Industry Analysis and Competition

Industry Analysis and Competition

• Industry analysis helps understand the competitive landscape and impacts of various sectors.

• Importance of competition in driving innovation and improving services.

Objectives

• Analyze different principles, tools, and techniques in creating a business.

• Identify the main sectors of the economy and related industries.

• Distinguish the different products and services of businesses and industries in the locality.

Let's Get Involved: PEST Analysis

• Understand the acronym PEST: Political, Economic, Social, Technological.

  • Political: Government policies, regulations, and stability.

  • Economic: Economic growth, interest rates, inflation, and exchange rates.

  • Social: Cultural aspects, demographics, population trends.

  • Technological: Innovations, research and development, technological awareness.

Industry vs. Sector

• Both terms are used interchangeably but have different meanings:

  • Sector: A broad classification of businesses in the economy.

    • Example: Basic Materials Sector (gold, aluminum).

  • Industry: A more specific category of companies with similar business activities.

    • Example: Financial sector includes life insurance and regional banks.

Economic Sectors and Related Industries

Classification of Economic Sectors

• Primary Sector: Extraction of raw materials

  • Agriculture, hunting, forestry, fishing.

• Secondary Sector: Manufacturing and construction of goods from raw materials.

• Tertiary Sector: Services including marketing and selling products.

Contribution to GDP

• Primary Sector: 9%

• Secondary Sector: 33%

• Tertiary Sector: 58%

  • Service sector dominates Philippines GDP, reflecting economic focus.

Specific Industries by Sector

Primary Sector

• Agriculture, hunting, forestry, and fishing.

• Involves farming and extraction of marine products.

Secondary Sector

• Transformation of raw materials into finished goods.

  • Includes mining, manufacturing, construction, utilities.

• Heavy vs. Light Manufacturing:

  • Heavy: Textile, metal, and steel products.

  • Light: Household food products, plastic goods.

Tertiary Sector

• Services related to primary and secondary sectors.

  • Includes transport, trade, financial services, real estate, and public administration.

Employment Structure

• Employment distribution across sectors indicates economy's labor concentration.

• Labor-intensive: Relies more on manual labor, e.g., restaurants, small farms.

• Capital-intensive: Heavy machinery/automation, e.g., oil refining.

Public vs. Private Sector

• Private Sector: Focuses on profit; provides private goods.

  • Characteristics: Rivalry and excludability.

• Public Sector: Provides public goods; typically funded through taxes.

  • Characteristics: Non-rivalry and non-excludability; examples include national defense.

Goods Categorization

Types of Goods

• Private Goods: Exclusive to individuals; e.g., a consumed fruit.

• Public Goods: Available to all; e.g., roads, which do not diminish in availability.

• Club Goods: Excludable but non-rival; e.g., concert tickets.

• Common Goods: Rival but non-excludable; e.g., fish in the ocean.

Free Rider Problem

• Public goods lead to the free rider problem, making it necessary for the government to provide services funded by taxes to prevent under-supply of essential services.

Externalities

• Occurs when the consumption of goods affects third parties.

• Positive Externalities: Benefits exceed personal gains (e.g., education).

• Negative Externalities: Harmful effects outweigh personal costs (e.g., pollution).

• Example: Driving increases congestion and carbon footprint.

Learning Reinforcement

• Assignment to categorize businesses in San Ildefonso into sectors and industries, with an emphasis on practical understanding of the local economy.