Business Environment Flashcards
What is business environment?
Business environment refers to sum total of all individuals, institutions and other forces that lie outside a business enterprise but may influence its functioning and performance.
What are the two types of forces in business environment
General forces suggest economic, social, political, legal and technological conditions which indirectly influence all business enterprises.
Specific forces such as investors, customers, competitors, and suppliers influence enterprises directly.
How is business environment interrelated, explain with an example?
Different elements of business environment are closely interrelated.
For example: Growing awareness for healthcare has led to increase in the demand for health foods and health resorts.
Why is business environment complex?
It is complex because it consists of several interrelated elements which keep on changing.
Explain the feature of relativity of business environment with an example.
Business environment is relative concept as it differs from country to country and even from region to region.
Eg: Demand for sarees is quite high in India but almost non-existent in Japan.
Choose the correct option:
Different components of business environment are _____________.
a) interdependent
b) independent
Interdependent
What is environmental scanning?
Environmental scanning is the process by which organisations monitor their relevant environment to identify opportunities and threats affecting the business.
How is first mover advantage a benefit of understanding the environment?
Awareness of environment helps an enterprise to take advantage of early opportunities instead of losing them to competitors.
How does environmental scanning change the perspective of the company towards the customers?
Environmental scanning makes the management sensitive to the changing needs and expectations of consumers.
How does environmental awareness serve as an early warning signal?
Environmental scanning makes firms aware of the impanding threat or crisis so that the firm can take timely actions to minimise the adverse effects.
How does environmental monitoring help in strategy formulation?
Environmental scanning provides relevant information about the business environment. This information serves as the basis for planning and policy making.
How does environmental scanning help the business leaders to cope with the rapid changes in environment?
In order decide the direction in nature of change business leaders need to understand the aspirations of people and other environmental forces through environmental scanning.
How can environmental scanning improve the public image of an enterprise?
A business firm can improve its image by showing that it is sensitive to its environment and responsive to be aspirations of public. Environmental understanding enables business firms to be responsive to the environment.
What are the two dimensions of business environment?
Micro environment - it refers to those internal and external forces that exercise a direct influence on the working and performance of an individual business organisation.
Macro environment- it refers to the general environment or remote environment within which a business firm and forces in its micro environment operate. It does not directly or regularly interact with macro environment.
Another name for micro environment?
Direct section environment or task environment
How does corporate culture influence business organisation?
The values, beliefs and attitudes of the founders and top management of the company exercise a strong influence on what the company stands for, how it does things and what it considered important. When the value system is shared by all members, the organisation is likely to be more successful.
What role does the mission and objectives of the organisation play in making it successful
The business philosophy and purpose of a company guide its priorities, business strategies, product market scope and development process.
What role does the image and brand equity of the company play?
It place significant role in raising finance forming alliances, chosing dealers and suppliers, launching new products and entering foreign markets.
Name some of the external factors of micro environment.
Customers
Competitors
Suppliers
Financiers
Marketing intermediaries (middlemen)
Publics
Another name for macro environment?
Indirect action environment
Which component of macro environment consists of factors and forces concerning means of production and distribution of wealth?
Economic environment
List all components of economic environment.
-
Nature of economic system of country
Property rights
Ownership of factors of production
Functioning of price mechanism
Economic planning and annual budgets
Role of public sector
Production relations -
Structural anatomy of the economy
Occupational distribution of labour
Structure of national output
Pattern of capital investment
Composition of trade
Structural equilibrium between different sectors - Organisation and development of the capital market
-
Economic policies
Industrial policy
Monetary policy
Fiscal policy
Trade policy - Stage and pace of economic growth in the country
-
Economic indices
Gross National product
Per capita income
Rate of savings
Rate of investment
Balance of payments position
Rate of inflation
Tax rates
Interest rates -
Industrial infrastructure
Transportation
Communication
Power -
Market conditions
Degree of competition
What is social environment?
Social environment consists of all social and cultural forces within which business firms operate.
What are the main components of social environment?
- Demographic trends such as size and distribution of population, age composition, male female ratio, rural urban mobility, income distribution, life expectancy, etc.
- Social attitude, customs, traditions, rituals, culture, lifestyles.
- Family structure and values.
- Social concerns regarding pollution, corruption, status of women and minorities, role of media.
- Education levels, awareness of rights, work ethics.
What is technological environment?
Technological environmental refers to the state of science and technology in the country. Technology means systematic application of scientific and other organised knowledge to practical tasks.
What does technological environment depend on?
It depends on several factors such as spirit of invention and innovation among people, facilities for research and development, incentives and concessions for development and application of new technology, legal protection for intellectual property rights, access to foreign technology, etc.
Why do you think new technology often faces resistance?
It often faces resistance due to changes required in organisations, skills and human relationships.
What is political environment and what are its components?
Political environment consists of forces concerning management of public affairs and their impact on business.
It’s main components are:
- constitutional framework
- political system,i.e., nature and ideology of political parties and power centres.
- political structure,i.e., centre-state relationships.
- political philosophy and stability of the government.
- political processes such as party system, elections and their funding.
- degree of politicisation of economic and business issues.
- foreign policy and defence policy of the country.
- foreign relations of the country.
What is legal environment and what are its main components?
Legal environment is the framework of laws and regulations of the country.
It’s main components are:
-rights and duties of citizens as specified in the constitution.
-loss concerning promotion, operation and expansion of business.
-flexibility in adaptability of laws.
-judicial system of the country and judicial decisions.
What is another name of legal environment?
Regulatory environment
What is SWOT analysis?
S- strength
Inherent capability of the company.
W- weakness
Inherent limitation of the company.
O- opportunities
Favourable condition in the company’s external environment.
T- threats
Unfavourable condition in the company’s external environment.
Expand the abbreviation
DOINKIS
Double income No kids
What type of competition comes from firms vying for discretionary income?
Indirect competition
Arun travels is a travel agency which books air tickets on commission basis. It takes 2 days for Arun travel to get the tickets from airport reservation counter and deliver to customer. During the last one year there has been a drastic decrease in its business as most of the customers have shifted to another travel agency, Durga travels which provides tickets within half an hour through internet. Identify the dimension of business environment overlooked by Arun travels.
Macro environment- technological environment.
Demonetisation move of the government comes under which dimension of business environment?
Macro environment- Economic environment
In winters the demand for woollens rises. This is an example of which feature of business environment.
Interrelatedness
The Uttarakhand government as developed surveillance network using latest satellite technology. Under this system the states mining department would be in a position to check illegal mining activities across the state. The state government is also considering the use of drones in its proposed campaign against illegal mining.
Identify the related dimensions of business environment.
Political and technological environment
In order to boost and double India’s export of goods and services to over 1000 billion $ by 2025, it is important to lower effective corporate tax rate, bring down cost of capital and simplify regulatory and tax framework.
Identify the related dimensions of business environment.
Economic and legal environment
The number of retail outlets selling silk and cotton sarees are much more in number in Chennai than in Delhi, due to more demand of sarees in Chennai.
Which characteristic of business environment is reflected here?
Relativity
Goods and service tax is a landmark step in the history of India by rationalising taxation. GST is going to be a changer for the country’s economy and promote ease of doing business. It will mark a paradigm shift in the nation’s business environment.
Identify the components of business environment.
Legal and economic environment
The government has recently announced the opening of multi brand retail to foreign direct investment.
Which dimension of change in business environment does this represent.
Economic environment
All kind of external devices like compact discs for computer have become obsolete. Google with its Google drive service, Apple with its iCloud offering, enables the uses to store documents, photos, music and movies on web based servers.
Identify the feature of business environment being described in the above lines.
Dynamic
According to the United Nations environmental agency, the world produces around 300 million tons of plastic each year, half of which constitutes single use items. The American car maker Ford as revealed that their Romanian built EcoSport SUVs’ carpets are made using 470 recycled single use plastic bottles.
Identify the related dimension of business environment.
Technological environment
Electric vehicles with zero tail pipe emission are emerging as a good alternative to problems with climate change, surging pollution leading to ill health, crude import bill and energy security.
Identify the related dimensions of business environment.
Economic dimension
Technological dimension
Social dimension
The dishes offered by Indian restaurants are very different as compared to the dishes offered by restaurants in other countries like Australia and USA.
Identify the feature of business environment.
Relativity
It is difficult to know the exact impact of log down due to corona virus on the environment of a business organisation.
Which feature of business environment is highlighted here?
Complexity
Which component of business environment makes it compulsory to write “MOTHER’S MILK IS THE BEST FOR THE BABY” on all type of baby food?
Legal environment
With election of a new government the sensex drops by 748 points. Identify the dimensions of business environment.
Economic environment
With introduction of mineral water bottle in India, Bisleri was able to capture the big market share in India. Which importance of business environment is highlighted above?
First mover advantage
As per consumer protection act 1986, manufacturers are under and obligation to provide all the relevant information like MRP, ingredients, date of manufacturing, quantity, expiry date, etc. Name the dimension of business environment highlighted above.
Legal environment
Even after opening up of the Indian economy in 1991, foreign companies final extremely difficult to cut through the bureaucracy and red tapism in government offices. This discourages them from investing in India. Identify the type of environment mentioned in the above paragraph.
Political environment
Increase life expectancy of people and increased awareness for healthcare have increased the demand for many help production services like diet coke, fat free cooking oil, health resorts and much more. New health products and services have changed people’s life styles.
Identify the feature of business environment highlighted above:
interrelatedness
Since business environment consists of numerous interrelated and dynamic conditions or forces, it becomes difficult to comprehend at once what exactly constitutes a given environment.
Identify the feature of business environment highlighted above:
Complexity
Economics survey of 2019 suggest that the psychological biases can be used in the realm of tax compliance. It is in favour of using religious norms such as “dying in that is a sin” to improve tax compliance.
Identify the dimension of business environment.
Economic and social environment
The finance minister reduce the repo rate to overcome recession.
Identify the related dimension of business environment.
Economic environment
India’s craft Heritage continues because of its customs and traditions. Crafts are used not only in the country by craftsman in Rajasthan, Gujarat and Assam but are also exported to USA, Germany, UK and France. The volume of exports and imports give India an advantage in Balance of payments and the much needed foreign exchange reserves. The prime minister of India desires that the handicraft industry should be expanded by linking it with technology. Focus should be on changing the manufacturing process ensuring durability and adapting innovations.
Identify the three dimensions of business environment quoted above.
Social environment
Economic environment
Technological environment
ABC Manufacturing Ltd., a textile company, recently encountered various challenges due to shifts in the business environment. Rising inflation rates led to an increase in the cost of raw materials, affecting the company’s production expenses. Additionally, new government regulations on waste disposal required the company to invest in eco-friendly practices to remain compliant. At the same time, there was a noticeable shift in consumer preferences toward sustainable products, pressuring the company to adjust its production methods. To remain competitive, the company also explored advanced technology to improve efficiency and reduce waste in its production processes.
Identify the dimensions of the business environment illustrated in this case.
Economic environment
Legal environment
Social environment
Technological environment
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