BUSINESS ENVIROMENT — OCM STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceOCMBUSINESS ENVIROMENT3 Marks
Question
Explain the meaning and importance of business environment.
✓
Answer
Meaning of business environment :
Business environment includes economic social, cultural, technological, political and legal factors.
Beside all this, some group such as employees, competitors, material suppliers, too is included in business environment.
Business environment is a group of such factors which creates continuous new opportunities and challenges.
So it must be considered while determining business activities.
Business environment include such factors and control on which in normal circumstances there is no control of any individual, firm management, or business or industry.
Business factors are constantly changing with changing of situation of the nation and policies are formulated accordingly.
Factors of business environment such as economic condition, customs, government regulations, availability of natural raw material, availability of employees etc create obstacle.
Invention of new technologies, continuous research, development, constant improvement of standard of living, expansion and growth of products and service create new job opportunities.
Importance and Business Environment :
Advantages of early entry :
Those business firm which studies business environment can understand opportunities in advance and introduces product in the market before his prior to competitors. E.g.
A cycle manufacturer can foresee the demand of motorcycle in future and collaborating with a foreign company for technology can make motorcycles popular in Indian market.
Sensitivity of the manger :
Manage have become increasingly sensitive towards business environment E.g. A dominating camera manufacturing unit in India, increased its profit by producing printer and copier machine.
Grab opportunities :
Understanding business environment enables to seize future opportunities of business.
Due to hike in the prices of petrol and diesel in international market, fuel efficient vehicles were in demand.
Considering this, vehicle manufactures started using alternative string fine material which reduced the weight of the vehicle that resulted into high mileage and such vehicles were demanded.
Indentifying dangers :
Ever changing environment contains some dangers too, so some customers do not accept certain products.
Identifying dangers and making certain required changed in the business can be beneficial E.g. Today through $FM$ band $($Frequency Modulation band$),$ radio service is available.
Announcer of various channels of radio are known as $RJ ($Radio Jokey$)$ and $MJ($Music Jockey$).$
As their announcement is different from traditional style, announcers of various channels of fm band radio have become much popular.
Pressure cookers with safety valves, washing machines with dryer, Atta makers, juicier machines, ball pen in place of fountain pen have come in to existence due to society’s needs and some dangers.
Helpful in policy decisions :
With times understanding and analysis of business environment by a business men takes timely policy decisions and surplus their competitors e.g. Insurance companies was nationalized in post independence period and after $1991$ economic policy was changed and foreign direct investment $(FDI)$ was accepted.
As a result business firms with diversified business have concentrated on insurance business also.
Continuous study :
Managers have opportunity to learn many new things through continuous study of business environment.
This result into increasing size and growth of business.
Managers can plan their business firm through the knowledge of the future demand of their product and capital market condition. E.g. In the field of computer many new software are being innovated continuously.
People connected with this sector have to study continuously.
This has lead to continuous development in this field.
Continuous study of environment is applicable to every business sector.
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