Different Principles, Tools,

and Techniques in Creating a

Business
Reporters:
Ralph Benedict P. EgeMichelle Ann J. Gajilomo
Joross A. Paltinca Alleah Jade L. Kinol
Michelle Devine Delposo Leonila A. Palalon
Tresia Lyn P. Gascar
 For a person to put up a business, it is essential that a
comprehensive analysis must first be made. According to
Richard Lannon (2016), “there are many tools and
techniques that can be applied to a strategic analysis.
The challenge is selecting the best approach, tools, and
techniques to use given the business problem or
opportunity.”
 Another part of the challenge is understanding the
objectives that you want to achieve based on your
mission and vision that you have envisioned in your
business proposal which should be always aligned. This
is why the following common analysis tools will be very
important for us to achieve a thorough study.
 Common Analysis
Tools and Techniques
 VMOST Analysis

VMOST stands for Vision, Mission, Objectives,

Strategy, and Tactical. VMOST is a tool that can help
you determine whether your business activities are in
line with your plan and strategies . Because alignment is
crucial to the success of a strategy, so this can be a
useful process to go through.
 This Guideline in using VMOST analysis consists on
4 Steps. In each of these Steps, it proposes to define
certain Factors related to the Company (Consuunt, n.d.).

1. Vision & Mission:

Vision: How you see the Market, and its Future.
Mission: The Role that the Company plays in it.

2. Objectives: The Goals to be Achieved (and When).

They should be Defined and Measurable
3. Strategy: What Methodology will be used to achieve
those Goals.
It will vary depending on the project.

4. Tactics: What Actions will be used to comply with

that Strategy.
 Example of VMOST Analysis

Here is another example from Consuunt (n.d.):

Vision & Mission

• Your Vision: High-quality Food is very expensive
and must be accessible to everyone.
• Your Mission: To offer high quality food in an
affordable and attractive way for everyone.
Objectives
• Have the Restaurant Open and fully operational
before 6 months.
• Have a 10% Profit Margin.
• 20% of your Clients must be Loyal Clients.

Strategy
• Customer Satisfaction is at the center of
everything.
• You’ll focus on a Total Quality approach.
Tactics
• You’ll implement a Continuous Learning process
to find what your Customers value the most.
• You’ll use recipes that people know but employing
good products.
• You’ll check Social media to track How your
Customers perceive your Restaurant..
• You’ll analyze your Income and Costs once a
month.
 The Swot Analysis

The SWOT analysis was created in the 1960’s by

business gurus, Edmund P. Learned, C. Roland
Christensen, Kenneth Andrews, and William D. Brook in
their book, “Business Policy, Text and Cases”
(Sathyabama, n.d.).
 SWOT, which stands for Strengths, Weaknesses,
Opportunities, and Threats, is an analytical framework
that can help a company meet its challenges and
identify new markets. The framework can help identify
the business’s risks and rewards. It is also a means of
identifying the internal and external forces that may
affect the business. It is very helpful in assessing new
ventures.
 The initiators, Learned, Christensen, Andrews, and
Book used a diagram as guide for identifying the
company’s strengths (S), weaknesses (W), opportunities
(O), and threats (T). S (strengths) and W (weaknesses)
actually refer to the internal factors, and these are the
resources and experiences readily available to the
business proponent. Usually included as internal factors
are:
1. Financial resources such as money and sources of
funds for investment;
2. Physical resources, such as the company’s location,
facilities, machinery, and equipment;
3. Human resources consisting of employees;
4. Access to natural resources, trademarks, patents,
and copyrights; and
5. Current processes, such as employee programs,
department hierarchies and software systems, sales
and distribution capabilities, marketing programs, etc.
 On the hand, when we speak of external forces,
these are those that affect a company, an organization,
an individual, and those outside their control. These may
include:
1. Economic trends including local, national and
international financial trends, developments in the
country’s stock market, reforms in the banking
system,
growth of the Gross Domestic Product;
2. Market trends, such as new products or technology or

evolving buyers’ profiles, including changes in tastes

3. National and local laws and statutes as well as
political, environmental, and economic regulations;
4. Demographic characteristics of the target market
such as the age, the gender, the culture of the
customers;
5. Relationships with suppliers and co-owners; and
6. Competitive threats.
 Before an owner can plan for its business’ future,
he/she must first evaluate the business by identifying
and analyzing internal and external resources and
threats. The SWOT analysis is a tool that can help a
proponent by enabling him/her to identify and assess
the internal and external forces that can affect the
business. When used properly and regularly, this can
serve as guide for the company to attain success.
 It is a guide to prepare for a new venture, design
business strategies, and identify areas of change and
reform. When used properly, the business owner can
anticipate problems, including possible solutions and
take advantage of identified opportunities. The owner
can maximize its strengths and attempt to cut out its
weaknesses (Dinio & Villasis 2017).
Table 1. Table for SWOT Analysis template.

Threat
 When drafting a SWOT analysis, what is created is a
table split up into four columns to list each element side
by side, for comparison. Most of the time, the business’
strengths and weaknesses will not match the listed
opportunities and threats, and this is where the
owner should attempt to somehow make them meet.
The table presents a SWOT analysis template that
can be used as a guide to identify the strengths,
weaknesses, opportunities and threats.
Table 2. Sample SWOT Analysis
 The TOWS Analysis

TOWS Analysis is a variant of the classic business

tool, SWOT Analysis created by Heinz Weihrich. It is a
variant of the classic business tool, SWOT Analysis.
Both TOWS and SWOT are having the same acronyms
for Strengths, Weaknesses, Opportunities and Threats,
and in reverse order of the words.
 TOWS analysis first matches internal factors to
external factors to help identify relevant strategic
options that an organization could pursue. By
combining the external environment’s opportunities and
threats with the internal organization’s strengths and
weaknesses, we can come up with four basic
strategies. It can help an organization to see how it can
take advantage of opportunities, reduce threats,
overcome weaknesses and exploit any strengths.
3. Weaknesses/Opportunities (WO):
Consider all weaknesses one by one listed in the SWOT
Analysis with each opportunity to determine how each
internal weakness can be eliminated by using each
external opportunity.
4. Weaknesses/Threats (WT):
Consider all weaknesses one by one listed in the SWOT
Analysis with each threat to determine both can be avoided.
The inner four squares inside the Matrix represent what
happens when the corresponding column and row labels
come together.
Table 3. TOWS analysis template.
Table 4. TOWS analysis sample
 Porter’s Five Forces

Porter’s Five Forces is a framework to analyze the

potential profitability of a marketplace. It was invented
by Michael Porter in 1979 and has been used
consistency by thousands of companies across the
world since originally being published (GetLucidity, n.d.)
 Five Forces looks at five key areas in a market that
impact your price and profitability. The forces analyzed
are:

• Bargaining power of Buyers

• Bargaining power of Suppliers
• Threat of Substitutes
• Threat of New Entrants
• Competitive Rivalry
Full List of Five Forces Factors
To help kickstart your analysis on Five Forces here’s
a list of the factors you should be considering
(GetLucidity, n.d.).
Competitive Rivalry
• Range of products and services offered
• Brand loyalty
• Number of competitors in market
• Ease of switching between providers
• Market growth rate
• Industry lifecycle point
Power of Buyers

• Number of buyers and market size

• Value of each buyer
• Ease of switching to competitor
• Number of options for buyers
• Alternative options for buyers
• Sensitivity to price points
• How key is product or service to buyer
Power of Suppliers

• Number of suppliers in market

• Size of suppliers in market
• Risk of supplier moving into your market
• Cost point of suppliers
• Substitution options for the supplier product or
service
• Ease to move between suppliers
• Differentiation of suppliers offering
• How big a customer you are to the suppliers
Threat of Substitution

• Current substitute products on offer

• Reasons for buyer churn
• Price of substitute vs product or service
• Quality of substitute vs product or service
• Cost of switching
• Usage trends
• External trends
 PESTLE Analysis

PESTLE analysis is a strategic management tool that

businesses use to identify macro-economic factors that it
needs to consider. The word ‘PESTLE’ stands for the six
factors – Political, Economic, Social,Technological, Legal,
and Environmental. Together, they form the basis for
identifying key issues that may impact the strategic
direction of the company (Boyce 2021).
 Here are the factors elaborated below by De Bruin
(2016):
Political
These factors are all about how and to what degree a
government intervenes in the economy or a certain
industry. Basically, all the influences that a government
has on your business could be classified here. This can
include government policy, political stability or instability,
corruption, foreign trade policy, tax policy, labor laws,
environmental law and trade restrictions.
Here are the guide questions:

• What government policies or political groups could be

beneficial or detrimental to our success?

• Is the political environment stable or likely to change?

Economic Factors
Economic factors are determinants of a certain
economy’s performance. Factors include economic
growth, exchange rates, inflation rates, interest rates,
disposable income of consumers and unemployment
rates. Here are the guide questions:
• What economic factors will impact on us moving
forward?
• Does the current economic performance affect us?
• How does each economic factor impact our pricing,
revenues, and costs?
Social Factors
This dimension of the general environment represents
the demographic characteristics, norms, customs and
values of the population within which the organization
operates. This includes population trends such as the
population growth rate, age distribution, income
distribution, career attitudes, safety emphasis, health
consciousness, lifestyle attitudes and cultural barriers.
These factors are especially important for marketers
when targeting certain customers.
 In addition, it also says something about the local
workforce and its willingness to work under certain
conditions. Here are the guide questions:
• How do our consumer’s values and beliefs impact on

their buying habits?

• How does human behavior or cultural trends play a
role in our business?
Technological Factors
These factors pertain to innovations in technology that
may affect the operations of the industry and the market
favorably or unfavorably. This refers to technology
incentives, the level of innovation, automation, research
and development (R&D) activity, technological change
and the amount of technological awareness that a market
possesses. These factors may influence decisions to
enter or not enter certain industries, to launch or not
launch certain products or to outsource production
activities abroad.
 By knowing what is going on technology-wise, you
may be able to prevent your company from spending a
lot of money on developing a technology that would
become obsolete very soon due to disruptive
technological changes elsewhere. Here are the guide
questions:

• What innovations and technological advancements

are available or on the horizon?
• How might they affect our operations?
Environmental Factors
Environmental factors have come to the forefront only
relatively recently. They have become important due to
the increasing scarcity of raw materials, pollution targets
and carbon footprint targets set by governments. These
factors include ecological and environmental
aspects such as weather, climate, environmental offsets
and climate change which may especially affect
industries such as tourism, farming, agriculture and
insurance.
 Furthermore, growing awareness of the potential
impacts of climate change is affecting how companies
operate and the products they offer. This has led to
many companies getting more and more involved in
practices such as corporate social responsibility (CSR)
and sustainability. Here are the guide questions:

• What regulations and laws apply to our business?

• Do they help or hinder our business?
• Do we understand the laws across all our markets?
Legal Factors
Although these factors may have some overlap with
the political factors, they include more specific laws such
as discrimination laws, antitrust laws, employment laws,
consumer protection laws, copyright and patent laws,
and health and safety laws. It is clear that
companies need to know what is and what is not legal in
order to trade successfully and ethically.
 If an organization trades globally this becomes
especially tricky since each country has its own set of
rules and regulations. Here are the guide questions:

• How does our physical environment affect us and

vice versa?
• What are the effects of climate, weather or
geographical location?
• Are we prepared for future environmental targets?
Table 5. PESTLE Analysis example of a Taxi Service.
POLITICAL ECONOMIC SOCIAL
• Need to make • Easily accessible • User friendly
its stand clear • Affordable fare • Quick pick up
about driver’s charges • Gives better
insurance • Offers jobs ride experience
• Have to follow opportunities, than bus
minimum wage but pay may
not be convincing
rules
TECHNOLOGICAL LEGAL ENVIRONMENTAL
• People in the
locality are • Need to •Fuel / Gasoline in
excellent mobile follow labor the locality is
app laws and abundant since
• People in the employee there are lots of
locality are using safety laws Gasoline station in
social media and as well the locality
other electronic
media