B.Com Ist Year Indian Business Environment Concept Components And Importance Short Questions Answer

B.Com Ist Year Indian Business Environment Concept Components And Importance Short Questions Answer :- hii friends this post is very useful for all the student B.com, In this post you will find Business Environment Topic Wise chapter wise all the content Question Answer Notes Model Paper Examination Paper Sample Practice Paper PDF Download Hindi & English For Free.

Q.1. Define Business Environment and its characteristics

Ans. See Page 1 and 2.

Q.2. Discuss the main constitutents of micro environment

Ans. See Page 4.

Q.3. What do you understand by the macro environment of a business firm?

Ans. See Page 5.

Q.4. Discuss the effects of Economic Environment on business.

Ans. Economic conditions, economic policies and the economi system are important external factors that constitute the economi environment of a business.

According to Sterdiwent, “Economic environment refers to those external factors which directly influences the economy of a business.”

(1) Economie Conditions : The economic conditions of a country such as nature of the economy, the stage of development, economie resources, level of income, distribution of income and wealth ete, have a great influence on the business strategies of an organisation. A busienss firm design his plans and programmes after studying the consumption level, income, employment and savings ete, in the country. There becomes continuous change in its components and the continuity of process of economic development is the result of it.

(2) Economic Policies : The economic policies of the government also influence the business policies of a firm. Industrial policy, monetary policy, fiscal policy, tariff policy exercise a great influence on the business decisions of a firm. For Example, the policy of liberalization in India, opened up new opportunities and threats. They have provided a lot of opportunities to a large number of enterprises to diversify and to make their product mix better. But they have also given rise to serious threat to many existing products by way of increased competition.

(3) Economic Systems : Economic system of the country determines the scope of private business. The previaling economic systems can be grouped into three categories: Capitilist, communist and mixed economy. In a free market economy all the factors of production such as land, labour, capital etc. are privately owned and the desire for profit is the sole consideration. Under the rule of a communist or socialist government, the state owns all the means of production, determines the goals of production and controls the economy according to a central master plan. There is hardly any consumer sovereignty in a centrally planned economy. In a mixed economy, both the public sector and private sector coexist, as in India. The State regulates the activities of the private sector so that t may serve the interest of the nation rather than its own interest. The State also regulates the monopolies and takes effective steps to educe inequalities of income and wealth. The economic system, hus is a very iraportant determinant of the scope of private business.

2.5. Discuss the effects of Non-economic environment on business.

Ans. Non-economic environment of business consists Political, Legal. Technological, Social and Cultural, Natural Demographic and International factors. All these factors have great influence on the business enterprises. (Detailed study of all these factors see on the Page 5). Q.6. Discuss the importance of study of Business Environment.

Ans. See Page 6 and 7.

Q.7. Write a short note on the Indian Business Environ. ment.


Discuss the changes in the Indian Business Environment due to economic liberalisation.

Ans. Environment is the mixture of dynamic and flexible factor hence there seems changes in the business environment also. After independence India adoped socialistic patter of society for welfare of masses, reducing poverty and unemployment and regional disparities. Therefore in the Industrial policy of 1948 certain sectors are reserved for the state only and all industries are brought under licensing except small-scale industries. Protection policy, price control, licencing, quota are applied in the economy to control the monopolies and concentration of economic power. These policies could not help Indian industries to become economical and competitive. Due to the different barriers Indian industrial units become uneconomical in size and uncompetitive in cost and quality. Therefore from 1980 onward larger capacity units were allowed to established and gradually controls and regulations were loosened.

Increasing world competition, globalisation, fast development of technology force the government to make drastic change in economic and industrial policy in 1991. In the new policy of 1991, licences were abolished over a large number of products, expansion of private sector by reducing the number of industries reserved for the public sector, liberal policy towards foreign investment and technology was introduced. Now there are no entry and growth restrictions on the private sector. These changes in the economic environment opened up new opportunities and threats for the management. They have provided a lot of opportunities to a large number of enterprises to diversify and to make their product mix better. But they have also given rise to serious threats to many existing products by way of increased competition.

Q.8 What do you understand by Business Environment ? Explain its importance.

Ans. See Page 1 for the meaning of business environment and page 6 for the importance of business environment.

Q.9. What is SWOT Analysis ? Explain in detail its main


Ans. SWOT analysis is popularly used management literature where ‘S’ is referred as strength, ‘W’ as weakness, ‘O’ as opportunities and T as threats. SWOT analysis is used by an business enterprise to understand and analyse its internal and external environment. Different individuals or orgaizations can identify their strengths and weaknesses and match them with opportunities and threats lying in the external environment. This analysis helps in formulating the plans and strategy by which a firm can have maximum profit by utilizing opportunities in best possible way. It helps in minimising business risks also.

A person with SWOT Analysis can control his emotional reactions and aggressiveness by keeping his temperament calm and quiet. He can overcome the language barrier and cultural differences by showing genuine respect for the other person.


The main component of SWOT analysis are as follows:

(1) Strengths : All factors and elements which enables a business enterprise to compete effectively and earn maximum profit are called strength of that business enterprise. Adequate amount of capital, skilled workers, ability of managers, research facilities etc. are the strength of a business enterprise through which it stands in a petter position than its competitors.

(2) Weaknesses : Inherent limitations of a business is termed as weaknesses of an organizatin. These weaknesses impose restrictions and limitations on the working, efficiency and profitability of an enterprise. For example over dependence on a supplier for materials etc.

(3) Opportunities : Favourable conditions in a business is known as opportunities. It provide opportunities to a business firm to earn more profit and to compete its competitors. For example-good quality product, monopolistic market conditions, availability of trademark and patent are the opportunities of a business firm through which it can earn more profit.

(4) Threats : Unfavourable conditions which create problems the progress and smooth running of a business is termed as threats. Labour unrest, unfavourable changes in the governmen policies, shortage of raw material etc. create problems in the smoot running of a business.

Q.10. Describe the relationship between Business and En


Ans. Business and environment are closely related to each other. Environment may act either as a stimulant or a constraint fo business. A business enterprise can expand itself as and when favourable changes take place in the environment. On the other hand, when the prevailing environment is unfavourable, the business may face challenges and problems. The relationship between business and environment may be discussed as follows:

(1) Mutually Related : There is correlation between business and its environment. Business is influenced by environment and it influences various aspects of environment. For Example, when the industry faces recession, business may cut down the rate o production; when the competition is more, the business may decide to go for aggressive advertisement. So, here environment is affecting business. In the same way, business enterprises in the form of group may exert pressure on the government to change its economid policies. So, here business is affecting environment. Hence business and environment are mutually related and both influence each other.

(2) Environment Requires Business to be Dynamic Because of changing environment business policies and strategies have to be dynamic. Many elements in the environment are constantly changing e.g., the economic, social, political, cultural technological factors of environment never remain constant. These factors are flexible or dynamic, so business policies should be dynamic enough to adjust to the changing environment. With experience and maturity, the alert managers acquire skill to dea with dynamic environment.

(3) Opportunities and Threats : If the prevailing environment is favourable for business growth and prosperity, ther business management feels happy and responds positively. Foll Example, business is often encouraged to produce more when government gives subsidy or reduces tax burden. On the other hand if business environment poses threat to the business, then it i unfavourable for business. For Example, when the governmen imposés high tax rates on profits, then it acts as hindrance in the growth.

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