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 be powered by fuel produced from garbage. He developed such a car exhibited it in Science Fair organised by Directorate of Education. He was awarded first prize fro his invention.
Identify and explain the dimensions of environment discussed in the above case.

Answer 1

The dimensions of business environment discussed in the above case are as follows:
(i) Economic Environment: Reference line "A recent cut in interest on loans announced by banks."
(ii) Technological Environment: Reference line: "Developed cars to be powered by fuel produced from garbage."
Explanations of aforementioned dimensions of business environment
(i) Economic Environment It comprises the economic variables such as interest rates, income, stock market indices that affect the functioning of the enterprises. For example, an increase in the income of the consumers increases the demand for goods and services of the enterprises. Similarly, a fall in the interest rates of loans for consumer durables increases the spending capacity, and thereby increases the demand for such products.
ii) Technological Environment Technological environment comprises the technological changes and improvements. For example, introduction of computers and the Internet has changed the working style of the organisations today. Similarly, continuous improvement and innovations in the technology used in the production improves the quality of production. While on the one hand, improvement in technology provides new business opportunities for the enterprises; on the other hand, h is a threat for the enterprises using obsolete technology.