Book 1 Chapter 3: Business Environment

Question 1

Business Environment

Answer 1

Sum total of all individuals, institutions and other forces that are outside the control of the business but may affect its performance

Question 2

Features of Business Environment

Answer 2

CID RUST

Question 3

The C in CID RUST

Answer 3

Complexity

Question 4

The I in CID RUST

Answer 4

Inter-relatedness

Question 5

The D in CID RUST

Answer 5

Dynamic Nature

Question 6

The R in CID RUST

Answer 6

Relativity

Question 7

The U in CID RUST

Answer 7

Uncertainty

Question 8

The S in CID RUST

Answer 8

Specific & General Forces

Question 9

The T in CID RUST

Answer 9

Totality of External Forces

Question 10

Specific Forces

Answer 10

Specific Forces affect individual enterprises directly and immediately in their day to day working

For Example, Investors, Customers, Competitors, Suppliers etc.

Question 11

General Forces

Answer 11

General Forces have impact on all business enterprises and thus may affect an individual firm only indirectly

For Example, Social, Legal, Political and Technological conditions

Question 12

Business Environment differs from country to country and even region to region

Answer 12

Relativity

Question 13

It is very difficult to predict future happenings in the Business Environment

Answer 13

Uncertainty

Question 14

The Business environment is a complex phenomenon that is relatively easier to understand in parts but difficult to grasp in totality

Answer 14

Complexity

Question 15

The Business Environment keeps on changing

Answer 15

Dynamic in Nature

Question 16

Business Environment is aggregative in nature

Answer 16

Totality of External Forces

Question 17

Different elements or parts of business environment are closely inter-related

Answer 17

Inter-relatedness

Question 18

Importance of Business Environment

Answer 18

IIT CAP

Question 19

The I in IIT CAP

Answer 19

Identify Opportunities and getting First mover Advantage

Identify Threats and early warning signals

Question 20

The I in IIT CAP

Answer 20

Identify Threats and early warning signals

Identify Opportunities and getting First mover Advantage

Question 21

The T in IIT CAP

Answer 21

Tapping Useful Resources

Question 22

The C in IIT CAP

Answer 22

Coping with Rapid Changes

Question 23

The A in IIT CAP

Answer 23

Assists in Planning and Policy formulation

Question 24

The P in IIT CAP

Answer 24

improves Performance

Question 25

Opportunities

Answer 25

They refer to the positive external trends or changes that will help a firm to improve its performance

Question 26

Environment provides numerous opportunities for Business Success

Answer 26

Identify Opportunities and getting first mover advantage

Question 27

Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them competitors

Answer 27

First mover Advantage

Question 28

Threats

Answer 28

They refer to the external environment trends and changes that will hinder a firm's performance

Question 29

Environment is a source of various resources for running a business

Answer 29

Tapping Useful Resources

Question 30

Inputs

Answer 30

They refer to the various resources required by a business enterprise to engage in any type of activity For example, finance, raw materials, labour etc.

Question 31

Outputs

Answer 31

They refer to the end products that the business enterprise supplies (such as goods and services) after applying the necessary inputs

Question 32

The business enterprise depends on the environment as a source of inputs or resources and as an outlet for outpus

Answer 32

Tapping Useful Resources

Question 33

The future of an enterprise is closely bound up with what is happening in the environment

Answer 33

improves Performance

Question 34

Managers must understand and examine the environment and develop suitable courses of action

Answer 34

Coping with Rapid Changes

Question 35

Dimensions of Business Environment

Answer 35

SLEPT

Question 36

The S in SLEPT

Answer 36

Social

Question 37

The L in SLEPT

Answer 37

Legal

Question 38

The E in SLEPT

Answer 38

Economic

Question 39

The P in SLEPT

Answer 39

Political

Question 40

The T in SLEPT

Answer 40

Technological

Question 41

Examples of Economic Environment

Answer 41

Interest rates and Inflation Rates Value of Currency Changes in Disposable Income of the People

Question 42

Examples of Social Environment

Answer 42

Consumer Tastes and Preferences Consumer Expectations Literacy Rates Life Expectancy

Question 43

Examples of Technological Environment

Answer 43

Scientific Improvements New Inventions and Innovations New ways of Production

Question 44

Examples of Political Environment

Answer 44

Constitution of the Country Prevailing Political System Political Unrests Foreign Political Relationships

Question 45

Examples of Legal Environment

Answer 45

New Legislations passed by the Government Court Judgements Administrative Orders by Government Authorities

Question 46

NIP

Answer 46

New Industrial Policy, 1991

Question 47

FIPB

Answer 47

Foreign Investment Promotion Board | Was set up to promote and channelise Foreign Investment

Question 48

When was NIP announced?

Answer 48

July 1991

Question 49

Disinvestment

Answer 49

It refers to dilution of stake of the Government in the Public Sector Enterprises and giving greater control to the Private sectors

Question 50

FDI

Answer 50

Foreign Direct Investment | Enabled Foreign Companies to directly invest in the Country

Question 51

Liberalisation

Answer 51

Freeing industries from the shackles of the licensing system and removing unnecessary controls and restrictions

Question 52

End of Licence-Permit-Quota Raj

Answer 52

Liberalisation

Question 53

Privatisation

Answer 53

Giving greater role to the Private sector enterprises as opposed to the public sector enterprises Diluting industries who were regularly incurring losses

Question 54

BIFR

Answer 54

Board of Industrial and Financial Reconstruction | Aimed at assisting viable industries and shutting down other industries who were regularly incurring losses

Question 55

Globalisation

Answer 55

Increasing the level of interaction and interdependence among various nations to remove physical geographical boundaries and gaps