Q.(a) Explain the micro environmental factors of business. (any 5)

(a) Micro-environment factors are the close forces — competitors, customers, suppliers, intermediaries and the public — that directly influence a business. (b) A stock exchange provides liquidity, mobilises savings, aids capital formation, prices securities, ensures safe dealings and reflects the economy.

(a) Micro Environmental Factors of Business (any 5)

1. Competitors — other firms selling the same or similar products; their prices, quality and strategies directly affect a business.
2. Customers — the buyers of the firm's products; their tastes, preferences and buying power decide the firm's success.
3. Suppliers — those who supply raw materials and inputs; their reliability, price and quality affect production.
4. Marketing intermediaries — wholesalers, retailers, agents and transporters who help move goods from the firm to customers.
5. Public — various groups such as media, local community and pressure groups whose opinions affect the firm's image. (These are 'micro' because they are close to the firm and it can influence them to some extent.)

OR

(b) Functions of Stock Exchange (any 5)

1. Liquidity and marketability — it provides a ready market where investors can easily buy and sell securities and convert them into cash.
2. Mobilisation of savings — it channels the savings of the public into productive investment in companies.
3. Capital formation — by making investment easy and attractive, it encourages saving and helps companies raise long-term capital. …