case study of business environment class 12

CBSE Class 12 Case Studies In Business Studies – Business Environment

BUSINESS ENVIRONMENT Business Environment: Definition The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

Importance of Business Environment

• It enables the firm to identify opportunities and getting the first mover advantage instead of losing them to its competitors.
• It helps the firm to identify threats and early warning signals which are likely to hinder a firm’s performance and take timely actions.
• It helps in tapping useful resources as the enterprise designs policies that allow it to get the resources that it needs so that it can convert those resources into outputs that the environment desires.
• It helps in coping with rapid changes as the managers are able to understand and examine the environment and develop appropriate courses of action.
• It helps in assisting in planning and policy formulation as its understanding and analysis can be the basis for deciding the future course of action or decision making. It helps in improving performance of an enterprise through continuous monitoring of the environment and adopting suitable business practices which help to improve both their present and future performance
• It helps in improving performance of an enterprise through continuous monitoring of the environment and adopting suitable business practices which help to improve both their present and future performance.

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Features of Business Environment

• It is a sum total of all the forces external to business firms.
• It consists of both specific forces such as investors, customers, competitors and suppliers which affect individual enterprises directly and immediately in their day-to¬day working and general forces such as social, political, legal and technological conditions which have impact on all business enterprises and thus may affect an individual firm only indirectly.
• All the elements of business environment are closely interrelated.
• It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market.
• It is highly uncertain as it is not always possible to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.
• It is complex in nature as it is relatively easier to understand in parts but difficult to comprehend in its totality because it consists of numerous interrelated and dynamic conditions or forces which arise from different sources.
• It is a relative concept since it differs from country to country and even region to region

DIMENSIONS OF BUSINESS ENVIRONMENT Dimensions of the business environment include economic, social, technological, political and legal conditions which are considered relevant for decision-making and improving the performance of an enterprise.

Various Factors Constituting the General Environment of Business

• Economic Environment comprises of factors that can affect management practices ina business enterprise. It includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc.
• Social Environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
• Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating business.
• Political Environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
• Legal Environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— center, state or local.

ECONOMIC ENVIRONMENT IN INDIA  Various Macro-level Factors of Economic Environment in India

• Stage of economic development of the country.
• The economic structure in the form of mixed economy which recognises the role of both public and private sectors.
• Economic policies of the Government, including industrial, monetary and fiscal policies.
• Economic planning, including five year plans, annual budgets, and so on.
• Economic indices, like national income, distribution of income, rate and growth of GNP, per capita income, disposal personal income, rate of savings and investments, value of exports and imports, balance of payments, etc.
• Infrastructural factors, such as, financial institutions, banks, modes of transportation communication facilities etc.

The Constituents of Economic Environment of Business in India at the time of Independence

• The Indian economy was mainly agricultural and rural in character.
• About 70% of the working population was employed in agriculture.
• About 85% of the population was living in the villages.
• Production was carried out using irrational, low productivity technology
• Communicable diseases were widespread, mortality rates were high and there was no good public health system.

Key Aspects of the Economic Planning in India After Independence

• Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty.
• Become self-reliant and set upa strong industrial base with emphasis on heavy and basic industries.
• Reduce inequalities of income and wealth.
• Adopt a socialist pattern of development— based on equality and prevent exploitation of man by man.

NEW INDUSTRIAL POLICY OF 1991 Three Major Componenets of New Industrial Policy of 1991

• Liberalisation
• Privatisation
• Globalisation

Disinvestment definition Disinvestments refers to transfer from public sector enterprises to the private sector through dilution of state of the Government in the public enterprise

The Broad Feature of New Industrial Policy, 1991

• The Government reduced the number of industries under compulsory licensing to six.
• Many of the industries reserved for the public sector under the earlier policy, were dereserved. The role of the public sector was limited only to four industries of strategic importance.
• Disinvestment was carried out in case of many public sector industrial enterprises.
• The share of foreign equity participation was increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted.
• Automatic permission was now granted for technology agreements with foreign companies.
• Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign investment in India.

Liberalisation  These economic reforms signalled the The new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the unnecessary controls and restrictions. Simplifying procedures for imports and exports. Key initiatives of the government:

• Abolishing licensing requirement in most of the industries except a short list .
• Freedom in deciding the scale of business activities
• Removal of restrictions on the movement of goods and services.
• Freedom in fixing the prices of goods and services.
• Reduction in tax rates and lifting of unnecessary controls over the economy.
• Making it easier to attract foreign capital and technology to India.

Privatisation The new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the unnecessary controls and restrictions. process and a reduced role emergence of a cohesive to the public sector. Key initiatives of the government:

• Adopted the policy of planned disinvestments of the public sector.
• Decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.

Globalisation These economic reforms signalled the The new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the unnecessary controls and restrictions. process and a reduced role emergence of a cohesive to the public sector. global economy. Key initiatives of the government:

• Import liberalisation and export promotion through rationalisation of the tariff structure and reforms with respect to foreign exchange.
• Increased level of interaction and interdependence among the various nations of the global economy.

Impact of Government Policy Changes on Business and Industry/ Challenges faced by the Indian Corporate Sector

• Increasing competition for Indian firms due to changes in the rules of industrial licensing and entry of foreign firms.
• More demanding customers as they are more aware and are offered wider choice in purchasing better quality of goods and services due to high competition.
• Repidly changing technological environment creates tough challenges before smaller firms.
• Necessity for change in the way of their operations.
• Need for developing human resource as the new market conditions require people with higher competence and greater commitment. Hence the need for developing human resources.
• Market orientation as the firms have to study and analyse the market first and produce goods accordingly.
• Loss of budgetary support to the public sector has declined over the years

Managerial Response to Changes in Business Environment

• Acquisitions and mergers
• Diversification
• Brand building
• Innovative distribution and selling techniques.
• Changes in capital structure
• Customer-oriented approach
• Technological developments
• Better labour relations

LATEST CBSE QUESTIONS

Question 1: 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 attracted many other players to enter the market. Competition resulted in reduction in prices, thereby benefiting the customers.

• In the above paragraph, two major concepts related to government policy have been discussed. Identify and explain these concepts.
• Also, explain briefly any three impacts of these concepts on Indian business and industry.
• Liberalisation: These economic reforms signalled the end of the licence-pemit-quota raj and were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions.
• Globalisation: Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy.
• Increasing competition: The Indian firms are facing lot of competition due to changes in the rules of industrial licensing and entry of foreign firms. This change is more apparent in the sectors which were earlier reserved for private sector only like banking, insurance, telecommunications, etc.
• More demanding customers: With the easy availability of wider choice in purchasing better quality of goods and services due to high competition consumers have become more aware and demanding. The growing expections of the consumers has increased the pressure on the business firms.
• Rapidly changing technological environment: With the entry of new firms which are far more superior in terms of technology the small firms are facing a lot of challenges. Moreover, the firms are constantly involved in innovating new products and upgrading present products with the help of better technologies in order to satisfy the customers demands.

Question 2: Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors’, competitors and other forces like social, political etc. that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.

• Identify and state the component of business environment highlighted in the above Para.
• State any two features of business environment as discussed by Professor Mehta with Naman and Govind.
• Also state two points of importance of business environment as stated by Professor Mehta in the above situation.
• Technological Environment is the component of business environment highlighted in the above Para. Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
• Dynamic nature: It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market.
• Inter-relatedness: All the elements of business environment are closely interrelated. Therefore, any change is one element may necessitate corresponding changes in the other elements as well.
• It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors.
• It helps the firm to identify threats and early warning signals: Sometimes the changes in the external environment may pose as a threat and hinder a firm’s performance. An awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.

Question 3: With changes in the consumption habits of people, Neelesh, who was running a sweet shop, shifted to the chocolate business. On the eve of Diwali, he offered chocolates in attractive packages at reasonable prices. He anticipated huge demand and created a website chocolove. com for taking orders online. He got a lot of orders online and earned huge profits by selling the chocolate. Identify and explain the dimensions of business environment discussed in the above case. Answer: The various dimensions of business environment being referred to in the above case are as follows:

• Social environment: Social Environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
• Technological environment: Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question 4: 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 organised by the Directorate of Education. He was awarded the first prize for his invention. Identify and explain the dimensions of business environment discussed in the above case. Answer: The various dimensions of business environment being referred to in the above case are as follows:

• Economic Environment: It comprises of factors that can affect management practices in a business enterprise includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc.
• Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question 5: ‘Accent Electronics Ltd.’ was operating its business in Malaysia. The company started exporting its products to India when the Prime Minister announced relaxation in import duties on electronic items. The company appointed retailers in India who had direct online links with the suppliers to replenish stocks when needed. Identify and explain the dimensions of business environment discussed in the above case. Answer: The various dimensions of business environment being referred to in the above case are as follows:

• Political Environment: Political Environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
• Technological Environment: Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question 6: After completing her MBA, Beni took up a job with a multinational company named Fortio. The company paid good salaries and perks to its employees. The wages were within the paying capacity of the company that provided the employees with a reasonable standard of living. The company also had a good work-culture and the behaviour of superiors was very good towards their subordinates. Beni was very happy in this organisation but due to long working hours, she did not have time to cook her meals. She had to depend upon outside food which was deteriorating her health. She observed that this problem was faced by many of her colleagues, not only in her company but also in many other companies. This was because of increase in the number of working women and non-availability of hygienic home-cooked food. She identified this as a great opportunity and decided to give up her job to supply packaged home-cooked food to office-goers at a reasonable price. At the end of the day, she also distributed the leftover food to the nearby night-shelters.

• State the dimension of business environment being discussed above.
• State the principle of management being followed by Fortio.
• Identify any two values being communicated by the company to society in above case.
• The dimension of business environment being discussed above is Social. Social Environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
• The principle of management being followed by Fortio is ‘Remuneration of employees’. Remuneration of employees: The overall pay and compensation should be fair to both employees and the organization. The employees should be paid fair wages, which should give them at least a reasonable standard of living. At the same time it should be within the paying capacity of the company i.e. remuneration should be just and equitable.
• Ethical Behaviour

Question 7: After completing his MBA from the USA, Mr. Ajay came to India to start a new business under the banner Ecom Creations Ltd. He launched a new product in e-learning for senior secondary school students in the commerce stream which already had an established market in the UK and the USA but not in India. His business started flourishing in India. As a result, more Indian companies entered into the market with other subjects also. Identify and quote the lines from the above paragraph which highlight the significance of understanding business environment. Answer:

• The understanding of business environment helps in assisting in planning and policy formulation as its understanding and analysis can be the basis for deciding the future course of action or decision making. It enables the firm to identify opportunities and getting the first mover advantage instead of losing them to its competitors. ” After completing his MBA from USA, Mr. Ajay came to India .to start a new business under the banner Ecom Creations Ltd. He launched a new product in e-learning for senior secondary school students in the commerce stream which already had an established market in UK and the USA but not in India.”
• It helps in improving performance of an enterprise through continuous monitoring of the environment and adopting suitable business practices which help to improve both their present and future performance. “His business started flourishing in India.”
• It helps the firm to identify threats and early warning signals that is likely to hinder a firm’s performance and take timely actions. “As a result, more Indian companies entered into the market with other subjects.”

Question 8: As per the directions issued by the Supreme Court, the government passed an order to ban the sale of tobacco products within the area of 200 meters of all educational institutions as:

• Its consumption is injurious to health.
• People are becoming more conscious about health and fitness. This indicates the government’s attitude towards this business. Identify the business environment under three different dimensions by quoting from above paragraph.

Answer: The various dimensions of business environment being referred to the in the above case are as follows:

• Legal Environment: “As per the directions issued by the Supreme Court.’
• Political Environment: “The government passed an order to ban the sale of tobacco products within the area of 200 meters of all educational institutions.”
• Social Environment: “Its consumption is injurious to health and people are becoming more conscious about health and fitness.”

Question 9: The court passed an order to ban polythene bags as:

• These bags create many environmental problems which affect the life of people.
• Innovative techniques are being developed to manufacture jute bags at low rates.
• Incomes are rising and people can afford to buy these bags. Identify the different dimensions of business environment by quoting lines from the above particulars.

Answer: The various dimensions of business environment being referred to in the above case are as follows:

• Legal Environment: “The court passed an order to ban polythene bags.”
• Social Environment: “The bags create many environmental problems which affect the life of people and society at large is more concerned about the,,quality of life.”
• Political Environment: “The government decided to give a subsidy to the jute industry in order to promote this business.”
• Technological environment: “Innovative techniques are being developed to manufacture jute bags at low rate.”
• Economic Environment: “Incomes are rising and people can afford to buy these bags.”

Question 10: The court passed an order that all schools must have water purifiers for the school children as:

• Society in general is more concerned about the quality of life. .
• Innovative techniques are being developed to manufacture water purifiers at competitive rates.
• Incomes are rising and children are drinking purified water at their homes as well.
• The Government is also showing a positive attitude towards the business of water purification. Identify the different dimensions of business environment by quoting from the above details.
• Legal Environment: “The court passed an order that all schools must have water purifiers for the school children.”
• Social Environment: “Society in general is more concerned about the quality of life.”
• Political Environment: “The government is also showing a positive attitude towards the business of water purifiers.”
• Technological environment: “Innovative techniques are being developed to manufacture water purifiers at competitive rate.”
• Economic Environment: “Incomes are rising and children are drinking purified water at their homes as well.”

Question 11: Just after the declaration of the results of the Lok Sabha Elections, 2009, the Bombay Stock Exchange’s price index (Sensex) rose by 2100 points in a day. Identify the environmental factor which led to this rise. Answer: Political environment has led to the rise in the sensex.

Question 12: The Government of India is seriously thinking of allowing the oil-marketing public sector undertaking to fix their own prices for petrol and diesel. Which economic reform is the reason for this change in the government’s policy? Answer: Privatisation as a reform is the reason for this change in the government policy.

ADDITIONAL QUESTIONS

Question 1: On 8 November 2016, the Government of India announced the demonetisation making all Rs.500 and Rs. 1,000 banknotes of the Mahatma Gandhi Series invalid past midnight. The government claimed that the action would curtail the use of illicit and counterfeit cash to fund illegal activity and terrorism. The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the day after the announcement. The decision was heavily criticised by members of the opposition parties, leading to debates in both houses of parliament and triggering organised protests against the government in several places across India. People seeking to exchange their bank notes had to stand in lengthy queues, and several deaths were linked to the inconveniences caused due to the rush to exchange cash. After demonetisation the demand for point of sales (POS) or card swipe machines has increased. E-payment options like PayTM has also seen a rise. In context of the above case:

• Identify and explain the various dimensions of business environment which relate to the above mentioned case.
• List any through two values that the government seeks to promote through demonetisation.
• Legal environment: Legal Environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— centre, state or local .
• Economic Environment: Economic Environment comprises of factors that can affect management practices in a business enterprise includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc.
• Transparency in dealings
• Promote well being of people

Question 2: Post demonitisation in a further push to cashless economy, the Central cabinet has recently approved the ordinance for paying wages via electronic means. Accordingly, the government approved to Amend Section 6 of the Payment Of Wages Act 1936, to allow employers of certain industries to make payment through the electronic mode and cheques . The new ordinance will be applicable to the public sector. Identify the various dimensions of business environment which relate to the above mentioned case. Answer: The various dimensions of business environment which relate to the above mentioned case stated below:

• Political environment
• Legal environment
• Technology environment

Question 3: Make in India is an initiative launched by the Government of India to encourage national and multinational companies to manufacture their products in India. It focuses on job creation and skill enhancement and is in twenty five sectors of the economy. Under the initiative, brochures on these sectors and a web portal were released. The initiative aims at high quality standards and minimising the impact on the environment. It also seeks to attract foreign capital investment in India. In context of the above case:

• Identify the various dimensions of business environment being referred to by quoting lines from the paragraph.
• List any two values which the Government of India wants to convey through this initiative.
• Political Environment: “Make in India is an initiative launched by the Government of India to encourage national and multinational companies to manufacture their products in India.”
• Technological Environment: “Under the initiative, brochures on the twenty five sectors and a web portal were released.”
• Economic Environment: “It also seeks to attract foreign capital investment in India.”
• High quality standards
• Concern for environment

Question 4: India’s retail sector has been undergoing structural changes for the last two decades. On one hand, the ‘mall culture’ has gradually become a way of life, especially in the metros and mini¬metros. On the other hand, there is accelerated growth in e-business as customers also prefer to buy products and services via the Internet, telephone and television. However, operating in either of the segments is marked by the presence of strong competitors. Identify the components of specific forces and general forces being discussed in the above paragraph. Answer: The components of specific forces discussed in the above paragraph are the customers and competitors. The components of general forces discussed in the above paragraph is the social and technological conditions.

Question 5: Kapil Sharma is working as the Country Head of a company which owns a chain of malls under the name of ‘Virtuoso’ in the various parts of India. Through an analysis report of the business environment, it has been brought to his notice that in the coming years, shopping at a mall will not be a necessity for the buyers as purchases can be made online from anywhere and at any time with ease and at the consumer’s convenience. Hence, malls will have to provide much more than shopping to be able to attract customers. So, he recommends that ‘Virtuoso’ malls should to be restructured into recreation centres, offering more spaces to socialise, host events and concerts, and provide ample Food and Beverages options. Consequently the share of entertainment segment and Food and Beverages segment in the overall mall space is increased by 20%. As a result, the company gains enormously by getting the first mover advantage. In context of the above case :

• Define the term ‘Business Environment’.
• Explain the terms ‘Threats’ and ‘Opportunities’ by quoting lines from the paragraph.
• The term ‘Business Environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.
• The term ‘Threats’ refers to the external environment, trends and changes that will hinder a firm’s performance. “Through an analysis report of the business environment, it has been brought to his notice that in the coming years, shopping at a mall will not be a necessity for the buyers as purchases can be made online from anywhere and at any time with ease and at the consumer’s convenience. Hence, malls will have to provide much more than shopping to be able to attract customers.” The term ‘opportunities’ refers to the positive external trends or changes that will help a firm to improve its performance. “As a result, the company gains enormously by getting the first mover advantage.”

Question 6: “Zero Defect Zero Effect” (ZED) is a slogan coined by the Prime Minister of India, Narendra Modi with reference to the Make in India initiative launched by the government. The slogan reflects the efficiency of production processes, i.e. the products have no defects and the process through which the product is made has zero adverse environmental and ecological effects. The ZED model aims to make India the manufacturing hub of the world and prevent the products developed in India from being rejected by the global market. Moreover, before the initiative was launched, the limits of foreign direct investment in various sectors had been relaxed. The application for licences was made available online and the validity of licences was increased to three years. Various other norms and procedures were also relaxed by the government. In the light of the above paragraph, identify and explain the major component of New Economic Policy of 1991 that are being referred to by quoting lines from the paragraph. Answer: The major components of New Economic Policy of 1991 that are being referred to are as follows:

• Liberalisation: These economic reforms signalled the end of the licence-pemit-quota raj and were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions. “Moreover, before the initiative was launched, the limits of foreign direct investment in various sectors had been relaxed. The application for licences was made available online and the validity of licences was increased to three years. Various other norms and procedures were also relaxed by the government.”
• Globalisation: Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. “The ZED model aims to make India the manufacturing hub of the world and prevent the products developed in India from being rejected by the global market.”

Question 7: It is interesting to know that the menu items of the multinational food chains are customised to suit the general palates of the local people in the region. When McDonald’s started its business in India in the year 1996, the company went through a complete localisation strategy. McDonald’s changed its product menu to accommodate the vegetable burger given the large vegetarian population. It also altered its store design and even reduced the product price by close to fifteen per cent. Also , the “McAloo Tikki burger” is not available anywhere but in the Indian outlets of McDonalds. Identify the relevant feature of business environment being discussed above. Answer: Relativity is the relevant feature of business environment which is being discussed above.

Question 8: Eco-friendly products are gaining power as the consumers’ awareness about environmental issues has increased over the years and they are conscious about choosing products that do not have adverse effects on the environment. They are now more conscious about the carbon emission and climate change effects, and want themselves to be ‘seen’ as a green advocate among their peers. In such a scenario, it has become a challenge for the companies as they have to not only meet the needs of the consumers but also ensure that their products are safe and environment friendly. As a result, there is growing need for better and advanced technologies to works as a catalyst in this regard.

• Identify the relevant feature of business environment being discussed above.
• Describe briefly any three points which highlight the importance of business environment and its understanding by managers.
• Inter-relatedness is the relevant feature of business environment which is being discussed above.
• It helps in tapping useful resources: As the enterprise designs policies that allow it to get the resources that it needs so that it can convert those resources into outputs that the environment desires.

Question 9: In the year 2016, the State Government of Kerala had made it mandatory for anganwadis hostels and canteens in educational institutions to secure the Food Safety and Standards Authority of India (FSSAI) licence to ensure food safety. As the educational institutions also get categorised as food business operators in the event of the annual turnover of the hostels, they run exceeding Rs. 12 lakh per annum. In context of the above case:

• Identify and explain the various dimensions of business environment being referred to here.
•  List any two values which the State Government of Kerala wants to convey through this initiative.
• Political Environment: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
• Legal Environment: Legal environment includes various legislations passed by the government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government -Center, State or Local .
• Good health

Question 10: Postage stamps have been unveiled to commemorate 140 years of existence of the country’s first stock exchange the Bombay Stock Exchange (BSE). The setting up of BSE is considered to be the greatest revolution that took place in the financial markets in India as it acts as a key driver for economic growth of a country. This is due to the fact that there exists a strong corelation between economic growth and capital accumulation. In the context of the above case:

• Identify the dimension of business environment of India being referred here.
• State any three factors which broadly affect the dimension of business environment of India as identified in part (a) of the question.
• Economic environment is the dimension of business environment of India being referred here.

Question 11: The organic food market in India is growing at 25-30 per cent which reflects a clear shift in consumer tastes and preferences. The current growth in the organic food market is driven by multiplicity of factors like rising health consciousness, changing lifestyles, increase in disposable income and growing availability of organic food products in shopping malls, retail outlets and online. In context of the above case:

• Identify and explain the features of business environment being referred to here.
• By quoting phrases from the paragraph identify the various components of general forces which have led to a growth in the organic food market.
• Social: “rising health consciousness, changing lifestyles”
• Economic: “increase in disposable income”
• Technological: “growing availability of organic food products in shopping malls, retail outlets and online.”

Question 12: Anurag, aspires to work with a socially and environmentally committed company as he does not want to work just for monetary benefits but also the brand value of the company he works for in the society matters a lot to him. Therefore, he has joined Cerebra Integrated Technologies a Bengaluru-based Infotech company. The company has built India’s largest e-waste recycling plant. The company strives to be one of the leading players in this business which has huge potential not only in terms of generating huge revenues and profits but also wants to contribute to the environment issues that have become crucial worldwide. The company sees big business in the mountains of e-waste in Bengaluru which produces 200,000 tonnes of e-waste a year. The company plans to make its millions by extracting metals such as gold and platinum from the e-waste piling up in the city. As a mobile phone, for example, is made up of a combination of rare earth and precious metals: it contains 250 mg of silver, 24 mg of gold and nine mg of palladium while a laptop has 1,000 mg of silver, 220 mg of gold and 500 grams of copper. To start the business, the company has obtained a licence from KSPCB ( Karnataka State Pollution Control Board) . In context of the above case:

• List any two values which the company wants to convey to the society.
• Technological Environment: Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
•  administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— center, state or local.
• Social Environment: Social environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.
• Sustainable development
• Concern for environment.

Question 13: The government wants to raise Rs.56,500 crore from the sale of stakes in state-owned enterprises National Thermal Power Corporation (NTPC) in the financial year 2016-17. Identify and explain the related concept. Answer: Disinvestment: Disinvestment refers to transfer in the public sector enterprises to the private sector through dilution of stake of the Government in the public enterprise.

Question 14: Bharat is running an ice cream parlour in a local market. Keeping in mind the changing perceptions about health among the people, one of his employee Abhiraj suggests to him that they should introduce a range a flavoured yogurt. Bharat accepts his suggestion as a result both the image and the profitability of his business increases. In the context of the above case:

• Identify the feature of management which is being highlighted.
• State the related dimension of the business environment.
• Name and explain the related principle of general management.
• The feature of management which is being highlighted is Dynamic.
• The related dimension of the business environment is Social.
• The related principle of general management is Initiative.

Initiative means taking the first step with self-motivation. The workers should be encouraged to develop and carry out their plans for improvement. Suggestion system should be adopted in the organization.

Question 15: As a result of the decision by Britian to exit to European Union the new trade agreements will come into force from the EU as it accounts for 35-40% of auto component exports from India. Tata Motors owned Britain’s largest carmaker Jaguar Land Rover (JLR) has been in Britain for three decades and makes 4,75,000 cars a year in the country of which most of them are exported inside the European Union and beyond. JLR estimates that their annual profit could be cut by one billion pounds ($1.47 billion) by the year 2020. In the context of the above case:

• Explain why are all the elements of business environment considered to be closely interrelated?
• Name any two related dimensions of the business environment.
• All the elements of business environment are considered to be closely interrelated as any change in one of them may necessitate a series of changes in other dimensions as well.
• The related dimensions of the business environment are Political and Legal.

Question 16: : After competing his education, Arun joins his father in their family business of manufacturing cookware. As a businessman, his father is rigid in his approach and has fixed ideas about various issues. He tends to maintain a distance from the factory workers. However, Arun is more receptive to the needs of the workers and doesn’t seem to believe in any class- differences. He believes that the prosperity of their business greatly depends upon the prosperity of their workers and vice versa. At the same time, he has a good understanding of the business environment. Therefore, he introduces a new range of green pans that provide a healthy cooking surface, as they are manufactured with all ceramic or silicon coating and are considered safer than the traditional petroleum based nonstick surfaces which may contain toxic substances. Although, the new cookware range is highly priced/, he expects a ready market for it as both the purchasing power of people and their preference for better quality products has increased over the years. In the context of the above case:

• Identify the nature of management which is being reflected in the different styles of management in practice adopted by Arun and his father.
• Name and explain the related principle of scientific management.
• State the related dimensions of business environment.
• The different styles of management in practice adopted by Arun and his father reflect that management is an art.
•  ‘Harmony, Not Discord’ is the related principle of scientific management. Taylor emphasised that there should be complete harmony between the management and workers instead of a kind of class-conflict, the mangers versus workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. The prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa. He advocated paternalistic style of management should be in practice.
• Economic Environment: Economic environment comprises of factors that can affect management practices in a business enterprise includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc.

Question 17: ‘Gallant’ is a well known FMCG (Fast Moving Consumer Goods) company in India. However, for the past few years its profitability is diminishing due to the presence of a new company ‘Prakritik’. ‘Prakritik’ has gradually acquired a reasonable share in a wide variety segments like soaps, shampoos, detergents, dish wash and oral care. One of the key reason is that ‘Prakritik’ has positioned itself as a natural/Ayurvedic brand and this approach has worked well with the Indian consumer. In order to compete with this threat ‘Gallant’ has acquired a premium Ayurvedic brand ‘Madhumita’ from another group. Moreover its likely to increase its advertising budget to counter the threat from ‘Prakritik’. In the context of the above case:

• Identify the related component of the business environment which has contributed effectively towards the success of Prakritik.
• Also, state the two ways in which ‘Gallant’ has responded to the changes in its business environment.
• Social aspect is the related component of the business environment which has contributed effectively towards the success of Prakritik.
• Acquisition

Banknifty Pivot Point comes under business environment if you see in stock market.

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• MCQs – Nature & Significance of Management
• MCQs- Principles of Management
• MCQs – Chapter – Business Environment
• MCQs – Chapter Planning
• MCQs – Chapter – Organizing
• MCQs – Chapter Staffing
• MCQs – Chapter – Directing PART-1
• MCQs – Chapter – Directing – Part-2
• MCQs- Chapter Controlling
• MCQs- Chapter – Financial Management
• MCQs – Chapter – Marketing Management Part-1
• MCQs- Chapter- Marketing Management -Part-2
• MCQs – Chapter- Marketing Management – Part-3
• Case Studies- Principles of Management
• Case Study – Business Environment
• Case Study-Planning
• Case Study-Organizing
• Case Study- Staffing
• Case Study-Directing
• Case Study – Chapter Controlling
• MCQs – Ch-2 – An Entrepreneur – Part-1
• MCQs – Ch-2 – An Entrepreneur – Part-2
• Ch-3 MCQs for ENTREPRENEURIAL JOURNEY
• MCQs – Ch-4 Entrepreneurship As Innovation And Problem Solving
• Ch-5 MCQs Analysis of Market Env & Market Research
• CH-6 MCQs Unit of sale – Unit cost – Gross Profit
• Unit-2 Entrepreneurial Planning
• Download PDF| Unit-3 Marketing Strategies
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Case Study – Business Environment

Welcome to study research . This time all-important case studies inform of questions and answers.

CASE STUDY – BUSINESS ENVIRONMENT

For class 12 cbse students of business studies..

Q1:  Anil a marketing manager of a car manufacturing company is of the view that in case of construction companies and automobiles manufacturers , low longer term rates are beneficial because they results in increased spending by consumers for buying homes and cars on borrowed money. Identify and explain the component of business environment that Anil is referring in the above case.

Q2:  In an interview , an interviewer asked the interviewee regarding the need of considering the changes of environment . In reply one of the interviewee replied,” Every business should consider the changes going on in inflation rates before taking any financial decisions because inflation rates result in constraints on business enterprises as they increase the various costs of business such as the purchase of raw materials or machinery and payment of wages and salaries to employees.” Interviewer liked the answer . Interviewee has put emphasis on the understanding of only one of the element of business environment. Identify that Element of Business environment.

Q3:’  Atul has got tremendous feedback from public for his newly started Gym plus gym related goods store which is a one stop solution for health conscious people. When asked about his success story then Atul said that the health and fitness trend has become popular among large number of urban dwellers. This has created a demand for products like organic food, diet soft drinks, gyms, bottled water and food supplements. that is why I thought of starting this business. Identify the dimension of business environment whose understanding has helped Atul in garnering the success,

Q4: Asia who is working as a advertisement advisor with one of the consumer goods manufacturing company is of the view that nowadays in order to inform and persuade the potential buyers to buy the product new and modified ways should be adopted by the companies to advertise their products. That is like CD-ROM’s , computerised information kiosks and internet/ world wide web multimedia pages highlighting the virtues of products. Marketing team really appreciated her idea. Identify the element of business environment on which Ashia has put the emphasis.

Q5: Ananya ‘s grand father while telling her about the past of Indian economy told her that even after opening up of our economy in 1991, foreign companies found it very difficult to cut through the bureaucratic red tape to get permits for doing business in India. Sometimes it took months to process even their application in process. As a result these companies were discouraged from investing in India but the situation has improved overtime. Identify the Element of business environment which was the cause for discouragement to foreign companies based on above case.

Q6: While doing labelling of the products companies have to write down certain statutory warnings over it. Understanding of which environment helped them taking above action Identify.

Q7:Identify the importance of Understanding business environment in the following cases:

(a) Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars in an environment of rising petrol prices and a large middle class population of India.

Answer: It enables the firm to identify opportunities and getting first mover advantage.

(b) If  an Indian firm  finds that a foreign multinational is is entering  the Indian market with new varieties. On the basis of above information the Indian firms can prepare themselves to meet the threat by adopting such measures as improving quality of the products , reducing cost of the production , engaging in aggressive advertising and so on.

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Case Study Chapter 3 Business Environment

Please refer to Chapter 3 Business Environment Case Study Questions with answers provided below. We have provided Case Study Questions for Class 12 Business Studies for all chapters as per CBSE, NCERT and KVS examination guidelines. These case based questions are expected to come in your exams this year. Please practise these case study based Class 12 Business Studies Questions and answers to get more marks in examinations.

Case Study Questions Chapter 3 Business Environment

Read the source given below and answer the following questions : Unique Ltd. is an electronic goods manufacturing company situated in Uttar Pradesh. It is earning low revenue in comparison to another electronic company ‘Pace Ltd.’ situated in Delhi. Both the enterprises are affected by the investors , customers, competitors and suppliers in their respective locations. At the same time both are also affected by economic condition, change in technology, etc.

Questions :

Question. Economic condition, changes in technology are related to (a) General forces (b) Specific forces (c) Both (a) and (b) (d) None of the above

Question. Business Environment includes : (a) All internal forces (b) All external forces (c) Both Internal (d) None of the above

Question. There is variation in the revenue of company operating in Uttar Pradesh and operating in Delhi. This is related to which feature of Business Environment ? (a) Uncertainty (b) Relativity (c) General and specific (d) None of the above

Question. Customers and suppliers represent : (a) General forces (b) Specific forces (c) Both (a) and (b) (d) None of the above

Read the source given below and answer the following questions : Two big banner movies were scheduled to be released on the same date. On the last moment release of one of the movies had to be postponed due to opposition of a group of people due to some unethical contents related to their religion was shown in the that movie. The other movie released on time and made huge profit as there was no competition and movie which was postponed suffered loss. “It may be difficult to know the extent of the relative impact of the social economic, political, technological or legal factors on change in demand of a product in the market.”

Question. When there is no competition then firms get : (a) First mover advantage (b) Warning signal (c) Resource allocation (d) None of the above

Question. Identify the dimension of Business Environment that delayed the release of movie. (a) Economic (b) Social (c) Technical (d) Legal

Question. The dimensions of Business Environment are : (a) lndependent (b) Interrelated (c) Both (a) and (b) (d) None of the above

Question. Which feature of Business Environment is highlighted here? (a) Uncertainty (b) Specific and general (c) Dynamic (d) Relativity

Read the source given below and answer the following questions : Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors, competitors and other forces like social, political, etc., that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.

Question. “He emphasised on making plans keeping in mind threat posed by the competitors.” This is related to which importance of Business Environment ? (a) Getting first mover advantage (b) Getting warning signal (c) Help in making plans and policy formulation (d) None of the above

Question. “They should be aware of the environmental trends and changes which may hinder their business performance”. This is related to which feature of business environment ? (a) All external forces (b) Specific and general (c) Relativity (d) Dynamic

Question. “The Alignment of business operations with the business environment will result in better performance.” This is related to which importance of Business Environment ? (a) Getting first mover advantage (b) Getting warning signal (c) Help in improving performance (d) Help in making plans and policy formulation

Question. “First analyse the business environment which consists of investors, competitors and other forces like social, political, etc.” This is related to which feature of business environment ? (a) All external forces (b) Specific and general (c) Relativity (d) Uncertainty

Read the source given below and answer the following questions : The name and taste of Coca-Cola is known to almost each and every individual in India as well as throughout the world. This carbonated soft drink holds the most market share in the soft drink market and got itself a special seat in each and every gathering. The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name. The most common of these are Diet Coke, along with others including Caffeine free Coca-Cola, Diet Coke Caffeine free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla and the list goes on. It has capitalized on each and every opportunity to market itself effectively and place itself in the middle of every gathering. The main reason for such an outstanding placement of product goes to the way they have established the connection between every occasion and the need for Coke to be present there, product design and creative advertising.

Question. Which of the following is not a product of COCA-COLA? (a) Diet Coke Caffeine free (b) Coca-Cola Zero Sugar (c) Coca-Cola Avocado (d) Coca-Cola Cherry

Question. In the context of the above given case, identify one valid importance of Business Environment. (a) Enables a firm to identify opportunities and getting first mover advantage (b) Uncertainty (c) Delay in action (d) Pervasive function

Question. Identify the feature of Business Environment which The Coca-Cola Company managed to get in their favour. (a) Complex (b) Specific and general forces (c) Futuristic (d) Mental Exercise

Question. Which business environment did Coca-Cola majorly tap into ? (a) Technological Environment (b) Social Environment (c) Political Environment (d) Economical Environment

Read the source given below and answer the following questions : 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 attracted many other players to enter the market. Competition resulted in reduction in prices, thereby benefiting the customers.

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

Liberalisation and Globalisation are the two major concepts related to government policy that have been discussed.

• Liberalisation:  These economic reforms signalled the end of the licence-pemit-quota raj and were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions.
• Globalisation:  Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy.

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

The three impacts of reforms on Indian business and industry are outlined below:

• Increasing competition:  The Indian firms are facing lot of competition due to changes in the rules of industrial licensing and entry of foreign firms. This change is more apparent in the sectors which were earlier reserved for private sector only like banking, insurance, telecommunications, etc.
• More demanding customers:  With the easy availability of wider choice in purchasing better quality of goods and services due to high competition consumers have become more aware and demanding. The growing expections of the consumers has increased the pressure on the business firms.
• Rapidly changing technological environment:  With the entry of new firms which are far more superior in terms of technology the small firms are facing a lot of challenges. Moreover, the firms are constantly involved in innovating new products and upgrading present products with the help of better technologies in order to satisfy the customers demands.

Read the source given below and answer the following questions : Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors’, competitors and other forces like social, political etc. that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.

Question. Identify and state the component of business environment highlighted in the above Para.

Technological Environment is the component of business environment highlighted in the above Para. Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question. State any two features of business environment as discussed by Professor Mehta with Naman and Govind.

The two features of business environment as discussed by Professor Mehta with Naman and Govind are as follows:

• Dynamic nature:  It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market.
• Inter-relatedness:  All the elements of business environment are closely interrelated. Therefore, any change is one element may necessitate corresponding changes in the other elements as well.

Question. Also state two points of importance of business environment as stated by Professor Mehta in the above situation.

The two points of importance of business environment as stated by Professor Mehta in the above situation are described below:

• It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors.
• It helps the firm to identify threats and early warning signals: Sometimes the changes in the external environment may pose as a threat and hinder a firm’s performance. An awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.

With changes in the consumption habits of people, Neelesh, who was running a sweet shop, shifted to the chocolate business. On the eve of Diwali, he offered chocolates in attractive packages at reasonable prices. He anticipated huge demand and created a website chocolove. com for taking orders online. He got a lot of orders online and earned huge profits by selling the chocolate. Identify and explain the dimensions of business environment discussed in the above case.

The various dimensions of business environment being referred to in the above case are as follows:

1. Social environment:  Social Environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.

2. Technological environment:  Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

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 organised by the Directorate of Education. He was awarded the first prize for his invention. Identify and explain the dimensions of business environment discussed in the above case.

1. Economic Environment:  It comprises of factors that can affect management practices in a business enterprise includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc.

2. Technological Environment:  It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

‘Accent Electronics Ltd.’ was operating its business in Malaysia. The company started exporting its products to India when the Prime Minister announced relaxation in import duties on electronic items. The company appointed retailers in India who had direct online links with the suppliers to replenish stocks when needed. Identify and explain the dimensions of business environment discussed in the above case.

1. Political Environment:  Political Environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.

2. Technological Environment:  Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Read the source given below and answer the following questions : Neel and Aakash after finishing their graduation under vocational stream decide to start their own travel agency which will book rail tickets and air tickets on commission basis. They also thought of providing tickets within 10 minutes through the use of internet.They discussed the idea with their professor Mr. Singh who liked the idea and suggested them to first analyse the business environment which consist of investors, competitors and other forces like social, political, etc., that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in customer preferences that were taking place and hence, they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threats posed by the competitors so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.

Question. Identify the points of importance of business environment as stated by Professor Singh in the above situation. (a) It enables the firm to identify opportunities and getting the first mover advantage (b) It helps the form to identify threats and early warning signals (c) It helps in tapping useful resources (d) The it helps in assisting in planning and policy formulation.

Question. Identify the components of business environment highlighted in the above paragraph (a)economic environment (b) social environment (c) technological environment (d) political environment

Question. Neel and Aakash after finishing their graduation under vocational stream decided to start their own travel agency which will book rail tickets and air tickets on commission basis which dimension of business environment highlighted here. (a) Economical (b) Political (c) Legal (d) social

Question. Identify the features of business environment as discussed by Professor Singh with Neel and Akash. (a)specific and general forces (b)inter-relatedness (c) dynamic nature (d) uncertainty

Question. Which of the following is not an element of legal environment (a) court judgement (b) The extent and nature of government intervention in business (c) Government regulations (d) Administrative orders issued by the government authorities.

Read the source given below and answer the following questions : The government all over the world are becoming more and more cautious towards the environment.To ensure the same, recently, many state governments passed an order to ban polythene bags since these are non biodegradable. As a result, the government also decided to give a subsidy to jute industry (bags). The minister said in the statement that they believe it will be helpful as income of people are rising and people can afford jute bag. After this subsidy, Aman saw great potential in jute multi-pocket bags business which was not established yet in India but had been flourishing in UK where he studied during his graduation. He launched the product and his business started to boom. So, more companies entered into the market with other articles and improvisations.

Question. Which business dimension is highlighted in the line,” As a result, the government also decided to give a subsidy to jute industry (bags).” (a) Legal (b) Political (c) Economic (d) Social

Question. Which merit of business environment is highlighted in the lines,” He launched the product and his business started to boom. So, more companies entered into the market with other articles and improvisations.” (a) Identify opportunities (b) Identified threats (c) Assisting in planning (d) Coping with rapid changes

Question. Which dimension of business environment is highlighted in the given lines,” To ensure the same, many state government passed an order to ban polythene bags since these are non biodegradable.”? (a) Political (b) Legal (c) Technological (d) Economic

Question. Which business dimension is highlighted in the line,” The Minister said in the statement that he believes it will be helpful as income of people are rising and people can afford jute bags.”? (a) Legal (b) Political (c) Economic (d) Social

Question. Which merit of business environment is highlighted in the lines, “After the subsidy Aman saw great potential in jute multi-pocket bags business which was not established yet in India but had been flourishing in UK where he studied during his graduation.” (a) Identify opportunities (b) Tapping useful resources (c) Coping with rapid changes (d)Assisting in planning

Read the source given below and answer the following questions : Yogesh Agro limited started a new venture for distribution of harmful and chemical free fertilizers vegetables they conducted a survey to find out customer preferences for such vegetables.They found out that most of the customers were concerned about the harmful chemicals being used in growing the vegetables. They found out that 90% of the households were searching for alternatives. The company connected a group of agriculture experts to lay down the procedure for growing the vegetables by the farmers. They decided to train the farmers in new technology to grow chemical free vegetables according to new innovative methods. The experts also suggested soil management techniques through which farmers would be able to create an abundant and lasting harvest. Due to increased awareness for healthcare, demand for products of Yogesh agro limited increased and thus the business flourished

Question. “Due to increased awareness for healthcare demand for products of Yogesh Agro limited increased and thus the business flourished.”What feature/ characteristic of business environment is highlighted above? (a) Specific and general forces (b) Inter-relatedness (c) Dynamic nature (d) Relativity

Question. Which of the following is not a component of economic environment? (a) Balance of payments and changes in foreign exchange reserves (b) The nature of relationship of our country with foreign countries (c) Expansion of transportation and communication facilities (d) Volume of imports and exports of different items.

Question. “They found that most of the customers were concerned about the harmful chemicals being used in growing the vegetables. They found out that 90% of the households searching for alternative.” identify the dimension of business environment highlighted above. (a) Economic environment (b) Social environment (c) Technological environment (d) Political environment

Question. “They decided to train the farmers in new technology to grow chemical-free vegetable according to new innovative methods.” Identity the dimension of business environment highlighted above. (a) Economic environment (b) Social environment (c) Technological environment (d) Political environment

Question. “The experts also suggested soil management techniques through which farmers would be able to create an abundant and lasting harvest.” which dimension of business environment is highlighted here? (a) Technological (b) Legal (c) Political (d) Social

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• Chapter 3: Business Environment

NCERT Solution for Class 12 Business Studies Chapter 3 - Business Environment

NCERT Solutions are an extraordinarily helpful book while preparing for the CBSE Class 12 Business Studies examinations. These solutions of NCERT are collated by subject matter experts who have vast experience in the subject.

NCERT Solution for Class 12 Business Studies Chapter 3 Business Environment

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Very Short Answer Questions NCERT Business Studies Solutions Class 12 Chapter 3

1. What is meant by business environment?

The sum of all the forces (external, institutions and individuals) that are outside the control of a business organisation is referred to as the business environment. The forces mentioned here can be of varied nature, such as social, economic, political, legal or technological. The organisation is unable to control such types of forces, but it can definitely have a positive or negative impact on their performance. For e.g., altering the design of a product with efficiency leads to its demand in the market, whereas below-par performance and poor design will result in making the product inferior.

2. How does understanding of business environment help in improving performance of a business?

Understanding the business environment properly by the organisation results in developing plans and policies according to the environment, which results in great improvement in performance. It also helps to counter any negativity that may exist in the market with a well-defined strategy. This will help an organisation perform at its best every time.

3. Give an example to show that a business firm operates within numerous interrelated factors constituting the business environment. (Hint: example highlighting the interrelatedness of dimensions of business environment).

The various elements of a Business organisation are interrelated and the outcome depends on all these elements. The business environment consists of economic, social, technological, and legal elements.

Let us understand using one example

An automobile company will have the combined impact of all these factors in context of a business environment.

1. If there is a global recession or economic slowdown, it will result in fewer sales of cars. Economic factor comes into play for purchasing a car, and it will impact the business.

2. Due to the introduction of new technology, car manufacturers need to follow that as an industry standard, which will be beneficial for the organisation. This is the impact of technological factors on the business environment.

3. With the introduction of GST, car manufacturers can charge GST, and GST is mandatory for business, which is a legal factor impacting the business environment.

4. Krishna Furnishers Mart started its operations in the year 1954 and emerged as the market leader in the industry because of their original designs and efficiency in operations. They had a steady demand for their products but over the years, they found their market share declining because of new entrants in the field. The firm decided to review their operations and decided that in order to meet the competition, they need to study and analyze the market trends and then design and develop their products accordingly. List any two impacts of changes in business environment on Krishna Furnishers Mart’s operations. (Hint: increase in competition and Market orientation).

The following impacts can be seen with changing of the business environment for Krishna Furnishers Mart

1. Rise in competitors leads to more competition.

2. Innovation in design is needed to differentiate their products from that of their competitors.

5. Name any two Specific forces of business environment affecting business.

Specific forces have a direct impact on the way a business is run. It can be due to the following changes:

1. Changing tastes of customers.

2. Competitor strategy

3. Shift in investor loyalty

Short Answer Questions NCERT Business Studies Solutions Class 12 Chapter 3

1. Why it is important for business enterprises to understand their environment? Explain.

It is essential to understand the business environment as it helps in determining the success or failure of an organisation. The functioning and performance of an organisation are dependent on various factors, which can be external. When we understand the business environment, it becomes easier to drive factors that help in growth.

The following points highlight the importance of understanding the business environment for business enterprises.

1. Business enterprises can identify positive opportunities for a business. It will help in making the first move and staying ahead of the competition.

2. Businesses can identify potential threats by studying the business environment, which can impact the growth of the organisation. Therefore, a study of the business environment proves beneficial for identifying threats and determining the best solution to neutralize the threat.

3. Various resources are required for a business to run, and the appropriate resources are determined by studying the local business environment. These inputs are used to create various products.

4. Business environment is of dynamic nature. Factors such as technology, consumer preferences and government policies are subject to change based on demand. Knowing the business environment will make things easier to adapt easily to the change.

5. Study of the business environment helps in formulating new plans and policies as per the market trends, which makes it more relevant for the current scenario.

6. Analysing the business environment will result in better performance for the organisation.

2. Explain the following terms:

(a) Liberalisation

(b) Privatization

(c) Globalisation

Liberalisation is the process or means of the elimination of the control of the state over economic activities. It provides greater autonomy to the business enterprises in decision-making and eliminates government interference.

The purpose of liberalisation is to increase competition between enterprises. It also encourages foreign trade between countries. It also helps the business expand its global footprint. The opening up of the economy improves the economic development of a nation by the inflow of funds from foreign resources.

Privatisation can be explained as the process of transfer of ownership from the public sector to the private sector. It is also known as Disinvestment in business. Privatisation aims at reducing government ownership in industries.

It reduces the workload on the public enterprises and also paves the way for economic development by encouraging foreign direct investment (FDI).

Globalisation can be understood as the integration of the national economy with the world economy. It represents a free flow of information, technology, goods and services, ideas, capital, and even people as a form of resources across different countries. Globalisation helps in improving t cross border connectivity between different markets in the form of investments, trade, and cultural exchanges.

3. Briefly discuss the impact of government policy changes on the business and industry.

Government policy has the following impact on the business and industry

1. By relaxing the licensing policy and reducing import duties, domestic firms face tough competition. More players will be in the field with their offerings which leads to more competition.

2. Due to the increase in competition, consumers are flooded with choices for goods and services. This leads to an increase in the demand of consumers for better quality goods and services.

3. Government policy changes result in changes in the business policies of the business enterprises for sustaining and making a profit while following the current policies set by the government.

4. With increasing competition, firms need to reach customers with products, and hence they adopt more innovative ways to promote their products by using updated technology.

5. All the improvements in technology and product are possible with the help of trained manpower. Without proper skills, no organisation will be able to execute any plans properly. Therefore, improvements in human resources are very important in the current context.

6. Market orientation has become important as customers have become more demanding and hence businesses need to analyze the market before launching any product.

7. Public sector enterprises need to perform more efficiently in order to survive the competition and stop relying on government funds.

4. National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. It works towards developing a framework of virtual repository of learning resources with a single-window search facility. It provides support to all academic levels including researchers, life-long learners and differently-abled learners free of cost. State the dimensions of business environment highlighted above.

The following business dimensions are highlighted here:

1. By developing a framework of a virtual repository of learning resources, it highlights the technological dimension.

2. By supporting researchers, learners and differently-abled learners free of cost, it highlights the social dimension.

5. State the impact of demonetization on interest rates, private wealth and real estate.

Demonetisation had the following effect on these sectors

1. Interest rates: As demonetisation happened, the number of cash transactions reduced; bank deposits increased in the form of Jan Dhan Accounts. More financial savings by the people of the nation.

2. Private Wealth: Private wealth saw a decline as large-volume transactions were not possible with old notes.

3. Real Estate: Demonetisation led to a decline in real estate prices. The real estate industry witnessed a huge drop in business.

Long Answer Questions NCERT Business Studies Solutions Class 12 Chapter 3

1. How would you characterise business environment? Explain, with examples, the difference between general and specific environment.

The sum of all the forces (external, institutions and individuals) that are outside the control of a business organisation is referred to as the business environment. The forces mentioned here can be of varied nature, such as social, economic, political, legal or technological. The organisation is unable to control such types of forces, but it can definitely have a positive or negative impact on their performance.

The following are the characteristics of the business environment:

1. Business environment is the sum total of all external forces, which includes individuals, government, and consumers. These have an impact on the business performance that is either positive or negative.

2. The different forces that have an impact on the business environment are interrelated. This interrelation has an effect on the business environment. For e.g., if there is an increase in the annual income of the consumers, they are more likely to purchase goods that fulfil all their demands, and this leads to an increase in demand for electric appliances, mobile phones, gadgets etc.

3. Business environment is constantly evolving and therefore is dynamic in nature. This can be explained as we see changing trends in consumer behaviour, technology and policies of the government.

4. The business environment is an uncertain territory. The changes in the market dynamics cannot be predicted easily. Due to this, there exists uncertainty.

5. Business environment is the sum total of all interrelated dynamic forces. Hence, it is somewhat complex and difficult to understand. All the factors like social, political, technological, etc., have an effect on the performance of the organisation. It can be easy to ascertain the individual impact of all the forces; it can be difficult to determine their cumulative effect.

6. Business environment varies with each region and hence is relative. The reason behind the variation in the business environment is that the forces that determine the nature of the business environment are dynamic in nature and therefore change as per region.

Specific environment is said to be the external forces that play a role in functioning of an organisation directly. These forces are specific to a particular organisation or an enterprise. Specific environment is unique to a industry and has an impact on how the day to day business is run. For example, change in price of a raw material required for production will result in less demand and abundant supply of raw materials has a direct impact on the production of the company.

General Environment comprises of all the forces that has an impact on all organisations irrespective of the type of industry. These forces do not differentiate between the industries or types of business. They have a cumulative effect on the organisation’s performance. For example, a new technology for communication will have a impact on the quality and quantity of production or if there is a change in government then it will have an effect on all organisations.

2. How would you argue that success of a business is significantly influenced by its environment?

Any organisation is unable to function on its own. It is influenced by various political, legal, social, and technological forces. These forces form the business environment of an organisation. It is essential that an organisation has a good understanding of its business environment. It enables an organisation to identify those that help or those that obstruct the growth of organisation. Knowing them well will help in reacting better to these forces.

The success of a business is influenced by its environment in the following ways:

1. Whenever there is a change in the business environment, it provides the opportunity to start fresh. Careful observation of the business environment is helpful in identifying these opportunities. It also gives the first movers an advantage in the business. Organisations can reap the maximum benefit in comparison to their competitors.

2. Studying of business environment helps in identifying threats to the business. It helps take preventive measures in order to counter those negative forces.

3. Environment provides sources or inputs such as machinery, raw materials, labour, etc., which are essential for an organisation. Therefore, it makes sense for organisations to choose those resources from the environment and convert them into desired products.

4. Business environment is dynamic in nature. There is a constant change in the factors that make up the business environment. Having a good understanding of the business environment helps cope with the factors better and helps organisations derive benefits from them.

5. Various threats and opportunities are discovered during the analysis of the business environment. The business can thus formulate plans and policies that will be appropriate for the market in the existing scenario.

6. Knowing about the threats and opportunities helps one improve their performance by adapting to these changes in a more informed manner. Being prepared for the situation helps in providing the best performance.

3. Explain with examples, the various dimensions of the business environment.

The business environment has the following dimensions:

1. Economic: The economic dimension consists of economic variables such as income, stock markets, and interest rates that are directly related to the functioning of business enterprises. For example, if there is an increase in purchasing power of consumers, it automatically leads to an increase in demand for goods and services, whereas if purchasing power is low, there is a decrease in demand.

2. Social: The social dimension comprises various traditions, trends, social values, and cultures. For example, companies can use religious festivals to produce items that cater to the occasion.

3. Technological: This dimension comprises all the technological changes and improvements that are happening in the business. There can be many examples, like the introduction of computers which changed the way information was gathered to the more recent developments in mobile phones and the internet. Businesses not updating themselves in the technology field can find themselves in a spot of bother with competitors.

4. Legal: This dimension consists of the various legal rules and legislations that are passed by the government. Non-compliance can lead to legal trouble for the business. For example, the setting up of a company is governed by the Companies Act, and not acting according to the law will result in the company facing legal hassles.

5. Political: Political dimension consists of peace, law and order, and stability. If there is a change in the government, there will be a change in the rules and policies. Frequent changes in administration can result in a loss of interest of investors. Also, relaxing rules can encourage investment. Such an example is of forming of a new policy in 1991 that opened the Indian economy to the world.

4. The government of India announced Demonetization of ₹ 500 and ₹ 1,000 currency notes with effect from the midnight of November 8, 2016. As a result, the existing ₹ 500 and ₹ 1,000 currency notes ceased to be legal tender from that date. New currency notes of the denomination of ₹ 500 and ₹ 2,000 were issued by Reserve Bank of India after the announcement.

The step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions and disclosure led to a rise in government revenue in the form of tax collection.

a. Enumerate the dimensions of business environment highlighted above.

b. State the features of Demonetization.

a. The following dimensions of the business environment are seen to be highlighted here:

1. Political: The government announced the demonetisation of the ₹ 500 and ₹ 1,000 currency notes with effect from midnight of November 8, 2016. It is a step by the government to curb the illegal use of money by some entities.

2. Legal: 500 and ₹ 1,000 currency notes stopped being the legal tender, and ₹ 500 and ₹ 2,000 became the new legal tender.

3. Technological: As demonetisation happened, there was a shortage of cash, which encouraged the use of digital forms of payment in the form of e-wallets like Paytm and other modes of cashless transactions.

The following are the features of demonetization:

1. Demonetization was done with the intention of exposing black money holders and those who evade tax.

2. Increase in savings of people. Earlier more people used to keep money at home rather than at the bank, and this step resulted in savings in the bank.

3. It helped in reducing the interest rates in banks.

4. To popularize the use of digital payments and reduce fraud.

5. What economic changes were initiated by the government under the Industrial Policy, 1991? What impact have these changes made on the business and industry?

The Industrial policy was introduced in 1991. The following are the major highlights of the policy:

1. As per the new Industrial policy of 1991, the system of licensing was abolished. This helped the private players in starting a new venture without the need to obtain a license. Some industries were not exempt, such as those involved in the manufacture of cigarettes, liquor, defence equipment, pharmaceuticals and dangerous chemicals.

2. There was a considerable reduction in the number of industries that were marked for the public sector. The private sector was given the liberty to operate across industries. The government chose to keep only selected industries under direct control, which were atomic energy, railways and atomic minerals.

3. Before the new policy was introduced, companies needed to seek permission from the government to expand production. The new policy relaxed these norms for companies which were having an asset base of 100 crores. These companies can increase production as per the market requirements.

4. The new policy allowed the industrialists to import capital goods from foreign countries and even allowed 100% of FDI in such cases.

5. There was a reform in the definition of small-scale industries. The maximum limit of investment was increased from 5 lakhs to 1 crore. This step helped the industries to develop and contribute more to the GDP of the nation. Industries became more modern with new technologies that made work easier for small-scale industries.

6. This policy also introduced the disinvestment concept, which allowed the government to sell some stakes to the private sector in order to bring development and monetary benefits to the public sector industries.

7. A board was set up to encourage foreign investment in India. It was called Foreign Investment Promotion Board.

The following were the impact of these changes in business and industry:

2. Due to the increase in competition, consumers are flooded with choices for goods and services. This led to an increase in consumers’ demand for better-quality goods and services.

4. With increasing competition, firms need to reach customers with products and hence they adopt more innovative ways to promote their products by using updated technology.

6. What are the essential features of 

i. Liberalisation

ii. Privatisation

iii. Globalisation

Liberalisation is the process or means of the elimination of the control of the state over economic activities. It provides greater autonomy to business enterprises in decision-making and eliminates government interference.

The purpose of liberalisation is to increase competition between enterprises. It also encourages foreign trade between countries. It also helps the business expand its global footprint. The opening up of the economy improves the economic development of a nation through the inflow of funds from foreign resources.

Essential features of liberalisation are:

1. Liberalisation brought about the abolition of licensing policies. Only a handful of industries were retained, such as those involved in the manufacture of cigarettes, liquor, defence equipment, pharmaceuticals and dangerous chemicals.

2. Businesses can decide on the number of goods they want to produce as per market conditions. This is applicable for those companies which have an asset base of 100 crores.

3. Liberalisation helped in the removal of various trade restrictions, tariffs, and duties which helped in the easy movement of goods and services.

4. Liberalisation helped encourage foreign direct investment and increased the competition attracting foreign service providers.

It reduces the workload on public enterprises and also paves the way for economic development by encouraging foreign direct investment (FDI).

The essential features of privatisation are:

1. Government adopted two different methods for disinvestment. In this, the first method was selling a part of the equity in one of the PSUs and the second process was strategic selling of PSUs. With these methods, many of the firms were sold off. This includes major companies like Maruti Udyog, BALCO etc.

2. A board was established that was specially entrusted with the revival of companies that were sick or loss-making. It was known as the Board of Industrial and Financial Reconstruction.

3. In privatisation, the role of the public sector was reduced substantially, with only 8 companies under government control. In the present condition, only 3 industries are under government control, and these are atomic energy, railways and atomic minerals.

4. To improve efficiency among public sector companies and increase the level of professionalism, the government decided to honour the title of Navaratna to all the 9 high-performing PSUs (Public Sector Units).

Globalisation can be understood as the integration of the national economy with the world economy. It represents a free flow of information, technology, goods and services, ideas, capital, and even people as a form of resources across different countries. Globalisation helps in improving cross-border connectivity between different markets in the form of investments, trade, and cultural exchanges.

The following are the essential features of globalisation:

1. It removed or reduced all the trade barriers such as tariffs, trade restrictions, customs duties, etc., which resulted in more business to and from India.

2. Export and Import duties were reduced, which helped in promoting free trade between India and the world.

3. The aim of globalisation was to encourage the setting up of foreign capital in the form of FDI (Foreign Direct Investment). It also resulted in the formation of SEZs (Special Economic Zones) and the creation of FEMA (Foreign Exchange Management Act).

This chapter in NCERT Solutions for Class 12 provides us with a brief introduction to the following concepts. It provides a clear picture of what and how the business environment operates.

• What is business environment? – It is a sum of all the external forces that influence enterprise and operation of business.
• Characteristics of business environment.

NCERT Solutions for Class 12 Business Studies Chapter 3 provides a broad range of illustrative examples, which helps the students to comprehend and learn quickly. The above-mentioned are the illustrations for the Class 12 CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 12 Business Studies , visit BYJU’S or download the app for more information and the best learning experience.

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• NCERT Solutions for Class 12 Business Chapter 3 - Business Environment
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Class 12 NCERT Solutions Business Studies - Business Environment - Free PDF Download

Business Environment Class 12 NCERT Solution gives you authentic information in the simplest manner. NCERT Solutions for Class 12 Business Studies Chapter 3 gives step by step explanations of all the concepts and important key points in a straightforward language. NCERT solution provides convenient learning material that is easy to understand and learn from, as it highlights important topics and explains the concepts through detailed explanations and examples in a systematic manner. 

The information in the NCERT Answers for Class 12 Business Studies is organised in such a way that it is simple to catch up at the last minute. NCERT answers for Business Studies Class 12 provide students with complete learning and aid in the development of skills as well as logical and reasoning abilities.

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Access NCERT Solutions for Class 12 Business Studies Chapter 3 – Business Environment

1. Which of the following does not characterise the business environment?

(a) Uncertainty (b) Employees (c) Relativity (d) Complexity

Ans: Employees do not characterise the company environment among the options listed above. Individuals, businesses, situations, and other external variables that affect an organization's success are referred to as the business environment. Changes in government economic policies, rapid technology breakthroughs, political uncertainty, changes in consumer styles and tastes, and greater market rivalry, for example, can have a significant impact on how a corporation operates. Employees are essential to a company's success, but they do not define its environment.

2. Which of the following best indicates the importance of the business environment? (a) Identification (b) Improvement in performance (c) Coping with rapid changes (d) All of them

Ans: All of the solutions outlined above emphasise the relevance of the company environment. Company managers who understand their environment may not only recognise and analyse external influences, but also respond to them. The following facts demonstrate the significance of the corporate environment and managers' comprehension of it:

It assists the firm in identifying opportunities and gaining a competitive edge

It assists the firm in identifying dangers and early warning signs

It assists the firm in coping with rapid changes

It aids in the planning and formulation of policies.

It aids in the enhancement of performance.

The study of the business environment aids in detecting positive improvements as well as risks or hindrances that affect an organization's performance. As a result, it assists individuals in taking the necessary steps to improve their performance. Furthermore, a thorough examination of the always changing environment aids the organisation in better coping with it.

3. Which of the following is an example of social environment?

(a) Money supply in the economy (b) Consumer Protection Act (c) The constitution of the country (d) Composition of family

Ans: The term "social environment" refers to the social influences that influence company prospects and performance, such as customs, traditions, social values, and social trends.

Composition of family is an example of social environment among the possibilities provided in the question. The health-and-fitness craze, for example, has swept a substantial number of city inhabitants. Organic food, diet soft drinks, gyms, bottled (mineral) water, and food supplements have all seen an increase in demand as a result of this. However, other industries such as dairy processing, tobacco, and liquor have suffered as a result of this tendency.

4. Liberalisation means

(a) Integration among the economies (b) Reduced government controls and restrictions www.vedantu.com (c) Policy of planned disinvestment (d) None of them

Ans: Government controls and restrictions, like licences and quotas, are reduced as a result of liberalisation. The Indian industry has liberalised in the following areas:

(i) the elimination of licencing requirements in most industries except a small number of them.

(ii) the freedom to decide the scale of business activities (i.e., no restrictions on expansion or contraction of business activities).

(iii) the removal of restrictions on the movement of goods and services.

(iv) the freedom to fix the prices of goods and services.

(v) the reduction of tax rates and the lifting of unnecessary controls.

5. Which of the following does not explain the impact of Government policy changes on business and industry?

(a) More demanding customers (b) Increasing competition (c) Change in agricultural prices (d) Market orientation

Ans: Changes in agricultural prices are not one of the options that can explain the impact of government policy changes on business and industry. Changes in government policy, such as liberalisation, privatisation, and globalisation, have an impact on how businesses operate.

Consumers' rising demands, more competition, and a shift in market orientation all contribute to the impact of such legal changes. Changes in agricultural pricing, on the other hand, come as a result of changes in agricultural product demand and supply and are unrelated to changes in government policy.

6. What do you understand by business environment?

Ans: The term "business environment" refers to all of the external variables that influence a company's performance. Economic, social, political, technological, and legal forces are examples of such forces. Individuals, consumers, the government, and legal issues all contribute to the business environment. Changes in client tastes and preferences, for example, as well as changes in government policies, the political environment, and legal restrictions, all contribute to the business climate. Although such influences are outside the control of an organisation, they have an impact on its performance, either positively or negatively. A shift in consumer preferences in favour of a company's goods, for example, increases demand for that company's product.

Similarly, when a new technology is introduced, the firm's existing technology becomes obsolete, and its products become inferior.

The following characteristics characterise the business environment:

The business environment is made up of a variety of external pressures.

The business environment encompasses both specific and general elements that have an impact on the enterprise, either directly or indirectly.

The business environment is dynamic in the sense that it is always changing.

The business environment is primarily uncertain in the sense that future events are difficult to forecast.

7. Why it is important for business enterprises to understand their environment? Explain briefly

Ans: The ability to comprehend the business environment is critical to an organization's success.

Any organisation cannot function without the help of others. Its operation and performance are also influenced by a number of external factors. Continuous review and understanding of the business environment enables a company to better account for these influences and, as a result, improve its performance. The following points emphasise the necessity of environmental awareness for businesses.

i. Recognizing opportunities and gaining a competitive advantage: Positive external trends or changes that will assist a company improve its performance are referred to as opportunities. There are several prospects for commercial success in the environment.

ii. Threat identification and early warning signals: Threats are external environment trends and changes that will impede a company's performance. A study of the business environment, in addition to good prospects, aids an organisation in identifying dangers or negative signals that may have a detrimental impact on its operations.

iii. Gathering Useful Resources: The environment supplies a firm with a variety of resources or inputs, such as raw materials, machinery, and labour.

Enterprises, on the other hand, generate output in the form of goods and services for the environment.

iv. Adapting to Changes: The business world is a dynamic place. Technology, customer tastes and preferences, and government policies all change on a regular basis. An enterprise's ability to deal with these changes and take appropriate action is aided by a thorough analysis and understanding of the environment.

v. Making Plans and Policies: An organization's ability to identify opportunities and risks is aided by a continuous study of the environment. As a result, it assists the organisation in developing appropriate plans and policies in light of the existing situation.

vi. Improving Performance: A continual analysis of the environment assists businesses in formulating appropriate policies and programmes, resulting in improved performance.

8. Mention the various dimensions of business environment.

Ans: i. Economic Environment: It includes economic variables such as interest rates, income, and stock market indexes that have an impact on how businesses operate. An increase in income, for example, has an impact on business demand for goods and services.

ii. Social Environment: The social forces of customs, traditions, social ideals, and social trends are all part of the social environment. Religious celebrations, for example, provide business opportunities for a variety of businesses, including those that produce sweets, decorations, and other things.

iii. Technological Environment: Technological developments and advances are part of the technological environment. Computers, the internet, and new telecommunications infrastructure, for example, all have an impact on businesses.

iv. Legal Environment: This refers to the government's regulations and rules, such as the Companies Act and the Trade Union Act. These regulations control how a company operates and behaves.

Enterprises must be aware of these laws because disobedience can land them in legal danger.

v. Political Environment: The political business environment is made up of political conditions such as peace and stability, as well as law and order. Political unrest has the potential to shatter that trust. Similarly, government officials' attitudes toward business can have a beneficial or negative impact on the economy. A condition of political upheaval, for example, erodes investor confidence and makes it difficult for businesses to run properly.

9. Briefly explain the following: 

(a) Liberalisation

Ans: The term "liberalisation" refers to the government's removal of needless regulations and limitations in the form of licences, permits, and quotas. India's industrial liberalisation took the following form.

i. The need for a licence to start a business was eliminated.

ii. Businesses gained control over the scope and size of their production as well as the pricing of their products.

iii. Restrictions on the movement of goods and services were lifted.

(b) Privatisation

Ans: Privatization entails giving the private sector a larger role while limiting the public sector's engagement. In India, privatisation proceeded in the following manner.

i. Public-sector enterprises are being disinvested.

ii. Establishing an Industrial and Financial Reconstruction Board to help ill and loss-making businesses get back on their feet.

iii. Reducing the government's stake in public-sector businesses.

(c) Globalisation

Ans: Globalisation is the process of diverse economies around the world integrating. It entails lowering import and export constraints such as licencing and tariffs. In terms of globalisation, India implemented the following policies.

i. Import restrictions are lifted

ii. Eliminating the export tax

iii. Reducing the import tax

10. Briefly discuss the impact of government policy changes on the business and industry.

Ans: The government's policies of liberalisation, privatisation, and globalisation have an impact on how businesses operate. The effects of government policy changes on business and industry are highlighted in the following points.

i. Increased Competition: As a result of initiatives such as loosening licencing requirements and lowering import tariffs, domestic enterprises face increased competition.

ii. Increased Demand: As competition grows, so does the number of goods and services available to consumers. As a result, consumers benefit from higher-quality items and more choice.

iii. Changes in Business Policies: Government policies have a direct impact on how businesses operate. As a result, they must adjust their policies accordingly.

iv. Technological Changes: As the market becomes more competitive, businesses must discover new and innovative ways to stay afloat. In this situation, technical advancements are required.

v. The Need for Trained Staff: Product innovation and improvement, as well as the application of new technologies, necessitate skilled and trained personnel. As a result, human resource development becomes necessary.

vi. Intensified Market Orientation: As competition has increased, production has become more market oriented.

vii. Public Sector Enterprises Rely Less on Budgetary Support: To survive growing competition, public sector enterprises must enhance efficiency and productivity rather than relying on budgetary support to absorb their losses. Overall, the impact of government policy changes, particularly those relating to liberalisation, privatisation, and globalisation, has been favourable, as Indian business and industry has demonstrated considerable resilience in dealing with the new economic order.

11. How would you characterise business environment? Explain, with examples, the difference between general and specific environment.

Ans: The phrase "business environment" refers to all of the external circumstances that affect the functioning of a firm. Such pressures include economic, social, political, technical, and legal forces. The business environment is influenced by individuals, consumers, the government, and legal concerns. Changes in client tastes and preferences, for example, as well as changes in government policies, the political environment, and legal restrictions, all contribute to the business climate. Although such variables are outside an organization's control, they have an impact on its performance, either positively or adversely. For example, a movement in customer preferences towards a company's goods boosts demand for that company's product.

When a new technology is launched, the firm's present technology becomes obsolete, and its goods become obsolete.

The characteristics of the business environment are as follows.

i. Aggregate of External Influences: The business environment is the sum of all external forces that influence an organization's performance, whether positively or negatively, such as individuals, consumers, government, and legal issues.

ii. Interrelation: Different forces in the corporate environment are intertwined. For example, as consumer income rises, demand for consumer durables such as televisions and refrigerators rises as well.

iii. Dynamic and Ever-Changing: The business environment is dynamic and ever-changing.

The particular environment refers to external influences that have a direct impact on an organisation. These are factors that are unique to a specific firm or organisation. For example, a movement in customer tastes and preferences towards a company's products has a direct influence on demand. A delay in raw material delivery from suppliers, for example, has a direct influence on a company's output.

The general environment, on the other hand, refers to the external forces that affect all organisations. General forces, unlike specialised forces, do not affect the performance of a single organisation; rather, they affect the performance of all organisation. As a result, such influences only have a tangential impact on a certain organisation. A change in technology, for example, has an impact on the quantity and quality of production in all organisations. Similarly, a shift in political conditions has an impact on all businesses at the same time.

12. How would you argue that the success of a business enterprise is significantly influenced by its environment?

Ans: The environment has a tremendous impact on the success of a company enterprise. The following points emphasise the significance of environmental awareness for businesses:

13. What economic changes were initiated by the government under the Industrial Policy, 1991? What impact have these changes made on the business and industry?

Ans: In July 1991, the Indian government announced the Industrial Policy. The following are the policy's main points.

(i) Abolition of Licensing- The obligatory licencing system was eliminated under the new industrial strategy of 1991.

In other words, as a result of the industrial reforms, private actors were no longer required to seek a licence in order to start a new business.

(ii) Desegregation- The number of industries that are solely for the public sector has been drastically reduced.

The private sector was allowed to operate in the bulk of industries, with only three industries remaining under the government's sole control: railways, atomic minerals, and atomic energy.

(iii) Increased Production Capacity-Prior to the programme, industries had to seek authorization from the government to increase production size.

With the liberalisation policy, MRTP companies (those with assets of more than Rs 100 crore) were free to scale up their operations in accordance with market conditions.

(iv) Importing Capital Goods Freedom- Industrialists were allowed to import capital goods from other countries under the policy.

In the foreign capital, 100 percent FDI was permitted.

(v) Small-scale Industry Reforms—In India, small-scale industries are defined by the maximum amount of investment that can be made in a single unit.

(vi) Disinvestment- Many public sector firms have gone through the disinvestment process. As a result, a growing portion of the assets of governmental industrial firms have been sold to the private sector.

(vii) Foreign Investment Promotion Board: The Foreign Investment Promotion Board was established to stimulate and channel foreign investment into India. The following points emphasise the impact of these changes on business and industry.

(a) Increasing Competition: As a result of initiatives such as the elimination of the licencing policy and dereservation, domestic enterprises are facing increased competition. In the service business, such as telecommunications and banking, India's companies faced rivalry.

(b) Increased Demand: As competition grows, so does the number of goods and services available to consumers. As a result, consumers benefit from higher-quality items and more choice.

(c) Changes in Business Policies: The government's policies under the new industrial policy had a direct impact on how businesses operated. As a result, they made the necessary changes to their policies and procedures.

(d) Technological Changes: As the market becomes more competitive, businesses must discover new and innovative ways to stay afloat. They are progressively embracing new technology and investing in research and development.

(e) Demand for Trained Employees: The demand for skilled, trained, and competent personnel has increased as a result of product developments and improvements, as well as the deployment of enhanced technology. As a result, human resource development becomes necessary.

(f) Greater Market Orientation: With increased competition, it is more important than ever for businesses to adapt their production to market demand. That is to say, production has become more market-driven.

(g) Less Reliance on Budgetary Support by Public Sector Firms: In order to compete, public-sector enterprises have realised the importance of increasing efficiency and productivity.

Case Problem

Several corporations have recently planned large investments in organised retailing in India. Numerous considerations influenced their choices in this regard. Customer earnings are increasing. Consumers have acquired a preference for higher-quality items, even if they must pay a higher price. The degree of aspiration has risen. The government has also liberalised its economic regulations in this area, allowing for 100 percent foreign direct investment in several retail industries.

1. Identify changes in business environment under different heads — economic, social, technological, political and legal that have facilitated the companies’ decisions to plan significant investments in organised retailing.

Economic: Customer income increased as a result of new job prospects.

Social: Customers have acquired a preference for higher-quality products, even if they have to pay more for them.

Technological: Advances in technology have made it easier for customers and retailers to do business.

Political: The government has liberalised its policies on foreign direct investment.

Legal: The government protects customers' rights.

2. What has been the impact of these changes with regard to globalisation and privatisation?

Ans: The impact of these changes, particularly in terms of privatisation and globalisation, has prompted merchants to invest in organised retailing. As a result, competition increased, as did customer demand, and more job possibilities arose as a result.

Chapter 3 - Business Environment

Ncert solutions class 12 business studies - free pdf download.

The Solution PDFs Business Studies for Class 12 provide a huge variety of questions to have a better understanding of the subject. Since Business Studies is one of the most important subjects, advanced knowledge about it is a must. Our PDF will give you detailed solutions for all the questions given in the textbook. The content writers for the subject Business Studies are experts in their field so be assured about the quality of the content. 

Along with this, some additional questions and some sample papers are also there for understanding. paper pattern. These NCERT solutions are based on the latest syllabus and practising them can help you score good marks in the exam. 

NCERT Solutions Class 12 BUSINESS STUDIES CHAPTERS

Business Environment is a part of Class 12 Business Studies. As the 3rd chapter in the book, it deals with various points covering the meaning of the business environment, characteristics of the business environment, the importance of the business environment, dimensions of the business environment, the economic environment in India, the government policy of liberalisation, privatisation, and globalisation, the impact of government policy changes on business and industry, etc. It gives a comprehensive outlook on what students need to know about the business environment.

Class 12 Business Studies Marks Weightage

Business Studies for Class 12 is one of the most important subjects. The theory paper for the subject of Business Studies is of 80 marks. It is divided into three parts. Those are as follows -

Part A: Principles and Functions of Management - 50 marks

Part B: Business Finance and Marketing - 30 marks

Part C: It consists of one project work - 20 marks

For Example; Chapter 3 Business Environment falls under Part A and it has its importance since a lot of questions from this chapter keep repeating in the exam.

This, you would get to know once you start solving sample papers daily. But make sure you complete within 3 hours. This would prepare you to solve the question paper in the final examination.

Our PDFs contain all the useful resources required for Class 12 Business Studies. Like mock papers and previous years' board papers of Business Studies Class 12.

It would aid you in the final examination conducted by CBSE. And it is better to be updated with the pattern of questions.

Why Are NCERT Solutions For Business Studies Class 12 Chapter 3 Important? 

NCERT solutions focus on fundamentals to help students to grasp basic concepts in an organized and quick way.  

NCERT solutions provide detailed step by step explanations and help students to solve doubts by giving them proper guidance throughout the process. 

These solutions give topic-wise answers along with important information about the topic.

NCERT Class 12 Business Studies Solutions come with key points, explanations, and examples that reduce the effort before the examination and make it a great tool for quick revision.

The easy languages of a brief overview of concepts, definitions, and examples can be very useful for the last-minute preparations and revisions as they can learn in a better and faster way.

Conclusion of Complete Chapter

NCERT Answers for Class 12 Business Studies, Chapter 3 - Business Environment, gives a complete and step-by-step solution to all of the questions provided by our specialists. Students who are experiencing problems understanding the chapter can refer to the answers PDF to have a thorough understanding of the ideas in Chapter 3. Students will be able to comprehend the major ideas of the chapter much more easily with the aid of this study material, which will boost their overall performance in the tests. For more NCERT Solutions for Class 12 Business Studies solutions and study resources, visit Vedantu's website or download the app for the finest learning experience.

FAQs on NCERT Solutions for Class 12 Business Chapter 3 - Business Environment

1. Why is it important for business organizations to understand their environment?

The business environment as it helps to determine the success or failure of a business organization. 

Business organizations can identify positive opportunities for a business. It will help to make the first move and stay ahead of the competition.

It is important to study the business environment to identify potential threats and understand their impact on growth to determine the best solution to neutralize.

The business environment is dynamic. The factors such as technology get affected as per consumer preferences and government policies as they are subjected to change based on demand. 

Understanding the business environment will make it easier to adapt to the new change.

2. Mention the essential features of 

A) Liberalisation B) Privatisation C)Globalisation?

Essential features of liberalization, privatization, and globalization as following. A) Liberalisation –

Reduction in tax rates.

Freedom on expansion or contraction of business.

Makes it easier to attract foreign capital and technologies to India

No restriction in fixing the prices of goods and services.

Free movement of goods and services.

Simplifying procedures for imports and exports.

Abolishing licensing requirements in most of the industries except a few. 

B) Privatisation

Filtering of sick enterprises to the Board of Industrial and Financial Reconstruction.

Redefining the role of the public sector by the government.

The policy of planned disinvestments in the public sector.

C) Globalisation

Export promotion

Foreign exchange reforms

Import liberalization

3. Where can I find NCERT Solutions for Class 12 Business Studies Chapter 3?

Vedantu   provides students with the best NCERT Solutions for Class 12 Business Studies . It provides all important questions and solutions for Chapter 3 “Business Environment''. It covers all types of questions. They have a variety of questions to help students understand the chapter better. These solutions and questions are extremely important for all CBSE students from the viewpoint of examinations. Also, the solutions PDF is available for free download on the Vedantu mobile app.

4. What are the basics of the chapter Business Environment for Class 12?

Business Environment is a part of the Class 12 Business Studies CBSE syllabus. It is the third chapter in the business studies book. The basics of the Business Environment chapter include topics covering the external forces that affect the organisation and business. It also deals with understanding the importance of the business environment and learning how the business environment helps to cope with changes happening around.

5. How can I learn Chapter 3 Class 12 Business Studies using NCERT Solutions?

NCERT Solutions for Class 12 Business Studies Business Environment covers a wide variety of concepts that students can learn. Vedantu provides students with the opportunity to learn these concepts. Chapter 3 helps students understand the different dimensions available in a business environment. It gives them a total outlook as to what they need to understand and learn about the business environment.

6. What’s the underlying concept of the Business Environment Chapter?

The underlying concept of the Business Environment Chapter of Class 12 Business Studies relies on understanding the basic elements of the business environment. These elements include economic environment, social environment, technological environment, political environment, and legal environment. The main concept to be learned and understood is how the business environment works with different changes and dimensions in the environment. The characteristics of a Business Environment is the most important concept in this chapter.

7. What are the most important concepts to remember in Class 12 Business Studies Chapter 3?

In Class 12 Business Studies Chapter 3 NCERT Solutions, Vedantu provides students with all the important concepts from the examination point of view. Some important concepts include Meaning of Business Environment, Features of Business Environment, Importance of Business Environment, Dimensions and Components of Business Environment, and Understanding Major Steps in Economic Forms. All these concepts are important for students to learn and understand from the examination point of view.

NCERT Solutions Class 12 Business Studies

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Class 12 Business Studies Case Study Questions

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In this article, we will discuss how to get CBSE class 12 Business Studies Case Study Questions from the myCBSEguide App and our Student Dashboard for free.

For the students appearing for class 12 board exams from the Commerce Stream, Business Studies is a core subject. Business Studies as a subject provides a way of perceiving and interacting with the business ecosystem . It well establishes the interdependence of business on various social, political, legal and economic forces and vice-versa. Business Studies is a purely theoretical and a relevantly easier subject for the Commerce students. Business Studies class 12 exam is a highly scoring subject and it facilitates the students to increase their percentile and excel in academics.

12 Business Studies Paper Design

The exam is divided into 2 parts:

• Part A generally contains questions from Principles and Functions of Management and carries 60 marks.
• Part B comprises questions from Business Finance and Marketing, it carries a total of 40 marks.

The syllabus of class 12 Business Studies comprises 12 chapters that are divided into 2 books

• Principles and Functions of Management
• Business Finance and Marketing

Business Studies Syllabus

CBSE has released the latest class 12 syllabus (2022-23) for Business Studies. 

Business Studies Case Study Questions

Case-based questions have always been an integral part of Business Studies class 12 question papers for the past many years. Students are required to focus more on case studies as they require the application of their knowledge of the key business concepts. In the year 2021-22 CBSE introduced a few changes in the question paper pattern to enhance and develop analytical and reasoning skills among students. Sanyam Bhardwaj, controller of examinations, CBSE quoted that case-based questions would be based on real-life situations encountered by the students.

The purpose was to drift from rote learning to competency and situation-based learning. He emphasized the fact that it was the need of the hour to move away from the old system and formulate new policies to enhance the critical reasoning skills of students. Introducing case study questions was a step toward achieving the goals of the National Education Policy (NEP) 2020.

What is a case study question? (Business Studies)

A case study in reference to Business Studies can be thought of as a real-world test of how the implementation works. It is predominantly a report of an organization’s implementation of something such as a practice, a product, a system, or a service. Case studies based on NCERT text form a substantial part of the Business Studies examination. Initially, they were confusing for both students and teachers but now there is a clarity that has made the question paper more student-friendly. A significant weightage has been given to case-based and application-based questions.

Critical and Analytical Thinking

These questions demand critical and analytical thinking on behalf of the students. The best part of these questions is that they provide conceptual hints and keys that point to the right answer. According to the new pattern implemented by CBSE, case-based questions would carry a significant weightage of more than 30% in the Business Studies question paper.

Case Study Passage

As part of these questions, the students would be provided with a comprehensive passage, based on which analytical questions will have to be answered by them. The students would be required to read the passage carefully before attempting the questions. In the coming examination cycle (2022-23), case-based questions have a weightage of around 30%.

Types of Case Study questions in Business Studies

CBSE plans to increase the weightage of such questions in the following years, so as to enhance the intellectual and analytical abilities of the students. Case study questions would be based on various topics and chapters in Business Studies. It is expected from the students to have complete knowledge of the concepts in their syllabus.

They will have to let go of the shortcut techniques and get to read their textbooks with full concentration, especially for solving case-based questions in Business Studies for the passages given are generally lengthy and require an in-depth study. The best part of having these questions is that the question itself projects a hint of its solution.

The questions asked could be :

• Direct and simple-such questions can easily be solved as the answers are either there in the given passage or the student can solve it at ease by reading and analyzing the passage carefully.
• Indirect and application-based- These are the ones that would require the student to have complete knowledge of the topic and could be answered by application of the concepts. The answers to such questions are slightly tricky and not visible in the given passage, though the passage would highlight the concept on which the questions would be asked by CBSE.

Class 12 Business Studies Case Study

Case study questions asked by CBSE were stated to be quite challenging by many students. It prominently focuses on real and present scenarios of the business world. Though the exam, on the whole, was quite direct and its difficulty level was termed out to be moderate. Around 30% of the question paper consisted of case-based questions that required high-order thinking and analytical skills from the students.

Content of Case Study Questions

The concept of case-based questions is not new since CBSE has always included questions based on Higher Order Thinking Skills (HOTs) and case-based questions. Though now we will have an increased percentage of such questions in the question paper. The student has to keep in mind that the concept-based questions can be attempted only with the proper understanding of the business concepts.

Benefits Of Case-based Questions

Class 12 Business Studies syllabus comprises two books and CBSE can ask Case study questions from any of them. Students must prepare themselves thoroughly for both the books. They must practice class 12 Business Studies case-based questions from the various options available to them.

• Enhance the intellectual capabilities of the students.
• Provide a complete and deeper understanding of the subject.
• Inculcate analytical reasoning and temperament in students.
• Help students retain knowledge for longer periods of time.
• Would definitely help to discard the concept of rote learning and cramming without understanding the core of the subject.
• The questions would facilitate bringing out the much-awaited change in the prevalent system of education in India that hinders the strengthening of practical learning.

Some Case-Study Questions (Business Studies) Class 12

Here are some case study questions for CBSE class 12 Business Studies. If you wish to get more case study questions and other related study material, download the myCBSEguide App now. You can also access it through our Student Dashboard .

Business Studies Case Study 1

Read the following text and answer the questions: ABLEX Ltd. is a big and well-reputed company. The biggest challenge for the company is managing many employees at the same time. As the company has various departments like human resources, marketing, finance,etc., it is very necessary for the company to maintain unity in different departments. All the employees work hard for the organisation. Despite their different interest, they all perform various activities together so as to achieve the objectives of the company. The career of employees is shown a developmental path through proper training modules and job enrichment. Ajay is a manager who assigns all duties and responsibilities to his employees in the department. He uses all sources to develop proper communication with them and leaves no attempt to motivate them.

• It integrates Group Efforts
• It is a Continuous process
• It ensures Unity of Action
• It is Pervasive
• Top Level Management
• Middle-Level Management
• Lower Level Management
• Supervisory Level Management
• Economic objectives
• Social Objectives
• Organisational Objectives
• Personal Objectives

Answer Key:

• (c) It ensures unity of action
• (b) Middle-level management
• (c) Personal objectives
• (a) Directing

Business Studies Case Study 2

Read the following text and answer the question: Mohan works in a bulb manufacturing company. Each bulb that is manufactured is of standard size and quality. Further, if there is any unrequited type of bulb manufactured then its production is stopped. Last month when the company came to know that 10-watt bulbs were no more liked by customers, their production was stopped. He works in the purchasing department. His job is to purchase the filaments required to make bulbs. This time when he purchases the filament he gets the instruction from the seller that some special care needs to be taken in the first hour of fixing the filaments inside the bulb. Mohan knows this information should be given immediately to the production department before the assembling process starts. However, he finds that his company’s policies only allow him to give the message to his immediate boss who will further pass this message to his boss. The passing of this message will continue until it reaches the desired person in the production department. Based on the passage answer the following questions:

• Method study
• Fatigue study
• Standardization and simplification
• None of these
• Scalar chain
• Departmentalization
• Division of Work
• None of the above
• Organization
• Authority and Responsibility
• All of these
• Division of work
• Scalar Chain
• (b) Fatigue study
• (a) Scalar chain
• (c) Gang plank
• (a) Division of work

Business Studies Case Study 3

Read the following passage carefully and answer the questions that follow: Two years ago Radhika completed her degree in food technology. She worked for some time in a company manufacturing chutneys, pickles and murabbas. She was not happy in the company and decided to have her own organic food processing unit for the same. She set the objectives and the targets and formulated an action plan to achieve the same. One of her objectives was to earn 10% profit on the amount invested in the first year. It was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on three months’ credit form farmers cultivating organic crops only. She also decided to follow the steps required for the marketing of the products through her own outlets. She appointed Rakesh as a production manager who decides the exact manner in which the production activities are to be carried out. Rakesh also prepared a statement showing the number of workers that will be required in the factory throughout the year. Radhika informed Mohan about her sales target for different products, area wise for the forthcoming quarter. While working on the production table a penalty of 100 per day for not wearing the caps, gloves and apron was announced.

• Standing Plan
• (a) Objectives
• (c) Procedure
• (b) Programme

Tips to Solve Case Study Questions in Business Studies

Let’s try to comprehend and solve case study questions of class 12 Business Studies. As mentioned earlier, the entire syllabus is divided into 2 books. It is expected from the students to rigorously follow the NCERT book as the language written is quite simple and crisp. The exam in spite of being totally theoretical is quite scoring.

• Read the passage in depth.
• Try to comprehend the situation and focus on the questions asked.
• Generally, the passage given in Business Studies is lengthy but the solutions are brief and simple.
• Can follow a reversal pattern, i.e read the questions before and then search for the answers. You will save time.
• Answer briefly and precisely.
• Focus on solidifying key Business Studies fundamentals for acing any case study. If your concepts are clear, you will hardly face any difficulty in answering them.
• While answering the case study, pick the keywords or any keyline based on which you are withdrawing your conclusion. You need to highlight the reason for your answer.

These simple points if kept in mind will definitely help the student to fetch good marks in case study-based questions in class 12 Business Studies.

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CBSE Class 12 Business Studies Chapter 3 – Business Environment Class 12 Notes

Business environment class 12 revision notes .

In the business environment class 12 notes, we will begin by going through the Pepsi-Cola controversy. Then, we will study the meaning and features of the Business Environment.  We will study the various terms in which Business Environment can be characterized. Moreover, we will consider some facts to understand the importance of the business environment. Furthermore, we will discuss the Dimensions of Business Environment. Thus, we will study the economic, social, technological, political and legal conditions that constitute the business environment. These will be discussed in detail. Then, we will discuss the economic environment in India. Here, we will study the various macro-level factors related to the means of production. Also, we will study the main objectives of India’s development plans.

We will see that the government took several steps. These included control by the state of key industries, central planning and reduced importance of the private sector. However, it led to serious foreign exchange crisis, high government deficit and a rising trend of prices. Thus, the Government introduced a new industrial policy in July 1991, as a part of economic reforms. Hence, we will study the concept of liberalization, privatization, and globalization. Then, we will study the impact of Government policy changes on Business and Industry. Thus, we will study these in terms of increasing competition, more demanding customers, rapidly changing technological environment. Also, in terms of the need for developing human resources, market orientation, etc.

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Sub-topics under Business Environment:

• Introduction & Meaning & Importance of Business Environment : In this Sub-topic, we will study the meaning and features of the Business Environment. Also, we will discuss the importance of the business environment.
• Dimensions of Business Environment : Here, we will discuss the economic, social, technological, political and legal conditions that constitute the business environment.
• Indian Industrial Policies : In this Sub-topic, we will study the policies of liberalization, privatization, and globalization.

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CBSE Class 12 Business Studies Revision Notes

• CBSE Class 12 Business Studies Chapter 13 – Entrepreneurship Development Class 12 Notes
• CBSE Class 12 Business Studies Chapter 12 – Consumer Protection Class 12 Notes
• CBSE Class 12 Business Studies Chapter 11 – Marketing Class 12 Notes
• CBSE Class 12 Business Studies Chapter 10 – Financial Markets Class 12 Notes
• CBSE Class 12 Business Studies Chapter 9 – Financial Class 12 Notes
• CBSE Class 12 Business Studies Chapter 8 – Controlling Class 12 Notes
• CBSE Class 12 Business Studies Chapter 7 – Directing Class 12 Notes
• CBSE Class 12 Business Studies Chapter 6 – Staffing Class 12 Notes
• CBSE Class 12 Business Studies Chapter 5 – Organising Class 12 Notes
• CBSE Class 12 Business Studies Chapter 4 – Planning Class 12 Notes

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Business Environment Class 12 Notes

Please refer to the  Business Environment Class 12 Notes for Business Studies given below. These revision notes and important question answers have been prepared based on the latest NCERT book for Class 12 Business Studies. Our teachers have developed these short notes and Important Questions Class 12 Business Studies as per the latest syllabus for Grade 12 Business Studies issued by CBSE. Read these notes and important questions to get better marks in examinations

Class 12 Business Studies Business Environment

Business Environment

The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

Types of Forces which Affect Business Environment

Features/Characteristics of Business Environment

1. Totality of External Forces  Business environment includes all the external forces so it is aggregative in nature. 2. Specific and General Forces  Business environment includes both specific and general forces. Specific forces such as investors, customers affect business directly. General forces such as social, political, legal and technological conditions. 3. Inter-relatedness  All the forces and factors of business are inter-related. 4. Dynamic Nature  Business environment is dynamic in nature. It keeps on changing whether in terms of technological improvements. 5. Uncertainty  Business environment is uncertain and these changes are difficult to predict. 6. Complexity  Business environment is difficult to understand. It can be understood easily in parts but in totality it is difficult to understand.

Importance of Business Environment

✔ It enables the firm to identify opportunities and getting the first mover advantage instead of losing them to its competitors. ✔ It helps the firm to identify threats and early warning signals which are likely to hinder a firm’s performance and take timely actions. ✔ It helps in tapping useful resources as the enterprise designs policies that allow it to get the resources that it needs so that it can convert those resources into outputs that the environment desires. ✔ It helps in coping with rapid changes as the managers are able to understand and examine the environment and develop appropriate courses of action. ✔ It helps in assisting in planning and policy formulation as its understanding and analysis can be the basis for deciding the future course of action or decision making. ✔ It helps in improving performance of an enterprise through continuous monitoring of the environment and adopting suitable business practices which help to improve both their present and future performance. ✔ It helps in improving performance of an enterprise through continuous monitoring of the environment and adopting suitable business practices which help to improve both their present and future performance

Dimension of Business Environment

1. Economic Environment  It consists of Gross Domestic product, Income at National level and per capita level. Profit earning rate, monetary and fiscal policy of the government etc.

2. Social Environment  It consists of the customs and traditions of the society in which business is existing. It includes the standard of living, taste, preferences etc.

3. Political Environment  It constitutes all the factors related to government affairs such as type of government, power, attitude of government towards different groups of societies etc.

4. Legal Environment  It constitutes the laws and various legislations passed in the parliament. Like as Trade Mark Act, Essential Commodity Act, Weights and Measures Act etc.

5. Technological Environment  It refers to changes taking place in the method of production, use of equipment’s and machineries to improves the quality of product

Economic Environment in India

Various Macro-level Factors of Economic Environment in India •  Stage of economic development of the country. •   The economic structure in the form of mixed economy which recognises the role of both public and private sectors. •   Economic policies of the Government, including industrial, monetary and fiscal policies. •   Economic planning, including five year plans, annual budgets, and so on. •   Economic indices, like national income, distribution of income, rate and growth of GNP, per capita income, disposal personal income, rate of savings and investments, value of exports and imports, balance of payments, etc. •   Infrastructural factors, such as, financial institutions, banks, modes of transportation communication facilities etc.

The Constituents of Economic Environment of Business in India at the time of Independence

✔  The Indian economy was mainly agricultural and rural in character. ✔  About 70% of the working population was employed in agriculture. ✔  About 85% of the population was living in the villages. ✔  Production was carried out using irrational, low productivity technology ✔  Communicable diseases were widespread, mortality rates were high and there was no good public health system.

New Industrial Policy Of 1991

Three Major Components of New Industrial Policy of 1991 1. Liberalisation 2. Privatisation 3. Globalisation

The Broad Feature of New Industrial Policy, 1991 •  The Government reduced the number of industries under compulsory licensing to six. •   Many of the industries reserved for the public sector under the earlier policy, were de reserved. The role of the public sector was limited only to four industries of strategic importance. •   Disinvestment was carried out in case of many public sector industrial enterprises. Disinvestment definition •   Disinvestments refers to transfer from public sector enterprises to the private sector through dilution of state of the Government in the public enterprise •   The share of foreign equity participation was increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted. •   Automatic permission was now granted for technology agreements with foreign companies.

Liberalisation These economic reforms signalled the new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the unnecessary controls and restrictions. Simplifying procedures for imports and exports.

Key initiatives of the government: •  Abolishing licensing requirement in most of the industries except a short list. •  Freedom in deciding the scale of business activities •  Removal of restrictions on the movement of goods and services. •  Freedom in fixing the prices of goods and services. •  Reduction in tax rates and lifting of unnecessary controls over the economy. •  Making it easier to attract foreign capital and technology to India.

Privatisation The new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the Unnecessary controls and restrictions. Process and a reduced role emergence of a cohesive to the public sector.

Key initiatives of the government: •  Adopted the policy of planned disinvestments of the public sector. •  Decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.

Globalisation These economic reforms signalled the new set of economic Globalisation means the end of the licence-permit-quota raj reforms aimed at giving integration of the various and were aimed at liberalising the greater role to the private economies of the world Indian business and industry from all sector in the nation building leading towards the unnecessary controls and restrictions. process and a reduced role emergence of a cohesive to the public sector global economy.

Key initiatives of the government: •  Import liberalisation and export promotion through rationalisation of the tariff structure and reforms with respect to foreign exchange. •  Increased level of interaction and interdependence among the various nations of the global economy.

Impact of Government Policy Changes on Business and Industry

1. Increasing Competition  There is a tough competition between multinationals and there is also competitions between Indian enterprises and foreign enterprises.

2. More Demanding Customers  Customers today become more demanding because they are well-informed.

3. World Class Technology  Changes in government policy regarding business and industry has provided us with world class technology.

4. Necessity for Change After 1991 , the market forces have become turbulent as a result of which the enterprises have to continuously modify their operations.

5. Need for Developing Human Resource  The new market conditions requires people with higher competence and greater commitment.

6. Market Orientation  Today firms are market oriented. They research the market, need and wants of consumers and then they produce good accordingly.

7. Loss of Budgetary Support to Public Sectors  The government’s budgetary support for financing the public sector has declined over the years.

Case Study Business Environment Class 12 Business Studies

Question. 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 attracted 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. 2. Also, explain briefly any three impacts of these concepts on Indian business and industry. Ans. 1. Liberalisation and globalisation are the two major concepts related to government policy that have been discussed. • Liberalisation:  These economic reforms signaled the end of the licence-pemit-quota raj and were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions. • Globalisation : Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. 2. The three impacts of reforms on Indian business and industry are outlined below: • Increasing competition:  The Indian firms are facing lot of competition due to changes in the rules of industrial licensing and entry of foreign firms. This change is more apparent in the sectors which were earlier reserved for private sector only like banking, insurance, telecommunications, etc. • More demanding customers:  With the easy availability of wider choice in purchasing better quality of goods and services due to high competition consumers have become more aware and demanding. The growing expectations of the consumers have increased the pressure on the business firms. • Rapidly changing technological environment:  With the entry of new firms which are far more superior in terms of technology the small firms are facing a lot of challenges. Moreover, the firms are constantly involved in innovating new products and upgrading present products with the help of better technologies in order to satisfy the customers’ demands.

Question. Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors’, competitors and other forces like social, political etc. that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance. 1. Identify and state the component of business environment highlighted in the above Para. 2. State any two features of business environment as discussed by Professor Mehta with Naman and Govind. 3. Also state two points of importance of business environment as stated by Professor Mehta in the above situation. Ans. 1. Technological Environment is the component of business environment highlighted in the above Para. Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business. 2. The two features of business environment as discussed by Professor Mehta with Naman and Govind are as follows: •  Dynamic nature: It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market. •  Inter-relatedness: All the elements of business environment are closely interrelated. Therefore, any change is one element may necessitate corresponding changes in the other elements as well. 3. The two points of importance of business environment as stated by Professor Mehta in the above situation are described below: •  It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors. •  It helps the firm to identify threats and early warning signals: Sometimes the changes in the external environment may pose as a threat and hinder a firm’s performance. An awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.

Question. With changes in the consumption habits of people, Neelesh, who was running a sweet shop, shifted to the chocolate business. On the eve of Diwali, he offered chocolates in attractive packages at reasonable prices. He anticipated huge demand and created a website chocolove. com for taking orders online. He got a lot of orders online and earned huge profits by selling the chocolate. 1. Identify and explain the dimensions of business environment discussed in the above case. Ans. The various dimensions of business environment being referred to in the above case are as follows: • Social environment: Social Environment includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. •  Technological environment: Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question. 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 organised by the Directorate of Education. He was awarded the first prize for his invention. • Identify and explain the dimensions of business environment discussed in the above case. Ans. The various dimensions of business environment being referred to in the above case are as follows: Economic Environment: It comprises of factors that can affect management practices in a business enterprise includes interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee etc. Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question. ‘Accent Electronics Ltd.’ was operating its business in Malaysia. The company started exporting its products to India when the Prime Minister announced relaxation in import duties on electronic items. The company appointed retailers in India who had direct online links with the suppliers to replenish stocks when needed. •  Identify and explain the dimensions of business environment discussed in the above case. Ans. The various dimensions of business environment being referred to in the above case are as follows: Political Environment: Political Environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. Technological Environment: Technological Environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

Question. Just after the declaration of the results of the Lok Sabha Elections, 2009, the Bombay Stock Exchange’s price index (Sensex) rose by 2100 points in a day. • Identify the environmental factor which led to this rise. Ans. Political environment has led to the rise in the sensex.

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Class 12th Business Studies - Business Environment Case Study Questions and Answers 2022 - 2023

By QB365 on 08 Sep, 2022

QB365 provides a detailed and simple solution for every Possible Case Study Questions in Class 12 Business Studies Subject - Business Environment, CBSE. It will help Students to get more practice questions, Students can Practice these question papers in addition to score best marks.

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Business environment case study questions with answer key.

12th Standard CBSE

Final Semester - June 2015

Business Studies

The name and taste of Coca-Cola is known to almost each and every individual in India as well as throughout the world. This carbonated soft drink holds the most market share in the soft drink market and got itself a special seat in each and every gathering. The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name. The most common of these are Diet Coke, along with others including Caffeine free Coca-Cola, Diet Coke Caffeine free, Coca-Cola Zero Sugar, Coca- Cola Cherry, Coca-Cola Vanilla and the list goes on. It has capitalized on each and every opportunity to market itself effectively and place itself in the middle of every gathering. The main reason for such an outstanding placement of product goes to the way they have established the connection between every occasion and the need for Coke to be present there, product design and creative advertising. 1. In the context of the above given case, identify one valid importance of Business Environment.

2. Identify the feature of Business Environment which The Coca-Cola Company managed to get in their favour.

3. Which business environment did Coca-Cola majorly tap into ?

4. Which of the following is not a product of COCA-COLA?

*****************************************

Business environment case study questions with answer key answer keys.

1. (a) Enables a firm to identify opportunities and getting first-mover advantage. 2. (b) Specific and general forces 3. (b) Social Environment  4. (c) Coca-Cola Avocado

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Business Studies Study Material for CBSE Class 12

Class 12 business studies advances your knowledge of the business world from what you learned in class 11 business studies teaching more important topics like management, planning, market, consumer protection, etc. completely prepare for the board or competitive exams with our cbse class 12 business studies study material that provides a structured blueprint with chapter-wise notes updated according to 2024-25 cbse guidelines. you can also test your knowledge with sample papers and the previous year's board question exam paper with solutions..

Discover a smoother learning journey through our effortless roadmap

Chapter 1: Nature and Significance of Management

Management : Meaning, Characteristics, Objectives, and Importance

Difference between Efficiency and Effectiveness

Nature of Management as a Science, Art and Profession

Levels of Management - Top, Middle and Lower

Functions of Management - Planning, Organising, Staffing, Directing and Controlling

Coordination in Management : Concept, Features & Importance

Difference between Coordination and Cooperation

Chapter 2: Principles of Management

Nature and Significance of Principles of Management

14 Principles of Management by Henri Fayol

Difference between Unity of Command and Unity of Direction

Principles of Scientific Management

Techniques of Scientific Management

Difference between Time Study and Motion Study

Difference between Fayol and Taylor Theories of Management

Chapter 3: Business Environment

What is Business Environment ? | Meaning and Features

Importance of Business Environment

Dimensions of Business Environment

Economic Environment in India

New Industrial Policy : Features & Impact

Concept and Features of Demonetization

Chapter 4: Planning

11 articles

Features, Importance and Limitations of Planning

Planning Process: Concept and Steps

Types of Plans: Standing Plan and Single-use Plan

Difference between Standing Plans and Single-Use Plans

Difference between Policies and Objectives

Difference between Policies and Strategy

Difference between Policies and Procedures

Difference between Procedures and Methods

Difference between Procedures and Rules

Difference between Policies and Rules

Difference between Rules and Methods

Chapter 5: Organising

10 articles

Organising : Meaning, Importance and Process

Types of Organisation Structure

Difference between Functional Structure and Divisional Structure

Formal and Informal Organisation

Difference between Formal and Informal Organisation

Elements and Importance of Delegation

Difference between Authority, Responsibility and Accountability

Centralization and Decentralization

Difference between Centralization and Decentralization

Difference between Delegation and Decentralization

Chapter 6: Staffing

12 articles

Staffing : Meaning, Definition, Features and Importance

Staffing and Human Resource Management

Staffing Process

Sources of Recruitment (Internal and External: Meaning, Merits and Demerits)

Difference between Internal Recruitment and External Recruitment

Steps in Selection Process

Difference between Recruitment and Selection

Importance of Training and Development to Organisation and Employees

Methods of Training: On-the-Job Methods and Off-the-Job Methods

Difference between On-the-Job Training Methods and Off-the-Job Training Methods

Difference between Training and Development

Difference between Training, Development and Education

Chapter 7: Directing

19 articles

Directing: Meaning, Characteristics and Importance

Principles and Elements of Directing

Importance of Supervision

Features and Importance of Motivation

Process of Motivation

Maslow's Hierarchy of Needs Theory

Financial and Non-Financial Incentives

Difference between Financial and Non-financial Incentives

Features and Importance of Leadership

Types of Leadership Styles

10 Qualities of a Good Leader

Which is more effective Push or Pull marketing ?

Communication: Meaning, Definition, Features and Importance

Elements of Communication Process

Communication Channels | Formal and Informal

Formal Communication: Meaning, Types, Merits and Demerits

Informal Communication: Meaning, Networks, Merits and Demerits

Barriers to Effective Communication

Measures to improve Communication Effectiveness

Chapter 8: Controlling

Controlling: Nature, Importance, and Limitations

Relationship between Planning and Controlling

Process of Controlling

Chapter 9: Financial Management

Role and Objectives of Financial Management

Types of Financial Decisions

Investment Decision: Meaning and Factors affecting Investment Decision

Financing Decision: Meaning and Factors affecting Financing Decision

Dividend Decision: Meaning and Factors affecting Dividend Decision

Financial Planning: Objectives and Importance

What is Capital Structure?

Factors affecting the choice of Capital Structure

What is Fixed Capital and Working Capital?

Factors Affecting the Fixed Capital

Factors Affecting the Working Capital

Chapter 10: Financial Markets

15 articles

Financial Market : Meaning, Functions, and Classification

Instruments of Money Market

What is Capital Market?

Difference between Money Market and Capital Market

What are the different Methods of Floatation of Securities in Primary Market?

Difference between Primary Market and Secondary Market

What is Stock Exchange?

Trading Procedure on a Stock Exchange

Basic Stock Market Terms | Common Terms in Stock Exchange

Depository System: Meaning, Services and Constituents

Demat Account: Types, Importance & How to Open

What is National Stock Exchange of India (NSEI)?

What is Over the Counter Exchange of India (OTCEI)?

Difference between NSEI and OTCEI

Securities and Exchange Board of India (SEBI): Objectives and Functions

Chapter 11: Marketing

24 articles

Marketing: Features and Functions

Advantages and Disadvantages of Commercial Paper

Marketing Management Philosophies

Elements of Marketing Mix : 4Ps

What is Product Mix?

Classification of Products

Difference between Convenience Products, Shopping Products and Speciality Products

Difference between Consumer Products and Industrial Products

What is Branding?

Packaging: Levels, Importance and Functions

What is Labelling?

Price Mix: Meaning and Factors Affecting Price Determination

What is Place/Physical Distribution Mix?

Types of Distribution Channels

Factors Determining Choice of Channels of Distribution

Components of Physical Distribution

What is Promotion Mix?

Advertising : Features, Merits and Demerits

Objections to Advertising

Personal Selling: Features, Merits and Role

Qualities of a Good Salesman

Difference between Advertising and Personal Selling

Sales Promotion: Merits, Demerits and Activities/ Techniques

Public Relations (PR) : Meaning, Importance, Roles and Tools

Chapter 12: Consumer Protection

Consumer Protection: Meaning, Importance and Means

Consumer Rights and Responsibilities

Who is a Consumer?

Consumer Protection Act 1986 v/s Consumer Protection Act 2019

Redressal Agencies under the Consumer Protection Act, 2019

Remedies available to Consumers under Consumer Protection Act 2019

Study Material Overview:

Our CBSE Class 12 Business Studies material provides concise notes covering the entire syllabus, keeping in mind the chapter-wise weightage for exams. Our resources include solved board papers for practice, ensuring a comprehensive understanding of business concepts. Equip yourself for success with our study material.

What do we offer?

GeeksForGeeks has curated the best study material for CBSE Class 12 business studies by taking inputs from teachers and pass-out students. The study material is the best choice to revise class 12 business studies before exams. We have provided chapter-wise notes, with extra emphasis on the important concepts that are frequently asked in board exam papers. Along with notes, the study material also consists of the previous year's board question paper solutions so that students can know the correct method to answer a question. By the end of this study material, you will have completed the entire class 12 business studies syllabus and mastered all important concepts. You can also test your knowledge with the help of a sample paper.

Key Highlights of this Study Material:

• Based on Latest NCERT Guidelines and update for the 2024-25 academic session.
• The in-depth teaching of the most important topics of CBSE class 12 Business studies.
• The use of images and infographics makes it a better choice than hand-written notes.
• The study material is easily accessible through the use of the internet.
• Practice and learn using sample paper and board paper solutions.

GeeksforGeeks breaks down complex ideas into easy-to-understand concepts. Very helpful.

With GeeksforGeeks, It become easy to understand class 12th Business Studies. Their easy explanations and helpful practical examples make studying less stressful.

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Easy to read and Understand. Great Business Studies learning Material

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Class 12 Business Studies Guide: Clear, simple, and exactly what I need for exams.

How many chapters are in Business Studies Class 12?

There are 12 chapters in CBSE class 12 business studies. They are categorized into two parts- Part A and Part B. Part A contains 8 chapters and Part B contains 4 chapters.

Is it necessary to use the Class 12 Business Studies notes PDF?

CBSE class 12 business studies note pdf is useful when revising the entire syllabus, but our study material not only helps you revise the entire syllabus but it will also help you revise specific important topics.

What should be the study plan to ace the CBSE class 12 Business Studies board exam?

The study plan to ace your business studies board exam should be, learning and revising important topics from our study material. Practice the previous year's questions, and at last, be consistent and practice every day.

How does this study material help in learning CBSE class 12 business studies?

The study material provided here is an updated study material that compiles every important concept with practice examples and solutions. After completing this study material, you can easily score 95+ in your board exams.

Are NCERT solutions helpful for Class 12 Business Studies?

Yes, NCERT solutions provide detailed solutions to all questions in the NCERT textbooks and are very helpful.

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McKinsey Global Private Markets Review 2024: Private markets in a slower era

At a glance, macroeconomic challenges continued.

McKinsey Global Private Markets Review 2024: Private markets: A slower era

If 2022 was a tale of two halves, with robust fundraising and deal activity in the first six months followed by a slowdown in the second half, then 2023 might be considered a tale of one whole. Macroeconomic headwinds persisted throughout the year, with rising financing costs, and an uncertain growth outlook taking a toll on private markets. Full-year fundraising continued to decline from 2021’s lofty peak, weighed down by the “denominator effect” that persisted in part due to a less active deal market. Managers largely held onto assets to avoid selling in a lower-multiple environment, fueling an activity-dampening cycle in which distribution-starved limited partners (LPs) reined in new commitments.

About the authors

This article is a summary of a larger report, available as a PDF, that is a collaborative effort by Fredrik Dahlqvist , Alastair Green , Paul Maia, Alexandra Nee , David Quigley , Aditya Sanghvi , Connor Mangan, John Spivey, Rahel Schneider, and Brian Vickery , representing views from McKinsey’s Private Equity & Principal Investors Practice.

Performance in most private asset classes remained below historical averages for a second consecutive year. Decade-long tailwinds from low and falling interest rates and consistently expanding multiples seem to be things of the past. As private market managers look to boost performance in this new era of investing, a deeper focus on revenue growth and margin expansion will be needed now more than ever.

Perspectives on a slower era in private markets

Global fundraising contracted.

Fundraising fell 22 percent across private market asset classes globally to just over $1 trillion, as of year-end reported data—the lowest total since 2017. Fundraising in North America, a rare bright spot in 2022, declined in line with global totals, while in Europe, fundraising proved most resilient, falling just 3 percent. In Asia, fundraising fell precipitously and now sits 72 percent below the region’s 2018 peak.

Despite difficult fundraising conditions, headwinds did not affect all strategies or managers equally. Private equity (PE) buyout strategies posted their best fundraising year ever, and larger managers and vehicles also fared well, continuing the prior year’s trend toward greater fundraising concentration.

The numerator effect persisted

Despite a marked recovery in the denominator—the 1,000 largest US retirement funds grew 7 percent in the year ending September 2023, after falling 14 percent the prior year, for example 1 “U.S. retirement plans recover half of 2022 losses amid no-show recession,” Pensions and Investments , February 12, 2024. —many LPs remain overexposed to private markets relative to their target allocations. LPs started 2023 overweight: according to analysis from CEM Benchmarking, average allocations across PE, infrastructure, and real estate were at or above target allocations as of the beginning of the year. And the numerator grew throughout the year, as a lack of exits and rebounding valuations drove net asset values (NAVs) higher. While not all LPs strictly follow asset allocation targets, our analysis in partnership with global private markets firm StepStone Group suggests that an overallocation of just one percentage point can reduce planned commitments by as much as 10 to 12 percent per year for five years or more.

Despite these headwinds, recent surveys indicate that LPs remain broadly committed to private markets. In fact, the majority plan to maintain or increase allocations over the medium to long term.

Investors fled to known names and larger funds

Fundraising concentration reached its highest level in over a decade, as investors continued to shift new commitments in favor of the largest fund managers. The 25 most successful fundraisers collected 41 percent of aggregate commitments to closed-end funds (with the top five managers accounting for nearly half that total). Closed-end fundraising totals may understate the extent of concentration in the industry overall, as the largest managers also tend to be more successful in raising non-institutional capital.

While the largest funds grew even larger—the largest vehicles on record were raised in buyout, real estate, infrastructure, and private debt in 2023—smaller and newer funds struggled. Fewer than 1,700 funds of less than $1 billion were closed during the year, half as many as closed in 2022 and the fewest of any year since 2012. New manager formation also fell to the lowest level since 2012, with just 651 new firms launched in 2023.

Whether recent fundraising concentration and a spate of M&A activity signals the beginning of oft-rumored consolidation in the private markets remains uncertain, as a similar pattern developed in each of the last two fundraising downturns before giving way to renewed entrepreneurialism among general partners (GPs) and commitment diversification among LPs. Compared with how things played out in the last two downturns, perhaps this movie really is different, or perhaps we’re watching a trilogy reusing a familiar plotline.

Dry powder inventory spiked (again)

Private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20 percent per annum since 2018. Dry powder reserves—the amount of capital committed but not yet deployed—increased to $3.7 trillion, marking the ninth consecutive year of growth. Dry powder inventory—the amount of capital available to GPs expressed as a multiple of annual deployment—increased for the second consecutive year in PE, as new commitments continued to outpace deal activity. Inventory sat at 1.6 years in 2023, up markedly from the 0.9 years recorded at the end of 2021 but still within the historical range. NAV grew as well, largely driven by the reluctance of managers to exit positions and crystallize returns in a depressed multiple environment.

Private equity strategies diverged

Buyout and venture capital, the two largest PE sub-asset classes, charted wildly different courses over the past 18 months. Buyout notched its highest fundraising year ever in 2023, and its performance improved, with funds posting a (still paltry) 5 percent net internal rate of return through September 30. And although buyout deal volumes declined by 19 percent, 2023 was still the third-most-active year on record. In contrast, venture capital (VC) fundraising declined by nearly 60 percent, equaling its lowest total since 2015, and deal volume fell by 36 percent to the lowest level since 2019. VC funds returned –3 percent through September, posting negative returns for seven consecutive quarters. VC was the fastest-growing—as well as the highest-performing—PE strategy by a significant margin from 2010 to 2022, but investors appear to be reevaluating their approach in the current environment.

Private equity entry multiples contracted

PE buyout entry multiples declined by roughly one turn from 11.9 to 11.0 times EBITDA, slightly outpacing the decline in public market multiples (down from 12.1 to 11.3 times EBITDA), through the first nine months of 2023. For nearly a decade leading up to 2022, managers consistently sold assets into a higher-multiple environment than that in which they had bought those assets, providing a substantial performance tailwind for the industry. Nowhere has this been truer than in technology. After experiencing more than eight turns of multiple expansion from 2009 to 2021 (the most of any sector), technology multiples have declined by nearly three turns in the past two years, 50 percent more than in any other sector. Overall, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later and exited in 2021 or before can be attributed to market multiple expansion and leverage. Now, with falling multiples and higher financing costs, revenue growth and margin expansion are taking center stage for GPs.

Real estate receded

Demand uncertainty, slowing rent growth, and elevated financing costs drove cap rates higher and made price discovery challenging, all of which weighed on deal volume, fundraising, and investment performance. Global closed-end fundraising declined 34 percent year over year, and funds returned −4 percent in the first nine months of the year, losing money for the first time since the 2007–08 global financial crisis. Capital shifted away from core and core-plus strategies as investors sought liquidity via redemptions in open-end vehicles, from which net outflows reached their highest level in at least two decades. Opportunistic strategies benefited from this shift, with investors focusing on capital appreciation over income generation in a market where alternative sources of yield have grown more attractive. Rising interest rates widened bid–ask spreads and impaired deal volume across food groups, including in what were formerly hot sectors: multifamily and industrial.

Private debt pays dividends

Debt again proved to be the most resilient private asset class against a turbulent market backdrop. Fundraising declined just 13 percent, largely driven by lower commitments to direct lending strategies, for which a slower PE deal environment has made capital deployment challenging. The asset class also posted the highest returns among all private asset classes through September 30. Many private debt securities are tied to floating rates, which enhance returns in a rising-rate environment. Thus far, managers appear to have successfully navigated the rising incidence of default and distress exhibited across the broader leveraged-lending market. Although direct lending deal volume declined from 2022, private lenders financed an all-time high 59 percent of leveraged buyout transactions last year and are now expanding into additional strategies to drive the next era of growth.

Infrastructure took a detour

After several years of robust growth and strong performance, infrastructure and natural resources fundraising declined by 53 percent to the lowest total since 2013. Supply-side timing is partially to blame: five of the seven largest infrastructure managers closed a flagship vehicle in 2021 or 2022, and none of those five held a final close last year. As in real estate, investors shied away from core and core-plus investments in a higher-yield environment. Yet there are reasons to believe infrastructure’s growth will bounce back. Limited partners (LPs) surveyed by McKinsey remain bullish on their deployment to the asset class, and at least a dozen vehicles targeting more than $10 billion were actively fundraising as of the end of 2023. Multiple recent acquisitions of large infrastructure GPs by global multi-asset-class managers also indicate marketwide conviction in the asset class’s potential.

Private markets still have work to do on diversity

Private markets firms are slowly improving their representation of females (up two percentage points over the prior year) and ethnic and racial minorities (up one percentage point). On some diversity metrics, including entry-level representation of women, private markets now compare favorably with corporate America. Yet broad-based parity remains elusive and too slow in the making. Ethnic, racial, and gender imbalances are particularly stark across more influential investing roles and senior positions. In fact, McKinsey’s research  reveals that at the current pace, it would take several decades for private markets firms to reach gender parity at senior levels. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion.

Artificial intelligence generating excitement

The transformative potential of generative AI was perhaps 2023’s hottest topic (beyond Taylor Swift). Private markets players are excited about the potential for the technology to optimize their approach to thesis generation, deal sourcing, investment due diligence, and portfolio performance, among other areas. While the technology is still nascent and few GPs can boast scaled implementations, pilot programs are already in flight across the industry, particularly within portfolio companies. Adoption seems nearly certain to accelerate throughout 2024.

Private markets in a slower era

If private markets investors entered 2023 hoping for a return to the heady days of 2021, they likely left the year disappointed. Many of the headwinds that emerged in the latter half of 2022 persisted throughout the year, pressuring fundraising, dealmaking, and performance. Inflation moderated somewhat over the course of the year but remained stubbornly elevated by recent historical standards. Interest rates started high and rose higher, increasing the cost of financing. A reinvigorated public equity market recovered most of 2022’s losses but did little to resolve the valuation uncertainty private market investors have faced for the past 18 months.

Within private markets, the denominator effect remained in play, despite the public market recovery, as the numerator continued to expand. An activity-dampening cycle emerged: higher cost of capital and lower multiples limited the ability or willingness of general partners (GPs) to exit positions; fewer exits, coupled with continuing capital calls, pushed LP allocations higher, thereby limiting their ability or willingness to make new commitments. These conditions weighed on managers’ ability to fundraise. Based on data reported as of year-end 2023, private markets fundraising fell 22 percent from the prior year to just over $1 trillion, the largest such drop since 2009 (Exhibit 1).

The impact of the fundraising environment was not felt equally among GPs. Continuing a trend that emerged in 2022, and consistent with prior downturns in fundraising, LPs favored larger vehicles and the scaled GPs that typically manage them. Smaller and newer managers struggled, and the number of sub–$1 billion vehicles and new firm launches each declined to its lowest level in more than a decade.

Despite the decline in fundraising, private markets assets under management (AUM) continued to grow, increasing 12 percent to $13.1 trillion as of June 30, 2023. 2023 fundraising was still the sixth-highest annual haul on record, pushing dry powder higher, while the slowdown in deal making limited distributions.

Investment performance across private market asset classes fell short of historical averages. Private equity (PE) got back in the black but generated the lowest annual performance in the past 15 years, excluding 2022. Closed-end real estate produced negative returns for the first time since 2009, as capitalization (cap) rates expanded across sectors and rent growth dissipated in formerly hot sectors, including multifamily and industrial. The performance of infrastructure funds was less than half of its long-term average and even further below the double-digit returns generated in 2021 and 2022. Private debt was the standout performer (if there was one), outperforming all other private asset classes and illustrating the asset class’s countercyclical appeal.

Private equity down but not out

Higher financing costs, lower multiples, and an uncertain macroeconomic environment created a challenging backdrop for private equity managers in 2023. Fundraising declined for the second year in a row, falling 15 percent to $649 billion, as LPs grappled with the denominator effect and a slowdown in distributions. Managers were on the fundraising trail longer to raise this capital: funds that closed in 2023 were open for a record-high average of 20.1 months, notably longer than 18.7 months in 2022 and 14.1 months in 2018. VC and growth equity strategies led the decline, dropping to their lowest level of cumulative capital raised since 2015. Fundraising in Asia fell for the fourth year of the last five, with the greatest decline in China.

Despite the difficult fundraising context, a subset of strategies and managers prevailed. Buyout managers collectively had their best fundraising year on record, raising more than $400 billion. Fundraising in Europe surged by more than 50 percent, resulting in the region’s biggest haul ever. The largest managers raised an outsized share of the total for a second consecutive year, making 2023 the most concentrated fundraising year of the last decade (Exhibit 2).

Despite the drop in aggregate fundraising, PE assets under management increased 8 percent to $8.2 trillion. Only a small part of this growth was performance driven: PE funds produced a net IRR of just 2.5 percent through September 30, 2023. Buyouts and growth equity generated positive returns, while VC lost money. PE performance, dating back to the beginning of 2022, remains negative, highlighting the difficulty of generating attractive investment returns in a higher interest rate and lower multiple environment. As PE managers devise value creation strategies to improve performance, their focus includes ensuring operating efficiency and profitability of their portfolio companies.

Deal activity volume and count fell sharply, by 21 percent and 24 percent, respectively, which continued the slower pace set in the second half of 2022. Sponsors largely opted to hold assets longer rather than lock in underwhelming returns. While higher financing costs and valuation mismatches weighed on overall deal activity, certain types of M&A gained share. Add-on deals, for example, accounted for a record 46 percent of total buyout deal volume last year.

Real estate recedes

For real estate, 2023 was a year of transition, characterized by a litany of new and familiar challenges. Pandemic-driven demand issues continued, while elevated financing costs, expanding cap rates, and valuation uncertainty weighed on commercial real estate deal volumes, fundraising, and investment performance.

Managers faced one of the toughest fundraising environments in many years. Global closed-end fundraising declined 34 percent to $125 billion. While fundraising challenges were widespread, they were not ubiquitous across strategies. Dollars continued to shift to large, multi-asset class platforms, with the top five managers accounting for 37 percent of aggregate closed-end real estate fundraising. In April, the largest real estate fund ever raised closed on a record $30 billion.

Capital shifted away from core and core-plus strategies as investors sought liquidity through redemptions in open-end vehicles and reduced gross contributions to the lowest level since 2009. Opportunistic strategies benefited from this shift, as investors turned their attention toward capital appreciation over income generation in a market where alternative sources of yield have grown more attractive.

In the United States, for instance, open-end funds, as represented by the National Council of Real Estate Investment Fiduciaries Fund Index—Open-End Equity (NFI-OE), recorded $13 billion in net outflows in 2023, reversing the trend of positive net inflows throughout the 2010s. The negative flows mainly reflected $9 billion in core outflows, with core-plus funds accounting for the remaining outflows, which reversed a 20-year run of net inflows.

As a result, the NAV in US open-end funds fell roughly 16 percent year over year. Meanwhile, global assets under management in closed-end funds reached a new peak of $1.7 trillion as of June 2023, growing 14 percent between June 2022 and June 2023.

Real estate underperformed historical averages in 2023, as previously high-performing multifamily and industrial sectors joined office in producing negative returns caused by slowing demand growth and cap rate expansion. Closed-end funds generated a pooled net IRR of −3.5 percent in the first nine months of 2023, losing money for the first time since the global financial crisis. The lone bright spot among major sectors was hospitality, which—thanks to a rush of postpandemic travel—returned 10.3 percent in 2023. 2 Based on NCREIFs NPI index. Hotels represent 1 percent of total properties in the index. As a whole, the average pooled lifetime net IRRs for closed-end real estate funds from 2011–20 vintages remained around historical levels (9.8 percent).

Global deal volume declined 47 percent in 2023 to reach a ten-year low of $650 billion, driven by widening bid–ask spreads amid valuation uncertainty and higher costs of financing (Exhibit 3). 3 CBRE, Real Capital Analytics Deal flow in the office sector remained depressed, partly as a result of continued uncertainty in the demand for space in a hybrid working world.

During a turbulent year for private markets, private debt was a relative bright spot, topping private markets asset classes in terms of fundraising growth, AUM growth, and performance.

Fundraising for private debt declined just 13 percent year over year, nearly ten percentage points less than the private markets overall. Despite the decline in fundraising, AUM surged 27 percent to $1.7 trillion. And private debt posted the highest investment returns of any private asset class through the first three quarters of 2023.

Private debt’s risk/return characteristics are well suited to the current environment. With interest rates at their highest in more than a decade, current yields in the asset class have grown more attractive on both an absolute and relative basis, particularly if higher rates sustain and put downward pressure on equity returns (Exhibit 4). The built-in security derived from debt’s privileged position in the capital structure, moreover, appeals to investors that are wary of market volatility and valuation uncertainty.

Direct lending continued to be the largest strategy in 2023, with fundraising for the mostly-senior-debt strategy accounting for almost half of the asset class’s total haul (despite declining from the previous year). Separately, mezzanine debt fundraising hit a new high, thanks to the closings of three of the largest funds ever raised in the strategy.

Over the longer term, growth in private debt has largely been driven by institutional investors rotating out of traditional fixed income in favor of private alternatives. Despite this growth in commitments, LPs remain underweight in this asset class relative to their targets. In fact, the allocation gap has only grown wider in recent years, a sharp contrast to other private asset classes, for which LPs’ current allocations exceed their targets on average. According to data from CEM Benchmarking, the private debt allocation gap now stands at 1.4 percent, which means that, in aggregate, investors must commit hundreds of billions in net new capital to the asset class just to reach current targets.

Private debt was not completely immune to the macroeconomic conditions last year, however. Fundraising declined for the second consecutive year and now sits 23 percent below 2021’s peak. Furthermore, though private lenders took share in 2023 from other capital sources, overall deal volumes also declined for the second year in a row. The drop was largely driven by a less active PE deal environment: private debt is predominantly used to finance PE-backed companies, though managers are increasingly diversifying their origination capabilities to include a broad new range of companies and asset types.

Infrastructure and natural resources take a detour

For infrastructure and natural resources fundraising, 2023 was an exceptionally challenging year. Aggregate capital raised declined 53 percent year over year to $82 billion, the lowest annual total since 2013. The size of the drop is particularly surprising in light of infrastructure’s recent momentum. The asset class had set fundraising records in four of the previous five years, and infrastructure is often considered an attractive investment in uncertain markets.

While there is little doubt that the broader fundraising headwinds discussed elsewhere in this report affected infrastructure and natural resources fundraising last year, dynamics specific to the asset class were at play as well. One issue was supply-side timing: nine of the ten largest infrastructure GPs did not close a flagship fund in 2023. Second was the migration of investor dollars away from core and core-plus investments, which have historically accounted for the bulk of infrastructure fundraising, in a higher rate environment.

The asset class had some notable bright spots last year. Fundraising for higher-returning opportunistic strategies more than doubled the prior year’s total (Exhibit 5). AUM grew 18 percent, reaching a new high of $1.5 trillion. Infrastructure funds returned a net IRR of 3.4 percent in 2023; this was below historical averages but still the second-best return among private asset classes. And as was the case in other asset classes, investors concentrated commitments in larger funds and managers in 2023, including in the largest infrastructure fund ever raised.

The outlook for the asset class, moreover, remains positive. Funds targeting a record amount of capital were in the market at year-end, providing a robust foundation for fundraising in 2024 and 2025. A recent spate of infrastructure GP acquisitions signal multi-asset managers’ long-term conviction in the asset class, despite short-term headwinds. Global megatrends like decarbonization and digitization, as well as revolutions in energy and mobility, have spurred new infrastructure investment opportunities around the world, particularly for value-oriented investors that are willing to take on more risk.

Private markets make measured progress in DEI

Diversity, equity, and inclusion (DEI) has become an important part of the fundraising, talent, and investing landscape for private market participants. Encouragingly, incremental progress has been made in recent years, including more diverse talent being brought to entry-level positions, investing roles, and investment committees. The scope of DEI metrics provided to institutional investors during fundraising has also increased in recent years: more than half of PE firms now provide data across investing teams, portfolio company boards, and portfolio company management (versus investment team data only). 4 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023.

In 2023, McKinsey surveyed 66 global private markets firms that collectively employ more than 60,000 people for the second annual State of diversity in global private markets report. 5 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023. The research offers insight into the representation of women and ethnic and racial minorities in private investing as of year-end 2022. In this chapter, we discuss where the numbers stand and how firms can bring a more diverse set of perspectives to the table.

The statistics indicate signs of modest advancement. Overall representation of women in private markets increased two percentage points to 35 percent, and ethnic and racial minorities increased one percentage point to 30 percent (Exhibit 6). Entry-level positions have nearly reached gender parity, with female representation at 48 percent. The share of women holding C-suite roles globally increased 3 percentage points, while the share of people from ethnic and racial minorities in investment committees increased 9 percentage points. There is growing evidence that external hiring is gradually helping close the diversity gap, especially at senior levels. For example, 33 percent of external hires at the managing director level were ethnic or racial minorities, higher than their existing representation level (19 percent).

Yet, the scope of the challenge remains substantial. Women and minorities continue to be underrepresented in senior positions and investing roles. They also experience uneven rates of progress due to lower promotion and higher attrition rates, particularly at smaller firms. Firms are also navigating an increasingly polarized workplace today, with additional scrutiny and a growing number of lawsuits against corporate diversity and inclusion programs, particularly in the US, which threatens to impact the industry’s pace of progress.

Fredrik Dahlqvist is a senior partner in McKinsey’s Stockholm office; Alastair Green  is a senior partner in the Washington, DC, office, where Paul Maia and Alexandra Nee  are partners; David Quigley  is a senior partner in the New York office, where Connor Mangan is an associate partner and Aditya Sanghvi  is a senior partner; Rahel Schneider is an associate partner in the Bay Area office; John Spivey is a partner in the Charlotte office; and Brian Vickery  is a partner in the Boston office.

The authors wish to thank Jonathan Christy, Louis Dufau, Vaibhav Gujral, Graham Healy-Day, Laura Johnson, Ryan Luby, Tripp Norton, Alastair Rami, Henri Torbey, and Alex Wolkomir for their contributions

The authors would also like to thank CEM Benchmarking and the StepStone Group for their partnership in this year's report.

This article was edited by Arshiya Khullar, an editor in the Gurugram office.

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