Question

Rajat was carrying on a business of manufacturing plastic disposables like plastic plates, plastic cups and plastic straws. He heard about the upcoming ban on single use plastics. He was able to identify this external environmental trend which could hinder his firm’s performance. So he took action and shifted to manufacturing the plates, cups and straws from bamboo and palm leaves. As a result, his business not only survived but was able to generate profit.
The point of importance of Business Environment highlighted above is :

• A. It enables the firm to identify opportunities and getting the first mover advantage.
• B. It helps the firm to identify threats and early warning signals.
• C. It helps in tapping useful resources.
• D. It helps in assisting in planning and policy formulation.

Hint:

Understanding business environment helps businesses react to risks before they become problems.

Answer 1

The Correct Option is B

Rajat foresaw a threat to his plastic products business from an impending ban on single-use plastics. This early anticipation enabled him to shift to eco-friendly alternatives like bamboo and palm leaves, thereby safeguarding and expanding his enterprise.
This illustrates the critical role of the business environment in delivering preliminary indicators of potential threats, allowing companies to adjust their strategies proactively.
Final Answer: (B) It assists the firm in detecting threats and preliminary indicators.