Question 1:

‘The first masters’ is a leading advertising company in its industry. Recently they had a meeting in which
all the reasons which were outside the control of the organisation were discussed. The organisation
wanted to maintain its supremacy in the market. They decided to break the meeting into two parts. In the
first part customers, competitors, suppliers, etc. were discussed where as in the second part the political,
economic, social conditions in the country were discussed. It was concluded that company was doing
extremely well in the domestic market and the client base was expanding. However when the company’s
performance in foreign markets was evaluated it was found that conditions were different in different
countries so the strategies adopted would have to be different. After the meeting the company was
looking forward to making new gains.
Which features of Business Environment have been highlighted in the above case? Also identify the lines.
Answer:
The features of Business Environment which have been highlighted are:

1.  Totality of external forces. Recently they had a meeting in which all the reasons which were
outside the control of the organisation were discussed.
2.  Specific and general forces. In the first part customers, competitors, suppliers, etc. were
discussed where as in the second part the political, economic, social conditions in the country were
discussed.
3.  Relativity. However when the company’s performance in foreign markets was evaluated it was
found that conditions were different in different countries so the strategies adopted would have to
be different.

Question 2:
Bright Services is a taxi service provider. The company is targeting a revenue of 50 crore rupees this
year. However with the passage of time it has found entrance of new service providers in the market
which was not expected at one stage of time. It has a good team of technicians, drivers, software
providers, etc. The company has decided to make it adaptable to such continuously changing
circumstances. It knows that if it has to expand in new countries it will have to learn the basic
differentiating factors like traffic rules, technological aspects, etc. Thus it understands that conditions are
different in different countries.
Which features of Business Environment are discussed in the above case? Which force is discussed
above?
Answer:

Answer:
The various features of Business Environment which are discussed above are: 

1. Uncertainty. However with the passage of time it has found entrance of new service providers in
the market which was not expected at one stage of time.
2.  Dynamic nature. The company has decided to make it adaptable to such continuously changing
circumstances.
3.  Relativity. Thus it understands that conditions are different in different countries.
The type of force which is discussed above is General Force —Legal (Traffic rules), Technological
(Technical aspects).
Question 3:
ABCDEF Ltd. decided to start its new venture in Delhi. For this they needed to understand the Business
Environment of the area. It was realised by the
company that the Business Environment of Delhi was very hard to understand unless and until it was
divided into different business dimensions like legal, political, economic, social and technological conditions. After
understanding the business situations the company started to study the close links between different elements of
the Business Environment. They gave a proper shape to their research and the business got started with full force.
Later they realised that the products they were selling in Delhi were more fit for the European culture and decided
to start a new branch in Belgium where the demand of their products was very high from the first day. The company
came to be recognized and in few years became a global brand. The reason for its success in different countries
was the adaptability’ it showed in meeting the changing environment. The company kept track of all happenings
and did a periodic survey of the choices of the customers. It recognized that there was no surety in the nature of
market and it was very unpredictable.
Which features of Business Environment have been highlighted in the above case? Identify the lines which highlight
these features.
Answer:

The various features of Business Environment which are highlighted in the above case are:

1.  Complexity. It was realised by the company that the Business Environment of Delhi was very hard
to understand unless and until it was divided into different business dimensions like legal, political,
economic, social and technological conditions. As we can see it is very difficult to.understand the
business environment unless it is broken into its dimensions.
2.  Interrelatedness. After understanding the business situations the company started to study the
close links between different elements of the Business Environment.
3.  Relativity. Later they realised that the products they were selling in Delhi were more fit for the
European culture and decided to start a new branch in Belgium where the demand of their products
was very high from the first day.
4.  Dynamic nature. The reason for its success in different countries was the adaptability it showed in
meeting the changing environment.

Question 4:
A company is a component of market. It utilises various raw materials, labour force, human
resources, power, water, other sources, etc. When all these resources are utilized output is
produced. But before output is produced the input has to go through various operations. These
operations convert the raw materials into final products which are then sold in the market.
In the above paragraph which importance of Business Environment is highlighted?
Answer:
The importance of business environment which is highlighted above is — Helps in tapping useful
resources.

Question 5:
The market is flooded with better quality toys of foreign origin. The result is fall in revenue of the
indigenous or local companies as their products are much interior and are also costlier in less
demand in the market
Which dimension of Business Environment can be seen here affecting the local companies’ revenue? 1
Answer:
The dimension of Business Environment which is affecting the indigenous companies is
Technological Environment. Since the products are technologically advanced they are replacing the
locally made inferior products.

Question 6:
The sale of sarees increases in the months of the year when a large number of marriages take place in
India. The saree manufacturing companies make special plans of sale for these months.
Which dimension of business environment comes into picture here?
Answer:
The dimension of business environment which is covered here is the “Social” dimension of business
environment as marriages come under the social dimension.

Question 7:
We can expect high sale of sarees in India but we can’t expect the same in Which feature of business
environment is discussed in the previous line?
Answer:
The feature of business environment which is discussed above is “Relativity” as the business
environment varies from place to place. The choice of people, their culture and purchasing capacity are
different in different areas.

Question 8:
Advertisements of a protein supplement must inform the potential buyer that the product if taken beyond a
given dose can be harmful to the diabetics.
Which dimension of business environment is highlighted here?
Answer:

The dimension of business environment which is highlighted here is the “Legal” environment as it comes

under the legal laws to clearly state the necessary information as directed by the government.

Question 9:
Long Drive Manufacturers is a leading vehicle manufacturing company. It claims that it can create a fuel in
its laboratory which can run the newly designed car. The company is ready to provide this fuel to its
customers for free for one year provided they buy the car.
Which dimension of business environment is affected here by the company’s innovative solution? 1
Answer:
The dimension of business which is affected here by the company’s innovation is
the “Technological” environment.

Question 10:
Identify the various dimensions of business environment:
Question 10:
Identify the various dimensions of business environment:

1.  With the election of a new government the sensex drops by 748 points.
2. A particular channel refrains from showing the advertisement of a particular product as it is banned
by the government.
3.  A software is in high demand among the industrial buyers as it can connect all the branches of a
company as a single integrated unit.
4.  At the time of holi a large number of manufacturing firms get involved in making colours which are
used in the celebration of this colourful festival.
5.  It is not advisable to open a luxury car showroom in the middle of an economy where per capita
income is very low.

Answer:

The various dimensions of business environment highlighted above are:

1. Political environment.
2.  Legal environment.
3.  Technological environment.
4.  Social environment.
5.  Economic environment.

Question 11:
A recent rate cut in the interest on loans announced by the Banks encouraged Amit, a science student of
Progressive School to take a loan from State Bank of India to experiment and develop cars to be powered
by fuel produced from garbage. He developed such a car and exhibited it in the Science Fair organized by
Directorate of Education. He was awarded first prize for his invention.
Identify and explain the dimensions of business environment discussed in the above case.
Answer:
Following are the dimensions of business environment discussed in the above para:

1.  Economic Environment. Economic dimension of business environment includes various economic

factors like inflation, interest rates, currency value, income of people, etc. Both short and long term
interest rates affect the demand for various goods and services in the economy. Lower interest rates
lead to higher demand while higher interest rates lead to less spending by consumers leading to
reduced demand.

1. Technological Environment. Scientific improvements and innovations are included in the

technological dimension of business environment. It provides new ways and methods of producing
goods and services. For example, technological developments in the field of computers and
information technology have changed the ways in which companies promote their goods and
services.
Question 12:
With change in the consumption habits of people, Neelesh, who was running a sweets shop shifted to
chocolate business. On the eve of Diwali he offered chacolates in attractive packages at reasonable
prices. He anticipated huge demand and created a website chocolove.com for taking orders online. He
got lot of orders online and earned huge profit by selling chocolates.
Identify and explain the dimensions of business environment discussed in the above case.
Answer:
Following dimensions of business environment are discussed in the given para:

1.  Social Environment. Social Environment consists of attitudes, beliefs, desires, customs and

traditions, level of education, composition of working population, culture, religion, values, etc. Values
2. efer to concepts which are held by the society in high esteem and traditions include social practices
that have been followed by the society for a long period of time.
3. Technological Environment. Scientific improvement and innovations are included in
the technological dimension of business environment. It provides new ways and methods of
producing goods and services. For example, technological developments in the field of computers
and information technology have changed the ways in which companies promote their goods and
services.

Question 13:
“World Softwares” is a software giant. It has many branches throughout the world. The company knows
that it has great opportunities in its path. When it it was limited only to its native country. With the passage
of time within 20 years the economies of various countries have integrated. This has come as a great
advantage to this company which has expanded. In many of the countries where it has its, branches the
control of government in the public sector enterprises has diluted leading to more control in the hands of

the private sector. One of the major reasons for the success of the company has been the role of the
initiator the company has played as it was the first company of its kind to enter the market.
Identify the two important concepts highlighted above. Which type of advantage has been indicated in the
last line of the above case?
Answer:
Globalisation. With the passage of time within 20 years the economies of various countries have
integrated.

1.  Disinvestment. In many of the countries where it has its branches the control of government in the
public sector enterprises has diluted leading to more control in the hands of the private sector.
2.  First mover advantage. The role of the initiator the company has played as it was the first
company of its kind to enter the market.

Question 14:

Metlapp Networks and Technologies Ltd. is a leader in technology innovation in the United States,
creating products and solutions for connecting the world. It has a large research and development team
which invented the first smart watch, named as W-7. The watch besides showing the time, also monitors
few health parameters like heart beat, blood pressure etc.
While in search of markets abroad, the company found that in India, the reform process was underway
with the aim of accelerating the pace of economic growth. The company decided to take advantage of
simplified export procedure and removal of quantitative as well as tariff restrictions in India.
It set up its office in Jamnagar with a view to capture the Indian market. In a short span of time, the
company emerged as a market leader. Success of the company athtected many other players to enter the
market. Competition resulted in reduction in prices, thereby benefiting the customers.

1.  In the above paragraph, two major concepts related to government policy have been discussed.
Identify and explain these concepts.

1. Also, explain briefly any three impacts of these concepts on Indian business and industry.

Answer:

1.  The two major concepts related to government policy discussed in the given para are as
follows:
o Liberalisation. Liberalisation means removing unnecessary control and restrictions over the
business. It refers to those government policies that promote economic growth by lessening
the restrictions and regulations placed on the business.
o Globalisation. It is an economic reform that aims at integration of markets in the global
economy leading to the increased inter-connectedness of national economies. It simply means
the integration of the various economies of the world leading towards the emergence of a
cohesive global economy.

 Three impacts of liberalisation and globalisation on Indian business.

o  Increase in competition. In today’s Indian economy, competition has increased due to liberalised
imports and entry of MNCs (foreign Multinationals). Although, it is good for consumers, but some of
the Indian industrial units, particularly small-scale and medium scale industries are facing problems.
o More demanding customers. Customers are well informed and so they have become more
demanding. They have a wider choice and can now purchase better products and services.
o Technological development. Increasing competition has forced the companies to develop new
technologies. New technologies make it possible to improve machines, production process,
products and services. The rapidly changing technological environment has created tough
challenges before small firms.
o  Necessity for change. Since Economic Reforms of 1991 market forces have been changing
rapidly. Therefore, business firms have to continuously modify their operations.
o Need for developing human resources. The new market conditions require people with higher
qualifications, competence and greater commitment. Hence there is a need to train and upgrade human
resources.

Question 15:
The internet has taken the whole world by surprise. The government has also been lenient in giving the
online companies a chance to flourish in the changing business scenario. Interneters Online is an
entrepreneurial initiative by a group of young engineers. The company has entered in the domain of
providing products online. Many new firms have also entered after seeing them enter this mode of
business and many of these firms are foreign in origin. The companies dealing in online business know
that in today’s world customer has many options. The customer is no more dependent on a single
company for the product he requires. This has empowered the customer who has more choices and the
result is a fragmented market. The firms selling with monopoly in the market are the stories of the past.
The products offered by the companies are going through different types of technological changes. The
companies are trying to give variety of products which are technologically advanced. “Interneters Online”
is a firm which is right now selling 200 products online. Recently if tried to increase the number of
products to be sold by 15 but it realised that many of these products were not allowed by the government
to be sold in their territory.
Identify three impacts of government policy changes on Business and Industry highlighted in the above
case. Also identify the dimension of business environment highlighted above.
Answer:
The three impacts of government policy changes on Business and Industry highlighted above are:

1.  Increasing Competition. Many new firms have also entered after seeing them enter this mode of
business and many of these firms are foreign in origin.

2. More demanding customers. This has empowered the customer who has more choices and the
result is a fragmented market.

3. Rapidly changing technological environment. The companies are trying to give variety of

products which are technologically advanced.
The dimension of business environment which is highlighted above is Legal environment. It realised
that many of these products were not allowed by the government to be sold in their territory.