Quarter2 – Module8 Socio-Economic Impact of a Business

Question 1

A new business, especially one that is innovative and focused on bringing some newproduct or service to the market, is always welcome to the consumer who islooking value for his money. If the newbusiness is selling a productthat has close substitutes in the market, then the owner of the business will try his best to win the consumers away from the existing sellers by offering something that will benefit the buyers.
How can the new business accomplish this? One good way is to innovate the product;comeupwithnewfeaturesthatarenotfoundintheexistingcompetinggoods. This can be in the form of a better appearance, a new feature or ingredient or a new convenientwayofmakingtheproductavailable.Anewbusinessthereforemeansnew products or services available to the buyers, giving them more choices (Dinio, et al., 2017).

Since the new sellerwilltry to attract buyers, anotherstrategy that could beadopted is to improve the quality of the good making it a notch higher than those

alreadybeingsoldinthemarket.Althoughthismaymeanhighpricesforbetterquality goods, this could cater to a market that is more after quality than low price.
Initially, as a business starts, the seller may make the product available at introductory prices lower than the other substitutes in the market. This will definitely be an advantage to the price conscious buyers who have limited budgets.
As long as anewbusiness can provide newgoods and services, better quality ofgoodsandmore options,theconsumercanbenefitfromit.Butifabusinesscomes up with a low quality good and does not provide the consumer value for his money, then this business will have a negative impact on the market.

Answer 1

Impact On The Consumer

Question 2

A new business will also provide opportunities for suppliers and investors. If a new construction company is set up, then this opens up opportunities for the other businesses that will supply them their needs, tools, wood, cement, steel, paints, nail, screws, and decorators. Many suppliers will now get a chance to sell to the newly established business, which means income for them.
Demandforthegoodsprovidedbythesupplierswillincrease.Thesesuppliers will now need to produce more of them and they will need to hire more workers who will earn wages from being employed. More capital will be needed to invest in the production of these tools and materials, generating again income for the economy. Investorsget to earn returnson theirinvestments, with capital plowed backinto more investmentsandgeneratingmoreincomefortheeconomy,thus,leadingtoeconomic growth.

Answer 2

Impact on Suppliers and Investors

Question 3

The government will also benefit from the establishment of new businesses, through revenues earned on fees collected from them and on taxes imposed on the incomes of the businesses.
Before a business can be setup,it has to meet requirements to start operating. First, the business owner has to apply to start its business. Licenses have to be obtained. Organizational fees have to be paid. On the municipal level, the local government earns revenue from these fees and licenses. This means money added to theirlocal budgetto provide social servicesto the community, for the development of the company, to pay salaries of local officials and workers, to maintain peace and order and to subsidize public schools.
On the national level, the government gets to impose taxes on the incomes earned by the businesses. Employees hired by these businesses also have to pay personal income taxes to the Bureau of Internal Revenue (BIR). For employed workers,thesetaxesareregularlywithheldbytheiremployersandremittedtotheBIR.
These tax revenues fuel development because they are used by the government for national activities and for budget allocations for its programs. The nationalgovernmenthasrevenuestofinanceitsprojects,topaygovernmentofficials,

to build schools, to improve the military, to promote peace and order all over the country, to build housing for the proor, and to provide health services and improved welfare programs for the people.

Answer 3

Impact on the Government

Question 4

New businesses mean employment opportunities for the Filipinos. Those who have jobs but are earning low-wages may find better paying jobs with the new companies. Unemployed workers looking for work may have the chance of being employed by these companies. The poolof unemployed workers will definitely decrease. Being employed will enable themto buy their basic needs and even some luxuries. This means that their quality of life and their standard of living will improve.
Acquisition of wealth and assets can now follow both for the business owners and the employees they hire. Profits earned by the owners can be invested back into the business for expansion, or some can be withdrawn by the owners which they can usetobuynewcarsornewhouses.Successstoriesontelevisionshowsfeaturerags- to-riches stories of entrepreneurs who used to be very poor, but with hard work and persistence,wereabletomaketheirbusinessessucceed,enablingthemtosendtheir childrentogoodexpensiveschools,buildingbighouses,andbuyingtwoormorecars housed in their garage. The owners, because of their success, manage to acquire wealth and buy assets which are fruits of their hard work.
With the growing focus on preserving the environment for future generations, businessesalso get to contribute their share. So-called green structures for buildings are means used to prevent further damage to the environment. Instilling the value of recycling and reusing of resources among employees and family members may also become the advocacy of these businesses. Spreading information on the dangers of global warmingmaybepromotedbythebusinessowners.Thus,businessesbecome instruments for society to have a better place to live in.

Answer 4

Impact on Households

Question 5

Corporate Social Responsibility (CSR) has become a growing trend among businesses today. As a result of this, corporations and even small businesses have increased their focus on projects that provide scholarships to poor but deserving students,allocatingbudgets for housingforlow-income families such asparticipation inprogramsliketheGawadKalinga,environmental protectionincluding treeplanting, eliminationofpollution,andotherenvironmentrelatedprograms.Communitiesbenefit from business-sponsored activities that include sports fests and wellness programs, livelihood projects, micro financing, and even medical and dental missions.

Answer 5

ImpactontheCommunity

Question 6

What is CSR?

Answer 6

Corporate Social Responsibility (CSR)