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6 The Circular Flow of Economic Activity
6 The Circular Flow of Economic Activity
CHAPTER 3
Industry and
Environmental Analysis:
Business Opportunity
Identification
LESSON 3.5
The Circular Flow of
Economic Activity
Chapter Learning Objectives
• To identify principles and tools in creating a business
• To apply SWOT analysis as a tool in evaluating a business
opportunity
• To understand that Porter’s Five Forces of Competitive
Position Analysis can be applied as a tool in evaluating a
business opportunity
• To analyze the activities in the circular flow of economic
activity in an effort to relate the concept to the putting up of
a business
Chapter Learning Objectives
• To make a simple industry analysis
• To identify the factors which are taken into account in
an environmental analysis
• To describe the economy’s three main producing
sectors and show how important they are in making a
choice of what business to establish
• To state the importance of competitiveness and
efficiency in the economy
Chapter Learning Objectives
• To explain the value of international trade in
how one can set up a business
• To show the role tourism plays in the economy
and how it can be utilized as business
opportunity
• To identify and assess small business
opportunities
Terms to Remember in
Chapter 3
• Business • Cooperative
• Industry • Micro business
• Competition • Small scale business
• Target market
• Medium scale business
• Suppliers
• Large scale business
• Distributors
•
• SWOT Analysis
Exports
• Imports • Porter’s Five Forces of
• Sole proprietorship Competitive Position
•
Analysis
Partnership
• Corporation • The Circular Flow of
Economic Activity
• Physical flow
Terms to Remember in
Chapter 3
• Financial flow • Service sector
• Household • ASEAN
• Business firm • Infrastructure
• Raw materials • Liberalization Policies
• Intermediate goods • Policy
• Final goods • Productivity/Efficiency
• Industry analysis • Technology
• Environmental analysis • Tourist
• Agriculture, Fishery and • Tourism
Forestry sector
• Industrial sector
Circular Flow Defined