Class 12 Business Studies - Chapter Business Environment NCERT Solutions | What economic changes were initiated by
What economic changes were initiated by the Government under the Industrial Policy, 1991? What impact have these changes made on business and industry?
The government of India announced a new industrial policy in july1991. Highlights of the policy are as follow:
1. The Government reduced the number of industries under compulsory licensing to six and that industries are liquor, cigarette, defence equipment, dangerous chemicals, industrial explosives, and drugs and pharmaceuticals.
2. It provided a greater role to the private sector and reduced the role of the public sector. The role of the public sector was limited to only industries of strategic importance.
3. Disinvestment was carried out in case of many public sector industrial enterprises.
4. Policy towards foreign capital was liberalized. The share of foreign equity participation was increased and in many activities 100 percent foreign direct investment (FDI) was permitted.
5. Automatic permission was now granted for technology agreements with foreign companies.
6. Foreign investment promotion board (FIPB) was set up to promote and channelize foreign investment in India.
The impact have these changes made on business and industry are:
1. Increasing competition: Changes in the rules of industrial licensing and entry of foreign firms, has increased the competition for Indian firms especially in service industries such as banking, communication, health, etc.
2. More demanding customers: Due to increase in competition, wider choices of products are available in the market. As a result, customers are becoming more chossy.
3. Rapidly changing technological Environment: The increased competition in the market forces the firms to develop new ways to survive and grow in the market. And due to this the small firms’ faces face tough challenges for transformations in processes, technology, machines and products.
4. Necessity for change: Frequent changes in the market, forces the enterprises to continuously modify their operations.
5. Need for developing human resources: The new market conditions need people with required skills and greater commitment. So, the need for developing human resources is increasing.
6. Market orientation: Earlier firms were production oriented; they produce first and then sell goods in the market. But now in the changing world production oriented technique is changed to market oriented where firms study and analyse the market first and produce goods accordingly.
7. Loss of budgetary support to the public sector: The budgetary support for financing the public sector has declined over the years. So the public sector undertakings have to realize that in order to survive, they will have to develop their own resources and be more efficient.
More Questions From Class 12 Business Studies - Chapter Business Environment
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How would you characterize the business environment? Explain with examples, the difference between general and specific environment.
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The government of India announced Demonetization of ₹ 500 and ₹ 1,000 currency notes with effect from the midnight of November 8, 2016. As a result, the existing ₹ 500 and ₹ 1,000 currency notes ceased to be legal tender from that date. New currency notes of the denomination of ₹ 500 and ₹ 2,000 were issued by Reserve Bank of India after the announcement.
This step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions and disclosure led to a rise in government revenue in the form of tax collection.
a. Enumerate the dimensions of the business environment highlighted above.
b. State the features of Demonetization. - Q:-
Why it is important for business enterprises to understand their environment? Explain.
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National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. It works towards developing a framework of virtual repository of learning resources with a single-window search facility. It provides support to all academic levels including researchers, life-long learners and differently-abled learners free of cost. State the dimensions of business environment highlighted above.
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How would you argue that the success of a business enterprise is significantly influenced by its environment?
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Briefly discuss the impact of Government policy changes on business and industry.
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What are the essential features of:
a. Liberalisation,
b. Privatization and
c. Globalisation? - Q:-
How does understanding of business environment help in improving performance of a business?
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Give an example to show that a business firm operates within numerous inter related factors constituting the business environment.(Hint: example highlighting the inter relatedness of dimensions of business environment).
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State the impact of demonetization on interest rates, private wealth and real estate.
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