Qtr2Wk3-4 Apply Business Principles Tools And Techniques PDF

Apply Business Principles, Tools, And Techniques In Participating In Various Types Of Industries In The Locality QUARTER 2 Wk 3-4 INTRODUCTION ◦ Entrepreneurial activities today have become very important and are keys to economic development. Growth, industrial developmen...

Apply Business Principles, Tools, And Techniques In Participating In Various Types Of Industries In The Locality QUARTER 2 Wk 3-4 INTRODUCTION ◦ Entrepreneurial activities today have become very important and are keys to economic development. Growth, industrial development, including employment generation depend upon entrepreneurial behaviour of a country. The application of business principles, tools and techniques are a must for a successful participation in various types of industries in one’s locality. LESSON OBJECTIVES ◦Define industry ◦Identify and differentiate the different industries ◦Cite examples of the different industries BUSINESS OPPORTUNITIES IN DIFFERENT TYPES OF INDUSTRIES Define Industry Understanding Industry Similar businesses are grouped into industries based on the primary product produced or sold. This effectively creates industry groups, which can then be used to isolate businesses from those who participate in different activities.  Understanding Industry Investors and economists often study industries to better understand the factors and limitations of corporate profit growth. Companies operating in the same industry can also be compared to each other to evaluate the relative attractiveness of a company within that industry. CLASSIFICATION OF INDUSTRY 1.Primary 2.Secondary 3.Tertiary 4.Quaternary 5.Quinary  CLASSIFICATION OF INDUSTRY 1. PRIMARY ⮚Primary activities are directly dependent on the environment as these refer to utilization of earth’s resources such as land, water, vegetation, building materials and minerals. ⮚Working with or extraction of raw materials/natural resources ⮚People engaged in primary activities are called red-collar workers due to the outdoor nature of their work. CLASSIFICATION OF INDUSTRY 1. PRIMARY ⮚EXAMPLES: fishing, forestry, agriculture, and mining and quarrying. CLASSIFICATION OF INDUSTRY 2. SECONDARY ◦Secondary activities add value to natural resources by transforming raw materials into valuable and usable products. ◦People engaged in secondary activities are called blue-collar workers. CLASSIFICATION OF INDUSTRY 2. SECONDARY ◦EXAMPLES manufacturing, processing and construction (infrastructure) industries. CLASSIFICATION OF INDUSTRY 3. TERTIARY ⮚Tertiary activities include both production and exchange. The production involves the ‘provision’ of services that are ‘consumed. Exchange involves trade, transport and communication facilities that are used to overcome distance. ⮚Tertiary jobs = White-collar jobs CLASSIFICATION OF INDUSTRY 3. TERTIARY ⮚EXAMPLES : transportation, finance, utilities, retail, housing, banking and others services CLASSIFICATION OF INDUSTRY 4. QUATERNARY ⮚are specialized tertiary activities in the ‘Knowledge Sector’ which demands a separate classification. There has been a very high growth in demand for and consumption of information-based services. Quaternary activities can also be outsourced. They are not tied to resources, affected by the environment, or necessarily localized by market. CLASSIFICATION OF INDUSTRY 4. QUATERNARY ⮚EXAMPLES : ICT industries, R & D industries, consultation services and others CLASSIFICATION OF INDUSTRY 5. QUINARY ⮚are services that focus on the creation, re-arrangement and interpretation of new and existing ideas; data interpretation and the use and evaluation of new technologies. ⮚Often referred to as ‘gold collar’ professions, they represent another subdivision of the tertiary sector representing special and highly paid skills of senior business executives, government officials, research scientists, financial and legal consultants, etc. The highest level of decision-makers or policymakers performs quinary activities. CLASSIFICATION OF INDUSTRY 5. QUINARY ⮚Examples : Executives in different companies, Government Officials, Government Owned Controlled Corporation (GOCC) Executives such as GSIS, PhilHealth ACTIVITY 1 Identify what type of industries the company is classified ( primary, secondary, tertiary, quaternary or quinary 2. Identify what type of industries the company is classified ( primary, secondary, tertiary, quaternary or quinary 3. 4. Identify what type of industries the company is classified ( primary, secondary, tertiary, quaternary or quinary 5. 6. Identify what type of industries the company is classified ( primary, secondary, tertiary, quaternary or quinary 7. 8 Identify what type of industries the company is classified ( primary, secondary, tertiary, quaternary or quinary 9. 10. 11- 15. Give examples of each classification of industry found in your area. references ◦ https://www.clearias.com/sectors-of-economy-primary-secondary-tertiary-quaternary- quinary/ LESSON OBJECTIVES ◦Define PSIC and its role ◦Identify and differentiate major industries in the Philippines ◦Give examples of each industry What is PSIC ? ⮚In the Philippines, we use the Philippine Standard Industrial Classification (PSIC). ⮚The Philippine Standard Industrial Classification (PSIC) is a detailed classification of industries prevailing in the country according to the kind of productive activities undertaken by establishments. The 2009 PSIC was patterned after the UN International Standard Industrial Classification (ISIC) Rev. 4, but with some modifications to reflect national situation and requirements. What is PSIC ? ⮚The PSIC was revised to (1) reflect changes in economic activities, emergence of new industries, and the structure of the economy (2) to take into account the new technologies employed which affect the organization of production and shifting of economic activities and (3) to realign with the ISIC revisions for purposes of international comparability.  What is PSIC ? ⮚The PSIC serves as a guide in the classification of establishments according to their economic activity useful for economic analysis. MAJOR INDUSTRIES IN THE PHILIPPINES 1. AGRIBUSINESS ⮚A business that earns most or all of its revenues from agriculture. An agribusiness tends to be large scale operations and deals with farming, processing and manufacturing, packaging and distributing agricultural products. LIST OF AGRIBUSINESS IN THE PHILS. 1. AGRIBUSINESS ⮚That’s just some of the in-demand agricultural business in the Philippines, there are still a lot of profitable agribusiness out there, these are: ⮚processed fruits and vegetable, seaweeds, tropical fruit purees and juices, fresh tropical fruits, sugar plantation, bio ethanol and others. 2. MANUFACTURING ⮚The process of converting raw materials, components, or parts into finished goods that meet a customer’s expectations or specifications. ⮚There are many laws and regulations that govern the manufacturing industry. The business will be require to conform to all the licensing bodies may it be the government or the local authority’s requirements. Some of the best small manufacturing businesses that can be carried out at your home are: 1. Furniture Making – make or create furniture such as lockers, bookshelves, showcases, chairs, tables, etc. 2. Drinking Water Business- Business that sell drinking water package in a plastic bottles or container. 3. Soap Manufacturing business- business that produce different soap products. 4. Commercial Bread Making- bread making is easy and simple business that can be done at home 3. RETAIL AND SERVICES ⮚Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit and usually it’s done directly to its final consumer. Retailing includes subordinated services, such as delivery. ⮚The term “retailer” is also applied where a service provider services the small orders of a large number of individuals. 3. RETAIL AND SERVICES ⮚ Online retailing, a type of electronic commerce used for business – to – consumer (B2C) transactions and mail order, are forms of non – shop retailing. ⮚A service business provides intangible products, such as accounting, banking, consulting, cleaning, landscaping, education, insurance, treatment, and transportation services.  3. RETAIL AND SERVICES ◦Retail is usually classified by the following types of products 1. Food products – typically require cold storage facilities. 2. Hard goods or durable goods – these are automobiles, appliances, electronics, furniture, sporting goods, lumber, etc., and parts for them. Goods that do not quickly wear out and provide utility over time. 3. Soft goods or consumables – clothing, other fabrics, footwear, cosmetics, medicines and stationery. Goods that are consumed after one use or have limited period (typically under three years) in which you may use them. 4. Arts – Contemporary art galleries, Bookstores, Handicrafts, Musical instruments, Gift shops, and supplies for them.  4. INTERNATIONAL TRADE ⮚International trade is the exchange of capital, goods, and services across international borders or territories, which could involve the activities of the government and individual. ⮚ In most countries, such trade represents a significant share of gross domestic product (GDP). ⮚While international trade has been present throughout much of history its economic, social, and political importance has been on the rise in recent countries. It is the presupposition of international trade that a sufficient level of geopolitical peace and stability are prevailing in order to allow for the peaceful exchange of trade and commerce to take place between nations.  4. INTERNATIONAL TRADE ⮚Trading globally gives consumers and countries the opportunity to be exposed to new markets and products. ⮚ Almost every kind of product can be found on international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies, and water. ⮚Services are also traded: tourism, banking, consulting, and transportation. ⮚A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Import and exports are accounted for in a country’s current amount in the balance of payments.  ACTIVITY 2 Direction Identify what is being describe by the following statements _______1. This industry employs man and machinery to process raw materials into finish goods. _______2. Type of retail products that usually require cold storage. _______3. This acronym stands for Philippine Standard Industrial Classification which is a detailed classification of industries prevailing in the Philippines. _______4. Consumables are the other term for these goods. _______5. Cars, appliances, electronics and lumber are examples of these products. _______6. This business involves in farming, processing, and packaging of agricultural products. _______7. Raising tilapia, catfish, prawns, and bangus to earn revenue is their main line of business. _______8. Piggery business is one of the most lucrative businesses in agriculture. _______9. Tomatoes, bell pepper, pechay, eggplant and bitter gourd are products of this business. ______10. Shops in the residential streets are part of this business. INDUSTRY AND ENVIRONMENTAL ANALYSIS : IDENTIFICATION OF BUSINESS OPPORTUNITY  LESSON OBJECTIVES ⮚discuss industry and environmental analysis as a tool in evaluating business opportunities; ⮚ apply Porter’s 5 Forces as a tool in evaluating a business opportunity. ⮚select business opportunities appropriate in your locality.  INTRODUCTION Businesses need to study various factors influencing the business. Internal and external factors are needed to be considered to identify business opportunities and threats affecting the business. As you go through lesson, you will learn about industry and environmental analysis and apply one of the most widely used industry analysis- the Porter’s 5 Forces as a tool in evaluating a business opportunity.  Industry and Environmental Analysis ◦In a book published by the Development Academy of the Philippines, how to prepare project feasibility studies, it includes an industry analysis of the following important factors: ⮚ Competition-Who are your competitors in the industry? What is the market share of these businesses? It is very important that you know your competitors and be ready for them. ⮚ Customers-Who will you sell your product to? The target market must be identified. Who exactly will buy your products? ⮚ Suppliers- Who are your suppliers, from whom one can source raw materials, intermediate products, or even finished goods one intends to resell. A business may need one or more suppliers. It is important to develop suppliers who are reliable in terms of quality of what they supply and their dependability in coming up with your order.  Industry and Environmental Analysis In short, Industry Analysis is a tool that facilitates a company's understanding of its position relative to other companies that produce similar products or services. Understanding the forces at work in the overall industry is an important component of effective strategic planning. Industry analysis enables small business owners to identify the threats and opportunities facing their businesses, and to focus their resources on developing unique capabilities that could lead to a competitive advantage.  Environmental Analysis ⮚ According to Robert Grant, author of “Contemporary Strategy Analysis” an environmental analysis surveys the business landscapes to determine how external variables will affect its decision making. ⮚ It is the careful study of various factors influencing the business. It is the process by which organization monitor their relevant environment to identify opportunities and threats affecting their business. ⮚ It helps to identify opportunities, to plan and to take appropriate actions. ⮚ It is the study of technological factor, political factors, global factor and so on. By carefully analyzing the environment, the businessmen come to know the opportunities provided and threat posed by environment. Keeping in view, its strengths and weakness, it can avail benefits of available opportunities and face threats. Objectives Environmental Analysis 1. To understand current and probable change in environment. It is importance that one must be aware of existing environment and changes in various factors of environment like changes in economic, technological, political, global environment, and so forth. 2. To provide input for decision – making. Decision – making means to select an alternate among the various available alternates. In this process, we need information for analyzing various alternates, so that the best alternate is selected. Environmental analysis provides such information to decision maker. 3. To ensure optimum utilization of resources. The key of business success lies in the most effective utilization of the company’s resources. Process Environmental Analysis 1.Monitoring- means to understand the various environment factors which affect the business and to identify published or unpublished sources of information which affect business. Eg. newspapers, magazines and journals Process Environmental Analysis 2. Searching and Scanning- needed to manage the timely availability of required information by scanning and searching. Many organizations have management information system for systematic gathering, processing, storing and providing information. Process Environmental Analysis 3. Forecasting- an essential element in environment analysis. Forecasting is concerned with estimation of direction and intensity of changes in environment factors. Forecasts of important components of business environment help in formulating plans and strategies. Process Environmental Analysis 4. Evaluation and Assessment- identify and evaluate as to how these environmental changes will affect our business so that appropriate counter strategies can be made well in time. Assessment provides us answer to the key issues presented by the environment and their impact on business PORTER’S FIVE FORCES One of the most widely known industry analysis is Porter’s 5 Forces or Competitive Forces Model, was introduced by Michael Porter in his book “ Competitive Strategy: Techniques for Analyzing In dustries and Competitors. ” According to Porter, analysis of the five forces gives an accurate impression of the industry and makes analysis easier. PORTER’S FIVE FORCES Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy. PORTER’S FIVE FORCES ◦Porter's model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company's long-term profitability. The Five Forces model is named after Harvard Business School professor, Michael E. Porter. PORTER’S FIVE FORCES The five forces are the following: 1. Competition in the industry 2. Potential of new entrants in industry 3. Power of suppliers 4. Power of buyers 5. Threat of substitute products/services  1. Existing Rivalry/Competition in the Industry ◦The first of the Five Forces refers to the number of competitors and their ability to undercut a company. The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company. ◦Suppliers and buyers seek out a company's competition if they are able to offer a better deal or lower prices. Conversely, when competitive rivalry is low, a company has greater power to charge higher prices and set the terms of deals to achieve higher sales and profits. 2. Potential of New Entrants in industry ◦A company's power is also affected by the force of new entrants into its market. The less time and money it costs for a competitor to enter a company's market and be an effective competitor, the more an established company's position could be significantly weakened. ◦An industry with strong barriers to entry is ideal for existing companies within that industry since the company would be able to charge higher prices and negotiate better terms.  3. Bargaining Power of Suppliers ◦The next factor in the Porter model addresses how easily suppliers can drive up the cost of inputs. It is affected by the number of suppliers of key inputs of a good or service, how unique these inputs are, and how much it would cost a company to switch to another supplier. The fewer suppliers to an industry, the more a company would depend on a supplier. ◦As a result, the supplier has more power and can drive up input costs and push for other advantages in trade. On the other hand, when there are many suppliers or low switching costs between rival suppliers, a company can keep its input costs lower and enhance its profits.  4. Bargaining Power of Buyers ◦The ability that customers have to drive prices lower or their level of power is one of the Five Forces. It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to find new customers or markets for its output. ◦A smaller and more powerful client base means that each customer has more power to negotiate for lower prices and better deals. A company that has many, smaller, independent customers will have an easier time charging higher prices to increase profitability.  5. Threat of Substitute Products ◦The last of the Five Forces focuses on substitutes. Substitute goods or services that can be used in place of a company's products or services pose a threat. Companies that produce goods or services for which there are no close substitutes will have more power to increase prices and lock in favorable terms. When close substitutes are available, customers will have the option to forgo buying a company's product, and a company's power can be weakened. PORTER’S FIVE FORCES ◦Understanding Porter's Five Forces and how they apply to an industry, can enable a company to adjust its business strategy to better use its resources to generate higher earnings for its investors. ACTIVITY 3 APPLICATION OF PORTER’S 5 FORCES Select one from among the following industries then make a Porter’s 5 Forces of the chosen industry. 1.Airline industry 2.Soft drink (Beverage) industry 3.Fastfood industry