Question

Naman and Govind after finishing their graduation under vocational stream decided to start their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of providing tickets within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Mehta who liked the idea and suggested them to first analyse the business environment which consists of investors, competitors and other forces like social, political, etc., that may affect their business directly or indirectly. He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.
(i) Identify and state the component of business environment highlighted in the above Pam.
(ii) State any two features of business environment as discussed by Professor Mehta with Naman and Govind.
(iii) Also state two points of importance of business environment as stated by Professor Mehta in the above situation.

Answer 1

(i) Technological Environment: It includes forms relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
(ii) (a) Specific and general forces.
(b) Dynamic nature
(iii) (a) It helps the firm to identify threats and early warning signals.
(b) It helps in planning and policy formulation.