Question

Explain the following point of importance of business environment:

Helps in tapping useful resources

Answer 1

The environment provides various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources, called inputs, such as finance, machines, raw materials, power and water, and labour, from its environment, including financiers, the government, and suppliers. They decide to provide these resources with their own expectations, seeking something in return from the enterprise. The business enterprise supplies the environment with its outputs, such as goods and services for customers, payment of taxes to the government, and returns on financial investment to investors, and so on. Because the enterprise depends on the environment as a source of inputs and as an outlet for outputs, it only makes sense that it designs policies that enable it to obtain the resources it needs so it can convert them into outputs the environment desires. This can be done better by understanding what the environment has to offer.