Business Environment

Question 1

What all forces are a part of the business environment?

Answer 1

The economic, political, social, technological and all other such forces which operate outside the business comprise the business environment.

Question 2

What do these external forces tend to affect in the business?

Answer 2

The external forces influence the performance of the firm.

Question 3

What are the features of a business environment?

Answer 3

It’s the sum total of external activity. Has both specific and general forces. Inter related with the business activity. Dynamic. Uncertain. Complex. Relative to region.

Question 4

Why do you say business environment is the total of external forces?

Answer 4

Business Environment is the sum total of all the forces external to the business. Therefore it’s aggregate in nature.

Question 5

What do you mean by Business Environment has both specific and general force?

Answer 5

The Business Environment comprises of specific forces such as customers, investors and competitors who directly affect the working of the business. And there are general forces such political, economic and technological conditions that affect the business indirectly.

Question 6

Why do say that Business Environment is inter related?

Answer 6

Because different elements of the Business Environment are in some way, closely related each other.

Question 7

Why do say that Business Environment is dynamic?

Answer 7

The Business Environment keeps on changing rapidly whether in terms of technology or shift in consumer preference.

Question 8

Why do say that Business Environment is Uncertain?

Answer 8

The CHANGES in the Business Environment are too FREQUENT, so it is very hard to PREDICT the future changes. Hence it is uncertain.

Question 9

Why do say that Business Environment is complex ?

Answer 9

Business Environment consists of many dynamic and inter related forces. So it’s very hard to COMPREHEND the TOTALITY of forces in the Business Environment

Question 10

How is Business Environment relative?

Answer 10

It’s a relative concept since it DIFFERS from country to country and even from region to region.

Question 11

Why is the importance of the Business Environment?

Answer 11

A business does not stay in isolation. It exists, survives and grows within the elements of the Business Environment. So a firm has no other option but to change according to the environment so a good knowledge of the Business Environment would help react to them in a good way.

Question 12

What are the importances of knowing the Business Environment?

Answer 12

It gives you a first mover advantage. It helps detect threats. It helps in getting resources. It helps cope up with change. It helps in making plans. And it helps improve performance.

Question 13

Who does Business Environment give you a first mover advantage?

Answer 13

These opportunities are positive external trend that can improve performance. Early identification of those trend can give the advantage of being the first one to exploit them. Instead of losing them to competitors.

Question 14

Why do you say Business Environment help identify threats?

Answer 14

Threats are trends in the environment that can hinder the performance. Identification them can serve as a early warning and can help the firm prepare for them.

Question 15

How does the Business Environment help tap in resources?

Answer 15

The Business Environment is a source for various resources and the business needs to get these resource to do anything. The environment gives these things expecting something in return. So the business should only design policies in way that it lets them make outputs which the environment desires, so that they keep getting resources.

Question 16

How does knowing the Business Environment help cope up with changes?

Answer 16

Today Business Environment is rapidly changing(market demand changes, tech changes). In order to cope with these changes the businesses must understand and examine the environment and develop suitable courses of action.

Question 17

How does knowing the Business Environment help formulate plans and policies?

Answer 17

The Business Environment is a source of both threat and opportunity. Understanding and analyzing it can a basis for deciding future courses of action or setting guidelines to make those decisions.

Question 18

How does knowing the Business Environment help improve performance?

Answer 18

The Business Environment and the performance of a firm are closely related. Analyzing the Business Environment can help the firm create practices that will help it increasing its present and long term performance.

Question 19

What are the dimensions or factors constituting Business Environment ?

Answer 19

Political, Legal, Technological, Social, Economic environments

Question 20

What kind of forces are Political, Legal, Technological, Social, Economic environments showing?

Answer 20

They represent the general environment. They are not specific forces like customers, competitors etc.

Question 21

What all comprise the economic environment? How does it affect the business

Answer 21

It is an environment which includes factors like interest rates, inflation rates, change in income, change in stock market condition and change in the values of rupee. Rise in long and short term interest rates cause a change in deman. Change in income causes a change in demand. Inflation causes an increase in the price of inputs etc.

Question 22

What does the social environment comprise?

Answer 22

The social conditions of the business environment include factors such as customs, transitions, values, social trends. The Tradition defines the social practice that have lasted for a very long time. Values refers to the concepts that a society holds in high esteem. Social trends present various threats and opportunities to the firm.

Question 23

How does trandition, values and social trend affect the company?

Answer 23

Transitions helps the firm identity customs which gives a big financial opportunity to the business. Understanding the Values helps the firm only take actions that will be accepted by the society. The social trend helps the firm understand the demand of the people.

Question 24

What is a technological environment?

Answer 24

It’s an environment which consists of forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating the business.

Question 25

How does technological factors affect the business?

Answer 25

It gives them the opportunity and time to analyze threat that one from technological advancements.

Question 26

What is a political environment consist of?

Answer 26

It includes political conditions such as General stability of and peace in the country and attitude of elected government towards businesses.

Question 27

How does the political environment affect the business?

Answer 27

Political stability and peace creates a situation were investors are confident to invest in long term projects.
Similarly the attitude of the govt. may have a negative or positive impact on the business.

Question 28

What does the legal environment comprise of?

Answer 28

It consists of various legislations passed and orders made by the government authorities. It also includes the court judgements and decisions made by government agencies at any level of government(central to district).

Question 29

Why is the legal environment important?

Answer 29

Having adequate knowledge of the rules and regulations framed by the government is a prerequisite for improved performance. And knowing the laws of the land stop the business from falling into any legal problems.

Question 30

What are the factors of the macro-level economic environment of India?

Answer 30

Stage of economic development. Economic structure. Economic policies(industrial, monetary, fiscal). Economic planning(budget). Economic indices(GDP,NNP etc.). Infrastructural factors.

Question 31

What was the condition of the Indian economy after independence?

Answer 31

Agricultural and rural type economy. 70% working in agriculture. 85% were living in rural areas. Production was very low, used low technology. No good public healthcare system, life expectancy low.

Question 32

What were the main objectives of the govt. development plan to solve the economic problems right after independence?

Answer 32

Initiate rapid growth to reduce poverty and unemployment. Become self-reliant and set up a strong industrial base. To reduce inequality of income distribution. To adopt a socialist pattern of development to stop exploitation of people by businesses.

Question 33

What was the role of the public sector and the private sector after independence?

Answer 33

The public sector was given the role to handle the infrastructure industries. And the public sector was broadcast give the role to develop the consumer goods industry.

Question 34

Why was the New Economic Reform brought up in 1991?

Answer 34

Because the economy faced a serious foreign exchange crisis

Question 35

What were the broad features of the reforms of 1991?

Answer 35

Reduced number of industries needing license. Dereserved industries earlier reserved for private sector. Disinvestment of PSUs. Liberalized policy towards foreign capital, allowed FDI. Automatic grant for technology agreements with foreign companies. Foreign Investment Promotion Board(FIPB) was set up to promote and channelize foreign investment in India.

Question 36

What were the main features of the New Economic Forum 1991?

Answer 36

Liberalization. Privatization. Globalization

Question 37

What is a business enviorment?

Answer 37

It’s is the sum Tortola of all individual, institutions and other external forces beyond the control of the business buy which affects the performance of the business.

Question 38

How did the reforms liberalize the economy?

Answer 38

The reforms were aimed at liberalizing the indian business and industries from all sorts of unnecessary control and restriction.

Question 39

In what are respected was the Indian economy liberalized?

Answer 39

Licensing requirements for many sectors were abolished except a short list. Freedom was given in deciding the business activity. Restrictions on movement of goods were removed. Taxes were removed and unnecessary control was lifted. Simplified the process of imoprt&export making it easier to attract foreign capital and technology.

Question 40

How did the reforms privatize the economy?

Answer 40

The aim of the reforms were to privatize the nations building process and reduce the role of the public sector.

Question 41

What were the steps taken to privatize India?

Answer 41

The new industrial policy of 1991 adopted the policy of planned disinvestment of the public sector. They referred the loss making public sectors enterprises to the Board of Industrial and Financial Reconstruction. Disinvestment is the transfer of public sector to the private sector. It results in the dilution of the govt. stake in public enterprises.

Question 42

How did the reforms globalize the economy?

Answer 42

The new reforms aimed at liberalizing trade namely import&export. The rationalized the tariff structure to promote exports. And had reforms in connection to the foreign exchange

Question 43

What were the restrictions to globalization before the reforms?

Answer 43

Before the reforms there were restrictions with licensing imports, there were high tariff restrictions, and there were quantitative restrictions on import.

Question 44

What all steps did the reforms make to the economy globalized?

Answer 44

The reforms brought in rapid advancement in technology and liberal trade policies on export and import were set up by the government. It helped the country have a interaction with the rest of the world.

Question 45

What are the impacts of the govt. policy changes on business and industry?

Answer 45

Increased competition. More demanding customers. Developed a fast changing technological environment. Created a necessity to change. Created a need for developing human resource. Changed the market orientation. The budgetary support for public sectors reduced.

Question 46

How did the reforms increase competition?

Answer 46

As a result of the reforms and industrial licensing rules a lot of foreign firms entered the market and this increased the competition for the Indian firms especially in the service sector.

Question 47

How did the reforms increase the demand of customers?

Answer 47

Increased competition has given them a wider choice in purchasing better quality products and they have also become well informed of what is happening. This made customers more demanding.

Question 48

How did the reforms create a rapidly changing technological environment?

Answer 48

Increased competition forced the firms to develop new ways to survive and grow in the market. And new technology helped the firms do just that by helping improve machines, products and services. This created problems for small firms.

Question 49

How did the reforms create a necessity for change?

Answer 49

As a result of the reforms the market forces have become highly turbulent and as a result firms have to continually modify their operation.

Question 50

How did the reforms create a need for developing human resource?

Answer 50

The new market conditions required personnel to Business Environment highs competent and committed. And this created a requirement for developing human resource.

Question 51

How did the reforms change the Market Orientation?

Answer 51

Earlier firms produced some product and sold it in the market and that was. A production oriented market. But now as there are a lot of products in the market the firm has to analyze the market and its demand and create the products accordingly.

Question 52

How did the reforms reduce the budgetary support to public sectors?

Answer 52

The central govt.financing support for the public sectors declined over the years. This made the public sector realize that in order to survive they had to rely on their own resources rather than relying in the govt. budgetary support and this made them more independent.