Saint Anthony Academy

Batuan, Bohol, Philippines

Member: Bohol Association of Catholic Schools ( BACS)
Catholic Education Association of the Philippines (CEAP)
ORGANIZATION AND MANAGEMENT 12

Name:___________________________ Year & Section:___________________________

Date:______________________________ Score: __________________
Teacher: Ms. Anabel A. Bahinting, LPT
ACTIVITY NO. 5
(Week 5)
Topic: The Local and International Business Environments
Competencies:*Describe the local and international business environment of a firm.
*Explain the role of business in relation to the economy.
*Discuss the different phases of economic development.
Objectives: *Recognize the factors that affect the local business environment.
*Acknowledge the forces that affect the international business environment.
*Discuss the different phases of economic development.
*Explain the role of business in the economy.
Concept Notes:
The Local Business Environment
In the conduct of their business, companies have to contend with the conditions changes in their local
business environment. The Philippine business environment is Influenced by a lot of factors both in the
microenvironment and macroenvironment. These factors all combine to create a unique business environment to
which companies and organizations must adapt in order to become successful.
One major consideration for Philippine businesses is the weather. It can be very hot the summer and very
stormy by the last quarter of the year. Intense weather conditions can have adverse effects especially on
businesses engaged in food production and agriculture. Any adverse weather phenomena, such as typhoons and
droughts, may result in the loss of crops which leads to an increase in food prices. Natural disasters such as
earthquakes can bring about disruptions in businesses and industries due to property damage and casualties.
Aspects of Philippine culture should also be considered by businesses especially when they endeavor to
provide products and services in the market. Certain local products, such as native cuisine and handicraft, may
have strong market in certain areas but may perform weakly in other place in the
country. Businesses who wish to bring foreign product into our local market should also be mindful whether these
product are acceptable in Philippine culture. Filipino are often inclined to purchase or patronize Western product,
particularly American-made product and services. Other businesses, however, appeal to local product that use
local ingredients or material.
Business opportunities and threats should also be considered in the local environment. At present several
BPO companies operating in the Philippines take advantage of the cheap operating and labor costs, as well as the
highly skilled workforce among Filipinos. They have reaped much profit form their operation. In the Philippines,
about 15 billion dollar as of 2013. The industry, in turn has also greatly contributed to the growth of the
Philippine economy. As of 2013, BPO companies have contributed about 5% of the Philippine GDP, and
employed almost one million Filipinos.

The International Business Environment

The international environment also consists of the political, economic, social, and technological
environmental forces. These must be considered when a company decides to expand its business overseas, as
different countries provide a variety of opportunities and threats for the business.
A company operating with international branches should take note of the political environment,
particularly the stability of the government of the country where it operates. Different countries have different
trade laws and policies. Taxes, quotas, tariffs, and other trade regulations can affect a company's operations so it
is important to monitor the changes in these laws in the country concerned. Copyright laws and patents may also
differ from country to country.
Many international companies take advantage of lax labor laws in certain countries like China. Other
companies take advantage of tax and trade exemptions offered by certain countries. The Philippines, for instance,
has established free trade and export zones in Clark,
Pampanga and Subic, Zambales where many international companies have built their factories and established
their operations. International companies often cultivate and maintain relations with political figures and
administrations and consider political developments in their strategic planning.
Companies should also consider the economic environment of the country such as presence of
infrastructures that support economic activities. Railroads, ports, plants, schools, commercial establishments,
markets, utilities, and communication systems should be evaluated. A country may offer a huge market, but its
infrastructure may be less than ideal for business operations. Additionally, should also consider the average
income of population. A product may be popular in a certain country, but the general financial situation of the
people may prevent profitability.
The Social environment includes cultural differences. Companies entering the international market should
learn the proper cultural practices and taboos. Taboos are social or religious customs that prohibit, for example,
discussion of a particular practice or association with a particular person, place, or thing. In Japan the Japanese
observe a strong group orientation while in Arab countries, women are not given management positions. There
are also language differences so managers should understand the colloquial meanings of words when translated
in other languages. Misinterpretations may occur if managers are not careful with the of language. Rewards and
punishments given to employees should be carefully studied since people across the world have different and
particular methods Of motivation depending on their cultural upbringing.
Lastly, a Company should also consider the technological factors in the conduct of international business. It
should ensure the compatibility of the available local technology with the technology it employs in its operations.
A company should also ensure that the country has an available workforce that is sufficiently competent to handle
the technologies that the venturing company will introduce. The potential benefits and harm that might result from
the introduction of technologies should also be taken into account.

Phases of Economic Development

Development in the global economy are influenced by changes in two significant aspect: (1) the capacity
to produce to manufacture and (2) the capacity to distribute or transport. Beginning in the 16 th century, the global
economy has experienced five major phases of economic development.

Economic Phase Time Period Overview

The rise of major European colonial powers such as Spain and

Portugal brought about the emergence of the mercantilist
system of trade. In this economic phase, countries
Mercantilism 1500-1780 accumulated wealth through trade relations with other
countries and colonies. Other empires like India and
China were not as active in global trade and were restricted
to trading within their regional markets. Methods of
production remained unchanged, relying on methods
and processes developed during the Middle Ages.

Production and distribution became mechanized since

many businessmen saw the benefit of investing in
machines and equipment. Large factories were established
Industrial 1780-1880 and there was also an increase in employment, Industrial
cities emerged and trade flourished. Transportation was
improved with the construction of canals, waterways,
roads, and railroads and these enabled the quick and easy
transport of raw materials and finished goods over long
distances.

This phase saw the rise of multinational corporations through

the pioneering work of Henry Ford of Ford Motor
Company. Fordism 1880-1970 Ford introduced a standardized production
process for his Ford Model T automobile which resulted in
increased production and profit. Ford's innovation led
to the introduction of the assembly line, a
production process where the assembly of an
automobile is done, usually along a moving
conveyor, with workers performing specific and
repetitive tasks in a series. Ford also introduced the electric
motor in his factory which greatly improved efficiency,
leading to lower production costs. During this period, the
term "Fordize" became popular and this meant "to
standardize a product and manufacture it by mass means at a
price so low that the common man can afford to buy it."

In this phase, production was no longer confined to

manufacturing plants and could be done anywhere in
the Post-Post-Fordism 1970-2010 world through improvements in production methods
and information technology. Computer-controlled tools
and efficient techniques customized and tailored the
production process to a particular location. The internet
provided a more convenient medium tor communication
among consumers. suppliers, investors, and
employees, enabling easy access and purchase of
products as well as their quick delivery to customers,

The current economic phase is the age of globalization where

and Globalization
regional
different
other. This period
competition among companies
maintain quality in order to attract
important concern in this period is
refers to the conduct of business
to its effects on the environment.
companies are operating within a global marketplace
2010-Present economy. This has given rise to the establishment of
economic organizations that enable companies from
countries to engage in free trade with each
is also characterized by stiff
and the constant need to
customer. Another
sustainability. which
operations with due regard
THE ROLE OF BUSINESS IN THE ECONOMY
No economy can survive without a thriving business sector. It fuels the economy of a country since
business organizations engage in transactions that maintain a smooth flow of trade relations among producers,
service providers, and households. These various business transactions include manufacturing, distribution,
delivery, and selling of products as well as providing different kinds of services to the consumers. These
transactions stimulate the movement of money and resources in and out of a country resulting in overall economic
growth. A robust economy with an active business sector attracts more investments from other countries which
encourage further economic growth.
A thriving economy provides a good environment for more start-up businesses. They generate new
products and services through innovation and extensive research and development which eventually lead to
further improvements in the lives of the people. These improvements come in the form of better job opportunities
and increased assortment of products and services available to consumers.
 ORGANIZATION AND MANAGEMENT 12

Name:___________________________ Year & Section:___________________________

Date:______________________________ Score: __________________
Teacher: Ms. Anabel A. Bahinting, LPT
ACTIVITY NO. 5
Activity: Select whether you will observe a Filipino-owned business or an international business. Research on
your selected business and describe its:
a. characteristics;
b. business structure;
c. goals and objectives;
d. operations;
e. products; and
f. services
Identify unique company traits and practices that set the business apart from the others in the industry. If possible,
interview an insider in the business (worker, manager, etc.) and interview him or her regarding the company.
Write a narrative report about what you have discovered in 1 whole sheet of long bond paper.

Rubrics:
Content - 20
Organization - 20
Originality - 10
50 pts