What traumatic event does Zitkala-Sa describe at the school?

The forcible cutting of her long hair

Why was the cutting of her hair so humiliating to Zitkala-Sa?

Among her people, shingled hair was worn by cowards and mourners

What is meant by business environment?

It is the totality of external forces and institutions that lie outside a business but affect its performance.

Distinguish between specific and general forces of the environment.

Specific forces (customers, competitors, suppliers) affect a firm directly; general forces (social, political, legal) affect all firms.

Why is the business environment said to be dynamic?

Because it keeps changing through new technology, shifting consumer tastes and the entry of new competitors.

How does environmental understanding help identify opportunities?

Early awareness of positive trends lets a firm exploit them first and gain the first-mover advantage.

Name the five dimensions of business environment.

Economic, social, technological, political and legal environment.

What was the New Economic Policy of 1991 based on?

Liberalisation, privatisation and globalisation, announced after the foreign-exchange crisis.

Define liberalisation.

Freeing industry from controls and restrictions, ending the licence-permit-quota raj.

What does disinvestment mean?

Transfer of ownership in public sector enterprises to the private sector, diluting government stake.

State any two impacts of government policy changes on business.

Increasing competition and more demanding customers (also rapid technology change and market orientation).

State one feature of demonetisation.

It acted as a tax-administration measure that pushed savings into the formal financial system (also promoted digitisation).

Business Environment

Class 12 Business Studies · Business Studies Part I · Chapter 3

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CBSE Class 12 · Business Studies

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Summary

Business environment means the sum total of all individuals, institutions and other forces that lie outside a business enterprise but may affect its performance. Its features are: it is the totality of external forces; it includes both specific forces (customers, competitors, suppliers, investors) and general forces (social, political, legal, technological); it is inter-related, dynamic, uncertain, complex and relative to country and region. Understanding the environment is important because it helps a firm identify opportunities and gain first-mover advantage, identify threats and early warning signals, tap useful resources, cope with rapid change, assist in planning and policy, and improve performance. The dimensions of business environment are economic, social, technological, political and legal. The chapter also studies the economic environment in India, especially the New Economic Policy of 1991 introduced after the foreign-exchange crisis, built on liberalisation (ending the licence-permit-quota raj), privatisation (a greater role for the private sector and disinvestment) and globalisation (integration with the world economy). The impact of these reforms on business and industry includes increasing competition, more demanding customers, rapidly changing technology, the need for change and human resource development, market orientation and loss of budgetary support to the public sector. Demonetisation of 2016 is studied as a recent policy with tax, digitisation and wealth effects.

Meaning and features of business environmentImportance of business environmentDimensions of business environmentEconomic environment in IndiaLiberalisation, privatisation and globalisationImpact of reforms and demonetisation

Key terms

Business environment

The sum total of all external forces and institutions that affect the performance of a business.

Specific forces

External forces such as customers, competitors and suppliers that affect a firm directly.

Opportunities

Positive external trends that help a firm improve its performance.

Liberalisation

Freeing business and industry from unnecessary controls such as the licence-permit-quota system.

Privatisation

Giving a greater role to the private sector and reducing the role of the public sector, including disinvestment.

Globalisation

The integration of a country's economy with the economies of the world.

Extra questions & answers

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Business environment refers to:

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