Module 2

Lesson 1
Analyzing the Market through Business Analysis
Frameworks
Simple Recall:

Recall the topics from the

previous module. What are the
PESTLE factors that you must
consider to be able to
successfully scan the market
before starting your business
venture? How does each factor
affect the success the business
Introduction
To make sure that the business idea that
you want to establish and utilize is viable
and achievable, you have to study the
idea further to make sure that it will be
feasible in terms of the market,
operations, and financials. You can utilize
different business frameworks and
methodologies in analyzing your business
ideas and opportunities. In this module,
you will learn about environmental
scanning and some business frameworks
and how these can be useful in planning
and managing your business
Let’s try
this!
After reflecting on
the activity above,
what have you
discovered about
yourself? Let’s see
how these
realizations are
related in our
lesson.
 Environmental Scanning

Bautista (2014) defined environmental

It is essential to conduct environmental scanning as the process of gathering,
scanning to identify the needs and wants of analyzing, and dispensing information
people, the niche for your business mission, for tactical or strategic purposes. The
and to give attention to the trends and issues. environmental scanning process entails
This may also serve as an evaluation of the
type of the entrepreneurial activity obtaining both factual and subjective
appropriate in the community. information on the business
environments in which a company is
operating (Bautista, 2014).
 Environment in the community can be viewed
according to its technological, political, economic, and
social aspects. For instance, in the past, people in the
community used personal computers but the
transmission of development in terms of technology
was interrupted because people were not satisfied
with what they have today. They still look for the
changes in their life and the corresponding in their
environment. Are you ready to learn today? In this
module, you will know how to scan the market
through environmental scanning frameworks.

As a future entrepreneur, you must be well-

versed in this kind of advancement and progression of
your environment particularly in technology so as to
secure the success of your future business. Always
think of something new, something novel, authentic,
reinvent the existing ones, and create your new
version of goods/products and services.
 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 titled, “Business Policy, Text and Cases.”
SWOT, which stands for Strengths, Weaknesses,
Opportunities, and Threats, analysis is an analytical
framework that can help a company meet its
challenges and identify new markets.

This framework can help identify the business’s

risks and rewards. It is also a means of identifying the
internal and external forces that may affect the
business. It is helpful in assessing new business
ventures.
Strengths and Weaknesses: These refer to
the internal factors, and these are the
resources and experiences readily available to
the business proponent.
• Financial resources such as money and
sources of funds for investment;
• Physical resources, such as the company’s
location, facilities, machinery, and equipment;
• Human resources consisting of employees;
• Access to natural resources, trademark,
patents, and copyrights; and
• Current processes, such as employee
programs, department hierarchies, and
software systems, sales and distribution
capabilities, marketing programs, etc.
Opportunities and Threats: These are the external forces
that affect a company, an organization, an individual, and
those outside their control.
• Economic trends including local, national, and international
financial trends, developments in the country’s stock market,
reforms in the banking system, growth in the Gross Domestic
Product (GDP);
• Market trends such as new products or technology or
evolving buyer’s profiles, including changes in tastes and
lifestyle behavior;
• National and local laws and statutes as well as political,
environmental, and economic regulations;
• Demographic characteristics of the target market such as
the age, the gender, the culture of the customers;
• Relationships with suppliers and co-owners; and
competitive ideas
Before an owner can plan for its business’ future, he/she must first
evaluate the business by identifying and analyzing internal and
external resources and threats. The SWOT Analysis is a tool that can
help a proponent by enabling him/her to identify and assess the
internal and external forces that can affect the business. When used
properly, this can serve as a guide for the company to attain success.
It is a guide to prepare for a new venture, design business
strategies, and identify areas of change and reform. The owner can
anticipate problems, including possible solutions and take
advantage of identified opportunities. The owner can maximize its
strengths and attempt to cut out its weaknesses.
When drafting a SWOT
analysis, individuals
typically create a table split
into four columns to list
each impacting element
side by side for comparison.
Strengths and weaknesses
won't typically match listed
opportunities and threats
verbatim, although they
should correlate, since they
are ultimately tied together
(Schooley, 2019).
Schooley (2019) cited Billy Bauer,
managing director of Royce Leather, and
noted that pairing external threats with
internal weaknesses can highlight the
most serious issues a company faces.
"Once you've identified your risks, you
can then decide whether it is most
appropriate to eliminate the internal
weakness by assigning company resources
to fix the problems, or to reduce the
external threat by abandoning the
threatened area of business and meeting
it after strengthening your business," said
Bauer (Schooley, 2019)
After you create your SWOT framework and fill out your
SWOT analysis, you will need to come up with some
recommendations and strategies based on the results. These
strategies should focus on leveraging strengths and
opportunities to overcome weaknesses and threats. Bear in
mind these simple rules for successful SWOT analysis:
• Be realistic about the strengths and weaknesses of your
business when conducting SWOT analysis.
• SWOT analysis should distinguish between where your
business is today, and where it could be in the future.
• SWOT should always be specific. Avoid any gray areas.
• Always apply SWOT in relation to your competition, i.e.,
better than or worse than your competition.
• Keep your SWOT short and simple. Avoid complexity and
over analysis.
• SWOT is subjective.
 1. 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
Porter’s Five there are a few suppliers of an essential input
and they therefore control the supply of that
Forces of input. Another source of power is how unique
Competitive the product or service is. The more unique the
Analysis product, the easier it is for the supplier to drive
up the price. In the same manner, a supplier who
has 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 the cost of switching is high, buyers of
suppliers would prefer to stick out with one
supplier, thus giving the supplier the power of
raising prices.
 2. 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 how easy it is for buyers
Porter’s Five to drive prices down. The small the number of
Forces of buyers in the market, the greater is the power
Competitive enjoyed by the buyer. Likewise, the more
important an individual buyer is to the
Analysis 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.
 3. Number of Competitors/ Competitive Rivalry – 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
Porter’s Five competitors to meet the market’s current needs will serve as
Forces of an attractive opportunity for the firm.
4. Possibility of Substitution – when it is easy to substitute
Competitive products in a market, it is expected that buyers will switch to
Analysis alternatives in case of price increases. The suppliers will
enjoy less power to drive prices up and the market will be
less attractive.
5. 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.
 It is a significant tool for organizations to
understand the factors affecting profitability in
a specific industry and can help to form
decisions on whether or not to enter a specific
The industry, whether or not to increase capacity in
a specific industry, and also for developing
Importance competitive strategies. Under this theory, a
of Porter’s business becomes more attractive, the greater
the supplier’s power to drive prices up, the less
Five Forces the buyer’s power to drive prices down, the
Analysis less the number of competitors in the market,
the more differentiated the product or service
is, the less the substitutability of the products
for similar goods, and the more difficult it is for
new entrants to participate in the market.
 Activity 1: Applying SWOT Analysis
Instruction: Think of a company or business within your community. Identify
five each of its strengths, weaknesses, opportunities, and threats.
Business Name:________________
Type of Business: ______________
STRENGTH WEAKNESSES

OPPORTUNITIES THREATS
Thank you!