UNDERSTAND BUSINESS ENVRIONMENT

 

Q1. What are the key components of the external environment that influence a firm's survival and success?

Ans. External environment means things outside the company that affect it. These include government rules, customers, competitors, technology, and economy.

Example: If a new rule bans plastic bags, a shop must switch to paper bags.

Q2. How does a SWOT analysis help in the strategic management process, and when is it typically conducted?

Ans. SWOT means Strengths, Weaknesses, Opportunities, and Threats. It helps companies know what they are good at, where they are weak, and how to prepare for risks.

Example: A cricket team checks its strong batsmen (strength), weak bowling (weakness), new players coming in (opportunity), and tough opponents (threat).

Q3. What are the main differences between the internal environment and the external environment?

Ans. Internal environment = things inside the company like workers, machines, money. External environment = things outside the company like laws, customers, and weather.

Example: In a home, family members are internal; neighbors, electricity supply, and market prices are external.

Q4. How can a company exercise control over its internal factors, and why are external factors generally considered uncontrollable?

Ans.  A company can control internal factors like training workers, using money wisely, or improving machines. But it cannot control external factors like government policies or natural disasters.

Example: A student can control study time (internal), but cannot control heavy rain during exams (external).

 Q5. When considering the microenvironment of a company, what are some examples of marketing intermediaries, and how do they impact business operations?

Ans.  Marketing intermediaries are helpers who connect products to customers, like wholesalers, retailers, and delivery companies. They impact business by making products reach people faster.

Example: A farmer sells milk to a dairy, the dairy packs it, and the shop sells it to you.

Q6. How do economic factors influence the business environment of a country?

Ans.  Economic factors like inflation, unemployment, and interest rates affect businesses. When the economy is good, people spend more; when bad, they spend less.

Example: In a festival season with good economy, people buy more clothes and sweets; during a slowdown, they buy only what is necessary.

Q7. What are the key differences between capitalism, socialism, and communism as economic systems?

Ans.  Capitalism = private people own businesses. Socialism = both government and people share control. Communism = government owns everything.

Example: Capitalism is like running your own shop, socialism is like a co-op society shop, and communism is like the government owning all shops.

Q8. How does the concept of a Welfare State modify modern capitalism?

Ans.  A Welfare State means the government also takes care of poor and needy people while keeping capitalism. It gives support like free education, hospitals, and pensions.

Example: A rich man runs a company (capitalism), but the government provides free school to poor children (welfare).

Q9. What is the role of economic planning in a mixed economy, and why is it important?

Ans.  In a mixed economy, both private people and government run businesses. Economic planning helps balance them and use resources properly.

Example: The government builds roads while private companies build shops along those roads.

Q10. How do general economic conditions, such as periods of boom and recession, affect businesses in a region?

Ans.  Boom = good times when people spend more, businesses grow. Recession = bad times when people spend less, businesses struggle.

Example: In boom, many people buy cars; in recession, they repair old cars instead of buying new ones.