BUSINESS- a small portion of an industry.

INDUSTRY- aggregation of the different businesses engaged in the same line of undertaking.

BUSINESS ORGANIZATION

1. SOLE PROPRIETORSHIP

-owned by a single individual who is responsible for running the business and is accountable for
all debts and obligations related to business.

2. PARTNERSHIP

- An agreement in which two or more persons combine their resources in a business with a
view to making profit.

- profits are divided among the partners according to the terms of agreement.

3. CORPORATION

- A legal entity that is separate from its owners, the shareholders

- -no shareholder is personally liable for the debts, obligations, or acts of the corporation.

- -directors and officers can bear liability for their involvement with the corporation.

4. COOPERATIVE

- an entity organized by people with similar needs to provide themselves with goods or
services or to jointly use available resources to improve their income.

- members have an equal say in decision-making with one vote per member regardless of
number of shares held, there is open and voluntary membership and surplus earning is
returned to the members according to the amount of their patronage.

- PORTER’S FIVE FORCES ANALYSIS- a significant tool for organizations to understand the
factors affecting profitability in a specific industry and can help form decisions on
whether or not to enter a specific industry, whether or not to increase capacity in a
specific industry.

PORTER’S FIVE FORCES OF COMPETITIVE POSITION ANALYSIS

1. SUPPLIER POWER- it is important to assess how much power the supplier has in his ability to
drive up prices.

- a supplier enjoys this power if there are a few suppliers of an essential input and they therefore
control the supply of that input.

2. BUYER POWER

-it is also possible for a buyer to drive prices down.

-the smaller the number of buyers in the market, the greater is the power enjoyed by the buyer.

3. NUMBER OF COMPETITORS
-the number and capability of competitors in the market will also impact on the attractiveness of
the market.

-if competitors are numerous and offer basically similar products and services, the market will be
less attractive.

4. 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.

5. POSSIBILITY OF NEW ENTRANTS

-when investors see that a market is profitable, they will desire to join the bandwagon and get a
share of the profits.

THE ECONOMY’S PRODUCING SECTORS

The economy has 3 main producing sectors:

1.Agriculture, Fishery and Forestry

2.Industry

- manufacturing

Construction

Electricity, gas and water

Mining and Quarrying

3. Service

-trade

- transportation, communication and storage

- banking and finance

- public service(Government)

-real estate

-private services

1. AGRICULTURE, FISHERY, AND FORESTRY SECTOR

reaps the fruits of natural resources like the soil, water, and forests.

However, these environmental resources are vulnerable to climate change affecting production
such as long dry spells and frequent devastating typhoons due to say, the El Niño phenomenon.
From this sector comes the food we cook at home and the raw materials processed or used by
other economic sectors (e.g., cotton for making pillows and mattresses).

2. INDUSTRIAL SECTOR- processes raw materials from agriculture, fishery and forestry into
intermediate products that are further processed into final products.
Ex. Local makers of wallets and bags produce the final products by processing the intermediate
product of leather which is manufactured from the animal hide extracted by agriculture.

Within the industrial sector itself, local cement manufacturers produce the product by heating
limestone mixed with clay from the quarrying industry for use in the construction industry.

3. SERVICE SECTOR

-produces the intangibles supporting and complementing production in the other sectors as well
as among its own industries.

Ex. The transport industry brings input and output among the other industries.

THE THEORY OF CONSUMER BEHAVIOR

CONSUMER THEORY- describes how consumers make decisions on what to buy.

CONSUMPTION- refers to the use of goods and services to satisfy human wants directly.

THE UTILITY FUNCTION

A consumer aims to maximize the satisfaction he/she derives from the use of a good or a
service.

UTILITY- term used for satisfaction

- it is intangible, not easy to measure

In order to make it easy to understand the concept of utility, we shall assume that it is
measurable in units, which we shall call utils.

Util-one unit of satisfaction

The UTILITY FUNCTION

TOTAL UTILITY- refers to the combined utility derived from consuming certain units of a good.

MARGINAL UTILITY- refers to the additional utility derived from consuming an additional unit of
the good.

We see that while his total utility increases with each additional chocolate bar, the additional
utility becomes less and less.

The satisfaction he derives from each additional units starts to diminish

This illustrates the LAW OF DIMINISHING MARGINAL UTILITY

The law states that as additional units of a good are consumed, the additional utility derived
form each additional units tend to diminish.

PRODUCTION-refers to the use of economic resources to create goods and services that will be
used to satisfy human wants
IMPACT ON SUPPLIES AND INVESTORS

If a new construction company is set up, then this opens up opportunities for the other
businesses that will supply them their needs, tools, wood, cement, steel, paints, nails, screws, and
decorators.

Many suppliers will now get a chance to sell to the newly established business, which means
income for them.

IMPACT ON THE GOVERNMENT

The government will also benefit from the establishment of new businesses, through revenues
earned on fees collected from them and on taxes imposed on the incomes of the businesses.

IMPACT ON HOUSEHOLDS

New businesses mean employment opportunities for the Filipinos.

Those who have jobs but are earning low-wages may find better paying jobs with the new
companies.

Unemployed workers looking for work may have the chance of being employed by these
companies. The pool of unemployed workers will definitely decrease.

Being employed will enable them to buy their basic needs and even some luxuries. This means
that their quality of life and their standard of living will improve.

IMPACT ON COMMUNITY

Communities benefit from business micro financing, and even medical and dental missions.

Corporate Social Responsibility (CSR) has become a growing trend among businesses today.

As a result of this, corporations and even small businesses have increased their focus on projects
that provide scholarship to poor but deserving students,

 allocating budgets for housing for low-income families such as participation in programs
like the Gawad Kalinga, environmental protection including tree planting, elimination of
pollution, and other environment related programs.

Source: APPLIED ECONOMICS, DINIO, ROSEMARY P., & VILLASIS, GEORGE A., REX Book Store

Market Players

There are often a number of different types of company or people playing in any marketplace.

Customers-the most important organization or people in the market are your customers. This includes
both current and potential customers.

Major customers-these always need careful attention and may have account/relationship managers
assigned to them. A problem is that big customers may also demand big discounts and special attention.
Minor customers -buy less, but nevertheless are useful as in aggregate they may buy quite a lot. The
only time minor customers are undesirable is when serving them costs more than the profit gained from
them. This can happen when they are angered or when they try to gain an unfair attention for their
smaller payment.

Suppliers- may sell directly into the market, for example selling spare parts, but largely they need to be
kept aligned to your strategy.

In some markets suppliers also supply your competitors. When supply is short, the supplier may hold a
position of power in the choice of who to serve.

You can also have major and minor suppliers. Major suppliers are critical for everyday delivery and a
problem from them can cause delays or product quality issues.

Complementors- are those who sell non-competing products and which generally help your sales. For
example in a rock musical instrument market, drum and guitar manufacturers are complementors to
one another.

It is generally a good idea to collaborate closely with complementors as mutual benefit may be gained.
They may also seek to work with competitors, which can be a tricky situation -- but if it all adds up to
expanding the market, then this is beneficial. An alternative strategy, as with suppliers, is that if you can
lead the complementors to support you more, then competitors may be weakened.

Competitors- are those who have products and services similar to you and where customers who are
buying something will compare your offerings and prices directly, weighing one up against the other.

The interaction with competitors is usually directly antagonistic. You seek to convince customers that
your offerings are better and that competitors' offerings are worse. Nevertheless, there are times when
collaborating with competitors is helpful, for example in influencing sensible regulations.

Substitutors- are like competitors but their products are not the same. The classic substitution is
replacing butter with margarine (a battle that is still raging).

A critical attribute of a substitutor group is that they all seek the same 'share of wallet'. Hence, when a
person is thirsty, all drinks are substitutes for one another.

Regulators

In any industry, standards are often helpful in many ways, from ensuring product safety to helping
suppliers create plug-compatible parts that enable economies of scale and hence lower product prices.

Regulation may be driven by collaboration between competitors. Regulations may also be created by
independent organizations or even governments, whose agendas may not align with company profit
motives.
Influencers-groups and organizations who have no direct control but who will seek to promote their
own agendas by influencing players within the marketplace, including regulators and retailers. These
often have an ethical basis, for example ecological or animal rights activists.

Influencers can be helpful if you listen to them and take their concerns seriously.

http://changingminds.org/disciplines/marketing/understanding_markets/market_players.htm

Service industry

WRITTEN BY: The Editors of Encyclopædia Britannica

Service industry-creates services rather than tangible objects.

Economists divide all economic activity into two broad categories, goods and services.

Goods-producing industries - agriculture, mining, manufacturing, and construction; each of them

Service industries - include banking, communications, wholesale and retail trade, all professional
services such as engineering, computer software development, and medicine, nonprofit economic
activity, all consumer services, and all government services, including defense and administration of
justice.

A services-dominated economy is characteristic of developed countries..

https://www.britannica.com/topic/service-industry

Manufacturing Industry-refers to those industries which involve in the manufacturing and processing of
items and indulge in either creation of new commodities or in value addition. The manufacturing
industry accounts for a significant share of the industrial sector in developed countries. The final
products can either serve as a finished good for sale to customers or as intermediate goods used in the
production process.

Evolution of the manufacturing industry:

Manufacturing industries came into being with the occurrence of technological and socio-economic
transformations in the Western countries in the 18th-19th century. This was widely known as industrial
revolution. It began in Britain and replaced the labor intensive textile production with mechanization
and use of fuels.

Working of manufacturing industry:

Manufacturing industries - chief wealth producing sectors of an economy. These industries use various
technologies and methods widely known as manufacturing process management. Manufacturing
industries are broadly categorized into engineering industries, construction industries, electronics
industries, chemical industries, energy industries, textile industries, food and beverage industries,
metalworking industries, plastic industries, transport and telecommunication industries.

Manufacturing industries are important for an economy as they employ a huge share of the labor force
and produce materials required by sectors of strategic importance such as national infrastructure and
defense. However, not all manufacturing industries are beneficial to the nation as some of them
generate negative externalities with huge social costs. The cost of letting such industries flourish may
even exceed the benefits generated by them.

http://www.economywatch.com/world-industries/manufacturing/?page=full

Retail- involves the process of selling consumer goods or services to customers through multiple
channels of distribution to earn a profit. Demand is identified and then satisfied through a supply chain.
Attempts are made to increase demand through advertising.

Retailing as a sector 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, rather than large orders of a small number of wholesale, corporate or government
clientele.

Shops may be on residential streets, streets with few or no houses, or in a shopping mall. Shopping
streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to
create a more comfortable shopping environment – protecting customers from various types of weather
conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include
online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and
mail order.

https://en.wikipedia.org/wiki/Retail

Agribusiness -refers to agriculture-related activities that put farmers, processors, distributors, and
consumers within a system that produces, processes, transports, markets, and distributes agricultural
products.

The transformation of agricultural farming into a thriving agribusiness-driven sector entails:

acquiring farming technologies, training in more sophisticated farming techniques, creating stable
supply chains, establishing transport and agricultural infrastructure, investing and research and
development, and securing a reliable property rights regime.

These activities can contribute not only in diversifying and increasing the value of agribusiness outputs,
but also contribute to the inclusive growth and rural development agenda of the Philippine government.
Because of this, the agribusiness sector is positioned to largely contribute to the industrial development
of the Philippine economy.

http://industry.gov.ph/category/agribusiness/