Module 08: Applying Business Principles, Tools, and Techniques in Various Types

of Industries / Identification of Business Opportunities

I. LEARNING COMPETENCIES
1. Apply business principles, tools, and techniques in participating in various types of
industries in the locality.
2. Distinguish the various types of industries in the locality.
3. Conduct a survey of macro and micro environments affecting business in a locality.

II. LESSON PRESENTATION

Types of Industries in the Philippines
1. Agribusiness
Agriculture in the Philippines employs 27.7% of the Filipino workforce as of 2017,
according to World Bank statistics. Agriculture accounts for 12% of Filipino GDP as of 2013,
according to the World Bank.
Rice
The Philippines is the 8th largest rice producer in the world, accounting for 2.8% of
global rice production. The Philippines was also the world's largest rice importer in 2010. In
2010, nearly 15.7 million metric tons of palay (pre-husked rice) were produced. In 2010, palay
accounted for 21.86% percent of gross value added in agriculture and 2.37% of GNP. Self-
sufficiency in rice reached 88.93% in 2015.
Rice production in the Philippines has grown significantly since the 1950s. Improved
varieties of rice developed during the Green Revolution, including at the International Rice
Research Institute based in the Philippines have improved crop yields. Crop yields have also
improved due to increased use of fertilizers. Average productivity increased from 1.23 metric
tons per hectare in 1961 to 3.59 metric tons per hectare in 2009.
Sugar
There are at least 19 provinces and 11 regions that produce sugarcane in the
Philippines. A range from 360,000 to 390,000 hectares are devoted to sugarcane production.
The largest sugarcane areas are found in the Negros Island Region, which accounts for 51% of
sugarcane areas planted. This is followed by Mindanao which accounts for 20%; Luzon by 17%;
Panay by 07%; and Eastern Visayas by 04%. It is estimated that as of 2012, the industry provides
direct employment to 700,000 sugarcane workers spread across 19 sugar producing provinces.
Coconuts
Coconuts plays an important role in the national economy of the Philippines. According
to figures published in December 2015 by the Food and Agriculture Organization of the United
Nations, it is the world's largest producer of coconuts, producing 19,500,000 tonnes in 2015.
Production in the Philippines is generally concentrated in medium-sized farms. There are 3.5
million hectares dedicated to coconut production in the Philippines, which accounts for 25 per
cent of total agricultural land in the country. In 1989, it was estimated that between 25 percent
and 33 percent of the population was at least partly dependent on coconuts for their livelihood.
Historically, the Southern Tagalog and Bicol regions of Luzon and the Eastern Visayas were the
centers of coconut production. In the 1980s, Western Mindanao and Southern Mindanao also
became important coconut-growing regions.
Abaca
According to the Philippine Fiber Industry Development Authority, the Philippines
provided 87.4% of the world's abaca in 2014, earning the Philippines US$111.33 million. The
demand is still greater than the supply. The remainder came from Ecuador (12.5%) and Costa
Rica (0.1%). The Bicol region in the Philippines produced 27,885 metric tons of abaca in 2014,
the largest of any Philippine region. The Philippine Rural Development Program (PRDP) and the
Department of Agriculture reported that in 2009-2013, Bicol Region had 39% share of Philippine
abaca production while overwhelming 92% comes from Catanduanes Island. Eastern Visayas,
the second largest producer had 24% and the Davao Region, the third largest producer had 11%
of the total production. Around 42 percent of the total abaca fiber shipments from the
Philippines went to the United Kingdom in 2014, making it the top importer. Germany imported
37.1 percent abaca pulp from the Philippines, importing around 7,755 metric tons (MT). Sales of
abaca cordage surged 20 percent in 2014 to a total of 5,093 MT from 4,240 MT, with the United
States holding around 68 percent of the market.
Fruits
The Philippines is the world's third largest producer of pineapples, producing more
than 2.4 million of tonnes in 2015. The Philippines was in the top three banana producing
countries in 2010, including India and China. Davao and Mindanao contribute heavily to the
total national banana crop. Mangoes are the third most important fruit crop of the country
based on export volume and value next to bananas and pineapples.
Corn
Corn is the second most important crop in the Philippines. 600,000 farm households
are employed in different businesses in the corn value chain. As of 2012, around 2.594 Million
ha of land is under corn cultivation and the total production was 7.408 million metric tons.
Rubber
There are an estimated 458,000 families dependent upon the cultivation of rubber
trees. Rubber is mainly planted in Mindanao, with some plantings in Luzon and the Visayas. As
of 2013, the total rubber production is 111,204 tons.

2. Manufacturing
The Philippine manufacturing industry remains to be the most important sector for long-
term productive employment, value-added generation, and innovation. It has the highest
multiplier effect to the economy compared to other sectors. Manufacturing is called the engine
of the economy. Many services exist because of manufacturing; and many service jobs will
disappear if manufacturing disappears.
Manufacturing creates more quality and gainful employment, as it has extensive
linkages not only among its sub-sectors, but also with other industries, not to mention that it
can further make the services and logistics sectors more active. Increasing manufacturing
activities also have spillover effects of inducing additional demand from the agriculture and
resource-based industries.
Industrialization, that is, promoting the resurgence of manufacturing, can contribute to
sustainable economic development because it can provide employment to a wider pool of the
labor force. Manufacturing can generate employment opportunities to vocational graduates
apart from the university graduates. Manufacturing also brings in newer technologies, which
can introduce quality jobs, skills and expertise in the country.
The Manufacturing Industry contributes to 23.25% of the Philippines’ 2015 GDP,
employing more than 3.2 million in the workforce. As of the 3rd Quarter of 2016,
Manufacturing Industry contributes to 23.8% of total GDP.

Image 8.1. Manufacturing Contribution to GDP 2015 (Source: PSA 2015)

3. Retail and Services

The favourable combination of strong sustained growth, a young and increasingly
affluent middle class, and high consumer confidence are combining in the Philippines to create
one of the most robust retail sectors in South-east Asia. With the Philippines’ growing
population now exceeding the 100m mark, 6.6% GDP growth in 2016, lower inflation rates and
a healthy consumer-driven market, the country presents significant opportunities for retail
products and services for both well-established domestic players and international brand
names.
This economic growth is underpinned in part by overseas workers’ remittances, which
totalled $26.9bn in 2016, up from $25.77bn the previous year, along with a strong services
sector driven by a business process outsourcing (BPO) industry that should continue to fuel
increasing levels of disposable income and consumer spending. At the same time, headline
inflation has remained in check, with 2016 levels holding steady at 1.8%; however, Bangko
Sentral expects that number to increase to 3.4% in 2017.
In addition to these positive economic and demographic factors, the market has the
added bonus of being a largely westernised culture with an English-speaking population. This
background is particularly attractive for foreign and international brands due to the greater
ease of marketing and doing business in the country, as well as the openness of consumers to
adopt international brands and practices compared to other markets in the region.
The tangible effects of these positive growth factors have resulted in Philippine retail
sales spiking 10.6% year-on-year in the first half of 2016, a significant jump from the 6.9%
growth experienced during the first half of 2015, according to data from the Philippine Statistics
Authority (PSA). Wholesale trade also edged upward over the same period, up 8.6% compared
with the 7.7% growth registered the previous year. Retail and wholesale sales for the first six
months of 2016 totalled P928.6bn ($19.6bn) and P229.6bn ($4.9bn), respectively.
 Image 8.2. A Retail Company in the Philippines (Source: https://oxfordbusinessgroup.com/overview/no-slowing-down-retail-
expanding-back-favourable-economic-conditions)

International Trade (Exports and Imports)

The main trade partners of the Philippines include China, Japan, the United States,
Singapore and Hong Kong. The Philippines is the world 36th largest economy and the thirteenth
largest economy in Asia. This newly industrialized country is mainly dependent on agriculture,
service and manufacturing for its GDP. With excellent trade route in the Pacific Ocean these are
some of the country’s main exports and imports.
Philippines´ Main Exports
Coconut oil
In 2018, coconut oil from the Philippines dominated the export market with 1.2 million
tones ahead of Indonesia’s 885,000 tonnes and India’s 390, 000 tonnes. The major customers
for Philippine’s coconut oil are the United States and Europe which are projected to increased
their demand causing the Suth Eastern nation to increase its supply by 2%.
According to the United Coconut Association of the Philippines they project the country
will be able to export 970, 380 metric tones compared to last year’s 951, 353 metric tones
despite the competition in the industry from vegetable oil. Over the last few years the country
has been experiencing an increase in total CNO shipments year by year.
Petroleum Products
There was an increase on the value of exported petroleum from the Philippines from
$654 million to $972 million in 2017 and this number has remained consistently high because of
the global brisk demand for oil and fuel. In 2018, the oil volume that was exported was up by
1.4 percent with the demand for Philippine oil reaching 169 million barrels compared to 2017’s
166 million barrels.
By June of 2019 the production of crude oil from the country had reached 14.61 barrels
per day and the oil production experienced a lot of fluctuation in the following months. In the
Philippines the production of crude oil also includes the production of Shale oil, natural gas
liquids but excludes the production of liquid fuels. The bulk of Philippines crude oil exports
include gasoline, condensate, naphtha, propylene and fuel oil.
Electronic Products
The nation’s Department of Trade and Industry has identified electronic products as one
of the Philippine’s key export commodities. Seeing as the sector grew by 11.6% from 2015 to
2019, the government s committed to providing comprehensive support to the industry to keep
it current and relevant in the international market.
In 2015 the exportation of electronic products and semi conductors netted $2.3 billion
in revenue for the Philippine government but by 2019, that figure was up to $2.6 billion.
Electronic product imports account for 53% of the total export revenue for the government in
2016 and the figure has remained consistently high until 2019.
Philippines´ Main Imports
Refined Petroleum
The Philippines has been experiencing delays in petroleum exploration and this has
created a massive over-reliance on imported refined oil. The decline in output of gas and oil is
the driving force behind the Philippine’s 48% dependency on imported oil to drive the country’s
economy and meet the domestic demand.
The situation is dire and the importation will only go up as the country’s existing oil
reserves get depleted and their gas to power project at Malampaya begins to produce less and
less by 2024. Philippines does have some prospective exploration blocks but these are within
the waters of the South China seas and are under heavy dispute by the Chinese. The main
refined oil import partners of the Philippines are the Russians and the Saudi Arabians.
Cars
The Philippines benefits from great trade relations with Japan which has resulted in a
steady influx of used and new Japanese cars into their market. By 2017, more than a million
private cars had been registered in the country and the numbers were growing year by year. In
addition to the increase in the number of cars, the vehicle industry in the country has also
experienced major sales boost over the years with the importation of cars into the nation.
In 2018, the number of units of vehicles sold in the Philippines was approximately 401.5
thousand units and the leading automotive company in the country was Toyota. Toyota
currently has over 182 thousand units sold annually from 2017.
Office Parts and Integrated Circuits
Office machine parts are the 11th most popularly traded commodities in the
international market and Philippines sources sells her parts to the United States, China,
Germany, Netherlands and Hong Kong. The office parts mainly exported from the Philippines
include the typewriters, computers, cash register and ticketing and accounting machines. These
are easily assembled in the country and shipped out to the international market for
consumption within different industries.
The main competitors to the Philippines for this very popular category of imports
products are Malaysia, South Korea, Thailand, China and Indonesia. Interestingly, China is both
a competitor against the Philippines in exporting the parts but also a consumer of some of the
components assembled in the Philippines.
Identification of Business Opportunities
Managerial Competence
Before the actual start of production, there is a need to study the market with respect
to demand, target customers, when and where the products are to be sold. Production has no
value unless the produced goods are sold. Hence, knowledge of anticipated market for a
product becomes an important aspect in every business. Demand forecasting is one such
method of knowing the anticipated market. The various methods of estimating the demand for
a product are:
- Opinion pool.
- Market survey.
- Life cycle analysis.
- Desk survey.
- Dealers opinion etc.
Business opportunities can be obtained from various magazines, trade journals, financial
institutions, government, commercial organizations, friends, relatives, competitors etc.
Choosing of best business opportunity from the information collected requires ingenuity, skill
and foresight of entrepreneur. An entrepreneur has to identify and select the most rewarding
opportunity from the available ones. For this one has to evaluate the following areas and
understand the gap between demand and supply.
- Study of government rules and regulations regarding the different business
opportunities.
- Extensive and in depth study of promising investment opportunity.
- SWOT analysis of the business opportunities.
- Market feasibility study.
- Technical feasibility study.
- Financial feasibility study and
- Social feasibility study.
An opportunity can be defined as an attractive and excellent project idea which an
entrepreneur searches for and accepts such idea as a basis for his investment decision. A good
business opportunity must be capable of being converted into feasible project. Two major
characteristics of business opportunity are: good and wide market scope and an attractive,
acceptable and reliable return on investment.
Sources of Business Ideas
1. Unfulfilled demand; An Unfulfilled demand will open doors to new products
2. Own idea: One own creative idea can result in a business opportunity.
3. Social and economic trends: Social and economic trends necessitate demand for new
products.
4. Magazines/Journals/ Research publications: Magazines/ Journals/ Research
publications form a major role of ideas.
5. Government: Government also identifies and proposes ideas and give support for
business opportunities.
6. Emerging new technology and scientific know how: commercial exploitation of
indigenous and imported technologies and know-how is another source of
opportunities.
 7. Charges in consumer needs: the needs of consumers charge giving rise to
requirement of new business opportunities.
8. Trade fairs/Exhibitions: Trade fairs and technical exhibitions also offer wide scope for
business opportunities.
9. Banks and government agencies: Commercial banks and government agencies
encourage entrepreneurs by providing business opportunities, ideas subsidies, loan etc.
Technical Feasibility Study
While making project appraisal, the technical feasibility of project is made. Technical
feasibility means the adequacy of the proposed plant and equipment to produce the product at
proposed technology. It should be ensured that know-how is available within the entrepreneur
or should be obtained from outside in the form of either collaboration or purchase or franchise.
Market Feasibility Study
Feasibility study is a detailed work of collection of data analysis and concludes the
feasibility of that operation. Market feasibility study involves the study and analysis of the
following aspects. Market feasibility study will assess whether the product has good market.
This needs to study the following:
Nature of Market: The nature of market in terms of monopolistic or perfect competition
is to be studied.
Cost of Production: It is essential to study and control cost of production. Cost of
production decides the selling price.
Selling Price and Profit: Selling price plays a vital role in profit. In price sensitive goods
like cosmetics, one should be careful in fixing the price.
Demand: Present demand and demand forecast are prepared and studied. This will
decide the facility planning.
Market Share: Estimated market share is to be made. Comparison is made with share of
similar products.
Target Market: Study is made with regard to the target market and market
segmentation.
Technical Feasibility Study
In technical feasibility study, the following points are studied.
Location of the Project: The data regarding the location of project is very important. It
may be located in rural, urban or semi-urban areas.
Construction of Factory, Building and its Size: The construction details, the nature/type
of building and its size for the project are to be analyzed.
Availability of Raw Materials: The study of availability of raw materials, sources of
supply, alternate sources, its quality and specifications cost etc., are to be studied.
Selection of Machinery: The selection of machinery required to produce the intended
product is to be carried out. The specifications are capacity, cost sources of supply,
technology evaluation of various makes of the machine. Their good and bad etc., are
studied.
Utilities: The details about availability of utilities like water, gas electricity, petrol, diesel
etc. are to be studied.
Production Capacity: Establishment off production capacity and utilization of production
capacity are analysed.
 Staff Requirement: Study and analysis of requirement of workers, technical staff and
officers etc. is to be made.
Technical Viability: The technical viability of the opportunity is to be studied.
Financial Feasibility Study
Financial feasibility is the most important aspect of a business opportunity. Some of the
aspects involved in financial feasibility study are:
Total Capital Cost of Project: It is very essential to study the total cost of project. This
includes fixed capital, working capital and interest factor.
Sources of Capital: The study of main sources of capital is to be made. If capital is
borrowed, interest burden is to be studied in detail.
Subsidiary Sources for Additional Finance: After study of main sources of capital,
subsidiary sources of capital are to be identified and studied.
Financial for Future Development of Business: Financial requirement for future
development of business are to be studied. Working capital requirement for at least
three months running of enterprise are to be estimated.
Break Even Analysis (BEA): BEA is to be carried out to see at what level of
production/sales will make the organization no loss/no profit situation. BEA is very
useful to identify the level of production that makes profit.
Estimation of Cash and Fund Flow: It is very essential to make a study of estimation of
cash and fund flow in the business.
Return on Investment (ROI): ROI is to be calculated to see the amount of return on
investment for the investors/shareholders and how much they get.
Proposed Balance Sheet: Proposed balance sheet is made showing liabilities and assets,
depreciation, interest burden, profits expected etc.
Cost of Labor and Technology: The cost of employees is to be estimated and studied. If
technology is not available then it has to be purchased from any R & D institution or by
way of foreign collaboration.
Social Feasibility Study
Social feasibility study is important in the social environment.
Location: The location is in such a place that it should not have objection from the
neighbors.
Social Problem: The enterprise should not create any nuisance to the public.
Pollution: There should not have any sort of noise or other pollution objectionable
society. Suitable measures are to be taken for controlling pollution.
Other Problem: Any other problems related to the society and people are to be studied.

III. SUMMARY OF LESSON

 Agriculture in the Philippines employs 27.7% of the Filipino workforce as of 2017, according
to World Bank statistics. Agriculture accounts for 12% of Filipino GDP as of 2013, according
to the World Bank.
 The Philippine manufacturing industry remains to be the most important sector for long-
term productive employment, value-added generation, and innovation.
 The Philippines to create one of the most robust retail sectors in South-east Asia due to the
favourable combination of strong sustained growth, a young and increasingly affluent
middle class, and high consumer confidence.
 To identify if a business opportunity is feasible or not, SWOT/TOWS/Five Forces analysis,
market, technical, financial and social feasibility studies are conducted.

IV. ENGAGEMENT ACTIVITY

Micro and Macro Environments of Industries
Direction: Complete the table below. Choose one establishment/company in your locality for
each type of industry and then using your learning from Module 01, describe its micro and
macro environments at present. Use a separate sheet for it. (10 pts. each industry;
Establishment/Company - 2, Correctness of Micro - 4, Correctness of Macro - 4)
Establishment/Company Microeconomic Macroeconomic
Ex.
Retail and Services:
Jollibee There are more McDonald’s Significant drop of sales the
stores in my barangay last 6 brought by community
compared to just one Jollibee. quarantine due to the
There are more competitors pandemic crisis.
Agribusiness:

Manufacturing:

Retail and Services:

V. ENRICHMENT
For you, which is the most ideal industry to venture business into at the current time?
Why do you say so? Answer in 5-10 sentences on a separate sheet. (10 pts.; 7 - Quality of Ideas,
3 - Organization of Ideas)

VI. EVALUATION
Multiple Choice
Direction: Choose the letter of the best answer. Answer on a separate sheet. (2 pts. each)
1. The Philippines is the ____ largest rice producer in the world, accounting for 2.8% of global
rice production.
a. 6th
b. 7th
c. 8th
d. 9th
2. The largest sugarcane areas are found in this region, which accounts for 51% of sugarcane
areas planted.
a. Negros Island Region
 b. Central Visayas Region
c. Bicol Region
d. National Capital Region
3. Coconut production in the Philippines is generally concentrated in ____ farms.
a. small-sized
b. medium-sized
c. large-sized
d. extralarge-sized
4. What region produced the largest metric tons of abaca in 2014?
a. Negros Island Region
b. Central Visayas Region
c. Bicol Region
d. National Capital Region
5. The Philippines is the world's ____ largest producer of pineapples, producing more than 2.4
million of tonnes in 2015.
a. 1st
b. 2nd
c. 3rd
d. 4th
6. The use of machines, tools and labor to produce goods for use or sale.
a. Retail
b. Wholesale
c. Manufacturing
d. Agriculture
7. The following contribute to the growth of the retail and services industry in the Philippines
except
a. the country being an archipelago
b. English-speaking population
c. overseas workers’ remittances
d. business process outsourcing (BPO) industry
8. The following are the main trade partners of the Philippines except
a. China
b. Japan
c. United States
d. South Korea
9. The adequacy of the proposed plant and equipment to produce the product at proposed
technology.
a. Technical Feasibility Study
b. Market Feasibility Study
c. Financial Feasibility Study
d. Social Feasibility Study
10. The most important aspect of a business opportunity.
a. Technical Feasibility Study
b. Market Feasibility Study
 c. Financial Feasibility Study
d. Social Feasibility Study

VII. RESOURCES
https://www.scribd.com/
https://en.wikipedia.org/wiki/Agriculture_in_the_Philippines
https://boi.gov.ph/wp-content/uploads/2018/02/Manufacturing-July-2017.pdf
https://oxfordbusinessgroup.com/overview/no-slowing-down-retail-expanding-back-favourable-economic-
conditions
https://www.icontainers.com/us/2020/03/30/philippines-main-imports-and-exports/
https://quizizz.com/admin/quiz/5da9bae4b02a67001afc30f0/types-of-industries