Which of the following pairs of an importance of business environment and its example is correctly matched?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Coping with rapid changes – Turbulent market conditions, less brand loyalty and more demanding customers
Option (1) Identifying opportunities and first mover advantage – An Indian firm learns that a foreign multinational is entering its market with new substitutes — Incorrect. A foreign firm entering with new substitutes is a threat. It is the example of identifying threats and early warning signals.
Option (2) Assisting in planning and policy formulation – Maruti Udyog was the first to recognise the need for small cars in India — Incorrect. Maruti saw the need for small cars first and became the leader. This is the example of identifying opportunities and the first mover advantage.
Option (3) Tapping useful resources – Entry of new players in the market makes an enterprise think afresh about the situation — Incorrect. New players making a firm think afresh is the example of assisting in planning and policy formulation. Tapping useful resources means getting inputs such as finance and raw materials.
Option (4) Coping with rapid changes – Turbulent market conditions, less brand loyalty and more demanding customers — Correct. Today’s environment changes at a fast pace. Turbulent markets, less brand loyalty and more demanding customers describe this. Understanding the environment helps managers cope with these rapid changes.
NCERT (2026-27 Edition): “(iv) It helps in coping with rapid changes: Today’s business environment is getting increasingly dynamic where changes are taking place at a fast pace. It is not the fact of change itself that is so important as the pace of change. Turbulent market conditions, less brand loyalty, divisions and sub-divisions (fragmentation) of markets, more demanding customers, rapid changes in technology and intense global competition are just a few of the images used to describe today’s business environment. All sizes and all types of enterprises are facing increasingly dynamic environment. In order to effectively cope with these significant changes, managers must understand and examine the environment and develop suitable courses of action.” “(v) It helps in assisting in planning and policy formulation: Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy). For instance, entry of new players in the market, which means more competition may make an enterprise think afresh about how to deal with the situation.” |