The correct answer is Relativity.

Key Points

Business Environment: 

• 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. 
• Business environment, has the following features: 
  • Totality of external forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature.
  • Specific and general forces: Business environment includes both specific and general forces.
    • Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working.
    • General forces (such as social, political, legal and technological conditions) have impact on all business enterprises and thus may affect an individual firm only indirectly.
  • Inter-relatedness: Different elements or parts of business environment are closely interrelated. 
  • Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market.
  • Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.
  • Complexity: Since business environment consists of numerous interrelated and dynamic conditions or forces which arise from different sources, it becomes difficult to comprehend at once what exactly constitutes a given environment.
  • Relativity: Business environment is a relative concept since it differs from country to country and even region to region.  

The correct answer is Improving Performance.

Key Points

Importance of business environment 

• A good understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firms. 
• The importance of business environment and its understanding by managers can be appreciated if we consider the following facts:
  • It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. 
  • It helps the firm to identify threats and early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance.
  • It helps in tapping useful resources: Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power and water, labour, etc., from its environment including financiers, government and suppliers
  • It helps in coping with rapid changes: Today’s business environment is getting increasingly dynamic where changes are taking place at a fast pace. It is not the fact of change itself that is so important as the pace of change. 
  • 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).
  • 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. The answer is that it does appear to make a difference. 

The correct answer is Legal conditions.

Key Points

Specific and general forces:

• The business environment includes both specific and general forces.
• Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working.
• General forces (such as social, political, legal and technological conditions) have impact on all business enterprises and thus may affect an individual firm only indirectly. 

The correct answer is Expansion of health facilities. 

Key Points

Following are the componenets of  Economic Environment

• Existing structure of the economy in terms of relative role of private and public sectors.
• The rates of growth of GNP and per capita income at current and constant prices.
• Rates of saving and investment.
• Volume of imports and exports of different items.
• Balance of payments and changes in foreign exchange reserves.
• Agricultural and industrial production trends.
• Expansion of transportation and communication facilities
• Money supply in the economy.
• Public debt (internal and external).
• Planned outlay in private and public sectors. 

The correct answer is All of the above.

Key Points

A truly global economy implies a boundaryless world where there is:

• Free flow of goods and services across nations;
• Free flow of capital across nations;
• Free flow of information and technology;
• Free movement of people across borders;
• A common acceptable mechanism for the settlement of disputes;
• A global governance perspective.

The correct answer is Public sector wealth

Key Points

Impact of Demonetization

• Money/Interest rates
  • Decline in cash transactions
  • Bank deposits increased iii. Increase in financial savings
• Private wealth - Declined since some high demonetized notes were not returned and real estate prices fell
• Public sector wealth - No effect
• Digitization - Digital transactions amongst new users (RuPay/AEPS) increased
• Real estate Prices - declined
• Tax collection - Rise in income tax collection because of increased disclosure

The correct answer is Loss of budgetary support to the private sector.

Key Points

• The policy of liberalisation, privatisation and globalisation of the Government has made a significant impact on the working of enterprises in business and industry. The Indian corporate sector has come face-toface with several challenges due to government policy changes.
• These challenges can be explained as follows:
  • Increasing competition: As a result of changes in the rules of industrial licensing and entry of foreign firms, competition for Indian firms has increased especially in service industries like telecommunications, airlines, banking, insurance, etc. which were earlier in the public sector.
  • More demanding customers: Customers today have become more demanding because they are well-informed. Increased competition in the market gives the customers wider choice in purchasing better quality of goods and services.
  • Rapidly changing technological environment: Increased competition forces the firms to develop new ways to survive and grow in the market. 
  • Necessity for change: In a regulated environment of pre1991 era, the firms could have relatively stable policies and practices.
  • Need for developing human resource: Indian enterprises have suffered for long with inadequately trained personnel.
  • Market orientation: Earlier firms used to produce first and go to the market for sale later. In other words, they had production oriented marketing operations.
  • Loss of budgetary support to the public sector: The central government’s budgetary support for financing the public sector outlays has declined over the years. 

The correct answer is option 4.

Key Points

Following are the major components of the political environment.

• Prevailing political system
• The degree of politicisation of business and economic issues.
• Dominant ideologies and values of major political parties.
• The nature and profile of political leadership and thinking of political personalities.
• The level of political morality.
• Political institutions like the government and allied agencies.
• Political ideology and practices of the ruling party.
• The extent and nature of government intervention in business.
• The nature of relationship of our country with foreign countries.

Legislations passed by the Government administrative orders issued by government authorities comes under the legal environment. 

The correct answer is Increase in foreign exchange reserves.

Key Points

Major elements of the crisis situation which led the Government of India to announce economic reform were:

• A serious fiscal crisis in which the fiscal deficit reached the level of 6.6 percent of GDP in 1990-91.
• Heavy internal debt which rose to about 50 percent of GDP with interest payments draining about 39 percent of total revenue collections of the central government. 
• Low GNP growth rate which fell to 1.4 per cent from the peak level of 10.5 percent in 1988-89 (at 1980-81 prices).
• Low overall agricultural production, foodgrain production and industrial production showed negative growth rates of –2.8 percent, –5.3 percent and –0.1 percent respectively.
• Soaring inflation rate based both on wholesale price index and consumer price index (for industrial workers) at 13-14 percent.
• Shrinkage of foreign trade, imports (in $ terms) fell by 19.4 percent and exports by 1.5 percent.
• Depreciation of rupee by 26.7 percent vis-à-vis US dollars. 
• Fall of foreign exchange reserves to such a low level that they were barely adequate to meet the import requirements of a few weeks. Non-resident Indians (NRIs) were withdrawing their deposits at an alarmingly high rate.
• The confidence of the international financial institutions was badly shaken and in just over a year its creditworthiness rating fell from AAA to BB+ (put on credit watch).

The correct answer is Political ideology.

Key Points

Major Elements of Social Environment

• Attitudes toward product innovations, lifestyles, occupational distribution and consumer preferences.
• Concern with quality of life
• Life expectancy 
• Expectations from the workforce 
• Shifts in the presence of women in the workforce 
• Birth and death rates n Population shifts 
• Educational system and literacy rates
• Consumption habits n Composition of family