Chapter III - Business Environment

Question 1

Meaning of Business Environment

Answer 1

It means the sum total of all individuals , instituitions and other forces that are outside the control of a business enterprise but may affect its performance.

Question 2

Nature/Features of Business Environment

Answer 2

i. Totality of external forces
ii. General and specific forces
iii. Inter-relatedness
iv. Dynamic nature
v. Uncertainty
vi. Complexity
vii. Relativity

Question 3

Importance of Business Environment

Answer 3

i. It enables the firm to identify opportunities and getting the first mover advantage.
ii. It helps the firm to identify threats and early warning signals.
iii. It helps in tapping into useful resources
iv. It helps in coping with rapid changes
v. It helps in assisting in planning and policy formulation
vi. It helps in improving performance

Question 4

Dimensions of Business Environment

Answer 4

i. Economic environment
ii. Social environment
iii. Technological environment
iv. Political environment
v. Legal environment

Question 5

Meaning of Liberalisation

Answer 5

It refers to liberating the industry from the shackles of the licensing system.

Question 6

Meaning of Privatisation

Answer 6

It refers to reducing the role of the public sector.

Question 7

Meaning of Globalisation

Answer 7

It refers to encouraging foreign private participation in industrial development.

Question 8

Impact of Government policy changes on Business and Industry

Answer 8

i. Increasing competition
ii. More demanding customers
iii. Rapidly changing technological environment
iv. Necessity for change
v. Need for developing human resource
vi. Market orientation
vii. Loss of budgetary support to the public sector