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1. Business environment helps in tapping useful resources.

2. 1. Social environment : “It has been dumping untreated possession of waste on river bank problems” for people. This shows that it is at the cost of human life as their life is affected. 

2. Legal Environment : “The court passed on order to seal the company”. It shows that through court interference the company was sealed.

Correct option is (c) both (a) and (b)

Importance of Business Environment:

• Advantage of Early Entry
• Sensitivity of the Management
• Grab Opportunities,
• Identifying Dangers
• Helpful in Policy Decisions
• Continuous Study.

Many surrounding factors affect business. The group of such factors is termed as business environment.
Economic, social, cultural, technological, political, legal, etc. factors are included in Business environment. Over and above this certain groups like; consumers, employees, competitors, suppliers of goods, etc. are also included in business environment.

In short, business environment is a group of such factors which continuously create new opportunities and new challenges for business.

Producing vehicles that run on alternate energy such as electrical or solar.

Business Environment is a relative concept.

(a) Both Assertion(A) and Reason (R) is the correct explanation of Assertion (A)

 Political environment.

(b) Both Assertion (A) and Reason (R) are true but reason (R) is not the correct explanation of Assertion (A)

(b) Both Assertion (A) and Reason (R) are true but reason (R) is not the correct explanation of Assertion (A)

c) Assertion (A) is true but Reason (R) is false

Economic condition of the nation is based on the gross domestic product, per capital income, availability of capital, growth of foreign trade and strength of capital market.

1. Economic environment consists of economic condition, economic policies and economic system along with basic economic philosophy, infrastructure, national income, money supply etc. 

2. Economic condition is based on GDP, per capital income, availability of capital, growth of foreign trade and capital market. 

3. Where as economic polices framed by the government from time to time changes with changes in the government. 

4. Every business has to function within the policy framework and responds to changes accordingly. 

5. This relates to Industrial Policy, monetary policy, foreign investment, EXIM policy education policy etc. Also the scope of private business and government regulation depends on the economic system such as capitalist economy, Socialist or mixed economy which impacts business decisions.

Social Environment.

Economic Environment

Political environment refers to political conditions in the country and attitude of the government towards business.

Major Elements of Political Environment

i. Political stability in the country.

ii. Peace in the country.

iii. Attitude of the government towards business.

iv. Type of government, i.e., single party government or multi-party government.

v. Ideologies of various political parties.

It refers to the sum total of all the Acts passed by the government, Judgments of the courts, and Decisions rendered by various commissions and agencies in the country.

After reforms were introduced in the banking sector, the bank loans were allowed on easy terms.

It refers to political conditions in the country and attitude of the government towards business.

(b) Stability of government

(a) Yes

(b) 2 Importance of Business Environment 

(1) Identification of opportunities :

Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them.

(2) Identification of threats :

Environmental awareness help managers to identify various threats on time and serves as an early warning signal. 

(3) Tapping useful resources :

Business environment helps to know the availability of resources and making them available on time

(4) Coping with rapid changes :

Environmental . scanning enables the firms to adapt themselves to the changes in the market. 

(5) Assistance in planning and policy formulation:

Environmental understanding and analysis is the basis for planning and policy making.

(6) Improving performance:

Environment scanning helps an organisation in improving its performance.

Customs and traditions.

Political Environment

By removing control on the capital market, a huge amount of capital was collected by issuing various new issues in the primary market.

Impact of Political Environment on Business: The following are some of the examples of the impact of the political environment on business:

i. In the year 1977, the Janta Government adopted a stringent attitude towards the multinational companies. As a result of this attitude, the multinational companies like the IBM and the Coca-Cola had to quit India.

ii. The new government encouraged the multinational companies for investment in India. This led to the opening of the doors of the Indian market for the multinational companies. Consequently, the Coca-cola, entered the Indian market once again.

iii. It was only because of the political interest that Hyderabad came to be known as Cyberabad. In other words, it came to be recognised as the centre of Information Technology (IT). As a result of it, many I.T. companies came to be established.

(c) Literacy rate

(b) Technological environment

A business has to work within the framework of the legal systems of the country. Legal environment includes the Acts that have been passed by the Parliament and State Legislature. The important laws that affect business include The Contract Act, Companies Act, Factories Act, Minimum Wages Act, Essential Commodities Act, etc.

Answer is (iv)  a & c

Privatisation: 

Privatisation means transfer of the public sector enterprises to the private sector. The role of private sector is encouraged.

This can be done in two ways. 

1. Disinvestment of a part of the shares held by the government in public sector units,

 2. Dereservatiion of areas formerly reserved for the public sector.

By entering the market early, the producer may update products well before his competitors, and earn high profit.

The study of business environment enables us to know about the opportunities available. A company which is more conscious about the changes taking place in the business environment is the first mover. For example, the ASIAN PAINTS a leading company of the paint industry, at one stage lagged behind because of technology. This was smartly understood by another company, GOODLASS NEROLAC (GN). In order to exploit this situation, the latter company entered with a contract with a foreign company named KANSAI PAINTS (KP) with the purpose of acquiring latest technology. The KP made available to the GN the Cathodic Electro Deposition (CED) technology. On this very basis, the GN was able to obtain the contract for the entire paint requirements of the MARUTI UDYOG. In this way, the GN earned huge profits by entering the market with the latest technology. It was a first mover advantage of the company.

In socialist economy, the government controls and regulates the trade. In this system all major decisions are taken by the government. Individuals do not have a major role to play. Such a business environment is a hindrance to innovation and efficiency.

• The government gives various subsidies in the agriculture sector. As a result, people tend to remain in agriculture and do not move to other sectors. This hinders the employment rate of other sectors. Moreover, the capital distributed as subsidies could be used for important projects in other sectors.
• As the country develops, the business environment rises and shifts from agriculture to industries and finally to service. Flowever, it is important that the country maintains a fine balance between these three sectors. Many a times, the balance gets disturbed and the other sectors do not get proper attention.
• Rise in national income increases demand for better and luxurious products. But, if the income is unequally divided then it leads to class difference and social conflicts.
• If the political parties are biased and slow in decision making, the decisions taken become obstacle for the growth of the nation.

Correct option is (D) Continuous investment

1. Rise in stock market index (sensex) is economic environment. But it has done due to political environment (Lok Sabha Election Results)

2. Two other dimensions of the environment are (a) Legal environment and (b) Technological environment

It refers to all those external factors which are closely related with business and influence each industrial unit differently.

Social Environment

It refers to all those external factors which have a distant relation with business and influence all business units almost in the same way.

It refers to unshackle the economy from bureaucratic cobweb to make it more competitive.

Globalization:

Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy.

Features of Globalisation:

1. Free ow of goods and services across nations

2. Free ow of capital across nations

3. Free ow of information and technology

4. Free movement of people across borders

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 equipments are included. For example, computerization of business and industries is a fashion today.

Globalisation means integration of natural economy with world economic.

(a) Minimising high import tariffs

1. Globalisation means integration of national economy and societies through cross country flows of information, ideas, technologies, good services, capital, finance and people. 

2. It also means “boundary less world”.

Liberalisation refers to removal of controls and restrictions by the government over business.

Impact of change in policy of the government on business and industry:

(i) Increase in competition: As a result of changes in the rules of industrial licensing, entry of foreign firms have increased especially in service industries like telecommunication, airlines, banking, insurance, etc. which were reserved for PSU earlier sector.

(ii) More Demanding Customers: Customers today have become more demanding because they are well informed. Increasing competition in the market gives the customers wider choice in purchasing better quality of goods and services at cheaper rates.

(iii) Rapidly Changing Technological Environment: Increasing competition forced the firms to develop new ways to survive and grow in the market. The rapidly changing technological environment creates tough challenges before smaller firms.

(iv) Necessity for Change: In a regulated environment of pre-1991 era, the firms could have relatively stable policies and practice. After 1991, the market forces have become turbulent, as a result of which, the enterprise have to continuously modify their operations.

(v) Need for Development of Human Resource: Indian enterprises lacked availability of trained technical personnel always. New market conditions require people with higher competence and greater commitment.

(vi) Market Orientation: Earlier firms used to decide production not the demand of products. In a fast changing world, there is a shift of market orientation as much as the firms have to study and analyse the market first and then produce goods accordingly.

(vii) Loss of Budgetary Support to the Public Sector: The central government's budgetary support for financing the public sector outlays has declined over the years. The public sector undertakings have realised that, in order to survive and grow, they will have to be more efficient and generate their own resources for survival.

Interaction of domestic economy with the rest of the world economy.

(i) Increasing competition;

(ii) More demanding customers

Impact of change in policy of the government on business and industry:

(i) Increase in competition: As a result of changes in the rules of industrial licensing, entry of foreign firms have increased especially in service industries like telecommunication, airlines, banking, insurance, etc. which were reserved for PSU earlier sector.

(ii) More Demanding Customers: Customers today have become more demanding because they are well informed. Increasing competition in the market gives the customers wider choice in purchasing better quality of goods and services at cheaper rates.

(iii) Rapidly Changing Technological Environment: Increasing competition forced the firms to develop new ways to survive and grow in the market. The rapidly changing technological environment creates tough challenges before smaller firms.

(iv) Necessity for Change: In a regulated environment of pre-1991 era, the firms could have relatively stable policies and practice. After 1991, the market forces have become turbulent, as a result of which, the enterprise have to continuously modify their operations. 

(v) Need for Development of Human Resource: Indian enterprises lacked availability of trained technical personnel always. New market conditions require people with higher competence and greater commitment.

(vi) Market Orientation: Earlier firms used to decide production not the demand of products. In a fast changing world, there is a shift of market orientation as much as the firms have to study and analyse the market first and then produce goods accordingly.

(vii) Loss of Budgetary Support to the Public Sector: The central government's budgetary support for financing the public sector outlays has declined over the years. The public sector undertakings have realised that, in order to survive and grow, they will have to be more efficient and generate their own resources for survival.