

Cooperative leadership is unique because it operates on democratic

principles, ensuring that decision-making is participatory, transparent, and
member-driven. Leaders in cooperatives must balance business
sustainability with social responsibility, making leadership styles and
decision-making processes crucial for success.
1. Leadership Styles in Cooperatives

Different cooperatives adopt different leadership styles based on

their size, structure, and objectives. The most common styles
include:

a. Democratic Leadership (Participative Leadership)

 Definition: Decision-making is shared among members, and leaders act

as facilitators rather than sole decision-makers.

 Characteristics:

o Encourages open discussions and consensus-building.

o Promotes fairness, equality, and collective responsibility.

o Board members and management consult members before

making major decisions.

 Example: A farmers' cooperative holding member consultations before

deciding on pricing strategies.

b. Transformational Leadership

 Definition: Leaders inspire and motivate members to achieve long-term

goals and cooperative growth.

 Characteristics:

o Visionary leadership that drives innovation and social change.

o Focuses on empowering members and employees.

o Encourages continuous learning and development.

 Example: A cooperative leader introducing digital tools for online sales

and financial management to modernize operations.

c. Servant Leadership

 Definition: Leaders prioritize serving members and employees,

ensuring their well-being and growth.

 Characteristics:

o Emphasizes ethical leadership and member-centered decision-

making.

o Leaders act as stewards of cooperative resources.

 o Builds strong relationships with stakeholders.

 Example: A credit cooperative leader ensuring that loan policies are

fair and accessible to low-income members.

d. Autocratic Leadership (Rare in Cooperatives)

 Definition: Decision-making is centralized, with leaders making key

decisions with minimal member input.

 Characteristics:

o Quick decision-making but may lack inclusivity.

o Useful in crisis situations but not sustainable for long-term

cooperative governance.

 Example: A cooperative chairman making emergency financial

decisions during an economic crisis.

e. Laissez-Faire Leadership (Delegative Leadership)

 Definition: Leaders delegate decision-making responsibilities to

members and employees, providing minimal supervision.

 Characteristics:

o Encourages self-management and member autonomy.

o Works well when members are highly skilled and knowledgeable.

o Can lead to inefficiency if there is a lack of direction.

 Example: A cooperative allowing different committees to operate

independently on specific projects.

2. Decision-Making in Cooperatives

Decision-making in cooperatives follows democratic principles, where

members participate actively in shaping policies and strategies. The key
decision-making processes include:

a. Consensus-Based Decision-Making

 Decisions are made when most members agree on a course of action.

 Encourages unity but may take longer to finalize.

 Used in General Assembly meetings for major cooperative policies.

b. Majority Rule Decision-Making

 The option with the most votes wins.

 Used for electing officers and passing policies.

 Efficient but may lead to disagreements among minority groups.

c. Delegated Decision-Making

 The Board of Directors or committees make decisions on behalf of the

General Assembly.

 Ensures efficiency and faster execution of cooperative operations.

 Requires trust and accountability to prevent misuse of power.

d. Participatory Decision-Making

 Engages members at all levels through surveys, discussions, and

consultations.

 Ensures that member concerns and interests are considered.

 Common in consumer and worker cooperatives where all stakeholders

contribute.

e. Emergency Decision-Making

 Applied during crisis situations (e.g., financial distress, economic

downturn).

 The Board of Directors or General Manager may act quickly to protect

cooperative interests.

 Should be reported to members for transparency.

Conclusion

The success of a cooperative depends on effective leadership and decision-

making that aligns with cooperative values. Democratic and participatory
leadership styles are the most common, ensuring that members remain
engaged in shaping their cooperative’s future. Decision-making must be
inclusive, transparent, and aligned with cooperative goals to ensure
sustainability and member satisfaction.

Ethics and Accountability in Cooperative Management

Cooperatives operate based on ethical principles and accountability to
ensure transparency, fairness, and sustainability. Since cooperatives are
member-owned and democratically controlled, ethical management is
essential in maintaining trust, integrity, and long-term success.

1. Ethical Principles in Cooperative Management

The ethical foundation of cooperatives is guided by the Cooperative

Principles established by the International Cooperative Alliance (ICA). These
principles emphasize:

a. Honesty and Integrity

 Cooperative leaders and staff must be truthful in all transactions.

 Financial reports and operational activities should be transparent and

accurate.

 Example: A credit cooperative should disclose all fees and interest

rates to members without hidden charges.

b. Transparency and Openness

 Members have the right to access financial records, policies, and

decisions.

 Annual reports should be presented clearly during the General

Assembly.

 Example: Publishing financial statements and audit reports for

members to review.

c. Fairness and Equity

 All members should have equal rights and opportunities in decision-

making.

 Benefits, such as dividends and patronage refunds, should be

distributed fairly.

 Example: A farmer’s cooperative ensuring that all members receive

equal access to training programs and financial assistance.

d. Social Responsibility

 Cooperatives should contribute to community development and

environmental protection.
  Ethical sourcing of products and fair labor practices should be followed.

 Example: A consumer cooperative promoting locally produced and eco-

friendly goods.

e. Democratic Member Control

 Decisions should be made collectively, respecting the "one member,

one vote" principle.

 The Board of Directors should consult members before making

significant changes.

 Example: A housing cooperative holding community meetings before

deciding on rent increases.

2. Accountability in Cooperative Management

Accountability in cooperatives ensures that leaders, management, and

employees fulfill their responsibilities in the best interest of members. Key
areas of accountability include:

a. Financial Accountability

 Proper management of funds, loans, and investments.

 Regular external and internal audits to prevent fraud and

mismanagement.

 Example: A cooperative ensuring that profits are reinvested in member

services rather than benefiting only a few individuals.

b. Leadership Accountability

 The Board of Directors and managers must act in the best interest of
members.

 Leaders should be answerable for their decisions and performance.

 Example: A cooperative chairperson being removed for misusing

cooperative funds.

c. Legal and Regulatory Compliance

 Cooperatives must comply with CDA regulations, tax laws, and labor
laws.

 Non-compliance can lead to penalties, suspension, or dissolution.

  Example: Filing annual reports with the Cooperative Development
Authority (CDA) to maintain legal status.

d. Ethical Governance and Conflict Resolution

 Establishing codes of conduct for officers, staff, and members.

 Setting up grievance mechanisms for addressing complaints and

ethical violations.

 Example: A cooperative implementing an anonymous reporting system

for unethical practices.

3. Measures to Strengthen Ethics and Accountability

To maintain ethical and accountable management, cooperatives can

implement the following:

✅ Regular Audits and Reporting – Conduct internal and external audits to

detect fraud and financial mismanagement.
✅ Code of Ethics – Establish written ethical guidelines for leaders, employees,
and members.
✅ Training and Education – Provide ongoing education on cooperative values,
governance, and financial management.
✅ Whistleblower Protection – Create a system where members or employees
can report unethical behavior without fear of retaliation.
✅ Member Participation – Encourage active engagement in General Assembly
meetings and decision-making.

Conclusion

Ethics and accountability are essential pillars of cooperative management,

ensuring fairness, transparency, and trust among members. By
implementing strong governance policies, financial oversight, and ethical
leadership, cooperatives can achieve long-term growth, sustainability, and
social impact.
Definition, Scope, and Significance of HRM

Human Resource Management (HRM) refers to the strategic approach to

managing people within an organization to maximize employee performance
and contribute to business success. HRM focuses on recruitment, training,
performance management, compensation, and employee relations to
ensure a motivated and skilled workforce.

Scope of HRM:
HRM covers various functional areas, including:

 Recruitment and Selection: Identifying and hiring qualified

candidates.

 Training and Development: Enhancing employee skills and career

growth.

 Performance Management: Evaluating and improving employee

productivity.

 Compensation and Benefits: Ensuring fair salaries, incentives, and

benefits.

 Workplace Safety and Compliance: Adhering to labor laws and

ensuring employee well-being.

Significance of HRM:

 Enhances Productivity: By hiring the right talent and providing

training.
  Fosters Employee Engagement: Through motivation, recognition,
and career growth.

 Ensures Legal Compliance: Helps organizations follow labor laws

and regulations.

 Aligns Workforce with Business Goals: Ensures human capital

supports company objectives.

Evolution of HRM: From Traditional Personnel Management to

Strategic HRM

HRM has evolved from a basic administrative function to a strategic

business partner over time:

1. Traditional Personnel Management (Early 20th Century)

o Focused on hiring, payroll, and compliance.

o Treated employees as a cost rather than an asset.

o Minimal employee engagement or development.

2. Human Relations Movement (Mid-20th Century)

o Recognized employee motivation and job satisfaction as key

factors.

o Introduced concepts like workplace culture, leadership, and

employee morale.

3. Modern HRM (Late 20th Century - Present)

o Emphasizes strategic workforce planning.

o Uses technology (HR analytics, AI in recruitment).

o Focuses on diversity, inclusion, and employee well-being.

4. Strategic HRM (21st Century and Beyond)

o Aligns HR practices with business strategy.

o Develops leadership pipelines and talent management programs.

o Uses data-driven HR decision-making.

The Role of HRM in Marketing and Business Strategy

HRM plays a critical role in both marketing and overall business strategy by
ensuring that the right people are in place to drive success.

1. HRM in Marketing Strategy:

 Talent Acquisition for Brand Success: Hiring employees who align

with the brand image.

 Employee Training in Customer Service: Ensuring employees

deliver excellent customer experiences.

 Employer Branding: Attracting top talent by positioning the company

as a great place to work.

2. HRM in Business Strategy:

 Workforce Planning: Aligning human capital with business goals.

 Performance Management: Driving productivity through structured

appraisals.

 Organizational Culture Development: Fostering a work

environment that enhances innovation and collaboration.

HRM is no longer just about managing people; it is a strategic function that

directly influences business growth, brand reputation, and market success.

 ACTRIVITY: Case Study: HRM practices in

successful Philippine companies
Definition, Scope, and Importance of Retail Management

Retail Management refers to the process of overseeing and controlling

retail operations to ensure efficient sales, customer satisfaction, and
profitability. It involves planning, organizing, and managing activities such as
merchandising, inventory control, store layout, customer service,
and marketing to enhance the shopping experience and maximize revenue.

Scope of Retail Management:

 Store Operations Management: Managing daily store functions,

including staffing and security.

 Merchandising and Inventory Control: Ensuring the right products

are available at the right time.

 Customer Relationship Management (CRM): Building long-term

customer loyalty.

 Marketing and Promotions: Implementing sales strategies and

advertising campaigns.
  E-commerce and Digital Retailing: Managing online platforms and
digital payments.

Importance of Retail Management:

 Enhances Customer Satisfaction: A well-managed retail store

provides a smooth shopping experience.

 Boosts Sales and Profitability: Efficient management leads to

higher revenue and cost savings.

 Drives Brand Loyalty: Satisfied customers are more likely to return

and recommend the store.

 Improves Supply Chain Efficiency: Ensures seamless flow of goods

from suppliers to customers.

History and Evolution of the Retail Industry

Retailing has evolved significantly from traditional marketplaces to modern

digital platforms.

1. Ancient and Traditional Retailing:

o Early trade took place through barter systems and open-air

markets.

o Development of money-based transactions led to the rise of

merchants and bazaars.

2. Department Stores and Chain Stores (19th – 20th Century):

o The rise of department stores (e.g., Macy’s, Harrods) provided

a wide range of goods under one roof.

o Chain stores and supermarkets expanded, offering

standardized pricing and convenience.

3. Modern Retail (Late 20th Century – Early 21st Century):

o Introduction of shopping malls, hypermarkets, and specialty

stores.

o Globalization allowed international brands to enter new

markets.

4. Digital and Omnichannel Retail (21st Century – Present):

 o E-commerce and mobile shopping have transformed how
consumers buy products.

o Artificial intelligence (AI), data analytics, and digital

payments enhance retail efficiency.

Retailing in the Global and Philippine Context

Global Retail Trends:

 Rise of E-commerce: Companies like Amazon, Alibaba, and Walmart

dominate online shopping.

 Sustainable and Ethical Retailing: Consumers demand eco-friendly

and fair-trade products.

 Personalized Shopping Experiences: AI-driven recommendations

and digital customer engagement.

Retailing in the Philippines:

 Traditional Retail Markets: Public markets ("palengke") and sari-sari

stores remain dominant.

 Shopping Malls Culture: The Philippines has some of the world's

largest malls (e.g., SM, Ayala, Robinsons).

 Growth of Online Shopping: Platforms like Lazada, Shopee, and

Zalora are reshaping consumer behavior.

 Challenges and Opportunities: The shift to digital retail, logistics

improvements, and consumer spending patterns.

Retail management is constantly evolving with new trends and

technologies, requiring businesses to adapt to changing consumer demands.

Overview

Retailing is the process of selling goods and services directly to consumers

through various channels, including physical stores and online platforms. It
encompasses different formats such as department stores, specialty stores,
supermarkets, hypermarkets, discount stores, convenience stores, e-
commerce, and omnichannel retailing. Retailing is a crucial part of the
economy, influencing consumer behavior, employment, and market trends.
Businesses operate through different models, including franchising, chain
stores, and independent retailers, each offering unique advantages. The
retail industry continuously evolves with technology, shifting consumer
preferences, and economic factors shaping its future.

Importance of Retailing

Retailing provides essential goods and services, ensuring accessibility and

convenience for consumers. It significantly contributes to job creation,
employing millions of people worldwide in various roles such as sales,
logistics, and customer service. Retail businesses drive economic growth by
generating revenue and taxes for governments. With advancements in
technology, retailing enhances consumer experiences through personalized
services, digital marketing, and seamless transactions. Furthermore, retail
innovation fosters competition, leading to better product quality and pricing.

Purpose of Retailing

The primary purpose of retailing is to bridge the gap between producers and
consumers by making products easily available. It enhances customer
convenience by offering multiple purchasing options, including in-store,
online, and mobile shopping. Retailing also aims to create value for
consumers through competitive pricing, promotions, and loyalty programs.
By leveraging data analytics and consumer insights, retailers can offer
personalized shopping experiences. Lastly, retailing fosters brand-customer
relationships by ensuring quality service and engagement.

Example of Retailing Businesses in the Philippines

1. Department Stores – SM Store, Rustan’s

2. Specialty Stores – Bench (fashion), National Book Store (books &

school supplies)

3. Supermarkets – Puregold, Robinsons Supermarket

4. Hypermarkets – SM Hypermarket, S&R Membership Shopping

5. Discount Stores – Daiso Japan, Japan Home Centre

6. Convenience Stores – 7-Eleven, Ministop

7. E-commerce – Lazada, Shopee

8. Omnichannel Retailing – SM Store (physical + online shopping),

Watsons (in-store & mobile app)
 9. Franchising – Jollibee, Potato Corner

10. Chain Stores – Mercury Drug, Chowking

11. Independent Retailers – Local sari-sari stores, small boutique

shops

Future of Retailing

The future of retailing will be shaped by digital transformation, automation,

and AI-driven analytics. E-commerce and omnichannel retailing will continue
to grow, integrating online and offline experiences for seamless customer
interactions. Personalization through AI and big data will enhance customer
engagement, offering tailored recommendations and promotions.
Sustainability will play a key role, with eco-friendly packaging, ethical
sourcing, and energy-efficient store operations becoming standard. Lastly,
innovations such as cashier-less stores, drone deliveries, and virtual reality
shopping will redefine the retail landscape, creating more efficient and
immersive experiences.

Types of Retailing

1. Department Stores

o Large retail establishments offering a variety of products across

multiple categories, such as clothing, electronics, and home
goods.

o Example: Macy’s, Nordstrom

2. Specialty Stores

o Focus on a specific product category or niche, offering

specialized expertise and a curated selection.

o Example: Nike Store (sportswear), Sephora (beauty products)

3. Supermarkets

o Large stores specializing in groceries and household goods, often

with self-service options.

o Example: Kroger, Tesco

4. Hypermarkets

o A combination of a supermarket and a department store, offering

groceries, clothing, electronics, and more under one roof.
 o Example: Walmart, Carrefour

5. Discount Stores

o Retailers that sell products at lower prices by offering fewer

services and focusing on high volume.

o Example: Dollar General, Walmart

6. Convenience Stores

o Small stores that offer essential products and are open for
extended hours, often located in residential areas or near gas
stations.

o Example: 7-Eleven, Circle K

7. E-commerce

o Online retailing where businesses sell products directly to

consumers through websites or apps.

o Example: Amazon, eBay

8. Omnichannel Retailing

o A seamless integration of physical and online shopping

experiences, allowing customers to shop across multiple
channels.

o Example: Target, which allows customers to shop in-store, online,

and via mobile apps with options like curbside pickup.

Retail Business Models

1. Franchising

o A business model where an individual (franchisee) operates a

store under an established brand’s name and system.

o Example: McDonald's, Subway

2. Chain Stores

o Retail outlets owned and operated by a single company with

multiple locations, ensuring brand consistency.

o Example: Starbucks, Walmart

3. Independent Retailers
 o Small businesses owned by individuals or families, operating
independently without corporate control.

o Example: Local boutique clothing stores, neighborhood grocery

stores

 ACTIVITY: Case Study: SM Supermalls vs.

Robinsons Retail Holdings
Behavior in Retailing

Factors Influencing Consumer Buying Decisions

Consumer buying decisions are shaped by multiple factors, which can be

broadly categorized as follows:

1. Personal Factors

o Age, gender, lifestyle, and income influence buying behavior.

o Example: A teenager may prioritize fashion trends when

purchasing clothes, while an older customer may look for comfort
and durability.

2. Psychological Factors

o Perception, motivation, learning, and attitudes shape how

customers view products.

o Example: A customer who perceives organic food as healthier

may be willing to pay more for it.

3. Social Factors

o Family, friends, reference groups, and social class impact

purchasing behavior.

o Example: A person may choose a smartphone brand

recommended by their peers.

4. Cultural Factors

o Culture, subculture, and social norms guide consumer

preferences.

o Example: In some cultures, gifting is a strong tradition, leading to

higher sales of chocolates and flowers during festivals.
 5. Situational Factors

o Store layout, promotions, and time constraints can affect

decisions.

o Example: A limited-time discount offer can create urgency,

prompting impulse purchases.

The Role of Customer Experience in Retail Success

Customer experience is crucial in shaping loyalty and driving sales. It

includes various aspects:

1. Store Ambience and Atmosphere

o Lighting, music, scent, and cleanliness influence how long

shoppers stay and what they buy.

o Discussion: A well-lit store with a pleasant fragrance (e.g., a

bakery with a fresh bread smell) can enhance the shopping
experience and boost sales.

2. Customer Service and Engagement

o Friendly, knowledgeable staff improve the likelihood of repeat

business.

o Discussion: Employees at Apple stores are trained to educate

customers rather than just sell, leading to strong brand loyalty.

3. Convenience and Technology Integration

o Self-checkouts, mobile apps, and online-to-offline experiences

streamline shopping.

o Discussion: Retailers like Amazon Go use cashier-less checkout to

make the experience faster and more convenient.

4. Loyalty Programs and Personalization

o Personalized offers and reward programs build customer

retention.

o Discussion: Starbucks' rewards program encourages repeat visits

by offering personalized deals.

Shopper Psychology and In-Store Behavior Analysis

Retailers use psychology to design stores and influence consumer actions:

 1. The Power of Impulse Buying

o Shoppers often make unplanned purchases due to in-store

stimuli.

o Example: Placing small, inexpensive items (like gum or snacks)

near checkout counters increases impulse buys.

2. The Gruen Effect

o A well-designed store layout can subtly encourage customers to

spend more time shopping.

o Discussion: IKEA's maze-like layout forces customers to walk

through multiple sections, increasing exposure to products.

3. The Decoy Effect

o Pricing strategies influence consumer choices by presenting an

intentionally unattractive option.

o Example: A coffee shop may offer three sizes—small for $3,

medium for $5, and large for $5.50—making the large size seem
like the best value.

4. Scarcity and Urgency

o Limited-time offers, and low-stock warnings create FOMO (fear of

missing out).

o Discussion: Online retailers like Amazon use "Only 2 left in

stock!" messages to push quick purchasing decisions.

Activity: Store observation and customer behavior

analysis