11 SENIOR HIGH SCHOOL

APPLIED ECONOMICS
Quarter 4 – Module 5
Evaluating Business Viability
and its Impacts to the Community
Applied Economics – Grade 11
Alternative Delivery Mode
Quarter 4 – Module 5: Evaluating Business Viability and Its Impacts to the
Community
First Edition, 2020

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 11

Applied Economics
Quarter 4 – Module 5
Evaluating Business Viability
and Its Impacts to the
Community
 I

Business plays a major role in our society. It shapes the society

through its creative and competitive activities. Businesses improve the
quality of life for people and create a higher standard living by
satisfying the needs and wants of the people.

As you continue your journey in economics, it is important that

you learn about business viability and its impacts to the community.

LEARNING COMPETENCY:
Evaluate the viability and impacts of business on the community
(NO CODE)

OBJECTIVES:
K: Explain how the business is viable and identify the
factors to consider viability of a business;

S: Evaluate and provide some ways to ensure the viability

of a business; and

A: Reflect and relate to real life experiences its impacts of

business to the community.

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 I

Pre-assessment:

Directions: Choose the correct answer and write the letter of the correct answer in your
notebook.
1. If the price of beef doubled and the price of poultry stayed the same, what would people
most likely to buy?
A. more poultry and less beef
B. less poultry and more beef
C. the same amount of poultry and beef
D. don’t know
2. If Country A stopped importing automobiles from country X, who would most likely to
benefit?
A. Automobile manufacturers in Country X
B. Consumers in Country A
C. Automobile manufacturers in country A.
D. none of the above
3. Brgy. A grows fruit and vegetables and Brgy. B produces beef. If Brgy. A trades fruits and
vegetables in exchange for the beef produce of Brgy. B, then:
A. Both Brgys. A and B benefited from the trade
B. Both Brgys. A and B lose from the trade
C. Brgy A benefited while the other loses from the trade
D. none of the above
4. When deciding which of the two items to purchase, one should always:
A. choose the item that costs less
B. choose the item that gives greater benefits
C. choose an item after comparing the costs and benefits of both items
D. all of the above
5. If the local government sets a maximum amount that landlords can charge for rent, what is
likely the result?
A. There will be more apartments available than people want to rent
B. There will be fewer apartments available than people who want to rent
C. There will be equal number of people who want to rent and available apartment
D. none of the above.
6. What analysis focuses on the impacts of business operations on various sectors that it
interacts with?
A. SWOT Analysis
B. Socioeconomic Impact Analysis
C. Economic Analysis
D. Environmental analysis

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7. Business firms create an impact on:
A. sellers only
B. both sellers and buyers
C. buyers only
D. buyers more than sellers

8. Which sourcing of factor input deals with manpower services?

A. Labor Services
B. Sourcing for Land Inputs
C. Payment of taxes
D. Capital Formation

9. Which input sourcing refers to the search and training of companies for skilled
professionals to make use of their talent?
A. Sourcing for Labor Services
B. Sourcing Funds for Capital
C. Sourcing Land Inputs
D. Sourcing for managers/professionals

10. An output of a business can affect households as consumers of these goods and services.
A. Government Consumption
B. Investment
C. Exports
D. Personal Consumption

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 ’s In

Task 1

Directions. Write your answers on your notebook and list as many as you can.

1. During the pandemic, did you experience having not enough resources to provide
for your everyday needs?
2. If so, write down the scarce resources.
a. _____________________________________________
b. _____________________________________________
c. _____________________________________________
d. _____________________________________________
e. _____________________________________________
f. _____________________________________________
g. _____________________________________________
3. What did you do to survive given that your resources are scarce?

’s New

Task 2

Directions. Write your answers on your notebook.

1. Observe some of the businesses in your area, were there some businesses who are
closing already? Were there businesses operating for so many years?
2. Why do you think some businesses were successful and still operating and some have
not survived?
3. Why do you think profit is important?
4. How can a business survive when its’s not making a profit?
5. How can a business fail when it is making a large profit?

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 is It

What is Viable Business?

A viable business is most of the time considered the profitable business. It means
that it makes more revenue that its spending. It is measured by a business’ potential for long-
term survival and the ability to sustain profits over a period of time. However, viability or
sustainability of a business is not always measured on how profitable the business is. It is also
measured on how it operates even through the existence of rivals, political forces and many
other environmental factors.

Factors to Consider When Evaluating Viability

1. Target Market / Target customer – We must identify the number of customers that
you targeted as buyer. The more customers we will have the more possible income we
will have. This will be a great factor to evaluate viability since the number of
customers can directly affect the profit of the company in which is one of the basic
requirement for viability.
2. Study of the geographic area – We must identify the external factors particularly the
geographic area or the location of the business you are going to put up. Is the location
good for business? Is it located in an area where there are lots of people, and etc. In
this factor, we may use the PESTLE analysis to identify the macro-external factors
that we need to understand the political, economic, technological, legal and
environmental aspect of the area.
3. Competitive advantage / unique selling proposition– What is your competitive
advantage over your competitors? What is your selling strategy that will make you be
on top of them? Do you have any feature that will distinguish you or your product
from its competitors? Can you handle the current level of rivalry among the
competitors in the market? Tools like SWOT and TOWS analysis and Porter’s five
forces can be very beneficial to answers these questions. In evaluating viability, we
must ensure that we must have some strategy to outplay the competitors, and will
make your business be still on top of the market.
4. Product viability – We must identify the salability of the product/ or service you are
selling. It can be determined by three dimensions. Viable products need to be
profitable, implementable and scalable. It is very important to identify if the product

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 or service you are planning to sell will ensure a stable income for you. If there is not
enough profit out of your business idea then it would mean that its not viable enough.
Following tools which will be useful to evaluate this factors would be projected
statement of comprehensive income, operating budget and sales budget.
5. Financial capacity – we must identify also the ability of the person who want to open
up the business if he can sustain the needed cash to operate. Following tools which
will be useful to evaluate this factor would be projected statement of cash flow and
Cash budget. It is also important that we must identify the financial capacity that we
have to evaluate viability. If your plan would not include to the financial aspect then
there is a big possibility that it cannot sustain for a long period of time to operate. We
must ensure that we will be able to identify how much finances that we need to
operate so that it can be provided accordingly and identify how much money would
be needed to sustain.
6. Impact to the community – we must also identify the long term impact of your
business in the community. We must not always think that in a business idea or
proposal, income is the number one aspect. We must also look of the long term effects
of the community in which can be harmful in the environment or the community.
What if your business / company is giving the people in your locality a hard time
making money due to your business activities that might affect the livelihood of the
community. We must always remember that in doing business our number goal is not
just profit but also to enhance and raise the economic stability of the people
community. So, how can your business enhance the economic impact to the
community? This can be done, by contributing or by bringing economic growth and
innovation to the community in which the business is established. It can also help
stimulate economic growth by providing employment opportunities to people who
may not be employable by larger corporations.

Considering all those factors that we must be aware of. We must use some ways to
identify these factors and for us evaluate the viability of your business and avoid getting
losses.

Here are some ways to ensure business viability:

1. Make a feasibility study – We must make a comprehensive study to understand more on

the different factors that may affect the business. This study will aim for us to identify the
macro-external factors that we need to know to understand better the target market and its
geographical area in which we will be using the tools like PESTLE analysis. Identifying
these factors, the Political, Economic, Social, Technological, Legal and Environmental
aspect will helps us determine the risk and opportunities in the market place. In this study,
it will also help us show the level of rivalry among its competitor and the level bargaining
power of both consumer and supplier it has in which we will be using Porter’s five forces.
It is a very important tool used in strategic analysis to analyze the competitiveness in an
industry.

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2. Create a business plan – after we have studied the different internal and external factors,
we will now proceed in the creation of the business plan in which will become a guide or
a road map in attaining the goals or objectives of your company one by one. It will serve
as a blue print on how you will operate your business. This will contain on what will be
your strategies you will use based on the information you have gathered in your
feasibility study.
3. Financial planning – After preparing the roadmap of your business plan, we must
prepare also the financial aspect of your business. Financial planning is a very important
task, as it helps in the reduction of uncertainties which can be a hindrance to growth of
the company. This also help in ensuring stability and profitability in concern. Few tools
can be used in financial planning like the working capital management which includes
statements like the Projected income statement which will indicate the forecasted income
that will be generated in a given period of time. Projected cash flow statement is also very
important to identify the needed cash to be prepared for the company to operate. Cash
budget can be an important business tool in financial planning since provides information
regarding the company’s expected cash receipts and disbursements over a given period.
4. Establish an evaluation for monitoring and control – monitoring and control is also
important to ensure viability of a business. Which is why applying your accounting
processes is an important aspect to be applied in a business to ensure viability since it
ensures proper recording of transactions and proper reporting of the income of the
company will be done. As part of the evaluation and monitoring it is important also to
keep track your customers. Do not forget that the customers are the life blood of your
business. Capture your customer satisfaction and to retain the profitable customers.
Suggestion box can be placed also to your business so that we will constantly know the
customers wishes to improve the services or doing business with them.
5. Prepare a contingency plan – Once you are done with your business plan, your financial
planning and your evaluation monitoring, you must also prepare plan A and plan B in
case situations are unfavorable to you and your company. We must also device a
contingency plan in order for us to continue operating despite of the changes to minimize
the effects of these changes.

’s More

Task 3
Directions: Reflect on the statements below and write your answer in your activity notebook.

1. If the competitor copies your idea about your business, focus on the customer, not the
competition.
2. The products that I will sell will be the products that I think I need.
3. My business will survive as long as I can dispose all my products regardless of how it
was disposed, it maybe through cash or credit.

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 The rubrics below will be used to identify your score for this performance task.
Level of General Approach Comprehension
Achievement
• Addresses the problem. • Demonstrates an accurate and
• States a relevant, justifiable complete understanding of the
answer. problem.
Exemplary • Presents arguments in a • Backs conclusions with data and
(15 points) logical order. warrants.
• Uses 2 or more ideas, examples
and/or arguments that support the
answer.
• Does not address the • Demonstrates accurate but only
question explicitly, although adequate understanding of
Adequate does so tangentially. question because does not back
(10 points) • States a relevant and conclusions with warrants and
justifiable answer. data.
• Presents arguments in a • Uses only one idea to support the
logical order. answer.
• Less thorough than above.
• Does not address the • Does not demonstrate accurate
Needs problem. understanding of the question.
Improvement • States no relevant answers. • Does not provide evidence to
(5 points) • Indicates misconceptions. support their answer to the
• Is not clearly or logically problem.
organized.
No answer
(0 pts)

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 I Have Learned

Task 4

Now that we are finished in our lesson, let us review the topics we have learned.

1. The __________ ________ is a tool used to analyze the strengths, weaknesses,

opportunities and threats of a firm, products, etc.
2. The _____________________ evaluates and summarizes the four macro-environmental
factors; political, economic, socio-demographic and technological.
3. The ____ ____________is a key component of external analysis.
4. The ______ _______________ used in strategic analysis to analyze the competitiveness
in an industry.
5. A ______________ is most of the time considered the profitable business.

I Can Do

Task 5

Directions. Write your answers in your activity notebook.

1. Observe business firms in our community and take note of their practices.
2. Compare the practices done by the business firms that are existing for many years
now to the practices of other firms that has been on and off in the business industry.
3. Based on your observation you made in question # 1, what do you think is the factor
that made their business viable?
4. If your will be given a chance to help the firms that you have identified who is on and
off in business. What would be your strategies for them to raise their viability and
continue operating?

Note: The rubrics that will be used in this activity will be the same on the rubrics in Task 3.

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I. Directions: Identify what is asked in each item. Write the letter of the correct answer in
your notebook.
1. Once a firm decides to enter an industry and chooses a market in which to compete, it must
gain an understanding of its competitive environment. This challenge can be undertaken by
completing a(n) ________ analysis.
A. Business C. Market
B. Competitor D. Industry
2. Each quarter, Juan Dela Cruz, who owns a chain of auto repair shops, does a detailed
analysis of his firm's competitors. This analysis is called ________ analysis.
A. Business C. Market
B. Competitor D. Industry
3. Which of Porter's five forces is most closely associated with the concept "barrier to entry"?
A. Threat of New Entrants C. Rivalry Among Existing Firms
B. Threat of Substitutes D. Bargaining Power of Buyers
4. In a PESTLE analysis, “Internet and webcams to access weather info” would be classed as:
A. Political factor C. Social factor
B. Economic factor D. Technological factor
5. In a PESTLE analysis, “Low inflation rates” would be classed as:
A. Political factor C. Social factor
B. Economic factor D. Technological factor
6. Strengths and weaknesses in a business as referred to by SWOT analysis.
A. External Factors C. Poor Planning
B. Internal Factors D. Good Management
7. Great communication skills and analytical abilities in an example of a type of
A. Strength C. Weakness
B. Opportunity D. Threat
8. This is a key component of external analysis.
A. PEST analysis C. Porter’s 5 forces
B. SWOT Analysis D. None of the above
9. These factors make impacts on an industry include specific policies and regulations
related to things like taxes, environmental regulation, tariffs, trade policies, labor laws,
ease of doing business, and overall political stability.
A. Political factor C. Social factor
B. Economic factor D. Technological factor

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10. It refers to trends among people and includes things such as population growth,
demographics (age, gender, etc.), and trends in behavior such as health, fashion, and
social movements.
A. Political factor C. Social factor
B. Economic factor D. Technological factor

Reflection

Write your answers on your activity notebook.

1. What have I learned that I can share with my family and friends?
2. What good value can I develop upon learning the lesson?
3. What other examples can I contribute to explore and think more?
4. What are my learnings on the lesson?
5. What can I conclude on the lesson?

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 13
WHAT I HAVE LEARNED WHAT I KNOW
TASK 4 1. A
1. SWOT 2. C
2. PEST ANALYSIS 3. A
3. BROAD FACTORS ANALYSIS/ 4. C
PEST ANALYSIS 5. B
4. COMPETITIVE FORCES MODEL 6. B
(PORTER’S 5 FORCES) 7. B
5. VIABLE BUSINESS 8. A
WHAT I CAN DO 9. D
10. D
TASK 5
(ANSWERS MAY VARY)
WHAT’S IN
ASSESSMENT TASK 1
1. B (ANSWERS MAY VARY)
2. B WHAT’S NEW
3. A TASK 2
4. D
(ANSWERS MAY VARY)
5. B
6. B WHAT’S MORE
7. A TASK 3
8. A (ANSWERS MAY VARY)
9. A
10. C
References
Industry Analysis. Accessed: March 20, 2021 [https://www.
corporatefinanceinstitute.com/resources/knowledge/strategy/industry-analysis-methods/]

Competitive Forces Model. Accessed: March 20, 2021 [https://www.

corporatefinanceinstitute.com/resources/knowledge/finance]

Broad Factors Analysis. Accessed: March 22, 2021 [https://www.

corporatefinanceinstitute.com/resources/knowledge/strategy/broad-factors-analysis/]

SWOT Analysis. Accessed: March 22, 2021

[https://corporatefinanceinstitute.com/resources/knowledge/strategy/swot-analysis/]

What is Business Viability? Accessed: March 22, 2021

[https://www.thebalancesmb.com/what-is-business-viability-3884327]

Trend Analysis. Accessed: march 22, 2021 [https://saylordotorg.github.io/text_managerial-

accounting/s17-01-trend-analysis-of-financial-st.html]

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