Question

Three Marks Question:-

What is meant by 'Business Environment' ?

Explain 'Dynamic nature' and 'Uncertainly' as features of Business Environment.

Answer 1

Business environment is the sum total of all individuals, institutions and other forces like customers, competitors, suppliers, distributors, industry trends, substitutes, regulations government activities, social and cultural factors that are outside the control of the business enterprise but may affect its performance.

Features of business environment are:

(a) Dynamic nature Business environment is dynamic as it keeps on changing. It is not static and its components are highly flexible, e.g. technological improvements, increase in competition, etc.

(b) Uncertainty Business environment is uncertain as it is difficult to predict future happenings when environment changes are taking place frequently