Business Studies Part I
Business Studies Part II

Solutions of Question Paper

1 Mark question solutions

Q1 What do you understand by business environment?

Answer The term ‘business environment’ means the sum total of all Individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance. The economic. social political, technological and other forces which operate outside the business enterprise are part of its environment.

Q2 Accent Electronics Ltd.’ was operating its business in Malaysia. The company started exporting its products to India when the Prime Minister announced relaxation in import duties on electronic items. The company appointed retailers in India who had direct online links with the suppliers to replenish stocks when needed.
Identify the dimensions of business environment discussed in the above case.

Answer: The various dimensions of business environment being referred to in the above case are as follows:

  1. Political Environment
  2. Technological Environment: 

Q3 The Government of India is seriously thinking of allowing the oil-marketing public sector undertaking to fix their own prices for petrol and diesel. Which economic reform is the reason for this change in the government’s policy?
Answer: Privatisation as a reform is the reason for this change in the government policy.

Q4 India’s retail sector has been undergoing structural changes for the last two decades. On one hand, the ‘mall culture’ has gradually become a way of life, especially in the metros and mini¬metros. On the other hand, there is accelerated growth in e-business as customers also prefer to buy products and services via the Internet, telephone and television. However, operating in either of the segments is marked by the presence of strong competitors. Identify the components of specific forces and general forces being discussed in the above paragraph.
Answer: The components of specific forces discussed in the above paragraph are the customers and competitors. The components of general forces discussed in the above paragraph is the social and technological conditions.

5 marks Case Studies

Q5 “Zero Defect Zero Effect” (ZED) is a slogan coined by the Prime Minister of India, Narendra Modi with reference to the Make in India initiative launched by the government. The slogan reflects the efficiency of production processes, i.e. the products have no defects and the process through which the product is made has zero adverse environmental and ecological effects. The ZED model aims to make India the manufacturing hub of the world and prevent the products developed in India from being rejected by the global market. Moreover, before the initiative was launched, the limits of foreign direct investment in various sectors had been relaxed. The application for licences was made available online and the validity of licences was increased to three years. Various other norms and procedures were also relaxed by the government. In the light of the above paragraph, identify and explain the major component of New Economic Policy of 1991 that are being referred to by quoting lines from the paragraph.
Answer: The major components of New Economic Policy of 1991 that are being referred to are as follows:

  1. Liberalisation: These economic reforms signalled the end of the licence-pemit-quota raj and were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions.
    “Moreover, before the initiative was launched, the limits of foreign direct investment in various sectors had been relaxed. The application for licences was made available
    online and the validity of licences was increased to three years. Various other norms and procedures were also relaxed by the government.”
  2. Globalisation: Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. “The ZED model aims to make India the manufacturing hub of the world and prevent the products developed in India from being rejected by the global market.”

Q6 The organic food market in India is growing at 25-30 per cent which reflects a clear shift in consumer tastes and preferences. The current growth in the organic food market is driven by multiplicity of factors like rising health consciousness, changing lifestyles, increase in disposable income and growing availability of organic food products in shopping malls, retail outlets and online. In context of the above case:

  1. Identify and explain the features of business environment being referred to here.
  2. By quoting phrases from the paragraph identify the various components of general forces which have led to a growth in the organic food market.

Answer:

  1. The features of business environment being referred to in the above case are as follows:
  • Dynamic nature: It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market.
  • Inter-relatedness: All the elements of business environment are closely interrelated. Therefore, any change is one element may necessitate corresponding changes in the other elements as well.
  1. The various components of general forces which have led to a growth in the organic food market are as follows:
  • Social: “rising health consciousness, changing lifestyles”
  • Economic: “increase in disposable income”
  • Technological: “growing availability of organic food products in shopping malls, retail outlets and online.”