CBSE Class 12-commerce Answered

Following are the lines that portray different dimensions of business environment in the question:

1. “India’s heritage industry is surviving because of its customs and traditions.” This line depicts the social environment. Social environment implies the nature of lifestyle, customs, literacy rates, traditions, social trends, educational level and other characteristics of society. These factors cannot be overlooked as they do have an impact on society in the long run. Any change in the social environment affects the supply of capital, labour as well as the demand of the product in the market. A business booms or survives only when there is cooperation between the business and the society.
2. “The volume of exports of these products gives India an advantage in the balance of payments and the much needed foreign exchange.” This line depicts the economic environment. Factors such as unemployment rates, earning foreign exchange, stock market indices, inflation rate and interest rate within which a business conducts and operates its working, points to the general condition of the economy.  All these factors constitute the Economic environment.
3. “The Prime Minister desires that the handicraft industry should be expanded by liking it with technology.” These lines depict the political environment. Political environment comprises of factors relating to the government, its policies, different political parties etc. These factors greatly influence the business environment.
4. “Focus should be on changing the manufacturing process, ensuring durability and adopting innovations.” These lines depict the technological environment. The nature of technology available and used by the economy or production house falls under the technological environment. It also comprises of any technological changes and improvements to improve the quality of product or services, which may also get reflected in factors such as expenditure on R&D and rate of obsolescence. Any new scientific improvements, new procedures or techniques for improving the quality of services and goods facilitate a firm’s effectiveness and efficiency to survive in the competing world.