Senior High School
Applied Economics
Module 8.2:
Business Principles, Tools, and Techniques in
Participating in Various Types of Industries in the
Locality
Module 8.2:
Business Principles, Tools, and Techniques in
Participating in Various Types of Industries in the
Locality
After going through this module, you are expected to:
opportunities;
evaluating a business opportunity.
Lesson
2
Apply SWOT Analysis as a Tool in
Evaluating a Business Opportunity
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 SWOT Analysis as a tool in
evaluating a business opportunity.
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What’s New
Every student knows National Bookstore especially booklovers. But do you
know the owner of National Bookstore? She is Socorro Ramos, the woman
behind National Bookstore. Now, I want you to read her story and answer
the questions below.
Socorro Ramos or Nanay Coring as they simply called her as a young girl helped
her grandmother sell fruits at the local market in their home province. Life was
hard and her mother decided to move to Manila to find better opportunities. She
attended a public school and took on many jobs during summer vacation – from
wrapping bubble gum to sewing buttons on shirts. After finishing high school, her
family did not have enough money to send her to college. She then worked as a
salesgirl at a bookstore. It was there where she met her would be husband, Jose.
They opened a stall shop in Escolta. They named it National Bookstore, after their
cash register. But things did not go uphill from there. In the 1940s, a strict
censorship on books was implemented. Nanay Coring had to put the books away
and resort to selling soap, candies, and slippers. After the war, the whole of Escolta
was burned down. This did not dampen Nanay Coring and Jose’s souls. They
opened another small store. This time, they sold the books they had previously put
away and whisky.
Gathering their earnings, the couple bought more school supplies and books. They
slowly rebuilt National Bookstore. They ventured into postcards and greeting cards.
They also partnered with international publishing houses and reprinted books at
lower prices. Aside from selling products of well-known brands, National Bookstore
also now manufactures its own school supplies – Best Buy. Keeping up with the
times, they have teamed up with Kobo, a Canadian based e-book seller. National
Bookstore is also visible on social media and customers can even shop online via
their website. Students, office workers, and everyone else will find what they are
looking for at National Bookstore. (Article by M. Tuvida)
Activity.
1. What are the problems/challenges encountered by Nanay Coring in her
business?
2. What alternatives did Nanay Coring take when the business encountered
problem?
3. What were the business opportunities she selected?
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What is It
Industry and Environmental Analysis
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 of 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.
Other object ives:
1.
2.
3.
4.
To identify the threats and opportunities of environment.
To identify the strengths and weakness of the business.
To diversify the business in new areas and to keep the business dynamic.
To foresee the impact of various helps the organization of business
environment.
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Process of Environment 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
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.
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.
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
The SWOT Analysis
SWOT is an acronym for strengths, weaknesses, opportunities, and threats.
In short, SWOT Analysis is a planning tool used to understand the strengths,
weaknesses, opportunities, and threats involved in a business or project.
A SWOT analysis can be carried out for a product, place, industry, or person. It
involves specifying the objective of the business venture or project and identifying
internal and external factors that are favorable and unfavorable to achieve that
objective. Some authors credit SWOT to Albert Humphrey (2005), who led a
convention at the Stanford research institute (now SRI International) in the 1960s
and 1970s using data from Fortune 500 companies. However Humphrey himself
does not claim the creation of SWOT, and the origins remain obscure.
1. Strengths – This pertains to the characteristics of the business or project
that gives advantage over others. The primary technique for identifying your
business strengths involves evaluating which operations actually make
money.
2. Weaknesses – A characteristic that place the business or project at a
disadvantage relative to others. Identify weaknesses by finding parts of your
operation that cost you money.
3. Opportunities – These are the elements that the business or project could
exploit to its advantage. The technique for identifying opportunities
encompasses finding markets, partnerships, products or services that you
actually can pursue.
4. Threats – These are the elements in the environment that could cause
trouble for the business or project. Owning a business means facing risk.
Use the technique of including only threats that have direct impact currently
on your business or that seem as if they will impact you and your business
in the next five years.
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Internal and External Factors of SWOT
The internal factors are the strengths or as weaknesses depending upon
their effect on the organization’s objectives. What may represent strengths with
their respect to one objective may be weaknesses (distractions, competition) for
another objective. The factors may include all of the 4Ps – price, product,
promotion and place; as well as personnel, finance, manufacturing capabilities and
so on.
The external factors may include macroeconomic matters, technological
change, legislation, and socio-cultural changes, as well as changes in the market –
place or in competitive position. The results are often presented in the form of a
matrix.
SWOT analysis may also be used in pre – crisis planning and preventive crisis
management. SWOT analysis may also be used in creating recommendations
during a viability study/survey.
How to Use SWOT Analysis as a Tool in Evaluating Business Opportunity
Learned it easy, use the SWOT Template.
HERE are TIPS that will help you in using the SWOT Template
STRENGTHS
WEAKNESSES
Is the business in demand in your community?
Is the product new in your community?
Is it accessible to all?
Will your community patronize it?
What could you improve?
What should you avoid?
What factors would cause the loss
of your sales?
OPPORTUNITIES
THREATS
Where are the good opportunities facing you?
What are the interesting trends you are aware of?
What are the external factors that can increase
profits?
What obstacles do you face?
What is your competitor doing that you
should be worried about?
Could any of your weaknesses threaten
your business?
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