Q. 1. ‘Konark Ltd.’ is an electronic goods manufacturing enterprise situated in Shivpuri, Madhya Pradesh. It is earning a very low revenue in comparison to a competing electronic goods manufacturing enterprise, ‘Nova Ltd.’ situated in Mumbai. Both Konark’s and Nova’s operations are affected directly by the investors, customers, competitors and suppliers, which are unique to their respective locations. In addition to this, individual firms of this field are affected indirectly by the factors like the money supply in the economy, composition of the families, the technological changes, etc.
(i) Identify and state the feature of the concept discussed in the above paragraph.
(ii) Also, state any four points of importance of this concept. [Delhi & OD 2018]
Ans. (i) Specific and General Forces Business Environment includes both specific and general forces. Specific forces affect individual enterprises directly and immediately in their dayto- day working. General forces have impact on all business enterprises and thus may affect an individual firm only indirectly.
(ii) Importance of business environment: (a) It helps to identify opportunities and getting the first mover advantage instead of losing them to the competitors.
(b) It helps to identify threats on time which serves as an early warning signal.
(c) It helps in tapping useful resources so that it can convert them into output that the environment desires.
(d) It helps in coping with rapid changes in an increasingly dynamic environment.
(e) It helps in assisting in planning and policy formulation.
(f) It helps in improving performance by continuously monitoring the environment and adopting suitable practices.
Q. 2. ‘‘Management of every enterprise can be benefitted from being aware of different dimensions of business environment.’’ Explain any four such dimensions. [Delhi Comptt. Set III 2010]
What constitutes general environment of business?
Explain various dimensions of business environment with example. [NCERT]
Ans. Dimensions of Business Environment:
(i) Economic Environment: It consists of gross national product, corporate profit, inflation rate, productivity, employment rate, balance of payment, interest rates, rate of taxes and consumer income, debt and spendings. Economic environment has stronger influence over organisation’s policies and actions.
(ii) Social Environment: It describes characteristics of the society in which the organisation exists. Literacy rate, customs, beliefs, values, lifestyle, demographic distribution and mobility of population are part of the social environment. It is important for managers to remember that although changes in the attributes of a society may come either slowly or quickly, changes will come inevitably.
(iii) Political Environment: It comprises those elements which are related to governmental affairs e.g., attitude of government towards various industries, lobbying efforts by corporate groups.
(iv) Legal Environment: It consists of legislation that has been passed by parliament and state legislature. This component prescribes rules and regulations for all the members of the business community.
(v) Technological Environment: Under this component, new approaches of producing goods and services, new procedures as well as new equipment are included. For example, computerisation of business and industries is a fashion today.
Q. 3. Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors, competitors and other forces like social, political, etc. that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.
(i) Identify and state the component of business environment highlighted in the above para.
(ii) State any two features of business environment as discussed by Professor Mehta with Naman and Govind.
(iii) Also state two points of importance of business environment as stated by Professor Mehta in the above situation. [SQP 2017]
Ans. (i) Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
(ii) (a) Specific and general forces.
(b) Dynamic nature.
(iii) (a) It helps the firm to identify threats and early warning signals.
(b) It helps in planning and policy formulation.
Q. 4. With rapid advancements in the field of replacing manual work with machines, a Robot named ‘Sujan’ has been invented and developed and is likely to get the citizenship of the country of its origin. It has led to a stage where machines are being used in place of human beings. ‘Sujan’ is doing all types of work whether routine or hazardous and even answering the queries of people. However, this issue has to be carefully looked into keeping in mind the consumer attitude towards product innovations, problem of unemployment and its impact on the quality of life. Through the orders and decisions of various commissions and agencies at Centre, State or local level the Indian Government is playing a very significant role in balancing the use of human and machine power. Various dimensions of business environment are being discussed in the above para. By quoting the lines from the above identify and explain any three dimensions. [Comptt. Delhi Set-I, II, III 2017-18]
Ans. (i) Technological Environment ‘With rapid advancements in the field of replacing manual work with machines, a robot named ‘Sujan’ has been invented and developed’. Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
(ii) Social Environment ‘However, this issue has to be carefully looked into keeping in mind the consumer attitude towards product innovations, problem of unemployment and its impact on the quality of life’. Social Environment includes social forces like customs and traditions, values, social trends and society’s expectation from business.
(iii) Legal environment ‘Through the orders and decisions of various commissions and agencies at Centre, State or local level the Indian Government is playing a very significant role in balancing the use of human and machine power.’ Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— Centre,state or local.
Q. 5. State any five points of impact of liberalisation on business and industry [Outside Delhi Set-I Comptt. 2017]
Ans. Impact of government policy changes on business and industry in India:
(i) Competition has increased for Indian firms due to the entry of foreign firms.
(ii) Customers have become more demanding as they have a wider choice.
(iii) Technological environment is rapidly changing creating thought challenges for small businesses.
(iv) It has become necessary for enterprises to change and modify their operations to cope with the turbulent market forces.
(v) There is a need for developing human resource as the new market conditions require people with higher competence and greater commitment.
(vi) Enterprises are forced to adopt a market orientation so that they could study the market and produce goods accordingly.
(vii) There is loss of budgetary support to the public sector as the government felt that the public sector needs to be more efficient in order to survive and grow.