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SECOND QUARTER
MODULE 2- WEEK 2
PRINCIPLES, TOOLS AND TECHNIQUES IN CREATING A
BUSINESS

CONTENT STANDARD :The learner demonstrates an understanding

of industry analysis, its principles, tools and
techniques leading to the identification of
business opportunities

PERFORMANCE STANDARD : The learners shall be able to apply tools

and
techniques for business opportunities like
the SWOT/TOWS analysis.

LEARNING OUTCOMES : Produce a SWOT/TOWS analysis or any of

the tool of business analysis about LGUs
handling of the pandemic or the economy in
particular

COMPETENCIES/CODE : Analyze different principles, tools, and

techniques in creating a business
ABM_AE12-Ia-d-9

TOPICS : Tools and Techniques for Business

Opportunities

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 What I Know

Multiple Choice: Write your answer on a separate sheet of paper.

1. Why is strategic management important?

a. It can make a difference in how well an organization perform
b. Examine relevant factors and decide what actions to take
c. Each part needs to work together toward achieving the
organization goals
d. All of the above

2. What are the groups or individuals who are affected by the

achievement of the organization’s mission, goals and strategies?
a. Entrepreneurs c. Stakeholders
b. Shareholders d. Stockholders

3. What strategy that determines what businesses a company is in or

wants to be in and what it wants to do with those businesses?
a. Marketing strategy c. Corporate strategy
b. Organization strategy d. Growth strategy

4. What strategy when an organization expands the number of markets

served or products offered either through its current businesses or
through new businesses?
a. Marketing strategy c. Corporate strategy
b. Organization strategy d. Growth strategy

5. What framework provides for understanding diverse businesses and

helps managers establish priorities for allocation resources?
a. Marketing Framework Matrix (MFM)
b. Corporate Portfolio Matrix (CPM)
c. Growth Share Matrix (GSM)
d. Boston Consulting Group Matrix (BCGM)

6. What matrix is designed to help with long-term strategic planning?

a. Marketing Framework Matrix
b. Corporate Portfolio Matrix
c. Growth Share Matrix
d. Boston Consulting Group Matrix

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7. What framework is for analyzing a company’s competitive
environment?
a. Maturity Model Framework
b. Root Cause Analysis Framework
c. Politics, Economics, Social, Technological, Legal,
Environment (PESTLE) Framework
d. SOAR Framework

8. What framework or tool that helps people assess the current

effectiveness of a person or group and supports figuring out what
capabilities they need to acquire next in order to improve their
performance?
a. Maturity Model
b. Root Cause Analysis
c. Vision, Mission, Objectives, Strategy (VMOST) Framework
d. Strengths, Weaknesses, Opportunities, Threats (SWOT)
Framework

9. What tool is to help a person or organization evaluate the four aspects

of the business or company’s competitive position?
a. Politics, Economics, Social, Technological, Legal,
Environment (PESTLE)
b. Strengths, Weaknesses, Opportunities, Threats (SWOT)
c. Vision, Mission, Objectives, Strategy (VMOST)
d. Boston Consulting Group (BCG)

10. What framework or evaluation technique for the organizations

strategic planning?
a. Politics, Economics, Social, Technological, Legal,
Environment (PESTLE)
b. Strengths, Weaknesses, Opportunities, Threats (SWOT)
c. Vision, Mission, Objectives, Strategy (VMOST)
d. Boston Consulting Group (BCG)
11. Which form of strategic orientation that focuses on customers and
competition?
a. customer orientation
b. product orientation
c. sales orientation
d. market orientation

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12. How is a “supply-led” market characterized?
a. There is a surplus of goods for sale
b. There is a shortage of goods for sale
c. There is no goods available
d. There are too many suppliers

13. In a competitive market it is important to retain customers, keep

them happy and increase the value of their orders. What technique is
this?
a. Cause related marketing
b. Transactional marketing
c. Customer relationship management
d. Consumer data management

14. What is the alternative term of marketing communications?

a. Promotion
b. Sales talk
c. Product literature
d. Price lists

15. Why is marketing important in a demand-driven economy?

a. Consumers have a lot of choice
b. There is competition for customers
c. Supply often exceeds demand
d. Sana all

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 What I Need To Know

As an ABM student, it is expected that this academic strand is

inclined to business and in any businesses, competition is tougher than we
know.This module is designed to help you understand the importance of the
different business strategies and how these strategies helps the business or
company survive the competition. At the end of this module, you are
expected to:

a. Identify the different tools or techniques in business.

b. Compare and contrast the tools or techniques in business
through a graphic organizer/concept map/flowchart.
c. Analyze the LGUs response to pandemic by using one of the
tool or techniques in business.

What’s In

A Filipino entrepreneur said, “fighting multinationals was very tough. At first,

everyone thought I was crazy. They told me how will I survive this? True
enough, it’s by the grace of God that I’m still here in the toothpaste industry
after 20 years. God is good.”
- Cecilio K. Pedro of Lamoiyan Corporation -

What do you think are the business approaches and solutions that
Lamoiyan Corporation utilize in order to survive the 20 years?

List down at least 3 approaches and solutions to the case. Write your
answer on a separate sheet of paper.

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 TOOLS AND TECHNIQUES
Lesson
FOR BUSINESS
1 OPPORTUNITIES

What’s New

In order to understand fully the intent of this module, I want you to

consider the case:

XYZ company is losing customers due to poor service. If you are the
owner of XYZ company, what are your tools or techniques to address
the problem? How relevant are your business analytic tools or
techniques to the case?

List down at least 3 business analytic tools or techniques that will help your
company grow and explain the relevance of this tools or techniques on a
separate sheet of paper.

What is a business analysis? What is the importance of business analytic

tools or techniques in an organization? According to the International
Institute of Business Analysis, it is the practice of enabling change in an
organizational context by defining needs and recommending solutions that
deliver value to stakeholders.

The great learning blog identified the following top 10 business analyst tools
in 2020:
1. VMOST – Vision, Mission, Objectives, Strategy
2. SWOT – Strengths, Weaknesses, Opportunities, Threats
3. UCM – Use Case Modelling
4. BPM – Business Process Modelling
5. NFM – Non- Functional Requirement
6. Brainstorming
7. Requirement Analysis
8. PESTLE – Politics, Economics, Social, Technological, Legal,
Environment
9. CATWOE –Customers, Actors, Transformation, World-view, Owners,
Environmental constraints
10. Use Stories

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 What Is It

In this module, we will only tackle the tools that are most preferred,
recommended, used and discussed by authors of business books.

1. PESTLE – determines the long term effect on the performance and

activities of the business.

Elements:
Politics – political factors act at three levels: supranational, national
and sub-national or local level.
Economics – economic factors refers to all the key economic variables
related to political action
Social – social factors refer to culture, demography, social structure
and attitudes, values, beliefs by people
Technological –technological factors refer to the software and not on
Hardware
Legal – legal factors refer to the laws and policies
Environment – environmental factors refer to outside forces that may
affect the business

POLITICAL

ENVIRONMENT ECONOMIC The PESTLE is

used to gauge
the external
COMPANY/ factors that
ORGANIZATION could have an
impact on the
profitability of
LEGAL SOCIAL the company
or organization
TECHNOLOGICAL

Figure 1: The PESTLE is more effective with larger corporations or organizations that are
more likely to experience a macro-level effect.

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 2. SWOT – usually preferred by small businesses, easier to determine
the pros and cons of a project or initiative.

Elements:

INTERNAL (within the organization)

Strengths – identify the advantages that a business has over the
competition
Weaknesses –identify the disadvantages that business has over the
competition

Internal factors are the strengths and weaknesses of the company.

Strengths are the characteristics that give the business its competitive
advantage, while weaknesses are characteristics that a company needs to
overcome in order to improve its performance.

Examples of internal factors include:

 Company culture
 Company image
 Operational efficiency
 Operational capacity
 Brand awareness
 Market share
 Financial resources
 Key staff
 Organizational structure

EXTERNAL (outside the organization)

Opportunities – refers to a favorable external factors that could give an
organization a competitive advantage
Threats - refers to the factors that can harm the organization

External factors are the opportunities and threats to the company.

Opportunities are elements that the company sees in the external
environment that it could pursue in the future to generate value. Threats
are elements in the external environment that could prevent the company
from achieving its goal or its mission or creating value.

Changes in the external environment may be due to:

 Societal changes
 Customers
 Competitors
 Economic environment
 Government regulations
 Suppliers

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  Partners
 Market trends

SWOT analysis is sometimes referred to as the IE matrices

Internal-External Matrix External, Positive External, Negative

Opportunities Threats

Internal, Strengths
Positive

Internal, Weaknesses
Negative

Strengths
(What do you do well? What unique resources can you draw on? What
do others see as your strengths?)

Weaknesses
(What could you improve? Where do you have fewer resources than
others? What are other likely to see as weaknesses?)

Opportunities
(What opportunities are open to you? What trends could you take
advantage of? How can you turn your strengths into opportunities?)

Threats
(What threats could harm you? What Is your competition doing? What
threats do your weaknesses expose to you?)

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To illustrate an example:

Figure 2: https://mindtools.com/pages/article/newTMC_05.htm

HELPFUL FOR YOUR OBJECTIVE HARMFUL FOR YOUR OBJECTIVE

Figure 3: https://corporatefinanceinstitute.com/resources/knowledge/strategy/swot-analysis/

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 The SWOT
analysis is
STRENGTHS WEAKNESSES represented in
a four square
determining
the four areas
of visualizing
arrangements
OPPORTUNITIES THREATS of the
company or
organizations
position.

Figure 4: The SWOT analysis was used in analyzing business but recently, it is often used
by the government, non-profit organizations or individuals.

3. Porters 5 forces competitive position analysis

Porter's Five Forces Analysis is an important tool for understanding the

forces that shape competition within an industry. It is also useful for helping
you to adjust your strategy to suit your competitive environment, and to
improve your potential profit.

It works by looking at the strength of five important forces that affect

competition:

 Supplier Power: the ability of suppliers to drive up the prices of your

inputs.
 Buyer Power: the strength of your customers to drive down your
prices.
 Competitive Rivalry: the strength of competition in the industry.
 The Threat of Substitution: the extent to which different products and
services can be used in place of your own.
 The Threat of New Entry: the ease with which new competitors can
enter the market if they see that you are making good profits (and
then drive your prices down).

By thinking about how each force affects you, and by identifying its
strength and direction, you can quickly assess your position. You can then
look at what strategic changes you need to make to deliver long-term profit.

The Five forces analysis helps organizations to understand the factors

affecting profitability in a specific industry, and can help to inform decisions
relating to: whether to enter a specific industry; whether to increase capacity
in a specific industry; and developing competitive strategies.

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 Porter recognized that organizations likely keep a close watch on their
rivals, but he encouraged them to look beyond the actions of their
competitors and examine what other factors could impact the business
environment. He identified five forces that make up the competitive
environment, and which can erode your profitability.

Supplier Buyer
Power Power

Developed by
Rivalry Michael E. Porter of
among Harvard Business
Competitors
School in 1979

Threat of Competitive
Substitution
Rivalry

Figure 5: Porters Five Forces determines the competitive intensity, attractiveness of a

market, identify its market power and potential.

To Illustrate:

Sample Case 1: PHILIPPINE AIRLINES

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 Figure 4: https://www.casequiz.com/philippine-airlines-93530/

Sample Case 2: MC-DONALDS

Figure 6: http://panmore.com/mcdonalds-five-forces-analysis-porters-model

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 What’s More

Determine the tool or technique of business from the given case, identify the
elements by indicating the factors under each element. Write your answer
on a separate sheet of paper.

CASE: In the mid-1990s, Dell Computer used a SWOT analysis to create a

strong business strategy that has helped it become a very strong competitor
in its industry value chain. Dell identified its strengths in selling directly to
customers and in designing its computers and other products to reduce
manufacturing costs. It acknowledged the weakness of having no
relationships with local computer dealers. Dell faced threats from
competitors such as Compaq and IBM, both of which had much stronger
brand names and reputations for quality at that time. Dell identified an
opportunity by noting that its customers were becoming more
knowledgeable about computers and could specify exactly what they wanted
without having Dell salespersons answer questions or develop
configurations for them. It also saw the internet as potential marketing tool.

Follow this format:

INTERNAL
Strengths
Weaknesses

EXTERNAL
Opportunities
Threats

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 What I Have Learned

In this time of pandemic and a struggling economy, which of the

following segments below that you think the Philippine economy should
focus first in order to bring back the investor’s confidence and boost its
economy?

SPECIAL INTERESTS SEGMENTS

1. Divers - the fame of the underwater world and the pristine biodiversity
are the reasons for travelling to the Philippines
2. Adventure Experiences - remote and unexplored areas while
undertaking soft or hard adventure activities
3. Shopping, Leisure and Entertainment Tourists (SLET) – time may be
limited but disposable income levels are high
4. Honey Mooners – newly weds on their honey moon spend an
important amount of money on a dream destination and residing in a
luxury resorts
5. Meeting, Incentive, Congress and Events (MICE) – tourists consuming
this tourism product travel with their company to the Philippines
expecting perfect services
6. Educational Tourism – regional students from all ages to the
Philippines to learn and improve their English language skills
7. Bird Watchers – willing to travel around the world driven by the wish
to see specific and rare birds
8. Health and Wellness – willing to travel to the Philippines due to the
high costs of medical care in the tourists home country
9. Culture Explorers – travelers find satisfaction in visiting museums,
archeological sites and experience living culture, traditions and
festivals
10. Beach Relaxation – seeking for relaxation and sun along the
Philippine beaches
11. Golf – their main motivation is to play golf and travel to the
destination that entitle them to do so

In a graphic organizer, use one of the following tools for business

opportunities (PESTLE, SWOT, PORTERS) and write down at least 2 factors
in each of the element of the chosen tool. You may use your own graphic
organizer template.

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 What I Can Do

Produce a SWOT analysis as to how your LGU handled the COVID-19

pandemic. Choose one from the following aspects of your LGU’s handling of
the pandemic. Write your answer on a separate sheet of paper.

a. Health protocol like wearing of face mask, face shield, hand

washing and use of hand sanitizer or rubbing alcohol
b. SAP distribution
c. Relief goods distribution
d. Q-pass and curfew implementation
e. Implementation of quarantine protocols

STRENGTH WEAKNESSES

OPPORTUNITIES THREATS

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 Assessment

Multiple Choice: Write your answer on a separate sheet of paper.

1. Which of the following is a major contribution of the SWOT analysis?

a. Determining the information flows
b. Understanding the political environment
c. Understanding the opportunities of a business
d. Carrying out intensive business process analysis

2. Which of the following is NOT true regarding the use of SWOT

analysis?
a. To build on the strengths of the business
b. To minimize the weaknesses of a business
c. To reduce the opportunities available to a business
d. To counteract threats to a business

3. Which of the following could be a weakness?

a. A developing market such as the internet
b. Competitors with better access to channels
c. Poor quality of goods and services
d. Special marketing expertise

4. Which of the following is an opportunity?

a. Having quality processes and procedures
b. Damaged reputation
c. A new competitor in the market
d. Moving into new market segments that offer improved profits

5. Which of the following is a threat?

a. Location of the business
b. Lack of marketing expertise
c. Changes in technology
d. A market vacated by an ineffective competitor

6. Which of the following is a strength?

a. New market opened up
b. Poor staffing
c. New competitor
d. Loyal customers

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7. What is meant by “substitute” in the five forces model?
A substitute _____________
a. Is a rival firm offering the same product.
b. Refers to an alternative manufacturing process
c. Something else consumers would rather spend
d. An alternative product or service that performs the same
function to the consumer

8. Which factor of the PESTLE analysis is not from the six key areas?
a. Ecological c. Technological
b. Social d. Political

9. Which is considered to be the political element in the PESTLE

analysis?
a. Trade-offs c. taxes and budget deficit
b. Interest rates d. weather and climate

10. Which of the following is an important tool to help you adjust your
strategy in a competitive market?
a. CATWOE c. PESTLE
b. SWOT d. Porter 5 forces

11. Which forces of Michael Porter that refers to the likelihood of your
customer’s finding a different way of doing what you do?
a. Sellers power c. Buyer power
b. Threat of substitution d. Threat of new entry

12. Which of the following that is mentioned by Michael Porter? A

substitution that is easy and cheap can weaken your ___________ and
threaten your ___________.
a. Position, profitability c. Product, market
b. Market, power d. Company, Outsource

13. Which factor of the PESTLE framework that alters the governments
influence and policies?
a. Political c. Environment
b. Legal d. Social

14. Why is important for companies to evaluate managerial decisions

using a SWOT analysis? It analyzes _________.
a. Obligations, strengths, weaknesses, threats and goals
b. Strong points, weak points, opportunities and threats
c. Strengths, weaknesses, opportunities and threats
d. Time constraints, opportunities and threats

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15. Which of the first steps management should consider determining
the feasibility of a new project or an expansion of projects?
a. External strengths and threats
b. External weaknesses and opportunities
c. Internal opportunities and threats
d. Internal strengths and weaknesses

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References
Arnold, R. A. (2015). Principles of economics. 11th ed. Cengage Learning.
Emerald Works (2020) . Porters Five Forces: Understanding Competitive
Forces to Maximize Profitability. Retrieved from
https://www.mindtools.com/pages/article/newTMC_08.htm

Grant, Mitchell (2020). Strengths, Weaknesses, Opportunities and Threats

(SWOT) Analysis. Retrieved from
https://www.investopedia.com/terms/s/swot.asp

Greenlaw, S. A., Shapiro, D., & Taylor, T. (2018). Principles of economics-2e:

OpenStax. Retrieved from
https://d3bxy9euw4e147.cloudfront.net/oscms-
prodcms/media/documents/Economics2e-OP_I2ne43X.pdf

Greenlaw, S. A., & Shapiro, D. (2017). Principles of macroeconomics 2e. Rice

University. Retrieved from
https://d3bxy9euw4e147.cloudfront.net/oscms-
prodcms/media/documents/Macroeconomics2e-OP.pdf

Gregory, Lawrence. (2018). McDonalds Five Force Analysis (Porter’s Model)

& Recommendations. [Figure 5]Retrieved from
http://panmore.com/mcdonalds-five-forces-analysis-porters-model

Harvard Case Studies (2019). Philippine Airlines Case Study Solution &
Analysis. [Figure 4] Retrieved from
https://www.casequiz.com/philippine airlines-93530/

Mankiw, G. N. (2015). Principles of economics. 7th ed. Cengage Learning

Olsen, Erica (2020). On Strategy: Internal and External Analysis. Retrieved
From https://on strategyhq.com/resources/internal-and-external
analysis/

Shewan, Dan (2020). How to Do a SWOT Analysis for your Small Business
(with Examples). Retrieved from
https://www.wordstream.com/blog/ws/2017/12/20/swot-analysis

Vipond, Tim (2021). SWOT Analysis: Analyzing a Company’s Strengths,

Weaknesses, Opportunities and Threats. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/strategy
/swot-analysis/

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