Environmental Factors and Quarter 1 - WEEK 5

HANDOUT
Sources of Opportunities
EXPECTATIONS
LEARNING OBJECTIVES: After going through this module, you are expected to:
1. distinguish different forces under industry environment;
2. analyze the forces of competition that affect a particular industry; and
3. identify the barriers to forces of competition.

LESSON

What can you say about the picture? How can you
relate the picture in a business perspective? When
starting a business, it is basic to consider who the
opposition will be and how you can beat them.
There is a wide assortment of contenders, some of
them are normal information while others might
be astonishing yet they all should be viewed as
when chipping away at who your potential rivals
are.

https://sirdargroup.com/competition-act-dos-donts/

Entrepreneurs can without much of a stretch be influenced if there are radical changes in the
environment. The industry environment is viewed as the prompt condition of the business where it
leads to its different operational exercises. A careful investigation of the business yields opens doors for
the cunning entrepreneur. Distinguishing the entire structure of the industry gives numerous
productive chances to business entrepreneurs.

Aduana (2016, 100-103) discussed Six industry forces which include:

• Government – it alludes to the entire framework

that handles the undertaking of the nation and has
the ward over the significant exercises within the
territory. The administration advances pioneering
adventures through its foundation, projects, and
priorities. The highlighted program of President
Rodrigo R. Duterte Build, Build, Build Program that
introduces the “Golden age of infrastructure” in
the Philippines that has produced employments
and financial exercises especially in regions
outside Metro Manila.
Suppliers – Morato (2016, 16) emphasized that it
incorporates providers of contribution for instance gas,
power, and crude materials. Providers of machinery and
equipment, suppliers of manpower and expertise, and
supplies of merchandise assume a vital job in the creation
of merchandise and enterprises. Along these lines, an
inflexible procedure of choosing the provider must be all
around characterized.

Customers – it incorporates the purchasers of

goods and administrations gave by the
business. Benefits are earned from each
exchange with the customers. All the more
along these lines, understanding the market is
the best answer to gain clients' dependability.
https://www.cnbc.com

Competitors- According to Zarate (2017, 63)

competitors are rival firms that offer similar goods and
services as the organization. Competitors are
classified either direct or indirectly. Direct competitors
produce and sell comparative items. Like for instance,
the direct competitor of the iPhone is Samsung since
they have a place with the same products and
ventures. Indirect competitors on the other hand offer
substitute products and services. Coca Cola offers soft
drink so their direct competitor is Pepsi Cola, on the
other hand, their indirect competitors are businesses
offer other goods such as natural product juices,
filtered water, milkshakes, caffeinated drink, and
sports drink.
https://www.businessinsider.com
Employees- Are the genuine work power of the business who are liable for the creation of merchandise or
conveyance of administrations to the clients. They guarantee the quality and amount of items or
administrations to the clients. They are viewed as the backbone of the business.

Creditors- It refers to financial institutions, banks financial intermediaries engaged in lending money to the
borrower usually for a fee in a form of interest. Creditors broaden their help by stretching out credit to the
business. This empowers the business to comprehend distinctive money related administrations gave by any
budgetary organizations. Thusly, great money related records mean great business pictures, particularly
during budgetary and financial disturbances.

The business must determine the intensity of competition within its industry environment. The drawn-out
impact in the presence of the business relies upon effective endeavors against serious competitive forces.
Aduana (2016, 104) highlighted the five forces of competition which is being popularized Michael Porter,
who is well known in competitive strategy formulation. Aduana (2016, 106-107) distinguished and disclosed
further all barriers to five forces competing within the business, such as:
1. Potential new entrants- An organization that is willing and ready to enter a market given the correct
condition. The threat of new entrants alludes to the danger of new contenders' posture to existing
rivals in the industry. In this manner, a beneficial industry will pull in more contenders hoping to
 accomplish more profit. What's more, new rivals can without much of a stretch go into the business,
rival existing firms, and take a piece of the overall industry. There is a decreased benefit potential as
more contenders are in the business.

There is less danger in this perspective if the accompanying circumstance being watched:
• Strict implementation on government strategy and policy e.g. capital Requirement
• Difficulty in the procedure of making a product or service accessible for the consumer or
business user who needs it.
• The high cost of production
• The high cost of product differentiation which distinguishes a product or services form others.
This is one approach to separate contenders' items from the company's item.

2. Buyers – They have solid and amplified dealing power in the business. In any case, the danger of its
dealing force will be less if the accompanying elements exist:
• The buyer has the potential for backward integration. It is when the company manage to buy or
merge with its suppliers or providers.
• There are few providers in the market
• The product represents a high percentage of the buyer’s cost .

3. Suppliers- The severity of the threat of the suppliers is solid if the following variables remain valid:
• If the product or service is exclusive and special.
• The cost of changing brands, suppliers, or products is very continuously high.
• Substitutes’ items are not promptly accessible in the market.
• Few suppliers but sales volume are generally high

4. Rivalry among existing firms in the industry is ascribed to the accompanying:

• Diversity of competing industry
• A great number of competing organizations
• Characteristics of product offerings
• Management styles and leadership

5. Substitute products present incredible dangers in the business condition if the accompanying variables
are noticeable.
• Lower cost of a substitute product
• Changing customers buying behavior.
• The innovation of substitute products.
• Switching cost is generally low
• Product value creation is hardly observable

Reference:
Entrepreneurship
Quarter 1 – Module 5: Industry Environment
First Edition, 2020
Department of Education – Schools Division of Pasig City
Name: ___________________________________________________ Date: _________________________
Section: _________________________________________________ Score: ________________________

ACTIVITY SHEET IN ENTREPRENEURSHIP

ACTIVITIES
ACTIVITY 1: PICTURE ANALYSIS! Identify the appropriate industry force that is represented in the following
pictures below. (2pts each)

WRAP-UP
WHAT’S ON YOUR MIND? With the given statement below, write POST if correct and DISCARD if wrong
together with its corrections about the lessons we discussed on industry environment and forces to the
competition. (2pts each)