Principles, Tools, and Techniques:

A business is a single entity focused on profit-making, owned

by individuals or a corporation. An industry comprises , multiple
businesses in the same line, serving the same buyers.

A. BUSINESS ORGANIZATION
1. Sole partnership - This is generally the simplest way to set up a
business.
2. Partnership - Is an agreement in which two or more persons combine
their resources in a business to make a profit.
a. The general Partnership
b. The limited partnership
3. Corporation - a corporation is a legal entity that is separate from its owners- the
shareholders. No shareholder is personally liable for the depts, obligations, or acts
of the corporation.
4. Cooperative - a cooperative is an entity organized by people with similar needs to
provide themselves with goods or services or services or to jointly use available
resources for better and cheaper access to, say, income opportunities
B. Small, Medium, Large-scale Business - It is also important to study the
classification of a business by size based on the worth of the business’s
assets.
Tools in Evaluating a Business:
1.The geographic area which your business will cater to.
2.The size, outlook, and trends of the industry.
3. The description of the product.
4. The identification of the buyers.
5. The regulatory environment.
6. The need to identify and profile the leading and most successful competitors in the
industry.
7. The factors that will affect the growth of the business.

A. The SWOT Analysis:

The SWOT analysis was created in the 1960s by business gurus Edmund P.
Learned, C. Roland Christensen, Kenneth Andrews, and William D. Book
‘’Business Policy, Text Cases’’ (R.D. Irwin, 1969) .

Strength - are the internal positive attributes and resources of an

organization that give it a competitive advantage.

Weaknesses - refer to the internal negative attributes and limitations of an

organization that may hinder its ability to achieve its goals and compete
effectively.
Opportunity - refer to external factors or situations in the
environment that an organization can exploit to its advantage,
potentially leading to growth and improvement.

Threats - refer to external factors or situations in the environment

that could negatively impact an organization and pose challenges
to its success.

After conducting a SWOT Analysis and assessing competitiveness,

the next step involves formulating a strategy that aligns internal
strengths with external opportunities while addressing
weaknesses and threats.
 Table 3.1
SWOT Analysis Template with Some Examples

Strength: Weaknesses:
Government incentives Inflexibility of organization
Low capital requirements Costly setup
Market acceptance Possible pollution problem
Experienced leaders Lack of training of worker
Good innovations Bad roads leading to the market

Opportunities: Threats:
Project may replace imported Entry of new competitors.
good available in the market. Time consuming production
will provide employee welfare. processes.
Improved company reputation. Opposition from residents in the
Increased target market the community.
cover those who normally do New political leaders who may
not patronize the product. impose new taxes and regulation.
B. PORTER’S FIVE FORCES OF COMPETITIVE
POSITION ANALYSIS

ANOTHER ANALYTICAL TOO THAT CAN BE USED TO ASSESS

A BUSINESS IS PORTER’S FIVE FORCES OF COMPETITIVE
POSITION ANALYSIS.

UNDER PORTER’S THEORY, IT IDENTIFIES FIVE FORCES THAT

DETERMINE THE COMPETITIVENESS AND ATTRACTIVENESS
OF A MARKET AND WHICH SEEK TO LOCATE THE POWER IN A
BUSINESS SITUATION, ITS CURRENT COMPETITIVE
POSITION, AND THE STRENGTH OF A POSITION THAT AN
ORGANIZATION MAY VENTURE INTO.
 Porter’s Five Forces of Competitive Position Analysis:

1. Supplier Power - It is important to assess how much power

the supplier has in his/her ability to drive up prices.
2. Buyer Power - If a supplier can enjoy the power to drive
prices up, it is also possible for a buyer to drive prices down.
3. Number of Customers - the number and capability of
competitors in the market will also impact on the
attractiveness of the market.
4. Number of Customers - the number and capability of
competitors in the market will also impact on the
attractiveness of the market.
5. Possibility of Substitution - when it is easy to substitute
products in a market, it is expected that buyers will switch
to alternatives in case of price increases.
 Importance of Porter’s Five Forces of Competitiveness Position
Analysis:
First, in terms of supplier power, our suppliers will be sellers of
Korean merchandise, ramen, and beverages.
Second, as to buyer power, it will be to our advantages if there
are just a few stores similar to what we plan to set up.
Third is the number of competitors. It will be an advantage if
there are few stores with a similar concept to our proposed
business.
Fourth, the possibility of substitution is a threat to our business.
Fake imitations are cheap, and unscrupulous sellers may copy
our original products and sell them at very low prices compared
to ours.
Last, the possibility of new entrants may cause a drop in our
market share.
 A Guide for Industry Analysis:

An industry analysis guide developed by North

Carolina’s Small Business and Technology Development
Center (SBTDC).

Industry Analysis: 1. Geographic Area - your area local, regional,

nationwide, or international.
Competition 2. Industry as Size - what are the trends and
Customers development s and future outlook.
Substitute 3. Product - the product has to be describe with
Suppliers regard to its physical attributes, characteristics
and uses.
4. Buyers - describe your target customers as to age,
income, group, geographical location and
occupation.
5. Regulatory Environmental - this should include
government laws and regulations that apply to the
business.
6. Company Information - make a list of the most successful
businesses in the industry.
7. A Brief History of the Industry - find out when the industry started
and how it develop.
8. Factors That Affect the Growth of the Industry - Identify factors
such as the migration of population from rural to urban areas,
availability of training for workers, and the educational system in
the locality.
9. The Trends in Sales Over Recent Years - show actual sales in the
industry over the 5 years.
10. Current Operational/Management Trends Within the Industry -
define what are the standard practices prevalent among the firms.
11. The types of Marketing Strategies - describe those that are
prevalent within the industry.
12. Competitor Information - data should include the location of
competitors, how long have they been in business, and what is thier
market share.
 ENVIRONMENTAL ANALYSIS:
1. Economic Forces - involves a look at economic factors such as the income
of the people and economic conditions such as inflation, recession,
prosperity, demand, and supply in the market.
2. Physical Environment - includes a look at the population size, the
geography of the place where the business will be located, land
distribution, climate, and in today’s global warming situation, whether, or
not the area is flood-prone or conducive to earthquake.
3. Political Factors - include the type of government, the stability and
strength of the government, and good leadership that can be an
advantage to a business.
4. Cultures and Lifestyles - it is important to study cultural practices such as
fiestas, the celebration of the Christmas season, and trends in
consumption patterns as means to identify the goods and services that
will fit into these celebrations and spending behaviors.
5. Competition - As already mentioned above, the degree of competition in
the market and the extent and strength of competition are all vital in
determining the success or failure of a business
The Circular flow of Economic Activity - To further guide you on how
the Market economy works Describe various economic activities
take place in economy.

The Simple Flow of Goods and Services - Goods and services flow from
the firm as producers to the households.
These Resources flow from the
households to the firms, also in a
clockwise direction.
A Closer Look figure 3.4 Magnifies the
production side of the circular flow
diagram in figure 3.3, showing product
payment flows across the different
stages in relation to consumers.
Raw Material - are unprocessed
goods, like raw minerals, logs, and
wheat, which are grown nature
and not any man-made process of
production.
The Government Sector and the Global Economy:

The Government are important because it

purchases economic resources from the
households, pay with money for the use of the
resources.
The Circular Flow as an Open
System

The Circular flow has

money leakages and
injections, change the
product and the resources
payment flows in the
system.
THANK YOU