Class 11 OCM Chapter 7: Business Environment

Key concepts: Business Environment

Meaning

The external factors outside the business that affect its operations: government policy, the economy, social and cultural factors, demographics, natural factors and global trends.

Wheeler's definition

The total of all things external to firms and industries that affect their organisation and operations.

Dimensions

Economic, social, political, legal, technological and natural environment.

Adapting

A business must monitor, identify and respond to opportunities and threats (e.g. shift to computerised billing with GST, ban on plastic).

Quick revision: important points

• Business environment is mainly external.
• Changes such as GST and plastic ban show legal and social environment at work.
• Successful businesses influence their environment as well as adapt to it.

Practice MCQs with answers

1. Business environment generally refers to the:

   1. External factors
   2. Only internal staff
   3. Only profits
   4. Only machinery
   Show answer

   Answer: A. External factors
   It refers to external factors that affect the business.

2. A plastic ban affecting a shopkeeper is an example of:

   1. Legal environment
   2. Only weather
   3. Cricket
   4. Internal audit
   Show answer

   Answer: A. Legal environment
   Laws and regulations are part of the legal environment.

3. Use of computerised billing shows the effect of:

   1. Technological environment
   2. Natural disaster
   3. Barter
   4. Religious rules
   Show answer

   Answer: A. Technological environment
   Technology changes how business operates.

4. A successful business should:

   1. Ignore the environment
   2. Monitor and adapt to the environment
   3. Avoid change
   4. Close down
   Show answer

   Answer: B. Monitor and adapt to the environment
   It must identify, appraise and respond to changes.

5. Which is NOT a dimension of business environment?

   1. Economic
   2. Political
   3. Technological
   4. Personal hobby of employee
   Show answer

   Answer: D. Personal hobby of employee
   Personal hobbies do not shape the business environment.

All Class 11 OCM chapters

• Chapter 1: Introduction of Commerce and Business
• Chapter 2: Trade
• Chapter 3: Small Scale Industry and Business
• Chapter 4: Forms of Business Organisation - I (Private Sector)
• Chapter 5: Forms of Business Organisation - II (Public Sector)
• Chapter 6: Institutes Supporting Business
• Chapter 7: Business Environment
• Chapter 8: Introduction to Management

Class 11 OCM notes: all chapters