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CHAPTER 3-
INDUSTRY AND ENVIRONMENTAL ANALYSIS:
BUSINESS OPPORTUNITY IDENTIFICATION

Presented by Ms. Jerlyn Estores

 LEARNING
OBJECTIVES:
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1. identify the principles and tools in creating a business;
2. apply SWOT analysis as a tool in evaluating business opportunity;
3. differentiate classifications of businesses and
4. explain the importance of assessing or analyzing a business
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 LESSON 3.1: PRINCIPLES, TOOLS AND TECHNIQUES
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A business is just a small portion of an industry. It is an undertaking by a
person or a group of persons who are partners, or of stockholders who
own a juridical entity known as a corporation. Its main objective is
toearn profit for the owners. An industry on the other hand, is the
aggregation of the different businesses
engaged in the same line of undertaking.
For a person to put up a business, it is essential that an industry
analysis first be made. Commonly used
is a system known as the SWOT analysis, which lists the strengths,
weaknesses, opportunities and threats that
the business faces
 SOLE PROPRIETORSHIP.
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This is the simplest way to set up a business
is owned by a single individual who is singly responsible for
running the business and is accountable for all debts and
obligations related to the business.
enjoys exclusive control and decision-making as well as gets all
the profits earned but he also shoulders all losses and has
unlimited liability which means payments of his loans will
extend to his personal assets
 PARTNERSHIP.
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It is an agreement in which two or more persons combine their

resources in a business with a view to making profit.
A partnership agreement is drawn up and profits are equally divided
among the partners according to the terms of agreement.
 THERE ARE TWO TYPES OF
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a. General partnership. All owners share the management of the

business and each is personally responsible for and must assume the
consequences of the actions of the other partners.

b. Limited partnership. Some members are general partners who control

and manage the business and may be entitled to a greater share of the
profit while other partners are limited and contribute
only capital, take no part in control or management and are liable for
debts to a specific extent only
 CORPORATION.
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It is a legal entity that is separate from its owners, the shareholders. No
shareholder is personally liable for the debts, obligations or acts of the
corporation.

Directors and officers can bear liability for their involvement with
the corporation.

Owners have limited liabilities. However, corporations are burdened

by heavy taxes
 COOPERATIVE.
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It is an entity organized by people with similar needs to provide

themselves with goods and services or to jointly use available resources
to improve their income. Members have an equal say in decision-making
with one vote per member regardless of the number of shares held,
there is open and voluntary membership and surplus earning is returned
to the members according to the amount of
their patronage.
 LESSON 3.2. TOOLS IN
EVALUATING A BUSINESS
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1. The geographic area which your business will cater to. Is it limited
to local areas? Or will it cover a
region, the entire country or even international market?
2. The size and outlook of the industry. What trends can be
identified?
3. Description of the product.
 LESSON 3.2. TOOLS IN
EVALUATING A BUSINESS
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4. The buyers have to be identified. Who ae your target
customers?
5. The regulatory environment. Are the local, national news will
restrict your business? One needs to
identify government regulations specific to the chosen industry.
6. The need to identify the leading businesses in the industry and
to provide company information on the
most successful businesses that you will be up against .
7. Factors that will affect the growth of the business.
 THE SWOT ANALYSIS
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4. The buyers have to be identified. Who ae your target
customers?
5. The regulatory environment. Are the local, national news will
restrict your business? One needs to
identify government regulations specific to the chosen industry.
6. The need to identify the leading businesses in the industry and
to provide company information on the
most successful businesses that you will be up against .
7. Factors that will affect the growth of the business.
 THE SWOT ANALYSIS
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The SWOT analysis was created in the 1960’s by
business gurus, Edmund P. Learned, C. Roland
Christensen, Kenneth Andrews and William D. Book in their book,
Business Policy, Text and Cases.
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.
 THE SWOT ANALYSIS
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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
SWOT actually refers to the internal factors and
these are the resources and experiences readily available to the
business proponent.
 INTERNAL
FACTORS
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1. financial resources such as money and sources of funds for
investment;
2. physical resources, such as 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.
 EXTERNAL
FACTORS
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1. economic trends including local, national and

international financial trends, developments in the
country’s stock markets, reforms in the banking system, growth
of the GDP;
2. market trends such as new products or technology or
evolving buyer’s profile, including changes in
tastes and lifestyle behavior;
 EXTERNAL
FACTORS
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3. national and local laws and statuses as well as political,

environmental and economic regulations;
4. demographic characteristics of target market such as the age,
gender and culture of customers;
5. relationships with suppliers and co-owners and
6. competitive threats
 EXTERNAL
FACTORS
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3. national and local laws and statuses as well as political,

environmental and economic regulations;
4. demographic characteristics of target market such as the age,
gender and culture of customers;
5. relationships with suppliers and co-owners and
6. competitive threats
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