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51.	Why is the understanding of business environment important for managers? Explain with the help of any four points.
Answer» Understanding of business environment is important for managers because, (i) It helps the firm to identify opportunities and get the first mover advantage: The ability to identifying theexternal opportunities early and to make the first move, makes an organisation the market leader.Environment provides numerous opportunities for business success. Early identification of opportunitieshelps an enterprise to be the first to exploit them instead of losing them to competitors and become themarket follower. (ii) It helps the firm to identify threats and early warning signals: Business environment is prone to numerousthreats. Environmental awareness can help managers to identify various threats on time and serve as an earlywarning signal. (iii) It helps in tapping useful resources: Environment is the source of all resources a business needs for itsoperation. It takes natural resources, human resource and financial resource and convert them to goods andservices to customers, make payment of taxes to government, return on financial investment to investors andso on. As an organisation is completely dependent on the resources from environment, a manager shouldhave a good understanding about business environment. (iv) It helps in assisting in planning and policy formulation: Business environment is very dynamic and is asource of both opportunities and threats. Only with a clear understanding of the various aspects of theenvironment, a manager can make plans for future and formulate policies.

52.	Enumerate the various ways in which managers respond to changes in business environment.
Answer» Following are the ways in which managers respond to changes in business environment (i) Strategic alliances, mergers and acquisitions of businesses (ii) Diversification (iii) Collaboration with multinationals (iv) Brand building (v) Restructuring of business activities (vi) Capital restructures (vii) Customer focus (viii) Latest technology (ix) Compensation levels and incentive schemes

53.	"A good understanding of environment by business managers enables them not only to indetify and evaluted but also to react to the forces external to their firm". In the light of the above statement explain any four points of importance of understanding business environment by a manager.
Answer» Importance of understanding business environment. (Any four) (1) It enables the firm to identify opportunities and getting the first mover advantage 2. It helps the firm to identify threats and early warning signals. 3. It helps in tapping useful resources. 4. It helps in coping with rapid changes. 5. It helps in assisting in plaining and policy formulation. 6. it helps in improving performance.

54.	Indentify the type of dimension of environment to the following are related (i) Banks reduces the interest rate on house loans (ii) No. of working women is increasing (iii) Reservation of Tickets by internet. (iv) Prohibition of alcohol behaverages to be advertised. (v) Winning of Aam Admi Party has built up confidence in economically weaker section people.
Answer» (i) Economic environment (ii) Social environment (iii) Technological environment (iv) Legal environment (v) Political environment.

55.	Even after opening up of indian Economy, foreign companies found it extremely difficult to cut through the bureacratic and redtapism in government offices. This discourages them from investing in India. Identify the dimension of environment mention in above para.
Answer» Political environment

56.	Mr. Ajay after completeing MBA from USA comes to india to start a new business under the banner Ecom Creations Ltd. He launches a new product in e-learing for senior Secondary School students in commerce stream, which already has an established market in UK and USA but not in India. his business starts flourising in India. Now more indian companies entered into the market with other subject also. Indetify and quote the lines from above para which highlight the significance of understanding business environment.
Answer» 1"comes to india to start a new business.........launches a new product in e-learing for senior secondary school students in commerce stream it helps in ". (a) Assisting in planning and policy formulisation. (b) It enables the firm to identify opportunities and getting the first mover advantage. 2. "his business starts flourishing in india " (c) It helps in improving performance. 3. Now more indian companies entered into the market with different subjects also. (d) It helps the firm to identify threats and early warning signals.

57.	The Indian corporate sector has come face-to-face with several challenges due to government policy change. Explain any four such challenges.
Answer» Challenges faced by the Indian corporate sector: (i) Threat from MNC: The massive entry and consolidation of multinationals in the Indian markets constitute another new challenge. (ii) Competition: Liberalisation of trade has led to more and more competition from multinationals and from imports. Competition has become global in nature. Local tailor is facing competition from PETER ENGLAND and HONEST SHIRT. (iii) World Class Technology: Competitive advantage and core competency rests largely on technological strengths. Investment in R & D (Research and Development) and innovation becomes inescapable for companies which enjoyed protection under the regulated regime example, Pharmaceutical industry made investment in R & D in India. (iv) Brand-Building: Expenditures were enhanced by companies on branding & politioning of products. The expenditures on the launch of the Korean brands like, Hyundai, LG and Samsung companies are good examples.

58.	Why is the study of business environment important for managers ?
Answer» Understanding of business environment is important for managers because, (i) It helps the firm to identify opportunities and get the first mover advantage: The ability to identifying theexternal opportunities early and to make the first move, makes an organisation the market leader.Environment provides numerous opportunities for business success. Early identification of opportunitieshelps an enterprise to be the first to exploit them instead of losing them to competitors and become themarket follower. (ii) It helps the firm to identify threats and early warning signals: Business environment is prone to numerousthreats. Environmental awareness can help managers to identify various threats on time and serve as an earlywarning signal. (iii) It helps in tapping useful resources: Environment is the source of all resources a business needs for itsoperation. It takes natural resources, human resource and financial resource and convert them to goods andservices to customers, make payment of taxes to government, return on financial investment to investors andso on. As an organisation is completely dependent on the resources from environment, a manager shouldhave a good understanding about business environment. (iv) It helps in assisting in planning and policy formulation: Business environment is very dynamic and is asource of both opportunities and threats. Only with a clear understanding of the various aspects of theenvironment, a manager can make plans for future and formulate policies

59.	Government of India is seriously thinking to allow oil marketing public sector, undertaking to fix their own price for petrol and diesel. (i) Name the economic reform related to decision of government. (ii) Name other two reforms recommended in new economic policy.
Answer» (i) Liberalisation (ii) Other two reforms : Privatisation and Globalisation.

60.	Naman and Govind after finishing their graduation under vocational stream decided to start their own travel a 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 then to first analyse the business environment whic consists of investors, competitors and other farces like social, political, etc. that may affect thier business directly of indirectly. he further told them about the technological improvements and shifts in consumer preference that were taking place and hence they should be aware of the environmental trends and change which may hinder their business performance. he emphasised on making plans keeping in mind the threate posed by the competition, so that they can deal with the situation effectively. this alignment of business operations with the business environment will result in better performance. (i) State any two features of business environment as discussed by professor mehta with Naman and Govind. (ii) State any two importance of business environment in above para.
Answer» (i) (a) Specific and general forces. (b) Dynamic nature (ii) (a) It helps the firm to identify and early warning signals. (b) it helps in planning and policy formulation.

61.	"Companies that fail to adopt to their environment are unlikely to survive in long run. " Discuss with an example.
Answer» Yes, the above statement is correct. Since business environment is dynamic in nature in the sense that consumer’s tastes and preferences, technology, political conditions, etc., change continuously, thus it is important for companies to adopt to their environment. Otherwise, companies will not survive in long run. In this regard, understanding of business environment is of vital importance for successful functioning of an organisation

62.	Enumerate the dimensions of business environment
Answer» The following are the dimensions of business environment. i. Economic Environment: It comprises of the economic variables such as interest rates, income, stock market indices that affect the functioning of the enterprises. For example, an increase in income affects the demand for goods and services of the enterprises. ii. Social Environment: Social environment refers to the social forces such as customs, traditions, social values, social trend etc. For example, religious celebrations provide business opportunities to many enterprises such as those producing sweets, decoration items, etc. iii. Technological Environment: Technological environment includes technological changes and improvements. For example, introduction of computers, internet, new telecommunication facilities, etc. all affect the business enterprises. An improvement in the technology used in the manufacturing of a product provides new business opportunities for the enterprises while on the other hand, is a threat for the enterprises using obsolete technology. iv. Legal Environment: It comprises of the legislation and rules passed by the government such as the Companies Act, Trade union Act, etc. These legislation govern how an enterprise functions and behaves. Knowledge of these legislation is essential for enterprises as their non-compliance can lead to legal trouble for them. v. Political Environment: Political conditions such as peace and stability, law and order compose political business environment. It directly affects the functioning of enterprises. For example, a situation of political unrest erodes confidence of the investors and thereby, makes it difficult for the enterprises to function smoothly.

63.	Enumerate the two categories of business environment and give the example of both
Answer» The two types of environment of business, i.e., (1) Internal Environment, and (2) External Environment.(1) Internal Environment: Internal environment of business includes physical assets, technological capabilities, human, financial and marketing resources, management structure, relationship among various constituents, goods, objectives and value system prevailing. Although business is undertaken with profit-maximization motive even then the top positions in modern corporate enterprises maintain some sense of values which usually influence the policies, practices and general internal environment of business. However, there are certain deviations, where the executives and management have been showing scant regards towards well being of the people. (2) External Environment:External environment of business is composed of various organisations, institutions and forces operating outside the company, which exert influence individually and collectively as well on this environment. External environment of business is broadly classified into micro environment and macro environment. (a) Micro Environment: Micro environment includes those, players whose decisions and actions have a direct impact on the company. Production and selling of commodities are the two important aspects of modern business. (b) Macro Environment: Another constituent of business environment in the macro environment which includes all those economic and non-economic factors which exerts its influence on the business activity in general.

64.	What do you mean by business environment ?
Answer» Business environment is the sum total of all external and internal factors that influence a business. You should keep in mind that external factors and internal factors can influence each other and work together to affect a business. For example, a health and safety regulation is an external factor that influences the internal environment of business operations. Additionally, some external factors are beyond your control. These factors are often called external constraints.

65.	What are the essential features of (a) Liberalisation (b) Privatisation (c) Globalisation
Answer» The essential features of the liberalization, privatization and globalization were : LIBERALIZATION : 1.Abolishing of licensing requirement in most of the industries. 2.Freedom on deciding the size of the operation. 3.Removal of restriction on the movement of goods and services. 4.Freedom in fixing the price of goods and services. 5.Simplification of process of exports and imports. 6.Easy norms to attract foreign capital and technology. PRIVATIZATION : 1.Reduction in the role of public sector in government undertakings. 2.Planned disinvestment of public sector undertakings. 3.Reference of loss making government entities to Board of Industrial and Financial Reconstruction(BIFR). GLOBALIZATION : 1.Import liberalization to import capital goods( heavy machineries). 2.Reduction in import duty. 3.Export promotion through rationalization of traffic structure and reforms. 4.Promote foreign investment in India through foreign investment promotion board .