Class 12th Business Studies Chpater Explanation

Chpater- Business Environment

What is 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.

Features of Business Environment:
  1. Totality of External Forces: The things that are out of the control of Business to an enterprise. Sum total of all these things makes business environment of an Enterprise.

  2. Specific and General Forces: specific forces are those affects the individual firm directly, whereas general forces are those who affects all the individual firms of an industry.

  3. Inter-relatedness: all the elements of the environment are inter-related, change in one lead to change in other.

  4. Dynamic Nature: Business environment always keeps changing, and facilitates advancements.

  5. Uncertainty: it is uncertain as one cannot analyse each and every change in whole industry throughout the world, it becomes extremely difficult to predict the future happenings.

  6. Relativity: business environment differs from place to place and time to time, due to difference in nature of humans of different places and time and humans are basis of environment.

  7. Complexity: business environment consists of interrelated and dynamic elements; it becomes difficult to understand it as whole, as compared to parts.

Importance of Business Environment:
  1. Discovery of opportunities: Enables the Firm to Identify Opportunities and Getting the First Mover Advantage.

  2. Warns about threats: Helps the Firm to Identify Threats and Early Warning Signals, to be ready to face it.

  3. Tapping useful resources: Helps in Identification and procurement of useful resources which helps in improving enterprise produce.

  4. Coping with Rapid Changes: Helps in Coping with Rapid Changes and facilitates survival of an enterprise.

  5. Helps in planning and policy formation: Helps in Assisting in Planning and Policy Formulation as it give a quite clear idea of future.

  6. Helps in improving efficiency: Helps in Improving Performance, as it introduces enterprise to latest technology and techniques which are more efficient.

Dimensions of Business Environment:
  1. Economic Environment: Value of rupee, inflation rate, disposable income, interest rate.
    for example, a rise in the disposable income of people creates increasing demand for product.

  2. Social Environment: Customs and traditions, social trends and values which bring various opportunities and threats to business enterprises.
    For example: Increase in diet soft drinks, mineral water, etc. because of health-and-fitness trend.

  3. Political Environment: Stability, peace, government attitude towards business.
    For example, if the government provides subsidy in the production of cotton garments, it will have positive effect on cotton textile businesses.

  4. Legal Environment: Legislations, administrative orders, court judgements.
    For example, advertisements for packets of cigarettes must carry the statutory warning. "Cigarette Smoking is Injurious to Health.

  5. Technological Environment: Scientific improvement and innovations.
    For example, booking railway and air tickets through internet.

What is Demonetisation?

can be defined as an economic policy where a certain currency unit eases to be recognised or not recognised as a tegal tender
In simple terms, Discontinuation of unit of currency for use of exchange and legal tender under an economic policy.

Objective of demonetisation:
  1. Curb Corruption.

  2. To Prohibit Accumulation of Black Money.

  3. To simplify and improve Tax Administration.

  4. To stop tax evasion.

  5. Channelising savings into the formal financial system.

  6. Creates cashless or cash-lite economy.

Impact of Demonetisation:
  1. Money/Interest Rates: As Cash transaction declined, Bank deposits increased and also Increased in financial savings.

  2. Private wealth: Private wealth declined as a lot of black money was ceased and some went in vain.

  3. Digital transaction: Digital transaction amongst new users, widespread of digital transaction.

  4. Real Estate: Decline in price of both residential and commercial infrastructure.

  5. Tax Collection: As digitalisation made hard to hide black income. Hence, lead to huge increase in tax collection.

Class 12th Business Studies Planning NCERT Solutions

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