Applied Economics

CONTEMPORARY ECONOMIC ISSUES - It is expectedto be enough for the

AFFECTING THE FILIPINO ordinary worker to afford things that
ENTREPRENEUR he/she usually buys.
- Objective: increasing minimum wage to
SAVING AND INVESTMENT- are necessary to
improve lives of ordinary households
build the future. Saving is to investment as food
but in reality, it brings unemployment
is to the body nourishment process.
that results in surplus of laborers. The
INVESTMENT problem of inadequate wage is
intertwined with the problem of
 Define as building up the capital stock unemployment. If there is a high rate of
for more future production and unemployment, it means that jobs are
consumption. not sufficient with the labor demand and
 A product that people buy with the hope wage become inadequate due to more
that they will be beneficial or will people searching for jobs.
generate income in the future.
a. LONG-TERM INVESTMENT TAXES
- Buying a property or engaging in real
- A tax is a mandatory financial charge, or
estate
some other type of levy imposed upon a
- Are assets that a company intends to taxpayer by a governmental
hold for more than a year. organization in order to fund various
b. SHORT-TERM INVESTMENT public expenditures. A failure to pay,
- Investment that a company has made along with evasion of or resistance to
that is expected to be converted into taxation, is punishable by law.
cash within one year. - A minimum wage is the lowest
- Savings and time deposits are usual remuneration that employers can legally
venues pay their workers. Equivalently, it is the
- Security risk is LOW price floor below which workers may
- Gain is LOW not sell their labor. Although minimum
- Interest rates are FIXED wage laws are in effect in many
- Opportunity cost is HIGH jurisdictions, differences of opinion
c. Other financial exist about the benefits and drawbacks
- The Philippines Stock Exchange- a of a minimum wage.
place where traders buy and sell stocks - it is considered inflows for the
for profit. government and outflows for firms.
- Business applies percentage tax on gross
RENTALS
receipts (3%) or value added tax (12%)
- A property from which the owner - Around 30% if gross receipts reached
receive payment from the occupant(s), 500,000 annually or around 40,000-
known as tenants, in return for 50,000/monthly gross sales
occupying or using the property - We pay taxes for government to provide
- Fixed cost includes rent, machinery, and a better place where we can exercise our
equipment. freedom secure fairly, and progressively.

MINIMUM WAGE PRINCIPLES, TOOLS, & TECHNIQUES OF

INDUSTRY ANALYSIS
 Applied Economics
1. Sole Proprietorship- is owned by single Small business, total assets are from P1,500,001
individual who is singly responsible for to P15,000,000.
running the business and is accountable
Medium business has total assets from
for all debts and obligations related to
P15,000,001 to P60,000,000.
the business
2. Partnership- is an agreement in which Any business with assets in excess of
two or more persons combine their 60,000,000 is considered large scale.
resources in a business with a view to
making profit A partnership agreement THE SWOT ANALYSIS
is drawn up and profits are divided The initiators, Learned, Christensen, Andrews,
among the partners according to the and Book used a diagram as guide for
terms of agreement identifying the company's strengths (S),
weaknesses (W), opportunities (O), and threats
TWO TYPES OF PARTNERSHIP: (T).

The general partnership- All owners

share the management of the business,
and each is personally responsible and
must assume the consequences of the
actions of the other partners. All general
partners have unlimited liability which
means a loan payment will extend to
their personal property

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 control or
management, and are liable for debts to
a specific extent only. PORTER’S FIVE FORCES OF COMPETITIVE
ANALYSIS

3. Corporation- is a legal entity that is

separate from its owners, the
shareholders. No shareholder.

4. 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.

1. Supplier Power- The power of suppliers

SMALL, MEDIUM, AND LARGE-SCALE to drive up the prices of your inputs. A
BUSINESS supplier enjoys this power if there are a
 Applied Economics
few suppliers of an essential input, and Carolina's Small Business and Technology
they therefore control the supply of that Development Center (SBTDC) can help in
input. making an analysis of one's business industry.
2. Buyer input- The power of your
customers to drive down your prices. The key factors to be considered in analyzing
The smaller the number of buyers in the your industry identified by the SBTDC are
market, the greater is the power enjoyed
by the buyer. 1. Geographic area
3. Number of competitors- The strength of
competition in the industry. The number 2 Industry (as to size)
and capability of competitors in the
market will also impact on the 3 Product
attractiveness of the market.
4. Possibility of substitution- The extent to 4 Buyers
which different products and services
can be used in place of your own. When 5 Regulatory environment
it is easy to substitute products in a
market, it is expected that buyers will 6 Company information
switch to alternatives in case of price
increase. 7 A brief history of the industry
5. Possibility of new entrants- The ease
with which new competitors can enter 8. Factors that affect growth of the industry
the market if they see that you are
making good profits. But when new 9 Trends in sales over a recent year
investors enter a market, the share of the
participants in the market will be 10. Current operational/management trends
divided among more people and will within the industry, which are standard practices
therefore decline, thus eroding profits. prevalent among the firm’s
INDUSTRY ANALYSIS
11. The types of marketing strategies prevalent
COMPETITION- Who are the major businesses
within the industry-
in the industry? Are those locations close to your
proposed business? Your aim is to win their
12. Competitor information
customers, convince them to buy from you
instead, and remains as loyal customers.

CUSTOMERS- Who will you sell your product

to? The target market must be identified. What
type of people will you cater to, based on their
preferences, lifestyles, and buying habits?
SUPPLIERS- Every retail business needs
suppliers from whom one can source raw
materials, intermediate products, or even the
finished goods one intends to resell.
GUIDE TO INDUSTRY ANALYSIS

An industry analysis guide developed by North