Name: Hitesh Patil
Roll no.: BBA019189
BBA Sem – 2
Core – C
Batch 2019-22
Assignment on Business environment
Q1. Fill in the blank with appropriate word from bracket:
1. ......................is the essence of business.
(Selling, Exchange, Advertising)
2. Productive branch of business is called ...................
(commerce, industry, aid-to-trade)
3. Cattle breeding is an .........................industry.
(extractive, genetic, service)
4. .....................is the oldest form of business organisation.
(Sole trading concern, Partnership firm, Co-operative societies)
5. Business Environment is .......................
(stable, dynamic, rigid)
ANSWER.
1.
2.
3.
4.
5.
Exchange
Industry
Genetic
Sole trading concern
Dynamic
Q2. Match the Columns:
1. Form utility
2. Place utility
a. Utility
b. Exchange
3. Time utility
4. Possession utility
5. Increase usefulness
c. Storage
d. Transportation
e. Production
ANSWER.
1.
2.
3.
4.
5.
–e
–d
–c
–b
–a
Q3. TRUE or FALSE
1.
2.
3.
4.
5.
Business mainly includes production activities.
Aid-to-trade assist in smooth flow of trade.
HMT is a statutory company.
Business environment is dynamic.
Joint sector is known as cooperative sector.
1.
2.
3.
4.
5.
ANSWER.
False
True
False
True
False
Q4. Answer the Following questions:
1. Define Business. what are the characteristics of
Business?
ANSWER.
Business may be understood as the organized efforts of
enterprises to supply consumers with goods and services to
earn profit.
Characteristics of Business:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Transfer of Ownership
Scope of Activities
Profit motive
Continuous and Recurring
Economic Institution
Social Institution
Ethical and Lawful
Risk and Uncertainty
Creative and Dynamic
Global Business
2. Discuss the scope of business with the help of a chart.
ANSWER.
SCOPE OF BUSINESS
The scope of business is very wide. It covers activities related
to production and distribution of goods and services with an
aim to earn profit.
The business activities are usually divided into two parts.
 INDUSTRY
 COMMERCE
A. INDUSTRY
The word “Industry” refers to that part of business activities
which is apprehensive with the extraction, production or fabrication of
products.
Types of Industry:
On the basis activity industry is further classified into various types are as
under:
Extractive Industries
Extractive industries are those industries which extract, raise or fabricate raw
materials from above or beneath surface of the earth. i.e. Mining, fisheries
forestry, agriculture.

Genetic Industries
Those industries which are engaged in reproducing and multiplying certain
species of animals and plants and selling them in the market for profit are
named as genetic industries. i.e. Cattle breeding farms, poultry farms, plant
nurseries.

Constructive Industries
Constructive industries as the name signifies are engaged in the construction
of building, canals, brides, dams, roads etc.

Manufacturing Industries
Manufacturing industries are those which are concerned of converting raw
material or semi - finished products into finished products. E.g. Shoes
Company, Textiles Mills.

Service Industries
Service industries are usually engaged in the manufacturing of intangible goods
which cannot be seen or touched by naked eye. The service of professionals
such as doctors, lawyers is examples of service industries.
B. COMMERCE
The second element that comes in the scope of business is
Commerce. It is a very important component of business
and is concerned with the buying and selling of goods. It
includes all the activities which are connected to the
transfer of goods from the place of production to the
ultimate consumers. The whole ranges of commerce
activities are classified are as under:Trade
The process of buying and selling of goods is called Trade. It is the exchange of
goods and services among buyers and sellers in which both the parties are
benefited. Trade is classified into two types.
1. Internal Trade
The process of buying and selling of goods within the edge of a country is
called internal trade.
1- Wholesale Trade. The process of purchase of goods in huge quantity from
producers and their resale to retailers is known as wholesale trade. The retailer
then further sells these goods to the final consumers.
2- Retail Trade. The retailer sale the goods and services to the ultimate
consumers is known as Retail Trade.
2. External Trade:
The purchase and sale of goods between two countries are called external
trade. It is also called foreign trade. There are two types of external Trade.
1. Import Trade
Aid to Trade
Export Trade.
The activities which help in the purchase of goods and services are called aids
to trade. The aids which are compulsory for the development of the trade are
as follows: Transport
The different ways of transport help in carrying goods from the places of
production to centers of utilization e.g. Railways, ships, airlines etc.
 Insurance
Insurance is very essential aid to trade. The risk of damage of goods due to fire,
flood, earthquake or other causes us covered by insurance.
 Warehousing
Warehousing is a kind of storeroom. Nowadays most of the goods are produce
in anticipation of demand. They are stored in safe places and are released as
and when demanded in the market. Warehousing thus helps in overcoming the
barrier of time and creates time utility.
 Banking
The commercial banks play a vital role in financing the different trade
activities. They are funding the traders for stock holding and transportation of
goods. They also support the buyers and sellers of goods in receiving and
making payments, both at the national and worldwide level. The credit facility
in the form of cash credit, overdrafts and loans is provided to the traders.
 Advertisement
Selling of goods is the most difficult problem for the producer. Advertisement
regarding the product through newspapers, magazines, radio and television
has greatly helped the consumers in choosing the goods of their taste. So
advertisements play a vital role in increasing sale of goods.
3. What are the various types of business organizations?
Explain them?
ANSWER.
Business may be defined as an enterprise engage at in production &
distribution of good for sale in market. Several Types of businesses
organization are exiting in order to satisfy various social, economic & rumen
requirements. Following are the main types of business organization.
1. Private sector
Individual ownership or Sole Proprietorship.
Partnerships
Joint Stock Companies
2. Public sector
Departmental Organizations
Public Corporation
Government Companies
3. Joint sector
Ownership & control shared by private entrepreneur. State and public.
PRIVATE SECTOR
 Individual ownership
As the name suggests, such type of business is owned & operated by one
person. This is the oldest and simplest form of business organization. The
businessman invests capital, employs labour & machines. Stance owner alone
enjoys the profits and suffer the losses in his business. Therefore, he is the
supreme authority to decide into different matters concerning it his business
and has unlimited freedom of action within legal jurisdiction. Overall control in
single hand helps him in quick decision efficient administration and working.
Such organization owner himself is responsible for the liabilities. Hence the
creditor can collect the money even from the personal property.
 Partnership Organization
 Joint stock company
Limited financial resources & heavy burden of risk involved in both of the
previous forms of organization has led to the formation of joint stock
companies these have limited dilutives. The capital is raised by selling shares of
different values. Persons who purchase the shares are called shareholder. The
managing body known as; Board of Directors; is responsible for policy making
important financial & technical decisions. There are two main types of joint
stock Companies.
Private limited company
Public limited company
PUBLIC SECTOR
 State ownership
Such ownership is the only serious competitor to the joint stock companies.
This form is most suitable for the establishment & development of modern
industries, because of facilities like owner, transport; Credit, insurance etc. are
easily available to them. The private ownership & the joint stock company gave
rise to exploitation of labours & of the consumers. Government either starts or
nation aliases certain industries to prevent the economic unbalance in the
nation. It serves as a means to obstruct the monopolistic tendencies.
Main reason for the above mentioned state ownership is that they cannot be
bundled like private enterprise.
1. Government Departmental Organizations
Types of organizations
a. Management through the concerned ministry
b. Management by inter department committee
2. Public corporation
A public corporation is wholly owned by the Government Centre to state. It is
established usually by a Special Act of the parliament. Special statute also
prescribes its management pattern power duties & jurisdictions. Though the
total capital is provided by the Government, they have separate entity & enjoy
independence in matters related to appointments, promotions etc.
3. Government companies
A state enterprise can also be organized in the form of a Joint stock company;
A government company is any company in which of the share capital is held by
the central government or partly by central government & party by one to
more state governments. It is managed by the elected board of directors which
may include private individuals. These are accountable for its working to the
concerned ministry or department & its annual report is required to be placed
ever year on the table of the parliament or state legislatures along with the
comments of the government to concerned department.
4. Define business environment. What are the features of
business environment?
ANSWER.
Definition of Business Environment is sum or collection of all internal and external
factors such as employees, customers needs and expectations, supply and
demand, management, clients, suppliers, owners, activities by government,
innovation in technology, social trends, market trends, economic changes, etc.
These factors affect the function of the company and how a company works
directly or indirectly. Sum of these factors influences the companies or business
organisations environment and situation.
Business environment helps in identifying business opportunities, tapping useful
resources, assists in planning, and improves the overall performance, growth, and
profitability of the business. There are various types of Business Environment like
Micro Environment and Macro Environment.
Features of business environment
(1) Environment is the Surrounding Situation: Business environment means the
surrounding situation within which business organization has to operate. It is a
sum total of cultural, political, economical, social, physical, technological, legal
and global forces which move around the business organization. These forces
collectively create a socio-economic-political situation called business
environment. Environment is an inseparable part of business which can not
operate in vacuum.
(2) Environment is Complex: Business environment has now become extremely
complex and the government intervention has become more frequent.
Business environment is a complex phenomenon and also difficult to grasp and
face in its totality. This is because it is governed by external factors.
Environment develops by chance and not by choice. In addition, the
environment factors vary from country to country. The business environment
in India and in USA may not be identical.
(3) Environment is Dynamic: Business environment is dynamic and perpetually
evolving. It changes frequently due to various external forces i.e. economic,
political, social, international, technological and demographic. Such dynamism
in the environment brings continuous change in its character. Business
enterprises have no alternative but to operate under such dynamic
environment. The only remedy is adjust business as per environmental
changes.
(4) Environment is Multi Faced: Environmental changes are frequent but their
shape and character depends on the knowledge & experience of the observer.
A particular change in the environment may be viewed differently by different
businessmen. This change is welcomed as an opportunity by some
organizations while some others take it as a threat for their survival.
(5) Environment has Long Term Impact on Business: Environment has long
lasting impact on functioning of business organizations. Their growth and
profitability depends upon the environment under which they have to operate.
Environment influences business enterprises. Such influences may be positive
or negative & may affect the profitability, efficiency & development of
business.
(6) Environment Needs Minute Study by Business Organizations: Every
business organization has to study changes constantly taking place in the
environment forces. This facilitates easy adjustments of business as per
environmental changes. Such adjustment is necessary for its survival and
growth. Environmental factors are, by and large, external as well as
uncontrollable. In view of these constraints businessmen have to study the
environment minutely and face it boldly. The success of business depends on
its ability to adjust itself with the local, national and international environment.
(7) Environment Influences Business Organization: Business organizations have
limited capacity to influence business environment as it is the result of
government policies and social and technological changes which are basically
external variables.
(8) Environment and Business Planning go Together: Business environment and
business planning are closely related concepts. In fact, planning is necessary in
order to derive maximum benefit from favorable environment. Similarly,
planning is useful for dealing with the problems created by unfavorable
environment.
(9) Environment needs Adaptability: Business have to learn adjust with ever
changing business environment. One of the basic laws of nature is that
adaptability is the price of survival. In the prehistoric ages, the dinosaur and
the mastodon – two of the strongest and largest animal that ever lived,
perished, while the insignificant cockroach survived. The reason was that those
mighty animals could not adjust themselves to changes brought about by the
passage of centuries, while the cockroach could. Businessmen have to adjust
with the prevailing environment. This adaptability is the price or the key
survival in the business world.
(10) Business Environment Changes Regularly: The environment factors
changes regularly. The business environment in India is totally different as was
in past. Future environment is the product of past & present environment.
5. Discuss the significance of business environment.
ANSWER.
Significance of Business Environment
Business Environment refers to the “Sum total of conditions which surround
man at a given point in space and time. In the past, the environment of man
consisted of only the physical aspects of the planet Earth (air, water and land)
and the biotic communities. But in due course of time and advancement of
society, man extended his environment through his social, economic and
political function.”
In a globalised economy, the business environment plays an important role in
almost all business enterprises. The significance of business environment is
explained with the help of the following points:
(i) Help to understand internal Environment:
It is very much important for business enterprise to understand its internal
environment, such as business policy, organisation structure etc. In such case
an effective management information system will help to predict the business
environmental changes.
(ii) Help to Understand Economic System:
The different kinds of economic systems influence the business in different
ways. It is essential for a businessman and business firm to know about the
role of capitalists, socialist and mixed economy.
(iii) Help to Understand Economic Policy:
Economic policy has its own importance in business environment and it has an
important place in business. The business environment helps to understand
government policies such as, export-import policy, price policy; monetary
policy, foreign exchange policy, industrial policy etc. have much effect on
business.
(iv) Help to Understand Market Conditions:
It is necessary for an enterprise to have the knowledge of market structure and
changes taking place in it. The knowledge about increase and decrease in
demand, supply, monopolistic practices, government participation in business
etc., is necessary for an enterprise.
6. Elaborate on the components of business environment.
ANSWER.
Components of business environment
A. Internal Environment
Internal environment includes all those factors which influence business and
which are present within the business itself. These factors are usually under
the control of business. The study of internal factors is really important for the
study of internal environment. These factors are:
(i) Objectives of Business, (ii) Policies of Business, (iii) Production Capacity, (iv)
Production Methods, (v) Management Information System, (vi) Participation in
Management, (vii) Composition of Board of Directors, (viii) Managerial
Attitude, (ix) Organisational Structure, (x) Features of Human Resource, etc.
Note:
All the above factors do influence the decisions of business, but since all these
factors are usually under the control of business, they cannot be wholly
included in the business environment.
B. External Environment
External environment includes all those factors which influence business and
exist outside the business. Business has no control over these factors. The
information about these factors is important for the study of the external
environment.
Some of these factors are those with which a particular company has very
close relationship. However, there are some other factors which influence the
entire business community.
Micro environment means that environment which includes those factors with
which business is closely related. These factors influence every industrial unit
differently. These factors are as under:
(i) Customers (ii) Suppliers (iii) Competitors (iv) Public (v) Marketing
Intermediaries.
(i) Customers:
Customers of an industrial unit can be of different types. They include
household, government, industry, commercial enterprises, etc. The number of
different types of customers highly influences a firm.
For example, suppose a firm supplies goods only to the government. It means
that firm has only one customer. If because of some reason their relations get
soured, the supply of goods will stop and in that case the closure of that firm is
certain.
This clearly indicates that the customers do influence business. Therefore, a
firm should make efforts to have different kinds of customers,
(ii) Suppliers:
Like the customers, the suppliers also influence business. If a business has only
one supplier and he gets annoyed because of some reason, the supply of goods
can be stopped and the very existence of the business can be threatened or
endangered. Hence, efforts should be made to have various suppliers.
(iii) Competitors:
The competing firms can influence business in a number of ways. They can do
so by bringing new and cheap products in the market, by launching some sale
promotion scheme or other similar methods.
(iv) Public:
Public has different constituents like the local public, press or media, etc. The
attitude or behaviour of these constituents can affect business units. For
example, the local population can oppose some established firm whose
business is excessively noisy.
Similarly, if the media gives some favourable report about a particular
company the price of its share can register an increase on this count.
(v) Marketing Intermediaries:
The marketing intermediaries play a significant role in developing any business
unit. They are those persons who reduce the distance between the producers
and agents.
For example, a company sells its goods with the help of agents and if because
of some reason all the agents get annoyed with the company and refuse to sell
its goods, there can be a crisis for the company.