GNG 2.

0 By RAJAT ARORA SIR

Chapter- 3
Business Environment

DAY -4 GNG 2.O By Rajat Arora Sir

Q 1. Which of the following is not a component of specific forces of business environment?

a) Technological conditions
b) Customers are
c) Employees
d) Investors

Q 2. Anju works in a law firm. She observed that numerous interrelated and dynamic conditions or
forces arise from different sources. Identify the features of business environment highlighted here.

a) Relativity
b) Uncertainty
c) Dynamic nature
d) Inter-relatedness

Q 3. ‘Sohan village' is a well-known resort for organising parties, especially for children. However, in
past 6 months its popularity has reduced considerably as a new resort with better ambience and
facilities has opened within its vicinity. Name the related feature of business environment which has
influenced the business of 'Sohan village' adversely.

a) Totality of external forces

b) Dynamic nature
c) Inter-relatedness
d) Uncertainty
GNG 2.0 By RAJAT ARORA SIR
Q 4. Any kind of external devices, like compact discs (CD's) for computer, have become obsolete.
Google, with its Google Drive service, Apple with its iCloud offering, enables the users store
documents, photos, music and movies on web- based servers. Identify the feature of business
environment being described in the above lines.

a) Relativity
b) Dynamic nature
c) Uncertainty
d) Inter-relatedness

Q 5. Since more number of people have become beauty and health conscious, our economy has
witnessed an unprecedented surge in the number of health and beauty spas and wellness clinics.
Related feature of business environment being described in the above lines is:

a) Totality of external forces

b) Dynamic nature
c) Inter-relatedness
d) Relativity
 GNG 2.0 By RAJAT ARORA SIR
Q 6. The Economic Survey, 2019 suggests that the psychological biases can be used for the tax
compliance. It is in favour of using religious slogan such as "dying in debt is a sin" to improve tax
compliance. Identify the related dimensions of business environment.

a) Legal dimension and social dimension

b) Social dimension and economic dimension
c) Technological dimension and political dimension
d) Political dimension and economic dimension

Q 7. The Prime Minister has given a relief package of 5 crore. This is related to which dimension of
business environment:

a) Political environment
b) Economic environment
c) Legal environment
d) Both (a) and (b)

Q 8. Which of the following is an example of social environment?

a) Money supply in the economy

b) Consumer protection act
c) The constitution of the country
d) Composition of family

Q 9. With the presence of women in the workforce, there has been a shift towards formal wear,
increased demand of electronic gadgets and increase in demand of cosmetics.

The related dimension of business environment referred in the above lines is:

a) Technological environment
b) Social environment
c) Political environment
d) Economic environment

Q 10. The market is flooded with better quality toys of foreign origin. The result is fall in revenue of
the indigenous or local companies as their products are much inferior costlier and have much less
demand in the market. Which dimension of business environment can be seen here affecting the
local companies' revenue?

a) Social environment
b) Technological environment
c) Political environment
d) Legal environment

Q 11 . "Ankur discovered amazing ability in the cotton cross luggage industry, which had no longer
established in India but was thriving in UK, where he had completed his graduation." Identify the
importance of business environment.

Q 12. Explain any four points of impact of government policy changes on business and industry.

Q 13. What is meant by Business Environment? State any three points of its importance.
 GNG 2.0 By RAJAT ARORA SIR
Q 14. The Government is considering a pioneer proposal to launch a single debit-cum- credit card to
increase the ease and usage for the consumers. The card which will be called the “National Mobility
Card” will have unique advantages for making payments in metro, buses, parking and making
transactions during visits abroad. After hearing this news, Mega Bank decided to launch a “Mega
Mobility Card” on similar lines, so that they could be the first to exploit the opportunity, arising due
to the increasing trend of digitization. In order to improve their performance, they laid down a plan
to hire more people in their marketing department and prepared guidelines to train their sales force
to market the new card facility being launched by the bank. By quoting the lines, identify and explain
any two points of importance of understanding Business Environment discussed above.

Q 15. India's craft heritage is surviving because of its customs and traditions. Craft products made by
craftsmen of Rajasthan, Gujarat, Assam, etc. are not only used in the country but are also exported
to USA, Germany, UK, France and other countries of the world. The volume of exports of these
products gives India an advantage in balance of payments and the much needed foreign exchange.
The Prime Minister desires that the handicraft industry should be expanded by linking it with
technology. Focus should be on changing the manufacturing process, ensuring durability and
adopting innovations. Quoting the lines from the above paragraph, explain any four dimensions of
the business environment.

Q 16. Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital
currency, as the system works without a central bank or single administrator. The network is peer-to-
peer and transactions take place between users directly, without an intermediary. These transactions
are verified by network nodes through the use of cryptography and recorded in a public distributed
ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the
name Satoshi Nakamoto and released as open- source software in 2009. The money can only be
tracked when it is converted into cash. This public way of managing transactions has created the
possibility of a huge revolution in the banking sector across the world.

Identify and explain any two dimensions of business environment being referred to the in the above
case.
 GNG 2.0 By RAJAT ARORA SIR
Answer Key
Ans 1. a) Technological conditions

Ans 2. d) Inter-relatedness

Ans 3. b) Dynamic nature

Ans 4. c) Uncertainty

Ans 5. c) Inter-relatedness

Ans 6. b) Social dimension and economic dimension

Ans 7. d) Both (a) and (b)

Ans 8. d) Composition of family

Ans 9. b) Social environment

Ans 10. b) Technological environment

Ans 11. It helps in identifying opportunities and making first mover advantage. The environment
provides numerous opportunities, and it is necessary to identify the opportunities to improve the
performance of a business. Early identification gives an opportunity to an enterprise be the first to
take first mover advantage instead of losing them to competitors.

Ans 12. Features of impact of government policy changes on business and industry are as follows:

i) Demanding customers: Government policies have allowed entry to competitively driven products
and services under new economic policies. Consumers have also become well- informed and could
choose from a variety of such products and services. Along twith rising incomes, increasing
purchasing power and changing lifestyles, Indian customers have become more demanding about
value- driven products and services.

ii) Increasing competition: Government's new policies have given an impetus to private sector and
enabled easy access to foreign companies, thus enabling a competitive structure in India.
Competition has led to the development of new products and services, innovation, creating easy
access to domestic and foreign markets and resources, led to existence of competitive pricing,
increased productivity and profitability across industries and businesses.

iii) Technological development: Increase in competition with the entry of foreign companies has led
to technological development in the country. Government policies and regulations have been
directed towards following global production compliances that have led businesses with large-scale
operations to adopt state-of-the art technology.

iv) Market orientation: Market orientation means that businesses attempt to discover and match the
needs and desires of the consumers by providing customised products and services by encouraging
privatisation and competition. Thus, businesses have to bear huge costs on planning based on
market research, and producing products or services based on the changing tastes, needs and wants
of their customers. The concept of market has changed from selling to marketing.

Ans 13. Business Environment:

 GNG 2.0 By RAJAT ARORA SIR
• Business Environment refers to the totality of external forces, factors, individuals
and institutions which are outside the control of a business enterprise but that may
affect its performance.
• In simple words, the business environment is the surrounding in which a business
exists.
Importance of business Environment
1) Enables the firms to identify opportunities and get the first mover advantages:
• Businessmen who can understand and scan the opportunities of the business
environment at an early stage get maximum benefit or they can capture a big
share of the market.
• For example, WhatsApp was the first application for mobile charts. Afterwards,
many other applications came but still WhatsApp is no. 1 in mobile chat.
• The environment provides numerous opportunities for business success.
2) Helps the firms to identify the threats and early warning signals:
• A businessman who can scan and understand the business environment in time
to get a warning signal to deal with the constraints of the negative policies of the
business environment
• Timely scanning of business environments and qualitative information which
business gets is taken as a warning signal and changes in the companies are
made.
• For example: on scanning the business environment, the Maruti Udyog company
got the qualitative information that more foreign car manufacturing companies
are going to set up their business in India. They took it as a warning signal and
started increasing their production capacity. The Maruti Company accepted the
entry of foreign car companies as a warning signal and increased their production
to supply the cars without any waiting period to compete with the new
companies.
3) Helpful in tapping and assembling resources:
• Businessmen have to supply the goods to the market according to the demand in
the market.
• To supply outputs they need input, raw materials, etc. They acquire raw materials
and other resources keeping in mind the output demanded by the environment.
• They select resources according to availability in the environment and the demand
for output in the environment.
• For example: With the demand for LED, 3D T.V Manufactures are collecting
resources necessary to manufacture LED &3D T.V rather
• than collecting resources of black and white T.V or flat screen etc.
Ans 14. Following are the points of importance of understanding Business Environment discussed:
(Any two).

(a) It helps to identify opportunities and get first mover advantage: "After hearing this news, Mega
Bank decided to launch a "Mega Mobility Card" on similar lines, so that they could be the first to
exploit the opportunity, arising due to the increasing trend of digitisation".
 GNG 2.0 By RAJAT ARORA SIR
The dynamic business environment provides numerous opportunities for a business to evolve as per
the changing needs. Therefore, early identification of the forthcoming opportunities helps an
enterprise to be the first to exploit them instead of losing them to the competitors.

(b) It helps in improving performance: "Improve their performance--"-

Sometimes the changes in the external environment may pose as a threat and hinder a Firm’s
performance . An awareness about the business environment helps the managers to identify such
threats on time and take necessary decisions and action.

(c) It helps in assisting in planning and policy formulation: "They laid down a plan to hire more people
in their marketing department and prepared guidelines to train their sales force"

(d) It helps the firm in identifying threat and early warning signal: "Improve existing card facility…..”.

Ans 15. i) Social Environment

ii) Economic Environment

iii) Technological Environment

iv) Political Environment (Explain)

Ans 16. The two dimensions of business environment being referred to the in the above case are as
follows:

(a) Technological Environment: 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.

(b) Economic Environment: Economic Environment comprises of factors that can affect management
practices in a business enterprise includes interest rates, inflation rates, changes in disposable
income of people, stock market indices and the value of rupee etc.

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GNG 2.0 Rajat Arora Sir