Diocese of Baguio – Schools

S a i n t L o u i s S c h o o l of P a c d a l , I n c .
Siapno Road, Pacdal Circle, Baguio City 2600, Philippine
e-mail: slpacdal@yahoo.com Tel. No. (074) 661-4223ample
Christian Character, Excellence, Servant Leadership, and Stewardship

APPLIED ECONOMICS
2nd GRADING
Module 3
TITLE : SOCIO-ECONOMIC FACTORS AFFECTING BUSINESS AND INDUSTRY

OVERVIEW/INTRODUCTION:
The first step to understanding what socioeconomic factors are is to understand social economics. This
is a specialized branch of economics that concerns itself with studying the intimate relationship between
economics and social behavior. Such things as ethics, social norms and different social philosophies have an
impact on how consumers behave in an economy and the eventual shape that economy will take. The study of
social economics seeks to predict what kind of results to expect when the society has been changed. It does this
by studying politics, history and other social sciences.

INSTRUCTION TO THE USER:

Read the notes of this module properly before you are to answer the different activities, answer all the
activities and be sure to pass your activities on time.

COMPETENCIES:
 Explain the effects of the various socio-economic factors affecting business and industry.

OBJECTIVES:
 Appy the economic flow on the socio-economic problems of the country.

CONCEPT DISCUSSION:
 In what way do socio-economic factors affect the business industry?

The first step to understanding what socioeconomic factors are is to understand social economics. This is a
specialized branch of economics that concerns itself with studying the intimate relationship between economics
and social behavior. Such things as ethics, social norms and different social philosophies have an impact on
how consumers behave in an economy and the eventual shape that economy will take. The study of social
economics seeks to predict what kind of results to expect when the society has been changed. It does this by
studying politics, history and other social sciences.

Socioeconomic factors are, therefore, the social and economic factors that shape and determine the dynamics a
society will experience. These are factors that affect the behavior of a particular group, also known as a
socioeconomic class. Perhaps the most interesting behavior of members of a socioeconomic class is their
behavior as consumers. Different socioeconomic classes will generally have different priorities, and this will
affect how they spend their money.

How Do Socioeconomic Factors Affect Businesses?

Understand the socioeconomic factors affecting business will help you make better decisions about the future
and direction of your business. To have an intimate understanding, however, you will have to understand both
external and environmental factors, as well as how their interplay affects your business.

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Environmental Analysis
This is a special term that refers to the process of looking at the external socioeconomic issues in a business. It
is considered a part of general business analysis, so it is useful to the executives of a company. It can help them
grow the organization, increase the streams of revenue the company receives and also get ahead of competitors.
A subset of environmental analysis is the PEST analysis, or some of its variants, such as the PESTLE analysis.
This is a form of analysis that looks at four relevant factors that affect a business environment, and these –
Political, Economic, Social and Technological factors – create the acronym “PEST.” There are other variations,
such as PESTLE, which includes Legal and Environmental factors. However, the four factors in PEST analysis
are the main economic factors that affect a business.

Economic Factors and Their Effect on Business

Economic factors are an essential part of all business analysis, no matter whether it is PEST analysis, PESTLE
analysis, or any other kind of business analysis. These are the main factors considered when a company makes
financial decisions.

These factors are connected to money, goods and services. They affect businesses on a micro-level, but they are
a lot more powerful than that – they also affect the entire economy on a macro-level. The economy, whether a
local economy or a global one, will pretty much be the determining factor in the details associated with the
operation of a company, such as the value of its assets, consumer demand and even taxes.
Some economic factors you must think about in your business include exchange rates, interest rates, recession,
inflation, taxes, and demand and supply. Here is a closer look into three of these factors and their connection to
businesses:

Interest Rates
Interest rates are everywhere, and are imposed by many different people. In fact, banking institutions are
obsessed with knowing what the status for interest rates in the economy is for a good reason. It is how they
determine their lending practices. It is also good information for a company that relies on debt capital to finance
ambitious projects.

Exchange Rates
This is a slightly more nuanced topic than that of interest rates. At the heart of it, exchange rates are an
important factor to consider for any business involved in importation and exportation of various goods and
services. When exchange rates fluctuate, they affect the ability of a company to pay its international suppliers in
a satisfactory manner. This can also affect the profit margin of the company, as well as the amount of resources
it needs to stay afloat.

Recession
Whenever an economy faces a recession, it has the potential to change the attitude taken by consumers toward
their purchasing decisions. This may force companies to drop prices to stay afloat.

What Are the Socioeconomic Factors That Affect Health?

There are many factors that come together to affect the health of both an individual and an entire community.
The health of a person or people, in general, is to a great extent determined by the environment as well as their
circumstances. These include such things as the level of education of a person, their genetics, the state of their
environment, their geographic location, the relationships they have with their family and friends, and so on. In
fact, these factors have an even greater effect on health than access to health-care services.
All in all, there are three major factors that affect the health of a society:
Socioeconomic environment
Physical environment
Individual behaviors and characteristics.
In other words, context is the most significant determinant of health. You cannot blame a person for his ill
health, and neither can you give him credit when he's in good health. For the most part, he's just in the right
environment. In fact, individuals do not have much control over most of the factors that affect their health.
Determinants include:

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Social Status and Income
Having a high social status and an above average income predisposes an individual to better health. In fact, lots
of studies have shown that as the gap between the rich and the poor increases, so does the gap between their
levels of health.

Education Level
It is also commonly observed that the level of education is directly linked to health. Communities with low
average education levels tend to have poorer health, overall. Low education levels are also linked to lower self-
confidence and more stress.

Physical Environment
Such things as safe homes, workplaces that are healthy, safe drinking water, clean air, wholesome communities
and updated infrastructure are important determinants of good health in a society. Of particular relevance to
businesses is the working conditions of those who are employed. The mere fact of being employed, to begin
with, predisposes an individual to better health. Also, the more control an individual has over her working
conditions, the better her health.

Social Support Network

When individuals have lots of support from family, friends and the community at large, they will be
predisposed to better health. More support factors include the culture of the community, such as traditions,
beliefs and customs. The improvement of these factors can lead to the improvement of the health of the
community.

Genetics
People's genetics play a large role in their health, their lifespan and their probability of contracting certain
diseases. There are also other personal factors that affect health, such as a person’s coping skills and behavior.
Do they keep active? Do they smoke? Do they drink alcohol? How do they deal with stress? All of these things
have an impact on the health of an individual.

Access to Health Services

The ability of people to access and use quality health facilities has an effect on their health. Of particular
importance is their access to preventive medication and procedures that protect them from certain diseases.

Socioeconomic Factors That Influence Educational Development

Socioeconomic status is not based solely on income. There are a slew of other things, such as education level,
financial security, and the perceived social class and status of the individual. Along with the quality of life
enjoyed by the individual, consider the privileges and opportunities gained as a result of this socioeconomic
status.
With that in mind, poverty isn’t necessarily a socioeconomic
mic factor but is brought about by the combination of many different factors and stressors in the environment.

The Role of Social Economics in Education

Children who come from families of a lower socioeconomic status tend to develop their academic skills at a
much slower rate than their counterparts from higher socioeconomic status families. Low socioeconomic status
has been linked to a variety of phenomena, such as poor language, cognitive development, socioemotional
processing, memory and a lower income and health status in adulthood.
In communities of low socioeconomic status families, education systems suffer from fewer resources, which has
an adverse effect on the academic progress of children. The children may receive inadequate instruction and
education and will have higher dropout rates. Their academic achievement can become stunted and the low
socioeconomic status will be perpetuated into the next generation. One way the situation can be helped is to
introduce early intervention programs and improve the school systems in these areas to mitigate some of the
negative factors involved.

The Connection to Family Resources

Gaps exist in literacy in children of different socioeconomic statuses, even before they begin school. Children
who come from lower socioeconomic backgrounds aren’t as likely as their higher socioeconomic status
counterparts to have the right experiences to encourage the development of oral language, vocabulary and
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phonological awareness. All of these are highly important to the development of reading skills. Additionally,
the rate of development of a child’s literacy skills is linked to the literacy levels of the parents as well as the
number of books in the house. Poorer households will generally have less access to computers, books, learning
toys and so on. All of these are crucial to the learning process of the child.

The Connection to Academic Achievement

Children who come from families of a lower socioeconomic status will be behind their peers from higher
socioeconomic backgrounds by an average of five years by the time they enter high school. The high school
dropout rate in 2014 among 16- to 24-year-olds was highest among low-income families. The percentage of
dropouts in low-income families was 11.6, while the percentage in high-income families was 2.8.
Students who come from low-income families also tend to do worse in the STEM (science, technology,
engineering, mathematics) fields than their counterparts from high-income families. According to the United
States Census Bureau, in 2014, individuals from families in the top 25 percent are up to eight times more likely
to complete a bachelor’s degree before age 24 than their counterparts from low-income families.

The Connection to Psychological Health

Students from families of a low socioeconomic status are more likely to suffer from negative psychological
conditions, such as learning disabilities, which will have an adverse effect on their academic achievement.
These students are exposed to more adversity and toxic stress, especially in early childhood, which will impact
their behavior, health and learning abilities in a lasting manner. These children are twice as likely as those from
high-income families to exhibit behavior problems related to learning. The socioeconomic status of the mother
will also affect the child’s level of interest, attention, and cooperation in school.

The Connection to Career Aspirations

There is a link between socioeconomic status and the career trajectory and aspirations of an individual, as well
as the resulting achievements.
Such things as socioeconomic, ethnic and racial barriers affect an individual’s ability to get ahead career-wise.
Those from poor backgrounds, women, people of color, the disabled and those of an alternative sexual
orientation are the most affected.
Individuals who come from a higher socioeconomic status, on the other hand, will have a higher probability of
success in their careers and will be better prepared for the work environment because of their access to such
things as career guidance counselors, better schools and higher quality education.

Final Thoughts
As a business owner, it is your responsibility to raise the socioeconomic status of your employees and those in
your community, even as you seek to raise your own. By doing so, you pave the way for yourself and others to
recruit better employees in the future. You can do this by improving workplace conditions, offering better work
benefits to your employees so they can take care of their families’ health and education, and take part in
corporate social responsibility projects to improve your community at large.

REFLECTION:
“Learn to do good; seek justice, correct oppression; bring justice to the fatherless, plead the widow’s cause.” Isaiah 1:1

REFERENCES:
Boado,s.,(2017).Diwa Learning Systems Inc.

https://smallbusiness.chron.com/socioeconomic-factors-affecting-small-businesses-73234.html

https://www.google.com/search?q=bible%20servant%20leadership
%20quotes&tbm=isch&hl=en&sa=X&ved=0CB0QtI8BKABqFwoTCICh8NDFrfMCFQAAAAAdAAAAABAH&biw=1349&bih=62
5#imgrc=OfCFbC8V2BpK
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