Test: Business Environment - 2 - Commerce MCQ

Yes booking ticket through internet from home or office is example of technological environment.......... it is technology because it is done through internet

Liberalisation means removal of trade barriers & restrictions made by the government

Privatization means conversion of public sector enterprises into private ownership by selling the shares of the company to private person or an organization, which means the shares cannot be sold to the public.
As the control and management transferred to private ownership, the role of public sector is reduced.

Globalization means interaction of a company or an organization with world economy. Importing and exporting is one of the major factor of globalization, hence export promotion is concerned with globalization.

Uncertainty of future is risk in the investment. There is no clue that when the government policies will change and what it will do the rate of return for the long-term investors. Hence, there is always a fear of political uncertainties.

Tax is paid by the owners of the business or a company to the government, such taxes are included in the cost of production. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead. 
Therefore, an increase in taxes will definitely increase the cost of production and will reduce the profits.

Because increase in competion in the market will give more choices to the consumer to consume whichever goods they want, resulting in decrease of fixed customers for a particular product line.

Changes in fashions and tastes of consumers will shift the market demand from existing product to new ones because the demands of people changed, so they don't want to buy old-fashioned products. They were fascinated by new modern products. Now, they buy new-fashioned products which has good quality and price than other products.

Political uncertainty threatens the investors the most because different political parties has different policies in case of political uncertainity the government changes very quickly hence investors fears for investing their money.

The technological improvements and innovations result in rendering existing products obsolete. Here's a detailed explanation:
Innovation and Technological Improvements
- Technological advancements and innovations refer to the development of new technologies or improvements in existing technologies.
- These advancements can lead to the creation of new products or the enhancement of existing products.
- Various industries, such as electronics, automotive, healthcare, and telecommunications, continuously strive to improve their products through technological advancements.
Rendering Existing Products Obsolete
- As technology progresses, older products may become outdated or less efficient compared to newer alternatives.
- Innovations often introduce new features, capabilities, and efficiencies that make older products less appealing to consumers.
- Consumers tend to prefer newer, more advanced products that offer better performance, functionality, and user experience.
- This can lead to a decline in the demand for older products, ultimately rendering them obsolete.
Impact on Industries and Businesses
- Technological advancements can pose challenges for industries and businesses that rely heavily on outdated technologies or products.
- Companies that fail to adapt to technological changes may face a decline in sales and market share.
- However, businesses that embrace innovation and adapt their products to meet evolving consumer needs can thrive in the competitive market.
Benefits of Technological Advancements
- Despite rendering existing products obsolete, technological advancements bring several benefits:
- Improved efficiency and productivity: New technologies often streamline processes and increase productivity, leading to cost savings and higher production output.
- Enhanced consumer experience: Innovative products offer improved features, convenience, and user-friendly interfaces, enhancing the overall consumer experience.
- Economic growth: Technological advancements drive economic growth by creating new industries, job opportunities, and revenue streams.
- Sustainable development: Innovations in clean energy, waste management, and resource conservation contribute to sustainable development and environmental protection.
In conclusion, technological improvements and innovations have a significant impact on industries, businesses, and consumers. While rendering existing products obsolete, they also bring numerous benefits, including improved efficiency, enhanced consumer experience, economic growth, and sustainable development.

The economic environment deals with the economic factors in the environment they could affect the consumer behavior. Since, value of money is one of the major factors in the economy, the increase and decrease its value is an example of economic environment.

Legal environment is the environment which is governed by the legal system of the country. The laws which are passed by the government for business operation is called legal environment. Non-implementation of legal policies results in heavy fines, penalties & punishment &therefore every organization must follow all these regulations.
So in this case cigarettes carrying the statutory warning is an implementation made by the government which has to be followed which makes it the factor of legal environment.

The social environment, refers to the immediate physical and social setting in which people live or in which something happens or develops. It includes the culture that the individual was educated or lives in, and the people and institutions with whom they interact.
And the Technological environment refers to the state of science and technology and related aspects such as rate of technological progress, institutional arrangements for development and application of new technology, etc.
So, the correct answer is definitely technological environment.

Enacted in 1986, this Consumer Protection Act protects the interests of consumers in India against deficiencies and defects in goods or services. It makes provision for the establishment of consumer councils and other authorities for the easier and quicker settlement of consumers' disputes and related matters.

National disposable income is estimated as the sum total of net domestic income at factor cost ,net indirect tax ,net factor income from abroad and net of current transfer from rest of the world because of rise in disposable income

Business Environment can be defined as ‘’the forces, factors and institutions with which the businessman has to deal with to achieve its objectives’’. In general words we can say business environment is surroundings in which business exists. Environment Scanning: Complete awareness and understanding of business environment is known as environment scanning.

Environmental scanning means gathering information about all the market which could affect the product or service. By gathering information, the business can find out if there is any competitor already in the market, if not they could be the first one in the market.
A first mover is a service or product that gains a competitive advantage by being the first to market with a product or service. Being first typically enables a company to establish strong brand recognition and customer loyalty before competitors enter the market.

All outside factors that may affect an organization make up the external environment. Such factors are uncertain factors which increases risk in the business. The external environment is divided into two parts: Directly Interactive and Indirectly Indirective.All outside factors that may affect an organization make up the external environment. Such factors are uncertain factors which increases risk in the business. The external environment is divided into two parts: Directly Interactive and Indirectly Indirective.

Globalisation refers to promoting trade relations with the rest of the world. this is possible only through export promotion, liberalising import restrictions and bringing about changes in foreign exchange reforms.

Advance understanding of business environment will help in Planning and Policy Formulation:
- Identifying Opportunities: A deep understanding of the business environment helps in identifying new opportunities for growth and expansion. This allows businesses to develop effective plans and policies to capitalize on these opportunities.
- Risk Assessment: A thorough understanding of the business environment enables businesses to assess potential risks and uncertainties. This helps in formulating policies and strategies to mitigate these risks and ensure the sustainability of the business.
- Market Analysis: Understanding the business environment allows businesses to analyze market trends, customer preferences, and competitor strategies. This information is crucial for effective planning and policy formulation to stay competitive and meet customer demands.
- Regulatory Compliance: The business environment is influenced by various regulations and laws. Having an advanced understanding of the business environment helps businesses stay compliant with these regulations and develop policies that align with legal requirements.
- Strategic Decision Making: A comprehensive understanding of the business environment provides businesses with valuable insights for strategic decision making. It helps in identifying strengths, weaknesses, opportunities, and threats, which are essential for formulating effective strategies.
- Resource Allocation: Understanding the business environment helps businesses allocate their resources effectively. This includes financial resources, human resources, and technological resources. By considering the business environment, businesses can make informed decisions regarding resource allocation to achieve their goals.
In conclusion, an advanced understanding of the business environment plays a vital role in planning and policy formulation. It helps businesses identify opportunities, assess risks, analyze the market, ensure regulatory compliance, make strategic decisions, and allocate resources effectively. All these factors contribute to the overall success and growth of a business.