Key Terms

The key terms of this NCERT chapter on Business Environment, exactly as listed in the CBSE Class 12 Business Studies textbook (Chapter 3), are:

• Business environment: The sum total of all individuals, institutions and other forces that lie outside the control of a business enterprise but that may affect its performance.
• Opportunities: Positive external trends or changes in the environment that help a firm improve its performance; spotting them early gives a business the first-mover advantage.
• Threats: External trends or changes in the environment that are likely to hinder a firm's performance and that serve as early-warning signals a manager must watch for.
• Economic Environment: The economic forces — interest rates, inflation rates, changes in the disposable income of people, stock-market indices and the value of the rupee — that shape demand and the cost of doing business.
• Political environment: Political conditions such as the general stability and peace in the country and the attitudes that elected government representatives hold towards business.
• Social environment: The social forces — customs and traditions, values, social trends and society's expectations from business — that influence how people live, work and spend.
• Technological environment: Forces relating to scientific improvements and innovations that provide new ways of producing goods and services and new methods and techniques of operating a business.
• Legal environment: The various legislations passed by the government, administrative orders, court judgments and the decisions of commissions and agencies at the centre, state and local levels, all of which a business must obey.
• Liberalisation: The freeing of Indian business and industry from unnecessary government controls and restrictions — the end of the licence-permit-quota raj — begun by the New Industrial Policy of 1991. …