ABM5

TOURISM

Tourism is an emerging industry as expenditures of foreign tourists on related services such as hotels and restaurants, transport and entertainment grew by twenty- nine percent (29%) in 2012. Gaining importance as an industry, it contributed six percent (6%) to the gross output of the economy (NSCB, Tourism Statistics 2012). It also figured as the third leading export of the country after electronics and miscellaneous services, which include business process outsourcing (26.9%). Most tourists prefer hotels for accommodation (80%) and cars for transport facilities (42%). Most also prefer restaurants (68%) and avail of Internet access (51%) in accommodating establishments. In addition, establishments concentrate operation in Metro Manila, Western, and Eastern Visayas as most preferred tourist destinations. However, the industry mostly composed of micro enterprises (90%) is yet to grow to its fullest potential. The country lags behind even in contrast to Singapore (16%), Malaysia (30%), and Thailand (24%). Thus, in Figure 3.14, the ASEAN region as a tourist destination with a minimal share (5%) in total arrivals in it also lags behind in tourist arrivals per 100 population even in the ASEAN region. ​

possibility of new entrants

When investors see that a market is profitable, they will desire to join the bandwagon and get a share of the profits. But when new investors enter a market, the share of the participants in the market will be divided among more people and will therefore decline, thus, eroding profits. However, if barriers to entry prevent new participants from entering the market, profits will be maintained among the existing participants.

possibility of substitution

When it is easy to substitute products in a market, it is expected that buyers will switch to alternatives in case of price increases. The suppliers will enjoy less power to drive prices up and the market will be less attractive.

medium business

has total assets from P15,000,001 to P60,000,000.

Business Proposal ​

A business proposal is a formal document that is created by a company and provided to a prospect with the purpose of securing a business agreement. It's a common misconception that business proposals and business plans are the same. The proposal's aim is to sell your product or service, rather than your business itself. Instead of assisting your search for investors to fund your business, a proposal helps you seek new customers. ​

cooperative

A cooperative is an entity organized by people with similar needs to provide themselves with goods or services or to jointly use available resources to improve their income. Cooperative members have an equal say in decision-making with one vote per member regardless of 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.

corporation

A corporation 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. The legal entity of the corporation gives it an individual identity of its own. Corporations normally can exist for a life of 50 years, which is renewable for another 50 years. Owners have limited liabilities. However, corporations are burdened by heavy taxes.

Formally Solicited

A formally solicited business proposal is made when you aim to respond to an official request for proposal. In this scenario, you know all the requirements and have more (if not all) information about a prospective buyer. You simply need to write a proposal for your buyer to evaluate.

partnership

A partnership 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 divided among the partners according to the terms of agreement.

the 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. All general partners have unlimited liability which means loan payments will extend to their personal property.

large scale

Any business with assets in excess of P60,000,000.

INTERNATIONAL TRADE

Assembled electronic products top the country's exports (40%) dominated by manufactures reflective of the country's waning agricultural sector (Philippines Statistics Authority, Foreign Trade Statistics 2013). The assembled parts are imports from subsidiaries in the global networks of the same multinational corporations (e.ge Intel, Texas Instrument). These electronic parts are also the country's leading imports (22%) followed by minerals, fuels, machineries and equipment, and the like. Almost all imports are semi-final and final manufactures in the absence of intermediate product industries. As already mentioned, electronics products hardly contribute to local output and employment being import-dependent and without much need for technology. Unlike their counterparts in other sectors, their assembly plants are mostly found in the CALABARZON industrial zone where support industries in manufacturing and trade are also moving into. ​

micro business

are worth below P1,500,001.

suppliers

Every retail business need supplier from whom one can source raw materials, intermediate products, or even the finished goods one intends to resell. A business may need one or more suppliers. It is important to develop suppliers who are reliable in terms of the quality of what they supply and their dependability in coming up with the things you order from them. With modern technology, one can easily go online and shop for suppliers, look at reviews made by other retailers to determine who the reliable ones are. The yellow pages of the telephone directories are also a good source of suppliers' stores and names.

buyer power

If a supplier can enjoy the power to drive prices up, it is also possible for a buyer to drive prices down. An assessment needs to be made on of how easy it is for buyers to drive prices down. The smaller the number of buyers in the market, the greater is the power enjoyed by the buyer. Likewise, the more important an individual buyer is to the organization, the greater his power is. The buyer's cost of switching from one supplier to another is also a determinant of the extent of the buyer's power to bring prices down. If cost is minimal, then it will be easy for the buyer to switch to another supplier and bargain on lower prices of the input.

AGRICULTURE AND FISHERY

In a global setting, these industries are the least competitive despite the country's natural resources mainly due to human factors affecting efficiency. The uncontrollable nature (e.g., typhoons, drought, etc.) occasionally disrupts production and causes damage to crops. But socio-economic and governance factors explain more why the country's agriculture lacks the technology, skills, market competition, and even credit enabling efficiency to be at least self-sufficient in food. Figure 3.11 shows that rice production—the leading crop of agriculture-is even short of consumption. Unlike fishery and livestock, agriculture is more exposed to both natural and human factors with its longer production cycle involving land cultivation and nurturing what nature grows.

TRADE AND TRANSPORT

In spite of being the top grosser (34%) of the biggest sector that is service, the trade industry supported by the transport industry is also handicapped by the limited size of its establishments. Almost all (92%) are micro in scale engaged in retail trade that contributes almost one-half (46%) to total trade (Census of Philippine Business and Industry, NSO 2012). However, the transport industry has a fair majority (73%) of micro businesses mostly engaged in land transport and transport support services (e.g., maintenance). Land transport accounts for almost one-half (46%) of all transport services while transport support services accounts for the bulk (52%) of industry output. On top of the limitation of size, thirty percent (30%) of trade establishments crowd in Metro Manila serving only thirteen percent (13%) of the country's population. But crowding more in the in the country. On the other hand, less crowded are thirteen percent (13%) of trade and same National Capital Region are more than one-half (56%) of transport establishments eight percent (8%) of transport establishments in nearby CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon) industrial zone serving fourteen percent (14%) of the country's population (Census, NSO 2010). At any rate, even businesses in this industrial zone are near support industries in the Metro Manila where almost one-third (30%) of manufacturing establishments are also based.

MANUFACTURING

In spite of the liberalization of foreign investment and trade, the manufacturing industry is hardly competitive even in the ASEAN region due to limitations of size and structural support. Likewise, these limitations smother manufacturing efficiency especially of the technology and skills to grow and compete in a global context. Almost all (89%) manufacturing establishments are micro in scale with limited access to competitive opportunities similar to agriculture and fishery (NSO 2008). These light enterprises produce consumer goods-mostly (86%) food manufactures-contributing the bulk (55%) of manufacturing output using low technology and skills (NSCB 2012). Lacking government support to deepen technology and production, the fewer enterprises of much larger scale are into the final production stages of electronics, machineries, chemicals, petroleum, and garments. In the absence of intermediate (middle) product industries, they are the most that we can have-import-dependent and without much need for technology and skills. Thus, they do not contribute much to the economy in terms of output and jobs. The same lack of government support fails to challenge micro enterprises to grow toward higher technology and creativity levels. As in agriculture, even local enterprises of larger scale are still to stand up to foreign investment and trade competition induced by liberalization policies. ​

Informally Solicited

Informally solicited business proposals come in where there isn't an official request for a proposal. A prospective buyer is interested in your services and asks for a proposal so they can evaluate it.

supplier power

It is important to assess how much power the supplier has in his ability to drive up prices. A supplier enjoys this power if there are a few suppliers of an essential input and they therefore control the supply of that input. Another source of power is how unique the product or service is. The more unique the product, the easier it is for the supplier to drive up the price. In the same manner, a supplier who has a relatively bigger size and strength in the market enjoys the power of driving up prices. The magnitude of the cost of switching from one supplier to another is likewise a factor such that when cost of switching is high, buyers of suppliers would prefer to stick it out with one supplier, thus, giving the supplier the power of raising prices.

cultures and lifestyles

It is important to study cultural practices such as fiestas, celebration of the Christmas season, trends in consumption patterns, as a means to identify the goods and services that will fit into these celebrations and spending behavior.

SMALL BUSINESS OPPORTUNITIES

Small farmers and fishermen can tap urban consumer markets and distribution centers with cooperative efforts to minimize the limitations of size and inadequate farm- to-market facilities. They can engage in the cooperative activities not only of sharing/ collectively owning resources to preserve freshness or delay perishability of goods at lower cost. Collectively, they can also gain direct and faster access to market networks to command higher product prices as well as cheaper production input. Let alone that they can access credit for expansion on collective credibility. However, more government provisions of farm-to-market infrastructure like concrete road network can boost the efficiency of cooperative market activities even of farmers and fishermen in the hinterland. The country's growing population also affords cooperating micro enterprises in the manufacturing, trade, and transport of new consumer markets for growth and expansion. More micro manufacturers of light consumer products can find new markets in growing industrial and urban areas like CALABARZON, away from overcrowded Metro Manila. Complementary and support industries are already gravitating toward these growing market efficiencies. Thus, new micro trade and transport enterprises can complement or centers, let alone the concentration of government infrastructures and services promoting support the growing number even of light manufacturers moving to these growth centers. To minimize the limitation of size, micro enterprises can form associations for inter- association can improve market access on competitive terms. But more government industry coordination and timely availability of services. In addition, manufacturer's provisions of physical infrastructure like concrete road network can greatly improve said inter-industry coordination and market access.

the 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

AGRICULTURE, FISHERY, AND FORESTRY

The Agriculture, Fishery and Forestry Sector reaps the fruits of natural resources like the soil, water, and forests. However, these environmental resources are vulnerable to climate change affecting production such as long dry spells and frequent devastating typhoons due to say, the El Niño phenomenon. From this sector comes the food we cook at home and the raw materials processed or used by other economic sectors (e.,cotton for making pillows and mattresses). Agriculture accounts for most (84%, NEDA) of sectoral production as fishery lags far behind despite the country's big fishing grounds. Much less does forestry contribute to output as it will take decades to revegetate our vastly denuded forests.

INDUSTRIAL SECTOR

The Industrial Sector supposedly processes raw materials from agriculture, fishery and forestry into intermediate products that are further processed into final products. For example, local makers of wallets and bags produce the final products by processing the intermediate product of leather which is manufactured from the animal hide extracted by agriculture. Within the industrial sector itself, local cement manufacturers produce the product by heating limestone mixed with clay from the quarrying industry for use in the construction industry. The lead industries in resource use and output are manufacturing and construction as they respectively account for 65% and 20% of sectoral production (NSCB 2009).

THE SWOT ANALYSIS ​

The SWOT analysis was created in the 1960s by business gurus, Edmund P. Learned, C. Roland Christensen, Kenneth Andrews, and William D. Book in their book, Business Policy, Text and Cases (Irwin 1969).

SERVICE SECTOR

The Service Sector produces the intangibles supporting and complementing production in the other sectors as well as among its own industries. For example, the transport industry brings input and output among the other industries. Reliant on its activity is the trade industry that takes on the complementary role of marketing their produce. The single biggest industry in resource use and output is trade as it accounts for 29% of sectoral production (NSCB 2009).

number of competitors

The number and capability of competitors in the market will also impact on the attractiveness of the market. If competitors are numerous and offer basically similar products and services, the market will be less attractive. Low capability of competitors to meet the market's current needs will serve as an attractive opportunity for the firm.

political factors

The type of government, the stability and strength of the government, and good leadership are factors that can be an advantage to a business.

substitutes

These are goods that may. even if partly satisfy the same needs of a consumer such that the consumer may use one instead of another. For example, margarine can be a substitute for butter or wheat bread for white bread. Some goods are close substitutes while others are not.

physical environment

This includes a look at the population size, the geography of the place where business will be located, land distribution, climate, and in today's global warming situation, whether or not the area is prone to flood or earthquake.

economic forces

This involves a look at economic factors such as income of the people, specifically the target market, economic conditions such as inflation, recession, prosperity, demand, and supply in the market.

sole proprietorship

This is generally the simplest way to set up a business. A sole proprietorship 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. The sole proprietor 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 payment of his loans will extend to his personal assets.

competition

This is something that needs to be studied. As already mentioned above, the degree of competition in the market and the extent and strength of competition are all very vital in determining the success or failure of a business.

competition

Who are the major businesses in the industry? Are there locations close to your proposed business? Have they been long existing or still new entrants? What is the market share of each of these businesses? It is very important that you know your competitors and be ready for them. Your aim is to win their customers, convince them to buy from you instead, and remain as loyal customers.

customers

Who will you sell your product to? The target market must be identified. Who exactly will buy your products? What income groups? What age brackets? What gender? What career groups? What type of people will you cater to, based on their preferences, lifestyles, and buying habits?

Unsolicited Business Proposals

With unsolicited business proposals, you approach a potential customer with a proposal, even if they don't request one, to gain their business.

small business

total assets are from P1,500,001 to P15,000,000.