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CBSE Class 12 Commerce Business Studies Management And Business Environment Complete Details

CBSE Class 12 Commerce Business Studies Management And Business Environment Complete Details

CBSE Class 12 Commerce Business Studies Management And Business Environment : CBSE is a renowned educational Board, which comes under the Union Government of India. This eminent board was formed in 1952 and associated with the Board of High School and Intermediate Education, Rajputana. Ajmer, Gwalior, Merwara and Central India were included in the administrative territory of this board along with the other places including Bhopal, Ajmer and Vindhya Pradesh. From 1952 onwards, it has been providing a standard education and robust learning environment to all. The Central Board of Secondary Education or CBSE is a prestigious board of education and it provides affiliation to public and private schools. Apart from this, all Jawahar Navodaya Vidyalayas and kendriya vidyalayas are affiliated to this board.

CBSE Class 12 Commerce Business Studies Management And Business Environment Complete Details

CBSE Class 12 Commerce Business Studies Management And Business Environment : Understanding the environment within which the business has to operate is very important for running a business unit successfully at any place. Because, the environmental factors influence almost every aspect of business, be it its nature, its location, the prices of products, the distribution system, or the personnel policies. Hence it is important to learn about the various components of the business environment, which consists of the economic aspect, the socio-cultural aspects, the political framework, the legal aspects and the technological aspects etc. In this chapter, we shall learn about the concept of business environment, its nature and significance and the various components of the environment. In addition, we shall also acquaint ourselves with the concept of social responsibility of business and business ethics.

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After studying this lesson, you will be able to:

• explain the meaning of business environment;

• identify the features of business environment;

• describe the importance and types of business environment;

• describe the recent developments in Indian Economy that have greatly influenced the working of business units in India;

• explain the concept of social responsibility of business;

• state the social responsibility of business towards different interest groups; and

• explain the concept of business ethics.

CBSE Class 12 Commerce Business Studies Management And Business Environment Complete Details

CBSE Class 12 Commerce Business Studies Management And Business Environment :  The business environment and the forces that push against it are something every manager must deal with and learn to work with. In this lesson, we will detail the four key functions of management and review how different forces present in the business environment impact these four key funtions

Four Key Functions

Managers have to deal with multiple different forces that pull and push their businesses and companies in any number of directions. In many ways, it’s like working in an obstacle course. There are obstacles you have to deal with, new things that you might not have ever seen before and challenges that will come up that will test your abilities. Managers as a whole focus on four key functions:

  • Plan: Have a specific outline of the steps they will take to be successful or have their department of the company be successful.
  • Control: Be able to keep all the pieces and parts of the plan moving together.
  • Organize: Get all the people and equipment together to support the plan.
  • Lead: Show vision and enthusiasm to reach the goal of the plan.

They have obstacles, if you will, that arise while they are focusing on these areas.


Technology is the application of scientific knowledge for practical purposes, and it represents potentially the fastest-moving force on the four functions of management – and it encompasses all forms of technology (communication, manufacturing, marketing, etc.). Technology is moving at an incredibly fast pace, and that forces managers to adjust how they plan, organize, lead and control. Primarily, technology allows a manager to have access to more data and to communicate that data faster and to more people. Thus, they have to be able to work with technology, understand how to use it as a manager and disseminate that information to their employees.


For any manager to be able to truly utilize the four main functions, they have to be able to accept innovation and indeed be innovative themselves. Innovation, which is the introduction of new ideas, impacts managers constantly. Just think of the huge changes the Internet posed to managers. Simple things, such as email or text messaging, changed how they managed their employees and communicated with them.

CBSE Class 12 Commerce Business Studies Management And Business Environment Complete Details

CBSE Class 12 Commerce Business Studies Management And Business Environment : The business has to make the necessary changes to adapt itself to the new policies. Similarly, a change in the technology may render the existing products obsolete, as we have seen that the introduction of computer has replaced the typewriters; the color television has made the black and white television out of fashion. Again a change in the fashion or customers’ taste may shift the demand in the market for a particular product, e.g., the demand for jeans reduced the sale of other traditional wear. All these aspects are external factors that are beyond the control of the business. So the business units must have to adapt themselves to these changes in order to survive and succeed in business.

Hence, it is very necessary to have a clear understanding of the concept of business environment and the nature of its various components. The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc. While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which are uncontrollable in nature and affects the business decisions of a firm.


On the basis of the above discussion the features of business environment can be summarized as follows.

(a) Business environment is the sum total of all factors external to the business firm and that greatly influence their functioning.

(b) It covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions.

(c) The business environment is dynamic in nature, that means, it keeps on changing.

(d) The changes in business environment are unpredictable. It is very difficult to predict the exact nature of future happenings and the changes in economic and social environment.

(e) Business Environment differs from place to place, region to region and country to country. Political conditions in India differ from those in Pakistan. Taste and values cherished by people in India and China vary considerably

CBSE Class 12 Commerce Business Studies Management And Business Environment-IMPORTANCE OF BUSINESS ENVIRONMENT

There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively. As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways:

(a) Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully.

(b) Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities.

(c) Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

(d) Image Building: Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power.

(e) Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly.

(f) Identifying Firm’s Strength and Weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments

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