BBA 1st Year Business Environment Social Responsibilities of Business Short Question Answer
BBA 1st Year Business Environment Social Responsibilities of Business Short Question Answer: Bachelor of Business Administration (BBA) Short Question Answers 2019 New Syllabus
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Section –B (Short Answer Questions).
Q. 1. Describe the nature and significance of the business environment.
Or Discuss the significance of the study of the business environment in the Indian context.
Ans. Business environment refers to those factors surrounding a business that influence or determine its effectiveness.
The environment is uncertain, always changing, and is outside the control of the management of the organization. It has both opportunities and risks, within it, which can make or break a business.
FT therefore, the success of a business depends on the fact as to how much it can adjust itself according to the changes in the environment.
It is not so, that only business is affected by the environment, environment to a certain extent is also affected by the business.
Significance of the Study of Business Environment: Study of the business environment is significant for a business enterprise to keep itself informed about its surrounding environment. It has the following significances:
1. It helps in developing broad strategies and long-term policies of the firm.
2. It gives us information about changes taking place in the environment so that it can adjust itself accordingly.
3. It is essential for the development of action plans to deal with technological advancements.
4. It helps in the analysis of competitors’ strategies and the formulation of effective counter measures.
5. A business enterprise can go for an expansion drive when favorable changes take place in the environment.
6. Knowledge about changing environment keeps the organization flexible and dynamic in its approach.
7. It enables us to visualize the impact of the socio-economic changes and accordingly make necessary adjustments.
Glucck and Jaurch stressed, Environmental analysis and diagnosis give strategists time to anticipate opportunities and plan to take optimal responses to these opportunities. It also helps strategists to develop an early warning system to prevent threats or to develop strategies which can turn a threat to firm’s advantages.” It is undoubtedly true that firms which systematically and analyze diagnose the environment are more effective than those which don’t.
Q. 2. What do you understand by changing dimensions of the business environment? Explain the various economic reforms taking place in India.
Ans. The business environment is not static, it is dynamic. Changes take place continuously On the eve of independence, India first adopted socialistic pattern of society where the public sector dominated. But gradually the policies were made more liberal. With the changing world and domestic scenario in 1991, major economic reforms were undertaken to give free hand to market forces. The process is continuously going on because of changing global and domestic environment. These changes, in turn, influence business, trade, and association industries do try to influence the thinking of politicians and the government. Thus, the business environment is a dynamic process. In business, we see great competitiveness, variety of products, new fashion technology, new machines, a great range of products and services, use of fastest means of communication, mobile, fastest means of transport, multi financial products, a new look of market, changing shape of advertisement, etc.
Economic Reforms: A number of economic reforms initiated in 1990—91 and thereafter have liberalized the economy from government controls. Some of the important reforms are highlighted below:
1. Most of the sectors have been opened up for the private sector except arms and ammunition, railways, atomic energy, minerals required for production, and the use of atomic energy.
2. Industrial licensing has been abolished in all industries with the exception of cigars, cigarettes and tobacco, electronics, aerospace, and defense equipment, pharmaceuticals as per Drugs policy.
3. MRTP Act has been diluted and no longer MRTP clearance is required for industrial license; now this Act is only for checking monopoly and unfair trade practices. Now, the “Competition Act” 2002 has come into vogue.
4. The mandatory convertibility clause is no longer applicable for term loans.
5. Approval for foreign investment has been liberalized and has been made automatic in most cases.
6. Payment for technical-know how the fee has been liberalized and if it is within guidelines, it is automatically approved.
7. Foreign equity participation up to 100 percent is permitted in most industries, subject to approval.
8. All imports have been freed from quantitative restrictions.
9. The list of industries for automatic approval for foreign investments is being extended continuously.
10. Cheap money policy has been adopted by the Reserve Bank of India and gradually the rates of interest are being reduced.
11. New big banks have been allowed to be set up in the private sector.
12. Income tax, excise, and customs duty rates have gradually been reduced and the tax structure has been simplified.
13. Tax Incentives have been provided for the establishment of infrastructure sector projects.
14. Weak public sector units are gradually fully and partially being privatized and there is a scheme of greater disinvestment for the future.
15. Greater incentives are being provided for export promotion and export parks are being established.
16. Voluntary Retirement Scheme [VRS] has been introduced in nationalized banks and is being extended to other government sectors to reduce surplus manpower.
17. Labour laws have been liberalized and National Labour Commission has recommended further liberalization.
18. Attempts are being made to widen the tax base.
19. States have agreed to levy VAT in place of sales tax.
20. Information and technology industry is being encouraged and information and technology Act has been enacted to help the industry.
21. Insurance sector has been opened up for the private sector.
22. Telecom sector has been opened up for the private sector and monopoly of government has been broken up and more competition is being encouraged.
23. Foreign exchange regulation Act has been replaced by more simple and liberal Foreign Exchange Management Act [FEMA].
24. Amalgamations and Mergers have been simplified and have been made easier.