Question

"A good understanding of environment by business managers enables them not only to identify and evaluate but also to react to the forces external to their firm."

In the light of the above statement explain any four points of importance of understanding business environment by a manager.

Answer 1

Importance of understanding business environment:

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

2. It helps the firm to identify threats and early warning signals.

3. It helps in tapping useful resources.

4. It helps in coping with rapid changes.

5. It helps in assisting in planning and policy formulation.

6. It helps in improving performance.