Choose the combination showing Importance of Business Environment.

(A) Complexity
(B) Dynamic
(C) Uncertain
(D) First mover advantage
(E) Early warning signals

Choose the correct answer from the options given below.

(D) and (E) Only

The correct answer is Option (4) → (D) and (E) Only

Only D & E is the importance of business environment. Others are features of business environment.

* First mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors. For example, Maruti Udyog became the leader in the small car market because it was the first to recognize the need for small cars in an environment of rising petroleum prices and a large middle-class population in India.

* Early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance. Besides opportunities, the environment happens to be the source of many threats. Environmental awareness can help managers to identify various threats on time and serve as an early warning signal. For example, if an Indian firm finds that a foreign multinational is entering the Indian market with new substitutes, it should act as a warning signal. Based on this information, the Indian firms can prepare themselves to meet the threat by adopting such measures as improving the quality of the product, reducing cost of the production, engaging in aggressive advertising, and so on.