IGNOU| BUSINESS ENVIRONMENT (ECO - 13)| SOLVED PAPER – (DEC - 2022)| (BDP)| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
(BDP)
Term-End Examination
December, 2022
(Elective Course: Commerce)
ECO-13
BUSINESS ENVIRONMENT
Time: 2 Hours
Maximum Marks: 50
Note: (i) Attempt any five questions.
(ii) All questions carry equal
marks.
1. Explain the meaning and significance of business environment. Describe briefly various non-economic factors of business environment. 4+6
Ans:- The term 'business environment' indicates the
sum total of all those people, organizations and other forces which are beyond
the power of the industry but which can influence its output. According to an
anonymous author - "Like the universe, set aside from it the subset that
describes the system and the rest is the environment". Therefore,
financial, cultural, governmental, technological and various forces operating
outside an enterprise are part of its environment. Individual customers or
facing enterprises as well as management, customer groups, competitors, media,
courts, and other entities operating outside an enterprise comprise its
environment.
Importance of
business environment:-
Just like us,
business operations don't survive in prison. Every enterprise is not an island
unto itself; It survives, endures and develops under circumstances to some
extent due to its position and forces. Although an individual enterprise is
capable of doing anything to change or manage these forces, it has no option to
react or modify them accordingly. Good knowledge of the environment by business
managers allows them not only to identify and evaluate, but also to respond to
forces outside their enterprises.
The
importance of business environment and its perception by managers can be
understood if we consider the following points given below:-
(A) It helps
in identifying opportunities and taking advantage of them first:-
(i) The
environment provides innumerable opportunities, and identifying opportunities
is essential to improve the performance of a business.
(ii) Early
identification gives an enterprise the opportunity to identify opportunities
earlier rather than losing them to competitors. Example: 'Airtel' recognized
the need for faster internet and took first-mover advantage by providing 4G
speeds to its users, followed by Vodafone and Idea.
(iii) Asian
Paints lost market share to Nerolac as it failed to match its technology.
(B) It helps
the firm to identify threats and early warning signals:-
(i) Business
environment helps in understanding the threats that may occur in the future.
(ii)
Environmental awareness can help managers to identify various hazards in time
and serve as early warning signals. Example: Patanjali products have become a
warning signal for the rest of FMCG
(iii) Areas
developing similar products. Similarly, if an Indian firm learns that a foreign
multinational is entering the Indian market with a new option; There is a need
to prepare accordingly.
(iv) Chinese
mobile phones have become a threat to Indian mobile phone manufacturers.
(C) It helps
in exploitation of useful resources:-
(i) Businesses
and industries take advantage of resources (inputs) from the environment and
convert them into useful products (outputs) and provide them to the society.
(ii) The
environment provides various inputs (resources) such as finance, machines, raw
materials, power and water, labour, etc.
(iii) Business
enterprise provides outputs like goods and services to customers, payment of
taxes to government, investors etc.
Example:
With the demand for latest technology, manufacturers will use resources from
the environment to make LED TVs and Smart TVs instead of gathering resources
for color or black and white TVs.
(D) It helps
in dealing with rapid changes:-
(i) The business
environment is changing very rapidly, and the industry is being affected by
changing market conditions.
(ii) Turbulent
market environment, low brand loyalty, fragmentation of markets, changes in
fashion, more demanding customers and global competition are some of the
examples of changes in the business environment.
Example:
Jack Ma started Alibaba because he saw the potential for interest in
e-commerce.
(E) It helps
in assisting planning and policy making:-
(i) Business
environment brings both threats and opportunities to a business.
(ii) Awareness
of the business environment helps in future planning or decision making.
Example:
Multiple entries of Chinese phones like Vivo, Gionee, Oppo etc. have posed a
threat to local players like Micromax, Karbonn, Lava etc. to rethink on how to
tackle the situation.
(F) It helps
in improving performance:-
(i)
Environmental studies show that the success of any enterprise is closely
related to the changes taking place in the environment.
(ii)
Enterprises which monitor and adopt proper business practices not only improve
their performance but also become leaders in the industry.
Example:
Apple has been successful in maintaining its market share due to proper
understanding of the environment and making proper innovations in its products.
Non-economic
factors of business environment include:-
(i) Social
factors: These include society's attitude, social mobility, education,
entrepreneurship legitimacy and cultural values.
(ii)
Political factors: These include political system and government policies.
(iii) Legal
factors: These include legal framework and legal environment.
(iv)
Technological factors: These include technological developments,
innovations, methods and equipment.
(v)
Demographic factors: These include demographic factors.
(vi) Natural
factors: These include natural environment, natural disasters, pollution,
carbon emissions and environmental accidents.
Non-economic
factors can influence the strategies adopted by companies and have far-reaching
effects on their operations.
2. (a) Discuss the views against social responsibilities
of business. 5
Ans:- Some
ideas against business social responsibility include:-
(i) Lack of
social skills: Business people do not have the understanding or training to
solve social problems.
(ii) Burden
on consumers: Social responsibilities are costly and businesses can pass the
burden on to consumers.
(iii)
Violation of profit maximization objective: Businesses exist to earn
maximum profits, hence social responsibility goes against this objective.
(iv)
Undermining economic goals: Businesses may compromise their economic goals
by accepting social responsibility.
(v) Lack of
widespread public support: The public will not like the interference of
businesses in social programs.
Corporate
social responsibility (CSR) holds businesses accountable for their social
commitments. CSR initiatives can be divided into four categories:
environmental, philanthropic, ethical and economic responsibility.
(b) Describe
the dimensions of social responsibility.
5
Ans:- There
are four dimensions of social responsibility:-
(i) Economic:
Being profitable, giving fair prices to customers, compensating employees and
returning profits to investors.
(ii) Legal:
To comply with laws and regulations such as anti-corruption laws
(iii)
Ethical: doing what is right, just and fair, avoiding harmful activities
and improving customer relations
(iv)
Philanthropic: To be a good corporate citizen, contribute and donate to
improve the quality of life.
These
dimensions help build trust and credibility between consumers and the
community.
Some
examples of moral responsibility include:-
(i) Avoiding
questionable practices
(ii) To act to
the highest standards of law
(iii) To know
what is good, bad and right
Some of the
stakeholders that can influence the activities of a company include:-
Owners,
employees, customers, suppliers, investors, government.
3. What do you mean by economic development? Discuss four
main indicators of economic development. 2+8
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