Applied SENIOR

HIGH
Economics SCHOOL

Self-Learning
Module

Business Environment 1
666
Quarter 4
Applied Economics
Quarter 4 – Self-Learning Module 1: Business Environment
First Edition, 2020

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Published by the Department of Education - Schools Division of Pasig City

Development Team of the Self-Learning Module

Writer: Emmanuel B. Penetrante
Editor: Edna D. Camarao, PhD
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Content/Language: Edna D. Camarao, PhD, Dennis T. Alex
Technical: Emmanuel B. Penetrante
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Pasig City
Applied SENIOR
HIGH

Economics
SCHOOL

Self-Learning
Module

1
Quarter 4

Business Environment
Introductory Message

For the facilitator:

Welcome to the Senior High School – Applied Economics Self Learning Module
on Business Environment!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
 For the learner:

Welcome to the Applied Economics Self Learning Module on Business

Environment!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this module, you are expected to:

1. define environmental scanning;
2. differentiate internal and external environment; and
3. discuss the micro and macro environment factors.

PRETEST

Directions: Read each statement carefully. Choose the letter of the best answer and
write it on a separate sheet of paper.

1. It is a process of identifying the internal and external elements that affect

the organization’s performance.
A. Business Analysis
B. Business Environment
C. Environmental Analysis
D. Environmental Scanning
2. It includes all internal and external factors that affect the performance of
the company.
A. Environmental Analysis
B. Environmental Scanning
C. Business Analysis
D. Business Environment
3. These factors are controllable by the management.
A. Micro Environment
B. Macro Environment
C. Internal Environment
D. External Environment
 4. These factors are beyond the control of the management however, have a
great impact on the performance, decision making, and strategy of the
business.

A. External Environment
B. Internal Environment
C. Macro Environment
D. Micro Environment
5. It is a strategic tool to identify the external and internal environment.

A. Environmental Analysis
B. Environmental Scanning
C. Business Analysis
D. Business Environment

RECAP

Directions: Describe the effects of taxation on income, indirect tax, and inflation.

1. ______________________________________________________________________________.

2. ______________________________________________________________________________.

3. ______________________________________________________________________________.

LESSON

Business Environment
It includes all internal and external factors that affect the company’s
performance and functions. It includes employees, customers, management, supply
and demand, business regulations, and competition.
 Every business organization has an internal and external environment. For
the organization to be successful, it is important to study its environment regularly.
This is to assess any developments and understand factors that can contribute to its
success.

Environmental scanning is a process used by organizations to monitor their

external and internal environments. The purpose of the scan is to identify the
opportunities and threats affecting the business. As a part of the environmental
scanning process, the organization collects the information regarding its
environment and analyzes the impact of changes in the market. Environmental
analysis is a strategic tool in assessing the level of threats or opportunities that might
affect the business. This eventually helps the management team to make better
decisions.

Internal Environment

The internal environment of the organization consists of factors that are

controllable by the management. As the figure above shows, the internal environment
of an organization consists of various elements like the value system,
mission/vision/goals/objectives of the organization, structure, culture, quality of
employees, labor unions, technological capabilities, etc. These elements lie within
the organization and any changes to them can affect the overall success of the
business.

External Environment

There are two elements in the external environment: micro and macro. These
environmental factors are beyond the control of the business but they still minimize
the impact if the business has an effective strategic plan.
Micro Environment Factors

1. Suppliers

Suppliers can control the success of the business when they hold power. The
supplier holds the power when they are the only or the largest supplier of the goods
in the market.

2. Resellers

Market intermediaries, middleman, or resellers have a great contribution to

the delivery of products to the ultimate consumers. For example, if the reseller has
a reputable name then this reputation can be leveraged in marketing the product.

3. Customers

A customer is an individual or business that purchases goods or services.

Customers are important because they drive revenues. Without them, businesses
have nothing to offer. Most public-facing businesses compete with other companies
to attract customers, either by aggressively advertising their products or by lowering
prices to expand their customer bases.

4. Competition

Those who sell the same or similar products and services as your organization
is called competitors. The presence of one or more competitors can reduce the prices
of goods and services as the companies attempt to gain a larger market share.

Macro Environment Factors

1. Political factors

These are about how and to what degree a government intervenes in the
economy. It includes government policy, political stability or instability in overseas
markets, foreign trade policy, tax policy, labor law, environmental law, and trade
restrictions.

2. Economic factors

Economic factors have a significant impact on how an organization does

business and also how it is profitable. These factors include economic growth,
interest rates, exchange rates, inflation, disposable income of consumers and
businesses.

3. Social Factors

These include the shared belief and attitudes of the population. These factors
are population growth, age distribution, health consciousness, career, attitudes and
so on.
4. Technological Factors

Technological factors affect the management and marketing in three ways:

new ways of producing goods and services, new ways of distributing goods and
services, and new ways of communicating with target markets.

5. Environmental Factors

These factors have become important due to the increasing scarcity of raw
materials, pollution targets, doing business as an ethical and sustainable company.

6. Legal Factors

It includes health and safety, equal opportunities, advertising standards,

consumer rights and laws, product labeling, and product safety. It is clear that
companies need to know what is and what is not legal in order to trade successfully.

ACTIVITIES

Activity: Environmental Scanning

Directions: Think of one (1) business establishment nearby. Identify the micro and
macro environment factors that affect the business establishment.

Micro Environment Factors

1. Suppliers

2. Resellers

3. Customers

4. Competitors

Macro Environment Factors

1. Political

2. Economic

3. Social

4. Technological

5. Environmental

6. Legal
 WRAP-UP

To summarize what you have learned in the lesson, answer the following
questions:

1. What is environmental scanning?

2. What is the difference between the internal and external environments?
3. What are the micro and macro environment factors?

VALUING

Reflect on this!

“You cannot get through a single day without having an impact on the world around
you. What you do makes a difference and you have to decide what kind of a
difference you want to make.”

—Jane Goodall

POSTTEST

Directions: Read each statement carefully. Write T if the statement is correct,

otherwise write F.

____________1. Economic factors include economic growth, interest rates, exchange

rates, inflation, disposable income of consumers and businesses.

____________2. The presence of one or more competitors can reduce the prices of
goods and services as the companies attempt to gain a larger market
share.

____________3. Environmental analysis is a process used by organizations to

monitor their external and internal environments.

____________4. A customer is an individual or business that purchases products.

____________5. Environmental scanning is a strategic tool in assessing the level of

threat or opportunity the factors might affect the business.
 KEY TO CORRECTION

5. A 5. F
4. A 4. T
3. C 3. F
2. D 2. T
1. D 1. T
PRETEST POSTTEST:

References
Academy, Professional. "Marketing Theories – PESTEL Analysis." Professional
Academy. Accessed August 13, 2020.
https://www.professionalacademy.com/blogs-and-advice/marketing-
theories---pestel-analysis.

Bloomenthal, Andrew. "Cashing in on Customers." Investopedia. February 05,

2020. Accessed August 13, 2020.
https://www.investopedia.com/terms/c/customer.asp.

"Environmental Scanning: Explanation, Components and Factors." Toppr.

December 09, 2019. Accessed August 13, 2020.
https://www.toppr.com/guides/commercial-knowledge/business-
environment/environmental-scanning/.

"What Is Competitor? Definition and Meaning." BusinessDictionary.com. Accessed

August 13, 2020.
http://www.businessdictionary.com/definition/competitor.html.

Brian BrassawBrian Formerly Managed the Earth911 Recycling Search and Shared
Green Living Tips and Tricks on Earth911’s Instagram, Manojweb, and
Venkanna. "Earth Day: 23 of the Greatest Environmental Quotes." Earth 911.
July 24, 2020. Accessed August 13, 2020.
https://earth911.com/inspire/earth-day-23-quotes/.