(a) Concept discussed above is 'Business Environment'. The feature discussed above is-
(i) Specific and General forces: Business environment includes both specific forces which affect business enterprises directly and immediately in their day to day working for example suppliers, investors etc as well as general forces - social, legal, technological forces which have impact on all the enterprises and effect individual firms indirectly.
(b) Four points of importance of Business Environment.
(i) It enables the firm to identify opportunities and getting the first mover advantage: Analysis of business environment helps to identify opportunities i.e., positive external changes to be exploited first instead of losing them to competitors.
(ii) It helps the firms to identify threats and early warning signals: A study of business environment helps an enterprise to identify threats i.e., negative signals that hinder business performance and to take appropriate preventive measures on time.
(iii)It helps in tapping useful resources: A business enterprise depends on environment as a source of input like raw materials, Iabour etc. and as an outlet for output i.e., goods or services, taxes, etc. Analysis helps to get resources that it needs to convert into outputs which an environment desires.
(iv) It helps in coping with rapid changes: It helps management to become more sensitive to ever changing needs of customers. As a result, they are able to respond to such changes effectively.
(v) It helps in assisting in planning and policy formulation: Environmental scanning provides the basis for deciding future course of action (planning) and guidelines for decision making (policy).
(vi) It helps in improving performance: The continuous monitoring of environment and adopting suitable business practices not only improve their present performance but also continue to succeed in the market for a longer period.
