UNIT 2 – BUSINESS OPPORTUNITIES & CHALLENGES

APPLIED
ECONOMICS
MODULE 6: Macroenvironment Analysis
Macroenvironment
Factor

Refers to all the external

forces that influence
organizations.
Microenvironmen
t Factor
Deals with factors that may affect
several or all industries in the
economy, while industry analysis
deals with factors that may impact
only the industry under study.
 Tax laws; fiscal policy; other
P 1. government rules and actions

E 2. GDP; inflation and prices; interest rate; forex;

other economic indicators.

S 3. Demography; lifestyle change and other trends.

T 4. Technological advances research and new

development; new process

E 5. Environment regulations; resource constrains;

climate change.

L 6. New and update business requirements.

 Tax laws; fiscal policy; other
P political government rules and actions
GDP; inflation and prices; interest rate; forex;
E economic other economic indicators.

S social Demography; lifestyle change and other trends.

Technological advances research and new

T technological
development; new process
Environment regulations; resource constrains;
E Environment
climate change.

L Legal New and update business requirements.

 P Political

Pertains to government
rules, law, and fiscal policy
changes that influence an
industry or organization.
 P Political
TAX REFORM
• Refers to revisions on the
implementation and collection of
taxes. These include increasing and
lowering of existing tax rates.

• A decline in demand and consumption

leads to a fall in profit for the firms.
 P Political
TAX REFORM
Sin tax is an example of tax
reform imposed on goods
considered as vice such as alcohol
and tabacco. Under Aquino
administration, Republic Act No.
10351 or more commonly known
as the sin tax reform law
 P Political
Government Spending
As part of fiscal policy, the
government monitors its expenditure
to ensure it remains within the
budget.
Government revenue comes largely
from tax collection.
 P Political
Government Spending
Nations or sovereigns running into
budget deficit borrow money from
Global financial institutions such as
INTERNATIONAL MONETARY
FUND.
WHICH HAVE 189 MEMBERS
High sovereign debt discourages the
 P Political
Political Stability
The strength and effectiveness of the
government in upholding its sovereignty
and implementing the rule of law is
another variable that affects the business
sector.
Transition to a new administration
understandably causes uncertain to the
business community.
 P Political
New Government Regulations
Government regulations to
streamline procedures in all
government agencies and
improve the ease of doing
business have a positive impact
on business.
 E Economic
The overall economic state of the country
is another factor that influences the
success of local industries.
National Economic and Developmental
Authority (NEDA) leads the research on
Philippines socioeconomic data that is
used in policy making and it monitors
infrastructure projects throughout the
country.
E Economic

The following are the

economic indicators.
 E Economic
It is the equivalent to total output is
a measure of a country’s economic
performance. A growth in GDP
means an increase in total output
from previous periods. A steady
growth in GDP signifies a strong
and stable economy.
 E Economic
INFLATION
Is the lost in value of money.
It is measured using the
consumer price index (CPI),
which monitors the prices of
a basket of economic goods.
Successive increases in the
prices of these goods means
there is inflation.
 E Economic
INTEREST RATE
The level of interest rate is
largely the responsibility of
the central bank.
It is one of the BSP’s most
effective monetary policy
tools.
 E Economic

FOREIGN EXCHANGE
 S Social Factor

Social factor examines the

importance of culture,
population, and over other
social determinants to the
business environment.
 S Social Factor
Demography
It is formally the study of the
population and its attributes. It
include gender and age
composition of the population,
growth rate, morality rate,
income rate level, etc.
 S Social Factor
Demography
Demographics are collected by
various government agencies
such as Philippine Statistics
Authority (PSA) and National
Statistics Office (NSO)
 S Social Factor
LIFESTYLE AND TRENDS
There is a growing trend for
consumers to lead a fit and healthy
lifestyle.
A number of Filipinos who are
becoming increasingly health
conscious are busy individuals. This
was seen as an opportunity by
entrepreneurs who came up with the
idea of food delivery.
 S Social Factor
RELIGION
Beliefs, customs, and religion
are other social factors that
may affect the
macroenvironment of industry.
What is the dominant religion
of the market? Is it primarily a
conservative market?
 T Technological

Trends in technology and

development present
opportunities for business,
similar to previous factor.
 T Technological
INNOVATION

Are largely driven by

continuous technology
development and research.
 T Technological
RESEARCH AND DEVELOPMENT

Research and development is

the backbone of innovation. It
is associated with science,
particularly in the field of
medicine.
 L Legal Factor
New regulations

Labor is an important input

of production.
 T Technological
RESEARCH AND DEVELOPMENT

Research and development is

the backbone of innovation. It
is associated with science,
particularly in the field of
medicine.