BUSINESS ENVIRONMENT QUESTIONS AND ANSWERS 1 Define Business Environment State any three of its features Answer The term business environment means the sum total of all individuals institutions and other forces that are outside the control of a business enterprise but that may affect its performance Features of Business Environment are i ii iii Complexity Totality of external forces Inter relatedness 2 List any two example of business environment Answer Economic environment social environment 3 List the major impacts of new industrial policy Answer The major impacts of new industrial policy are i Liberalisation ii Globalisation iii Privatisation 4 Give one example of opportunity and one example of threat offered in Indian econ environment Answer Opportunity liberalisation in external trade Threat MRTP Act 5 Define political environment Answer Business environment comprises those elements that are related to government affairs in the type of government in power 6 What were the reasons to implement new economic policy of India Fiscal crisis Fall in growth rate of GNP Answer The main reasons to adopt new economic policy of 1991 were the following crises which Indian economy had to face i ii iii Rise in internal debt iv Negative growth in agriculture section v Rise in inflation rate Fall in foreign reserve vi Fall in credit worthiness of financial institutions from AAA vii to BBP Shrinking of foreign trade Pledge of gold by RBI and SBI 7 Business environment is dynamic Comment by viii ix mentioning these examples Answer It is right to say that business environment is dynamic as every day new changes are taking place in that business environment These changes are so fast and effective that the companies which are able to scan them or recognise them on time only survive in the market Examples i Rapidly changing technology has affected the business world Large number of new products are being introduced in market such as refrigerator with bio fresh technology or door cooling technology etc The spread of literacy and public consciousness has contributed in rousing the aspirations of people and today companies give priority to customer s preference and demands ii iii With new legislation and policies of deregulation of industries there is increase in the foreign direct investment in capital market
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