The importance of the business environment and its understanding by managers can be appreciated if we consider the following facts:
A. It helps in tapping useful resources
B. It helps in coping with rapid changes
C. It helps in assisting in planning and policy formulation
D. It helps in improving performance
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → A, B, C and D
A. It helps in tapping useful resources — Correct. A business takes its finance, machines, raw materials and workers from its environment, and knowing the environment helps it get them.
B. It helps in coping with rapid changes — Correct. Markets, technology and tastes change fast. A firm that watches its environment can respond in time.
C. It helps in assisting in planning and policy formulation — Correct. The opportunities and threats seen in the environment become the base for future plans and policies.
D. It helps in improving performance — Correct. Firms that keep watching their environment and act on what they see do better than those that do not.
NCERT (2026-27 Edition): “Importance of Business Environment … (iii) It helps in tapping useful resources: Environment is a source of various resources for running a business. …” “(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. …” “(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). …” “(vi) It helps in improving performance: The final reason for understanding business environment relates to whether or not it really makes a difference in the performance of an enterprise. …” |