Read the passage and answer the following questions.

Dynamic Horizons Ltd., a global brand, is known for its innovative approach to manufacturing and selling smartwatches. Recently, the company decided to launch its operations in two new markets- a developing country and a European nation. In the developing country, the company faced challenges such as unstable policies, a lack of proper infrastructure, limited purchasing power among the local population and an unfavorable attitude from the government. However, they noticed that the younger population was showing a growing interest in smartwatches, providing a potential market segment to target. But, the European nation presented an entirely different scenario with stringent laws and an established consumer base with high purchasing power and intense competition from local brands with similar watches. The smartwatch, which was desirable for populations in developing countries, was just another watch in European countries. Dynamic Horizons understood that they should adapt their products to the preferences of Europeans to gain a foothold here. So, the company in both the markets, leveraged advanced technological solutions including Al (Artificial Intelligence) technology and a tracking application in the smartwatch to enhance the customer experience. However, they faced challenges due to fluctuations in inflation rates which impacted raw material costs and transportation expenses. It is also imperative for the management of the enterprise to obey the law of the land.

The company's decision to modify product design according to European customers reflects which characteristic of business environment?

Relativity

The correct answer is option 2- Relativity.

Relativity as a characteristic of the business environment means that the same product, strategy, or business decision may be perceived differently in different countries or regions. In this case, the smartwatch is highly desirable in the developing country but considered ordinary in the European nation, prompting the company to modify the product design. This reflects how business environments vary from place to place, which is the essence of relativity.

Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.