NCERT Solutions for Class 12 Business Studies Chapter 3 Business Environment
Q. Krishna Furnishers Mart started its operations in the year 1954 and emerged as the market leader in the industry because of their original designs and efficiency in operations. They had a steady demand for their products but over the years, they found their market share declining because of new entrants in the field. The firm decided to review their operations and decided that in order to meet the competition, they need to study and analyse the market trends and then design and develop their products accordingly. List any two impacts of changes in business environment on Krishna Furnishers Mart’s operations. (Hint: increase in competition and market orientation).
Ans. The following impacts can be seen with changing of business environment for Krishna Furnishers Mart’s:
Q. Name any two specific forces of business environment affecting business.
Ans. Specific forces refers to those external forces that affect an organisation directly. These are specific to a particular organisation. It can be due to the following changes:
Q. What is meant by business environment?
Ans. The sum of all the forces (external, institutions and individuals) that are outside the control of a business organisation is referred to as the business environment. The forces mentioned here can be of varied nature such as social, economic, political, legal or technological. The organisation is unable to control such type of forces, but it can definitely have a positive or negative impact on their performance. For e.g. altering the design of a product delivering efficiency leads to its demand in market whereas below par performance and decline in design will result in making the product inferior.
Q. How does understanding of business environment help in improving performance of a business?
Ans. Understanding the business environment properly by the organisation results in developing plans and policies according to the environment which results in great improvement in performance. It also helps to counter any negativity that may exist in the market with a well-defined strategy. This will help an organisation perform at best every time.
Q. Why it is important for business enterprises to understand their environment? Explain.
Ans. It is very essential to understand business environment as it helps in determining success or failure of an organisation. The functioning and performance of an organisation is dependent on various factors which can be external. When we understand business environment it becomes easier to drive factors that help in growth. Following points highlight the importance of understanding the business environment for business enterprises:
Q. How would you characterise business environment? Explain, with examples, the difference between general and specific environment.
Ans. The sum of all the forces (external, institutions and individuals) that are outside the control of a business organisation is referred to as the business environment. The forces mentioned here can be of varied nature such as social, economic, political, legal or technological. The organisation is unable to control such type of forces, but it can definitely have a positive or negative impact on their performance.
The following are the characteristics of business environment:
Specific environment is said to be the external forces that play a vital role in functioning of an organisation directly. These forces are specific to a particular organisation or an enterprise. Specific environment is unique to a industry and has an impact on day to day business activities. For example, change in price of a raw material required for production will result in less demand and abundant supply of raw materials has a direct impact on the production of the company. General environment comprises of all the forces that has an impact on all organisations irrespective of the type of industry. These forces do not differentiate between the industries or types of business. They have a cumulative effect on the organisation’s performance. For example, a new technology for communication will have a impact on the quality and quantity of production or if there is a change in technology then it will have an effect on all organisations.
Q. How would you argue that success of a business is significantly influenced by its environment?
Ans. Any organisation is unable to function on its own. It is influenced by the various forces such as political, legal, social, technological. These forces form the business environment of an organisation. It is essential that an organisation has a good understanding of its business environment. It enables an organisation to identify that help or those that obstruct the growth of an organisation, knowing them well will help in reacting better to these forces.
Success of a business is influenced by its environment in the following ways:
Q. Explain with examples, the various dimensions of business environment.
Ans. Business environment has the following