1 principle, tools and techniques in creating business.pdf

applied economics

1. INDUSTRY AND ENVIRONMENTAL ANALYSIS:
BUSINESS OPPORTUNITIES IDENTIFICATION

2. Duetohealthcrisisbroughtbycovid19,alotofsmallandmedium
enterprisescloseddownalreadyfortheyhavealreadyincurredmuchlosses
forthepastfewmonths.However,therearestillbusinessesthatflourish
amidstthepandemic.Forexample,Puregold’sstockvaluerosesignificantly
forcoupleofmonthswhileotherindustrieshaddifficultycopingupwiththe
pandemic.Ifyouaregoingtoputupabusinessduringthesetryingtimes,
whatwoulditbeandwhy?Whydoyouthinkthisindustryisattractiveinthe
marketevenduringpandemic?”

3. The activity aims to let you realize that firms
always analyze the industry first before putting up a
business. Different firms use different tools in assessing
the business environment and to see the rewards,
challenges and even attractiveness in the industry where
the business belongs.”

4. Business
•It is an entity or organization that is intended for
commercial, industrial or any professional activities.
•Its main objective is to earn profit for the owners.
•A business is just a small portion of an industry.

5. Industry
•It is a group of companies or businesses that carry on
the same line of business activities or undertaking.

7. FORMS OF BUSINESS
ORGANIZATIONS

8. SOLE PROPRIETORSHIP
•This form of business organization consists of one person who
runs business.
•Among all business organizations, this takes the simplest
method to set-up and even to dissolve. “The owner has sole
control over business management and gets solely the profit
earned from its operations.”
•However, the sole proprietor also carries the whole
responsibility for all the debts and obligations and absorbs
all the losses in the course of the business operations.
•The owner faces the risk of unlimited liability in which his
personal assets might be exhausted to pay for the business’
loans.

9. PARTNERSHIP
•A partnership consists of two or more people who combine
their resources and run the business together with an
aim to gain profit.
•There must be a partnership agreement and profits are
divided among partners according to the terms of
agreement.

10. 2 types of partnership:
a.General Partnership
All partners take part in the management of the business.
The general partners have unlimited liability wherein their
personal properties might be used just to pay for the debts of
the company.
b.Limited Partnership
These are the partners who contribute only capital and do
not take part in the management of the business. They have
limited share in the profit, but they are also only liable to
business debts to some extent only.

11. CORPORATION
•It is a legal entity that is separate from the owners of
the corporation or the shareholders.
•Board of Directors and the highest officers may bear
liability for their involvement with the corporation.
•The shareholders have limited liability.
•Corporations have unlimited commercial life for they can
exist for 50 years and it is renewable for another 50
years.
•Among all forms of business organizations, corporations
are heavily taxed and regulated by the government.

12. Generallyspeaking,onemustbefullyknowledgeable
oftheindustryfirstbeforeputtingupabusiness.By
analyzingtheindustryandthebusinesstobeestablished,
appropriateactionsandstrategieswillbeplannedand
executedwellwhichwillalsominimize,ifnotavoid,
wasteofresources.

13. In planning a business, a thorough study needs to be
made from the creation of business. Understanding how the
business will operate and co-exists in the business world
thus one needs to study principle, tools and techniques in
creating business.

14. 10 Principles in Creating a Business

15. Scalability
•Businesses which has a businesses which has a potential
to grow. For some potential to grow. For some instances
people are growing their business by aligning their
strategy/efforts on the present situation. (example the
Covid-19 pandemic)
•A business must be scalable for it to be successful.
Scalability is the capability of a company to sustain or
improve its performance in terms of profitability or
efficiency when its sales volume increases.

16. Big ideas
•Greater opportunities, in creating your business big
ideas plays a vital role, adopting to abrupt changes,
planning and aligning people to fit in the business.
Every business begins with an idea.
•Business ideas come from many from many sources.
Hobbies, interests, and business experiences often give
people ideas often give people ideas for new business.
•The success of one’s busine is through collaboration of
ideas.

17. Systems
•Recognizing small and big parts contributes success and
failures to the business, everybody should fit in from
the owner to its employee, resources and equipment. In
making plan/decision one should be align to the other.
•A business is a system in which all parts contribute to
the success or failure of the whole. In this system,
everything must work together from employee to
president; from equipment to resources.

18. Sustainability
•A business must be powerful able to harness all economic
conditions, in all market settings, providing positive
and meaningful quality results to its customers. Such
differentiated result is the key to survive.
•A business must be dynamic-able to thrive through all
economic conditions, in all markets, providing
meaningful highly differentiated results to all of its
customers.

19. Growth
•All business need to be growing especially in the
internal as internal aspect of business. When you are a
beginner in a business. When you are a beginner in a
business it is like a school wherein your employees are
students that need your guidance, with your intention
and determination that the business will grow.
•Growth is essential in business. Without continued
growth, operations will stagnate. This can result in
lowered standards of quality for products or services,
decreased customer service, and poor employee morale.

20. Vision
•What do you What do you want your business to be the
future, your very purpose in creating a business, in
creating a business, vision plays a vital role as it is
your guide in planning. Creating your own vision
statement, aligning it in abrupt changes, like what is
happening right now in our economy.
•Business must manifest the higher purpose upon which it
was seeded, the vision it was meant to exemplify, the
mission it was intended to fulfill.

21. Purpose
•A business is the results of a big dream in mind of the
person who dream for it.
•A business is the fruit of a Higher Aim in the mind of
the person who conceived it.

22. Autonomy
•A business if not part of the owner’s life, but in fact,
its own entity. A business possesses a life of its own.
Many start-up business owners are quite independent.
•Their businesses were started because they do not want
to take direction from other people. A business is
difficult is to start, however, without the help of
others. Even the smallest businesses need a few full or
part-time employees. The employees must be selected
carefully for their ability to work as a team.
•Choosing the “team”becomes one of the most important
initial business decisions.

23. Profitability
•A business help economic entity, managing economic
reality, creating an economic certainty for the
communities in which it thrives.

24. Standards
•A business creates standard against all businesses
measured as either successful or not. In order a
business will go beyond, aim high beyond the existing
standard.

27. TOOLS IN EVALUATING A BUSINESS
The following are the general factors that must be put into
consideration when evaluating a certain industry as indicated in a
guide developed by North Carolina’s Small Business and Technology
Development Center:

28. •Geographic area
•Market size and market trend in the industry
•Product Description
•Identifying and understanding the target market
•Laws governing the business industry
•Competitors’analysis
•Business growth

29. The SWOT Analysis

30. The SWOT Analysis
•It stands for Strength, Weaknesses, Opportunities and
Threats
•It is a framework that is used to seek business
opportunities and evaluate new business ventures.
•It helps to identify the company’s challenges and risks
of doing business.
•A helpful tool to assess the internal and external
factors affecting the business.

31. Internal factors that may affect the business:
•Financial aspect-source of capital, uses and sources of
funds for short-term and long-term, investment funds of the
company
•Human resources-consist of employees and their designated
positions in the company
•Physical resources-machines, equipment, facilities, location
•Business processes-production process, sales and marketing
strategies, supply chain, value chain, information and
technology systems, programs for laborers and employees, job
description of each employees, logistics, etc.

33. External forces that may affect the business:
•Economic aspect-international trading, financial and economic
trends in local, national and international scenes, inflation,
interest rate, GDP, banking system, national economic status, etc.
•Market trends-behavioral and psychographic descriptions of target
market, change in taste and lifestyle of customers, new products
and technology in the market, etc.
•Regulatory environment-political environment surrounding the
business, laws governing business operations, local and national
statutory regulations
•Demographic characteristics of target market-age, gender,
financial status, culture, etc.
•Competition in the market
•Relationship with suppliers and channel partners

35. SWOTAnalysisisoneofthemostwidelyused
businessevaluationtoolinanybusinessindustry.Itis
helpfulindeterminingthebusinessparametersthatmust
beimprovedon,whichbecomesthebasisincreating
businessstrategies.Theownerscanidentifythecompany’s
strengthsthattheycanusefortheiradvantageandthey
canalsoaddresstheirweaknessesinordertolevelthe
competitioninthemarket.

37. Group Activity
1.Because of the Covid 19 pandemic the students of G12 GAS
experience a financial crisis and their family and in
order to help their families the students want to start
a small business. Think of two option of business that
your group want to start in your locality.
2.Write a SWOT analysis about each option.
3.Decide and choose the best small business based on your
careful analysis.

38. Internal Factors
Strength Weakness
External Factors
Opportunity Threat

39. Direction: Choose the letter of the best answer.
1.
2.

40. 3.
4.
5.