NCERT Solutions for Class 12 Business Studies Chapter 3: Business Environment; Available for download

NCERT Solutions for Class 12 Business Studies Chapter 3: This article brings to you complete NCERT Solutions for Class 12 Business Studies Chapter 3, Business Environment. In this article you can also find free PDF download link for full NCERT solutions of the chapter mentioned above. Reading of NCERT chapters can help you understand the concepts of the topics and practically implement them while solving NCERT questions. Practise of NCERT Solutions plays an important role in scoring good marks in CBSE Board Examinations.

Chapter 3, Business Environment of Class 12 Business Studies subject, teaches students about multiple factors affecting a business, methods adopted by our governments over the years for impoverishment of our industrial sector and much more. Some important topics from the chapter are:

• Importance of business environment
• Dimensions of business environment
• Economic environment in India
• Demonetization and Impact of demonetization

Clearing concepts of above-mentioned topics can give you sufficient knowledge about the chapter. These topics are also important from CBSE Board Examination’s point of view.

Related:

 CBSE Class 12 Business Studies Revised Syllabus 2023-2024 (PDF)

CBSE Class 12 Business Studies Sample Paper 2023-2024(PDF)

Find NCERT Solutions for Class 12 Business Studies Chapter 3: Business Environment, below.

Very Short Answer Type:

 1.What is meant by business environment?

Answer. The sum total of all forces that are outside of a business’s control but affects its performance is called business environment. These forces are all the institutions, individuals, political, social, economic, technological etc that operate outside your business. It is also quoted as “ Just take the universe, subtract from it the subset that represents the organisation, and the remainder is environment”.

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

Answer. Understanding of business environment can help business adopt suitable business practises and monitor their environment. It teaches them to upgrade and change practises as per new norms which ultimately improves the performance of a business.

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

Answer. A business operates under multiple dimensions. For example: if XYZ is a fashion company, its business environment constitutes of social, technological, legal, environmental dimensions. It has to operate within all of these inter related factors.

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).

Answer. Two impacts of changes in business environment on Krishna Furnisher’s Mart Operations are:

a. Increase in competition from existing and new entrants in the industry.

b. Change in market orientation, business policies from time to time.

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

Answer. Two specific forces of business environment affecting business are:

a. Investors loyalty

b. Strategies of competitors’

Short Answer Type:

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

Answer. It is important for business enterprises to understand their environment because:

a. Identifies opportunity and gets the first mover advantage- Opportunities refer to new trends or changes in an organization’s functioning that improves its performance. Understanding of our  business environment helps business identify such opportunities and stand apart from competition by being the first one to bring the change in the industry. It not only improves performance of the company but also builds trust among the stakeholders. For example: Ola India was the market leader in providing taxi services because it identified the problem of searching for taxi’s in India.

b. Identifies threat and early warning signals- Threat can be change in strategies of competitors, trends that might turn the business upside down, governmental policies, environmental threats etc. Understanding of business environment can help a business be prepared about such environmental disturbances that might affect the business. It acts as early warning signal for companies. For example: if a firm knows that a multinational company is entering your market, it can be termed as a threat, so by using this information you can prepare and adopt strategies to hold your place in the market.

c. Taps useful resources- Understanding of business environment can help you keep an eye on resources available in the environment. A business functions on resources, it is important to find, mine and utilize those resources in the best way possible and it can turn out to be profitable if you identify a resource before your competitors.

d. Helps in coping with changes- Business environment in today’s day and age has turn out to be dynamic and changes at a rapid pace, be it in terms of competitors or customers or trends. Understanding of business environment helps a business to be prepared for these changes and create suitable coping measures accordingly. It’s always better to be aware about changes that are going to affect your business in coming years.

e. Assists in planning and policy formulation- Since business environment is dynamic and changes rapidly, it can act as both opportunity as well as threat. Understanding of you business environment can help you decided your future actions(planning) and prepare guidelines(policy formulation) as necessary.

f. Improves performance- Main purpose of keeping updates about your business environment is because you want to grow, improve your performance and not lag behind then your competitors. Studies have proven that constant monitoring of your environment and advance planning helps your business grow and improves its performance.

2.Explain the following terms:

a. Liberalisation- Liberalisation refers to freeing an enterprise from unnecessary restrictions and controls. Industrial revolution promoted liberalisation of Indian businesses. As a consequence, license-permit-quota raj was abolished. Reforms that changed the nook and corner of Indian Industrial setup are: Abolishment of licensing, Curb on restrictions on expansion or contraction of business activities, Removal of restrictions on movement of goods and services, freedom of deciding the prices of goods and services, reduction in tax rates, simplifying procedures of export and import, easier attraction of foreign technology and ideas to Indian market.

b. Privatization- Economic reforms focused on increasing the entry of private sector in India and less inclusion of public sector in multiple services. This process of shift from public to private sector involvement is called privatization. Inorder to achieve this, government brought in New Industrial Policy of 1991, adopted the policy of disinvestment(transfer from public to private sector) of public sector and decided to refer the loss making firms to the Board of Industrial and Financial Reconstruction. If there is dilution of Government ownership beyond 51 percent, it would result in transfer of ownership and management of the enterprise to the private sector.

c. Globalisation- Integration of multiple economies of the world leading towards the emergence of a cohesive global economy is known as globalisation. Till 1991, Indian government restricted the import of goods by laying down guidelines, putting high tariff rates and putting quantitative restrictions. New reforms focused on indulging India into world market setup. It brought liberalization of trade, rationalisation in tariff structure, ease on import and export of goods and services and much more. Globalisaton brings expansion of markets and customer by making entry into new geographical markets. Economic reform of 1991 was the first step in globalisation of Indian market.

3.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.

Answer. Dimensions of businesses highlighted above are:

a. Social dimension- Social environment includes values of business, society’s expectation from business, educational value in society and customs. To promote this aspect of business, CSR activities have been included in the corporate world. NDL India tries to create an impact in society by allowing life-long learners, researchers, disabled people to have free access of knowledge. It values the customs and values of society.

b. Technological dimension- Every business is expected to benefit society by introducing new technologies and adapting to existing ones. Here, opening of NDL puts Indian education sector one step ahead in fair inclusion of technology in education. Since, NDL works towards developing a framework of virtual repository of learning resources with a single window search facility, it uses technological dimension of business environment.

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

Answer. On 8^th of November 2016, Indian government announced demonetization of two largest denominations notes i.e Rs 500 and Rs 1000. With immediate effect, there was curb on use of these notes except for payment of utility bills. This made almost 86% of money in circulation invalid. Certain restrictions were imposed on convertibility of domestic money and bank deposits. People of India gathered in long queues outside Indian banks and ATM to convert their money. Main aim of demonetization was to curb corruption, accumulate black money not registered for payment of tax. Demonetization impacted interest rates, private wealth and real estate in following ways:

Interest rates- There was a decline in cash transactions, bank deposits were increased, there was an increase in financial savings

Private wealth- It declined since some high demonetized notes were not returned.

Real Estate- Real estate prices fell.

For further NCERT Solutions for Class 12 Business Studies Chapter 3, click on the link below.

Important Resources for CBSE Board Examinations 2023-2024

CBSE Class 12 Syllabus 2023-24 (All Subjects)

CBSE Class 12 Sample Papers 2023-24 (All Subjects)

NCERT Books for Class 12 (All Subjects)

NCERT Solutions for Class 12 (All Subjects)