Case-Based Questions: Business Environment | Business Studies (BST) Class 12 - Commerce PDF Download

Carefully read the following case studies, which present real-world business scenarios, and answer the question(s) that follow each case to test your understanding and application of business studies concepts.
Case 1: FDI in Retail Sector
As the government has opened up its economy to Multinational Corporations, it has encouraged foreign companies to invest in some sectors of retailing. It has also put in place new rules and regulations for FDI (Foreign Direct Investment) in the retail sector. The FDI policy allows foreign investment through two modes. It may be either under the ‘automatic route’ or under the ‘approval route’, where prior approval of the Indian Government is required for any foreign investment in an Indian company which is carrying on retail business in India. Moreover, the policy also talks about ‘Single brand retailing’ like Nike or ‘Multi-brand retailing’ like Walmart. The argument is that customers can afford to purchase the products of these companies as their income is rising gradually. It will increase research and innovations in the retail sector, which will provide new ways of producing goods as well as increase the variety of goods in the market. This will eventually improve the quality of life.

Q1: “This will eventually improve the quality of life.” Identify which dimension of the business environment is depicted here.
(a) Social environment
(b) Legal environment
(c) Technological environment
(d) Economic environment

Correct Answer: Option (a)
The social environment of business includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.

Q2: “Customers can afford to purchase the products of these companies as their income is rising gradually.” Identify which dimension of the business environment is depicted here.
(a) Social environment
(b) Legal environment
(c) Technological environment
(d) Economic environment

Correct Answer: Option (d)
Economic environment refers to factors like interest rates, inflation rates and changes in the disposable income of people, etc., which have an impact on business enterprise.

Q3: “As the government has opened up its economy to Multinational Corporations, it has encouraged foreign companies to invest in some sectors of retailing.” Identify which dimension of business environment is depicted here.
(a) Political environment
(b) Legal environment
(c) Technological environment
(d) Economic environment

Correct Answer: Option (a)
Political environment includes political conditions such as general stability and peace in the country, and specific attitudes that elected government representatives hold towards business.

Q4: “It will increase research and innovations in the retail sector…” Identify which dimension of the business environment is depicted here.
(a) Social environment
(b) Political environment
(c) Technological environment
(d) Economic environment

Correct Answer: Option (c)
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.

Case 2: Coca-Cola Company
The name and taste of Coca-Cola is known to almost each and every individual in India as well as throughout the world. This carbonated soft drink holds the most market share in the soft drink market and got itself a special seat at every gathering. The Coca-Cola Company has, on occasion introduced other cola drinks under the Coke name. The most common of these are Diet Coke, along with others including Caffeine free Coca-Cola, Diet Coke Caffeine free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla and the list goes on. It has capitalised on each and every opportunity to market itself effectively and place itself in the middle of every gathering. The main reason for such an outstanding placement of product goes to the way they have established the connection between every occasion and the need for Coke to be present there, product design and creative advertising.

Q5: Which of the following is not a product of Coca-Cola?
(a) Diet Coke Caffeine free
(b) Coca-Cola Zero Sugar
(c) Coca-Cola Avocado
(d) Coca-Cola Cherry

Correct Answer: Option (c)
The most common of these are Diet Coke, along with others including Caffeine free Coca-Cola, Diet Coke Caffeine free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla and the list goes on.

Q6: Identify the feature of Business Environment which the Coca-Cola Company managed to get in their favour.
(a) Complex
(b) Specific and general forces
(c) Futuristic
(d) Mental Exercise

Correct Answer: Option (b)
Business environment includes both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working. General forces (such as social, political, legal and technological conditions) have an impact on all business enterprises and thus, may affect an individual firm only indirectly.

Q7: In the context of the above given case, identify one valid importance of the Business Environment.
(a) Enables a firm to identify opportunities and getting first mover advantage
(b) Uncertainty
(c) Delay in action
(d) Pervasive function

Correct Answer: Option (a)
Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.

Q8: Which business environment did Coca-Cola majorly tap into?
(a) Technological Environment
(b) Social Environment
(c) Political Environment
(d) Economic Environment

Correct Answer: Option (b)
The social environment of business includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.

Case 3: DRCR Card Launch
The Government is considering an innovative proposal to launch a single card having the features of both debit and credit cards in order to improve the existing card facility and to increase the ease and usage for consumers to carry out monetary transactions. The card will have unique advantages as it could be used for making a variety of payments like utility bills, metro and bus tickets, parking fees, etc., other than shopping and cash withdrawal facility. After this announcement was made, many banks decided to bring out a similar product, i.e., a debit-cum-credit card. Your Bank Ltd., a private bank became the first one to exploit this opportunity. They launched a card called ‘DRCR Card’ in this era of increasing digitisation. In order to improve their sales, a unique feature was added to the card that it could also be used for making international transactions within the home country and abroad as well. In order to meet the increasing demand of the customers and to capture the market, they planned to hire more sales force and marketing personnel to reach the end customer. They also trained their staff and prepared guidelines regarding the issue, usage, renewal, withdrawal and charges related to the new card.

Q9: “... they planned to hire more sales force and marketing personnel…” Identify which of the following aspects of understanding the business environment is discussed here.
(a) It helps in assisting in planning and policy formulation.
(b) It enables the firm to identify opportunities and getting the first mover advantage.
(c) It helps the firm to identify threats and early warning signals.
(d) It helps in improving performance.

Correct Answer: Option (a)
Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy).

Correct Answer: Option (b)
The passage discusses the government's innovative proposal to launch a card that combines the features of debit and credit cards, prompting banks to release similar products. This represents an opportunity for growth and competition among banks. The text indicates that banks decided to bring out a similar product after the announcement, highlighting the importance of recognizing market trends and opportunities. Understanding the business environment allows firms to identify opportunities and gain a first-mover advantage by adapting to changes in consumer preferences and technological advancements effectively.

Correct Answer: Option (b)
Enabling the identification of opportunities and getting the first mover advantage: Business environment provides many opportunities to the firms. The firms which are able to scan these opportunities at an early stage get maximum benefit and can leave their competitors behind. For example, scientific research has come out with an energy efficient light bulb which lasts at least 20 times more than a normal bulb. General Electric and Phillips had identified this discovery and are coming up with their new bulbs.

Correct Answer: Option (d)
There are two main ways to improve performance: improving the measured attribute by using the performance platform more effectively, or by improving the measured attribute by modifying the performance platform, which in turn allows a given level of use to be more effective in producing the desired output.