The correct answer is Option (3) → (A), (B), (C) and (D)
All the given statements correctly describe the importance of the business environment.
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(A) Helping firms to identify the opportunities: Scanning the environment helps a firm spot positive external trends and changes (opportunities) early, allowing it to gain a "first-mover advantage."
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(B) Helping firms in improving performance: By continuously monitoring the environment and adapting suitable business practices, firms can improve their present performance and succeed in the long run.
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(C) Helping firms in planning and policy formulation: Understanding the environment (which is a source of opportunities and threats) is the basis for deciding the future course of action (planning) and framing the guidelines for decision-making (policy formulation).
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(D) Helping firms in coping with turbulent market conditions: The business environment is often dynamic and uncertain. Continuous study helps management become sensitive to changes (like new technology, changing customer demand, and competition) and develop suitable responses to effectively "cope" with this turbulence.
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