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Questions
State any three points of importance of business environment.
State any four points that highlight the importance of business environment.
Discuss any five points highlighting the importance of business environment.
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Solution
- Identification of opportunities and threats: The business environment is ever-evolving. Interaction with the environment and careful analysis will help a business identify positive opportunities and possible threats. An identification of the threats can enable the organization to take appropriate measures such as improving the quality and features of its mobile advertising. It enables the organization to grab these opportunities, gain maximum benefit and move ahead of its competitors.
- Accumulating useful resources: The environment offers itself as a source of inputs such as raw material, machinery, and labor for running an organization. In return, the business supplies the environment with its output. This is possible only if the enterprises have an understanding of what the environment desires and what it can offer. Thus, it is rational for the organizations to take up those resources from the environment which can be converted to the desired output.
- Adjusting to changes: The Business environment is dynamic in nature and is prone to numerous socioeconomic changes. A careful analysis and understanding of the environment help an enterprise to adapt to these changes and to take timely actions.
- Improving performance: The main aim of analysing and understanding the environment is to improve a firm’s performance and efficiency. The future of an organisation depends on how closely it bonds with the environment and strives to survive its ever-changing policies.
- Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding, and skills to meet the predicted changes in the realm of business.
- Image Building: Environmental understanding helps the business organizations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power.
- Meeting Competition: It helps the firms to analyze the competitors’ strategies and formulate their own strategies accordingly.
- Identifying Firm’s Strength and Weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.
Notes
Students should refer to the answer according to their questions.
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