Why is the understanding of business environment important for managers? Explain with the help of any four points.
Understanding of business environment is important for managers because,
(i) It helps the firm to identify opportunities and get the first mover advantage: The ability to identifying the external opportunities early and to make the first move, makes an organisation the market leader. 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 and become the market follower.
(ii) It helps the firm to identify threats and early warning signals: Business environment is prone to numerous threats. Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.
(iii) It helps in tapping useful resources: Environment is the source of all resources a business needs for its operation. It takes natural resources, human resource and financial resource and convert them to goods and services to customers, make payment of taxes to government, return on financial investment to investors and so on. As an organisation is completely dependent on the resources from environment, a manager should have a good understanding about business environment.
(iv) It helps in assisting in planning and policy formulation: Business environment is very dynamic and is a source of both opportunities and threats. Only with a clear understanding of the various aspects of the environment, a manager can make plans for future and formulate policies.
Explain how does the understanding of business environment help the management in the following:
(a) Tapping useful resources; and
(b) Coping with rapid changes
What is included in ‘Political Environment of business? State.
State any five impacts of government policy changes on business and industry.
An environmental conscious multinational company “AXN Ltd.” follows certain well-defined business principles that result to minimize the employee turnover. Following are some of the important environmental factors followed by ‘AXN Ltd.’
(1) Honour the law of every country in which it operates.
(2) Respect the culture and customs of all nations.
(3) Provide clean and safe products to enhance the quality of life throughout the world.
(4) Develop a culture in the company that enhances individual creativity and team work while honouring mutual trust and respect between management and labour.
From the above:
(i) identify and state any one general principle of management and any one dimension of business environment.
(ii) also identify any two values which the above guiding principles and environmental factors are conveying to the society.
