Applied Economics
Contemporary Issues Affecting
the Filipino Entrepreneurs
Lesson 7
Most Essential Learning Competencies:
At the end of the lesson the learner should
be able to:
Analyze the effects of contemporary economic
issues affecting Filipino entrepreneurs.
Objectives:
At the end of the Lesson, the learner
should be able to:
a. Identify the different challenges faced
by the Filipino entrepreneurs.
Review:
• 1. What do you call to a place where goods and
services are being sold and purchased where
the buyers and sellers are direct competition?
a. Market b. Mall c. Grocery d. Sari-sari store
• 2. Who are the important feature in the market?
• a. People c. Buyers
• b. Buyer and Seller d. Sellers
Review:
• 3. What forms of market structure where the
number of firms are varied but not too many?
a. Perfect Competition c. Monopolistic Competition
b. Monopoly Market d. Oligopoly Market
• 4. What forms of market structure where the
degree of monopoly power is Zero?
a. Monopolistic competition c. Monopoly Market
b. Perfect Competition d. Oligopoly Market
Review:
• 5. What forms of market structure where the entry
and exits of the firm is restricted?
a. Perfect Competition c. Monopolistic Competition
b. Oligopoly Market d. Monopoly Market
• 6. What forms of market structure where the nature
of product is one type?
a. Monopoly Market c. Oligopoly Market
b. Monopolistic Competition d. Perfect Competition
Review:
• 7. Enumerate at least four (4) advertisement
paraphernalia?
What is Entrepreneur?
one who attempts to organize his own
business, he assumes all the risk and returns
on his investment decides on what, how, and
how much of a food or service will be
provided, and also monitors and controls all
the activities of the business.
He has an important role in our economy.
Benefit of Entrepreneur:
an individual was given access to
better lives not only for themselves but
for their family.
It can also provide the solution to our
economic problems by creating wealth,
jobs, and social empowerment.
Famous Entrepreneur:
TONY TAN CAKTIONG HENRY SY
History:
In the Philippines, Entrepreneurship is viewed as
important to empowering the poor, enhancing
production, and being a driving force for innovation.
The 1987 Philippines Constitution recognizes
entrepreneurship as an engine of economic growth.
Article XII Section 1 highlights the role of private
enterprises in supporting the equitable distribution
of income and wealth, sustaining the production of
goods and services, and expanding productivity.
History:
In 2011, there were approximately 830,000
business enterprises in the Philippines.
99.6% of it is classified as micro, small, and
medium-sized enterprises (MSME) which
are responsible for 38% of total job growth.
(Universal Access to Competitiveness and
Trade – U-ACT).
Present Entrepreneur:
Entrepreneurship involves financial
activity and it is called Investment.
• Investment is a product (Asset) that
people buy which are not consumed
today but are used in the future to
generate wealth.
How does the investment work?
• The goal of investment is to generate
income and increase value over time, for
example, by buying bonds, stocks, real
estate property, or even buying products for
the purpose of selling or to create products
for selling.
• In general, any activity that is taken in the
hope of gaining income in the future is
considered an investment.
Terms of investment:
[Link] Term Investment – engages in buying
a property or engaging in real estate which
intends to hold and accumulate profit for
more than a year.
2. Short Term Investment – engages in
savings and time deposits that is expected to
earn profits within one year.
Other Reasons of Investment:
To replace worn out or failing machinery,
equipment or building due to the continuous
depreciation of such assets.
To purchase new machinery, equipment or
building to increase productive capacity, and
competitiveness and raised their profits.
•Since investment is expenditure on capital goods,
it is also a component of Aggregate Demand
which influences the capital stocks and productive
capacity of the Economy.
• What is Aggregate Demand?
• Aggregate Demand is an economic
measurement of the total amount of demand for all
finished goods and services produced in an
economy.
It is expressed as the total amount of money
exchanged for goods and services at a specific
price level and point in time.
Why Aggregate Demand Important?
It gives an economist a tool for measuring the
strength of economy. Usually, economists
estimate the total market for items produced
in an economy over a year.
If aggregate demand is high, then the
economy is strong – it means more selling of
goods.
If it is low, then the economy is weak – it
means it trouble in moving the goods in the
market, signals of potential downturn
What is the difference between Aggregate Demand
and Demand?
• Demand describes the market for a specific
product.
• Aggregate Demand is a function of the
individual market for every product in a
marketplace.
How to measure Aggregate Demand?
• Example Food panda in the Philippines.
• Consumer buy only Breakfast, Lunch and Dinner.
• The Total Demand for Breakfast in the country is
P1 Million, Lunch is P3 Million, and Dinner is P5
Million.
• The total Aggregate Demand of the Country is
P9 Million –it is the Sum of the need for every
goods that the consumers demanded.
Factors that influence
investment:
[Link] Return of Investment – it is
required by the business to cover the risk of
investing.
[Link] confidence – any changes in
business confidence can affect investment
decisions.
[Link] in National Income- At the level of
macro-economic, small changes in national
income can trigger much larger changes in
Factors that influence
investment:
4. Interest rates – investment is inversely related
to interest rates for two reasons:
[Link] interest rates rise, the opportunity cost of
investment rises.
[Link] interest rates rise, the firm may anticipate
that consumer will reduce their spending.
5. General Expectation – any indication of the
downturn in the economy may reduce the expected
cost.
Factors that influence
investment:
6. Level of savings – increased savings may
reduce interest rates and stimulate corporate
borrowing and investment. It provides a flow of
funds into the financial sector.
7. Corporation Tax – business organization
usually paid their taxes from their profit, a
reduction in tax may increase the profit they
retain after tax is paid and this act as an incentive
to invest.
What is the investment climate in the Philippines?
• The Philippines is trying to improve its investment climate this past
decade. But still, the country is struggling to overcome its
investment constrain such as corruption, poor infrastructure, poor
internet connection, the low public trust of politicians, and the
burden of government regulation.
• One of the businesses that play a very important and significant
role in the economic and social development of the country is the
Small and Medium Enterprise, this is acknowledged by the
Department of Trade and Industry (DTI 2004-2010 SME Development
Plan). They created new products, produce wealth, and provide jobs
to the people.
•
Challenges of the Filipino Entrepreneurs:
[Link] Licensing and Permits- it is one of
the common complaints of Filipino entrepreneurs is
the difficulty to apply for or renew business permits
due to lots of documents required.
[Link] Rental Rates and other Clauses in
Malls – Due to the thought that many people visited
a mall, it is anticipated that entrepreneurs earned
high profits. Eventually, the administrator of malls
will increase rentals and add other incidental
charges.
Challenges of the Filipino Entrepreneurs:
3. Hiring Employees – Since unemployment is high in the
country, normally thousands of applicants are expected to
come. The hiring process will take several days to find those
people who have the right attitude and disposition in life.
4. Inadequate access to technology – In terms of internet
penetration, only 29% of Filipinos had access to the web
through various channels.
5. Financial Capital – most entrepreneurs utilize loans for
the sustenance of their business which would have a negative
impact on the income status of the firm.
Challenges of the Filipino Entrepreneurs:
6. Marketing Advice – Entrepreneurs exist due
to experience and desire to pursue a business,
that is why risk is expected without marketing
advice.
7. Maintaining competitiveness – innovation
is the secret of success of an entrepreneur, it is
where they maintain high value by costumer and
against competitors. Usually, they fail because
they stop creating and innovating products.
Challenges of the Filipino Entrepreneurs:
8. Minimum Wage and insurances – business
is obliged to pay minimum wage to their
employee regardless of how much they earned.
9. Taxes – payment of taxes may vary on the
kind of business does an entrepreneur.
10. Income tax – business is obliged to pay
government impost taxes based on their income.
Why is it important to study the
Different Challenges of the
Filipino Entrepreneurs?
Activity: Dramatize Entrepreneurial
Business.
• Choose a small business to roleplay and
show the challenges of the Filipino
Entrepreneurs.
• Group 1- Challenges 1-2
• Group 2 – Challenges 3-4
• Group 3 – Challenges 5-6
• Group 4 – Challenges 7-8
• Group 5 – Challenges 9-10